Article VIII


I. Not inconsistently with the provisions of KRS 279.140 and subsection 2, the Corporation shall not sell, mortgage, lease or otherwise dispose of or encumber all or any substantial portion of its properties and assets unless such sale, mortgage, lease or other disposition or encumbrance is authorized by a majority of the then-total members of the Corporation, cast in person, at a duly held meeting of the members. No member shall be entitled to vote by proxy on any question submitted to the members under this Article. Notwithstanding anything herein contained, the Board, without authorization of the members thereof, shall have full power and authority to:

(a) Sell or otherwise dispose of:

1. Property which, in the judgment of the Board, neither is nor will be necessary or useful in maintaining the Corporation's system and facilities; provided, however, that all sales of such property shall not in any one (1) year exceed in value ten (10) per centum of the value of all of the property of the Corporation (value shall be defined as the total utility plant value);

2. Services of all kinds, including electric energy;

3. Personal property and merchandise acquired for resale; and

4. Properties and assets sold in the ordinary course of business.

(b) Authorize the execution and delivery of a mortgage or mortgages or a deed of trust upon, or the pledging or encumbering of, any or all of the properties, assets, rights, privileges, licenses, franchises and permits of the Corporation, 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 Corporation to the United States of America or any instrumentality or agency thereof or any other agency where mortgage arrangements can be accommodated and approved by the Rural Utilities Service (hereinafter "RUS"); provided further that the Board may upon the affirmative vote of a majority of members voting by mail ballot as set forth in Article III, Section 5, of these Bylaws, sell, lease or otherwise dispose of all or a substantial portion of its properties and assets to another Corporation or foreign corporation doing business in this state pursuant to the act under which this Corporation is incorporated.

II. Supplementary to the first sentence of the foregoing subsection (1) and any other applicable provisions of law or these Bylaws, no sale, mortgage, lease or other disposition of all or any substantial portion of the Corporation's properties and assets ("transactions") shall be authorized except in conformity with the following:

(a) If the Board looks with favor upon any proposal for any such transaction, it shall first appoint three (3) persons, each of whom is independent of the Corporation and of the other two (2) and is expert in electric utility property evaluations, and commission them separately to study, appraise and evaluate such assets and properties, including their going concern value and the values associated with the rights of the members to participate in the ownership and control of the Corporation. Such appraisers shall be instructed to, and shall take into account, any other factors they may deem relevant in determining the present market value of such assets and properties. Within not more than sixty (60) days after their appointment and commission, each appraiser shall render his highest determination of such present value. The Board shall not recommend and submit any proposal it shall have received for such a transaction, or make any offer of such a transaction for a consideration that is less than the highest such determination rendered by the appraisers; nor shall it, following the expiration of one (1) year thereafter, make such a recommendation or offer without, again, first complying with the foregoing appraisal requirements.

(b) If, after receiving such appraisals, the Board resolves to pursue the matter further, it shall, within sixty (60) days after adoption of such resolution, transmit the appraisals, together with any underlying data and information that may have accompanied them, to every other electric membership corporation and electric utility corporately sited and operating in Kentucky and invite it to submit competing or alternative proposals, including proposals to merge or consolidate with the Corporation. Such appraisals shall also be accompanied by any proposal for such a transaction received by the Corporation; PROVIDED, only the most recent proposal from an entity that has made two (2) or more proposals need be so transmitted. Such other electric membership corporations shall be given at least sixty (60) days within which to submit competing or alternative proposals, and they shall be notified in such transmittal of the actual final date for such submissions.

(c) If, after such date, the Board so resolves, it shall recommend and submit to the members: [1] a proposal for such a transaction, or [2] a proposal to merge or consolidate the Corporation with one (1) or more other electric membership corporations. The Board may recommend and submit two (2) or more such proposals in the alternative, in which case it shall specify its preference as to which shall be approved by the members -- that is, first choice, second choice, etc.—and the order in which such alternatives will be considered and acted upon at the meeting. The Board shall accompany its recommended proposal(s) with verbatim copies of all competing or alternative proposals it has received, together with all of the appraisals and any underlying data and information that may have accompanied such appraisals. The Board shall submit such recommendation and information to the members and shall at the same time call and give notice of a special meeting of the members thereon or, if it so determines, notify the members that the matter will be considered and acted upon at the ensuing annual member meeting, in either case, stating in detail each of any such proposals. The special or annual meeting shall be held not sooner than ninety (90) days after the giving of such notice thereof.

(d) Ten (10) per centum of the then-total membership of the Corporation may, over their respective signatures and within not less than forty-five (45) days prior to the date of such member meeting, petition the Corporation to mail to all of the Corporation's members any statement of opposition to the Board's recommendation and/or of their own recommendation that a competing or alternative proposal, which may be or include a proposition to merge or consolidate the Corporation with one (1) or more other electric membership corporations, be submitted to and acted upon by the members at such meeting, in which event, the Board shall cause a printed copy of the petition, including the printing of the names of the member signatories thereof, together with a printed copy of the statement, to be transmitted to all of the Corporation's members via the United States mail not less than twenty-five (25) days prior to such member meeting, with the cost of such printing and mailing to be borne by the Corporation. When so mailed, such petition and statement shall constitute sufficient notice of any such competing or alternative proposal for the same to be considered and acted upon at such meeting. The meeting shall first consider and act upon the recommendation(s) of the Board. If two (2) or more alternative such recommendations have been made by the Board, they shall be considered and acted upon in the order specified by the Board. If the members fail to approve any Board-recommended proposal, they shall then consider and act upon the competing, alternative proposal(s) which have, by petition, been submitted by the members in the order in which they were received, if two (2) or more such proposals have been submitted, or in the order of priority specified in a petition. The members may take such action on such proposal(s) as may be legally availing to them.

III. No offer of such a transaction, whether made to or by the Board, shall be valid or, if made and accepted, enforceable unless the total consideration to be paid or otherwise furnished therefor, to the extent that the same is in excess of the amounts necessary to discharge, or to provide for the discharge of, all of the Corporation's debts, obligations and liabilities, shall be distributed to or, if such be the case, allocated and assigned to the patrons or former patrons of the Corporation in the manner provided for in the Articles of Incorporation, Bylaws or applicable law.

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