bylaw4.doc Aug 2000 Results of committee meeting Bylaws of the MCNULTY WATER ASSOCIATION ARTICLE I. MEMBERSHIP Section 1. MEMBERSHIP QUALIFICATIONS a) Any owner of real property in the area served with domestic water by this association, or to be served as such as shall be determined by the board of directors, may be admitted to membership, provided an application has been approved by the board of directors, and said owner has provided the MEMBERSHIP FEE in the amount currently applicable. b) Each family dwelling (single family dwelling, single mobile home, separate house of a group on the same property) shall have a separate membership. Multiple family dwellings, duplexes, motels, trailer courts and the like shall have separate membership for each family unit unless specifically authorized by the board of directors. [This PP Still needs work?] Section 2. MEMBERSHIP FEE. Before a water connection is approved and provided, the member shall provide a fee, as provided in Section 3. This fee shall be considered to be 30% for the physical connection equipment and labor, 10 % for various administrative and other costs, and 60% for ownership (EQUITY) of a portion of the McNulty Water Assn. capital equipment, including wells, tanks, distribution lines, buildings, and other items. The amount of the MEMBERSHIP FEE shall be determined from time to time, at the yearly meeting of the Association, by the board of directors. See Section 6 of this Article for explanation of EQUITY. Section 3. MEMBERSHIP CANCELLATION. In the event any member is delinquent in payment of water bills beyond the various grace periods provided, McNulty Water may, after attempting to provide notice, disconnect and remove the water service at the meter. The EQUITY, defined in Section 2, shall continue to obtain to the member, and may be used as a portion of any desired reconnection MEMBERSHIP FEE, by the SAME OWNER, to the SAME PROPERTY. Section 4. MEMBERSHIP TRANSFER shall be made only pursuant to the provisions in Article III of the articles of incorporation. [NEEDS WORK, or drop] TRANSFER OF MEMBERSHIP shall be made only upon the books of the Association, only to persons eligible to become members, only with the approval of the board of directors and only when the member transferring is free from indebtedness to the Association. Section 5. MEMBERSHIP CANCELLATION. In the event any member is delinquent as to any portion of the fees two months after the original date the billing was made, water service may be terminated. Termination may include removal of the meter, at the discretion of the board, in which case both the 30% parts and labor fee and the 10% administration fee are forfeit. The 60% equity portion remains the property of the owner, but is not refundable. Re-Connection, after termination and removal of the meter, requires payment of the parts and labor fee and the administration fee. [Tom made changes - look it over] Section 6. MEMBER'S RIGHT TO SERVICE. Each member shall be entitled to water delivered to the water meter serving his outlet. In the event of a shortage of water the board of directors shall have the power to restrict, on an equitable basis as among the members, the sprinkling or irrigation of lawns and gardens. Section 6 b TEMPORARY SUSPENSION OF SERVICE. On request by the owner, water supply may be suspended, dismantled or locked off for a period of time. Billing for this supply may be suspended, with no charges accruing for each full month of suspension. A fee of $20 may be charged for reconnecton when requested by the owner. Section 7. OWNERSHIP OF SYSTEM COMPONENTS. The SYSTEM shall be defined as all the equipment including property, wells, pumps, service lines, valves, hydrants, meters at the members connection, and all other property owned by McNulty Water, including land, easements, buildings and equipment.. EQUITY ownership refers to a proportional part of this OWNERSHIP. [Look this over] The SYSTEM so described, any future extension thereof, and branches extending to and including the meter of the user shall be owned and maintained by this association. Equipment beyond the members water meter, including such items as pipes, backflow devices, and valves, is NOT the property of the Association, and is NOT to be maintained by the Association. Cross Connection Control Equipment (backflow control devices) are NOT the property of the Association. Section 8. EACH MEMBER GRANTS RIGHT OF ENTRY. Each member of this corporation grants to it the right of entry upon his property for the purpose of maintenance and repair of the main line, for the purpose of reading the water meter, and for the purpose of terminating water service in the event his membership shall have been duly canceled. ARTICLE II. FISCAL YEAR - MEETINGS Section 1. FISCAL YEAR. The fiscal year of this corporation shall be the calendar year. Section 2. ANNUAL MEETING. The annual meeting of the members of this corporation shall be held on the 4th Tuesday of February of each year, or as the board may direct, at such place, and hour as shall be determined by the board of directors. Section 3. SPECIAL MEETINGS. Special meetings of the members may be called by the board of directors for any place, date and hour. Such meetings shall be called whenever requested in the form of a written petition filed with the secretary and signed by twentyfive memgers, which petition shall state the nature of the business to be brought before the corporation. Section 4. MEETING NOTICES. Notice of each annual or special meeting shall be mailed by the secretary to each member to the address shown on the books of the corporation not less than ten (10) or more than twenty (20) days prior thereto. Notice of any special meeting shall state the nature of the business to be transacted. Section 4a. BOARD MEETINGS. BOARD meetings of the board may be held at any time to transact the routine business of the Association. These meetings may be attended by any interested party. BOARD MEETINGS are usually scheduled on the 1st Tuesday of each month, at 7 PM, at 34240 Millard Road. Section 5. QUORUM. Those members present shall constitute a quorum for the transaction of business at any meeting of the members. Section 6. VOTING Each member in good standing shall have one and only one vote. Voting by proxy or by mail shall not be permitted, except as required by law. A partnership that is a member shall have only one vote , to be cast by the person designated by the partnership. For voting purposes a husband and wife shall be deemed to be a partnership. The vote of a member that is an incorporated group shall be cast by any person duly authorized by the member corporation. The vote of a member that is an estate shall be cast by the legal representative thereof. Article III. DIRECTORS - OFFICERS Section 1. BOARD OF DIRECTORS. The board of directors of this association shall consist of five (5) persons elected by ballot by and from the members. irectors shall be elected each to serve a term of three (3) years. Each director shall serve until his successor shall have been duly elected, qualified, and entered upon the discharge of his duties. [Corporation was changed to association] Section 2. BOARD ORGANIZATION Within the ten (10) days after each annual election the Board of directors shall meet and elect from their number a President, a Vice-President and a Secretary-Treasurer. All officers shall hold office for one year or until their successors shall have been duly elected. [Removed loosness about who may be secretary-treasurer. see changes in V 3] Section 3. BOARD VACANCIES Any vacancy on the board of directors, other than by expiration of a term, shall be filled by affirmative majority vote of the remaining members of the board, and any director so chosen shall hold office for the unexpired portion of the term of the director he shall have been elected to replace] [small changes made NJT] Section 4. BOARD MEETINGS The board of directors shall meet on call of the President, at the principal office of the corporation or at such other place the board shall have determined. Special meetings of the board shall be called when requested by petition to the Secretary by two(2) member of the board. Effective notice of all board meetings shall be given by the Secretary, except that notice may be waived by attendance of all board members. [WRITTEN requirement removed] Section 5. QUORUM Three (3) members of the board of directors shall constitute a quorum for the transaction of business at any duly called meeting. Section 6. BOARD COMPENSATION The corporation may provide, at any meeting of the members, a fair remuneration for the costs actually spent by its directors and officers in the performance of their duties. No board member, during his term of office, shall occupy any position in the corporation on regular salary, nor be a party to a contract for profit with the corporation different in any way from the business relations with other persons. [Changed DIRECTOR to BOARD MEMBER] [Doesn't this still conflict with normal practice of payment to the secretary?] [Is HOURLY pay different from SALARY and therefore OK?] Article IV. DUTIES OF DIRECTORS Section 1. CONDUCT AFFAIRS The board of directors shall establish the policies, generally conduct the affairs, and make the necessary rules and regulations, including provisions for an annual audit, not inconsistent with the law, the articles of incorporation or these by-laws, for the management of the business and for the guidance of the officers, employees and agents of the corporation. Section 2. MANAGER. The board of directors may designate or employ a manager, or a caretaker. The board may define his duties, fix his compensation if any, and may dismiss him for cause. [changes] Section 3. MEMBERSHIP MEETINGS The board of directors shall call all meetings of the members. Section 4. DEPOSITORY The board of directors shall designate one or more depositories for corporation funds and, by appropriate resolution inscribed in the minute book, specify proper safeguards for the handling of such funds including the person or persons authorized to sign checks and vouchers. Section 5. REGISTERED OFFICE AND REGISTERED AGENT The board of directors shall cause to be kept on a current basis the records in the office of the State Corporation Commissioner as to the corporation's registered office and registered agent Section 6. MEMBERSHIP SERVICE CHARGES. The board of directors shall, prior to the beginning of each calendar year, a:) determine the flat minimum rate to be charged each member during the following calendar year for a specified quantity of water, such flat minimum monthly rate to be payable irrespective of whether any water is used by a member during any month, and b:) determine the amount of additional charges, if any, for additional water which may be supplied the members, and c:) fix the date for the payment of such charges, and d:) notify each member of the amount of such charges and the dates for the payment thereof. A member to be entitled to the delivery of water shall pay such charges, at the office of the association or as directed by the billing, at or prior to the dates fixed by the board of directors. [snuck in a hint at paying bills at Western bank] Section 7. BONDS AND INSURANCE The board will require officers, employees and/or agents charged with responsibility for the custody of any corporation funds or other property to give bonds with sufficient surety to guarantee the faithful performance of their duties, the premium on which bonds shall be paid by the corporation. The board shall provide adequate insurance covering liability for accidents to corporation employees and to the public. [TOM SAYS: These are strong words, and reason enough to NOT be on the board.] Article V. DUTIES OF OFFICERS Section 1. The PRESIDENT shall preside over all meetings of the members and of the board of directors, call all meetings of the board, and sign the minutes of all meetings over which he presides; serve as judge of elections; sign all contracts and other documents as he is so directed by the board; and perform all duties usually required of an executive and presiding officer. Section 2. VICE-PRESIDENT In the event of the absence or disability of the President or upon his request, the Vice-President shall serve in his stead. Section 3. The SECRETARY-TREASURER SHALL BE RESPONSIBLE FOR: [addition] a. Keep the minutes of the meetings of the members, and of the board of directors. b. Maintain the membership roll and billing records [addition] c. Serve as custodian of all property of the corporation including the corporation seal. d. Make such reports as shall be required by the Internal Revenue Service, the State Tax Commission, and the State Corporation Commissioner. e. Maintain records covering withholdings from employees, for federal and state income taxes, and social security; and covering liability of the corporation for industrial accident, and unemployment compensation insurance; and remit to the proper federal and state agencies. f. Maintain authorized insurance coverages. g. Within ten (10) days after the close of each month reconcile the records of the corporation with those of the depository. h. Be held responsible for the completeness and integrity of all accounting. i. Receive and disburse all funds of the corporation under such regulation as shall be determined by the board of directors. j. At each annual meeting make a full report on the business of the corporation. k. Compile and make such other reports as may be requested by the board of directors and membership. [N J T THIS IS WAY TOO MUCH FOR ANY PERSON, especially one not allowed compensation (Section III 6). Permitting help is required here. Thus---] V 3 b. Any of the above duties may be handled by others, under the direction of the SECRETARY-TREASURER. Such others may either be paid or be volunteers. ARTICLE VI. FINANCE Section 2. OPERATING FUNDS. The operations of this corporation shall be financed by membership fees payable by each member and for which he shall be entitled to one outlet from the main water supply line: and by service charges for water service in addition to usage as measured by water metered to him. [SECTIONS 4, 5, 6 and 7 below need rewriting, mostly by removal.] [If they are necessary, a competent person had better rewrite.] [a Would it be acceptable to change ALL words CORPORATION to ASSOCIATION/] [b The following words cause trouble, at least by their lack of DEFINITION: balance - credit due - savings - net savings - credit due - balance... Some of these words are used interchangably. Make up our mind which word and stick to it. NJT] [I would expect REMOVAL of ITEM 5 would cause a furor if the membership understood what has NOT been complied with, and understood a move to REMOVE the item NJT] Section 4. EXPENSE ALLOCATION At the close of each fiscal year there shall be deducted from the corporation's gross receipts for that year the total of all expenses including reserve for depreciation, labor, materials used in maintenance and repairs, any interest, any insurance including that covering injury to persons or damage to property, industrial accident and unemployment compensation; for taxes, fees and license, and any other expense; and the balance shall be allocated on the books of the corporation to the credit of the members in proportion to their patronage of business done with the corporation. Section 5 .DISTRIBUTION OF NET SAVINGS Subject to the provisions of section 7 of this article; there shall be deducted from any credits due a member as authorized by section 4 of this article any amounts due the corporation from membership fees, annual dues, annual service charges, or other; and any authorized deduction for working capital which deduction shall be credited to his capital reserve account, which account shall evidence a debt of the corporation; and the balance shall be paid to the member in cash. [GOT THAT - paid to the member in cash. -- WE NEVER HAVE. NJT] Section 6. DEDUCTIONS LIMITED Not less than twenty percent (20%) of the net savings as calculated pursuant to the provisions of section 5 of this article shall be paid to the member in cash. Section 7. MEMBER CONSENTS TO TAXABILITY OF ALLOCATIONS TO HIS CREDIT Each person who hereafter applies for and is accepted to the membership of this corporation and each member of this corporation on the effective date of this by-law who continues as a member after such date shall, by such act alone, consent that the amount of any distributions with respect to his patronage occurring after December 31, 1962, which are made in written notices of allocation (as defined in 26 U.S.C. 1388) and which are received by him from this corporation, will be taken into account by him at their stated dollar amounts in the manner provided in 26 U.S.C 1385 (a) in the taxable year in which such written notices of allocation are received by him. ARTICLE VII. AMENDMENTS These by-laws may be amended at the annual meeting of the members, by affirmative majority vote of the members of this corporation present, provided notice setting forth the proposed amendment or a summary of the changes to be effected thereby shall have been included in the call for a meeting. [Thompson note: Where is this "Article III of the Articles of Incorporation" spoken about in Membership 4 ?] - - - - -McNulty Water Association Bylaws, Version BYLAW4, August 2000 6