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Covenants

Rules & Policies

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Section 6.01. Powers. The powers of the Board of Directors shall include (but not be limited to)
the following:

(a) The power to exercise for the Association all the duties and responsibilities of the
Association permitted under the Act and whose exercise is not reserved or committed to
the membership of the Association by these Bylaws or the Articles of Incorporation.

(b) The power to adopt and publish Rules and Regulations and to amend such Rules and
Regulations from time to time.

(c) The power to levy assessments on individual members of the Association equivalent to
actual damages sustained by the Association or any member thereof by reason of the
activity of any such other member, any members of his or her family, any guests, tenant
or other visitors to such member who visit the member with his consent and permission
and to assess fines upon individual members of the Association for violating the rules and
regulations.

(d) The power to create such temporary and standing committees as it shall deem necessary
and to assign to each committee so created such duties as the Board of Directors shall
consider proper for assignment to such committee. The Board of Directors shall choose
committee members from the membership of the Association, and each such committee
member shall serve at the pleasure of the Board of Directors.

(e) The power to hire, appoint, and remove a manager and other employees of the
Association and to determine compensation for such manager and other employees.

(f) The power to enter into contracts for the purchase or financing of equipment, services
and supplies for the Association.

(g) The power to acquire title to property and to hold, use, convey (subject to Article X),
lease and mortgage Association property for the use and benefit of the Association.

(h) The power to administer the finances of the Association, to replace existing equipment
when necessary for operations and maintenance and borrow money for the general
operation and business of the Association, provided that money borrowed during any
single fiscal year shall not exceed 30 percent of the Association's current annual
operating budget without authorization by vote of a majority of a quorum of the members
present in person or by proxy at a duly called membership meeting.

(i) The power to establish and maintain a reserve fund, which would be available to address
any unexpected or emergency expenses of the Association. The reserve fund shall be
maintained in an interest-bearing insured account. Monies for the reserve fund may be
obtained from

     i. donations by members of the Association;

     ii. monies collected as dues (including interest thereon) in excess of sums needed to
         satisfy operating and capital budgeted expenses for the year;

     iii. income earned from Association property; and/or, if needed,

      iv. special assessments.

(j) The power to initiate legal action against any member, if required, to collect dues or
assessments which any member has failed timely to pay. The Board of Directors shall
follow the ensuing procedure before initiating legal action against any member:

    i. The Board of Directors shall specify the date upon which any dues payment or
assessment is due to be paid.

    ii. If a member fails to pay any dues or assessments on or before that date, the
member shall be sent a delinquency notice.

    iii. If the member, following the sending of such notice, does not make payment
of any delinquent dues or assessment, he or she shall be sent a second notice
which will advise said member that unless payment of the delinquent dues,
assessments and any penalties is made within fifteen (15) days of the date of
receipt of the second notice, the Board shall suspend the member's privileges
of membership and may also initiate legal proceedings to collect sums due.
The Association shall be entitled to recover from a member against whom
legal proceedings are initiated, the costs incurred, including reasonable
attorney fees, to collect the amounts due.

     iv. A late charge of one percent (1%) per month shall be assessed upon any
member for each month that payment is not made, beginning with the thirtieth
day following the due date.

      v. The Association also shall be entitled to a lien with regard to any delinquency,
in accordance with the provisions of the Rules and Regulations and the Act.
Section 6.02. Duties. The duties of the Board of Directors shall include (but not be limited to):

(a) The duty to fix, at least thirty (30) days prior to the first day of the fiscal year, the amount
of annual dues and any special assessments, consistent with the annual budget, that are to
be made against each member of the Association pursuant to the provisions for such
charge that are contained in the Articles of Incorporation.

(b) The duty to determine lot status. For purposes of this Section, a lot shall be considered
improved as soon as ground is broken.

(c) The duty to establish the operating budget annually for the Association. A proposed
operating budget shall be prepared by the Treasurer of the Association and presented to
the Board of Directors for review. The Board of Directors, thereafter, shall present the
proposed operating budget, with any amendments approved by the Board of Directors, to
the membership prior to the fall semi-annual meeting so that the membership has an
opportunity to comment upon the proposed operating budget. The membership shall have
the opportunity to vote and approve the budget at the Fall semi-annual meeting.
Following the fall semi-annual meeting, at the next regularly scheduled meeting of the
Board of Directors, the Board of Directors shall establish the annual operating budget for
the succeeding fiscal year. The decision to approve, alter, change, or reject the operating
budget shall rest solely with the Board of Directors.

(d) The duty to prepare each year (in addition to the operating budget established in
accordance with Section 6.02(c) above) a proposed capital budget. The proposed capital
budget shall be prepared by the Board of Directors and be presented to the membership
prior to the fall semi-annual meeting so that the membership has an opportunity to
comment upon the proposed capital budget. The membership shall have the opportunity
to vote and approve the budget at the Fall semi-annual meeting. Following the fall semiannual
meeting, the Board of Directors shall establish the annual capital budget for the
succeeding fiscal year. The Board of Directors shall not be authorized, however, to
expend more than 30 percent of the annual operating budget for any single capital
expense in a given fiscal year without obtaining the approval, by vote, of a majority of a
quorum of the members present in person or by proxy at a duly constituted membership
meeting.

(e) The duty to employ an independent accountant to perform an annual review of Sky
Valley's financial operations for the prior fiscal year. The review performed is to ensure
Association finances meet all criteria for use, accounting, and distribution pursuant to
these Bylaws. The accountant shall submit its report to the Board of Directors at its
meeting preceding the fall semi-annual meeting. The Treasurer shall present the findings
at the fall semi-annual meeting and provide copies of the accountant's report upon
request by a member.

(f) The duty to procure and maintain adequate liability and hazard insurance on property
owned by the Association, adequate officers' and directors' indemnity insurance, and
adequate fidelity insurance as required by the Act.

Section 7.01. Number. The officers of the Association shall be a President, a Secretary, and a
Treasurer, and, in addition, the Directors may choose not more than two Vice Presidents. Any
person may hold two (2) offices at the same time except the office of President. All officers shall
be Directors and members in good standing of the Association.

Section 7.02. Election and Term of Office. The officers shall be chosen annually by the Board of
Directors at the annual meeting of the Board of Directors. Each officer shall hold his/her office
until a successor shall have been chosen and qualified, or until death, resignation, or removal.

(a) Nomination of Officers. Nominations for officers must be submitted to the Secretary in
writing by regular mail or electronic means (e-mail, text, etc.) no less than two weeks in
advance of the annual meeting of the Board of Directors. The Secretary will notify the
nominated officers and obtain written acceptance of the nomination at least one week in
advance of the annual meeting of the Board of Directors. If an office does not receive any
nominations or the nominated director(s) choose not to accept the nomination, the office
may be filled by write in votes on the ballot described in subparagraph (b) during the
annual Board meeting.

(b) Election of Officers. Election of officers will occur at the annual meeting of the Board of
Directors. The current Secretary shall prepare paper ballots listing each Board office and
each director who accepted nomination for that office. Ballots will also provide the
option to write in names for each office. If an office has no nominees, the Secretary will
call for nominees prior to the election and ensure the ballots are updated, by hand,
accordingly. The Secretary will distribute the ballots to each director eligible to vote
(newly elected and continuing directors). The Secretary plus one board director chosen at
random will collect the completed ballots, tally the votes, and announce the results at the
meeting. The director with the most votes for each office shall be the officer elect. If two
or more directors receive equal votes for any office, the tie will be broken by cutting a
deck of playing cards (from which jokers have been removed), with aces as the highest
cards and the order of suits (highest to lowest) spades, hearts, diamonds, and clubs. If a
director is elected to more than one office, the director will choose the preferred office
and the nominee with the next highest number of votes will be the officer elect for the
remaining office.

Section 7.03. Removal. Any officer may be removed, with or without cause, at any time, by a
majority vote of the Board of Directors, at a special meeting of the Board of Directors called for
the purpose of considering such removal.

Section 7.04. Vacancies. Any vacancy in any office as a result of death, resignation, removal, or
other cause shall be filled for the unexpired portion of the term by a Director chosen by the
Board of Directors.

Section 7.05. The President. The President shall have active executive management of the
operations of the Association, subject, however, to the control of the Board of Directors. He/she
shall, in general, perform all duties incident to the office of President and such other duties as,
from time to time, may be assigned by the Board of Directors.

Section 7.06. The Vice President. The Vice President shall have such powers and perform such
duties as the Board of Directors may prescribe or as the President may delegate. In the case of
absence or inability of the President to act, the Vice President shall temporarily act in his/her
place.

Section 7.07. The Secretary. The Secretary shall keep or cause to be kept, in books that shall be
provided for the purpose and shall remain in the Secretary's custody, the minutes of the meetings
of the members of the Association and of the Board of Directors; shall at all times keep at the
principal office of the Association a complete and accurate list of the names and addresses of all
members of the Association; shall attend to the giving of all notices in accordance with the
provisions of these Bylaws and as required by law; shall be the custodian of the records (except
the financial records) of the Association and of any die or other instrument usable in affixing the
seal of the Association to paper; shall, where required by law, affix the seal of the Association
(by means of a die or by hand) to every document whose execution on behalf of the Association
under its seal shall have been properly authorized; and shall, in general, perform all duties
incident to the office of Secretary and such other duties as, from time to time, may be assigned
by the Board of Directors or the President.

Section 7.08. The Treasurer. The Treasurer shall be the financial officer of the Association; shall
keep, or cause to be kept, in books that shall be provided for the purpose and shall be kept at the
principal office of the Association, complete books and records showing the financial condition
1 1 of the Association and shall keep a separate financial account of each member of the
Association; shall have charge and custody of, and be responsible for, all funds of the
Association and shall deposit or cause to be deposited all such funds in the name of the
Association in such banks, trust companies, or other depositories as shall be selected by the
Board of Directors; shall receive, and give receipts for, monies due and payable to the
Association from any source; shall disburse or cause to be disbursed the funds of the Association
in accordance with the instructions of the Board of Directors of the Association; shall render to
the President, on request, an account of all transactions as Treasurer and of the financial
condition of the Association; shall provide the membership in writing a fiscal statement semiannually;
and shall, in general, perform all the duties incident to the office of Treasurer and such
other duties as, from time to time, may be assigned by the Board of Directors or the President.

Section 8.01. Place of Keeping in General. Except as otherwise provided by the laws of the State
of Maryland or these Bylaws, the books and records of the Association shall be kept at the
principal office of the Association and all such books and records, except personal records, shall,
upon reasonable notice, be open for examination or copying by any member of the Association
for proper purposes at any reasonable time.

Section 9.01. Execution of Checks. Every check for the payment of money of the Association,
and every promissory note of the Association shall, unless otherwise ordered or authorized by
the Board of Directors or required by law, be signed by the Treasurer of the Association.

Section 9.02. Execution of Contracts. Every contract (in addition to those mentioned above in
these Bylaws) to which the Association shall be a party, shall be executed in its name by its
President or Vice President and attested by one other Board member.

Section 10.01. Maintenance of Association Real Estate. The Board of Directors is authorized to
maintain the common areas and roads consistent with their original intended use. Discretionary
authority is so limited that they may not make significant changes in either the character of the
common areas or alignment of existing roads without Specific Approval of the Association
Membership as defined in Section 10.03.

Section 10.02. Disposition of Association Real Estate. The Board of Directors is not authorized
to dispose or otherwise encumber any real estate without Specific Approval of the Association
Membership.

Section 10.03. Specific Approval of the Association Membership Defined. Specific Approval of
the Association Membership for purposes of this Article X is defined as approval by a vote of
not less than 60 percent of the entire membership, either in person or by proxy, at any semiannual
meeting.

Section 11.01. Acceptable Forms of Notice. All notices of meetings of members or the Board of
Directors, and all information provided to members shall be deemed adequate if given in written
or electronic form.

Section 11.02. Delivery of Notice or Information in Written Form. If given in written form,
notice shall be considered delivered to a member or director if mailed or otherwise conveyed to
such member or director at the address of such member or director appearing in the current
official Sky Valley Directory maintained by the Secretary or otherwise supplied by such member
or director.

Section 11.03. Delivery of Notice or Information in Electronic Form. If given in electronic form,
notice shall be considered delivered to a member or Director if such member or Director has
given the Association prior written authorization to provide notice in electronic form and an
officer or agent of the Association certifies in writing that the Association has provided notice as
authorized by such member.

Section 12.01. In General. The power to add to, alter, amend, or repeal (wholly or in part) these
Bylaws shall be vested in the members of the Association, who may approve such amendments
by a vote of not less than 60 percent of those present, either in person or by proxy, at any semiannual
meeting of the Association. These Bylaws may not be amended except at semi-annual
meetings and notice of any proposed change in the Bylaws must be furnished with notice of the  semi-annual meeting and conform to the requirements of the notice for semi-annual meetings

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