Flathead Electric Bylaws
Article I: Name
Article II: Purpose
Article III: Membership
Section 1 - Membership Eligibility
Section 2 - Membership Classifications
Section 3 - Joint Membership
Section 4 - Non-Member Patrons
Section 5 - Suspension or Termination of Membership or Services
Article IV: Rights and Responsibilities of Members
Section 1 - Access to Property
Section 2 - Non-Liability for Debts of the Cooperative
Section 3 - Provision of Service
Section 4 - Membership List
Article V: Meeting of Members
Section 1 - Annual Meeting
Section 2 - Special Meeting
Section 3 - Notice of Members' Meetings
Section 4 - Conduct and Attendance at Members' Meetings
Section 5 - Quorum
Section 6 - Voting
Section 7 - Mail Ballot
Section 8 - Announcement of Voting Results
Article VI: Trustees
Section 1 - General Powers
Section 2 - Composition
Section 3 - Trustee Qualifications
Section 4 - Trustee Disqualifications
Section 5 - Trustee Nominations
Section 6 - Trustee Elections
Section 7 - Trustee Seating
Section 8 - Trustee Compensation
Section 9 - Trustee Terms
Section 10 - Trustee Resignation
Section 11 - Trustee Vacancies
Section 12 - Removal of Trustees by Members
Article VII: Meeting of Trustees
Section 1 - Regular Meetings
Section 2 - Special Meetings
Section 3 - Conduct of Board Meetings
Section 4 - Notice of trustees’ Meeting
Section 5 - Quorum and Voting
Article VIII: Trustee Districts and Redistricting
Section 1 - Redistricting - Appointment of Redistricting Committee
Article IX: Officers
Section 1 - Number
Section 2 - Election and Term of Office
Section 3 - Removal of Officers by Trustees
Section 4 - Delegation of Duties
Section 5 - President
Section 6 - Vice President
Section 7 - Secretary
Section 8 - Treasurer
Section 9 - Reports
Section 10 - Manager
Section 11 - Bonds
Article X: Committees
Section 1 - Standing Committees
Section 2 - Special Committees
Article XI: Cooperative Operations
Section 1 - Not-for-Profit
Section 2 - Allocating Capital Credits
Section 3 - Assignment of Capital Credits
Section 4 - Retiring and Refunding Capital Credits
Article XII: Dissolution
Article XIII: Acquisition or Disposition of Assets/Property
Section 1 - Board Approved Acquisitions and Dispositions
Section 2 - Membership Approved Acquisitions
Section 3 - Membership Approved Disposition
Article XIV: Merger or Consolidations with another Cooperative
Section 1 - Approval for Merging or Consolidating
Article XV: Indemnification
Article XVI: Financial Transactions
Section 1 - Contracts
Section 2 - Checks, Drafts, Etc.
Section 3 - Deposits
Section 4 - Fiscal Year
Article XVII: Parliamentary Authority
Article XVIII: Amendment
Glossary

ARTICLE I

NAME

The name of this corporation shall be Flathead Electric Cooperative, Inc., hereinafter called the Cooperative.

ARTICLE II

PURPOSE

The purpose of this member-owned Cooperative is to provide competitive and reliable services, achieve the highest level of member satisfaction and enhance the quality of life in our communities.

ARTICLE III

MEMBERSHIP

Section 1: Membership Eligibility

A. Any individual or entity shall be eligible to apply for membership who has the capacity to enter into legally binding contracts and who consumes, receives, purchases, or otherwise uses:

  1. Electric power or energy generated, transmitted, distributed, sold, supplied, furnished, or otherwise provided; or
  2. Any other good or service provided by the Cooperative and, as determined by the Cooperative, reasonably relates to the person using electric power or energy.

B. No person, either individually or through an entity not considered legally separate from its members, owners, or participants, may hold more than one (1) membership.

C. Membership shall become effective upon completing the membership application to the Cooperative's satisfaction and receiving a Cooperative service.

Section 2: Membership Classifications

The Cooperative may have one or more classes of membership to accommodate various types of service If the Cooperative has more than one class of membership, the Board of Trustees shall determine, under rules of general application, the definition, rights, and obligations of each class, including the method for allocating patronage capital.

Section 3: Joint Membership

Two or more persons may be issued a joint membership, or any existing membership may be converted to a joint membership if the member so requests in writing, and if all parties to the joint membership agree to comply with the Articles of Conversion, these Bylaws and rules adopted by the Board of Trustees. Joint members are subject to the following conditions:

A. The joint membership shall be entitled to one vote at a meeting of the members.

  1. Notice to any party to a joint membership shall constitute notice to all parties;
  2. The presence of any party to a joint membership, at a meeting, shall be regarded as the presence of the member; and
  3. The waiver in writing or the presence at a meeting of one party to a joint membership waives notice of the meeting by the joint membership.

B. The suspension or termination of any party to a joint membership constitutes suspension or termination of all parties to the joint membership.

C. Any party to a joint membership, but only one, may be elected or appointed as an officer or Board member, if individually qualified.

D. Upon the death of any party to a joint membership, such membership shall be converted to either an individual membership or a joint membership less the deceased party. However, the estate of the deceased party shall not be released from any debts due the cooperative.

E. Members of a joint membership are jointly and individually liable to the Cooperative for the membership's obligations.

Section 4: Non-Member Patrons

Under unusual circumstances, the Board may provide for establishment of categories for non-member patrons. Non-member patrons shall be bound by the same rules, regulations, rates and policies, as are members of the Cooperative.

Non-member patrons shall have none of the rights granted to members other than the right to be allocated and paid capital credits by credit to a capital account and to receive retired and refunded capital credits.

Section 5: Suspension or Termination of Membership or Service

A. The Cooperative may suspend or terminate membership or service:

  1. Upon request of the affected member;
  2. For failure of the member to pay, in a timely manner, any amounts due to the Cooperative;
  3. For failure of the member to complete, in a timely manner, the membership procedure; or
  4. For failure of the member to comply with the Articles of Conversion, these Bylaws, or policies of the Cooperative.

B. Membership may be suspended or terminated if the member dies or if the membership is legally dissolved or legally ceases to exist. Membership or service may also be suspended or terminated if the member has tampered with, altered, interfered with or damaged Cooperative equipment.

C. Suspension or termination of membership does not forgive any amount owed to the Cooperative at the time of suspension or termination.

D. The Board shall establish policy regarding review, effect, lifting and appeal of any suspension or termination.

ARTICLE IV

RIGHTS AND RESPONSIBILITIES OF MEMBERS

Section 1: Access to Property

A. As determined or required by the Cooperative, each member or patron shall provide the Cooperative safe and reliable access reasonably necessary to operate the Cooperative safely, reliably and efficiently or to provide Cooperative services to any real or personal property in which the member possesses a legal right.

B. Members or patrons shall grant the Cooperative the right to inspect, monitor, operate, repair, maintain, or remove or extend or relocate along property boundaries or existing roadways, any Cooperative facilities or equipment. Members or patrons shall also give the Cooperative access to provide, monitor, measure or maintain any Cooperative service or to satisfy or facilitate any obligation incurred or right granted by the Cooperative regarding the use of Cooperative equipment.

C. Unless otherwise determined by the Board, the Cooperative owns all Cooperative facilities and equipment. Each member and patron shall protect all Cooperative equipment and shall install, implement and maintain any protective device or procedure required by the Cooperative.

Section 2: Non-Liability for Debts of the Cooperative

A Member is not liable to third parties for the Cooperative's acts, debts, liabilities or obligations.

Section 3: Provision of Service

A. The Cooperative shall provide Cooperative services to members in a reasonable manner. The Cooperative neither guarantees nor warrants continuous or flawless provision of Cooperative services.

B. After providing a member with reasonable notice and an opportunity to comment orally or in writing, the Cooperative may suspend or terminate any Cooperative service to that member.

C. The Cooperative may suspend or terminate service without notice if a member has tampered or interfered with, damaged or impaired any facilities or equipment furnished or used by the Cooperative to provide, monitor, measure or maintain any Cooperative service, or upon discovery of any unsafe condition or imminent hazard.

Section 4: Membership List

The Cooperative shall maintain a current membership list, but in order to protect the privacy of individual members, the list shall not be made generally available.

ARTICLE V

MEETING OF MEMBERS

Section 1: Annual Meeting

The annual meeting of the members, for the purpose of giving reports for the previous fiscal year and transacting any other properly noticed business as may come before the meeting, shall be held in March of each year, at such place in Flathead County, Montana, as shall be designated by the Board of Trustees.

Section 2: Special Meetings

A. The Cooperative shall hold a special meeting of members at a date, time, and location determined by the trustees upon the Cooperative's receiving:

  1. A written or oral request from the President; or
  2. A written request signed by at least three (3) Trustees; or
  3. One or more written petitions signed and dated, within sixty days (60) following the first signature, by at least 2500 members.
  4. Each page of the petition shall include the purpose for which the meeting is being called, the printed name and address of the signer and his or her telephone number and original dated signature.

B. If the Cooperative fails properly to notify the members of a special members' meeting within thirty (30) days of receiving any member petition, then any member signing the petition may:

  1. Set a reasonable time, place and location for the special members' meeting; and
  2. Properly notify the members of the special meeting.

C. The agenda for a special meeting shall be limited to the purpose for which the meeting is called.

Section 3: Notice of Members' Meetings

A. As directed by the president, secretary, or any other officer or member(s) properly calling a members' meeting, the Cooperative shall deliver written notice of the meeting, personally or by mail, to all members entitled to vote at that meeting at least ten (10) days, but no more than twenty-five (25) days, before the meeting.

For any annual meeting the notice shall indicate the date, the time and location, and shall include the agenda for the meeting.

For any special meeting, the notice shall indicate the date, the time and location, and the purpose of such meeting.

B. Unless otherwise provided in these Bylaws, a mailed notice of members' meeting is delivered when deposited in the United States mail with prepaid postage affixed, and addressed to a member at the member's address shown on the membership list.

The inadvertent and unintended failure of any member to receive notice of any members' meeting shall not affect any action taken at that meeting.

C. The Board shall determine the agenda for any members' meeting. Members may request an item be placed on the agenda:

  1. If agreed upon by three (3) Board members at least forty-five (45) days before the meeting; or
  2. If petitions including the printed names, addresses, telephone numbers and original and dated signatures of at least 2,500 members are provided to the Board at least forty-five (45) days before the meeting.

Section 4: Conduct and Attendance at Members' Meetings

At any meeting of members, unless otherwise determined by the Board, the president:

A. Shall preside at all members' meetings;

B. May exercise any power reasonably necessary for conducting any members' meeting efficiently and effectively.

Section 5: Quorum

The quorum of any annual or special members' meeting shall be two hundred (200) members present who are eligible to vote. The quorum established at the beginning of the meeting shall constitute the quorum for the entire meeting.

In the event that a quorum is not present at any annual or special members' meeting, a majority of the members present may adjourn the meeting to a date no more than thirty (30) days following the original members' meeting.

Section 6: Voting

Each membership shall be entitled to one vote.

Section 7: Mail Ballot

Members shall vote by mail on all Bylaw amendments and trustee elections in conjunction with the annual members' meeting. All other voting arising from the agenda items shall be done at the annual meeting or special meeting.

Members may vote by mail as provided elsewhere in these Bylaws.

All properly completed mail ballots received on or before the time and date specified shall constitute a vote. If duplicate ballots are received from a member, all of that member's ballots shall be disqualified.

A member's failure to receive a mail ballot does not affect any action taken by mail ballot.

The mail ballot shall:

A. Describe each proposed Bylaw amendment and identify all candidates upon which the members are asked to vote;

B. Provide a reason for the proposed bylaw amendment, if any; and

C. Instruct members how to complete and when to return the mail ballot.

Section 8: Announcement of Voting Results

The results of all voting shall be announced after certification by the Board and will become effective at that time.

ARTICLE VI

TRUSTEES

Section 1: General Powers

The Board shall manage the business and affairs of the Cooperative and shall exercise all the powers of the Cooperative except those that are reserved to the members by law, the Articles of Conversion, or these Bylaws.

Section 2: Composition

The Board of Trustees (referred to as the Board) shall be composed of one (1) elected trustee from each of its nine (9) districts.

Section 3: Trustee Qualifications

Any person shall be eligible to become or remain a trustee who:

A. Is a member of the Cooperative and is not otherwise disqualified;

B. Maintains primary residence within the district which he or she represents; and

C. Is a natural person.

Section 4: Trustee Disqualifications

A member shall not qualify for the office of trustee or shall become disqualified to serve as a trustee if:

A. The member has been an employee of the Cooperative for any length of time within the immediately preceding seven (7) years;

B. The member or a member of his or her immediate family is, or becomes, an employee of the Cooperative;

C. The member trustee fails to attend three (3) monthly meetings of the Board in a calendar year without approval of the Board;

D. A conflict of interest exists which includes but is not limited to situations in which the Board candidate or member:

  1. Is employed by, is an agent of, or is an immediate family member of an employee or agent of the Cooperative;
  2. Is employed by or materially affiliated with any other Trustee;
  3. Regularly and directly competes with the Cooperative or any entity that the Cooperative controls or in which the Cooperative owns a majority interest;
  4. Owns an interest greater than 10% or holds a management position in a business wherein more than ten percent (10%) of the goods or services sold are sold to the Cooperative or one of its subsidiaries, or combination thereof.

E. Upon determining that a trustee is holding office in violation of any of the foregoing provisions, the Board shall immediately remove such trustee from office upon written notification to the trustee of the basis for disqualification.

F. Nothing contained in this section shall affect or shall be construed to affect in any manner whatsoever the validity of any action taken at any meeting of the Board.

Section 5: Trustee Nominations

A. In any year in which a vacancy in the office of trustee shall occur in any district, there shall be nominated from the vacant district at least one candidate for the office of trustee.

B. A candidate for each vacancy shall notice his or her interest in the vacant or expiring position by submitting a nominating petition to the nominating committee of the Board at least five (5) business days before the annual meeting. Each petition shall consist of the printed name, address, telephone number, and original and dated signature of not less than twenty-five (25) members from the candidate's district.

C. The nominating committee shall review the petitions to determine that all signers are members and reside in said district, and that the nominee is qualified to serve.

D. A written profile of each nominee shall be required.

Section 6: Trustee Elections

A. The election of trustees shall take place in conjunction with the annual meeting of the members at which time members shall elect the number of trustees necessary to fill the position or positions of those whose terms have expired or been vacated.

B. Elections of trustees shall be determined by a plurality vote. If, after a recount, there is a tie for a trustee position, the winner shall be determined by a coin toss.

C. If, because of redistricting, two (2) Board members whose terms have not expired represent the same district, an election shall be held between these two current Board members.

Section 7: Trustee Seating

At the next Board meeting following an election, all newly-elected Board members shall sign a statement verifying that they are qualified and have no conflict of interest that violates these Bylaws. The newly-elected Board members shall then be seated.

Section 8: Trustee Compensation

Trustees may not receive any salary for their services. By resolution, the Board may authorize payments to or for the benefit of Board members as a result of their performance in the position of trustee.

Section 9: Trustee Terms

Each elected trustee shall hold office for three (3) years, or until a successor shall have been elected. The trustee terms shall be staggered so that no more than three (3) trustee terms expire in any year.

Section 10: Trustee Resignation

A trustee may resign at any time by delivering written notice of resignation to the Board, the president, or secretary. Unless the written notice of resignation specifies a later date, a trustee's resignation is effective upon receipt.

Section 11: Trustee Vacancies

Any trustee vacancy that occurs as the result of the death, mental or physical incapacity, resignation, removal by the members, or disqualification shall be filled within 45 days by the board. The appointee shall meet all the qualifications required of a trustee, and shall serve until the next annual or special meeting of the members at which time a trustee shall be elected from the vacated district.

Section 12: Removal of Trustees by Members

A. Any member may initiate the removal of a trustee based upon disqualifications as set out in these Bylaws or based upon breach of the discharge of duties as a trustee by filing a statement of the basis for removal, in writing, with the secretary of the Board. This statement shall be in the form of a petition that includes the printed names, addresses, telephone numbers and original and dated signatures of at least 2,500 members.

B. The trustee whose removal is being sought shall be:

  1. Informed in writing of the basis for removal at least five (5) days before the meeting at which the removal is being considered.
  2. Given, along with those seeking removal, the opportunity at the meeting to be heard in person or by counsel, and to present evidence in respect to the allegations made supporting the removal.

C. If the Board determines that the trustee removal petition complies with these Bylaws, the Cooperative shall notice and hold a special member meeting within sixty (60) days following the Board's determination. The question of the removal of such trustee shall be considered in conjunction with that meeting.

ARTICLE VII

MEETING OF TRUSTEES

Section 1: Regular Meetings

The Board shall meet regularly at the time, date and location within the Cooperative service territory determined by the Board. Any trustee not present at a Board meeting at which the time, date or location of a subsequent Board meeting is changed shall be entitled to written notice of the change at least ten (10) days before the meeting. For good cause, the president or three or more trustees may change the date, time or location of a regular Board meeting but all trustees are entitled to written notice ten (10) days before such meeting.

Section 2: Special Board Meetings

The Board, the president, or at least three (3) trustees may call a special meeting of the Board.

Section 3: Conduct of Board Meetings

A. It is the intent of this bylaw that trustees shall attend regular Board meetings in person.  However, under exceptional circumstances and upon approval of the Board, a trustee may attend a regular Board meeting by telephone or other universally audible means of communication.

B. Special Board meetings or other meetings of the Board may be held in person or, under special circumstances, with any or all of the trustees participating by telephone or any universally audible means of communication.

C. If a quorum is present at any meeting, the president, vice-president, secretary and treasurer, in descending order, may preside at the Board meeting.  If no officer is present, the trustees attending the meeting may elect a trustee to preside over the meeting.

Section 4: Notice of Trustees' Meeting

Written notice of the time, place and purpose of any special meeting of the Board of Trustees shall be delivered not less than five days before the meeting, to each trustee. Said notice may be given personally or by mail. Said notice shall be given either by or at the direction of the secretary. If the secretary is unwilling or unable to give notice, then the president or the trustees calling the meeting may give notice. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the trustee at his or her address as it appears on the records of the Cooperative, with postage thereon prepaid.

Written notice may also be given by either facsimile or electronic data transmission to an address or number provided by the trustee to the Cooperative.

Section 5: Quorum and Voting

A quorum for Board meetings is a majority of the trustees in office immediately before a Board meeting begins. If a quorum is present at the time a matter is voted or acted upon, and unless the vote of a greater number of trustees is required, then the affirmative vote of a majority of trustees present is the act of the Board.

ARTICLE VIII

TRUSTEE DISTRICTS AND REDISTRICTING

Section 1: Redistricting - Appointment of Redistricting Committee

A. Beginning in 2008, and at least every third year thereafter, the Board shall appoint a redistricting committee comprising one (1) officer of the Board, one (1) then-serving member of the Board, and three (3) at large members of the Cooperative. This committee shall present a written recommendation to the Board in August of the year preceding the possible redistricting. The committee's recommendation shall propose revisions using natural geographic division lines when practical and providing that the membership in each district shall be as nearly equal as possible. The Board shall then review the committee's recommendation at the next regular monthly meeting for adoption or rejection.

B. If the plan is rejected, it shall be returned to the committee for modification. If the Board rejects the committee's proposal a second time, the Board shall be responsible for adopting a redistricting plan within sixty (60) days of such rejection.

C. If the plan is adopted, the newly-proposed district boundaries shall be drawn at least sixty (60) days before the annual meeting, and the resulting districts shall be in effect for elections at the next annual meeting.

ARTICLE IX

OFFICERS

Section 1: Number of Officers

The officers of the Cooperative shall be the president, vice-president, secretary and treasurer, and these shall constitute the Executive Committee. The offices of secretary and treasurer may be held by the same person.

Section 2: Election and Term of Office

A. The officers shall be elected annually, by ballot, at the first meeting of the Board held after the annual meeting of the members. If, for any reason, the election cannot be held at such meeting, it shall take place at the next meeting of the Board. Election of any officer requires an affirmative vote of a majority of the Board.

B. Officers shall hold office until the first meeting of the Board following the next annual meeting of the members or until their successor(s) have been elected.

C. There shall be no term limits with the exception of that of the president, who shall serve a maximum of three (3) consecutive one-year terms.

D. A vacancy in any office shall be filled by the Board for the unexpired portion of the term.

Section 3: Removal of Officers by Trustees

A. The Board may remove any officer it has elected or appointed whenever, in its judgment, such removal is in the best interest of the Cooperative.

B. Removal of any officer requires an affirmative vote of a majority of the Board.

Section 4: Delegation of Duties

Officers may delegate appropriate duties and responsibilities of their office to a non-Board member, Cooperative officer, employee, agent or representative, with Board approval.

Section 5: President

The president may exercise all authority prescribed by the Board or the members, and shall:

A. Be the principal executive officer of the Cooperative and, unless otherwise determined by the members of the Board, shall preside at all meetings of the members, and of the Board of Trustees;

B. On the Cooperative's behalf, sign any document properly authorized or approved by the Board or Members;

C. Perform all other duties, shall have all other responsibilities which the Board or the members prescribe;

D. Appoint any and all committees; and

E. Be an ex officio member of all standing and special committees with the exception of the Nominating Committee.

Section 6: Vice President

The vice president shall:

A. Upon the president's death, absence, mental or physical disability, or refusal or inability to act, perform the duties and have the powers of the president;

B. Perform all other duties, have all other responsibilities, and exercise all other authority prescribed by the Board or the members; and

C. In the event of a vacancy arising in the office of president, assume the office until an election is held at the next meeting of the Board.

Section 7: Secretary

The secretary shall:

A. Be responsible for assuring that the minutes of all Board meetings, and meetings of the members, reflect the official action(s) taken at that meeting;

B. Affix the Cooperative's seal to any document authorized or approved by the Board or members; and

C. Perform all other duties, have all other responsibilities, and exercise all other authority prescribed by the Board or members.

Section 8: Treasurer

The treasurer shall:

Perform all duties, have all responsibility, and exercise all authority prescribed by the Board or the members, unless otherwise determined by the Board or the members, and unless otherwise required by law, the Articles of Conversion, or these Bylaws.

Section 9: Reports

The officers of the Cooperative shall submit at each annual meeting of the members, reports covering the business of the Cooperative for the previous fiscal year. Such reports shall set forth the condition of the Cooperative at the close of such fiscal year.

Section 10: Manager

The Board of Trustees shall hire a manager who shall serve according to the terms and conditions as the Board may require.

Section 11: Bonds

At the Cooperative's expense, the Cooperative may purchase a bond covering any Cooperative trustee, officer, employee, agent or representative handling or having responsibility for custody of the Cooperative's funds or property.

ARTICLE X

COMMITTEES

Section 1: Standing Committees

A. The standing committees of the Board shall be:

Bylaws
Resolutions
Finance & Audit
Policies
Nominating

B. Composition

Each standing committee shall be composed of a chair, appointed by the president from the Board of Trustees, and as many additional members as needed. The additional members may be Board members, administrative staff, or members at large.

C. Committee Functions

The Board shall set forth policy outlining the function of each committee.

D. Term of Office

The term of office shall be one (1) year.

E. Reporting

The chair of each standing committee shall report, if appropriate, at each annual meeting.

F. Vacancies

The president shall fill all vacancies.

Section 2: Special Committees

A. Establishment/Composition

Special committees may, at the discretion of the Board, be established as needed. Each committee shall be composed of a chair appointed by the president from the Board and as many additional members as needed. The additional members may be Board members, administrative staff, or members at large.

B. Term of Office

Special committees shall serve until their final report is submitted to the Board.

C. Vacancies

The president shall fill all vacancies.

ARTICLE XI

COOPERATIVE OPERATIONS

Section 1: Not-for-Profit

The Cooperative shall operate on a not-for-profit basis, shall operate on a cooperative basis for the mutual benefit of all members, and may not pay interest or dividends on capital furnished by members.

Section 2: Allocating Capital Credits

A. Members and/or non-member patrons shall furnish and contribute to the Cooperative, and the Cooperative shall receive as capital all operating margins. Operating margins are defined to be all funds and amounts, received from its' members and/or non-member patrons for the provision of a Cooperative service, that exceed the Cooperative's costs and expenses of providing that service.

B. For each Cooperative service, the Cooperative shall annually allocate to each member and/or non-member patron and pay by credit to a capital account for each individual and/or entity, operating margins from the Cooperative service in proportion to the value or quantity of the Cooperative service which the individual or entity used during the applicable fiscal year. The value of the Cooperative service used shall be based on its relative contribution to the operating margins of the Cooperative. Operating losses shall be allocated at the discretion of the Board.

C. Funds and amounts, other than operating margins, that exceed the Cooperative's costs and expenses may be:

  1. allocated as capital credits to members in the same manner that the cooperative allocates operating margins;
  2. retained or used by the Cooperative as permanent non-allocated capital;
  3. used to pay or offset any Cooperative cost or expense; or
  4. used as otherwise determined and approved by the Board.

D. The amounts accumulating in each member's or non-member patron's capital account is known as Patronage Capital. The members, in their capacity of accumulating Patronage Capital may be referred to as Patrons. The Cooperative shall annually notify each patron of the dollar amount of capital credits allocated or credited to the patron's account.

Section 3: Assignment of Capital Credits

Capital credited to the account of each patron is assignable on the books of the Cooperative only pursuant to written instruction from the assignor and only to the Cooperative or to successors in interest or successors in occupancy in all or part of such patron's premises served by the Cooperative.

Section 4: Retiring and Refunding Capital Credits

A. At any time before the Cooperative's dissolution or liquidation, and if the Board determines that the Cooperative's financial condition shall not be adversely impacted and it complies with any lender's requirements, the Board may authorize the Cooperative to, and the Cooperative shall, wholly or partially retire and refund capital credits to patrons and former patrons.

B. The Board shall determine the manner, method and timing of retiring capital credits as well as the type of distribution.

C. Before retiring and refunding any capital credits, the Cooperative may deduct from the capital credits any amounts owed to the Cooperative by the patron or former patron including any reasonable compounded interest and late payment fees determined by the Board. If a patron files for bankruptcy, the Cooperative may deduct, from payments made to settle the bankruptcy, amounts owed to the Cooperative by the patron, including any reasonable compounded interest and late payment fees.

D. In the closing of an account, the patrons may be offered a retirement of their capital credits at a discounted rate at the discretion of the Board.

E. The Board shall also have the power to provide for the special retirement of all allocated capital credits of a deceased patron or of a patron who is a natural person and is seventy-five (75) years of age or older, provided that such retirement shall be on a discounted basis using a rate that shall be established from time to time by the Board to determine the then-current value of each capital credit account. The special retirement of capital credits shall be made only when the finances of the Cooperative and the cash available make such a retirement possible without impairing the financial condition of the Cooperative.

F. Upon the death of one of the parties holding a joint membership or upon the request of one such party who has attained the age of seventy-five (75) years or more, the joint membership shall terminate and the Cooperative shall retire and pay to the surviving or requesting member on a discounted basis one-half (1/2) of the capital credits previously allocated to such joint membership.

G. The Board of Trustees may, after consideration of the overall financial condition of the cooperative, offer the early retirement of capital credits on a discounted basis. Individual members may accept or refuse discounted payments.

ARTICLE XII

DISSOLUTION

In the event of dissolution or liquidation of the Cooperative, after all outstanding debts of the Cooperative have been paid, outstanding capital credits shall be retired without priority on a pro rata basis.

ARTICLE XIII

ACQUISITION OR DISPOSITION OF ASSETS/PROPERTY

Section 1: Board-Approved Acquisitions and Dispositions

An affirmative vote of two-thirds (2/3) of the Board may authorize, in any one year, acquisition or disposition of an asset or property that has a price equal to or less than twenty percent (20%) of the total assets of the Cooperative.

Section 2: Membership-Approved Acquisitions

A majority vote of the membership, by mail-in ballot, shall authorize acquisition of any single asset or property greater than twenty percent (20%) of the total assets of the Cooperative.

Section 3: Membership-Approved Dispositions

The Cooperative shall not sell, lease, exchange, or otherwise dispose of property or assets (other than as provided in Article XIV), in any one year, in excess of twenty percent (20%) of the value of all property or assets unless all of the following occur:

A. The Board appoints three (3) independent appraisers each of whom, within a reasonable period of time, evaluates the Cooperative's assets and renders an appraisal valuing the Cooperative's specified assets. These appraisals shall be paid for by the entity desiring to purchase the assets.

B. The Board approves the transaction.

C. Members are notified at least ninety (90) days in advance of a meeting to vote on acquisition or disposition of assets or property and the terms of the proposed transaction.

D. If the proposed transaction is to dispose of Cooperative assets, at least thirty (30) days before the member meeting, the Cooperative shall invite all other electric cooperatives in the State of Montana to submit proposals to acquire the Cooperative's specified assets.

E. Members are mailed, at least thirty (30) days before the member meeting, any alternative proposal made by Cooperative members, if it has been submitted to the Board with dated signatures, printed names, addresses and phone numbers of fifty (50) or more members.

F. At least two-thirds (2/3) of the total membership approves the transaction by mail in ballot.

G. The Cooperative allocates and credits to members and patrons as capital credits any consideration received for the specified assets in excess of the Cooperative's debts, obligations and liabilities on those specified assets. The Cooperative shall allocate these credits in proportion to the value of Cooperative services used, received or purchased by members or patrons during the period in which the Cooperative owned the assets.

H. In the case of a purchase of all Cooperative property by a third party, that party shall pay at least fair market value for the property, pay off all debts of the Cooperative, and return all capital credits in full to all members and patrons and former members and former patrons of the Cooperative.

ARTICLE XIV

MERGER OR CONSOLIDATION WITH ANOTHER COOPERATIVE

Section 1: Approval for Merging or Consolidating

The Cooperative may merge or consolidate with any one or more cooperatives by complying with the following:

A. The proposal for merger or consolidation shall have been approved by two-thirds (2/3) of the Board of Trustees.

B. The proposed merger or consolidation plan shall be submitted to the membership at an annual or special membership meeting. The notice for such meeting shall set forth the full particulars of the proposed merger or consolidation.

C. The proposal for merger or consolidation and the proposed articles of the merged or new entity shall be approved by two-thirds (2/3) of the members voting thereon at the meeting.

ARTICLE XV

INDEMNIFICATION

The Cooperative may indemnify any officer, trustee, employee, or agent of the Cooperative who is made a party to a proceeding because of that relationship if the individual (a) conducted business in good faith; (b) reasonably believed his or her conduct was in the best interest of the Cooperative; and (c) in the case of a criminal proceeding, had no reasonable cause to believe the action taken was unlawful. There shall be no indemnification in connection with a proceeding by the Cooperative in which the party is adjudged liable to the Cooperative, or if in a proceeding the party is found to have improperly received personal benefit from his or her actions. This indemnification is limited to reasonable expenses incurred in connection with the proceeding. The determination to indemnify must be made by the Board of Trustees based upon majority vote of a quorum consisting of trustees who are not parties to the proceeding.

The Cooperative shall purchase and maintain reasonable insurance on behalf of an individual who is or was an officer, trustee, employee or agent of the Cooperative, against liability asserted or incurred by the individual in that capacity or arising from his or her status as an officer, trustee, employee or agent of the Cooperative.

ARTICLE XVI

FINANCIAL TRANSACTIONS

Section 1: Contracts

Except as otherwise provided in these Bylaws, the Board, at any regularly scheduled meeting or any special meeting called for the purpose, 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 the behalf of the Cooperative, and such authority may be general or confined to specific instances.

Section 2: Checks, Drafts, Etc.

Except as otherwise provided by law or in these Bylaws, all checks, drafts, or other orders for 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, officers, agent or agents of the Cooperative and in such manner as shall from time to time be determined by resolution of the Board of Trustees.

Section 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 may select.

Section 4: Fiscal Year

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

ARTICLE XVII

PARLIAMENTARY AUTHORITY

The rules contained in the current edition of Robert's Rules of Order shall govern the meetings of the Cooperative, so long as these rules are not inconsistent with federal, state or local law, the Articles of Conversion, and these Bylaws. The Board of Trustees may designate a person to act as parliamentarian for the purpose of interpreting said rules.

ARTICLE XVIII

AMENDMENT

These Bylaws may be amended in conjunction with any regular or special meeting of the members by a majority of those voting by mail ballot, provided that the text of the amendment is included, in writing, with the ballot.

All titles and headings of the articles in these Bylaws, sections, and subsections are for convenience and reference only and do not affect the interpretation of any Bylaw article, section or subsection.

* * * * * * * * * * * * * * * * * * * * * *

The foregoing bylaws were amended by a vote of the members of Flathead Electric Cooperative on April 17, 2009.

President: Earl Messick
Secretary: George Taylor

Glossary

Articles of Conversion

Articles that bind a corporation that has been formed due to its conversion from another corporation.
Flathead Power, a Montana Corporation, was converted to Flathead Electric Cooperative, Inc. in 1937 under Articles of Conversion.

Assignor

One who assigns to another, as in the assigning of capital credits.

Capital Account

An account established for each patron of the cooperative to which undistributed capital credits are allocated.

Capital Credits

Margins, in excess of operating expenses, that have been allocated to the capital accounts of patrons.

In Conjunction with

Conjunction - an act of being conjoined
Conjoined - brought together so as to meet
"In conjunction with" as used in these bylaws - mail-in balloting is brought together with or a part of the annual meeting process.

Easement

An interest in land owned by another that entitles its holder to a specific limited use.

Ex officio

By virtue or because of an office - The president of the Board is an ex officio member of all committees because of his position as president.

Immediate Family

Parent, child, spouse, brother or sister.

Incapacity

A physical or mental condition which renders the person unable to perform his or her duties.

Indemnify

To secure against loss or damage.

Natural Person

Natural person does not include corporations or other non-human legal entities which are members. To be eligible to be a trustee, the member must be a person.

Non-member Patron

A user of cooperative services who has not completed the membership procedure and is therefore not entitled to all of the benefits of membership.

Operating margins

All funds and amounts received from patrons for the provision of a Cooperative service, that exceed the Cooperative's costs and expenses of providing that service.

Patron

A Cooperative member and/or non-member patron, with regard to that member and/or non-member patron accumulating and/or being entitled to a return of Patronage Capital (sometimes known as Capital Credits).

Patronage Capital

Capital credits that have been allocated to members and non-member patrons on the books of the cooperative and have been retained as capital until such time the financial position of the cooperative warrants retirement of these credits.

Plurality

A greater number of votes cast for one candidate than for another candidate or candidates - does not require a majority.

Principal residence

The home located within the Flathead Electric service area in which a member lives the greater part of the year.

Pro-rata

Proportionately according to an exactly calculable factor - capital credits will be allocated to members and non-member patrons in proportion to the amount of services purchased from the cooperative.

Profile

A concise biographical sketch.

Quorum

The number of members which, when assembled, is legally required to conduct business.

Special Meeting

A meeting of the members, called for a specific purpose, and on a date other than that of the regularly scheduled annual meeting. Special meetings require notification to be sent to each member.

Successors in interest

One who follows and has an interest in.

Successors in occupancy

One who follows in occupancy of the premises.

Updated: Friday, April 30, 2010