SECTION 2.6  Annual Meeting  (Amended 7-20-85 and 11-25-89)

The annual meeting shall be held on the second Saturday of July at 10:00 a.m. each year, at a location within Hemlock Farms fixed by the Board of Directors, notice of which shall be published at least thirty (30) days in advance in the Association's official publication.  The business of the annual meeting shall consist of:

A.             The approval or disapproval of the statutory report of the Board of Directors for the preceding calendar year, a copy of which shall be mailed to the members at least thirty (30) days before the meeting.

B.             The election of Directors.

C.             The election of an independent auditor from the nominee of the Board of Directors and such persons as are nominated in accordance with Section 3.5.

D.            Such other business as may properly come before the meeting, provided that the purpose thereof shall have been given to the members in the notice of the meeting.

The polls shall be reopened on the Sunday which is eight (8) days after the annual meeting exclusively for the purpose of permitting members who have not voted at the annual meeting to cast their votes.

SECTION 2.7 Special Membership Meetings  (Amended 7-19-92)

Special meetings may be called at any time by the Board of Directors or by members entitled to cast at least ten percent (10%) of the votes which all members are entitled to cast at the particular meeting by their written request addressed to the Secretary stating the purpose of the meeting and asking the Secretary to fix a time for the meeting on a weekend date no more than seventy-five (75) days after the receipt of the request.  Notice of all special membership meetings stating the purpose thereof shall be sent to the members at least sixty (60) days in advance by first class mail, addressed to the members at their last known addresses.  In the instance of a special membership meeting called by the Board, the Board may cancel or postpone said special membership meeting, provided that notice be sent to the membership by first class mail at least ten (10) days in advance of the originally scheduled date.  Special membership meetings called by members in accordance with the above shall not be canceled or postponed.                      

SECTION 2.8  Voting Rights   (Amended 4-11-81, 7-18-04)

A.             The owners of each lot shall be entitled to two (2) votes for each lot.

B.             If a lot is owned by a husband and wife or any other two (2) owners, each shall be entitled to one (1) vote.  No more than two (2) votes per lot may be cast by any one (1) of the owners or by two (2) of the owners casting one (1) vote each.         

C.             The vote of a corporation or other business entity owning lot(s) shall be cast by such person or persons as may be authorized by action of its governing body evidenced by a duly certified document.

D.            The vote of a partnership shall be cast by such person or persons as may be authorized by action of a majority in number of the partners or in the case of unequal interest, by action of the partners having a majority interest in the partnership.  Such action shall be evidenced by a duly certified document.

E.             (1) Unless otherwise limited in a trust instrument, and (2) unless a beneficiary of a trust has put the Association on notice in writing of any applicable limitation, for any lot owned in trust, a trustee (or with the trustee's written approval, a beneficiary) of a trust shall be deemed a member of the Association and the vote of a trust shall be cast by the trustee or by the designated beneficiary. The person entitled to vote shall be evidenced by a duly certified document.

F.             Voting rights of associate members shall be limited to the right to vote on matters directly involving the operation of utility services by the Association.

SECTION 2.9 Quorum; Required Votes  (Amended 7-18-81)

A.             The presence of individual members in person and members referred to in Section 2.8 (C) and (D) together entitled to cast one hundred (100) votes shall constitute a quorum for all purposes. 

B.             The vote of a majority of the votes cast, a quorum being present, shall be sufficient to adopt any resolution, except as provided in Section 3.1 and Article 8.

C.             At all elections of Directors, the candidates receiving a plurality of the votes cast shall be deemed elected.  In the event of a tie there shall be a runoff election for the seat(s) involved.

D.            All votes except procedural votes shall be by secret paper ballot or by voting machine.

E.             All ballots shall be retained by the Secretary until the next annual meeting.

SECTION 2.10 Elections Committee

The Elections Committee shall:

A.             Conduct the voting at all membership meetings.

B.                Determine the validity of vote(s) to be cast by members referred to in Section 2.8 (C) and (D).

SECTION 2.11 Other matters

All matters relating to the conduct of meetings not covered by statute, or these Bylaws, shall be governed by the Modern Rules of Order as published by the Pennsylvania Bar Institute (Latest edition).¹

¹Pennsylvania Bar Institute, 5080 Ritter Road, Mechanicsburg, PA 17055-6903, (717) 796-0804, (800) 932-4637. http://www.pbi.org infor@pbi.org

ARTICLE 3

DIRECTORS

SECTION 3.1 Powers

Subject to the restrictions of the Declaration and these Bylaws, the Board of Directors shall:

A.             Manage the business and affairs of the Association in trust for the members.

B.                Promulgate rules and regulations and levy dues, fees and special assessments in respect thereof and take any other lawful action in respect thereto.

C.             Have the power to inquire, discuss, investigate and evaluate all matters pertaining to the affairs of the Association.

D.            Adopt an Administrative Code establishing appropriate procedures for carrying into effect the provisions of these Bylaws.

E.             Exercise the specific powers conferred by the certificate of incorporation and the general powers of the Association prescribed in Title 15, Section 7502, of the Pennsylvania Statutes; provided, however, that the Directors may not dispose of any of the real property of the Association or grant rights or easements therein other than utilities unless approved by two-thirds (2/3) of the votes cast, a quorum being present at the annual membership meeting or a special membership meeting called for that purpose, provided further that any special membership meeting called for the purpose of disposing of the real property of the Association or the granting of rights or easements therein, members acting in the capacity of a developer or a builder may not vote.

SECTION 3.2 Number of Directors; term; qualifications (Amended 7-21-96, 7-18-2004)

There shall be nine (9) Directors who shall be elected at the annual meeting of the members. The three (3) candidates receiving the highest number of votes shall be elected for three-year terms to replace the three (3) Directors whose terms expire during that year. Directors shall serve without compensation for staggered three (3) year terms that begin at 10:00 a.m. of the first Saturday in August following the date of their election. All nominees and directors shall be over the age of eighteen (18), shall be members of the Association entitled to vote, shall have completed at least one (1) year of service or is currently serving on a Standing Committee, and shall be free of any conflict of interest including but not limited to the type of conflict referred to in Section 3.6.

SECTION 3.3 Transitional provisions  (Deleted July 2002)

SECTION 3.4 Vacancies (Amended 7-18-2004)

If any vacancy or vacancies should occur on the Board of Directors between annual meetings but before May 1, the vacancy or vacancies shall be filled within thirty (30) days by the unsuccessful candidate or candidates who at the previous election received the next highest votes in descending order, and so long as the unsuccessful candidate(s) received at least 50% of the lowest number of votes received by a successful candidate at the previous election. Should there be no such candidates, the Board shall appoint by majority vote of the Board a member of the Association to fill the vacancy. A vacancy occurring May 1 or later shall be filled by election at the annual meeting of the members, unless (1) the vacancy occurs after the deadline for filing Board candidates' petitions, and (2) there are not enough candidates to fill that vacancy. In that case, the Board by majority vote shall appoint a member to fill the vacancy through the next year's annual meeting. Any Director so appointed to fill a vacancy shall serve until the next annual meeting when the membership shall elect a Director to serve the remainder of the unexpired term, if any, of the previous Director. If less than a quorum of Directors are in office at any time, a special election of Directors shall take place at the call of the remaining Directors or of any ten (10) or more members entitled to cast not less than twenty (20) votes.

SECTION 3.5 Nominations

A.             All nominations of candidates for election as Directors shall be by petition signed by members entitled to at least thirty (30) votes.  Any member shall be entitled to sign as many nominating petitions as there are vacancies to be filled.  If any member signs a greater number of petitions, all of his or her signatures shall be void.

B.             All nominating petitions shall be filed with the Secretary at least forty-five (45) days before the election.

SECTION 3.6 Conflict of Interest

Every contract or transaction between the Association and one of its Directors, officers, employees or any other entity in which one (1) or more of the aforementioned has an interest shall be voidable at the instance of the Association and shall not be enforceable at the instance of the Director, officer, employee or other party.  Any Director, officer or employee shall be deemed to have vacated office if involved in any such conflict of interest.

SECTION 3.7 Administrative Matters

The Board of Directors shall deal with all matters of administration through the Community Manager. Individual Directors or committees may deal with such matters, but only with the approval of the Board.  The Board shall evaluate the performance of the Community Manager, within the first six (6) months of his or her employment and annually thereafter.

SECTION 3.8 Resignation by Absence

Any Director who is absent from four (4) consecutive regular meetings of the Board of Directors, or a total of six (6) regular meetings in the course of a twelve-month period, shall be deemed to have resigned and the Board shall fill the vacancy in accordance with Section 3.4.

SECTION 3.9 Recall of Directors

A.             A member of the Board of Directors may be removed from office in accordance with the recall procedure provided for in this section.

B.             A recall petition demanding the removal of a designated Director must be signed by qualified voters holding at least ten percent (10%) of the votes that all members of the Association are entitled to cast and shall be filed with the Secretary.  Within ten (10) days of the filing of a petition, the Secretary shall determine whether the petition, be sufficient and shall, within two (2) days, serve the Director with a copy of the petition by certified mail.

C.             If, within fourteen (14) days after such service, the Director in question does not resign, the Secretary shall fix a weekend date at least forty-five (45) days but no more than sixty (60) days after the serving of the petition for the holding of a special membership meeting, at which a recall election shall be held.  Notice of the filing of a petition, a copy thereof and notice of the date of the election shall be sent by the Secretary to all Association members by first class mail at least thirty (30) days prior to the meeting.  The Director whose removal is sought shall have the right to make a statement in his or her own behalf which shall be printed in the notice of the meeting and the official publication of the Association.

D.            If the recall election does not result in the Director's removal, no further recall petition may be filed against the same Director for the same cause.

SECTION 3.10 Directors, Meetings; Quorum, etc.

A.             An organizational meeting of the Board shall be held annually at 10:00 a.m. on the first Saturday in August.  At that meeting the Board shall:

1.	Elect officers from amongst its members.
2.	Set the calendar of regular meetings for the coming year.
3.	Appoint members of standing committees.

B.             Regular meetings shall be held once a month, on a weekend day and shall be open to the membership at all times except as provided in Subsection (H) of this section.  The order of business at regular meetings, and so far as applicable at special meetings, shall be taken up for consideration and disposed of as follows:

1.	Quorum roll call.
2.	Approval of the minutes of previous meetings.
3.	Treasurer's report.
4.	Manager's report.
5.	Committee Reports.
6.	Payment of Bills.
7.	Awarding of Contracts.
8.	Hearing upon, adoption or amendment of proposed changes to the Administrative Code, rules and regulations or policies on second reading.
9.	Other unfinished business.
10.	New Business.
11.	Proposed changes (additions, deletions, and modifications) to the Administrative Code, rules and regulations or policies on first reading.
12.	Communications, (a) written and (b) oral; petitions; hearings; and comments by members.
13.	Miscellaneous.
14.	Adjournment.

C.             Motions affecting the Administrative Code, rules and regulations or policies shall be introduced on first reading and shall not be acted upon until the succeeding meeting of the Board.  The agenda for each regular meeting shall be prepared by the Community Manager and posted at the offices of the Association and the Association post office at least ten (10) days prior to the date of the meeting.   All first and second reading motions as well as all items of unfinished and new business shall be published in the official publication upon publication of the agenda.  Except for emergency matters which may be added to the agenda at any time with the approval of the President, the agenda for each regular meeting of the Board of Directors shall include only those matters of Association business as have been submitted in writing to the Community Manager at least fourteen (14) days prior to the meeting.  Agenda items may be submitted by the Community Manager, Directors, committees or members.

D.            Special meetings of Directors shall be called by the Secretary on the written request of the President, the Community Manager or three (3) Directors.  The request and the call for a special meeting shall specify the purpose of the meeting, and no other business may be transacted.

E.             All special meetings of Directors shall be on a weekend day, except in the event of an emergency specified in the request for and in the call for the meeting.  Upon receipt of any such request, the Secretary shall forthwith give notice of such meeting by telephone or telegraph to each Director at such place as he or she shall have previously designated for that purpose and shall also serve or cause to be served a written copy of the request for the meeting upon each Director, by delivery of a copy to them personally or by mail.  Notice of at least eight (8) days shall be given for each special meeting, and such notice shall be posted in the offices of the Association and the Association post office.

F.             Upon written waiver executed by all of the Directors, a special meeting may be held without notice. 

G.            Five (5) Directors shall constitute a quorum.  If less than a quorum shall be present at any meeting of the Directors, those present shall adjourn.

H.            Closed meetings may be held only upon resolution of a majority present at any open meeting of the Board and only for the following purposes (providing that said resolution shall specify the purpose of the closed meeting and only those matters referred to in said resolution may be discussed):

1.             To discuss the reputation and character, physical condition, mental health and/or the professional competence of an individual. The meeting shall be opened if the individual involved so requests.

2.             To consider the discipline or dismissal of or to hear complaints or charges brought against a Director, employees, staff members or individual members of the Association.  The meeting shall be opened if the individual involved so requests.

3.             To discuss strategy with respect to collective bargaining or litigation.

                4.                To discuss the deployment of security personnel or devices.             

5.             To consider the purchase, exchange, lease or value of real property, if such open discussions are  believed to have a detrimental effect on the negotiating position of the Association.

SECTION 3.11 Committees  (Amended 7-14-84, 7-21-96 and 7-19-98)

A.             The Board of Directors may, by resolution adopted by a majority of the Directors in office, establish, appoint, and remove the members of one (1) or more committees, to consist of one (1) or more members of the Association or their spouses.  The Board of Directors may delegate its powers only to committees consisting exclusively of Directors.  Each committee shall have the power to enact rules governing its own procedures, provided that, except in an emergency, all committees shall meet on week-end dates and that the rules so adopted shall provide for reasonable notice of meeting dates to all committee members.  No committee shall have power as to the following:

1.             The submission to the members of any action requiring the approval of members under these Bylaws or the laws of Pennsylvania.

                2.                The filling of vacancies on the Board of Directors.

                3.                The adoption, amendment or repeal of any resolution of the Board.

                4.                The amendment or repeal of the Bylaws.

5.             Action on matters committed by the Bylaws or resolution of the Board of Directors to another  committee.

B.             The following committees of the Association shall be established with such duties as the Board of Directors may prescribe from time to time.

                 1. Architectural.

                 2. Official Publications and Public Information.

                 3. Elections.

                 4. Finance.

                 5. Planning and Land Use.

                 6. Public Health, Safety and Security.

                 7. Public Works and Physical Properties.

                 8. Recreation.

                 9. Appeals Committee (Added 7-16-95).

                10. Environmental (Added 7-19-98)                .

C.             Each of the standing committees shall consist of no less than five (5) members who shall serve at the pleasure of the Board.  The membership of all standing committees shall be approved by the Board of Directors at the regular organizational meeting of the Board.  A minimum of one (1) Director shall be appointed to each standing committee, to serve as a member of said committee.  Directors shall not compose a majority of the members of any standing committee. 

SECTION 3.12 Minutes

The Directors shall cause a complete record to be kept of all of their meetings, the meetings of committees and the votes, acts and meetings of the members.

SECTION 3.13 Official Publication

The Directors shall cause an official publication to be published by the Hemlock Farms Community Association no less than twelve (12) times a year.  The editor of the official publication shall be selected by the Board and need not be a member of the Board.

ARTICLE 4

OFFICERS; POWERS AND DUTIES

SECTION 4.1 Officers

A.             The officers shall be the President, Vice-President, Secretary and Treasurer and such other officers as the Directors may from time to time create by resolution prescribing the duties and powers of the holders thereof.

B.             In case of vacancy, the respective office shall be filled by the Board of Directors to serve until the next annual election of officers.  All officers and employees having contractual or fiduciary responsibility shall be bonded at the expense of the Association.

SECTION 4.2 Duties of President and Vice President

The President or, if at any time the President shall be absent or unable to act, the Vice President shall:

A.             Preside over all meetings of the members and of the Board of Directors.

B.             Sign as President, all contracts and other instruments approved by the Board of Directors.

C.             Have the right to vote on all matters.

D.            Have such other powers and duties as are conferred by the Board of Directors.

SECTION 4.3 Duties of Secretary

In addition to the duties referred to elsewhere in these Bylaws, the secretary shall keep a record of all the proceedings of the Board of Directors and of the members, shall be custodian of the corporate seal and all legal records of the Association, shall respond to, keep record of, and report on all correspondence to the Board , and maintain a permanent file of all minutes of meetings.  All such records shall be maintained in the offices of the Association.

SECTION 4.4 Duties of Treasurer

The Treasurer shall have the custody of all funds and securities of the Association, shall have the responsibility to see that full and accurate accounts are kept of all monies received and paid out for the Association, and shall, at each regular meeting of the Board of Directors, report on the financial condition of the Association, and at such other times as the Board may direct.

SECTION 4.5 Other Officers (Amended 7-18-2004)

The Board of Directors may from time to time appoint or elect one (1) or more Assistant Secretaries and one (1) or more Assistant Treasurers who are directors or employees of the Association, who shall serve under the Secretary and Treasurer respectively, and to whom the Board of Directors may delegate such of the duties of the Secretary and Treasurer as they deem proper.      

ARTICLE 5

COMMUNITY MANAGER

SECTION 5.1 Community Manager

A.             The affairs of the Association shall be administered by a Community Manager (hereinafter called the "Manager") and such other personnel as are, from time to time, authorized by the Board of Directors.

B.             The Manager shall be the chief operating and administrative officer of the Association and shall be responsible to the Board of Directors for the management of the affairs of the Association and the execution of the policies and decisions of the Board of Directors.  The Manager shall be chosen by the Board of Directors.  The Manager at no time may be a Director.

SECTION 5.2  Appointment; Tenure

The Manager shall be appointed for an indefinite term, and may be removed by a two-thirds vote of the Board.  At least thirty (30) days before such removal shall become effective, the Board shall notify the Manager of its decision to remove him from office, stating the reasons for his removal.  The Manager may reply in writing and may request a public hearing, which shall be held not earlier than twenty (20) days not later than thirty (30) days after the filing of such request.  After such public hearing, if one be requested and after full consideration, the Board by a two-thirds vote of its members, may adopt a final resolution of removal.  By the preliminary resolution, the Board may suspend the Manager from duty, but may, in any case, cause to be paid to him forthwith any unpaid balance of his salary.

SECTION 5.3 Illness or Absence

The Manager may designate a qualified administrative employee of the Association to perform his duties during his temporary absence or disability.  In the event of his failure to make such designation, or if the absence or disability continues more than thirty (30) days, the Board may appoint an employee of the Association to perform the duties of the Manager during such absence or disability until he shall return or his disability shall cease.

SECTION 5.4 Specific Duties

The Manager shall:

A.             Be the chief operating officer of the Association.

B.             Execute the Administrative Code, rules and regulations as promulgated by the Board of Directors.

C.             Appoint and have power to remove department heads, a deputy manager, if one is authorized by the Board, and appoint subordinate employees under procedures established by the Board.

D.                Negotiate contracts for the community, subject to the approval of the Board, make recommendations concerning the nature and location of community improvements and execute community improvements as determined by the Board.

E.             Assure that all terms and conditions imposed in favor of the Association or its inhabitants in any statute, public utility franchise or other contract are faithfully kept and performed and, upon knowledge of any violation, call the same to the attention of the Board.

F.             Prepare agendas for and attend all meetings of the Board, with the right to take part in the discussions, but without the right to vote.

G.            Make such recommendations to the Board concerning policy  formulation as he deems desirable and keep the Board and the Public informed as to the conduct of Association affairs.

H.            Prepare and submit the annual budget to the Board, together with such explanatory comment as he may deem desirable and administer the Board approved budget.

I.              Perform such other duties as may be required of the Manager by resolution of the Board.

J.              Be responsible to the Board for carrying out all policies established by it and for the proper administration of all affairs of the Association within the jurisdiction of the Board.

SECTION 5.5  Administration

It is the intention of these Bylaws that the Board of Directors shall act in all matters as a body, and it is contrary to the spirit of this section for any of its members to seek individually to influence the official acts of the Manager or any other employee or for any individual member to direct or request the appointment of any person to or his removal from office or to interfere in any way with the performance by such officers of their duties.  The Board and its members shall deal with the administrative service solely through the Manager and shall not give orders to any subordinates of the Manager, either publicly or privately.  Nothing herein contained shall prevent the Board from appointing committees or commissions of its own members or of Association members to conduct investigations into the conduct of any employee or department or any matter relating to the welfare of the community and delegating to such committees or commissions such powers as the Board may deem necessary.

ARTICLE 6

FINANCE

SECTION 6.1 Definitions (Amended 7-21-79)

A.                "Operating expenses," as used in this Article, shall mean all of the recurring expenses of the Association other than the expenses described in Subsections (B) and (C) of this section.

B.             "Capital expenses," as used in this Article, shall mean all items of expenditure for the purchase or improvement of real estate, construction, reconstruction or improvement of Association buildings and structures, and the purchase of machinery and equipment exceeding an acquisition cost of two thousand dollars ($2000).

C.             "Capital project," as used in this Article, shall mean a proposal to purchase or construct a facility of the Association involving expenditures totaling more than twenty-five thousand dollars ($25,000) in the aggregate.

D.            The "fiscal year" of the Association shall correspond with the calendar year.

SECTION 6.2 Budgets, Budget Preparation

A.            Budgets

All expenditures of the Association shall be provided for in the budgets described in this section.  The Board shall have the duty to make an operating expense budget and a capital expense budget for each fiscal year in accordance with Subsections (D) and (E) of this section.  The budgets shall also fix the amount of dues to be levied for the fiscal year and the anticipated revenue, if any, to be received from other sources.  No expenditure for the purpose of a capital project shall be included in any budget, unless the capital project has been authorized by the membership of the Association at a regular or special meeting called for said purpose by a resolution submitted by the Board of Directors which resolution shall describe the project, its estimated cost and the manner in which the necessary funds are to be provided.

B.                Operating Expense Budget

1.             Each operating expense item shall be included in an annual operating expense budget and shall be classified as to type and amount in a manner approved by the Board and consistent with generally accepted accounting principles.   

2.             Once an operating expense budget has been approved by the Board, no budget line item shall be exceeded by ten percent (10%) or five hundred dollars ($500), whichever is less, unless reviewed by the Finance Committee and approved by the Board, provided that no major budget category is exceeded.  Additional appropriations shall, when possible, be transferred from another budget line item from within the same department or, if not possible, then from the general fund.

3.             All unexpended funds remaining in the operating expense budget for any one (1) fiscal year at the conclusion of said year shall be carried forward in the general fund or used to reduce the indebtedness of the Association, at the discretion of the Board.

C.            Capital Expense Budget    

1.             Each item of capital expense shall be classified as to type and amount in a manner approved by the Board and consistent with generally accepted accounting principles.

2.             Once a capital expense budget has been approved by the Board, no budget line item within said budget may be exceeded, at any time, unless otherwise approved by the Board.

3.             Unexpended sums budgeted for capital expenses otherwise authorized for a capital project which has been completed, shall be applied first to the reduction of debt and any balance shall be transferred to a capital fund.

D.                Hearings, Approvals and Publication

1.             The Board shall hold at least two (2) public hearings at least fourteen (14) days apart, each being held on a weekend day, with the last occurring at least seven (7) days prior to the Board taking final action on a proposed operating expense budget and capital expense budget or in the case of a proposed authorization of a capital project, at a membership meeting called for said purpose.  The notice for these hearings shall include a summary of the proposed budget plus the anticipated dues, fees and assessments to be levied upon the membership if said budget is approved.  A copy of the completed budget shall be available in the Association office at least one (1) week before the first scheduled hearing.  Before final action on a proposed budget is taken by the Board of Directors, the Finance Committee shall submit its recommendations on all budget line items.

2.             The budget which shall set forth the dues, fees and assessments shall be set and approved on or before the last day preceding the fiscal year in question.

3.             Once a budget is approved, the Manager shall print it in reasonable detail in the official publication and mail it to all members of the Association on or before January 31 of each year.

E.             Budget Preparation  (Amended 7-17-94)

1.             No later than September 15, the Manager shall submit a proposed budget to the Board and Finance Committee.

2.             On or before October 30th, the Finance Committee shall report its recommendation to the Board.

SECTION 6.3 Dues, Fees and Assessments  (Amended 4-11-81, 7-20-85 and 10-12-85)

A.                Membership dues, fees, utility charges and assessments shall be fixed by the Board and vary reasonably as between improved, unimproved and adjacent lots.  The method and basis for determining the amount of annual dues by type of lot shall not be changed unless approved by favorable vote by two-thirds (2/3) of the total votes cast on the two (2) voting days of the annual election meeting.  Associate members shall not be responsible for dues, fees, charges or assessments other than such utility fees, charges or assessments as are fixed by the Board in connection with the receipt of utility services, including water services, by associate members.  Assessments and rates to be established by the Board for utility services shall be the same for both regular members and associate members, it being the intention of the Section 6.3(A) to preclude the establishment of rates or charges for associate members in excess of those established for regular members. 

B.             Special assessments to meet unbudgeted operating or capital expenses shall be deemed additional dues and shall be computed as a stated percentage of each member's annual dues.  Assessments may vary by type of lot (improved, unimproved, adjacent), but must be levied equally for all lots within each type of category (improved, unimproved and adjacent).  Where such special assessments are attributable to unbudgeted operating or capital expenses of any utilities operated by the Association, associate members shall be responsible for payment of such special assessments to the same extent as regular members. 

C.             The Manageror his/her designee shall prepare and mail dues notices to the entire membership no later than January 31 of each year.  Said notices shall indicate the lot, block and stage number, the member's name and permanent address and the amount due for the fiscal year in question and all unpaid prior balances. All such amounts shall become due and payable in full no later than March 1 of each year, except as otherwise provided for by the Board.  Simple interest or the maximum allowable rate from the due date, calculated on a monthly basis, shall be added to the amount due the Association for all payments received after March 1.  Payments not received by June 30 of each year shall be subject to collection proceedings, including but not limited to a statutory lien and seizure and sale for the purpose of collecting said delinquent dues, accumulated interest charges, reasonable collection fees and costs, including reasonable attorney's fees, and all other charges determined by law. 

D.            The Manager, with the consent of the Treasurer and the Finance Committee, may enter into reasonable arrangements for the payment of an individual member's dues, fees and assessments, provided that such arrangements do not extend beyond the fiscal year in question and further provide that said member is fully paid up for prior years.  The Manager shall provide a written report on all such actions taken at the next regularly scheduled meeting of the Board.

E.             Periodic billing for utility charges shall be made in accordance with a schedule to be set by the Board.  A thirty (30) day period shall be allowed for payment at a flat rate.  Simple interest at the maximum allowable rate from the due date, calculated on a monthly basis, shall be added to the amount due the Association for all payments received after the flat rate period.  Payments not received within sixty (60) days from the due date of any billing shall be subject to collection proceedings, including but not limited to the filing of liens and seizure and sale for the purpose of collecting said delinquent fees, accumulated interest charges and reasonable collection fees and costs.  The Association also reserves the right, after due notice, to shut off utility services for failure to pay bills rendered or for violation or refusal to comply with such rules and regulations as may be established by the Board regarding utility services, and to make a reasonable charge for resumption of service. 

SECTION 6.4 Purchases (Amended 7-21-96)

A.             Except as provided in Subsection (E) of this section, all purchases or leasing of goods or services that are in excess of an amount stipulated in the Hemlock Code, as adopted by the Board of Directors, shall be advertised and solicited for public bid and shall be awarded to the lowest qualified bidder as determined by the Board.  Any monetary limits set by the Board for this subsection shall be in the aggregate for each item of purchase during any three-month period.

B.                Advertisements for bids shall be published in the public notices section of at least two (2) newspapers published in Pike, Monroe or Wayne Counties and the official publication of the Association at least once, fourteen (14) days or more prior to the date fixed for receiving bids.  All advertisements shall state that all bids must be sealed when submitted and otherwise comply with the terms stated in the advertisement and with specifications.  The advertisements shall describe the goods or services to be acquired in general terms, shall designate the time and place of the meeting at which the bids shall be received, and shall contain detailed specifications, unless the advertisement provides for a procedure under which prospective bidders may obtain copies of detailed specifications at least ten (10) days prior to the date for receiving bids.  At such time and place, the Manager or his or her designee shall receive the bids, and immediately proceed to unseal them and publicly announce their contents and shall make proper record of the prices and terms.  No bids shall be opened prior to the hour designated, and none shall be received thereafter.

C.             The specifications shall detail the nature and amount of work to be performed or the goods to be provided and the form of contract to be executed.  The Board of Directors shall determine for which contract(s) a performance bond shall be required from the successful bidder(s).  All documents in respect thereto shall be approved as to form by counsel to the Association and reviewed by the committee having advisory responsibility for the purchase in question at least seven (7) days in advance of the date of advertisement.

D.            The Manager, or his or her designee, shall deliver all bids received to the Board for award.  No bid shall be awarded until the Manager and the committee having advisory responsibility for the purchase in question have reported their recommendations to the Board.  In lieu of the requirement for a bond securing the faithful performance of a contractor, the Board may approve the establishment of a payment reserve, provided said reserve is in an amount equal to not less than fifteen percent (15%) of the value of the contract, and provided, further, that the release of said reserve to the contractor shall be made only upon completion of the contract and then only upon the recommendation of the Manager and approval of the Board.  Unless the Board has authorized the establishment of a payment reserve, failure to deliver said bond or to obtain the approval of the Board shall subject the successful bidder to forfeiture of its contract, and the award may be made to the next lowest qualified bidder at the discretion of the Board.

E.             Any purchases and purchase contracts may be made, negotiated or awarded without public advertising of bids and bidding under any one (1) of the circumstances described below:

1. If the transaction falls within the exceptions contained in Subsection A.             

                2. If the subject matter thereof consists of:

A. Professional services and disbursements reasonably incurred in connection therewith, including the printing of legal briefs, records and appendices and contract and other papers to be used in any legal proceeding in which the Association is a party or in other matters in which the Association is interested;

                                B. The services of Association employees;

                                C. Election expenses of the Association; or

D. The hiring of supplementary labor or equipment in the event of a public emergency affecting the health, safety and security of the members of the Association.

3.             If no bids have been received pursuant to an advertisement and solicitation, no award shall be made without review  of the Manager and the Finance Committee and the approval of the Board.

4.             If all bids received are deemed to be unreasonable as to price, no contract or purchase may be entered into unless:

A. Notification of the intention to negotiate and a reasonable opportunity to negotiate shall have been given to each prior bidder; and

B. The negotiated price is lower than the lowest rejected bid price and it is the lowest negotiated price offered.

5.             The Board by a two-thirds (2/3) vote may elect to waive the bid and or performance bond requirements if they are deemed to be inappropriate for a particular industry and if payment of the goods or services are held until after delivery or performance.

F.             In no event shall any contract or purchase be made without advertising and bidding in the absence of the review of the Manager and the Finance Committee and the approval of the Board.

SECTION 6.5 Payment of Bills (Amended 7-21-96)

A.             All bills and demands against the Association, except as provided in Subsection E, shall be fully itemized and written on the form provided by the Manager and approved by the Board.  The Claimant shall swear to the affidavit attached to said form and present same to the Manager, who shall, after examination thereof, deliver such bill or bills to the department head having jurisdiction over the matter.

B.             The said bill or bills shall be compared by the department head, and if found correct as to delivery, quantity and price shall be endorsed by said department head and returned to the Manager.

C.             The Manager shall approve bills by endorsement, if found correct, and report the same to the Board for payment at its next meeting.

D.            Checks issued under one thousand dollars ($1,000) shall require only one signature authorized by the Board.  Checks issued for one thousand dollars ($1,000) or more shall require two (2) signatures authorized by the Board.

E.             Payment of any budgeted amount may be authorized by the Manager and the Treasurer jointly or as otherwise authorized under procedures adopted in the Hemlock Code by the Board.

F.             At each Board Meeting a schedule of all bills paid and a schedule of all approved unpaid bills shall be submitted to the Board for its approval.

SECTION 6.6 Cash Management (Amended 7-20-97)

A.             All funds of the Association shall be kept in depositories approved by Board and insured by the Federal Deposit Insurance Corporation.  No changes of depositories shall be made without the approval of the Board.

B.             All funds in any depository in excess of the statutory insurance limit set by the Federal Deposit Insurance Corporation, or funds not needed for immediate use by the Association, or in excess of Association cash flow requirements shall be invested by the Treasurer in investments as shall be approved by the Board.  The investments shall only be made in (a) United States Treasury or Agency instruments guaranteed by the full faith and credit of the United States Government or (b) in money market accounts or similar investments that substantially (1) are invested in U.S. Treasury and U.S. Government Agency instruments and securities or (2) are directly secured by U.S. Treasury and U.S. Government Agency instruments and securities.  The investment funds or other investment vehicles shall be controlled or managed by banks having the highest attainable rating from the Office of the Controller of the Currency or a rating of at least "A" by Moodys.

SECTION 6.7 Books and Records; Audits  (Amended 7-16-89)

A.             All of the books, records and membership lists of the Association shall be kept by the Manager and shall be open to the membership during normal business hours.  In the event that a member requests a copy of the membership list, the member shall reimburse the Association for all of its out-of-pocket costs incurred in respect of the member's request.  Access to the membership list of the Association shall be limited only to those members whose stated purpose for said request is noncommercial and relates to the affairs of the Association.

B.             Annually, at the end of each fiscal year, the Board shall engage a certified public accountant as independent auditor elected pursuant to Section 2.6(C) to audit the books and records of the Association, to prepare tax returns and certified financial statements.   The Board shall cause such certified financial statements to be printed in their entirety, including footnotes and the auditor's opinion letter, and mailed to the membership with the statutory report of the Board of Directors in accordance with Section 2.6(A). In addition, the Board may order an independent audit of the books and records of the Association at any time during the year as well as set up an internal audit committee for the purpose of performing the same duties on a noncertified basis. 

SECTION 6.8 Borrowing; Debt Ceiling  (Amended 4-11-81)

A.                Borrowing

1.             All borrowings to meet operating and capital expenses shall be approved by the Board of Directors.   No borrowing shall be made to meet operating expenses unless said borrowing can be liquidated by reasonable expectations of receipt of the dues, fees and assessments outstanding at the time of such borrowing.

2.             All borrowing to finance capital projects shall be approved by the membership at a meeting called for the purpose.  Additional borrowings up to ten percent (10%) of the amount previously authorized by the membership may be authorized by the Board.

B.             Debt Ceiling

No debts to finance capital expenses or capital projects shall be incurred which shall have the effect of increasing the annual debt service of the Association for interest and amortization above ten percentum (10%) of the annual operating expense budget for any one (1) year; provided, however, that where the Board determines that additional debt service is necessary in order to provide adequate water services to the membership, the Board may, by two-thirds (2/3) vote of its members, exceed the ten percent (10%) limitations set forth above, but the total debt service shall not exceed twenty percent (20%).

ARTICLE 7

INDEMNIFICATIONS

(AMENDED 7-17-88)

SECTION 7.1 Third Party Action Indemnification (Amended 7-18-2004)

The Association shall have the power to indemnify any person, including but not limited to an officer, Director or employee, who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a representative of the Association or is or was serving at the request of the Association directly or as a representative of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorney's fees), judgments, fines and amounts paid in settlement, actually and reasonably incurred by him or her in connection with the action, suit or proceeding, if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Association and with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.

SECTION 7.2 Derivative Action Indemnification (Amended 7-18-2004)

The Association shall have power to indemnify any person, including but not limited to an officer, Director or employee, who was or is a party or is threatened to be made a party to any threatened pending or completed action or suit by or in the right of the Association to procure a judgment in its favor by reason of the fact that he or she is or was a representative of the Association or is or was serving at the request of the Association directly or as a representative of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorney' fees) actually and reasonably incurred by him or her in connection with the defense or settlement of the action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Association. No indemnification shall be made in respect of any claim, issue or matter, however, as to which a person shall have been adjudged to be liable for negligence or misconduct in the performance of his or her duty to the Association unless and only to the extent that the court in which the action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnify for expenses which the court shall deem proper.

SECTION 7.3 Mandatory Indemnification

To the extent that a representative of this Association has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 7.1 or Section 7.2 or in defense of any other claim, issue or matter in the action, he or she shall be indemnified against expenses (including attorney's fees) actually and reasonably incurred by him or her in connection with the action.

SECTION 7.4 Standard of Care and Justifiable Reliance

A.            Director as Fiduciary

A Director of the Association shall stand in a fiduciary relation to the Association and shall perform his or her duties as a Director, including his or her duties as a member of any committee of the Board upon which he or she may serve, in good faith, in a manner he or she reasonably believes to be in the best interest of the Association and with the care, including reasonable inquiry, skill and diligence as a person of ordinary prudence would use under similar circumstances.  In performing his or her duties, a Director shall be entitled to rely in good faith on information, opinions, reports or statements, including financial statements and other financial data, in each case prepared presented by any of the following:

1.                  One (1) or more officers or employees of the Association whom the Director reasonably believes to be reliable and competent in the matters presented.

2.             Counsel, public accountants or other persons as to matters which the Director reasonably believes to be within the professional or expert competence of that person.

3.             A committee of the Board upon which he or she does not serve, duly designated in accordance with law, as to matters within its designated authority, which committee the Director reasonably believes to merit confidence.

A Director shall not be considered to be acting in good faith if he or she has knowledge concerning the matter in question  that would cause his or her reliance to be unwarranted.

B.                Consideration of Factors

In discharging the duties of their respective positions, the Board of Directors, committees of the Board and individual Directors may, in considering the best interests of the Association, consider the effects of any action upon employees, upon suppliers and customers of the Asso