Article VII
COOPERATIVE OPERATION
SECTION 1. NON-PROFIT AND COOPERATIVE OPERATION. The Cooperative:
1. Must operate on a non-profit basis;
2. Must operate on a cooperative basis for the mutual benefit of all Members; and
3. May not pay interest or dividends on Capital furnished by patrons.
SECTION 2. ALLOCATING AND CREDITING CAPITAL. In operating the Cooperative:
A. Patron. A Cooperative Patron is a:
1. Member; or
2. Non-Member Person who:a. Uses any Cooperative Service, and
b. Prior to Using the Cooperative Service, is entitled to an allocation of, and payment by credit to a Capital Account for, Capital Credits and Affiliated Capital Credits regarding the Cooperative Service
B. Capital Credits. Patrons shall furnish, and the Cooperative shall receive, as capital (“Capital”) all funds and amounts received by the Cooperative from Patrons for the Cooperative’s provision of a Cooperative service that exceed the Cooperative’s costs and expenses of providing the Cooperative Service (“Operating margins”). For each Cooperative Service, the Cooperative shall annually allocate to each patron, and pay by credit to a Capital account for each patron, Operating Margins from the Cooperative Service in proportion to the value or quantity of the Cooperative Service used, or received, or purchases by each Patron during the applicable fiscal year (“Capital Credits”). Capital Credits must be treated as though the Cooperative paid the Capital Credit amounts to each Patron in cash pursuant to a legal obligation, and each Patron furnished the Cooperative Capital in the corresponding Capital Credit amounts.
C. Affiliated Capital Credits. The Cooperative shall separately allocate and credit to Patrons capital allocated and credited to the Cooperative by any organization furnishing services, supplies, or products to the Cooperative (“Affiliated Capital Credits”):
1. In proportion to the value or quantity of each service, supply, or product furnished by the organization that is used, received, or purchased by each Patron; and
2. If the Cooperative determines, and separately identifies, the Affiliated Capital Credits.
D. Non-Operating Margins. Funds and amounts, other than Operating Margins, received by the Cooperative that exceed the Cooperative’s costs and expenses (“Non-Operating Margins”) may be:
1. Allocated as Capital Credits to patrons in the same manner as the Cooperative allocates Operating Margins to patrons; or
2. Used by the Cooperative as permanent, non-allocated Capital.
E. Assignment and Notification. Unless otherwise determined by the Board or provided in these Bylaws, Capital Credits and Affiliated Capital Credits may be assigned only upon a patron:
1. Delivering a written assignment to the Cooperative; and
2. Complying with any other requirements reasonably determined by the Board.
The Cooperative shall annually notify each Patron of the dollar amount of Capital Credits or Affiliated Capital Credits allocated or credited to the Patrons.
F. Joint Memberships. Upon the termination, conversion, or alteration of a Joint Membership, and upon the Cooperative receiving written notice and adequate proof of the Joint Membership termination, conversion, or alteration:
For any Joint Membership:
1. Terminated or converted through the death of one (1) Joint Member, the Cooperative shall reallocate and re-credit to the surviving Joint Member all Capital Credits and Affiliated Capital Credits previously allocated and credited to the joint Membership; and
2. Otherwise terminated or converted, and unless otherwise instructed by a court or administrative body of competent jurisdiction, the Cooperative shall reallocate and re-credit to each Joint Member his or her fractional share of the Capital Credits and affiliated Capital Credits previously allocated and credited to the Joint Membership.
SECTION 3. RETIRING AND REFUNDING CAPITAL CREDITS. At any time prior to the Cooperative’s dissolution or liquidation:
1. The Board may authorize the Cooperative to, and the Cooperative shall, wholly or partially retire and refund Capital Credits to Patrons and former Patrons; or
2. After an organization furnishing services, supplies, or products to the Cooperative retires and refunds capital to the Cooperative, the Board may authorize the Cooperative to and the Cooperative shall, retire and refund the corresponding Affiliated Capital Credits to Patrons and former Patrons.
The Board shall determine the manner and method of retiring and refunding Capital Credits and Affiliated Capital Credits.
Upon the death of any natural person Patron or former Patron (“Deceased Patron”), and pursuant to a written request from the Deceased patron’s legal representative, the Board may retire the Deceased Patron’s Capital Credits and Affiliated Capital Credits under terms and conditions agreed upon by the Deceased Patron’s legal representative and the Cooperative.
After perfection in a manner allowed by Law, to secure payment of any amounts owed by a member or patron to the Cooperative, including any reasonable compounded interest, and late payment fee, determined by the Board, the Cooperative has a perfected security interest in the Capital Credits and Affiliated Capital Credits of every member or patron. Before retiring and refunding any Capital Credits or Affiliated Capital Credits, the Cooperative may deduct from the Capital Credits or Affiliated Capital Credits any amounts owed to the Cooperative by the Member or Patron, including any reasonable compounded interest, and late payment fee, determined by the Board.
SECTION 4. NON-MEMBER PATRONS AND NON-MEMBER NON-PATRONS. As a condition of persons using, receiving, or purchasing any Cooperative Service, and unless otherwise determined by the Board:
1. To the same extent as Members, Patrons who are not Members (“Non-Member Patrons”) and Persons using, receiving, or purchasing any Cooperative Service who are neither Members nor Patrons (“Non-Member Non-Patrons”) shall abide by, and be bound to, all the duties, obligations, liabilities, and responsibilities imposed by the Governing Documents upon Members;
2. Other than the rights to:a. Be allocated and paid by credit to a Capital account Capital Credits and Affiliated Capital Credits; and
b. Receive retired and refunded Capital Credits and Affiliated Capital Credits.3. Non-Member Patrons and Non-Member former Patrons shall have none of the rights granted by the Governing Documents to Members; and
4. Non-Member Non-Patrons shall have none of the rights granted by the governing Documents to Members.
