Section 1. Interest or Dividends on Capital Prohibited. The Cooperative shall at all times be operated on a cooperative, non-profit basis for the mutual benefit of its patrons. No interest or dividends, other than “patronage dividends” as defined below, shall be paid or payable by the Cooperative on any capital furnished by its patrons.
The term “patron” as used herein shall mean only a person, firm, or entity with whom the Cooperative does business on a cooperative basis, either as a member in accordance with the provisions of these bylaws or as a nonmember by authorized contractual authority.
Section 2. Patronage Capital in Connection with Furnishing Electric Energy. In furnishing of services of all kinds, including the furnishing of electric power and energy, the Cooperative’s operations shall be so conducted that all patrons, members, and nonmembers will through their patronage furnish capital for the Cooperative. In order to induce patronage and to assure that the Cooperative will operate on a nonprofit basis, the Cooperative is obligated to account on a patronage basis to all its patrons, members, and nonmembers and to assign patronage dividends in an aggregate amount equal to the Cooperative’s Federal taxable income related to its patronage business computed assuming no deduction for patronage dividend amount and after reduction for any losses and deductions incurred during prior years and deductible by the Cooperative in computing its current Federal taxable income. All such amounts in excess of operating costs and expenses at the moment of receipt by the Cooperative are received with the understanding that they are furnished by the patrons, members, and non-members as capital. The Cooperative is obligated to pay by credits to a capital account for each patron all such patronage dividends. The books and records of the Cooperative shall be set up and kept in such a manner that at the end of each fiscal year the amount of capital, if any, so furnished by each of such patrons is clearly reflected and credited in an appropriate record to the capital account of each of such patrons and the Cooperative shall within reasonable time after the close of the fiscal year notify each of such patrons of the amount of capital so credited to his/her account; provided that individual notices of such amounts furnished by each patron shall not be required if the Cooperative notifies all patrons of the aggregate amount of such excess and provides a clear explanation of how each patron may compute and determine for himself/herself the specific amount of capital so credited to him/her and that specific information on such amount of capital is available from the Cooperative on request.
All such amounts credited to the capital account of any of such patrons shall have the same status as though they had been paid to such patron in cash in pursuance of a legal obligation to do so and such patron had then furnished the Cooperative corresponding amounts for capital. All other amounts received by the Cooperative in excess of costs and expenses shall, insofar as permitted by law, be allocated to its patrons on a patronage basis, and any amount so allocated shall be included as a part of the capital credited to the accounts of patrons, as herein provided.
In the event of dissolution or liquidation of the Cooperative, after all outstanding indebtedness of the Cooperative shall have been paid, outstanding capital credits shall be retired without priority on a pro-rata basis before any payments are made on account of property rights of patrons. If at any time prior to dissolution or liquidation, the Board of Trustees shall determine that the financial condition of the Cooperative will not be impaired thereby, the capital then credited to patrons’ accounts may be retired in full or in part. The Board of Trustees shall determine the method, basis, priority, and order of retirement, if any, for all amounts thereafter furnished as capital. In no event, however, may any such capital be retired unless the security provisions of any deeds of trust or mortgages given by the Cooperative to the United States of America or any financial institution at any time and which are then in force and effect are satisfied. However, at the discretion of the Board of Trustees, a reasonable cash reserve over and above the minimum requirements of the Government’s or various financial institution’s deed of trust or mortgage provisions shall be maintained.
Provided, however, that the Board of Trustees shall have the power to adopt rules providing for the separate retirement of that portion (“power supply portion”) of capital credited to the accounts of patrons which corresponds to capital credited to the account of the Cooperative by an organization furnishing electric service to the Cooperative. Such rules may (a) establish a method for determining the power supply portion of capital credited to each patron for each applicable fiscal year, (b) provide for separate identification on the Cooperative’s books of the power supply portion of capital credited to the Cooperative’s patrons, (c) provide for appropriate notifications to patrons with respect to the power supply portion of capital credited to their accounts and (d) preclude a general retirement of the power supply portion of capital credited to patrons for any fiscal year prior to the general retirement of other capital credited to patrons for the same year or of any capital credited to patrons for any prior fiscal year.
Capital credited to the account of each of such patrons shall be assignable only on the books of the Cooperative pursuant to written instruction from the assignor and only to successors in interest or successors in occupancy in all or a part of such patron’s premises served by the Cooperative unless the Board of Trustees, acting under policies of general application, shall determine otherwise.
Notwithstanding any other provision of these Bylaws, the Board of Trustees, at its discretion, shall have the power at any time upon the termination of membership or the death of any patron who was a natural person if the legal representatives of his estate shall request in writing that the capital credited to any such patron be retired prior to the time such capital would otherwise be retired under the provisions of these Bylaws, to retire capital credited to any such patron immediately upon such terms and conditions, inclusive of discounts, as the Board of Trustees, acting under policies of general application, and the former Patron or legal representatives of such patron’s estate shall agree upon; provided, however, that the financial condition of the Cooperative will not be impaired thereby.
To secure payment of any amounts owed by a Patron or former Patron to the Cooperative, including up to the maximum legal interest rate compounded and late payment fee determined by the Board, the Cooperative has a security interest in the Capital Credits of every Patron and former Patron. The Cooperative, before retiring any capital credited to any patron’s account, shall deduct therefrom any amount owing by such patron to the Cooperative, together with interest thereon at the state legal rate in effect when such amount first became overdue, compounded annually.
If the Cooperative takes measures to notify any Patron or former Patron by mail of retired or refunded Capital Credits and if the Patron or former Patron fails to claim the retired or refunded Capital Credits within the greater of seven years or the time which is allocated by the OK State Tax Commission regarding unclaimed property, then the Patron or former Patron contributes the unclaimed amounts to the Cooperative, and the Cooperative, with Board review, will accept the unclaimed amounts from the Patron or former Patron, as permanent, non-allocated capital.
The patrons of the Cooperative, by dealing with the Cooperative, acknowledge that the terms and provisions of the Articles of Incorporation and Bylaws shall constitute and be a contract between the Cooperative and each patron, and both the Cooperative and the patrons are bound by such contract, as fully as though each patron had individually signed a separate instrument containing such terms and provisions. The provisions of this Article of the Bylaws shall be called to the attention of each patron of the Cooperative by posting in a conspicuous place in the Cooperative’s office.
Section 3. Patronage Refunds in Connection with Furnishing Other Services. Patronage refunds shall be made only in connection with the consumption of electrical energy, unless the Board of Trustees shall determine otherwise. Patronage refunds in connection with the furnishing of other services may, by resolution of the Board of Trustees, be made to all patrons on an equal basis.