1.01 The corporate purpose of the Jackson County Rural Electric Membership Corporation (hereinafter called the “Rural Electric”) shall be to render service to its members and no person shall become or remain a member of the Rural Electric, unless such person shall purchase electric energy from the Rural Electric and shall have complied with the terms and conditions in respect to membership contained in these By-laws.

1.02 Anyperson (meaning natural person who is an adult or emancipated minor, firm, association, company, corporation, business trust, partnership, limited liability company or body politic) may become a member of the Rural Electric by:

1.03 A husband and wife may jointly become a member provided they comply jointly with the terms of membership.

1.04 No person, as defined in Section 1.02 of these Bylaws, shall be permitted to own more than one (1) membership in the corporation regardless of the number of locations of the person receiving electrical service from the corporation.

2.01 Any person or body desiring to purchase electric energy from the Rural Electric shall file with the Rural Electric an application for membership agreeing to all of the conditions set forth in Section 1 of this article, for each and every separately metered service connection to be supplied by the Rural Electric.

The Rural Electric shall not permit the sale of electric energy from any service connection until the purchaser of said energy has filed with the Rural Electric a written application for membership and has complied with all terms and conditions of the By-laws of the Rural Electric and Amendments thereto and of such Rules, Regulations and Policies, all as may be adopted from time to time by the board of directors. Each member shall, as soon as electric energy shall be available, purchase from the Rural Electric all electric energy purchased for use on the premises specified in his applications and shall pay therefore at rates, which shall be fixed from time to time by the board of directors as specified in Article XII, Section 4. Production or use of electric energy on such premises, regardless of the source thereof, by means of facilities which shall be interconnected with Rural Electric facilities, shall be subject to appropriate regulations as shall be fixed from time to time by the Rural Electric. It is expressly understood that members furnish amounts paid for electric energy in excess of the cost of service as capital and each member shall be credited with the capital so furnished as provided in these By-laws. Each member shall pay the Rural Electric such minimum amounts, regardless of the amount of electric energy consumed, as shall be fixed by the board of directors from time to time. Each member shall also pay all amounts owed by him to the Rural Electric as and when the same shall become due and payable.

A membership fee of thirty dollars ($30.00) shall accompany each application for membership. In case of withdrawal or termination of membership in any manner, the Rural Electric shall repay to the member the amount of the membership fee paid by him, provided, however that the Rural Electric shall deduct from the amount of the membership fee the amount of any debts or obligations owed by the member to the Rural Electric.

An applicant for membership in the Rural Electric shall become a member when he has met all specified conditions for membership.

Membership in the Rural Electric and all rights, privileges and liabilities thereto shall continue as long as the member:

Membership in the Rural Electric may, if the board so resolves, 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 Rural Electric’s Articles of Incorporation or its By-laws. The Secretary, if authorized to be issued by the board, shall sign by the President and such certificate, and the seal shall be affixed thereto: PROVIDED, that the seal and the signatures of the President and the Secretary may be imprinted thereon by facsimile. No membership certificate shall be issued for less than the membership fee fixed by these By-laws nor until such membership fee has been fully paid. In case of a lost, destroyed or mutilated certificate, a new certificate may be issued therefor upon such terms and such indemnity to the Rural Electric as the board of directors may prescribe.

8.01 A husband and wife may apply for a joint membership, and subject to their compliance with the requirements set forth in Section 1 of this Article, may be accepted for such membership. The term “member” as used in these By-laws shall be deemed to include a husband and wife holding a joint membership and any provisions relating to the rights and liabilities of membership shall apply equally with respect to the holders of a joint membership. Without limiting the generality of the foregoing, the effect of the hereinafter-specified actions by or in respect of the holders of a joint membership shall be as follows:

9.01 A person’s membership in the Rural Electric shall be terminated under any one or more of the following conditions:

9.02 Except as provided in Section 8.03, the death of an individual human member shall automatically terminate his membership. The cessation of the legal existence of any other type of member shall automatically terminate such membership: PROVIDED, that upon the dissolution for any reason of a partnership, such membership shall continue to be held solely by such remaining partner or partners as were parties to the original membership and continue directly to occupy or use the premises covered by such membership.

9.03 Upon the termination in any manner of a person’s membership, he shall be entitled to refund of his membership fee and any additional service connection fees still held by the Rural Electric, less any amount due the Rural Electric; but neither he nor his estate may be released from any debts then remaining due the Rural Electric.

Upon dissolution, the remaining property and assets of the Rural Electric shall be distributed in accordance with the applicable provisions of law, after:

The private property of the members shall be exempt from execution or other liability for the debts of the Rural Electric and no member shall be individually liable or responsible for any debts or liabilities of the Rural Electric.

The annual meeting of the members shall be held each year on a date to be determined by the board of directors of the Rural Electric in regular meeting, beginning with the year 1951, at Brownstown, in the County of Jackson in the State of Indiana, or such place as shall be designated in the notice of the meeting, for the purpose of electing directors, passing upon reports covering the previous fiscal year and transacting such other business as may come before the meeting. Failure to hold the annual meeting at the designated time shall not work a forfeiture or dissolution of the Rural Electric.

Special meetings of the members may be called by the President, by Resolution of the board of directors, upon written request signed by three or more directors, or upon a written request signed by at least five per centum (5%) of all members and it shall be the duty of the Secretary to cause notice of such meeting to be given as hereinafter provided. Special meetings of the members may be held at any place within one of the counties served by the Rural Electric as designated by the board of directors and shall be specified in the notice of the special meeting.

Written or printed notice stating the place, day and hour of the meeting, and in case of a special meeting or annual meeting at which business other than that listed in Section 7 of this Article is to be transacted, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) days nor more than thirty (30) days before the date of the meeting, either personally or by mail, by or at the direction of the Secretary, or upon default in duty by the Secretary, by the persons calling the meeting, to each member. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the member at his address as it appears on the records of the Rural Electric, with postage thereon prepaid. The failure of any member to receive notice of an annual or special meeting of the members shall not invalidate any action, which may be taken by the members at any such annual or special meeting.

Any member may waive in writing, any notice of a meeting required to be given by these By-Laws. The attendance of a member at any meeting shall constitute a waiver of notice of such meeting by such member, except in case a member shall attend a meeting for the express purpose of objecting to the transaction of any business because the meeting shall not have been lawfully called or convened.

At least two per centum (2%) of the total number of members of the Rural Electric present in person shall constitute a quorum for the transaction of business at all meetings of the members; provided that if less than two per centum (2%) of the total number of members are present at said meeting a majority of the members so present may adjourn the meeting from time to time without further notice, provided that the Secretary shall notify any absent members of the time and place of such adjourned meeting.

6.01 Each member, regardless of the number of connections in his name, shall be entitled to one vote and no more upon each matter submitted to a vote at a meeting of the members. At all meetings of the members at which a quorum is present, all questions shall be decided by a vote of a majority of the members who are present in person except as otherwise provided by law, the Articles of Incorporation of the Rural Electric, or these By-Laws. Voting by proxy shall not be permitted.

7.01 The order of business at the annual meeting of the members, and so far as possible at all other meetings of the members, shall be essentially as follows:

The board of directors shall, at least ten (10) days before any meeting of the members, appoint a Credentials and Election Committee consisting of an uneven number of members, not less than five (5) nor more than fifteen (15), who are not close relatives or members of the same household of existing directors or known candidates for directors to be elected at such meeting. In appointing the Committee, the board shall have regard for equitable representation of the several areas served by the cooperative. The Committee shall elect its own chairman and secretary prior to the member meeting. It shall be the responsibility of the Committee to establish or approve the manner of conducting member registration and any ballot voting, to pass upon all questions that may arise with respect to the registration of members, to count all ballots cast in any election or any other ballot vote taken, to rule upon the effect of any ballots irregularly or indecisively marked, and to pass upon any protest or objection filed with respect to any election or to conduct affecting the results of any election. In the event a protest or objection is filed concerning any election, such protest or objection must be filed within three (3) business days following the adjournment of the meeting in which the election is conducted. The Committee shall thereupon be reconvened, upon notice from its chairman, not less than seven (7) days after such protest or objection is filed. The Committee shall hear such evidence as is presented by the protestor(s) or objector(s) who may be heard in person, by counsel, or both; and the Committee, by a vote of a majority of those present and voting, shall, within a reasonable time but not later than thirty (30) days after such hearing, render its decision, which may be either to affirm or change the results of the election or to set aside such election. The Committee’s decision (as reflected by a majority of those actually present and voting) on all such matters shall be final.

At all meetings of the members, and of any committees thereof, meeting procedure, except as provided by law, the Articles of Incorporation or these Bylaws, shall be governed by the latest edition of Robert’s Rules of Order.

The business and affairs of the Rural Electric shall be managed by a board of nine (9) directors who shall exercise all the powers of the Rural Electric except such as are by law, or by the Articles of Incorporation or by these By-Laws, conferred upon or reserved to members.

2.01 Directors shall be elected by secret ballot at the annual meeting of the members. They shall be elected by and from the members to serve terms of office of three (3) years. The election of directors shall be so arranged that only three (3) directors will be elected each calendar year. The order of expiration of the terms of the directors for the various districts shall begin as follows: Districts Nos. 3, 6 and 9 in the year 1942. Districts Nos. 2, 5 and 8 in the year 1943. Districts Nos. 1, 4 and 7 in the year 1944.

2.02 No person shall be eligible to become or remain a director of the Rural Electric: 1) who is not a member of the Rural Electric, 2) whose primary residential abode is not within the district represented by him, 3) who does not receive electrical service at his primary residential abode from the Rural Electric, 4) who is a close relative of an incumbent director or of an employee of the cooperative, or 5) who has been an employee of the Rural Electric within the last five years. No person shall be eligible to become or remain a director of, or to hold any other position of trust in, the Rural Electric who, outside of his duties as a director or agent of the Rural Electric, is in any way employed by or financially interested in a competing enterprise. Upon establishment of the fact that a nominee for director lacks eligibility under this Section or as may be provided elsewhere in these By-laws, it shall be the duty of the Chairman presiding at the meeting at which such nominee would otherwise be voted upon, to disqualify such nominee. Upon the establishment of the fact that any person being considered for, or already holding, a position of trust in the Rural Electric lacks eligibility under this Section, it shall be the duty of the board of directors to withhold such position from such person, or to cause him to be removed there from, whichever be the case. Upon the establishment of the fact that a director is holding office in violation of this Section, it shall be the duty of the remaining directors on the board to remove such director from office. Nothing in this Section contained shall, or shall be construed to, affect in any manner whatsoever the validity of any action taken at any meeting of the board of directors, unless such action is taken with respect to a matter which is affected by the provisions of this Section and in which one or more of the directors have an interest adverse to that of the Rural Electric.

3.01 It shall be the duty of the board of directors to appoint, not less than sixty (60) days nor more than one hundred twenty (120) days before the date of a meeting of members at which directors are to be elected, a committee on nominations consisting of not less than three (3) members from each district from which a director is to be elected. Said committee from each such district shall nominate at least two (2) candidates for director from the district who possess the qualifications set out in Article IV, Section 2, of these Bylaws. No officer, incumbent director, or close relative, or member of the same household of, an incumbent director or known candidate for director shall be appointed to or serve as a member of any nominating committee. The Rural Electric shall post at the principal office, at least twenty (20) days before the meeting, a list of nominations of directors, but any fifteen (15) or more members from within a district may make other nominations for director from that district in writing over their signatures not less than forty (40) days nor more than one hundred (100) days prior to the meeting and the Rural Electric shall post such nominations at the same place where the list of nominations made by committee is posted. The Secretary shall be responsible for mailing to each member at least ten (10) days before the meeting a statement of the number of directors to be elected and showing separately the nominations made by the committee on nominations and the nominations made by the petition, if any.

4.01 Subject to the provisions of these By-laws with respect to the removal of directors, vacancies occurring in the board of directors shall be filled by the affirmative vote of a majority of the remaining directors, and a director thus elected shall serve for the balance of the unexpired term of the office in which the vacancy occurred.

Directors shall not receive any salary for their services as such, except that the board of directors may by resolution authorize certain insurance benefits and a fixed sum for each day or portion thereof spent on Rural Electric business, such as attendance at meetings, conferences, and training programs or performing committee assignments when authorized by the Board. If authorized by the board, directors may also be reimbursed for expenses actually and necessarily incurred in carrying out such Rural Electric business or may be granted a reasonable per diem allowance by the board in lieu of detailed accounting for some or all of these expenses. No director shall receive compensation for serving the Rural Electric in any other capacity, nor shall any close relative of a director receive compensation for serving the Rural Electric, unless the service and amount of compensation shall be specifically authorized by a resolution of the board of directors.

The board of directors by a majority vote of all the directors at any regular meeting may create an executive committee. The President, Vice-President, Secretary, and Treasurer shall constitute such committee and the President shall be chairman. If the offices of Secretary and Treasurer are combined as authorized by Article VI, Section 1, of these Bylaws, then the President, Vice President, and Secretary-Treasurer shall constitute such committee with the President being chairman. During the intervals between the meetings of the board of directors, the executive committee shall consider such business of the Rural Electric as it deems advisable or as directed by the board of directors. The executive committee shall have power only to make recommendations to the board of directors. All recommendations determined by the executive committee shall be reported to the board of directors at its meeting next succeeding such determination. Regular minutes of the proceedings of the executive committee shall be kept in the regular minute book of the Rural Electric. A majority of the executive committee shall be necessary to constitute a quorum, and in every case the affirmative vote of a majority of the members shall be necessary for the passage of any recommendation. The executive committee shall fix its own rules of procedure, and shall meet as provided by such rules or resolution of the committee, and it shall also meet at the call of the chairman or of any member of the committee. The board of directors by a majority vote of all the directors at any regular meeting may disband and terminate such executive committee.

Any member may bring charges against an officer or director by filing them in writing with the Secretary, together with a petition signed by ten per centum (10%) of the members, requesting the removal of the officer or director in question. The removal shall be voted upon at the next regular meeting or special meeting of the members and the members at such meeting may fill any vacancy created by such removal. The director or officer against whom such charges have been brought shall be informed in writing of the charges at least twenty (20) days prior to the meeting at which the charges are to be considered, and shall have an opportunity at the meeting to be heard in person or by counsel and to present evidence; and the person or persons bringing the charges against him shall have the same opportunity.

8.01 The area served by the Rural Electric shall be divided into nine (9) geographic districts for the purpose of nominating and electing director candidates. There shall be only one director from each district. The boundaries of each district shall, wherever practical, follow easily recognized landmarks or County and Township boundaries.

8.02 The board of directors shall review district boundaries at least once every three years and revise them, by Resolution, where deemed appropriate, for demographic, geographic, governmental unit and membership balance.

8.03 Timely notice of any change in boundaries shall be given to the membership prior to the first nominating committee meeting for the election in which the change is to become effective, and all subsequent elections shall be consistent with such boundaries.

Section 1. Regular Meetings

A regular meeting of the board of directors shall be held without notice other than this By-law immediately after, and at the same place as, the annual meeting of the members. A regular meeting of the board of directors shall also be held monthly at such time and place in one of the counties served by the Rural Electric, as the board of directors may provide by resolution. Such regular monthly meetings may be held without notice other than such resolution fixing the time and place thereof.

Section 2. Special Meetings

The President or any three (3) directors may call special meetings of the board of directors and it shall be the duty of the Secretary to cause notice of such meeting to be given as hereinafter provided. The person or persons authorized to call special meetings of the board of directors may fix the time and place (which shall be in one of the counties served by the Rural Electric), for the holding of any special meeting of the board of directors called by them.

Section 3. Notice

Written notice of the time, place and purpose of any special meeting of the board shall be delivered to each board member either personally or by mail, by or at the direction of the Secretary, or upon a default in duty by the Secretary, by the President or the board member calling the meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the board member at his address as it appears on the records of the Rural Electric, with postage thereon prepaid, at least five days before the date set for the meeting.

Any director may waive in writing, any notice of a meeting required to be given by these By-laws. The attendance of a director at any meeting shall constitute a waiver of notice of such meeting by such director, except in case a director shall attend a meeting for the express purpose of objecting to the transaction of any business because the meeting shall not have been lawfully called or convened.

A majority of the board of directors shall constitute a quorum for the transaction of business at any meeting of the board of directors, provided, that if less than a majority of the directors are present at said meeting, a majority of the directors present may adjourn the meeting from time to time; and provided further, that the Secretary shall notify any absent directors of the time and place of such adjourned meeting.

Section 1. Number

The officers of the Rural Electric shall be a President, Vice-President, Secretary, Treasurer and such other officers as may be determined by the board of directors from time to time. The same person may hold the offices of Secretary and Treasurer.

Section 2. Election and Term of Office

The officers shall be elected, by written ballot and without prior nomination, annually by and from the board of directors at the first meeting of the board of directors held after each annual meeting of the members. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as conveniently may be. Each officer shall hold office until the first meeting of the board of directors following the next succeeding annual meeting of the members or until his successor shall have been duly elected and shall have qualified, subject to the provisions of these By-laws with respect to the removal of officers.

Section 3. Removal

The board of directors may remove any officer elected by the board of directors whenever in its judgment the best interest of the Rural Electric will be served thereby.

Section 4. Vacancies

Except as otherwise provided in these By-Laws, a vacancy in any office may be filled by the board of directors for the unexpired portion of the term.

Section 5. President

The President:

a. Shall be the principal executive officer of the Rural Electric and shall preside at all meetings of the members and of the board of directors.

b. Shall sign, with the Secretary, certificates of membership, and may sign any deeds, mortgages, deeds of trust, notes, bonds, contracts or other instruments authorized by the board of directors to be executed, except in cases in which the signing and execution thereof shall be expressly delegated by the board of directors or by these By-Laws to some other officer or agent of the Rural Electric, or shall be required by law to be otherwise signed or executed; and

c. In general shall perform all duties incident to the office of President and such other duties as may be prescribed by the board of directors from time to time.

Section 6. Vice-President

In the absence of the President, or in the event of his inability or refusal to act, the Vice-President shall perform the duties of the President, and when so acting, shall have all the power of and be subject to all the restrictions upon the President and shall perform such other duties as from time to time may be assigned to him by the board of directors.

Section 7. Secretary

The Secretary shall be responsible for:

a. Keeping the minutes of meetings of the members and the board of directors in one or more books provided for that purpose.

b. Seeing that all notices are fully given in accordance with these By-Laws or as required by law.

c. Safekeeping of the corporate records and of the seal of the Rural Electric and seeing that the seal of the Rural Electric is affixed to all certificates of membership prior to the issue thereof and to all documents, the execution of which on behalf of the Rural Electric under its seal is duly authorized in accordance with the provisions of the By-Laws.

d. Keeping a register of the post office address of each member, which shall be furnished, to the Secretary by such member.

e. Signing with the President certificates of membership.

f. Having general charge of the books of the Rural Electric in which a record of the members is kept.

g. Keeping on file at all times a complete copy of the Articles of Incorporation and By-Laws of the Rural Electric containing all amendments thereto, which copy shall always be open to the inspection of any member, and at the expense of the Rural Electric forwarding a copy of the By-Laws and all amendments thereto to each member upon request, and

h. Performance of all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the board of directors.

Section 8. Treasurer

The board of directors may appoint a General Manager who may be, but shall not be required to be, a member of the Rural Electric. The General Manager shall perform such duties and shall exercise such authority as the board of directors may from time to time require of him and shall have such authority as the board of directors may from time to time vest in him.

The board of directors shall require the Treasurer or any other officer of the Rural Electric charged with responsibility for the custody of any of its funds or property, to be bonded in such sum and with such surety as the board of directors shall determine. The board of directors in its discretion may also require any other officer, agent or employee of the Rural Electric to give bond in such amount and with such surety, as it shall determine.

The powers, duties and compensation of officers, agents and employees shall be fixed by the board of directors subject to the provisions of these By-Laws.

The officers of the Rural Electric shall submit, at each annual meeting of the members, reports covering the business of the Rural Electric for the previous fiscal year and showing the conditions of the Rural Electric at the close of the fiscal year.

Notwithstanding the duties, responsibilities and authorities of the Secretary and of the Treasurer hereinbefore provided in Sections 7 and 8 of this article, the board of directors by resolution may, except as otherwise limited by law, delegate wholly or in part, the responsibility and authority for,

and the regular and routine administration of, one or more such officers’ such duties to one or more agents or other officers of the Rural Electric who are not directors. To the extent that the board does so delegate with respect to either such officer, that officer as such shall be released from such duties, responsibilities and authorities.

The corporate seal of the Rural Electric shall be in the form of a circle and shall have inscribed thereon the name of the Rural Electric “Jackson County Rural Electric Membership Corporation,” the words “REA CO-OP, BROWNSTOWN, INDIANA” and the figures “1937”.

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

Except as otherwise provided in these By-Laws, 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 the behalf of the Rural Electric and such authority may be general or confined to specific instances.

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

All funds of the Rural Electric shall be deposited from time to time to the credit of the Rural Electric in such bank or banks as the board of directors may select. Appropriate investments may also be made, as the board of directors shall determine.

Unless such sale, lease, exchange, mortgage, pledge or other disposition of all, or substantially all, the property of the Rural Electric (a) is authorized at a meeting of the members thereof by a resolution duly adopted by the affirmative vote of not less that two-thirds (2/3rds) of the members who are present and the affirmative vote at such meeting of at least one fifth (1/5th) of all its members, (b) the meeting was duly called and held and the notice of such proposed sale, lease, exchange, mortgage, pledge or other disposition was contained in the notice of the meeting, and (c) the same shall be approved by the Indiana Utility Regulatory Commission; provided, however, that notwithstanding anything herein contained, the board of directors, 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 Rural Electric, whether acquired or to be acquired, and wherever situated, as well as the revenues and income there from, for the purpose of financing the construction or maintenance of the Rural Electric’s distribution system and for general plant as defined in the uniform system of accounts prescribed by the Indiana Utility Regulatory Commission, all upon such terms and conditions as the board of directors shall determine, to secure any indebtedness of the Rural Electric to the United States of America or any agency or instrumentality thereof or to any financial institution, subject to approval of the Indiana Utility Regulatory Commission, as provided by law.

Section 1. Interest or Dividends on Capital Prohibited

The Rural Electric 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 Rural Electric on any capital furnished by its patrons.

Section 2. Patronage Capital in Connection with Furnishing Electric Energy

2.01 In the furnishing of electric energy the Rural Electric’s operations shall be so conducted that all patrons, will, through their patronage furnish capital for the Rural Electric. In order to induce patronage and to assure that the Rural Electric will operate on a non-profit basis the Rural Electric 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 Rural Electric are received with the understanding that they are furnished by the patrons, as capital. The Rural Electric 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 Rural Electric 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 Rural Electric 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, provided, that individual notices of such amounts furnished by each patron shall not be required if the Rural Electric notifies all patrons of the aggregate amount of such excess and provides a clear explanation of how each patron may compute and determine for himself the specific amount of capital so credited to him. 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 Rural Electric corresponding amounts for capital.

2.01.1 All other amounts received by the Rural Electric 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.

2.02 In the event of dissolution or liquidation of the Rural Electric, after all outstanding indebtedness of the Rural Electric shall have been paid, outstanding capital credits shall be retired without priority on a pro rata basis. If, at any time prior to dissolution or liquidation, the board of directors shall determine that the financial condition of the Rural Electric will not be impaired thereby, the capital then credited to patrons’ accounts may be retired in full or in part. 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 Rural Electric being the first retired. In no event, however, may any such capital be retired unless, after the proposed retirement, the capital of the Rural Electric shall equal at least eighty per centum (80%) of the total assets of the Rural Electric.

2.03 Capital credited to the account of each patron shall be assignable only on the books of the Rural Electric pursuant to written instruction from the assignor and only to a successor in interest or successor in occupancy in all or a part of such patron’s premises served by the Rural Electric unless the board of directors, acting under the policies of general application, shall determine otherwise.

2.04 Notwithstanding any other provision of these bylaws, the board of directors, at its discretion and at any time after a member’s death or cessation of legal existence, may retire all or any portion of capital so credited to the member, upon such terms and conditions as the board, acting under policies of general application to situations of like kind, and such member’s legal representatives shall agree; PROVIDED, however, that the financial condition of the Rural Electric will not be thereby impaired.

2.05 The patrons of the Rural Electric, by dealing with the Rural Electric, acknowledge that the terms and provisions of the Articles of Incorporation and By-Laws shall constitute and be a contract between the Rural Electric and each patron, and both the Rural Electric 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 By-Laws shall be called to the attention of each new patron of the Rural Electric.

2.06 The Rural Electric shall deduct from any retirement of patronage capital to be made under terms of this Article the amount of any past debt or obligation owed by the member to the Rural Electric from any past period of patronage or service to the member.

Section 3. Patronage Refunds in Connection with Furnishing Other Services

In the event that the Rural Electric should engage in the business of furnishing goods or services other than electric energy, all amounts received and receivable therefrom which are in excess of costs and expenses properly chargeable against the furnishing of such goods or services shall, insofar as permitted by law, be pro-rated annually on a patronage basis.

Section 4. Unclaimed Funds

Notwithstanding any provisions herein contained to the contrary and pursuant to the statutes of the State of Indiana (I.C. 8-1-13-11), the Rural Electric shall recover, after a period of two (2) years, any unclaimed stocks, dividends, capital credits, patronage refunds, utility deposits, membership fees, account balances, or book equity for which the owner (member or former member) cannot be found and are the result of distributable savings of the Rural Electric, giving 60 days’ notice in a newspaper printed in the English language and published in the county in which the Rural Electric locates its general headquarters. Such notice shall state the owner’s name and approximate amount of owner’s interest, and that if not duly claimed within 60 days of said notice, the same shall be turned over to the Rural Electric, which shall reallocate the same to other members. If no provable claim shall have been filed by such notice within 60 days after the one-time publication of said notice, the Rural Electric may credit against said account any amounts due and owing the Rural Electric by said members and thereafter allocate to the other members of the Rural Electric on a pro rata basis. Such amounts of said member (the allocation herein contemplated) shall be allocated to those who are members as of the year and on a pro rata basis for the year in which the 60th day falls after the published notice.

Any member or former member who fails to claim any cash retirement or capital credit or other payment within two years after payment has been made available to such person, such failure will constitute an irrevocable assignment and gift to the Rural Electric of such capital credits or other payments.

Section 1. Rules and Regulations and Policies

The board of directors shall have power to make, adopt and enforce such rules, regulations, and policies, not inconsistent with law, the Articles of Incorporation of the Rural Electric or these By-laws, as it may deem advisable for the management, administration, and regulation of the business and affairs of the Rural Electric.

Section 2. Accounting System and Reports

The board of directors shall cause to be established and maintained a complete accounting system which, among other things, subject to applicable laws and rules and regulations of any regulatory body, shall conform to such accounting system as may from time to time be designated by the Administrator of the United States Department of Agriculture Rural Development Electric Programs or any successor federal agency thereto. The board of directors shall also after the close of each audit year cause to be made by a Certified Public Accountant a full and complete audit of the accounts, books and financial condition of the Rural Electric as of the end of such audit year. The Board of Directors may establish an audit year for a different time period than the fiscal year set out in Article VIII of these Bylaws.

Section 3. Membership in Other Organizations

The Rural Electric shall not become a member of any organization without an affirmative vote of the board of directors.

Section 4. Area Coverage

The board of directors shall make diligent effort to see that electric service is extended to all unserved persons within the assigned territory of the Rural Electric who:

a. Desire such service, and

b. Meet all reasonable requirements established by the Rural Electric as a condition of such service.

The Rural Electric will use its best efforts to furnish adequate and dependable electric service throughout its area although it cannot and therefore does not guarantee a continuous and uninterrupted supply of electricity.

As used in these By-laws, “close relative” means a person who is related to the principal person, by consanguinity or affinity, to the third degree or less - that is, a person who is either spouse, child, grandchild, great-grandchild, parent, grandparent, great-grandparent, brother, sister, aunt, uncle, nephew or niece, by blood or in law, of the principal.

Section 6. Subscription to Rural Electric Newsletter

For the purpose of disseminating information devoted to the economical, effective and conservative use of electric energy, the board of directors is authorized, on behalf of and for circulation to the members periodically, to subscribe to a newsletter entitled “Watt High Lights”. The annual subscription therefor shall be determined in a reasonable amount from time to time by the Board of Directors and shall be deducted from any funds accruing in favor of such members, so as to reduce such funds in the same manner as would any other expense of the Rural Electric.

Section 1. Actions by Third Parties

The Rural Electric shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether criminal, civil, administrative or investigative (other than an action by or in the right of the Rural Electric) by reason of the fact that he is or was a director, officer, employee or agent of the Rural Electric or a member of the Rural Electric serving the Rural Electric in an official capacity or is or was serving, at the request of the Rural Electric, as a director, officer, employee or agent of another cooperative, corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorney fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Rural Electric, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful, except that no indemnification shall be made in relation to matters as to which he shall be adjudged in such action, suit or proceeding to be liable for negligence or misconduct in the performance of his duty to the Rural Electric. A director's conduct with respect to an employee benefit plan for a purpose the director reasonably believed to be in the interests of the participants in and beneficiaries of the plan is conduct that satisfies the requirement that the individual's conduct was at least not opposed to the best interests of the Rural Electric. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Rural Electric, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

Section 2. Actions by or in the Right of the Rural Electric

The Rural Electric shall indemnify any person who was or is a party or threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Rural Electric to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Rural Electric or member of the Rural Electric while serving the Rural Electric in an official capacity or is or was serving at the request of the Rural Electric as a director, officer, employee or agent of another cooperative, corporation, partnership, joint venture, trust or other enterprise against expenses, including attorney fees, actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Rural Electric, except that no indemnification shall be made in respect to any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in a performance of his duty to the Rural Electric.

Section 3. Indemnification As a Matter of Right

Any director, officer, employee, agent or member who has been wholly successful, on the merits or otherwise, with respect to any claim, suit or proceeding of the character described in this Article is entitled to indemnification as a matter of right. Except as provided in the preceding either or both of the procedures hereunder may determine sentence eligibility for indemnification as follows: 1. The board of directors acting by a quorum consisting of directors who are not parties to, who have no interest in or who have been wholly successful with respect to such claim, action, suit or proceeding shall find that the director, officer, employee, agent or member has met the standards of conduct set forth in this Article; or 2. Independent legal counsel, mutually agreed upon by the involved director, officer, employee, agent or member and the executive committee of the Rural Electric, shall deliver to the Rural Electric their written opinion that such director, officer, employee, agent or member has met such standards of conduct.

Section 4. Advancement of Expenses

The Rural Electric may advance expenses incurred in defending a civil or criminal action to, or where appropriate may, at its expense undertake the defense of, any such director, officer, employee or agent upon receipt of an undertaking by or on behalf of such person to repay such expenses if it should ultimately be determined that he is not entitled to indemnification under this Article.

Section 5. Claims to Which This Article Applies

The provisions of this Article shall be applicable to claims, actions, suits or proceedings made or commenced before or after the adoption hereof and whether arising from acts or omissions occurring before or after the adoption hereof.

Section 6. Indemnification by This Article Not Exclusive

The indemnification provided by this Article shall not be exclusive of any other rights to which those seeking indemnification may be entitled under the Articles of Incorporation, any agreement, vote of disinterested members of the Rural Electric, vote of disinterested directors or as a matter of law, any insurance purchased by the Rural Electric or otherwise, both as to action in his official capacity and as to action in any other capacity while holding such office and shall continue as to a person who has ceased to be a director, officer, employee, agent or member acting in an official capacity and shall inure to the benefit of the heirs, executors and administrators of such person.

Section 7. Insurance

The Rural Electric may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, agent of the Rural Electric or member acting in an official capacity for the Rural Electric or is or was serving at the request of the Rural Electric as a director, officer, employee or agent of another cooperative, corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such whether or not the Rural Electric would have the power to indemnify him against such liability under the provisions of this Article.

These By-laws may be altered, amended or repealed by the affirmative vote of not less that two-thirds (2/3) of all members of the board of directors, which vote may be taken at any regular or special meeting of the board of directors; provided that notice of such alteration, amendment or repeal shall have been given with the notice of the meeting.