Article VIII

DISPOSITION OF PROPERTY

SECTION 1. The cooperative may not sell, mortgage, lease or otherwise dispose of or encumber all or any substantial portion of its property unless such sale, mortgage, lease or other disposition or encumbrance is authorized at a meeting of the members thereof by the affirmative vote of not less than a two-third (2/3) majority of all members of the Cooperative, and unless the notice of such proposed sale, mortgage, lease or other disposition or encumbrance shall have been contained in the notice of the meeting; provided, however, that notwithstanding anything herein contained, the Board of Directors of the Cooperative, without authorization by the members thereof, shall have full power and authority 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 property, assets, rights, privileges, licenses, franchises and permits of the Cooperative, whether acquired or to be acquired, and wherever situated, as well as the revenues and incomes therefrom, all upon such terms and conditions as the Board of Directors shall determine, to secure any indebtedness of the Cooperative to the United States of America or any agency or instrumentality thereof, or to secure any indebtedness of the Cooperative to the National Rural Utilities Cooperative Finance Corporation, or any other lending agency. Provided further, that the Board of Directors may, upon the authorization of three-fourths of those members of the Cooperative present at a meeting of members thereof, sell, lease, or otherwise dispose of all or a substantial portion of its property to another Cooperative or foreign Corporation doing business in this State pursuant to the act under which this Cooperative is incorporated, or to a municipality or other body politic or subdivision thereof.

SECTION 2. MERGER OR CONSOLIDATION. In a manner determined by the Board that is consistent with this Bylaw, the Cooperative may consolidate or merge with any other consumer-owned cooperative that provides electric power or provides any Cooperative Service (“Consolidate or Merge”).

A. Board Approval. The Board must approve an agreement or plan to Consolidate or Merge (“Consolidation or Merger Agreement”) stating the:

1. Terms and conditions of the Consolidation or Merger;
2. Name of each entity Consolidating or Merging with the Cooperative;
3. Name of the new or surviving Consolidated or Merged Entity (“New Entity”);
4. Manner and basis, if any, of converting memberships, or ownership rights, of each Consolidating or Merging entity into memberships or ownership rights of, or payments from the New Entity;
5. Number of Directors of the New Entity, which must equal or exceed seven (7);
6. Date of the New Entity’s annual meeting;
7. Names of New Entity Directors who will serve until the New Entity’s first annual meeting; and
8. Any other information required by Law.

B. Member Approval. After the Board approves a Consolidation or Merger Agreement, a majority of the Members present and voting in person must approve the Consolidation or Merger Agreement. Members may not approve the Consolidation or Merger Agreement by Mail Ballot.

C. Notice. The Cooperative shall notify Directors of any Board Meeting, and Members of any Member Meeting, at which Directors or Members may consider a Consolidation or Merger Agreement. This notice must contain, or be accompanied by, a summary or copy of the Consolidation or Merger Agreement.

D. Other Requirements. The New Entity Directors named in the Consolidation or Merger Agreement must sign and file Articles of Consolidation or Merger in a manner, and stating the information, required by Law. The Cooperative shall comply with all other requirements for Consolidation or Merger specified by Law.

SECTION 3. DISTRIBUTION OF COOPERATIVE ASSETS UPON DISSOLUTION. Upon the Cooperative’s dissolution:

1. The Cooperative shall pay, satisfy, or discharge all Cooperative debts, obligations, and liabilities, including retiring and refunding without priority all Capital Credits and Affiliated Capital Credits to all Patrons and former Patrons in proportion to the value or quantity of Cooperative Services used, received, or purchased by each Patron or former Patron; and
2. After paying, satisfying, or discharging all Cooperative debts, obligations, and liabilities:

a. To the extent practical, the Cooperative shall first distribute gains from selling any appreciated Cooperative Asset to Members who used, received, or purchased Cooperative Services during the period in which the Cooperative owned the Cooperative Asset in proportion to the value or quantity of Cooperative Services used, received, or purchased by the Member during the period the Cooperative owned the Cooperative Asset; and
b. The Cooperative shall then pay or distribute any remaining Cooperative Assets, and any amounts received from selling any remaining Cooperative Assets, to:

(1) The Members who were using, receiving, or purchasing Cooperative Services at the time of the Cooperative’s dissolution in proportion to the value or quantity of Cooperative Services used, received, or purchased by each Member prior to the Cooperative’s dissolution; or
(2) Any nonprofit charitable or educational entity or organization exempt from paying Federal income tax.