Bylaws

Section 15.1 Request To Inspect Books & Records

A Member may request to examine the Cooperative’s Books and Records by making a request in writing on such form as the Cooperative has promulgated for that purpose specifying the particular Books and Records desired to be examined and providing all of the information required. Within 10 business days, the Cooperative shall respond to the request.

Section 15.2 Inspection Only for a Proper Purpose

The inspection and copying of Books and Records must be for a Proper Purpose. Any request that does not adequately specify a Proper Purpose may be denied or returned to the requesting Member with comments or instructions, or granted only in part. The Cooperative shall have the right to deny any request based on evidence that such request is not for a Proper Purpose, as may be determined in the Cooperative’s reasonable discretion.

Section 15.3 Right To Inspect

Upon proper request, and subject to the provisions of subsections 14.7 and 14.8, the Cooperative will allow the requesting member to inspect the requested Books and Records by viewing them at the Cooperative’s headquarters or other location where the Books and Records may be kept.

Section 15.4 Copying of Books & Records

A Member who has inspected Books and Records may request that the Cooperative copy all or any portion of the Books and Records that the requesting Member has inspected. Subject to the provisions of subsections 14.7 and 14.8, the Cooperative will make a copy of such Books and Records for Member within a reasonable time at the Member’s sole cost and expense. All copies shall be provided on the condition that the requesting Member use the Books and Records only for a Proper Purpose.

Section 15.5 Definitions

In this Article, the following terms shall have the following meanings:

“Books and Records” means:

1. Articles of Incorporation or Certificates of Formation and all amendments and restatements thereof
2. Bylaws and all amendments and restatements thereof
3. Resolutions adopted by the Cooperative board relating to the characteristics, qualifications, limitations, obligations, rights or classifications of Members
4. Minutes of all meetings of Members and records of all actions approved by the Members in the past 3 years
5. Written communications to Members as a whole within the past 3 years, including financial statements furnished on request in the past 3 years
6. Names and business or home addresses of current directors and officers
7. Accounting records directly related to the Proper Purpose articulated by the Member
8. The most recent annual report delivered to the Secretary of State
9. Membership lists, subject to the provisions of Section 14.7
10. Minutes of Board Meetings, subject to the provisions of Section 14.8

“Proper Purpose” means:

1. Reasonably related and germane to a person’s interest as a Member
2. Proper, lawful and in good faith
3. Not adverse, detrimental or hostile to the Cooperative
4. Not to be used to gratify curiosity or to engage in speculation
5. Not to be used to harass, embarrass or annoy the Cooperative
6. Not to be used to aid a competitor
7. Not to be used for any commercial purpose

Section 15.6 Inspection by Members Only

Notwithstanding any provision herein to the contrary, the Cooperative shall not be required to make its Books and Records available to members of the general public who are not Members of the Cooperative.

Section 15.7 Membership Lists

The membership list may be inspected by a requesting Member only for the purpose of communicating with other Members for a Proper Purpose. If, the Cooperative determines that the requesting Member’s inspection of the Membership List is for a Proper Purpose, the Cooperative shall have the option of either (1) providing the membership list to the requesting Member on the condition that it may be used only for a Proper Purpose or (2) offering to disseminate the requesting Member’s communications for a Proper Purpose to the Members of the Cooperative. If this offer is accepted by the requesting Member, the Cooperative shall disseminate the requesting Member’s communications for a Proper Purpose to the Members of the Cooperative on behalf of the requesting Member, and at the requesting Member’s sole cost and expense.

Section 15.8 Board Minutes

In addition to the requirements of Sections 14.1 and 14.2, Member’s request shall:

1. Describe with reasonable particularity the purpose and the excerpts the Member wants to inspect
2. Seek only excerpts that are directly connected to the Member’s purpose

Section 15.9 Exceptions to Disclosure

Notwithstanding any other provisions in this Article XIV, the Cooperative shall have the right to redact or otherwise deny access to certain information, including but not limited to the following:

1. Information made confidential by law
2. Social security numbers
3. Information in a personnel file, the disclosure of which would constitute an invasion of personal privacy
4. Information relating to civil or criminal litigation to which the state or a political subdivision is or may be a party as a consequence of their position
5. Information relating to pending or threatened litigation involving a governmental body or an officer or employee
6. Information that, if released, would give an advantage to a competitor or bidder
7. The location of real or personal property for utility purposes before the project is publicly announced and the appraisals or purchase prices of real or personal property for a public purpose before contracts for the property are formally awarded
8. Trade secrets obtained from a person and privileged or confidential by statute or judicial decision, and commercial or financial information, the disclosure of which would cause substantial competitive harm
9. Competitive matters, including but not limited to commercial information, which would, if disclosed, give an advantage to competitors or prospective competitors
10. Credit card, debit card, charge card and access device numbers
11. Email addresses

These bylaws may be altered, amended, or repealed by not less than the affirmative vote of 2/3 of all the Board of Directors at any regular or special meeting.

The Corporate seal of the Cooperative shall be in the form of a circle and shall have inscribed thereon the name of the Cooperative and the words “Corporate Seal, Texas.”

The fiscal year of the Cooperative shall begin on the first day of January of each year and end on the 31st day of December of the same year.

Section 11.1 Disposition of Property

(a) Except as provided in paragraph (b) and paragraph (c) of this Section 10.1, the board of directors may not sell, lease, lease-sell, exchange, transfer or otherwise dispose of all or substantially all of the Cooperative’s property nor may the board authorize any such transaction unless such sale, lease, lease-sale, exchange, transfer or other disposition is first authorized at a meeting of the members thereof by the affirmative vote of not less than a majority of all of the members of the Cooperative and unless the notice of such proposed sale, lease, lease-sale, exchange, transfer or other disposition shall have been contained in the notice of the meeting.

(b) The board of directors, without authorization by the members thereof, shall have full power and authority to borrow monies from any source and to authorize the execution and delivery of a mortgage or mortgages or a deed or deeds of trust upon, or the pledging or encumbering of, any or all of the Cooperative’s property and assets, whether acquired or to be acquired, as well as the revenues and income there from, all upon such terms and conditions as the board shall determine, to secure any indebtedness of the Cooperative.

(c) The board of directors may, upon the authorization of a majority of those members of the Cooperative present at a meeting of the members thereof, sell, lease, or otherwise dispose of all or any portion of its property to another corporation doing business in this State pursuant to the Act under which this Cooperative is incorporated.

Any member or director may waive, in writing any notice of meetings required to be given by these bylaws.

(a) As used in these Bylaws, subject to the context requiring otherwise, and as determined by
the Board:

1. “Electronic” and “Electronically” mean relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities
2. To sign an Electronic Document means, with present intent to authenticate or adopt the Electronic Document, to attach to, or logically associate with, the Electronic Document an Electronic sound, symbol, or process
3. Electronic transmission includes transmission through:
   • Electronic mail
   • The Cooperative’s website
   • A website or information processing system that the Cooperative has designated or uses to send, receive, or transmit Electronic Documents or Electronic information, or to Electronically conduct an action, transaction, business, meeting, or activity.

(b) If a Member or Director owns, controls, or has reasonable access to the applicable or necessary hardware and software, then, the Member or Director may choose to transact certain business with the Cooperative in an electronic format. In such event:

1. The Member or Director consents and agrees to: (A) use, accept, send, receive, and transmit an Electronic signature, contract, record, notice, vote, communication, comment, and other document regarding an action, transaction, business, meeting, or activity with, for, or involving the Cooperative (“Electronic Document”); (B) Electronically conduct an action, transaction, business, meeting, or activity with, for, or involving the Cooperative; and (C) Electronically give or confirm this consent and agreement
2. An Electronic Document sent or transmitted to, or received or transmitted from, the Member or Director satisfies a requirement imposed by the Governing Documents that the underlying signature, contract, record, notice, vote, communication, comment, or other document be in writing
3. Electronically sending or transmitting an Electronic Document to, or receiving or transmitting an Electronic Document from, the Member or Director satisfies a requirement imposed by the Governing Documents that the underlying signature, contract, record, notice, vote, communication, comment, or other document be sent or received personally or by mail
4. The Member or Director Electronically taking an action provided in these Bylaws satisfies a requirement imposed by the Governing Documents regarding the form or manner of taking the action.

Except as otherwise provided in these Bylaws, an Electronic Document Electronically sent or transmitted to a Member or Director or former Member at the Member or Director or former Member’s last known Electronic address is considered sent, received, transmitted, and effective on the date sent by the Cooperative. An Electronic Document Electronically received or transmitted from a Member or Director or former Member is considered sent, received, transmitted, and effective on the date received by the Cooperative.

Section 8.1 Nonprofit & Cooperative Operation

The Cooperative

1. Shall operate on a nonprofit and cooperative basis for the mutual benefit of all Members
2. Shall not pay interest or dividends on capital furnished by Patrons (defined in Section 2(a) below).

Section 8.2 Allocating Capital Credits

The Cooperative shall allocate Capital Credits as provided in this Section. The Cooperative must allocate Capital Credits in a Patron’s name as shown in the Cooperative’s records, regardless of the Patron’s marital status.

(a) Patron. The term “Patron” means, during a fiscal year:

1. A Member
2. Any other Person using a Cooperative Service

(b) Entity Patron. The term “Entity Patron” means any Patron that is a distinct legal entity or non-natural person, such as a corporation, partnership, organization, or association.

(c) Cooperative Service. The term “Cooperative Service” means the provision of electric service (electric energy and/or services). Such term shall also include the provision of other utility type goods and services to the extent the provision of such goods and services would qualify an organization for exemption from federal income taxation under Section 501(c)(12) of the Internal Revenue Code and for which the Cooperative has a legal obligation to provide such goods and services on a patronage basis through the allocation of Capital Credits. Notwithstanding any provision of these Bylaws to the contrary, Cooperative Service does not include any good or service provided by an affiliate of the Cooperative to its customers.

(d) Allocating Earnings. For each Cooperative Service provided during a fiscal year, the Cooperative shall equitably allocate to each Patron, in proportion to the Patronage, (which is the quantity or value of the Cooperative Service used by the Patron during the fiscal year and timely paid for by the Patron,) the Cooperative’s Patronage Earnings. “Patronage Earnings” means the amount by which the Cooperative’s patronage sourced revenues, income, and gains from and directly related to providing a Cooperative Service exceed the Cooperative’s patronage sourced expenses and losses of providing the Cooperative Service, all as determined under federal cooperative tax law.

Provided, however, for each Cooperative Service, if costs and expenses exceed the amounts received and receivable from and directly related to providing such Cooperative Service, hereinafter referred to as “Patronage Loss”, then the Board of Directors shall have the authority, under accepted accounting practices, loan covenants, and federal cooperative tax law, to prescribe the accounting procedures under which such operating loss may be addressed.

For each fiscal year, the Cooperative may, as determined by the Board, use, retain, or equitably allocate the Cooperative’s nonpatronage earnings. “Nonpatronage Earnings” means revenue, income, and gains in excess of expenses and losses from the provision of a good or service not provided to the Patrons on a patronage basis, including earnings or losses from a subsidiary corporation. Such nonpatronage earnings may be used to offset an operating loss as determined by the Board.

(e) Capital Credits. For each Patronage Earnings amount allocated to a Patron, the Patron shall be deemed to have contributed such amount to the Cooperative as capital. The Cooperative must credit all capital contributions from a Patron to a capital account for the Patron. The Cooperative shall maintain books and records reflecting the capital contributed by each Patron. At the time of receipt by the Cooperative, each capital contribution is treated as though the Cooperative paid the Patronage Earnings amount allocated to the Patron in cash and the Patron contributed the corresponding amount to the Cooperative as capital. The term “Capital Credits” means the amounts allocated to a Patron and contributed by the Patron to the Cooperative as capital.

To secure a Patron’s obligation to pay amounts owed to the Cooperative, including any compounded interest and late payment fee, and in return for the Cooperative providing a Cooperative Service to the Patron, the Cooperative has, and by accepting service, each Patron hereby grants to the Cooperative, a security interest in Capital Credits allocated to the Patron. The Patron authorizes the Cooperative to perfect this security interest by filing a financing statement.

(f) Method of Allocation. Notwithstanding other provisions of this Bylaw, the Board, acting through policy, has the authority to (1) determine the process for annually calculating the amount of Patronage Earnings and Patronage Losses, and (2) determine the kind, timing, method, and type of allocation; provided however, that such methods are fair and equitable on the basis of Patronage. Such policies apply separately to each Cooperative Service and includes, but is not limited to, the authority to determine the items of revenue included in the definition of Patronage.

As reasonable and fair, the Cooperative may allocate Patronage Earnings to different classes of similarly situated Patrons under different manners, methods, and timing, provided the Cooperative allocates Patronage Earnings to similarly situated Patrons under the same manner, method, and timing. If the Cooperative is a member, patron, or owner of an entity from which the Cooperative uses a good or service in providing a Cooperative Service and from which the Cooperative is allocated Patronage Earnings or similar amount, then, as determined by the Board and consistent with this Bylaw, the Cooperative may separately identify and allocate to the Cooperative’s Patrons this capital credit or similar amount allocated by the entity.

(g) Notification of Allocation. Within a reasonable time after the end of each fiscal year, the Cooperative shall notify all Patrons, through general publication or similar method of communication, of the aggregate amount of Capital Credits allocated to the Capital Accounts of all Patrons, and upon request, the Cooperative shall inform an individual Patron of the specific amount of capital credited to the Patron’s capital account.

(h) Joint Memberships. Upon the death of a Joint Member, the Cooperative shall assign and transfer to the surviving Joint Member an equal portion of Capital Credits allocated, or to be allocated, to the surviving Member; or upon the death of both Members of a Joint Membership, the membership will terminate and the balance in the capital account will be subject to the Special Retirement provisions of Article VIII [Non-Profit Operation], Section 4(b) of these Bylaws.

Section 8.3 Assignment of Capital Credits

Subject to the right of offset for any amounts owed the Cooperative, Capital Credits of a Patron or former Patron are assignable only on the books and records of the Cooperative. Except as otherwise provided by the Board or these Bylaws, in order for a Patron to assign or transfer a Patron’s Capital Credits:

1. The Cooperative must receive a written or Electronic request signed by the Patron to assign or transfer the Capital Credits
2. The Patron and the assignee or transferee must comply with all reasonable requirements specified by the Cooperative
3. The Board shall have the right to approve or deny the assignment or transfer in its sole discretion

Section 8.4 Retiring Capital Credits

The Cooperative may retire and pay Capital Credits allocated to Patrons and former Patrons as provided in these Bylaws (“Retired Capital Credits”). If the Cooperative retires and pays Capital Credits, then the Cooperative must retire and pay Capital Credits in a Patron’s name as shown in the Cooperative’s records, regardless of the Patron’s marital status. If the Cooperative mails a Retired Capital Credits payment, then the Cooperative shall mail the payment to the Patron or former Patron’s address as shown in the Cooperative’s records. The Patron’s capital account shall reflect and be reduced by the amount of such retirement.

(a) General Capital Credit Retirements. At any time before the Cooperative’s dissolution, liquidation, or other cessation of existence, the Cooperative may generally retire and pay some or all Capital Credits allocated to Patrons and former Patrons.

(b) Special Capital Credit Retirements. The Cooperative may specially retire and pay some or all Capital Credits allocated to an individual Patron or former Patron in accordance with Section 4(d) of this Article VIII:

1. After the death of the individual
2. After receiving a written or Electronic request from the deceased individual’s heir or authorized representative
3. According to the terms and conditions established by the Cooperative.

The Cooperative may not specially retire and pay Capital Credits allocated to an Entity Patron or former Entity Patron

• (A) during or after the entity’s dissolution, liquidation, or other cessation of existence
• (B) during or after the entity’s reorganization, transfer, merger, or consolidation

(c) Capital Credit Recoupment and Offset. The Cooperative may recoup, offset, or setoff an amount owed to the Cooperative by the Patron or former Patron, including any compounded interest and late payment fee, by reducing the amount of Retired Capital Credits paid to the Patron or former Patron by the amount owed to the Cooperative.

(d) Capital Credit Retirement Discretion. The Cooperative may retire and pay Capital Credits only if the Board determines that the retirement and payment will not adversely impact the Cooperative’s financial condition. Consistent with this Bylaw, the retirement and payment of Capital Credits are in the sole discretion of the Board and are not affected by previous retirements and payments. The manner, method, order, and timing of retiring and paying Capital Credits may be determined only by the Board.

Pursuant to such discretion, the Board shall also have the power, exercisable in its sole discretion to retire all or a portion of Capital Credits of Patrons prior to the time such capital would otherwise be retired under the provisions of these Bylaws or the policies of the Board, but only if the financial condition of the Cooperative will not be impaired. The payment portion of such early retirement may be on a discounted and net present value basis in order to reflect the time value of money. Such policies shall establish the criteria used in determining the discounted and net present value of early retirements. The discount, which is the difference between the total of Capital Credits retired and the cash payment of such early retirement, shall be deemed a contribution of capital to and part of the net savings of the Cooperative. Subject to Board action that legally binds the Cooperative to maintain records of the discount by Patron or former Patron, the discount shall be a form of retained but allocated capital for purposes of distributing the cumulative amount of all such discounts to the respective Patron or former Patron upon dissolution and liquidation of the Cooperative.

(e) Different and Separate Capital Credit Retirements. As reasonable and fair, the Cooperative may retire and pay Capital Credits to separately established classes of similarly situated Patrons and former Patrons under different manners, methods, and timing, provided the Cooperative retires and pays Capital Credits to such separately established similarly situated Patrons and former Patrons under the same manner, method, and timing. If the Cooperative separately identified and allocated Capital Credits representing capital credits or similar amounts allocated to the Cooperative by an entity in which the Cooperative is or was a member, patron, or owner, then the Cooperative may retire and pay these Capital Credits only after the entity retires and pays the capital credits or similar amounts to the Cooperative.

(f) Unclaimed Retired Capital Credits. The Cooperative may receive returned retired Capital Credits that members have failed to claim or may receive notifications as a result of members' failure to cash retired Capital Credits. In each instance, the Cooperative will void any unclaimed or uncashed retired Capital Credits within 90 days of issuance. The Cooperative may post on its website the names of members with retired Capital Credits that have been unclaimed or uncashed. When retired Capital Credits remain unclaimed after 3 years, those amounts may be delivered in accordance with Section 74.3013 of the Texas Property Code. Otherwise, the Cooperative will notify the member regarding any unclaimed retired Capital Credits in accordance with the current State of Texas unclaimed property laws and following such notice to those members, such retired Capital Credits will be reported and remitted to the State Comptroller's Office as required by law.

Section 8.5 Patron Agreement

Each Patron and former Patron agrees that:

1. Capital Credits are not securities under state or federal law
2. The Patron’s right to Capital Credits becomes payable only upon the Cooperative retiring the Capital Credits as provided in these Bylaws, and not upon the Cooperative allocating the Capital Credits
3. As required by law, each Patron will: (A) report to the appropriate entity all allocated or retired Capital Credits; and (B) pay the appropriate entity any tax or similar amount on allocated or Retired Capital Credits. To the extent that the Cooperative is required to make any tax withholding amounts from the retirement or payment of such Capital Credits, the Patron acknowledges and agrees to such withholding.

Section 8.6 Non-Member Patrons & Non-Patrons

As a condition of using a Cooperative Service, and except as otherwise provided by the Board:

1. To the same extent as a Member, a Patron who is not a Member (“Non-Member Patron”) and a Person Using a Cooperative Service who is not a Member or Patron (“Non-Patron”) must abide by and be bound to the duties, obligations, liabilities, and responsibilities imposed by the Governing Documents upon Members
2. A Non-Member Patron or Non-Member former Patron has none of the rights granted by the Governing Documents to Members, other than the rights to:
   • (A)Be allocated Capital Credits
   • (B) Be paid Retired Capital Credits
3. A Non-Patron or former Non-Patron has none of the rights granted by the Governing Documents to Members.

Section 7.1 Certificates of Membership

Membership in the Cooperative shall be evidenced by a certificate of membership which shall be in such form and shall contain such provisions as shall be determined by the board of directors not contrary to, or inconsistent with, the articles of incorporation of the Cooperative bylaws. Such certificates shall be signed by the President and by the Secretary of the Cooperative and the corporate seal shall be affixed thereto.

Section 7.2 Issue of Membership Certificates

No membership certificates shall be issued for less than the membership fee fixed in these bylaws, nor until such membership fee has been fully paid for in cash and such payment has been deposited with the Treasurer.

Section 7.3 Lost Certificates

In case of a lost, destroyed, or mutilated certificate, a new certificate may be issued upon such terms and indemnity to the Cooperative as the board of directors may prescribe.

Section 6.1 Contracts

Except as otherwise provided in these bylaws, the board of directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name and on behalf of the Cooperative, and such authority may be general or confined to specific instances.

Section 6.2 Checks, Drafts, etc.

All checks, drafts or other orders for the payment of money, and all notes, bonds or other evidence of indebtedness issued in the name of the Cooperative shall be signed by such officer or officers, agent or agents, employee or employees of the Cooperative and in such manner as shall from time to time be determined by resolution of the board of directors.

Section 6.3 Deposits

All funds of the Cooperative shall be deposited from time to time to the credit of the Cooperative in such bank or banks as the board of directors may select.