Article VII: Non- Profit Operation

Section 1. Interest or Dividends of 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 shall be paid or payable by the Cooperative on any capital furnished by its patrons.

Section 2. Patronage Capital in Connection with Furnishing Electric Energy

In the furnishing of electric energy, the Cooperative’s operations shall be so conducted that all patrons will, through their patronage, furnish capital for the Cooperative. In order to induce patronage and to assure that the Cooperative will operate on a non-profit basis, the Cooperative is obligated to account on a patronage basis to all its patrons for all amounts received and receivable for the furnishing of electric energy in excess of operating costs and expenses properly chargeable against the furnishing of electric energy. 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 patron as capital.

The Cooperative is obligated to pay by credits to a capital account for each patron all such amounts in excess of operating costs and expenses. The books and records of the Cooperative shall be set up and kept in such manner that at the end of each calendar year the amount of capital, if any, so furnished by each patron is clearly reflected on an equitable basis that reflects the contribution by each patron to net operating revenues or net operating margins, and credited in an appropriate record to the capital account of each patron and the Cooperative shall, within a reasonable time after the close of the calendar year, notify each patron of the amount of capital so credited to his or her account. All such amounts credited to the capital account of any patron shall have the same status as though they had been paid to the patron in cash in pursuance of a legal obligation to do so and the patron had then furnished the Cooperative corresponding amounts of capital.

All other amounts received by the Cooperative from its operation in excess of costs and expenses shall be, (a) used to offset any losses incurred during the current or any prior calendar year, and (b) to the extent not needed for that purpose, allocated to its patrons on an equitable basis that reflects the contribution by each patron in a negligible manner to net operating margins, and any amount so allocated shall be included as 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 members. If at any time prior to dissolution or liquidation the board shall determine that the financial condition of the Cooperative will not be impaired thereby, the capital credited to patron’s accounts may be retired in full or in part. Any such retirements of capital shall be made in order or priority according to the year in which the capital was furnished and credited, the capital first received by the Cooperative being first retired.

Capital credited to the account of each patron 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, acting under policies of general application, shall determine otherwise.

Notwithstanding any other provision of these bylaws, the board at its discretion shall have the power at all times upon the death of any natural person, if the legal representatives of his estate shall request in writing, that the capital credited to any such natural person 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 natural person immediately upon such terms and conditions as the board, acting under policies of general application, and the legal representatives of such natural person’s estate shall agree upon; provided however that the financial condition of the Cooperative will not be impaired thereby.

The patron of the Cooperative, by dealing with the Cooperative, acknowledges 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 bounded 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 the best means determined by the board from time to time.

Section 3. Capital Credits from Power Supplier

Capital credits received from Hoosier Energy REC, Inc., the power supplier for the Bartholomew County REMC, shall be maintained as a separate capital credit account of the patron of the Bartholomew County REMC and shall be associated to the accounts of the patrons of the Bartholomew County REMC in the year in which Bartholomew County REMC receives official written notice that Hoosier Energy REC, Inc., has allocated capital credits to the Bartholomew County REMC. The separate capital credits received from Hoosier Energy REC, Inc., that are credited to the special accounts of the patrons of the Bartholomew County REMC shall not be retired or distributed to the patrons until such time capital credit has been actually distributed by Hoosier Energy REC, Inc., to Bartholomew County REMC and until such time as the board of directors of the Bartholomew County REMC, by appropriate resolution duly adopted and passed, authorize the distribution of these special capital credits to the accounts of the patrons. No notice of the allocation of these special capital credits shall be required to be given to the patron, but it may be given and, even if given the patron’s special capital credits account shall be available for the patron’s inspection.

Section 4. Unclaimed Capital Credit Checks

Notwithstanding any provisions herein contained to the contrary and pursuant to the statutes of the State of Indiana (I.C.8-1-13-11) the Cooperative shall recover after a period of 2 years any unclaimed stocks, dividends, capital credits, patronage refunds, utility deposits, membership fees, account balances or book equity for which the owner (member or former member) cannot be found and are the result of distributable savings of the Cooperative, giving 60 days’ notice in a newspaper or newsletter printed in the English language and circulated in the county in which the Cooperative locates its general headquarters. Such notice shall state the owner’s name and approximate amount of owner’s interest, and that if not duly claimed within 60 days of said notice, the same shall be turned over to the Cooperative, which shall reallocate the same to other members.

If not provable claim shall have been filed by such member within 60 days after the one-time publication of said notice, the Cooperative may credit against said account any amounts due and owing the Cooperative by said member and thereafter allocate to the other members of the Cooperative on a pro rata basis. Such amounts of said members (the allocation herein contemplated) shall be allocated to those who are members as of the year and on a pro rata basis for the year in which the 60th day falls after the published notice.

Any member or former member who fails to claim any cash retirement or capital credit or other payment within 2 years after payment has been made available to such person, such failure will constitute an irrevocable assignment and gift to the Cooperative of such capital credits or other payments.

Nothing contained in this section shall be construed to prohibit the Cooperative from crediting any of the above described funds against a member or former member’s debt to the Cooperative prior to any payment to such member or any allocation in favor of other members.