FALLS RUN COMMUNITY ASSOCIATION

AMENDED AND RESTATED

FALLS RUN COMMUNITY ASSOCIATION

Revised: April 22, 2009

BYLAWS

ARTICLE III

Board of Directors: Voting, Composition, Powers, and Meetings

A. Composition and Selection

3.1 Term of Office and Election. Each Director shall hold office until his or her term expires or until his or her successor has been elected. Terms of Directors expire at the conclusion of the Annual Meeting. The Board shall consist of seven (7) Directors, each serving for two years. No elected Director shall serve for more than three (3) consecutive full terms.

3.2 Nomination of Directors. Nominations for election to the Board shall be made in accordance with policies and procedures established, from time to time, by the Board. Such policies and procedures may include, but are not limited to, requiring a specified number of signatures as a precondition to appearing on the ballot or permitting nominations through a Nominating Committee.

3.3 Policies and Procedures. The Board shall establish policies and procedures for election of Directors no later than sixty (60) days prior to any election. Nominations for election of Directors shall be made no later than thirty (30) days before the election shall be held. The Board shall provide for as many nominations on each slate for election to the Board as it, in its discretion, shall determine.

3.4 Nominating Committee. For any election, the Board may, but shall not be obligated to, appoint a Nominating Committee. If appointed, the Nominating Committee shall consist of three (3) or more persons and a Chairperson, who shall be a member of the Board. The remaining members of the Nominating committee shall be Members, Residents, or Voting Members.

3.5 Election Process. Voting for the election of Directors by the Voting Members may be by ballots mailed to the Voting Members and shall be conducted according to the Election Policy established by the Board. The Board shall determine the method of voting, the form of all ballots, the wording of questions thereon and the deadline for return of ballots. The Board may include on ballots any questions of which it seeks an advisory vote. Any other matters may be voted on by mail-in ballot to the extent not prohibited by law.

B. Meetings.

3.6 Organizational Meetings. The Board shall hold a meeting within thirty (30) days after each annual meeting of the Members.

3.7 Meetings. Regular meetings of the Board may be held at such time and place as the Board shall determine, but at least one (1) such meeting shall be held each quarter. Special meetings of the Board shall be held when requested by the President, Vice President or the majority of the Directors.

3.8 Notice of Meetings. Notice of the time and place of a regular or special meeting shall be communicated to Directors and to Members of the Association as provided in Virginia Code Section 55-510.1B. The notice shall specify the time and place of the meeting and, in the case of a special meeting, the nature of any special business to be considered. The notice shall be given to each Director by one (1) of the following methods: (a) personal delivery; (b) first class mail, postage prepaid; (c) telephone communication, either directly to the Director or to a person at the Director’s office or home who would reasonably be expected to communicate such notice promptly to the Director; or (d) by Electronic Transmission (e.g. facsimile, computer, fiber optics, or any such other communication device). All such notices shall be given at the Director’s telephone or facsimile, or e-mail number or sent to the Director’s address as shown on the Association’s records. Notices sent by first class mail shall be deposited into a United States mailbox not less than four (4) days before the time set for the meeting. Notices given by personal delivery, telephone, facsimile, or other device shall be delivered, telephoned, or transmitted at least seventy-two (72) hours before the time set for the meeting.

3.9 Waiver of Notice. The transactions of any meeting of the Board, however called and noticed or wherever held, shall be as valid as though taken at a meeting duly held after regular call and notice if (a) a quorum is present, and (b) either before or after the meeting each of the Directors not present signs a written waiver of notice, a consent to holding the meeting, or an approval of the minutes. The waiver of notice or consent need not specify the purpose of the meeting. Notice of a meeting also shall be deemed given to any Director who attends the meeting without protesting before or at its commencement about the lack of adequate notice.

3.10 Quorum of Board of Directors. At all meetings of the Board, a majority of the Directors shall constitute a quorum for the transaction of business, and the votes of a majority of the Directors present at a meeting at which a quorum is present shall constitute the decision of the Board, unless otherwise specifically provided in these Bylaws or the Declaration. A meeting at which a quorum is initially present may continue to transact business, notwithstanding the withdrawal of Directors, if any action taken is approved by at least a majority of the required quorum for that meeting. If any meeting of the Board cannot be held because a quorum is not present, a majority of the Directors present at such meeting may adjourn the meeting to a time not less than five (5) nor more than thirty (30) days from the date of the original meeting. At the reconvened meeting, if a quorum is present, any business which might have been transacted at the meeting originally called may be transacted without further notice.

3.11 Compensation. No Director shall receive any compensation from the Association for acting as such; provided however, any Director may be reimbursed for expenses incurred on behalf of the Association upon approval of a majority of the other Directors. Nothing herein shall prohibit the Association from compensating a Director, or any entity with which a Director is affiliated, for services or supplies furnished to the Association in a capacity other than as a Director pursuant to a contract or agreement with the Association.

3.12 Conduct of Meetings. The President shall preside over all meetings of the Board, and the Secretary shall keep a minute book of meetings of the Board, recording all resolutions adopted by the Board and all transactions and proceedings occurring at such meetings. All meetings shall be conducted in accordance with Roberts Rules of Order, (current edition), as published from time to time.

3.13 Attendance at Meetings by Members. Members may attend meetings of the Board unless excluded by the Board pursuant to Virginia Code Section 55-510.1 C. Also, the Board shall hold informational meetings from time to time, but not less frequently than once each year, to which all Members shall be invited and at which the Board shall report to the Members on what the Board has worked on and accomplished since the preceding meeting and shall open the meeting for questions and comments from Members.

3.14 Action Without a Formal Meeting. Any action to be taken at a meeting of the Directors or any action that may be taken at a meeting of the Directors may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the Directors, and such consent shall have the same force and effect as a unanimous vote. Written consent or consents shall be filed with the minutes of the proceedings of the Board.

3.15 Telephonic Participation. One (1) or more Directors may participate in and vote during any regular or special meeting of the Board by telephone conference call or similar communication equipment by means of which all Persons participating in the meeting can hear each other at the same time, and those Directors so participating shall be present at such meeting. Any such meeting at which a quorum participates shall constitute a meeting of the Board.

C. Powers and Duties.

3.16 Powers. The Board shall have all of the powers and duties necessary and appropriate for the administration of the Association’s affairs and for performing all responsibilities and exercising all rights of the Association as set forth in the Declaration, these Bylaws, the Articles, and as provided by law. The Board may do or cause to be done all acts and things as are not by the Declaration, Articles, these Bylaws, or Virginia law directed to be done and exercised exclusively by the Voting Members or the membership generally.

The duties of the Board shall include, without limitation:

(A) preparation and adoption of annual budgets and establishing each Owner’s share of the Common Expenses, if any;

(B) levying and collecting assessments from the Owners to fund the Common Expenses, if any;

(D) providing for the operation, care, upkeep, and maintenance of Areas of Common Responsibility;

(E) providing for the recreation and social activities for the Members of the Association;

(F) designating, hiring, and dismissing the personnel necessary to carry out the rights and responsibilities of the Association and, where appropriate, providing for the compensation of such personnel and for the purchase of equipment, supplies, and materials to be used by such personnel in the performance of their duties;

(G) depositing all funds received on behalf of the Association in a bank depository which the Board shall approve or in U.S. Treasury instruments and using such funds to operate the Association; provided, any reserve fund may be deposited, in the Directors’ best business judgment, in depositories other than banks;

(H) making and amending rules and regulations, including use restrictions, and establishing penalties for infractions thereof;

(I) opening of bank accounts on behalf of the Association and designating the signatories required;

(J) making or contracting for the making of repairs, additions, and improvements to or alterations of the Common Area in accordance with the Declaration and these Bylaws;

(K) subject to limitations provided for in the Declaration, enforcing by legal means the provisions of the Declaration, these Bylaws, and the rules adopted by the Board and bringing any proceedings which may be instituted on behalf of or against the Owners concerning the Association;

(L) obtaining and carrying property, liability and other insurance, as provided in the Declaration, paying the cost thereof, and filing and adjusting claims, as appropriate

(M) paying all taxes and/or assessments which are or could become a lien on the Common Area or a portion thereof;

(N) paying the cost of all services rendered to the Association or its Members and not chargeable directly to specific Owners;

(O) keeping books with detailed accounts of the receipts and expenditures of the Association;

(P) making available (at a reasonable cost) to any prospective purchaser of a Dwelling Unit, any Owner, and the holders, insurers, and guarantors of any Mortgage on any Dwelling Unit, current copies of the disclosure packet required under Virginia law;

(Q) permitting utility suppliers to use portions of the Common Area reasonably necessary to the ongoing development or operation of the Properties;

(R) indemnifying a Director, officer or committee member, or former Director, officer or committee member of the Association to the extent such indemnity is required by Virginia law and the Articles; and

(S) assisting in the resolution of disputes between owners and others without litigation, as set forth in the Declaration.

3.17 Management. The Board may, but shall not be required to, contract with a professional management company at an amount established by the Board to perform such duties and services as the Board shall authorize for the Association. The Board may delegate to such management company such powers as are necessary to perform its assigned duties, but shall not delegate policy making authority. The Board may delegate to one (1) of its members the authority to act on behalf of the Board on all matters relating to the duties of the management company, if any, which might arise between meetings of the Board.

3.18 Accounts and Reports. The following management standards of performance shall be followed unless the Board, by resolution, determines otherwise:

(A) accrual accounting, as defined by generally accepted accounting principles, shall be employed; provided however, that any “shortage” shall be calculated on a cash basis of accounting as provided in the Declaration;

(B) accounting and controls should conform to generally accepted accounting principles;

(D) no remuneration shall be accepted by the Managing Agent from vendors, independent contractors, or others providing goods or services to the Association, whether in the form of commissions, finder’s fees, service fees, prizes, gifts, or otherwise; any thing of value received shall benefit the Association;

(E) any financial or other interest which the managing agent may have in any firm providing goods or services to the Association shall be disclosed promptly to the Board; and

(F) the following financial and related information shall be regularly prepared by the Board and copies made available to all Members of the Association at the expense of the Association:

(i) The Board shall cause a reserve budget and an expense budget (collectively referred to as the “Budget”) for the Association (which shall include the budget for all Common Areas), to be prepared for each fiscal year of the Association. The Board shall post written notice in a prominent place within the Properties that the Budget is available at the business office of the Association or at another suitable location within the Properties. If any Member requests a copy of the Budget, the Association shall provide one (1) copy to the Member without charge by first-class United States mail and deliver such copy within seven (7) days of such request.

(ii) The Board shall cause an annual financial statement or annual audit report (“Financial Statement”) to be prepared in accordance with generally accepted accounting principles within one hundred twenty (120) days after close of the Association’s fiscal year. The Board shall post written notice in a prominent place within the Properties that the Financial Statement is available at the business office of the Association or at another suitable location within the Properties. If any Member requests a copy of the Financial Statement, the Association shall provide one (1) copy to the Member without charge by first-class United States mail and deliver such copy within seven (7) days of such request. The Financial Statement shall consist of:

(a) a balance sheet as of the end of the fiscal year;

(b) an income and expense statement for the fiscal year (this statement shall include a schedule of assessments received and receivables identified by the total number of the Dwelling Units); and

Such Financial Statement shall be prepared on an audited, reviewed, or compiled basis, as the Board determines, by an independent public accountant.

(iii) The Board shall do the following at least quarterly:

(a) cause a current reconciliation of the Association’s operating accounts to be made and review the same;

(b) cause a current reconciliation of the Association’s reserve accounts to be made and review the same;

(d) review the most current account statements prepared by the financial institution where the Association has its operating and reserve accounts;

(e) review an income and expense statement for the Association’s operating and reserve accounts; and

(f) review the delinquency report listing all Owners who are delinquent in paying any assessments at the time of the report and describing the status of any action to collect such assessments which remain delinquent.

3.19 Borrowing. The Association, acting through its Board, shall have the power to borrow money for any legal purpose; provided, the Board shall obtain the approval by vote or written consent of Voting Members representing at least a majority of the total votes if the proposed borrowing is for the purpose of making discretionary capital improvements or purchasing additional capital assets and the total amount of such borrowing, together with all other debt incurred within the previous twelve (12) month period, exceeds or would exceed ten percent (10%) of the budgeted gross Common Expenses of the Association for that fiscal year. No mortgage lien shall be placed on any portion of the Common Area without the affirmative vote or written consent of Voting Members representing at least a majority of the total votes of Dwelling Units entitled to use such portion.

3.20 Rights of the Association. The Association shall have the right to contract with any Person for the performance of various duties and functions. This right shall include, without limitation, the right to enter into common management, operational, or other agreements with trusts, condominium associations, cooperative associations, non-condominium homeowners associations and other owners or residents associations, both within and outside the Properties.

3.21 Enforcement of Violations of Governing Documents. The Board, pursuant to Virginia Code Ann., Section 55-513B, and the Declaration, para. 4.3, may impose graduated sanctions for violations of the Governing Documents. The Board shall develop enforcement policies and procedures for imposing sanctions.

3.22 Board Training. Each Director shall attend a Board training seminar within the first six (6) months he or she serves as a Director. Such seminar shall educate the Directors about their responsibilities and duties and may be live, video or audio tape, or other format. The Board shall offer the seminar at a time reasonably convenient for the subject Director. In conjunction with this requirement, prior to serving as a Director, each board member shall certify in writing that he or she has read and understands the Governing Documents.

3.23 Board Standards. In the performance of their duties, Directors and officers are subject to insulation from liability provided for Directors and officers of corporations by Virginia laws and as otherwise provided in the Governing Documents. A Director shall discharge his or her duties in accordance with his or her good faith judgment of the best interests of the Association.