KRS 272A.11-010: Member's dissociation.

(1) A person has the power to dissociate as a member at any time, rightfully or

wrongfully, by express will.

(2) Unless the organic rules otherwise provide, a member's dissociation from a limited

cooperative association is wrongful only if the dissociation:

(a) Breaches an express provision of the organic rules; or

(b) Occurs before the termination of the limited cooperative association and:

1. The person is expelled as a member under subsection (4)(c) or (d) of this

section; or

2. In the case of a person that is not an individual, trust other than a

business trust, or estate, the person is expelled or otherwise dissociated

as a member because it dissolved or terminated in bad faith.

(3) Unless the organic rules otherwise provide, a person that wrongfully dissociates as a

member is liable to the limited cooperative association for damages caused by the

dissociation. The liability is in addition to any other debt, obligation, or liability of

the person to the association.

(4) A member is dissociated from the limit ed cooperative association as a member

when:

(a) The association receives notice in a record of the member's express will to

dissociate as a member, or if the member specifies in the notice an effective

date later than the date the association received notice, on that later date;

(b) An event stated in the organic rules as causing the member's dissociation as a

member occurs;

(c) The member is expelled as a member under the organic rules;

(d) The member is expelled as a member by the board of directors because:

1. It is unlawful to carry on the association's activities with the member as

a member;

2. There has been a transfer of all the member's financial rights in the

association, other than:

a. A creation or perfection of a security interest; or

b. A charging order in effect under KRS 272A.6 -050 which has not

been foreclosed;

3. The member is a limited liability company, association, or partnership,

which has been dissolved, and its business is being wound up;

4. The member is a corporation or cooperative and:

a. The member filed articles of dissolution or the equivalent, or the

jurisdiction of formation revoked its charter or right to conduct

business;

b. The association sends a notice to the member that it will be

expelled as a member for a reason d escribed in subdivision a. of

this subparagraph; and

c. Not later than ninety (90) days after the notice was sent under

subdivision b. of this subparagraph, the member did not revoke its

articles of dissolution or the equivalent, or the jurisdiction of

formation did not reinstate the corporation's or cooperative's

charter or right to conduct business; or

5. The member is an individual and is adjudged incompetent;

(e) In the case of a member who is an individual, the individual dies;

(f) In the case of a mem ber that is a trust or is acting as a member by virtue of

being a trustee of a trust, all the trust's financial rights in the association are

distributed;

(g) In the case of a member that is an estate, the estate's entire financial interest in

the association is distributed;

(h) In the case of a member that is not an individual, partnership, limited liability

company, cooperative, corporation, trust, or estate, the member is terminated;

or

(i) The association's participation in a merger if, under the plan o f merger, the

member ceases to be a member.