Code of Regulations | The Frontier Power Company

CODE OF REGULATIONS

THE FRONTIER POWER COMPANY

Coshocton, Ohio

AS AMENDED BY THE MEMBERS AT

THE ANNUAL MEETING OF MEMBERS HELD

JULY 28, 2006

The objective of The Frontier Power

Company is to make electric power and

energy available to its customers at the

lowest cost consistent with sound

economy and good management.

ARTICLE I Members

ARTICLE II Meetings of Members

ARTICLE III Trustees

ARTICLE IV Right and Liabilities of Members

ARTICLE V Meetings of Trustees

ARTICLE VI Officers

ARTICLE VII Financial Transactions

ARTICLE VIII Non-Profit Operation

ARTICLE IX Disposition of Property

ARTICLE X Seal

ARTICLE XI Miscellaneous

ARTICLE XII Indemnification of Board Members and Officers

ARTICLE XIII Removal of Officers and Trustees

ARTICLE XIV Amendments

ARTICLE I

MEMBERS

Section 1. Qualifications and Obligations. The subscribers to the Articles of Incorporation of the Cooperative shall be members of the Cooperative. In addition to such subscribers, any person, firm, partnership, association, corporation or body politic may become a member of the Cooperative by: (a) paying in full the membership fee; (b) agreeing to purchase from the Cooperative the amount of electric energy hereinafter in Section 4 of this Article specified; and (c) agreeing to comply with and be bound by the Articles of Incorporation and this Code of Regulations of the Cooperative and any amendments thereto and by such rules and regulations as may from time to time be adopted by the Board of Trustees of the Cooperative, provided, however, that no person, firm, partnership, association, corporation or body politic accepted for membership by the members at any meeting thereof, shall become a member of the Cooperative unless and until he/she or it has been accepted for membership by the affirmative vote of a majority of the members of the Board of Trustees of the Cooperative. No person, firm, partnership, association, corporation or body politic shall own more than one (1) membership in the Cooperative. A husband and wife shall be considered as a joint and survivor owner of a membership. That either one shall have the right to vote said share, but in no case shall they be entitled to two votes. That at the decease of one of the joint members, said membership shall pass to the survivor, but shall not release the deceased estate from debts owing said Cooperative. That this regulation shall be in effect unless the member shall in writing state that said membership shall not become a joint and survivor membership.

Section 2. Membership Fee. The fee for membership in the Cooperative shall be determined by the Board of Trustees. Moneys received by the Cooperative in payment of membership fees may be used for any corporate purpose.

Section 3. Membership Certificates. Membership in the Cooperative may be evidenced by a membership certificate which shall be in such form and shall contain provisions as shall be determined by the Board. Such certificate shall be signed either manually or by facsimile signature by the President and by the Secretary of the Cooperative and the corporate seal or a facsimile thereof shall be affixed to such certificate. Failure to issue a membership certificate or the loss or destruction thereof shall not affect the membership status of any person listed as a member in the Cooperative’s membership records. In case a certificate is lost, destroyed or mutilated, a new certificate may be issued thereof upon such uniform terms and conditions as the Board may prescribe.

Section 4. Purchase of Electric Energy. Each member shall, as soon as electric energy shall be available, purchase from the Cooperative all electric energy used on the premises specified in his/her application for membership, and shall pay thereof rates which shall from time to time be fixed by the Cooperative in accordance with all applicable requirements of law. It is expressly understood that amounts paid for electric power and/or energy in excess of the cost of the service are furnished by the patrons of the Cooperative, as capital and each patron shall be credited with the capital so furnished as provided in this Code of Regulations. Each patron shall pay in amounts owed by him/her to the Cooperative as and when the same shall become due and payable.

Section 5. Termination of Membership.

(a) Any member may withdraw from membership upon compliance with such uniform terms and conditions as the Board may prescribe. The Board may, by the affirmative vote of not less than two-thirds of all the members of the Board, expel any member who fails to comply with any of the provisions of the Articles of Incorporation, this Code of Regulations, or rules or regulations adopted by the Board, but only if such member shall have been given written notice by the Cooperative that such failure makes him/her liable to expulsion and such failure shall have continued for at least ten days after such notice was given. Any expelled member may be reinstated by vote of the Board or by vote of the members at any annual or special meeting.

(b) Upon the withdrawal, death, cessation of existence or expulsion of a member, the membership of such member shall thereupon terminate, and membership certificate of such member shall be surrendered forthwith to the Cooperative. The Board may adopt uniform rules governing the membership status of persons whose electric service is temporarily discontinued by the Cooperative. Termination of membership in any manner shall not release a member or his/her estate from any debts or obligations due to the Cooperative.

(c) In case of withdrawal or termination of membership in any manner, the Cooperative shall repay to the member the amount of the membership fee paid by him/her, provided, however, that the Cooperative shall deduct from the amount of the membership fee the amount of any debts or obligations owed by the member to the Cooperative.

Section 6. Service to all Persons within the Cooperative’s Service Area.

(a)The Cooperative shall extend electric service to all persons, within the Cooperative’s service area who (i) desire such service and (ii) meet all requirements established by the Cooperative as a condition of such service. Conditions of service shall be set forth in the rules and regulations of the Cooperative. All such rules and regulations shall be just, reasonable and not unreasonably discriminatory or preferential. No discrimination or preference shall be made between patrons of the Cooperative within the same classification, with respect to rates or terms or conditions of service. As used in this Code of Regulations, the term “service area” shall mean the entire geographical area wherein the Cooperative supplies electric power and/or energy or maintains electric facilities as well as all areas adjacent thereto which are unserved by any other supplier of electric energy, and all areas which are closer to the electric distribution facilities of any other electric supplier, or as may be determined by any governmental agency or other body having jurisdiction in making a determination for certificated areas to be served by suppliers or electric energy.

(b) Nothing contained in this Code of Regulations, in the Cooperative’s rules and regulations, policies, or otherwise, shall be construed to prevent the Cooperative from selling electric power and/or energy or otherwise rendering electric service to nonmembers or to prohibit the Cooperative from entering into and performing franchises or other contracts with political subdivisions, bodies politic, or governmental agencies or instrumentalities, which franchises or contracts provide for the selling of electric power and /or energy or otherwise rendering electric service to any such subdivision, bodies, agencies, instrumentalities or the citizens thereof.

ARTICLE II

MEETINGS OF MEMBERS

Section 1. Annual Meetings. The annual meetings of the members shall be held on or before the twentieth day of August in each year beginning with the year of 1954, upon such date and at such hour as the Board of Trustees shall determine, in the service area, for the purpose of electing trustees, passing upon reports covering the previous fiscal year and transacting such other business as may come before the meeting. If the election of trustees shall not be held on the day designated herein for any annual meeting, or at any adjournment thereof, the Board of Trustees shall cause the election to be held at a meeting of the members as soon thereafter as conveniently may be. Failure to hold annual meeting at the designated time shall not work a forfeiture or dissolution of the Cooperative.

Section 2. Special Meetings. Special meetings of the members may be called by the President, by the Board of Trustees, or a majority thereof, or by petition signed by not less than a majority of all the members of the Cooperative. Special meetings of the members may be held at any place within the service area, specified in the notice of the special meeting.

Section 3. Notice of Members’ Meetings. Written or printed notice stating the place, day and hour of the meeting; and in case of a special meeting, the purposes for which the meeting is called, the date of the meeting, either personally or by mail, by or at the direction of the President or the Secretary or the persons calling the meeting, to each member of the Cooperative. Said notice to be given at least fifteen days before date fixed for meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mails, addressed to the member at his/her address as it appears on the records of the Cooperative with the postage thereon prepaid.

Section 4. Failure to Receive Notice. The failure of any member to receive any such notice of an annual meeting 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. The attendance of a member at any meeting shall constitute a waiver of notice of such meeting, unless he/she shall attend for the express purpose of objecting to the transaction of any business because the meeting shall not have been lawfully called or convened.

Section 5. Quorum. One hundred fifty (150) members of the Cooperative present in person, voting by mail, electronic means or any combination thereof shall constitute a quorum for the transaction of business at all meetings of the members, except as provided in Article IX.

Section 6. Voting. Each member shall be entitled to one vote and no more upon each matter submitted to a vote at a meeting of the members and 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 voting except as otherwise provided by law, the Article of Incorporation or this Code of Regulations. The election of trustees shall be by ballot and each member shall have the right to cast one vote for each trustee to be elected at such election and the number of candidates equal to the number of trustees to be elected receiving the highest number of votes shall be elected for the term specified in Section 2 of Article III of this Code of Regulations. The means of voting may include a vote in person, a vote by mail, or a vote by electronic means, according to the instructions accompanying the ballot determined by the Board of Trustees, which shall govern the validity of the votes. Voting by proxy will not be allowed. If the member is a firm, association, corporation, partnership, body politic, or subdivision, the vote shall be cast by a duly authorized representative.

Section 7. Order of Business. The order of business at the annual meeting of the members, and as far as possible at all other meetings of the members, shall be as follows:

1. Call to order.

2. Reading of the notice of the meeting together with proof of the due mailing thereof or of the waiver or waivers of notice of the meeting.

3. Presentation and reading of unapproved minutes of previous meeting of the members and the taking of necessary action thereon.

4. Presentation and consideration of, and acting upon reports of officers, trustees and committees.

5. Election of trustees.

6. Unfinished business.

7. New Business.

8. Adjournment.

ARTICLE III

TRUSTEES

Section 1. General Powers. The business and affairs of the Cooperative shall be managed by a board of seven (7) trustees which shall exercise all of the powers of the Cooperative except such as are by law or by the Articles of Incorporation or by this Code of regulations conferred upon or reserved to the members.

For the purpose of electing trustees, the territory in which the members of the Cooperative live shall be divided into the following districts.

District A Shall compromise the following territory:

1. Coshocton County north of the Walhonding and Tuscarawas Rivers.

2. Killbuck and Mechanic Townships, and that portion of Clark Township west of S.R. 93, all located in Holmes County.

This district shall be represented by two trustees.

District B Shall be divided into two divisions known as B-I and B-II.

B-I Shall comprise all the territory in Auburn, Sugarcreek and Dover Townships in Tuscarawas County, and that portion of Clark Township east of S.R. 93 in Holmes County.

B-II Shall comprise all the territory in York, Warwick, Goshen and Clay Townships and that portion of Jefferson and Salem Townships east of Interstate 77, all located in Tuscarawas County.

Each of the above divisions shall be represented by one trustee.

District C Shall comprise the territory of Bucks and Oxford Townships and that portion of Jefferson and Salem Townships west of Interstate 77 all located in Tuscarawas County.

This district shall be represented by one trustee.

District D Shall comprise the following territory:

1. Coshocton County south of the Kokosing, Walhonding, and Tuscarawas Rivers.

2. That portion of Knox County south of the Kokosing River and Licking County, both bordering on the western border of Coshocton County.

3. That portion of Muskingum and Guernsey Counties, both bordering on the southern border of Coshocton County.

This district to be represented by two trustees.

Section 2. Qualification and Tenure. No person shall be eligible to become or remain a trustee of the Cooperative who:

(a) Is not a bona fide Cooperative member;

(b) Has not been a member of the Cooperative for at least the three (3) most recent prior

years;

in the particular district within the service area of the Cooperative which such

member is to represent;

(d) Is in any way employed by or has been an employee within the previous five (5)

years of the Cooperative or any subsidiary of the Cooperative; or

(e) Is a close relative of any existing Trustee or employee. Close relative means a person

who, by blood or in law, including half, foster, step and adoptive kin, is either a

spouse, child, parent, brother, or sister of the principal.

Trustees shall hold office for three years and until his/her successor is elected and qualified.

Section 3. Vacancies. Subject to the provisions of Article VI, Section 5 hereof, vacancies occurring in the Board of Trustees between annual meetings of the members of the Cooperative shall be filled by a majority vote of the remaining trustees. Trustees thus elected shall serve until the next annual meeting of the members and until their successors shall have been elected and shall have qualified.

Section 4. Compensation. Trustees as such shall not receive any salary for their services but by resolution of the Board of Trustees a fixed sum and expenses of attendance, if any, may be allowed for attendance at each meeting of the Board of Trustees; provided, that nothing herein contained shall be construed to preclude any trustee from serving the Cooperative in any other capacity and receiving compensation therefore.

Section 5. Rules and Regulations. The Board of Trustees shall have power to make and adopt such rules and regulations, not inconsistent with the Articles of Incorporation or this Code of Regulations or the laws of the State of Ohio, as it may deem advisable for the management, administration and regulation of the business and the affairs of the Cooperative.

Section 6. Accounting System and Reports. The Board of Trustees shall cause to be established and maintained a complete accounting system, which, among other things, subject to the laws of the State of Ohio and the rules and regulations of any regulatory body thereof having jurisdiction in the premises, shall conform to such system of accounts as may from time to time be designated by the Rural Utility Service of the United States of America. All accounts of the Cooperative shall be examined by the Board of Trustees at least four times a year at regular meetings of the Board. The Board of Trustees shall also within thirty (30) days after the close of each fiscal year cause to be made a full and complete audit of the accounts, books and financial condition of the Cooperative as of the end of such fiscal year. A report of such audit shall be submitted to the members at the following annual meeting.

Section 7. Nominations. It shall be the duty of the Board to appoint, not less than thirty (30) days nor more than ninety (90) days before the date of the meeting of the members at which members of the Board are to be elected, a committee on nominations consisting of not less than three (3) nor more than five (5) members who shall be selected so as to insure equitable representation on the committee to the geographic area constituting the service area of the Cooperative. The nominating committee shall nominate at least two (2) candidates from each district for each position for a board member representing such district which is to be filled at the next annual meeting of members or at any meeting held in lieu thereof. The nominating committee shall be furnished a list of all members in the district from which a member is to be elected to the Board and each member will be considered as a potential member to the Board. The nominating committee before making its final selection shall call to the attention of each nominee the qualifications, duties and responsibilities of a Board member and the nominee will advise the nominating committee whether or not he/she will serve if elected. Any nominee may be withdrawn by stating that he/she is not willing to serve on the Board. No person shall be voted upon for membership on the Board who has not signified his/her willingness to serve if elected.

ARTICLE IV

RIGHTS AND LIABILITIES OF MEMBERS

Section 1. Property Interest of Members. Upon dissolution, after (a) All debts and liabilities of the Cooperative have been paid, and (b) All capital furnished through patronage has been retired as provided in this Code of Regulations, the remaining property and assets of the Cooperative shall be distributed among the members and former members in the proportion which the aggregate patronage of each bears to the total patronage of all members during the ten years next preceding the date of the filing of the certificate of dissolution.

Section 2. Non-liability for Debts of the Cooperative. The private property of the members shall be exempt from execution or other liability for the debts of the Cooperative and no member shall be liable or responsible for any debts or liabilities of the Cooperative.

ARTICLE V

MEETING OF TRUSTEES

Section 1. Regular Meetings. A regular meeting of the Board of Trustees shall be held without notice other than this Code of Regulations immediately after, and at the same place as, the annual meeting of the members. A regular meeting of the Board of Trustees shall also be held monthly and at such time and place in the Counties of Coshocton and Tuscarawas, State of Ohio, as the Board 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. Special meetings of the Board of Trustees may be called by the President or any two (2) trustees. The person or persons authorized to call special meetings of the Board of Trustees may fix the time and place for the holding of any special meeting of the Board of Trustees called by them.

Section 3. Notice. Notice of the time, place and purpose of any special meeting shall be given at least two (2) days previous thereto, by written notice, delivered personally or mailed to each trustee at his/her last known address. If mailed, such notice shall be deemed to be delivered when deposited in the United States mails in a sealed envelope so addressed, with postage thereon prepaid. The attendance of a trustee at any meeting shall constitute a waiver of notice of such meeting, unless he/she shall attend for the express purpose of objecting to the transaction of any business because the meeting shall not have been lawfully called or convened.

Section 4. Quorum. A majority of the Board shall constitute a quorum, provided that if less than such majority of the Board is present at said meeting, a majority of the Board present may adjourn the meeting from time to time; and provide further, that the Secretary shall notify any absent Board members of the time and place of such adjourned meeting. The act of a majority of the Board members present at a meeting at which a quorum is present shall be the act of the Board, except as otherwise provided in this Code of Regulations.

Section 5. Action of Trustees without a Meeting. Any action which may be authorized or taken at a meeting of the Board may be authorized or taken without a meeting in a writing or writings signed by all of the members of the Board.

ARTICLE VI

OFFICERS

Section 1. Number. The officers of the Cooperative shall be a President, Vice-President, Secretary, Treasurer, General Manager and such other officers as may be determined by the Board from time to time. The offices of Secretary and Treasurer may be held by the same person.

Section 2. Election and Term of Office. Each officer, except the General Manager and any officer appointed pursuant to Section 3 of this Article VI, shall be elected by ballot annually by and from the Board at the meeting of the Board held immediately after the 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 following the next succeeding annual meeting of the members or until his/her successor shall have been elected and shall have qualified, subject to the provisions of this Code of Regulations with respect to the removal of officers. The General Manager shall be chosen and employed and his/ her compensation shall be set by the Board. A vacancy in any office shall be filled by the Board for the unexpired portion of the term.

Section 3. Additional Officers. In addition to the officers specified in Section 1 of this Article VI, the Board, in its discretion, may appoint one or more Assistant Vice Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers and such other officers as may be deemed necessary or desirable who shall have such duties and authority as generally pertains to their respective offices and such as may be prescribed by the Board, and who shall hold office for such period as may be prescribed by the Board.

Section 4. Resignations. Any officer may resign at any time by giving written notice to the Board, or to the President or to the Secretary of the Cooperative. Any such resignation shall take effect at the time specified therein and unless otherwise specified therein the acceptance of such resignation shall not be necessary to make it effective.

Section 5. Vacancies. A vacancy in any office, except that of the General Manager, may be filled by the Board for the unexpired portion of the term. In the event of a vacancy in the office of General Manager, the Board shall choose and employ a General Manager upon terms and conditions which the Board considers to be in the best interest of the Cooperative.

Section 6. President. The President shall:

(a) be the principal executive officer of the Cooperative and, unless otherwise determined by the members or the Board, shall preside at all meetings of the members and the Board;

(b) on behalf of the Cooperative, subject to the direction and instruction of the Board, sign, with the Secretary, certificates of membership and may sign any deeds, mortgages, deeds of trust, notes, bonds, financing statements, security agreements, contracts or other instruments, except in cases in which the signing and execution thereof shall be expressly delegated by the Board or by this Code of Regulations to some other officer or agent of the Cooperative, or shall be required by law to be otherwise signed or executed;

(c) in general perform all duties incident to the office of President and such other duties as may be prescribed by the Board from time to time.

Section 7. Vice President. In the absence of the President, or in the event of his/her inability or refusal to act, the Vice President shall perform the duties of the President, and when so acting shall have all the powers and be subject to all the restrictions upon the President. The Vice President shall also perform such other duties as from time to time may be assigned to him/her by the Board or by the President.

Section 8. Secretary. The Secretary shall be responsible for:

(a) keeping the minutes of the meetings of the members and of the Board in books provided for that purpose;

(b) seeing that all notices are duly given in accordance with this Code of Regulations or as required by law;

(c) the safekeeping of the corporate books and records and the seal of the Cooperative and affixing the seal of the Cooperative or a facsimile thereof to all certificates of membership prior to the issue thereof, and to all documents, the execution of which on behalf of the Cooperative under its seal is duly authorized in accordance with the provisions of this Code of Regulations;

(d) keeping a register of the names and post office addresses of all members;

(e) signing, with the President, certificates of membership;

(f) keeping on file at all times a complete copy of the Articles of Incorporations and Code of Regulations of the Cooperative containing all amendments thereto (which copy shall always be open to the inspection of any member) and at the expense of the Cooperative, furnishing a copy of the Code of Regulations and of all amendments thereto to any member upon request; and

(g) in general performing all duties incident to the officer of Secretary and such other duties as from time to time may be assigned to him/her by the Board.

Section 9. Assistant Secretary. The Assistant Secretary, if one is appointed by the Board pursuant to Section 3 of this Article VI, need not be a member of the Board and he/she shall hold office until relieved by the Board. He/she shall assist the Secretary in the performance of the Secretary’s duties as requested by the Secretary or by the Board.

Section 10. Treasurer. The Treasurer shall be responsible for:

(a) custody of all funds and securities of the Cooperative;

(b) the receipt of and the issuance of receipts for all moneys due and payable to the Cooperative and for the deposit of all such moneys in the name of the Cooperative in such bank or banks as shall be selected in accordance with the provisions of this Code of Regulations; and

(c) the general performance of all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him/her by the Board.

Section 11. Assistant Treasurer. If an Assistant Treasurer is appointed by the Board pursuant to Section 3 of this Article VI, he/she need not be a member of the Board and he/she shall hold office until relieved by the Board. He/she shall assist the Treasurer in the performance of the Treasurer’s duties as requested by the Treasurer or by the Board.

Section 12. General Manager. The General Manager shall:

(a) be the chief administrative officer responsible for the general direction, coordination and control of all operations in accordance with the policies adopted by the Board, subject to the direction and instruction of the Board;

(b) have supervision over and be responsible for the operations of the Cooperative and, in performing this duty, carry out and administer the policies adopted by the Board;

(c) prepare for the Board of Trustees such reports and budgets as are necessary to inform the Board concerning the operations of the Cooperative; and

(d) in general perform duties incident to the office of General Manager as chief administrative officer and perform such other duties as may from time to time be assigned to him/her by the Board.

Section 13. Bonds of Officers. The Treasurer and any other officer or agent of the Cooperative charged with responsibility for the custody of any of its funds or property shall be bonded in such sum and with such surety as the Board shall determine. The Board in its discretion may also require any other officer, agent or employee of the Cooperative to be bonded in such amount and with such surety as it shall determine.

Section 14. Compensation. The powers, duties and compensation of officers, agents and employees shall be fixed by the Board.

Section 15. 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.

ARTICLE VII

FINANCIAL TRANSACTIONS

Section 1. Contracts. Except as otherwise provided in this Code of Regulations, the Board 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 behalf of the Cooperative, and such authority may be general or confined to specific instances.

Section 2. Checks, Drafts, Etc. All checks, drafts and other orders for payment of money, and all notes, bonds or other evidences of indebtedness issued in the names of the Cooperative shall be signed by such officer or officers, agent or agents, employee or employees of the Cooperative and in such manner as shall from time to time be determined by resolution of the Board.

Section 3. Deposits. All funds except working 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 shall end on the thirty-first day of December of the same year.

ARTICLE VIII

NONPROFIT OPERATION

Section 1. Interest or Dividends on Capital Prohibited. The Cooperative shall at all times be operated on a Cooperative nonprofit basis for the mutual benefit of its patrons. No interest or dividends shall be paid or payable by the Cooperative on any capital furnished by its patrons.

Section 2. Patronage Capital in Connection with Furnishing Electric Energy. In the furnishing of electric energy, the Cooperative’s operations shall be so conducted that all patrons will, through their patronage, furnish capital for the Cooperative. In order to induce patronage and to assure that the Cooperative will operate on a non-profit basis, the Cooperative is obligated to account on a patronage basis to all its patrons for all amounts received and receivable from the furnishing of electric energy in excess of operating costs and expenses properly chargeable against the furnishing of electric energy. All such amounts in excess of operating costs and expenses at the moment of receipt by the Cooperative are received with the understanding that they are furnished by the patrons as capital. The Cooperative is obligated to pay by credits to a capital account for each patron all such amounts in excess of operating costs and expenses, unless otherwise agreed upon in writing or by contract. The books and records of the Cooperative shall be set up and kept in such a manner that at the end of each fiscal year the amount of capital, if any, so furnished by each patron is clearly reflected and credited in an appropriate record to the capital account of each patron, and the Cooperative shall within a reasonable time after the close of the fiscal year notify each patron of the amount of capital so credited to his/her account. All such amounts credited to the capital account of any patron shall have the same status as though they had been paid to the patron in cash in pursuance of a legal obligation to do so and the patron had then furnished the Cooperative corresponding amounts for capital.

All other amounts received by the Cooperative from its operations in excess of costs and expenses shall, insofar as permitted by law, be (a) used to offset any losses incurred during the current or any prior fiscal year and (b) to the extent not needed for that purpose, allocated to its patrons on a patronage basis and any amount so allocated shall be included as part of the capital credited to the accounts of patrons, as herein provided.

In the event of dissolution or liquidation of the Cooperative, after all outstanding indebtedness of the Cooperative shall have been paid, outstanding capital credits shall be retired without priority on a pro rata basis before any payments are made on account of property rights of members. If, at any time prior to dissolution or liquidation, the Board shall determine that the financial condition of the Cooperative will not be impaired thereby, the capital credited to patrons’ accounts may be retired in full or in part. The Board of Trustees shall determine the method, the basis, the priority, the assignment of patronage, if any, and the order of retirement, if any, for all amounts furnished as capital.

Notwithstanding any other provision of the Code of Regulations, the Board at its discretion, shall have the power at any time upon the death of any patron, who was a natural person, if the legal representatives of his/her estate shall request in writing that the capital credited to any such patron be retired prior to the time such capital would otherwise be retired under the provisions of this Code of Regulations, to retire capital credited to such patron immediately upon such terms and conditions as the Board, acting under policies of general applications, and the legal representatives of such patron’s estate shall agree upon; provided, however, that the financial conditions of the Cooperative will not be impaired thereby; provided further, however, that, if acting under policies of general application the aggregate amounts so retired in any one year as determined in the discretion of the Board are not sufficient to retire the capital credited to any such patron or patrons, such patron or patrons shall have the capital credited to them retired in the next succeeding year before any other retirements are made in such succeeding year.

It is the responsibility of every past or present patron or his/her legal representative or heirs to keep the Cooperative advised of his/her current address, and in the event any capital credited becomes retireable and the Cooperative cannot within six months of such date locate the person entitled to payment of such capital, any obligation to retire such capital shall be considered discharged and all claim against the Cooperative by reason of it shall be forfeited. If any person to whom such capital becomes payable is at the time for payment indebted to the Cooperative, the amount available to retire such capital shall be used to discharge such indebtedness to the Cooperative and no statute of limitations shall be a bar to this procedure.

The patrons of the Cooperative, by dealing with the Cooperative, acknowledge that the terms and provisions of the Articles of Incorporation and Code of Regulations shall constitute and be a contract between the Cooperative and each patron, and both the Cooperative and the patrons are bound by such contract, as fully as though each patron had individually signed a separate instrument containing such terms and provisions. The provisions of this article of the Code of Regulations shall be called to the attention of each patron of the Cooperative by posting in a conspicuous place in the Cooperative’s office.

Notwithstanding any other provision of this Code of Regulations or other provisions of the membership certificate, if any patron or former patron fails to claim any cash retirement of capital credits or other payment from the Cooperative within four years after payment of the same has been made available to him/ her by notice or check mailed to him/her, at his/her address, furnished by him/her to the Cooperative, such failure shall be and constitutes an irrevocable assignment and gift by such patron of such capital credit or other payment to the Cooperative. Failure to claim any such payment within the meaning of this section shall include the failure by such patron or former patron to cash any check mailed to him/her by the Cooperative at the last address furnished by him/her to the Cooperative. The assignment and gift provided for under this section shall become effective only upon the expiration of four (4) years from the date when such payment was made available to such patron or former patron without claim therefore and only after the further expiration of sixty days (60) days following the giving notice by mail and publication that unless such payment is claimed within said (60) day period such gift to the Cooperative shall become effective. The notice by mail herein provided for shall be mailed by the Cooperative to such patron or former patron at the last known address and the notice by publication shall be two (2) consecutive insertions in a newspaper circulated in the service area by the Cooperative, which may be the Cooperative newsletter. The sixty (60) day period following the giving of such notice shall be deemed to terminate sixty (60) days after the mailing of such notice or sixty (60) days following the last date of publication thereof, whichever is later.

ARTICLE IX

DISPOSITION OF PROPERTY

The Cooperative shall not sell, mortgage, lease or otherwise dispose of or encumber all or any substantial portion of its property or merge or consolidate with any other corporation unless such sale, mortgage, lease, other disposition, encumbrance, merger or consolidation is authorized at a meeting of the members thereof by the affirmative vote of not less than a majority of all the members of the Cooperative, (proxy voting will not be allowed for the disposition of property), and unless the notice of such proposed sale, mortgage, lease, other disposition, encumbrance, merger or consolidation shall have been contained in the notice of the meeting; provided, however, that notwithstanding any other provision of this Article, the Board of the Cooperative, without authorization by the members thereof, shall have full power and authority to authorize the execution and delivery of mortgage, deeds of trust, security agreements and financing statements or otherwise pledging, encumbering, subjecting to a lien or security interest, any or all of the property, assets, rights, privileges, licenses, franchises and permits of the Cooperative, whether acquired or to be acquired, and wherever situated, as well as the revenues and income therefrom, all upon such terms and conditions as the Board shall determine, to secure any indebtedness of the Cooperative to the United States of America or any instrumentality or agency thereof or to any other bona fide lender, lending institution or investor; provided, further, however, that notwithstanding any other provision of this Article, the Board may upon the authorization of a majority of those members of the Cooperative present at a meeting of the members, thereof, sell, lease, or otherwise dispose of all or a substantial portion of its property to, or merge or consolidate with, another nonprofit corporation which is or has been a member of Ohio Rural Electric Cooperatives, Inc.

Notwithstanding the foregoing provisions of this Article, nothing contained herein shall be deemed or construed to prohibit an exchange of electric plant facilities for electric plant facilities of another electric company when in the judgement of the Board such facilities are of approximately equal value, but in no event shall the value of the Cooperative’s facilities so exchanged within any 12 month period exceed 10% of the total electric plant of the Cooperative.

ARTICLE X

SEAL

The corporate seal of the Cooperative shall have inscribed thereon the name of the Cooperative and the words “Corporate Seal, Ohio,” but failure to affix such seal shall not affect the validity of any instrument duly executed on behalf of the Cooperative by its authorized officers.

ARTICLE XI

MISCELLANEOUS

Section 1. Waiver of Notice. Any member or Board member may waive in writing any notice of a meeting required to be given by this Code of Regulations. The attendance of a member or Board member at any meeting shall constitute a waiver of notice of such meeting by such member or Board member, except in case a member or Board member shall attend a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting has not been lawfully called or convened.

Section 2. Policies, Rules and Regulations. The Board shall have power to make and adopt such policies, rules and regulations, not inconsistent with law, the Articles of Incorporation or this Code of Regulations, as it may deem advisable for the management, administration and regulation of the business and affairs of the Cooperative.

ARTICLE XII

INDEMNIFICATION OF BOARD MEMBERS AND OFFICERS

Section 1. Each board member and officer now or hereafter serving the Cooperative, and each person who at the request of or on behalf of the Cooperative is now serving or hereafter serves as a trustee, director or officer of any other corporation, and the respective heirs, executors, and administrators of each of them, shall be indemnified by the Cooperative against all costs, expenses, judgements, decrees, fines, penalties and liabilities, including attorneys’ fees, actually and necessarily incurred by or imposed upon him/her in connection with or resulting from any action, suit or proceeding, civil or criminal, in which he/ she is or may be made a party by reason of his/her being or having been such Board Member, trustee, director or officer, or by reason of any action alleged to have been taken or omitted by him/her as such Board member, trustee, director or officer whether or not he/she is a Board member, trustee, director or officer at the time of incurring such costs, expenses, judgments, decrees, fines, penalties and liabilities; provided, however, that the indemnification provided for in this Section 1 shall be make only if such Board member, trustee, director or officer:

(a) is adjudicated or determined not to have been negligent or guilty of misconduct in the performance of his/her duties to the Cooperative or the corporation of which he/she is or was a trustee, director or officer;

(b) is determined to have acted in good faith in what he/she reasonably believed to be the best interest of such corporation, and

(c) in any matter the subject of a criminal action, suit or proceeding, is determined to have had no reasonable cause to believe that his/her conduct was unlawful.

The determination as to (b) and (c), and in the absence of an adjudication as to (a) by a court of competent jurisdiction, the determination as to (a), shall be made by the Board acting at a meeting at which a quorum is present consisting of the Board members who are not parties to or threatened with any such action, suit, or proceeding as that giving rise to the matter. Any Board member who is a party to or threatened with any such action, suit, or proceeding shall not be qualified to vote and, if for this reason a quorum of the Board cannot be obtained to vote on such indemnification, no indemnification shall be made unless a determination is made as to (a), (b) and © above by the Executive Committee of Ohio Rural Electric Cooperatives, Inc. acting at a meeting thereof at which a quorum consisting of the members of said committee who are not trustees, directors or officers of the indemnifying corporation are present. Any member of said Executive Committee who is a trustee, director or officer of the indemnifying corporation shall no be qualified to vote and, if for this reason a quorum of members of the Executive Committee of said Executive Committee cannot be obtained to vote on such indemnification the matter shall be submitted to an arbitrator appointed pursuant to the rules of the American Arbitration Association for determination, and said arbitration shall be conducted in accordance with the rules of said Association. Such indemnification shall be made with respect to adjudication other than on the merits and shall extend to settlements and compromises.

Section 2. The right of indemnification provided for by Section 1 of this Article XII shall not be exclusive of any other rights to which a Board member, trustee, director or officer may be entitled under any law, agreement, vote of shareholders, vote of members, any insurance purchased by the Cooperative, or otherwise.

ARTICLE XIII

REMOVAL OF OFFICERS AND TRUSTEES

The members of the Cooperative shall have the power at any annual meeting or special meeting of the members called for that purpose in the manner hereinabove provided to remove any trustee or officer for cause and to fill the vacancy caused by such removal. The trustee or officer so elected shall hold office until the next annual meeting of the members and until his/her successor shall have been elected and shall have accepted office.

ARTICLE XIV

AMENDMENTS

This Code of Regulations may be altered, amended or repealed at any regular or special meeting of the members at which a quorum is present by the affirmative vote of a majority of the members voting, provided notice of the proposed alteration, amendment or repeal shall have been given, and also provided that no article, section, or subsection of this Code of Regulations shall be altered, amended, repealed by an affirmative vote which is less in number or different in character than the affirmative vote required for action under said article, section, or subsection.