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Article IV

Directors

Section 1: General Powers
The business and affairs of the Cooperative shall be managed by a board of nine directors which shall exercise all of the powers of the Cooperative except such as are by law, or by the Articles of Incorporation of the Cooperative, or by these bylaws conferred upon or reserved to the members.

Section 2: Election by Districts
For the purpose of electing directors, the territory served by the Cooperative is hereby divided into three separate districts designated as Districts 1, 2, and 3. District No. 1 shall include all territory lying west of a north and south line drawn through the center of Range 59; District No. 2 shall include all territory lying east of a north south line drawn through the center of Range 59, extending to and including all of Range 58 and 57; District No. 3 shall include all territory lying east of the easterly boundary line of Range 57. There shall be elected from each of the aforesaid districts three directors in the manner hereinafter set forth.

Section 3: Qualifcation and Tenure
No person shall be eligible to become or remain a director who is not a member of the Cooperative in good standing and whose principal place of residence is not located within the director district from which he or she has been nominated, elected or appointed. Further, no person shall be eligible to be nominated or elected or appointed to the office of director unless such person is a natural person who, in his or her name and capacity, shall have been a member of the Cooperative for not less than three years prior to the day of the election or appointment. Further, no member shall be eligible to become or remain a director or to hold any position of trust in the Cooperative who is in any way employed by, or financially interested in a competing enterprise, or a business selling electric energy or supplies to the Cooperative, or a business primarily engaged in selling electrical appliances, fixtures or supplies to the members of the Cooperative. When a membership is held jointly, so long as one of the joint members shall serve as a director, the other joint member or members shall be ineligible to be elected or appointed to the office of director. At each annual meeting following the year 1960, one director shall be elected by ballot from each district, by and from the members of the Cooperative, not voting by district, to serve for a term of three years or until his or her successor has been elected and has qualified. Each member shall have the right to cast one vote for each director to be elected at any annual meeting and the number of candidates to be elected from each district equal to the number of directors to be elected from each district who receive the highest number of votes shall be elected for the term hereinabove specified. The election of directors shall be done by written or printed ballot, except that election by voice vote by and from the members at the annual meeting shall be allowed to elect a director for any election district if, for that district, only one candidate has been nominated for election. Nothing contained in this section shall be construed to affect, in any manner whatsoever, the validity of any action taken at any meeting of the board of directors.

Section 4: Nomination of Directors
Nominations for the office of director shall be made by any fifteen or more members in writing over their signatures affixed to nominating petitions not earlier than sixty-five days prior to the meeting at which the election is to be held. Such nominating petitions shall be filed with the board of directors no later than forty-five days prior to the meeting at which the election is to be held.

Section 5: Vacancies
Subject to the provisions of these bylaws, with respect to the removal and replacement of directors by the members, a vacancy occurring in the board of directors shall be filled by a majority vote of the remaining directors, and the director thus elected shall serve for the unexpired portion of the term.

Section 6:Compensation
Directors and officers as such shall not receive any salary for their services, but by resolution of the board of directors, a fixed sum and expenses of attendance, if any, may be allowed for attendance at each meeting of the board of directors or for otherwise representing the Cooperative in his or her capacity as such director or officer upon the business of the Cooperative or in the pursuit of its objectives, and a director shall have the option of participating in the Cooperative’s group insurance plans upon such terms and conditions as the board shall specify. No board member shall receive compensation for serving the Cooperative in any other capacity, nor shall any close relative of a board member 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 by the board member or his or her close relative shall have been certified by the board as an emergency measure. Every director, officer or employee of the Cooperative shall be defended and indemnified by the Cooperative against all expenses and liabilities, including reasonable counsel fees, incurred by or imposed upon him or her in connection with any action, suit or proceeding, civil or criminal, to which he or she may be made a party, or in which he or she may become involved, by reason of being or having been a director, officer or employee of the Cooperative, or any settlement thereof, whether or not he or she is a director, officer or employee at the time such expenses are incurred, except in relation to matters as to which he or she is adjudged, in such action, suit or proceeding to be liable for negligence or misconduct in the performance of duty to the Cooperative. The foregoing right of indemnification shall be in addition to and not exclusive of all other rights to which such director, officer or employee may be entitled.

Section 7: Accounting System and Reports
The board of directors shall cause to be established and maintained a complete accounting system, which, among other things, subject to applicable laws and rules and regulations of any regulatory body, shall conform to such accounting system as may be designated by the Administrator of the Rural Electrification Administration of the United States of America. The board of directors, after the close of each fiscal year, shall cause to be made, by an independent certified public accounting firm, a full and complete audit of the accounts, books and financial condition of the Cooperative as of the end of such fiscal year.

Section 8: Removal of Directors
Any member may bring charges against a director by filing them in writing with the Secretary of the Cooperative, together with a petition signed by members equal in number to ten percent of the entire membership of the Cooperative or three hundred members, whichever is the lesser, which requests the removal of such board member by reason thereof. A director of the Cooperative may be removed only for cause, and cause, as defined in the context, means malfeasance, misfeasance or nonfeasance adversely affecting the corporate interests. Cause does not mean action taken or decisions made in the exercise of the office in matters of a discretionary nature, or good faith acts of a director exercising honest business judgment on behalf of the Cooperative. Each petition presented pursuant to this section shall contain a statement of the charges against the director and the request for such director’s removal, and the signatures of members of the Cooperative as of the date such petitions are filed with the Secretary, and each signature shall be affixed before a notary public who shall acknowledge the signing thereof. The Secretary shall, upon receipt of the charges and petition or petitions against a director, transmit them with all convenient haste, to an arbitrator chosen jointly by the member or members bringing the charges and the Secretary under the Commercial Arbitration Rules of the American Arbitration Association on the question of whether or not cause has been stated in the charges under the definition of cause which has been stated in this section, and on any other issue or matter concerning the recall request. In the event that the arbitrator determines that the charges set forth cause as herein defined, the removal shall be voted upon at the next regular meeting of the members or at any special meeting of the members convened prior to the date of the next regular meeting. Any vacancy created by such removal may be filled by the members at such meeting without compliance with the foregoing provisions with respect to nomination. In the event that the arbitrator determines that cause has not been stated, the question of removal shall not be presented to the membership, and all expenses of the arbitration shall be borne by the member or members submitting the request for removal. The director against whom such charges have been brought shall be informed in writing of the charges thirty days prior to the meeting and shall be given the opportunity to be heard at the meeting in person or by counsel or both, and to present evidence; and the member or members bringing the charges against him shall have the same opportunity.

Section 9: Limitation Liability
A director shall not be liable to the corporation or to its members for breach of fiduciary duty as a director, provided that such exemption from liability for breach of fiduciary duty shall not be construed to eliminate or limit the liability of a director to the corporation or to its members for monetary damages for:

1. a breach of the director’s duty of loyalty to the Cooperative or to its members; or,
2. an act or omission not in good faith or which involves intentional misconduct or a knowing violation of the law; or,
3. an act or omission of the director for which the statutes of the State of Colorado have specified as being an act which may give rise to the liability of a director; or,
4. a transaction from which the director derived an improper personal benefit; or,
5. an act or omission of a director occurring prior to March 19, 1988.

No person shall be liable to the Cooperative for any loss or damage suffered by it on account of any action taken or omitted to be taken by him or her as director, officer, agent, or employee of the Cooperative in good faith, if this person:

1. relied upon financial statements of the Cooperative represented to him or her to be correct by the President or other officer of the Cooperative having charge of its books of account, or stated in a written report by an independent public or certified public accountant or firm of accountants, fairly to reflect the financial condition of the Cooperative; or considered the assets to be of their book value; or,
2. relied upon the advice of legal counsel for the Cooperative.