BY-LAWS OF GRANDFATHER GOLF AND COUNTRY CLUB

BY-LAWS OF GRANDFATHER GOLF AND COUNTRY CLUB ARTICLE I. NAME AND EMBLEM Section 1. Name. The name of the corporation is Grandfather Golf and Country Club, a not-for-profit North Carolina corporation (the Club ). Section 2. Emblem. The emblem of the Club shall be used only as authorized by the Board of Directors. ARTICLE II. PURPOSE Section 1. Purpose. The purpose of the Club is to provide facilities for recreational and social activities, encourage the mutual associational interest, and protect the health, safety and welfare, all solely for the members of the Club ( Members ), their Immediate Families (as defined in Section 3 of Article III) and their guests. Section 2. Prohibited Use of Membership. No Member shall permit his or her Club membership ( Membership ) to be used for political, charitable, religious or community service without prior approval of the Board of Directors. Section 3. Membership Rosters. The Club retains a proprietary right in each Membership roster. Every roster must be returned to the Club or destroyed if not in the direct possession of a Member in good standing. No Member shall allow use of a roster by any non-member for any purpose. ARTICLE III. MEMBERSHIP Section 1. Membership Limitations. The Membership of the Club shall be limited to: A. 465 Capital Members. The Capital Membership of the Club may not be increased without the prior approval of a majority vote of the Club s voting Members. B. Regular Memberships in effect as of March 5, 1982, provided that such Memberships will be cancelled

C. Honorary Memberships as approved by the Board of Directors from time to time. D. All Members shall be at least 21 years of age unless otherwise approved by the Board of Directors in its sole discretion. Section 2. Admission. A. Admission to Capital Membership in the Club shall be only by invitation of the Board of Directors, in its sole discretion, when and as Memberships are available. No new Regular Members shall be admitted to the Club except as provided in Section 7, Section 8(B) and Section 9(B) of this Article III. B. The Board of Directors shall prescribe by resolution the procedures, and determine the qualifications required, for Memberships. C. Each Member, by virtue of his or her Membership, shall be subject to these By-Laws, and all other Club and Village Rules and Regulations in effect from time to time. D. The Board of Directors may approve Honorary Members from time to time. Section 3. Classification. The Membership shall be classified as Capital Members, Regular Members and Honorary Members. Within Capital Memberships and Regular Memberships, there may be one or more categories, including Junior Members, Young Adult Members and Surviving Spouse Members as determined by the Board of Directors from time to time. A Membership shall entitle the entire Immediate Family of the Member to the privileges of the Club. A Member s Immediate Family shall mean the spouse of the Member (except as provided in Section 8 of this Article III) and all unmarried children of the Member under the age of 26 years. 2

Section 4. Capital Members. A Capital Member is a Member who has paid the Capital Membership initiation fee prevailing at the time he or she became a Capital Member or converted to Capital Membership by paying a supplementary initiation fee, or activated a Capital Membership Right (see Section 5 of this Article III), and paid the Refundable Capital Investment. A Capital Member may transfer his or her Membership and rights in the Refundable Capital Investment only as follows: A. To a spouse by gift, inheritance or by testamentary bequest (see Section 7 of this Article III) or in connection with a divorce and/or agreed upon settlement (see Section 8(B) of this Article III). B. To a natural child, adopted child or stepchild by gift, inheritance or testamentary bequest. In the event the child is a Member at the time of such transfer, the transfer shall be made without payment of any fee to the Club. If the child is not a Member at the time of transfer, then the child must make proper application for Membership and, upon acceptance, pay an amount equal to 40% of the then prevailing Capital Membership initiation fee, which 40% is to be retained by the Club. C. To the purchaser of any residence, condominium or lot located within Grandfather Village owned by a resigning Capital Member, provided such purchaser makes proper application for, and is accepted into, Membership and pays the applicable initiation fee. Upon payment by such newly admitted Member of the then prevailing Capital Membership initiation fee, the Club shall pay to the resigning Capital Member a sum equal to 60% of the initiation fee paid by the newly admitted Member, and the Club shall retain the remaining portion of the initiation fee. D. To the Club by a resigning Member who has not transferred or assigned his or her Capital Membership in the manner set forth in Section 4(A), (B) or (C) of this Article III. (i) If the Club reissues such Membership to a newly admitted Capital Member and he or she pays the then prevailing Capital 3

Membership initiation fee and the Refundable Capital Investment, then within 30 days after such payment the Club shall pay to the resigning Member a sum equal to the Refundable Capital Investment and 60% of the initiation fee paid by the newly admitted Member, and the Club shall retain the remaining portion of the initiation fee. (ii) (iii) Alternatively, in the sole discretion of the Board of Directors, the Club may, prior to the reissuance of the Membership to a newly admitted Member, repurchase such Membership by paying to the resigning Member a sum equal to the Refundable Capital Investment and 60% of the then prevailing initiation fee. Capital Memberships of resigning Members transferred under this Section 4(D) shall be assigned by the Club only to newly admitted Capital Members who own or are purchasing a residence, condominium or lot in Grandfather Village. E. If a Capital Member does not assign to another person his or her rights in the Refundable Capital Investment, the Refundable Capital Investment will be refunded by the Club, adding this amount to the 60% of the Membership initiation fee to be received by the Member upon the transfer or sale of the Capital Membership. Payment by the Club shall be made within 30 days after the Club has received payment from the new Capital Member for his or her initiation fee and Refundable Capital Investment. Section 5. Capital Membership Rights. A. A Capital Membership Right is a reservation for a future Capital Membership which is attached to a specific parcel of property within the corporate limits of Grandfather Village. B. A Capital Membership Right shall belong to the property owner and there are no dues applicable to 4

the Right until the Right is activated into a Capital Membership through the Club. C. A Capital Membership Right may be transferred from the specific property for which it was acquired to another parcel of property within Grandfather Village and will continue to be so transferable until it is activated into a Capital Membership. D. A Capital Membership Right shall not be transferable to a parcel of property outside of the corporate limits of Grandfather Village. E. A Capital Membership Right is subject to the following provisions: (i) (ii) (iii) (iv) The holder of a Capital Membership Right shall be entitled to 100% of proceeds received by the Club for the acquirer s initiation fee for Capital Membership on the first sale of property attributed thereto from a person accepted into Membership. The holder of a Capital Membership Right shall be entitled to only 60% of the proceeds received by the Club for the acquirer s initiation fee for Capital Membership if the acquirer of the Right did not also acquire the property attributed thereto. The holder of a Capital Membership Right may activate the Right into a Capital Membership subject to his or her acceptance into Membership. Upon activation, the acquirer of the Right will be required to pay to the Club a Refundable Capital Investment which is required of every new Member as set forth under Article XIII. Capital Memberships which have been the result of an activation of a Capital Membership Right will be otherwise subject to the terms of these By-Laws. Section 6. Regular Members. A Regular Member is a Member who has paid an initiation fee and Refundable 5

Capital Investment to the Club, but did not elect to convert his or her Regular Membership to a Capital Membership. A Regular Member shall have no right or privilege of transfer or sale except as set forth in Section 7, Section 8(B) and Section 9(B) of this Article III. Except as provided in Section 7 or Section 8(B) (for the divorced spouse awarded a Membership) of this Article III, the Regular Member s Refundable Capital Investment will be refunded (without interest) out of future initiation fees within 36 months after the termination of the Regular Membership or the Regular Member s resignation or death. Section 7. Surviving Spouse. The Capital or Regular Membership of any deceased Member may be transferred to the surviving spouse of such deceased Member along with such Member s rights in the Refundable Capital Investment upon application by such surviving spouse to the Board of Directors and its approval, without payment of any fee. Section 8. Marriage and Divorce. A. If a Member should marry or remarry, if widowed or divorced, after such Member has been admitted to Membership, the new spouse of such Member shall not become a Member, nor shall the new spouse be entitled to the privileges of the Club merely by virtue of such marriage. The new spouse shall become entitled to the privileges of the Club without fee, only after request by the Member for such privileges has been approved by the Board of Directors. B. In the event of a divorce and/or agreed upon settlement, either divorced spouse may retain the Membership awarded by the court without fee. The other spouse may make proper application for a new Capital Membership under Section 2 of this Article III and, if accepted, pay all the initiation fees and any other fees applicable to a new Capital Membership. Section 9. Membership Certificates. A. Certificates issued prior to October 13, 1979 shall be placed in sequential order for redemption and may be 6

redeemable only when the total Capital Membership reaches 465. B. Subject to the requirements of Section 8(A) of this Article III, Members who are married have the option of having the Capital or Regular Membership Certificate recorded in either name, or jointly, subject to the following conditions: (i) (ii) (iii) (iv) A written request for joint ownership shall be directed to the Secretary, who shall so record the Certificate. If the Membership Certificate is jointly held, upon the request of both Members the Certificate may be rerecorded in just one name. If there is a death of one spouse in a jointly owned recorded Certificate, the surviving spouse shall automatically have full title to the Certificate. If there is a death of one spouse and title for the Membership Certificate is in the name of the deceased spouse only, then the surviving spouse may take title to that Certificate without payment of any fees, provided that the transfer of title has been approved by the Board of Directors. See Section 7 of this Article. If title to the Membership Certificate is recorded in both names, then the resignation from the Club by one will be considered a resignation by both, unless the Membership Certificate has been previously re-recorded in the non-resigning Member s name only. C. Jointly-held Capital and Regular Memberships shall be entitled to one vote, which may be cast by either spouse at annual or special meetings of Members. Only one spouse may sign a petition referred to in Section 8 of Article IV or a nomination petition referred to in Section 2(B) of Article VI. Only one spouse may serve concurrently as a member of the Board of Directors or Village Council. 7

D. Resignation and Death. (i) (ii) (iii) Resignation by a Member must be made in writing and addressed to the Secretary of the Club. When the resignation has been accepted by the Board of Directors, the Member shall forthwith assign and transfer to the Club the Membership Certificate by endorsement in blank, whether or not jointly held. See Section 9(B)(iv) of this Article III. Upon the death of a Member, the legal representative to the estate of that Member shall similarly transfer the Membership Certificate of that deceased Member to the Club. Section 10. Inactive Memberships. All Capital Memberships shall be deemed active Memberships and no Capital Membership shall be placed on an inactive Membership list or in an inactive status. Notwithstanding the above, the payment of dues by Capital Members may be deferred in accordance with the following: A. Capital Memberships held by estates or specified beneficiaries which are not entitled to Club privileges may defer payment of such dues subject to the conditions set out in Section 10(C) of this Article III. B. With the specific prior approval of the Board of Directors, the dues of a Capital Member encountering financial hardship may be deferred if such Member (i) resigns in accordance with Section 9(D) of this Article III, (ii) is in good standing, (iii) has owned property within Grandfather Village for a five year period or the entire term of his or her Membership, and (iv) is actively attempting to sell the property owned within Grandfather Village to which the Capital Membership is attached. During any such deferral period, the Member shall have all other rights and privileges suspended. The deferral of such dues shall be subject to the conditions set out in Section 10(C) of this Article III. 8

C. A property-owning Capital Member who resigns from the Membership but desires to maintain his or her right to transfer the Membership to the future purchaser of his or her property will be granted a deferral period of one year insofar as his or her dues obligation is concerned, but will be required to pay dues after the one-year period. D. All dues deferred under Sections 10(A), (B) or (C) above shall become immediately payable to the Club at the time of any transfer of the Capital Membership of a deceased Member or resigned Member, together with interest accrued on the accumulated deferred dues at the rate charged by the Club on past due accounts for the period of time such dues were deferred. Notwithstanding any other provision of these By- Laws to the contrary, all deferred dues and interest thereon shall be payable out of any proceeds of the initiation fee or any Refundable Capital Investment due to the deceased or resigned Member from the Club under Section 4 of this Article III. The accumulated deferred dues and interest thereon may not exceed the proceeds of any initiation fee or Refundable Capital Investment due to the estate of the deceased Member or resigned Member upon the transfer of the property to which the Capital Membership is attached. In such cases, the Member who has resigned, or the estate of the deceased Member, shall pay to the Club the amount by which such dues and interest thereon exceeds the amount of such initiation fee and Refundable Capital Investment; otherwise, such Capital Membership shall be transferred to the Club for cancellation in full settlement of all unpaid dues and interest thereon and shall not be transferable to a prospective purchaser. Section 11. Honorary Members. An Honorary Member shall be entitled to the same privileges as a Capital Member except that an Honorary Member shall not be entitled to vote as a Member, be eligible to be elected to the Board of Directors or Village Council or be appointed as an Officer of the Club. An Honorary Membership is not transferable and may be terminated at any time for 9

any reason by the Board of Directors. Sections 4 through 9 of this Article III do not apply to Honorary Memberships. An Honorary Member shall not be required to pay any initiation fees or dues, but shall pay the same charges and fees as other Members. ARTICLE IV. MEETING OF THE MEMBERS Section 1. Place of Meetings. All meetings of the Members shall be held at Grandfather Golf and Country Club, or at such other place as shall be designated by the Board of Directors. Section 2. Annual Meetings. The Annual Meeting of Members shall be held during the last 16 days of August of each year or on such later date as the Board of Directors shall determine pursuant to Section 3 of this Article IV. Notice of the date of the Annual Meeting shall be mailed to each Member, accompanied by a proxy and certain other information in accordance with Section 2(C) of Article VI. Section 3. Substitute Annual Meeting. If, for any reason, the Annual Meeting of Members shall not be held on the day designated, a substitute date may be designated in accordance with the provisions of Section 4 of this Article IV. A meeting so called shall be designated and treated for all purposes as the Annual Meeting of Members. Section 4. Special Meetings. The Chairman of the Board of Directors or the Board of Directors may call, and the Board of Directors upon written request of at least 10% of the voting Members (as determined by the Secretary of the Club) shall call, a Special Meeting of Members by giving at least 10 days notice, by mail to the last known address of each Member or by other usual means of communication. The notice of every Special Meeting shall state the object or objects for which it is called, and no other business shall come before such meeting. In calling Special Meetings upon request of the Members, the Board of Directors shall generally schedule such meetings as soon as reasonably practicable, considering such factors as it shall deem appropriate such as seasonal inactivity at the Club, or the need to prepare additional information concerning the proposed business, provided 10

that in no event shall such Special Meeting be delayed longer than 60 days. Section 5. Quorum. Fifty percent of the voting Members, present in person or by proxy, shall constitute a quorum at all meetings of Members, and at all such meetings a majority of those Members so voting shall determine the result. All other By-Laws in conflict with this are hereby amended to conform. Section 6. Voting. Each Capital Member and each Regular Member shall be entitled to one vote on each matter submitted to a vote at a meeting of Members, provided that only those Members owning property within Grandfather Village shall be entitled to vote on the election of members of the Village Council. Voting shall not be cumulative. Section 7. Proxies. A. Any Member may vote in person at any meeting of Members or such Member may be represented (and his or her Membership voted) at any meeting by one or more proxies authorized as set forth in this Section 7. B. A Member may appoint one or more proxies to vote or otherwise act for the Member by signing an appointment form, either personally or by his or her duly authorized attorney-in-fact. A photocopy, telegram, cablegram, facsimile transmission, electronic transmission or equivalent reproduction of the appointment form will be valid. C. The written appointment of proxy must be signed, dated and filed with the Secretary of the Club. Any proxy not signed or dated shall be invalid and not counted. D. If the appointment form directs a Member s proxy or proxies to vote in a specified way, then (unless there is a question by the Tellers about such direction) the proxy shall be considered for all purposes to be a ballot cast in accordance with the direction given by the Member. 11

E. A Member may revoke his or her appointment of proxy by: (i) (ii) attending the Members meeting for which the appointment applies and voting in person at the meeting by completing and submitting a ballot to the Tellers, or signing and delivering to the Secretary of the Club either a written statement that the appointment of the proxy is revoked or a subsequently dated proxy appointment form. Section 8. Petitions and Membership Communications. Any petition or communication relating to the business or affairs of the Club to be circulated by or on behalf of a Member among all or substantially all of the Membership shall be filed with the General Manager or Secretary of the Club not less than five days prior to its circulation. Any petition submitted to the Board of Directors requesting a Special Meeting of Members and the submission of any matter to a vote of the Members shall contain a statement by petitioners as to the reasons such vote of the Members is being requested. The provisions of this Section 8 do not apply to (i) bulletins, newsletters or other official communications from the Club to Members or (ii) nomination petitions described in Section 2(B) of Article VI. Section 9. Ballots in Lieu of Meeting. A. Any matter requiring the consent of the Members or other action by the Members may be submitted for approval by written ballot in lieu of a Members meeting. An election or vote by written ballot shall be conducted under the guidance of Tellers. See Section 10 of this Article IV. B. The form of the ballot shall (i) set forth each proposed action and (ii) provide an opportunity to vote for or against each proposed action. The ballot and any other relevant materials, including a properly addressed return envelope together with the required postage affixed thereto, shall be mailed to each Member at such Member s mailing address (as set forth in the records of the Club) in sufficient time to 12

allow the Member at least 10 days in which to vote and return the ballot to the Club. C. A vote by ballot shall be deemed valid action by the Members if the number of votes properly cast by ballots and returned to the Secretary of the Club equals or exceeds the quorum of the voting Members required to be present at a Members meeting authorizing the action, and the number of approvals equals or exceeds the number of votes that would be required to approve the matter at a meeting at which the same total number of votes were cast. Section 10. Tellers. A. The Board of Directors shall appoint Members to act as Tellers (the number of Tellers to be determined by the Board of Directors) to supervise the tabulation of all ballots (or proxies) at any meeting of Members or ballots submitted to Members in lieu of a meeting of Members. No member of the Board of Directors, and no Member who has served on the Board of Directors within the past five years, may be appointed as a Teller. The Board will appoint one of the Tellers as the Head Teller to supervise and coordinate the activities of the Tellers. B. All rules set by the Tellers with respect to the procedure for tabulating or validating the ballots (or proxies) shall be final so long as such rules are consistent with these By-Laws. Section 11. Records. A. The aggregate tabulation of all ballots and proxies (but not the actual ballots and proxies or any other identification of the way individual Members voted) shall be available for inspection by any Member within five days after the results of the vote have been reported to the Members. B. All ballots and proxies shall be kept confidential, retained by the Head Teller in his or her possession following the tabulation of ballots and proxies and destroyed following the five-day period referred to in 13

Section 11(A) above or, if a dispute arises regarding the vote, then five days after such dispute is resolved. ARTICLE V. BOARD OF DIRECTORS Section 1. General Powers. The business and affairs of the Club shall be governed by a Board of Directors and a Village Council in the best interests of the Members in a manner to perpetuate the purposes for which the Club exists and to maintain the unique characteristics of the Club. Section 2. Number, Term and Qualifications. A. The Board of Directors shall consist of nine Capital and/or Regular Members. B. Three Directors shall be elected at each Annual Meeting of Members to replace those three Directors whose terms expire at such Annual Meeting of Members. C. (i) Each Director shall hold office for three years, or until his or her death, resignation, removal or disqualification, or until his or her successor is qualified and elected. (ii) (iii) No person shall be eligible to serve on the Board of Directors for more than one consecutive elected or appointed term, regardless of the length of such term. Directors shall serve without compensation or reimbursement of expenses, except that the Club may pay for the reasonable expenses of meals, lodging and air travel incurred by them in connection with their duties as Directors under rules approved by the Board of Directors from time to time. D. If the Secretary or the Treasurer of the Club shall not be a Director, such Officer shall serve as a nonvoting, ex-officio member of the Board of Directors. The outgoing President of the Club shall serve as a non-voting, ex-officio member of the Board of 14

Directors. Except as specifically permitted herein, no Director shall be a member of the Village Council. E. See Section 1(D) of Article VI for the qualifications of a Director. ARTICLE VI. ELECTION OF BOARD OF DIRECTORS AND VILLAGE COUNCIL Section 1. Nominating Committee. A. The Board of Directors shall annually appoint a Nominating Committee of six members: the Chairman, who shall not be entitled to vote, and five voting members. Of the voting members, two may be members of the Board of Directors (provided that only Board members whose terms are expiring at the next Annual Meeting of Members may be so appointed) and the others shall not be members of the Board of Directors and shall not have been members of the Board of Directors within the past five years. The Chairman of the Committee shall be the immediate past President of the Club; if the immediate past President of the Club is deceased or unwilling or unable to serve, then the past President who served as President most recently and is willing and able to serve shall be Chairman. No member of the Nominating Committee, or his or her spouse, may be a candidate for election to the Board of Directors or Village Council. B. The Board of Directors shall announce the Nominating Committee no later than June 1 of each year, by posting the names of the Committee in the Clubhouse and mailing such information to the Members. As part of such notification, the Board of Directors shall solicit the Members to submit to the Nominating Committee by June 15 the names of nominees for the Board of Directors and Village Council. C. Following the solicitation of names of such nominees from the Members and after giving due consideration to any such names submitted, the Nominating Committee shall nominate candidates for the Board of Directors and the Village Council each year in 15

accordance with the procedures set forth in this Article VI. D. Each nominee for the Board of Directors or the Village Council, including nominees by petition pursuant to Section 2(B) of this Article VI shall be required to (i) have been a Member in good standing for at least five full years before his or her term as a Director or Council member would begin, (ii) be a person of good character and integrity and have the capability to serve as a Director or Council member and (iii) have demonstrated an active interest in the Club through service on a Club Committee, use of Club facilities or otherwise. Each nominee shall be required to complete a questionnaire prepared by the Board of Directors. The questionnaire shall be used to provide background information about each nominee to Members and to determine whether each nominee, if elected as a Director or Council member, could be insured under the Club s directors and officers insurance policy at normal rates. In determining who the nominees are, the following additional factors shall be considered: (i) to the extent practicable, the nominees should reflect the diverse interests and demographics of the Members and (ii) the nominee s prior experience effectively serving on the governing body of other organizations and other qualifications or experiences which would enable the nominee to be an effective member of the Board of Directors or Village Council. Section 2. Election of Board of Directors and Village Council. A. (i) The Board of Directors (pursuant to Section 1(B) of this Article VI) and the Nominating Committee will, from June 1 to June 15, solicit from the Members their suggestion as to nominees. (ii) No later than July 1 of each year, the Nominating Committee shall nominate two candidates for each member of the Board of Directors or Village Council whose term is expiring at the next Annual Meeting of Members. 16

(iii) As soon as practicable, but not later than July 1 of each year, the Nominating Committee shall mail to the Members the list of such nominees proposed by the Nominating Committee, and include appropriate background information (including a copy of the questionnaire referred to in Section 1(D) of this Article VI), to inform the Members as to each nominee s qualifications to hold office. (iv) The President of Grandfather Lodge Association, Inc. shall be a voting, exofficio member of the Village Council, but may not be elected an officer of the Village Council while serving in that capacity. The President of Grandfather Lodge Association, Inc. shall not be elected directly by the Members but will automatically become a member of the Village Council upon becoming President and shall remain a member of the Village Council during his or her term as President. (v) The President of Grandfather Lodge Association, Inc., as a voting ex-officio member of the Village Council, may not also be an elected member of the Village Council. B. Additional qualified persons to fill the expiring terms on the Board of Directors of the Club or Village Council may be nominated by petition of not less than 25% of the Members eligible to vote in such election. The Secretary of the Club shall be notified promptly of any effort to obtain signatures on a petition to nominate one or more qualified candidates. The number of nominees nominated by petition may not be more than the number nominated by the Nominating Committee. If more nominees than the number allowed herein shall be submitted, those qualifying nominees with the most valid signatures (as determined by the Secretary of the Club) shall be included on the form of appointment of proxy mailed to Members before the Annual Meeting of Members and the ballot used at the 17

Annual Meeting of Members. The deadline for the Secretary of the Club to receive petitions shall be 5:00 p.m. on July 15. C. (i) At least 15 days prior to the Annual Meeting of Members, the Secretary shall cause to be mailed the form of an appointment of proxy listing the names of the candidates for the Board of Directors and the Village Council nominated by the Nominating Committee, and any additional persons nominated by petition, along with the notice of the Annual Meeting of Members, to each Member in good standing. The appointment form will designate proxies approved by the Board of Directors. (ii) (iii) (iv) (v) Along with the appointment of proxy, background information shall be provided on all nominees (including any nominees by petition) for election to the Board of Directors or Village Council to inform the Members as to such nominee s qualifications to hold office. Note Section 2(A)(iii) of this Article VI. Each Member may complete and return an appointment of proxy to the Secretary of the Club, as provided in Section 7 of Article IV. Alternatively, the Member may attend the Annual Meeting of Members and vote in person, regardless of whether the Member has previously returned an appointment of proxy to the Secretary of the Club. Nominees for the Board of Directors or the Village Council (and their representatives) are discouraged from actively campaigning for votes among the Members. (a) Those candidates who receive the highest number of votes shall be elected to succeed the Board members and Council members whose terms are expiring. Any ballot or proxy voting for a number of candidates (including 18

candidates for the Village Council) greater or fewer than the number of positions to be filled shall be invalidated and shall not be included in the tabulation of votes. (b) Any written ballot which has been properly marked as to the election of members of the Board of Directors or the Village Council, signed, dated and properly returned to the Tellers shall be deemed valid and shall be tabulated in the vote for each such election. In the event that the ballot is either not marked or improperly marked as to the election of members of the Board of Directors or the Village Council, then the ballot shall, as to such election, be invalidated and not counted in the tabulation of votes for that election. In the event a ballot is not dated or signed, the ballot shall be invalidated and shall not be tabulated in the vote. (c) If an appointment of proxy is submitted with a ballot, and the appointment is properly dated and signed, but the ballot is improperly marked, then the ballot shall be declared invalid, and the proxies may vote as they deem appropriate. D. If any specified dates should fall on Saturday, Sunday, or a holiday, the specified dates shall be deemed the next succeeding business day. Section 3. Removal. A. Members of the Board of Directors or Village Council may be removed with or without cause by a vote of a majority of the voting Members at a meeting of Members called for the purpose of removing a particular Director or Village Council member, and the meeting notice shall state that the 19

purpose, or one of the purposes, of the meeting is such removal. B. A member of the Board of Directors or Village Council may be removed from the Board of Directors or the Village Council by a majority of the members of the Board or Village Council then in office upon his or her failure to attend two-thirds or more of the meetings of the Board of Directors or Village Council, as the case may be, during any year (that is, the approximately 12-month period between Annual Meetings of Members) of his or her term. C. Any member of the Board of Directors or Village Council member shall be automatically removed from the Board of Directors or the Village Council if such member of the Board of Directors or Village Council is expelled from the Club in accordance with the provisions of Article XIV. Section 4. Vacancies. If a vacancy shall occur on the Board of Directors or the Village Council, the Board may appoint a successor to serve for the unexpired term, including the vacancies on the Board of Directors and Village Council which were filled by the Board of Directors following the 2007 Annual Meeting of Members. ARTICLE VII. COMMITTEES Section 1. Committees. A. The Board of Directors shall appoint an Audit Committee, a Finance Committee and all other Committees deemed necessary. B. No Executive Committee shall be authorized. C. Committee members shall serve without compensation or reimbursement of expenses, except that the Club may pay for the reasonable expenses of meals, lodging and air travel incurred by them in connection with their duties as Committee members under rules approved by the Board of Directors from time to time. 20

Section 2. Composition. A. Within 30 days following the Organizational Meeting of the Board of Directors, the President shall appoint, with the concurrence of the Board, a Chairman of each Committee. B. Promptly following his or her appointment, each Chairman of a Committee, subject to the approval of the President and the Board of Directors, shall name the members of his or her Committee. C. The President shall be a non-voting, ex-officio member of all Committees. D. Any vacancy occurring in any Committee may be filled by the Chairman of the Committee with the approval of the President and the Board of Directors. Section 3. Powers and Duties. Each Committee shall have the powers, duties and responsibilities set forth in the Board-approved Job Description or Charter on file with the Secretary, and such other duties that may be assigned by the Board of Directors. Section 4. Terms. All Committee Chairmen and Committee members shall serve without compensation and at the pleasure of the Board of Directors. Each Committee Chairman or the member of a Committee shall be appointed to serve on the Committee for a one-year term. ARTICLE VIII. THE VILLAGE COUNCIL Section 1. General Powers. The Village Council shall have responsibility for such of the following as shall be delegated by the Board of Directors: maintenance of roads, beautification, community services, utilities, waste management, security, health, architectural review, land planning and zoning, fire and rescue, and maintenance of all properties consisting of the Club s property other than those properties that are related to Clubhouse, golf, tennis, croquet, beach activities or any social activity, pursuant to the terms of these By-Laws, and other than the common areas of condominium clusters within Grandfather Village. 21

Section 2. Number, Term and Qualifications. A. The Village Council shall consist of 10 members: nine members elected directly by the Members (the elected members ) and the President of Grandfather Lodge Association, Inc. Only Members may serve as members of the Village Council. B. Three elected members of the Village Council shall be elected at each Annual Meeting of Members to replace those three elected members whose terms are expiring. C. Each elected member shall hold office for three years, or until his or her successor shall have been elected. D. No elected member shall be eligible to serve on the Village Council for more than two consecutive terms regardless of the length of such term. E. See Section 1(D) of Article VI for the qualifications of a member of the Village Council. Section 3. Rules and Regulations. The Village Council shall, subject to the approval of the Board of Directors, develop such rules and regulations governing its activities, consistent with the terms of these By-Laws, as shall be necessary and appropriate to carry out effectively its duties as set forth herein. Such rules and regulations shall set forth provisions regarding meetings of the Village Council, Officers of the Council, and any other provisions appropriate and necessary for the orderly carrying out of its activities. No member of the Village Council may be appointed President of the Village Council for more than two consecutive terms of one year each. ARTICLE IX. MEETINGS OF THE BOARD OF DIRECTORS Section 1. Organizational Meetings. The annual Organizational Meeting of the Board of Directors shall be held promptly after the Annual Meeting of Members in order to elect the Officers of the Club. 22

Section 2. Regular Meetings. The Secretary shall give notice to each member of the Board of Directors at least 10 days in advance of any regular meeting. Section 3. Special Meetings. Special Meetings of the Board of Directors may be called by the Chairman or by any two Directors. The Secretary will give notice to each member of the Board of Directors and at least 48 hours in advance of the holding of any Special Meeting of the Board of Directors. Section 4. Waiver of Notice. Attendance by a Director at a meeting of the Board of Directors shall constitute a waiver of notice of such meeting, except where a Director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called. Section 5. Quorum. A majority of the voting members of the Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors. Section 6. Manner of Acting. Except as otherwise provided in these By-Laws, the act of the majority of the members of the Board of Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Section 7. Informal Action by the Board of Directors. Action taken by the Board of Directors without a meeting is nevertheless Board action if written consent to the action in question is signed by all the members of the Board of Directors, and filed with the minutes of the proceedings of the Board of Directors whether done before or after the action so taken. Section 8. Meeting by Telephone. Any one or more members of the Board of Directors may participate in a meeting of the Board of Directors by means of a conference telephone which allows all persons participating in the meeting to hear each other, and such participation shall be deemed presence in person at such meeting, provided that the meeting complies with all other requirements of these By-Laws. 23

ARTICLE X. OFFICERS Section 1. Number. The Officers of the Club shall consist of a President of the Club, who shall be the Chairman of the Board of Directors; one Vice President who shall be Vice Chairman; one or more other Vice Presidents; a Secretary; a Treasurer; and such Assistant Secretaries, Assistant Treasurers and other Officers as the Board of Directors may from time to time appoint. The President (Chairman) and the Vice Presidents shall be members of the Board of Directors with the exception that the General Manager may be appointed a Vice President. As to any other office, the Board of Directors may determine, in its sole discretion, that such Officer need not be a member of the Board of Directors, provided that each Officer who is not a member of the Board of Directors shall serve as a non-voting, ex-officio member of the Board of Directors. Section 2. Appointment and Term. A. The Officers of the Club shall be appointed by a majority vote of the Board of Directors promptly after the Annual Meeting of Members. B. Each Officer shall hold office for a period of one year, or until his or her death, resignation, retirement, removal, disqualification, or until his or her successor is appointed. C. No Director may be appointed President of the Club for more than two consecutive terms of one year each. Section 3. Removal. Any Officer or agent appointed by the Board of Directors, may be removed by the Board, with or without cause, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Section 4. Vacancies. A vacancy in any office because of an Officer s death, resignation, removal, disqualification or otherwise, may be filled by the Board of Directors for the unexpired portion of the term. Section 5. Chairman (President). The President (Chairman) shall preside at all meetings of Members and 24

the Board of Directors. He or she shall supervise and evaluate the General Manager; with the concurrence of the Board of Directors, appoint persons to chair such Committees as the Board of Directors may establish (Section 2 of Article VII); coordinate the activities of the Board of Directors and Committees; and in general, perform all duties incident to the office of Chairman and President, and such other duties as may be prescribed by the Board of Directors from time to time. Section 6. Vice President (Vice Chairman). The Vice Chairman shall perform such duties as may be assigned to him or her by the Chairman or the Board of Directors. In the absence or disability of the Chairman, the Vice Chairman shall perform the duties and exercise the powers of that office. Section 7. Other Vice Presidents. Any other Vice Presidents shall perform such duties as may be prescribed by the Board of Directors from time to time. Section 8. Secretary. The Secretary shall keep a correct record of all the proceedings at the meetings of Members and the Board of Directors. He or she shall attend to the giving of notices and perform such other duties as are incident to the office of Secretary, and shall have such other powers and duties as may be conferred upon him or her by the Chairman or the Board of Directors. Section 9. Treasurer. A. The Treasurer shall supervise the preparation of the annual budget; the handling of all monies of the Club; the keeping of adequate books of accounts showing the receipt and disbursement of funds of the Club. B. The Treasurer shall make a financial report at each meeting of the Board of Directors, and at the Annual Meeting of Members. C. The Treasurer shall comply with all provisions of Article XII of these By-Laws. D. The Treasurer shall perform such other duties as are incident to the office of Treasurer, and shall have 25

such other powers and duties as may be conferred upon him or her by the Chairman or the Board of Directors. Section 10. Assistant Secretaries and Treasurers. The Assistant Secretaries and Assistant Treasurers shall, in the absence or disability of the Secretary or the Treasurer, respectively, perform such other duties and exercise the powers of those offices, and they shall perform such other duties as shall be assigned to them by the Secretary or the Treasurer, respectively, or by the Chairman or the Board of Directors. Section 11. Other Officers. Any other Officers shall have such duties and shall be assigned to them by the Chairman or the Board of Directors. ARTICLE XI. MANAGEMENT Section 1. General Manager. The daily operation of the Club and Village shall be under the direction of a General Manager who shall be recommended by the Chairman, and approved by the Board of Directors. The General Manager shall manage the operations of the Club and Village in accordance with these By-Laws, the Rules and Regulations and the policies and other directives issued by the Board of Directors and the Village Council, as the case may be. Section 2. Term. The General Manager shall be employed under contract, and shall be a full time employee of the Club and Village. Section 3. Compensation. The compensation of the General Manager, and any other employee under employment contract, shall be approved by the Board of Directors. ARTICLE XII. FINANCIAL POLICY AND FISCAL RESPONSIBILITY Section 1. Fiscal Year. The fiscal year of the Club shall begin the first day of March, and end on the last day of February, or as otherwise determined by the Board of Directors (the Fiscal Year ). 26

Section 2. Financial Report to Members. The Board of Directors, after considering the recommendations from the Audit Committee, shall retain the services of an independent certified public accounting firm to perform an audit and render an opinion on the financial statements of the Club. Such report of audit, opinion and financial statements shall be made available to the Members as soon as practicable following the end of the Fiscal Year, along with any appropriate comments by the Chairman of the Audit Committee, the Treasurer or the Board of Directors. Section 3. Fiscal Responsibility. The operations of the Club for financial reporting and control purposes shall be segregated into two sections: Operating Funds (Club and Village) and Capital Funds. The Board of Directors shall annually appoint a Finance Committee and Audit Committee to assist the Board in fulfilling its financial responsibilities. These Committees shall adhere to duties as outlined in each Committee s Job Description or Charter to be reviewed annually by the Board of Directors. The Finance Committee shall submit to the Board of Directors a budget for the ensuing Fiscal Year for each of the operating segments in accordance with the following: A. Operating Fund. (i) (ii) The revenue, dues and fee structure shall be established at a level to provide for the operating expenses (excluding depreciation). If the actual results for the Fiscal Year reflect that the Club and Village have operated at a deficit (expenses and operating charges, excluding depreciation, exceed all revenue, fees, plus all other income) for the year, then such operating deficit or deficiency in the Operating Fund may be provided for in the next Fiscal Year by either an appropriation of existing unappropriated operating surplus funds, an increase in dues for the ensuing year or by a special assessment of the Members. All items of revenue/income and all items of expenses/charges in the statement of 27

Revenue and Expenses of the Club not specifically designated herein as Capital Fund items shall be considered as Operating Fund items for purposes of the budget and for determining if an operating deficit has occurred. (iii) The independent certified public accounting firm reporting on the Club s financial statements will prepare a separate letter or report to the Board of Directors setting forth its determination as to the amount of the operating deficit. B. Capital Fund. (i) (ii) The following items of income and expense are Capital Fund transactions and shall be considered a part of the Capital Fund activities and separated from the Operating Fund activities of the Club. The Capital Fund shall be increased by: (a) Receipts from sales of Capital Memberships, Capital Membership Rights, Refundable Capital Investments, and similar capital and Membership transactions. (b) All receipts derived from the sale of lots held for development or sale and/or any real estate. (c) All commissions on property sales or real estate related transactions. (d) All contributions from Members related to Capital Fund activities. (e) Interest income on Capital Fund assets. (iii) The Capital Fund shall be reduced by: 28

(a) All disbursements related to capital or other Membership transactions such as refunds of capital investments. (b) All expenses associated with the sale or disposal of real estate or the holding of such real estate for sale including operating or membership promotional expenses. (c) All disbursements from the Capital Fund for capital additions to or improvement of Club facilities as may be authorized from time to time individually by the Board of Directors or through approval of the annual capital fund budget. 1) The property so acquired by the Capital Fund shall be transferred to the Club along with any liabilities related thereto and thus subsequently excluded from the Capital Fund assets. 2) All charges for the maintenance of property or facilities shall be provided for in the operating budget and not be a part of Capital Fund activities or charges. (d) Interest expense on all liabilities incurred for the acquisition of capital or property assets. (e) The excess of interest earned over interest expense of the Capital Funds shall be transferred to the Club and treated as Operating Fund revenue available for general Club purposes. (f) Non-recurring expenditures, having multiple year impact and not related to current operations, as may be 29