ARTICLE VII
NON-PROFIT 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 Cooperative Services.
In the furnishing of Cooperative services, 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 nonprofit 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 Cooperative services in excess of operating costs and expenses properly chargeable against the furnishing of Cooperative services. 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 as related to the services received by the patron. 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 manner 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 account; provided that individual notices of such amounts furnished by each patron shall not be required if the Cooperative 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 Cooperative corresponding amount for capital. Any patron who discontinues Cooperative services before the end of the calendar year, donates that year’s allocated patronage to the Cooperative.
All other amounts received by the Cooperative from its operation in excess of the 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.
Upon dissolution or liquidation of the Cooperative, after all outstanding indebtedness of the Cooperative has 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, prior to dissolution or liquidation, the Board shall determine that the financial condition of the Cooperative will not be impaired, the capital then credited to patron’s accounts may be retired in full or in part. The method utilized to retire capital shall be determined by the Board of Trustees, provided however, that the financial condition of the Cooperative will not be impaired thereby.
Capital credited to the account of each patron shall be assignable only on the books of the Cooperative pursuant to written instructions from the assignor and only to successors in interest or successors in occupancy in all or in part of such patron’s premises served by the Cooperative unless the Board of Trustees, acting under policies of general application, shall determine otherwise.
Notwithstanding any other provisions of these bylaws, the Board of Trustees, at its discretion, shall have the power at any time upon the death of any patron who was a natural person and not a corporation, 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 these bylaws, to retire capital credited to any such patron immediately upon such terms and conditions as the Board of Trustees, acting under policies of general application, and the legal representatives of such patron’s estate shall agree upon; provided, however, that the financial condition of the Cooperative will not be impaired thereby.
The patrons of the Cooperative, by dealing with the Cooperative, acknowledge that the terms and provisions of the Articles of Incorporation and bylaws shall constitute and be a contract between the Cooperative and each patron, and both the Cooperative and 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 bylaws shall be called to the attention of each patron of the Cooperative by posting in a conspicuous place in the Cooperative’s office.
Section 3. Newspaper Subscriptions Sixty cents and such additional sum as the Board of Trustees shall determine, from time to time, shall represent the annual subscription price for the newspaper of the Cooperative and shall be retained by the Cooperative to offset the cost of publication from the amount of credits accruing to each patron each year.