Section 1. COOPERATIVE.

“Cooperative” shall mean Mid-Rivers Telephone Cooperative, Inc., and any entities wholly-owned by Mid-Rivers Telephone Cooperative, Inc., and operated on a cooperative basis.

Section 2. MEMBER.

“Member” or “member” shall mean any person, as defined in MCA, §35-18-102(5) as that statute presently exists or hereinafter may be amended, who has agreed to purchase Retail Telecommunication Services (as defined below) from the Cooperative and accepted for membership by the Board in accordance with these Bylaws.

Section 3. PATRON.

“Patron” or “patron” shall mean any person who purchases Retail Telecommunication Services (as defined below) from the Cooperative, whether or not a Member.

Section 4. RETAIL TELECOMMUNICATION SERVICES.

“Retail Telecommunication Services” shall collectively mean all retail telecommunication services provided by the Cooperative to its Members on a cooperative basis, including, but not limited to, telephone (wired and wireless), cellular, internet, or television or video related services. To the maximum extent allowed by law, the Board shall have the discretion to expand the types of Retail Telecommunication Services provided to members and patrons on a cooperative basis and to allocate and redeem capital credits generated by such services in accordance with these Bylaws.

Section 1. PRINCIPAL OFFICE.

The principal office of the Cooperative shall be in Circle, McCone County, State of Montana.

Section 2. OTHER OFFICES.

The Cooperative may also have an office or offices at such other places as the Board of Trustees may from time to time designate and the business of the Cooperative may require.

Section 1. REQUIREMENTS FOR MEMBERSHIP.

Any person may become a member of Mid-Rivers Telephone Cooperative, Inc., provided that person has first:

(a) Agreed to purchase one or more Retail Telecommunications Services from the Cooperative in accordance with established tariffs and as hereinafter specified.

(b) Agreed to provide right-of-way when needed at no cost, provided that reasonable compensation shall be paid by the Cooperative for any surface damage arising from use of the right-of-way.

(c) Agreed to comply with and be bound by the Articles of Incorporation and Bylaws of the Cooperative and any rules and regulations adopted by the Board.

(d) Agreed to pay the service charges as presented and hereinafter specified on uniform terms and conditions established by the Board; and provided further however, that no person shall become a member unless and until that person has been accepted for membership by the Board.

Purchasers of telecommunication equipment or purchasers of the Cooperative’s services at wholesale, or otherwise for resale, shall not be eligible for membership with respect to such wholesale services.

Section 2. JOINT MEMBERSHIP.

A husband and wife may apply for a joint membership, and subject to this compliance with the requirements of Section 1 of this Article, may be accepted for such membership. The term “member” as used in these bylaws shall be deemed to include a husband and wife holding a joint membership and any provision 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 action by or in respect of the holders of a joint membership shall be as follows:

(a) The presence at a meeting of either or both shall be regarded as the presence of one member, and shall constitute a joint waiver of notice of the meeting;

(b) The vote of either separately or jointly shall constitute a joint waiver;

(c) A waiver of notice signed by either or both shall constitute a joint waiver;

(d) Notice to either shall constitute notice to both;

(e) Expulsion of either shall terminate the joint membership;

(f) Withdrawal of either shall terminate the joint membership;

(g) Either but not both may be elected or appointed as an officer or trustee, provided that both meet the qualifications for such office.

Section 3. CONVERSION OF MEMBERSHIP.

A membership may be converted to a joint membership upon the written request of the holder thereof and the agreement by such holder and his or her spouse to comply with the Articles of Incorporation, bylaws and any rules and regulations adopted by the Board.

Upon the death of either spouse who is a party to the joint membership, such membership shall be held solely by the survivor, provided, however, that the estate of the deceased shall not be released from any debts due the Cooperative.

Section 4. PURCHASE OF RETAIL TELECOMMUNICATION SERVICES.

Each member shall, as soon as one or more Retail Telecommunication Services are available, take one or more Retail Telecommunication Services from the Cooperative to be used on the premises specified in his application for membership and shall pay, therefore monthly at rates which shall from time to time be fixed by the Board, provided, however, that the Board may limit the Retail Telecommunication Services which the Cooperative shall be required to furnish to any one member.

It is expressly understood that amounts paid for Retail Telecommunications Services in excess of the cost of Retail Telecommunication Services are furnished by members as capital and each member shall be credited with the capital so furnished as provided in these bylaws. Each member shall pay to the Cooperative such minimum amount per month for Retail Telecommunication Services as shall be fixed by the Board from time to time. Each member shall also pay all amounts owed by him to the Cooperative as and when the same shall become due and payable.

Section 5. TERMINATION OF MEMBERSHIP.

Any member may voluntarily withdraw from membership upon payment in full of all debts and obligations due the Cooperative 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 trustees, expel any member who fails to comply with any of the provisions of the Articles of Incorporation, bylaws, or any rules and regulations adopted by the Board, but only if such member shall have been given written notice by the Secretary that such failure makes him 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. The membership of a member who has not permitted the installation of Retail Telecommunication Services within thirty (30) days after he has been notified service is available to him, or of a member who has ceased to purchase Retail Telecommunication Services from the Cooperative, shall be cancelled by resolution of the Board.

Upon the withdrawal, death, cessation of existence or expulsion of a member the membership of such member shall thereupon terminate. Termination of membership in any manner shall not release a member or his estate from any debts due the Cooperative. Prior to the repayment of equity capital, the Cooperative shall deduct the amount of any debts owing from the member to the Cooperative.

Section 1. PROPERTY INTEREST OF MEMBERS.

Upon dissolution, after:

(a) All debts and liabilities of the Cooperative shall have been paid, or an adequate provision made therefore, and

(b) All capital furnished through patronage shall have been retired as provided in these bylaws, the remaining property and assets of the Cooperative shall be distributed among the members in proportion to the aggregate patronage of each such member during the seven years next preceding the date of the filing of the certification 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.

Section 1. ANNUAL MEETING.

The annual meeting of the members shall be held on a day in May or June to be determined by the Board of Trustees at such place to be determined by the Board of Trustees, located in a county which is served in whole or in part by the Cooperative and which is included in whole or in part in a district from which a trustee is to be elected at the annual meeting. The time/and place of the annual meeting shall be designated in the notice of the meeting for the purpose of electing trustees, passing upon the report of the previous fiscal year and transacting such other business as may come before the meeting. It shall be the responsibility of the Board to make adequate plans and preparations for the annual meeting. Failure to hold the annual meeting at the designated time or place shall not work a forfeiture or dissolution of the Cooperative.

Section 2. SPECIAL MEETINGS.

Special meetings of the members may be called by resolution of the board, or upon a written request signed by any three board members, by the President, or by ten per centum of all members. Upon receipt of such a call, the Secretary shall cause notice of such meeting to be given as hereinafter provided. Special meetings of the members shall be held at the location provided for the annual meeting for the year in which such special meeting is to be held and shall be specified in the notice of the special meeting. When a special meeting is called by written request of the members only those signatures affixed not more than thirty (30) days prior to submission of the request to the Secretary shall count toward validation of the call.

Section 3. NOTICE OF MEMBERS’ MEETINGS.

Written notice stating the place, day and hour of the meeting and in case of a special meeting or an annual meeting at which business requiring special notice is to be transacted, the purpose or purposes for which the meeting is called, shall be delivered not less than ten days or more than twenty days before the date of the meeting, either personally, by mail, or by another method by or at the direction of the Secretary, or upon a 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 Cooperative 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 meeting.

Section 4. QUORUM.

At least 50 members of the total number of members must be present in person to constitute a quorum for the transaction of business at all meetings of the members. If less than a quorum is present at any meeting, a majority of those present in person may adjourn the meeting from time to time without further notice. The minutes of each meeting shall contain a list of the members present in person.

Section 5. VOTING.

Each member shall be entitled to only one vote upon each matter submitted to a vote at a meeting of the members. All questions shall be decided by a vote of a majority of the members voting thereon in person, except as otherwise provided by law, the articles of incorporation or these bylaws.

Section 6. VOTING LIST.

The Secretary of the Cooperative shall make, at least fifteen (15) days before each meeting of the members, a complete list, arranged in alphabetical order, of the members entitles to vote at such meeting and their addresses. Such list shall be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any member during the whole time of the meeting.

Section 7. VOTING BY MAIL.

Any member who is absent from any annual or special meeting of the members may vote by mail, upon all corporate matters except such matters as require the presence of the members at the meeting, as determined by the board in their sole discretion. Proposed corporate action capable of being voted on by mail shall be designated as such in the notice of meeting of members. The ballot shall be in the form prescribed by the board; shall contain the exact text of the proposed action, motion, resolution or amendment to be acted upon at such meeting; and shall contain spaces following the text of the proposed corporate action in which such member may indicate his affirmative or negative vote therein. Duly validated ballots, which are received by the Cooperative prior to the day of the meeting at which the proposed corporate action is to be considered, shall be accepted and counted as the vote of the absent member at such meeting. The failure of any such absent member to receive a copy of any such motion or resolution or ballot shall not invalidate any action which may be taken by the members at any such meeting.

Section 8. ORDER OF BUSINESS.

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: Except as otherwise determined by the members at such meeting.

1. Report on the number of members present in order to determine the existence of a quorum.

2. Reading of the notice of the meeting and proof of the due publication of mailing or delivery by another method thereof, or the waiver or waivers of notice of the meeting, as the case may be.

3. Reading of unapproved minutes of previous meetings of the meetings of the members and the taking of necessary action thereon.

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

5. Election of Trustees.

6. Unfinished Business.

7. New Business.

8. Adjournment.

Section 1. GENERAL POWERS.

The business and affairs of the Cooperative shall be managed by a board of trustees which shall exercise all of the powers of the Cooperative, except such as are by law, the Articles of Incorporation or these bylaws conferred upon or reserved to the members.

The territory to be served by the Cooperative shall be divided into five or more districts, which shall be designated by the Board. Each district shall contain as nearly as practicable the same number of members, taking into account relevant factors of practicability, including without limitation telephone exchange boundaries, geographic consideration, community of interest, municipal boundaries and the existence of at-large voting for election of the trustees. Each district shall be represented by one or more trustees, provided that the Board shall consist of not less than 6 nor more than 10 trustees, and provided that each district shall be represented by an equal number of trustees.

Not less than 90 days before any meeting of the members at which trustees are to be elected, the Board shall review the composition of the districts and, if it should be found that inequalities of representation have developed which can be corrected by a redelineation of the districts, the Board shall reconstitute the districts so each shall contain as nearly as practicable the same number of members. The Board shall further, in the event of the expansion of the Cooperative boundaries, have the power to add such territory onto any existing district or districts or establish a new district.

Section 2. ELECTION AND TENURE OF OFFICE.

Trustees shall be elected in each district by secret ballot who shall compose the board and hold office until their successors shall have been elected and qualified as in these bylaws provided. Whenever applicable, in order to obtain alternate year terms, the trustees of the Cooperative shall be divided into two or three classes, each class to be as nearly equal in number as possible with the term of office of the first class to expire at the first annual meeting of members after their election, the term of the second class to expire at the second annual meeting after their election and the term of the third class, if any, to expire at the third annual meeting after their election. At each annual meeting after such classification, the number of trustees equal to the number of the class whose term expires at the time of such meeting shall be elected to hold office until the second succeeding annual meeting if there be two classes or until the third succeeding annual meeting if there be three classes or until their successors shall have been elected and qualified.

Section 3. QUALIFICATIONS.

No person shall be eligible to become or remain a trustee or to hold any position of trust in the Cooperative who:

(a) Is not a bona fide resident and member in the area served by the Cooperative or the district which he is to represent.

(b) Is in any way employed by or financially interested in a competing enterprise or a business engaged in selling Retail Telecommunication Services or supplies, or constructing or maintaining telephone facilities, other than a business operating on a cooperative nonprofit basis for the purpose of furthering rural telecommunication service.

Upon establishment of the fact that a trustee is holding office in violation of any of the foregoing provisions, the Board shall remove such trustee from office.

Nothing contained in this section shall affect in any manner whatsoever the validity of any action taken at any meeting of the Board.

Section 4. NOMINATION AND ELECTION OF TRUSTEES.

It shall be the duty of the Trustees to provide notice to members that the Cooperative is seeking candidates to be Trustees in the Districts scheduled to elect a Trustee at the annual meeting. Such notice shall be given through media of general circulation serving the Districts concerned, first posted no later than 90 days before the annual meeting. All interested candidates, including incumbent Trustees seeking re-election, must be nominated by petition. Any 5 or more members from the District for which the nomination is made, acting together may make nominations by petition, and the secretary shall post such nominations at the principal office of the Cooperative at least 60 days before the meeting. The secretary shall be responsible for delivering with the notice of the meeting, a statement of the number of Board members to be elected, and the names and addresses of the candidates nominated by petition.

Election of Trustees in a contested election shall be by written ballot. The ballots shall list, by district, the names of the candidates. Any member desiring to vote for a candidate nominated shall make any mark before each candidate voted for. In the event only one (1) candidate has been nominated for a Trustee position, the provision for election by ballot may be suspended by a majority of members voting at such meeting and the candidate shall be elected by acclamation of the members present.

Each eligible member of the Cooperative present in person at the meeting shall be entitled to vote for one candidate from each district from which a trustee is to be elected in a contested election. The candidate from each district from which a trustee is to be elected receiving the highest number of votes at such meeting shall be declared elected as a trustee. “Eligible member” for these purposes shall mean any member in good standing and registered may cast his ballot at the time the Chairman declares the close of nominations. In the event that three or more candidates are nominated in any district, there shall be a runoff election and the two candidates receiving the greater number of votes shall be separately voted upon except if one candidate has more than 50% of the votes cast on the first ballot.

Section 5. REMOVAL OF TRUSTEES BY MEMBERS.

Any member may bring charges against a trustee and, by filing with the Secretary such charges in writing together with a petition signed by at least ten per centum of the members, may request the removal of such trustee by reason thereof. Such trustee shall be informed in writing of the charges at least ten days prior to the meeting of the members 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 in respect of the charges. The person or persons bringing the charges shall have the same opportunity. The question of the removal of such trustee shall be considered and voted upon at the meeting of the members. No trustee shall be removed from office unless by a vote of two-thirds of the members present at such meeting. Any vacancy created by such removal may be filled by vote of the members at such meeting. The successor must reside in the same district as the trustee in respect to whom the vacancy occurs.

Section 6. VACANCIES.

Subject to the provisions of these bylaws for filling vacancies caused by removal of trustees by the members, a vacancy occurring in the board shall be filled by the affirmative vote of a majority of the remaining trustees for the unexpired portion of the term. If the vacancy is not filled by the Board within sixty (60) days after the vacancy occurs, the members shall have the right to fill such vacancy at a meeting of the members. The successor must reside in the same district as the trustee in respect to whom the vacancy occurs.

Section 7. COMPENSATION.

Trustees shall not receive any salary for their services as trustees, except that by resolution of the Board a reasonable fixed sum per diem and expenses of attendance, if any, may be allowed for attendance at each meeting of the Board and for attendance at state, area, regional, national and other meetings on behalf of the Cooperative where attendance is authorized by the Board. No trustee shall receive compensation for serving the Cooperative in any other capacity, nor shall any close relative of a trustee receive compensation for serving the Cooperative, unless the payment and amount of compensation shall be specifically authorized by a vote of the members or the service of such trustee or close relative shall have been certified by the Board as an emergency measure. Close relatives shall be deemed to include, but not necessarily limited to spouse, parent, children, brothers and sisters.

Section 8. TRUSTEE INDEMNIFICATION.

The Cooperative shall indemnify each trustee and officer of the Cooperative (including former trustees and officers) against any claim, demand, action, suit or proceeding (excluding those arising from such person’s criminal act, willful misconduct, or improper personal benefit) made because of such person’s office in the Cooperative or made because such person is serving or has served as a director, trustee or officer of another organization at the specific direction of the Board of Trustees of the Cooperative (but only to the extent that such person is not indemnified by the organization or insurance), against expenses (including reasonable attorney’s fees), Judgements, penalties, and amounts paid in settlement actually and reasonably incurred by such person in connection with such claims, demand, action, suit or proceeding. This indemnification shall inure to the benefit of the heirs and personal representatives of such person and shall include matters occurring prior to adoption of this provision. The Cooperative may maintain insurance to provide this indemnity or may maintain insurance coverage beyond the terms of this indemnity. Any question about whether a specific circumstance is excluded from this indemnity shall be resolved by the Board of Trustees.

Section 1. REGULAR MEETINGS.

A regular meeting of the Board shall be held without notice, immediately after, and at the same place as, the annual meeting of the members. A regular meeting of the Board shall be held monthly at such time and place within any town in one of the counties served or to be served at least in part by the Cooperative, or by other communication as is designated by the Board through which all participants in the meeting have the opportunity to read or hear the proceedings substantially concurrently with their occurrence, vote on matters submitted to the trustees, pose questions, and make comments. Such regular monthly meeting may be held without notice other than resolution fixing the time and place thereof.

Section 2. SPECIAL MEETINGS.

Special meetings of the Board may be called by the President or by any three trustees, and it shall thereupon be the duty of the Secretary to cause notice of such meeting to be given a hereinafter provided. The President or the trustee calling the meeting shall fix the time and place for the holding of the meeting.

Section 3. NOTICE OF TRUSTEES MEETING.

Written notice of the time, place and purpose of any special meeting of the Board shall be delivered to each trustee not less than seven days previous thereto either personally, by mail, or by another method by or at the direction of the Secretary, or upon a default in duty by the Secretary, by the President or the trustee calling the meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the trustee at his address as it appears on the records of the Cooperative, with postage thereon prepaid.

Section 4. QUORUM.

A majority of the Board shall constitute a quorum. If less than such majority of the Board is present at a meeting, a majority of the Board present may adjourn the meeting from time to time. The Secretary shall notify any absent board member 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 these bylaws.

Section 1. NUMBER.

The officers of the Cooperative shall be a President, Vice-President, Secretary and Treasurer. The office of Secretary and Treasurer may be held by the same person.

Section 2. ELECTION AND TERM OF OFFICE.

The officers of the Cooperative shall be elected by ballot, annually by and from the Board during 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 reasonably can 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 successor shall have been elected and shall have qualified. A vacancy in any office shall be filed by the Board for the unexpired portion of the term.

Section 3. REMOVAL OF OFFICERS AND AGENTS BY TRUSTEES AND MEMBERS.

Any officer or agent elected or appointed by the Board may be removed by the Board whenever, in its judgement, the best interests of the Cooperative will be served thereby. Any member of the Cooperative may bring charges against an officer, and by filing with the Secretary such charges in writing together with a petition signed by ten percent of the members may request the removal of such officer. The officer against whom such charges have been brought shall be informed in writing of the charges at least ten days prior to the members 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 relevant to the charges. The person or persons bringing the charges against the officer shall have the same opportunity. The question of the removal of such officer shall be considered and voted upon at the meeting of the members. A vote of two-thirds of the members present at the meeting shall be required for removal.

Section 4. 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) sign any deed, mortgage, deeds of trust, notes, bonds, contracts or other instruments authorized by the Board to be executed, except in cases in which the signing and execution thereof shall be expressly delegated by the Board or by these bylaws to some other officer or agent of the Cooperative, or shall be required by law to be otherwise signed or executed; and

(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 5. 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 powers of and be subject to all restrictions upon the President. The Vice-President shall also perform such other duties as from time to time be assigned to him by the Board.

Section 6. SECRETARY.

The Secretary shall:

(a) keep the minutes of the meetings of the members and of the Board in one or more books provided for that purpose;

(b) see that all notices are duly given in accordance with these bylaws or as required by law;

(c) be custodian of the corporate records and of the seal of the Cooperative and affix the seal of the Cooperative 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 these bylaws;

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

(e) have general charge of the books of the Cooperative;

(f) keep on file at all times a complete copy of the Articles of Incorporation and bylaws 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, forward a copy of the bylaws and of all amendments thereto to each member; and

(g) in general, perform all duties incident to the office of Secretary and such other duties as of from time to time may be assigned to him by the Board.

Section 7. TREASURER.

The Treasurer shall:

(a) have charge and custody of all and be responsible for all funds and securities of the Cooperative;

(b) be responsible for the receipt of and the issuance of receipts for all money 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 these bylaws; and

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

Section 8. MANAGER.

The Board may appoint a manager who may be, but who shall not be required to be, a member of the Cooperative. The manager shall perform such duties and shall exercise such authority as the Board may from time to time vest in him.

Section 9. 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 give bond 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 give bond in such amount and with such surety as it shall determine.

Section 10. COMPENSATION.

The powers, duties and compensation of officers, agents and employees shall be fixed by the Board, subject to the provisions of these bylaws with respect to compensation for trustees and close relatives of trustees.

Section 11. REPORTS.

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

Section 1. INTEREST OR DIVIDENDS ON CAPITAL PROHIBITED.

The Cooperative shall at all times be operated on a cooperative nonprofit basis for the mutual benefits of 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 RETAIL TELECOMMUNICATION SERVICES AND PATRONAGE-RELATED EVENTS OF UNUSUAL OR EXTRAORDINARY INCOME OR LOSS.

In the furnishing of Retail Telecommunications Services the Cooperative’s operation shall be so conducted that all patrons will through their patronage furnish capital for the Cooperative. In order to induce patronage and assure that the Cooperative is obligated to account on a patronage basis to all its patrons for all amounts received and receivable from the furnishing of Retail Telecommunication Services in excess of operating costs and expenses properly chargeable against the furnishing of Retail Telecommunication Services; provided, however, that no patronage shall be due with respect to the purchase of telecommunication equipment or the purchase of services at wholesale, or otherwise for resale. 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. 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 account. All such amounts credited to the capital account of any patron shall have the same status as though they have been paid to the patron in cash in pursuance of legal obligation to do so and the patron had then furnished the Cooperative corresponding amounts for capital.

The Cooperative is further obligated to account on a patronage basis to its patrons for all net income, gain (or loss) arising from patronage-sourced business conducted by the Cooperative with or for its patrons, or activities and transactions that are related to the Cooperative’s business or actually facilitates the Cooperative’s purpose. Upon the occurrence of an event of unusual or extraordinary income or loss (examples include, but are not limited to, the sale of a major asset at a significant gain or loss, or the resolution of a lawsuit with significant receipt or payment of funds), the Board of Trustees shall equitably allocate material gains or losses to patrons, that in the judgment of the Board of Trustees should appropriately share in that income (or bear that loss).

Capital credited to the account of each person 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 a part of such patron’s premises served by the Cooperative unless the Board, acting under policies of general application, shall determine otherwise.

If, at any time prior to dissolution or liquidation, the Board of Trustees shall determine that the financial condition of the Cooperative will not be impaired thereby, the capital then credited to patrons accounts may be retired in full or in part. The Board shall determine the method, basis, priority, and order of any such retirements. Notwithstanding any other provisions of these Bylaws the Board at its discretion, shall have the power at any time upon the death of any patron, if the legal representatives of his 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, 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 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 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. PATRONAGE CAPITAL CREDIT ALLOCATIONS.

In the discretion of the Board of Trustees, the Cooperative may or may not separately classify, under policies of general application, certain cooperative functions of groups of Member or Patrons, or revenue categories, so as to more properly account for costs of service and patronage margins supplied by the Members or Patrons. In doing so, the allocation of expenses and patronage credits may be determined by the discretion of the Board of Trustees based upon a variety of relevant factors such as the cost of rendering service, the terms and conditions of certain types of service, the cost of allocation accounting, the terms of agreements with Members or Patrons, and the obligations of the parties involved. Patronage capital credits may accrue at a different rate for certain classifications of Members or Patrons or for different types of Retail Telecommunication Services.

Section 4. UNCLAIMED CAPITAL CREDITS.

Notwithstanding any other provision of the bylaws or other provisions of the Membership Certificate, if any member or former member fails to claim any cash retirement of capital credits or other payment from the Cooperative within five (5) years after payment of the same has been made available to him by notice at his last address furnished by him to the Cooperative, such failure shall be and constitutes an irrevocable assignment and gift by such member of such capital credits or other payment to the Cooperative for educational purposes. Failure to claim any such payment within the meaning of this section shall include the failure of such member or former member to cash any check mailed to him by the Cooperative at the last address furnished by him to the Cooperative. The assignment and gift provided for under this section shall become effective only upon the expiration of five (5) years from the date when such payment was made available to such member or former member without claim therefore, and only after the further expiration of sixty (60) days following the giving of a notice by mail and publication that unless such payment is claimed within said sixty (60) day period, such gift to the Cooperative shall become effective. The notice by mail herein provided shall be one mailed by the Cooperative to such member or former member at the last known address. If notice by publication is given, such publication shall be one insertion in a newspaper circulated in the service area of the Cooperative, which may be the Cooperative newsletter.

The Corporate seal of the Cooperative shall be in the form of a circle and shall have inscribed thereon the name of the Cooperative and the words “Corporate Seal, State of Montana”.

Section 1. CONTRACTS.

Except as otherwise provided in these bylaws, 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 the specific instances. All contractors shall be bonded in accordance with RUS if applicable.

Section 2. CHECKS, DRAFTS, ETC.

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 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 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. CHANGE IN RATES.

Written notice shall be given to the Administrator of RUS of the United States of America if applicable not less than ninety days prior to the date upon which any proposed change in the monthly rates charged by the Cooperative for telephone and communication service becomes effective.

Section 5. 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.

Section 1. MEMBERSHIP IN OTHER ORGANIZATIONS.

The Cooperative shall not become a member of or purchase stock in any other organization without an affirmative vote of the members at a duly held meeting, the notice of which shall specify that action is to be taken upon such proposed membership or stock purchases. The Cooperative may, however, upon the authorization of the Board, purchase stock in or become a member of any corporation or organization organized on a non-profit basis for the purpose of engaging in or furthering the cause of area wide rural telephone or other communication service: or, with the further approval of the Administrator of RUS if applicable, may purchase stock in or become a member of any other corporation or organization for the purpose of acquiring telephone or other communications facilities for assuring more adequate telephone or other communication service to its members. Nothing in the foregoing provision shall limit the power of the Board to cause the Cooperative to become a member of another Cooperative as an incidental requirement for the purchase from another Cooperative or organization of goods and services for use by the Cooperative in the conduct of its business.

Section 2. WAIVER OF NOTICE.

Any member or trustee may waive in writing any notice of a meeting required to be given by these bylaws. The attendance of a member or trustee at any meeting shall constitute a waiver of notice of such meeting by such member or trustee, except in case a member or trustee shall extend a meeting for the purpose of objecting to the transaction of any business on the ground that the meeting has not been lawfully called or convened.

Section 3. RULES AND REGULATIONS.

The Board shall have power to make and adopt such rules and regulations, not inconsistent with law, the Articles of Incorporation or these bylaws as it may deem advisable for the management of the business affairs of the Cooperative.

Section 4. ACCOUNTING SYSTEM AND REPORTS.

The Board shall cause to be established and maintained a complete accounting system which, among other things, and 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 RUS of the United States of America if applicable. The Board shall also after the close of each fiscal year cause to be made a full and complete audit of the accounts, books and financial conditions of the Cooperative as of the end of such fiscal year. Such audit reports shall be submitted to the members at the next following annual meeting.

Section 5. CONDUCT OF MEETINGS.

All meetings of the members and of the Board shall be conducted in accordance with Roberts Rules of Order.

These Bylaws maybe altered, amended, or repealed at any regular or special meeting of the members, provided that notice of such meeting shall have contained a copy of the proposed alteration, amendment or repeal. Such action shall require the affirmative vote of two-thirds of all members voting, whether in person or by mail.