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 shall be paid or payable by the Cooperative on any capital furnished by its patrons.
Section 2. Patronage Capital in Connection with Furnishing Electric Services, Energy or Other Service. In the furnishing of electric services, energy or other services, the Cooperative’s operation 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 from 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 patrons 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 a manner that at the end of each fiscal year the amount of capital, if any, so furnished by each patron is clearly reflected 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 fiscal year notify each patron of the amount of capital so credited to his 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 for capital.
All other amounts received by the Cooperative from its operations in excess of costs and expenses shall, insofar as permitted by law, be (a) used to offset any losses incurred during the current or any prior fiscal year and (b) to the extent not needed for that purpose, 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 members. If, at any time prior to dissolution or liquidation, the Board of Directors shall determine that the financial condition of the Cooperative will not be impaired thereby, the capital then credited to patrons’ account may be retired in full or in part. One-half of any such retirements of capital shall be made in order of priority according to the year in which the capital was furnished and credited, the capital first received by the Cooperative being first retired; the other one-half of any such retirement shall be made in the same proportion as the patron’s total outstanding contributed capital bears to the outstanding contributed capital of all patrons.
Capital credited to the account of each patron shall be assignable only on the books of the Cooperative pursuant to written instructions 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 Directors, acting under policies of general application, shall determine otherwise.
Notwithstanding any other provision of these bylaws, the Board of Directors, at its discretion, shall have the power at any time upon the death of any patron, and upon written request by the legal representatives of the estate, to retire capital credited to any such deceased patron immediately upon such terms and conditions as the Board of Directors, acting under policies of general application shall determine; provided, however, that the financial condition of the Cooperative will not be impaired thereby. Requests to retire any other capital credited to a member prior to the time such capital would otherwise be retired, for reasons other than death, may be considered by the Board of Directors on a case-by-case basis.
The Cooperative shall have the right to offset the retirement approved by the Board of Directors for a patron against the debt owed to the Cooperative by such patron. The Cooperative, before retiring any capital credit of any patron’s account, shall deduct from the retirement of capital credits any amounts owed by such patron to the Cooperative. This provision shall apply to all retirements of capital credits.
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 bylaw 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. Escheat. That all persons to whom capital have been allocated shall keep the Cooperative informed of their current mailing address in order that the Cooperative may retire or refund capital credits, membership fees, deposits and any other amounts to such persons in accordance with the bylaws. If, prior to retirement of capital as provided by these bylaws, a person ceases to be a member or patron of the Cooperative and such person’s existence and whereabouts are unknown to the Cooperative, and if such non-member or a member fails to cash or claim a check, the Cooperative shall use reasonable efforts as required by law to notify the member or non-member of such failure.
If the capital credits remain unclaimed after 3 years, the distribution may be delivered in accordance with Section 74.3013 of the Texas Property Code to a scholarship fund, to an economic development fund and to an energy efficiency assistance fund, each as further described and to the limits described in such Section 74.3013 of the Property Code. Otherwise, such amounts will be reported and remitted to the State Comptroller’s Office in accordance with current State of Texas unclaimed property laws.