Association Rules

ARTICLES OF INCORPORATION OF

MONTARA HOMEOWNERS ASSOCIATION

The undersigned incorporator, desiring to form a nonprofit association pursuant to Chapter 82 of the Nevada Revised Statutes, adopts the following Articles of Incorporation

for such association. ARTICLE 1

NAME

The name of the Association is and shall be: MONTARA HOMEOWNERS ASSOCIATIOtthe "Association"). ARTICLE II RESIDENT AGENT

The name and address of the Associations initial resident agent is Woodbury, Morris & Brown, 701 N. Green Valley Parkway, Suite 125, Henderson, Nevada 89074.

ARTICLE III PURPOSE AND POWERS The Association isa nonprofft corporation organized for those purposes thatqualify it as an exempt organization under the Internal Revenue Code of 1986, as amended (the

Code") The objective of the Association is to provide for management, administration,

maintenance, and architectural contro' of the common interest ownership community

referred to as Montara, located on the real property described in the Peclaration of Covenants, Conditions, and Restrictions for Montara recorded on August 24,2004, in Book

20040824 as Instrument 01751 in the Official Records of the Clark County Recorder (the

'Declaration") and pursuant to the terms thereof and of Chapter 116 of the Nevada Revised Statutes. Except as provided below, the Association may engage in any lawful activities incident to such purposes and objectives. Capitalized terms used herein, unless

otherwise defined, shall have the meanings ascribed to such terms in the Declaration.

ARTICLE IV INITIAL BOARD OF DIRECTORS The Association shall be governed by a board of directors consisting of at least two

(2) persons. The initial board of directors shall consist of two (2) directors, and the names

and addresses of the persons who shall serve as directors until the first annual meeting of members or until their successors are elected and qualified are:

Address

Name

Michael J. Galatio

4535 West Russell Road, Suite 1 Las Vegas, Nevada 89118

Patricia L. Shaw

4535 West Russell Road, Suite 1 Las Vegas, Nevada 89118 ARTICLE V

LIMITATION ON LIABILITY No director or officer shall be personally liable to the Association or its Members for

monetary damages for breach of fiduciary duty as a director or officer; provided, however,

that this Article V shall not eliminate or limit the liability of a director or officer for: (a) acts

or omissions that involve intentional misconduct, fraud, or a knowing voIation of law; (b) the paynient of distributions in violation of NRS § 82.136; or (c) an action or proceeding brought pursuant to NRS § 82536 or NRS Chapter 35. 2

ARTICLE VI INDEMNIFICATION

The Association shall indemnify any director or officer for any liability asserted against such director or officer and for any liability and legal expenses, including attorneys

fees, judgments, fines, and amounts paid in settlement actually and reasonable incurred by him or her arising out of his of her status or actions as a director or officer if he or she

acted in good faith and in a manner that he or she reasonably believed to be in or not opposed to the best interests of the Association and had no reasonable cause to believe his or her conduct was unlawful.

ARTICLE VII AMENDMENT

Amendment of these Articles of Incorporation shall require the approval of the Board, the consent of sixty-seven percent (67%) of the Members entitled to vote, and such

other requirements as set forth in the Declaration.

ARTICLE VIII INCORPORATORS The name and address of the incorporator is: Name

Address

Rodney S. Woodbury

701 N. Green Valley Parkway Suite 125 Henderson, Nevada 89074

All powers, duties, and responsibilities of the incorporator shall cease upon the filing of

3

CERTIFICATE OF ACCEPTANCE OF APPOINTMENT BY RESIDENT AGENT In the mailer of Montara Homeowners Association, we, Woodbury, Morris & Brown

with address at 701 N. Green Valley Parkway, Suite 125, City of Henderson, County of Clark, State of Nevada 89074, hereby accept the appointment as Resident Agent of the above-entitled corporation in accordance with NRS § 78.090. Dated this 27th day of August, 2004. WOODBURY, MORRIS & BROWN

W By:

Rodney S. Woodbury, Esq.

V

sECTA

OF

STATE

r CORPORATE CHARTER

I, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do hereby certify that MONTARA HOMEOWNERS ASSOCIATION did on August 27, 2004, file in this office the original Articles of Incorporation; that said Articles are now on file and of record in the office of the Secretary of State of the State of Nevada, and further, that said Articles contain all the provisions required by the law of said State of Nevada.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Great Seal of State, at my office, in Las Vegas, Nevada, on August 27, 2004.

DEAN HELLER Secretary of Slate

I By

Litx, vRjr

Clerk

L

A

DEAN HELLER

Secretary of State 20$ North Carson Street Carson City, Nevada 89701.4299 (775)684 5708

-O

FILED #

Website: secretaryofstate.biz

AUG 27 2004

Nonprofit Articles of Incorporation

w i81afl'

(PURSUANT TO NS 82)

Important: Read attached instructions before completing foim. 1. Name of Comoraflon:

ASOVE SPACe IS FOR OFFPCE USE ONLY

MONTARA HOMEO\W4ERS ASSOCIATION

2. Resident Aoent Nan,e WOODBURY, MORRIS & BRO\W4 -

nttraet Address:

3. Names. Addresses.

Number of Board of Directors/Trustees:

Name

701 N. GREEN VALLEY PARKWAY! SUITE 125

flENDERSON

Physical Street Address

City

Additional Mailing Address

City

NEVADA 89074 Zip Code

State

Zip Code

The names and addresses of the First Board of Dfrectorsjlrustees ere as followt

i. MICHAEL J. GALATIO Name

4535 WEST RUSSELL ROAD. SUITE I Street Address

LAS VEGAS

NEVADA S9 IS State

City

Zip Code

2. PATRICIA L. SFIAW Name

NEVADA 89118

4535 WEST RUSSELL ROAD, SUITE I

LAS VEGAS

Street Address

City

State

Zip Code

City

State

Zip Code

City

State

Zip Code

3, Name

Street Address 4,

Name

Street Address

4. Pumose:

The purpose ofthis Corporation shall be:

Provide mngmnl, administ., maintenance and architectural control ofcomnion mt. ownership community ..

.

RODNEY S. WOODSURY

insQfPgnio

Name

m,rno,eThfl

1O1}. GREEN VALLEY PARXWAY,SU1TE 125

uJaawQLalpL

Sweet Address

6 CertIficate

.

.

:1-1ENDERSOt

City I hereby acce t appointment as Res' nt Agent for Une above named corporation.

LI

Acceotancepf

raernkrrJto

Signature

Authorized Signature

R.A. or On Behal f nA. Company

This form must be accompanied by appropriat fees. See attached fee scheduie.

. NEVADA 89HZ State

Zip Coda

' '2W?/Joy Date / N.vada Sc,eIar ofSiaffi F NRS 82 PTFCLa 2003 Read on 4121/04

BYLAWS OF

MONTARA HOMEOWNERS ASSOCIATION

TABLE or CONTENTS ARTICLE I GENERAL

1

101 Registered Office 102 Principal Office 1.03 Other Offices 1.04 Defined Terms 1.05 Powers

1 1

I 1

I

ARTICLE II

.1

MEMBERS

.1

2.01 Membership Rights 202 Control of Association (a) (b)

(c) (d)

(e) (1)

(g)

Voting Rights Declarant Control of Association Composition of the Board Eection of Directors Annua! Elections (I) Notice of Eligibility: Nominations (ii) Qualifications (iii) Required Disclosure (iv) Election Procedure (v) Director Certification (vi) Term of Office (vii) Removal of Board Members Joint or Common Ownership Proxy Voting Cumulative Voting

(h) 2.03 Meetings of Members (a)

(b) (c) (d) (e) (f) (g) (h) (i) (j)

Annual Meeting Special Meetings Place of Meetings Notice Agenda Emergency Quorum Organization Action by Members Owners Right to Record Meetings Minutes

(k) 2.04 Action By Members Without a Meeting ti

I

.2 .2 .2 .2 .3 .3 .3 .3 .3 .3 .4 .4 .5 .5 .5 .6 .6 .6 .6 .6 .6 .7 .7 .7 .7 .8 .8 8

2.05 Fixing Date for Determination of Members 2.06 Assessments ARTICLE III BOARD OF DiRECTORS

(e) (f) (g)

(h) (I) (I) (k) (I) (m) (n)

g

g 9 9

3.01 General Powers 3.02 Number of Board Members 3.03 Board Meetings (a) (b) (c) (d)

.8

Regular Meetings SrecipI MeetinQs Plpce of Meetings Notice to Directors Notice to Members

9 9 9 9

10 10

Aciencla

Emergency Quorum Organization Quarterly Review Owners Right to Record Meetings

10

Owners' Right to Speak at Meet jg

11

Executive Sessions Minutes

11

11 11

ii 11

12

3.04 Action by Directors Without a Meeting

13

3.05 Resignations 3.06 Vacancies

13 13

ARTICLE IV OFFICERS

13

4.01 Officers

13

4.02 Ejection and Term of Office 4.03 Agents; Managers 4.04 Removal 4.05 Resignations 4.06 Vacancies

14 14 14

14 14 14 15 15 15 16

4.07 President 4.08 Vice President 4.09 Secretary 4.10 Treasurer 4.11 Assistant Officers ARTICLE V COMMITTEES

16 II

ARTICLE VI NOTICE AND HEARING

6.01 NoticeofViolation

17 17

6.02 Opportunity for Hearing

17

ARTICLE Vii 17

SEAL ARTICLE VIII

INDEMNIFICATION OF DIRECTORS AND OFACERS 8.01 indemnification

8.02 Determination 8.03 Payment in Advance 8.04 insurance 8.05 Other Coverage

18 18 18 19

19 19

ARTICLE IX PROHIBITED ACTS OF DIRECTORS, OFFICERS, AND AGENTS CompensaUon / Confficts of Interest

19 19

9.02 Alleged Misconduct 9.03 Retaliatory Action Prohibited

20

9.01

20

ARTICLE X MISCELLANEOUS 10.01 Execution of Contracts 10.02 Attestation 10.03 Checks, Drafts 10.04 Deposits 10.05 Fiscal Year 10.06 Severability 10.07 Priorities, Inconsistencies

20 20 20 21 21 21 21 21

ARTICLE XI

AMENDMENTS

21

CERTIFICATE OF SECRETARY

UON1

23

III

BYLAWS

or MONTARA HOMEOWNERS ASSOCIATION

ARTICLE I GENERAL

1.01 Registered Office. The registered office of the Association shall be located at 701 N. Green Valley Pkwy., SLIite 125, Henderson, Nevada 3gQ74

1.02 Principal Office. The principal office of the Association shall be located at 4535 West Russell Road, Suite 1, Las Vegas, Nevada 89118, or such other place as the Board may from time to time determine, 1.03 Other Offices. The Association may also have offices at such other places both within and without the State of Nevada as the Board may from trne to time determine or the business of the Association may require.

1.04 Defined Terms. Capitaflzed terms used herein, unless otherMse defined herein, shall have the meanings ascribed to such terms in the Declaration of Covenants, Conditions, and Restrictions for Montara, Recorded or to be Recorded in the Office of the Clark County Recorder and applicable to the Development (the 'Dec(aration").

1.05 Powers. The Association shall have all of the powers of a nonstock, nonprofit corporation organized under the laws of the State of Nevada in operating for the

benefit of ts members, including, without limitation, all of the powers set forth in NRS 1163102, subject only to such limitations upon the exercise of such powers as are expressly set forth ri the Articles, these Bylaws, and the Declaration. It shall have the power to do any and all lawful things that may be authorized, required, or permitted to be done under and by virtue of the Declaration and to do and perform any and all acts that may be necessary or proper for or incidental to the exercise of any of the express powers of the Association for the peace, health, comfort, safety, or general welfare of the Owners.

ARTICLE II MEWBERS

2.01 Membership Rights. Only Owners, including Declarant, shall be Members of the Association. Each Owner shafl automaticafly be a Member of the Association without the necessity of any further action on its part, and membership in the Association

shall be appurtenant to and shall run with the property interest ownership that qualifies the

Owner to membership in the Association. Membership in the Association may not be severed from or in any way transferred, pledged, mortgaged, or alienated except with the title to the property ownership interest that qualEfies the Owner thereof to membership and

then only to the transferee of title to the property interest. Any attempt to make a prohibited severance, transfer, pledge, mortgage, or alienation shall be void.

2.02 Control of Association. Voting Rights. Subject to subsections (b) and (c) below, Members (a) shall be entitled to one (1) vote per Lot. Only votes cast in person, by secret ballot, or by proxy may be counted. If any votes are allocated to a Lot that is owned by the Association, those votes may not be cast, by proxy or otherwise, for any purpose. DeclarantCpntrolofAssocjation, Notwithstandinganyotherprovision of the Declaration or of these Bylaws arid subiect to subsection (c) below, there shall be a period during which the Declarant shall control the Association, arid the Declarant or a Person designated by the Declarant may appoint and remove all or some of the officers and Directors of the Association. The period of Declarant control of the Association terminates no later than the earlier of: (b)

sixty (60) days after the conveyance by Declarant of sevent(i) y-five percent (75%) of the Lots that may be created within the Property to Owners other than the Declarant; five (5) years after the Declarant has ceased to offer Lots for (ii) sale in the ordinary course of its business; or (ui) exercised by Declarant.

five (5) years after any right to annex new Lots was last

The Declarant may, but is not obligated to, voluntarHy surrender the right to appoint and remove officers and Board members as provided herein before the termination period

set forth above, provided that the Declarant may require that specified actions of the Association orthe Board may require Declarant approval priorto becoming effective. Such surrender of rights shall only be by a recorded instrument.

Composition of the Board. Not later than sixty (60) days after (c) conveyance by Declarant of twenty-five percent (25%) of the Lots that may be created within the Property to Owners other than Declarant, at least one (1) member of the Board and not less than twenty-five percent (25%) of the members of the Board must be elected by Owners other than Declarani. Not later than sixty (60) days after conveyance by Declarant of fifty percent (50%) of the Lots that may be created within the Property to Owners other than Declarant, not less than thirty-three and one-third percent (33-1/3%) of the members of the Board must be elected by Owners other than the Declarant. Upon 2

expiration of the Declarant control period set forth in subsection (b) above, the Owners shall elect the Soard, which shall consist of at least three (3) members, at least a majority of whom must be Owners. (d)

Election of Directors.

Annual Elections. After termination of the Declarant's control period, elections of Board members must be held annuafly. (i)

(ii)

Notice of Ehgibiliy; Nominations. Not less than thirty (30) days

before the preparation of any ballot for the ejection of any member of the Board, the Secretary of the Association shaH cause notice to be given to each Owner of his or her eligibility to serve as a member of the Board. Each Owner who is qualified to serve as a member of the Board may have his or her name placed on the ballot along with the names of the nominees selected by the members of the Board or by the nominating committee established by the Association.

Qualifications. Each member of the Board must either be a Member or an employee, partner, manager, member, director, trustee, beneficiary, fiduciary, officer oragent of a Memberthat is not a natural person. In all events where the (iii)

Person seniing or offering to serve as a member of the Board is not the record Owner, the Person shall file proof in the records of the Association that:(a) states that the Person is associated with the Owner; and (b) identifies the Lot(s) owned by the Owner. Unless a Person is appointed by the Declarant, a Person may not be a member of the Board if the Person, his or her spouse, or his or her parent or child, by blood, marriage, or adoption, performs the duties of a community manager for the Association.

Ruired Disclosure. Each person whose name is placed on the ballot as a candidate for a member of the Board must make a good faith effort to disclose any financial, business, professional, or personal relationship or interest that would result or would appear to a reasonable person to result in a potential conflict of (iv)

interest for the candidate if the candidate were to be elected to serve as a member of the

Board. The candidate must make the disclosure, in writing, to each member of the Association in the manner estabUshed by the Association. (v)

Election Prpced. The election of any member of the Board

must be conducted by secret written ballot. A vote may not be cast pursuant to a proxy for the election of any Board member. The Secretary of the Association shall cause a secret

ballot and a return envelope to be sent, prepaid by United States mail, to the mailing address of each Lot within the Development or to any other mailing address designated in writing by the Lot Owner. Each Owner must be provided with at least fifteen (15) days after the date the secret written ballot is mailed to the Owner to return the secret written ballot to the Association. A quorum is not required for the election of any member of the Board. Only the secret written ballots that are returned to the Association may be counted to determine the outcome of the election. The secret written ballots must be opened and H:.RSII1ItP,.,O,,

3

counted at a meeting of the Association. A quorum is not required to be present when the secret written ballots are opened and counted at the meeting. The incumbent members of the Board and each Person whose name is placed on the ballot as a candidate for a member of the Board may not possess, be given access to, or participate in the opening or counting of the secret written ballots that are returned to the Association before those secret written baUots have been opened and counted at a rneetüig of the Association. The

candidates receiving the highest number of votes up to the number of Directors to be elected shall be elected. Each member of the Board shall take office upon election and hold office until his or her successor is elected or appointed and qualified. (vi)

Director Certification. Each member of the Board shall within

ninety (90) days after his or her appointment or election, certify in writing to the Association, on a form prescribed by the Real Estate Administrator, that he or she has read and understands the governing documents of the Association and the provisions of the Act to the best of his or her ability.

Term of Office. The term of office of Board members shall be one (1) year, or such other term not to exceed two (2) years as the Board may from time to time establish. If any Board member senses a term in excess of one (1) year, the terms of office for Board members must be staggered in such a manner that, to the extent possible, an equal number of Board members are elected at each election. The foregoing provisions of this subsection 2.02(d)(vh) do not applyto Board members who are appointed by the Declarant. There is no imitation on the number of terms that a Person may serve as a member of the Board. (vii)

Removal of Board Members. Notwithstanding any provision of the (e) Declaration or these Bylaws to the contrary, the Owners, by a two-thirds (2/3) vote of all Persons entitled to vote at any meeting of the Owners at which a quorum is present, may remove any member of the Board with or without cause, other than a member appointed by the Declarant. The removal of any member of the Board must be conducted by secret written ballot. A vote may not be cast pursuant to a proxy for the removal of any Board

member. The Secretary of the Association shall cause a secret bauot and a return envelope to be sent, prepaid by United States mail, to the mailing address of each Lot within the Development or to any other mailing address designated in writing by the Lot Owner. Each Owner must be provided with at least fifteen (15) days after the date the

secret written baflot is rnafled to the Owner to return the secret written ballot to the Association. Only the secret written ballots that are returned to the Association may be counted to determine the outcome. The secret written ballots must be opened and counted at a meeting of the Association. A quorum is not required to be present when the secret written ballots are opened and counted at the meeting. The incumbent members of the Board, including, without limitation, the member who is subject to the removal, may not possess, be given access to, or participate in the opening or counting of the secret written ballots that are returned to the Association before those secret written ballots have been opened and counted at a meeting of the Association.

4

Joint or Common Ownership. If any property interest, ownership of (f) which entitles the Owner thereof to vote, is held jointly or in common by more than one (1) Person, the vote or votes to which such property interest's entitled shall also be held jointly or in common in the same manner. However, the vote or votes for such property interest shall be cast, fat all, as a unit, and neither fractional votes nor split votes shall be allowed, In the event joint or common Owners are unable to agree among themselves as to how their vote or votes shall be cast as a unit, they shall lose the right to cast their vote or votes on the matter in question. Any joint or common Owner shall be entitled to cast the vote or votes belonging to the joint or common Owners unless another joint or common Owner shall have delivered to the Secretary of the Association prior to the time for casting such vote a wñtten statement to the effect that the Owner wishing to cast the vote or votes has not been authorized to do so by the other joint or common Owner or Owners. Proxy Voting. Except as otherwise provided in this subsection2.02(g), (g) votes allocated to a Lot may be cast pursuant to a proxy executed by the Owner thereof. An Owner may give a proxy only to a member of his immediate family, his tenant who resides in the Development, another Owner who resides in the Development, or any other Person permitted by the Act. If a Lot is owned by more than one 1) Person, each Owner of the Lot may vote or register protest to the casting of votes by the other Owners of the Lot through an executed proxy. An Owner may revoke a proxy only by actual notice of revocation to the person presiding over a meeting of the Association, Before a vote may be cast pursuant to a proxy: (i) the proxy must be dated; (U) the proxy must not purport to

be revocable without notice; (UI) the proxy must designate the meeting for which t I executed; (iv) the proxy must designate each specific item on the agenda of the meeting for which the Owner has executed the proxy, except that the Owner may execute the proxy without designating any specific items on the agenda of the meeting if the proxy is to be used solely for determining whether a quorum is present for the meeting (If the proxy designates one (1) or more specific items on the agenda of the meeting for which the Owner has executed the proxy, the proxy must indicate, for each specific item designated in the proxy, whether the holder of the proxy must cast a vote in the affirmative or the negative on behalf of the Owner. If the proxy does not indicate whether the holder of the proxy must cast a vote in the affirmative or the negative for a particular item on the agenda of the meeting, the proxy must be treated, with regard to that particular item, as if the Owner were present but not yoUng on that particular item); and (v) the holder of the proxy must disclose at the beginning of the meeting for which the proxy is executed the number

of proxies pursuant to which the holder will be casting votes. A proxy terminates immediately after the conclusion of the meeting for which it is executed. A vote may not be cast pursuant to a proxy for the election or removal of a member of the Board. The holder of a proxy may not cast a vote on behalf of the Owner who executed the proxy in a manner that is contrary to the proxy. A proxy is void if the proxy or the holder of the proxy violates any provisions of this subsection 2.02(g).

(h)

Cumulative Voting. Voting shall not be cumulative.

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2.03 Meetings of Members. Annual Meeting. The Association shall hold an annual meeting of the (a) Members. The annual meeting of the Members shall be held on orabout one (1) year after the date of the last annual meeting. If the Members have not held a meeting for one (1) year, a meeting of the Members must be held in accordance with the Act.

Special Meetings. Special meetings of the Members may be called by the President of the Association, a majorfty of the Board! or Members having ten percent (10%) or more of the votes in the Association. (b)

Place of Meetings. Meetings of the Members shall be held at the Associations principal office, unless otherwise specified in the notice calling any such meeting, or in the event of a waiver of notice of such meeting, in such waiver of notice. (c)

Notice. Not less than ten (10) days (twenty-one (21) days in the event of a meeting at which an Assessment for a capital improvement or commencement of a civU action is to be considered or action is to be taken on such an Assessment) nor more than sixty (60) days in advance of each meeting of the Members, the Secretary shall cause (d)

notice of the meeting to be hand-derivered, sent prepaid by United States mail to the mailing address of each Lot or to any other mailing address designated in writing by the Lot Owner, or if the Association offers to send notice by electronic mail, sent by electronic mail at the request of the Owner to an e'ectronic mafl address designated in writing by the

Owner. The notice of the meeting must state the time and place of the meeting and include a copy of the agenda for the meeting. The notice must also include notification of the right of an Owner: (i) to have a copy of the minutes or a summary of the minutes of the meeting provided to the Owner upon request and, if required by the Board, upon payment to the Association of the cost of providing the copy to the Owner: and (ii) to speak to the Association or the Board, unless the Board is meeting in executive session.

Anenda. The agenda for every meeting of the Owners must consist (e) of: (i) a clear and complete statement of the topics scheduled to be considered during the meeting, including, without limitation, any proposed amendment to the Declaration or Bylaws, any fees or Assessments to be imposed or increased by the Association, any budgetary changes, and any proposal to remove an officer of the Association or member of the Board; (ii) a list describing the items on which action may be taken and clearly denoting that action may be taken on those items; and (iii) a period devoted to comments by Owners and discussion of those comments. In an Emergency (as hereinafter defined), the Owners may take action on an tern which is not isted on the agenda. Except in Emergencies, no action may be taken upon a matter raised during the owner comment period until the matter itself has been specificafly included on an agenda as an item upon which action may be taken.

II:RSWM 9ClM"lk

6

Ernerciency. As used in this Section 203, 'Emergency" means any occurrence or combination of occurrences that: (I) could not have been reasonably foreseen: (ii) affects the health, welfare, and safety of the Owners; (iii) requires the immediate attention of, and possible action by, the Board; and (iv) makes It impracticable to comply with the notice provisions of this Section. (1)

(g)

Quorum. A quorum is present throughout any meeting of the

Association if the number of Members who are present in person or by proxy at the beginning of the meeting equals or exceeds a majority of the total nthTber of voting Members of the Association. If after proper notice has been given for a meeting, the Members who are present in person or by proxy at the meeting are unable to hold the meeting because a quorum is not present at the beginning of the meeting, the Members who are present in person at the meeting may adjourn the meeting to a time that is not less than forty-eight (48) hours or more than thirty (30) days from the date of the meeting, at which subsequent meeting, a quorum shall be deemed to be present if the number of Members who are present in person or by proxy at the beginning of the subsequent meeting equals or exceeds twenty percent (20%) of the total number of voting Members of the Association. If such a quorum is deemed to be present at the subsequent meeting but the actual number of Members who are present in person or by proxy at the beginning of the subsequent meeting is less than the number of Members who are required for a quorum underthe governing documents of the Association, the Members who are present in person or by proxy at the subsequent meeting may take action only on those matters that were included as items on the agenda of the criginal meeting. The provisions of this subsection 203(g) do not change the actual number of votes that are required under the

governing documents of the Association for taking action on any particular matter. Anything herein to the contrary notwithstanding, a quorum is not required for the election of any memberof the Board nor is a quorum required to be present when the secretwritten ballots for the election of any member of the Board are opened and counted.

Organization. The President, or in his or her absence the (h) Vice-President, shall call meetings of Members to order and act as chairman of such meetings. In the absence of both of said officers, any officer of the Association may call the meeting to order and act as chairman of the meeting. The Secretary of the Association, or in his or her absence the Assistant Secretary, shall act as secretary of the theeting. In the absence of both the Secretary and the Assistant Secretary, any officer of the Association may act as secretary of the meeting. Action by Members. Except as otherwise provided in the Declaration or these Bylaws, any action incIuding any approvals required under the Declaration or these Bylaws) may be taken at any legally convened meeting of the Members at which a quorum is present upon the affirmative vote of the Members having a majority (or such greater percentage as may be required in the Declaration or these Bylaws for approval of the Members of any matter) of the total votes present at such meeting in person, by secret ballot, or by proxy. Only votes cast in person, by secret ballot, or by proxy may be counted. (i)

7

Owners' Right to RecQrd Meetings. An Owner may record on U) audiotape or any other means of Sound reproduction a meeting of the Owners if the Owner, before recording the meeting, provides notice of his intent to record the meeting to the other Owners who are in attendance at the meeting. Minutes. The Secretary of the Association shall cause minutes to be (k) recorded orotherwise taken at each meeting of the Owners. Not more than thirty (30) days

after each such meeting, the Secretary shall cause the minutes or a summary of the minutes of the meeting to be made available to the Owners. A copy of the minutes or a summary of the minutes must be provided to any Owner upon request and, if required by the Board, upon payment to the Association of the cast of providing the copy to th Owner. The minutes of each meeting of the Owners must include: (i) the date, time, and place of

the meeting; (ii) the substance of alt matters proposed, discussed, or decided at the meeting; and (iU) the substance of remarks made by any Owner at the meeting if he requests that the minutes reflect his remarks or, if he has prepared written remarks, a copy of his prepared remarks if he submits a copy for inclusion. Notwithstanding the forgoing, the Board may establish reasonable limitations on materials, remarks, or other information to be included in the minutes of a meeting of the Owners. The Association shall maintain

the minutes of each meeting of the Owners until the common-interest community is terminated. 2.04 Action By Members Without a Meeting. Any action required or permitted to be taken at a meeting of the Members may be taken without a meeting, without notice and without a vote, if a consent in writing, setting forth the action so taken, is signed by the Members with the percentage of the voting power required to take such action. Prompt notice of the taking of any such action shall be given to any such Members entitled to vote who have not so consented in writing.

2.05 FixIng Date for Determination of Members. In order that the Association may determine the Members entitled to notice of and to vote at any meeting of Members or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or for the purpose of any other Iawfu action, the Board may fix in advance a record date, which shall not be more than sixty (60) nor less than ten (10) days (twenty-one (21) days in the event of a meeting at which an Assessment for a capital improvement or commencement of a civil action is to be considered or action is to be taken on such an Assessment) prior to the date of such meeting or such action, as the case may be. If the Board has not fixed a record date for determining the Members entitled to notice of and to vote at a meeting of Members, the record date shall be at close of business on the day next preceding the day on which notice is given, or if notice is waived, on the close of business on the day next preceding the day on which the meeting is held. If the Board has not fixed a record date for determining the Members entitled to express consent to action in writing without a meeting, when no prior action bythe Board is necessarythe record date shall be the day on which the first written consent is expressed by any Member. If the Board has not fixed a record date for determining Members for any other purpose, the record date shalt be at the close of business on the day on which the Board adapts the

8

resolution relating thereto. A determinalion of Members of record entitled to notice of or to vote at a meeting of Members shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting.

2.06 Assessments. The Owner of any Lot, by acceptance of a deed therefor, covenants and agrees to pay to the Association annual Assessments and special Assessments, such Assessments to be estabhshed and collected as set forth in the Declaration.

ARTICLE Ill BOARD OF DIRECTORS

3.01 General Powers. The business and affairs of the Association shall be managed by the Board.

3.02 Number of Board Members. The Board shall consist of not less than two (2) nor more than five(S) members, the numberthereof to be determined from time to time by the Board. Upon expiration of the Declararit control period, the Board shall consist of at least three (3) members, at east a majority of whom must be Owners.

3.03 Board Meetings. Regular Meetings. Regular meetings of the Board shall be held at (a) such regular times at least once every ninety (90) days, as may be fixed from time to time by resolution of the Board.

Special Meetings. Special meetings of the Board shall be held (b) whenever called by the President, Secretary, or a majority of the Directors at the time ri office. Place of Meetings. The Board may hold its meetings at such place or (c) places as it may from time to time by resolution determine or as shall be designated in any notices or waivers of notice thereof. Any such meeting, whether regular or special, may be held by conference telephone or sirnilarcommunications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting in such manner shall constitute presence in person at such meeting.

Notice to Directors. Except as otherwise provided in subsection (d) 303(h) hereof, notice of each meeting of the Board shall be mailed to each Director, addressed to him or her at his or her residence or usual place of business at 'east two (2) days before the day on which such meeting is to be held or shall be sent addressed to him or her at such place by telegraph, cable, wireless, orotherform of recorded communication or delivered personafly or by telephone not later than the day before the day on which such

I,.,!1MflNRE31],l.I

9

meeting is to be held. The notice shall state the time and place of such meeting, but need not state the purposes thereof. A written waiver of notice, whether given before or after the meeting to which it relates, shall be equivalent to the giving of notice of such meeting

to the Director or Directors signing such waiver. Attendance of a Director at a Board meeting shall constitute a waiver of notice of such meeting, except when he or she attends

the meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Notice to Members. Except in an Emergency(as hereinafterdefined), (e) the Secretary of the Association shall, not less than ten (10) days before the date of each meeting of the Board, cause notice of the meeting to be given to the Owners. Such notice must be either sent prepaid by United States mail to the mailing address of each Lot within the Development or to any other mailing address designated in writing by the Lot Owner, published in a newsletter or other similar publication that is circulated to each Owner, or, if the Association offers to send notice by electronic mail, sent by electronic mail at the request of the Ownerto an electronic mail address designated in writing by the Owner. In an Emergency, the Secretary shall, if practicable, cause notice of the meeting to be sent prepaid by United States mail to the mailing address of each Lot within the Development. If delivery of the notice in this manner is impracticable, then notice must be hand-delivered to each Lot within the Development or posted in a prominent place or places within the Common Area. The notice of a meeting of the Board must state the time and place of the meeting and include a copy of the agenda for the meeting or the date on which and the locations where copies of the agenda may be conveniently obtained by the Owners. The notice must include notification of the right of an Owner (i) to have a copy of the minutes or a summary of the minutes of the meeting provided to the Owner upon request and, if required by the Board, upon payment to the Association of the cost of providing the copy to the Owner; and (U) to speak to the Association or the Board, unless the Board is meeting

in executive sSsion. AQenda, The agenda for every meeting of the Board must consist of: (I) (i) a clear and complete statement of the topics scheduled to be considered during the meeting, Including, without limitation, any proposed amendmentto the Declaration orthese Bylaws, any fees or Assessments to be imposed or increased by the Association, any budgetary changes, and any proposal to remove an officer of the Association or member of the Board; (U) a list describing the items on which action may be taken and clearly denoting that action may be taken on those items; and (iii) a period devoted to comments by Owners and discussion of those comments. The period required to be devoted to comments by Owners and discussion of those comments must be scheduled for the beginning of the meeting. In an Emergency (as hereinafter defined), the Board may take action on an item which is not listed on the agenda. Except in Emergencies, no action may be taken upon a matter raised during the owner comment period until the matter itself has been specifically included on an agenda as an tern upon which action may be taken.

Emernency. As used in this Section 3.03, Emergency' means any occurrence or combination of occurrences that (i) could not have been reasonably (g)

II'RSW"•MO\O,,,!b'D'

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10

foreseen, (ii) affects the heath, welfare, and safety of the Owners, (IU) requires the immediate attention of, and possible action by, the Board, and (iv) makes it impracticable to comply with the notice provisions of this Section. Quorum. A quorum is deemed present throughout any meeting of the (h) Board if members of the Board entitled to cast fifty percent (50%) of the votes of the Board are present at the beginning of the meeting, and except as otherwise specified in these Bylaws and except also as otherwise expressly provided by Nevada law, the vote of a majority of the Directors present at any such meeting at which a quorum is present shall be the act of the Board. In the absence of a quorum from any such meeting, a majority of the Directors present thereat may adjourn such meeting from lime to time to another time or place without additional notice to the Board members other than announcement at the meeting until a quorum shall be present thereat. The Directors shall act only as a Board, and the indivduaI Directors thafl have no power as such,

Organization. At each meeting of the Board, the President, or if he or she is absent therefrom, a Director chosen by a majority of the Directors present thereat, shall act as chairman of such meeting and preside thereat. The Secretary, or if he or she is absent, the person (who shall be an Assistant Secretary, if any and if present) whom the chairman of such meeting shall appoint, shall act as secretary of such meeting and keep the minutes thereof. (i)

Quarterly Review. At least once every ninety (90) days, the Board (j) shall review at one of its meetings (i) a current reconciliation of the operating accounts of the Association, (ii) a current reconciliation of the reserve accounts of the Association, (Ui) the actual revenues and expenses for the reserve accounts, compared to the budget for those accounts for the current year, (iv) the atest account statements prepared by the financial institutions in which the accounts of the Association are maintained, (v) an income

and expense statement, prepared on at least a quarterly basis, for the operating and reserve accounts of the Association, and (vi) the current status of any civil action or carn submitted to arbitration or mediation in which the Association is a party.

Owners' Right to Record Meetings. An Owner may record on (k) audiotape or any other means of sound reproduction a meeting of the Board, unless the Board is meeting in executive session, if the Owner, before recording the meeting, provides notice of his intent to record the meeting to the members of the Board and the other Owners who are in attendance at the meeting. (I)

Owners' Right to Speak at Meetings. Except as otherwise specifically

provided in the Declaration or these Bylaws, an Owner may attend any meeting of the Board and speak at any such meeting. The Board may establish reasonable limitations on the time an Owner may speak at such a meeting.

(m) Eçutive Sessions. The Board may not meet in executive session to enter into, renew, modify, terminate ortake any other action regarding a contract, unless P1 'R

IocI,'D' w,,d

11

it is a contract between the Association and an attorney. The Board may meet in executive

session only to: (i) consult with the attorney for the Association on matters relating to proposed or pending litigation, if the contents of the discussion would otherwise be governed by the attorney-client privilege set forth in NRS 49.035 to 49.115, inclusive, or to enter into, renew, modify, terminate, or take any other action regarding a contract between the Association and the attorney; (ii) discuss the character, alleged misconduct, professional competence, or physical or mental health of a community manager or an employee of the Association; (iii) except as otherwise provided below in this subsection 3.03(m), discuss a violation of the governing documents of the Association, including, without limitation, the failure to pay an Assessment; (iv) discuss the alleged failure of an Ownerto adhere to a construction schedule required or established pursuant to the Act or

Section 7.14 of the Declaration, if the alleged failure may subject the Owner to a construction penalty. The Board shall meet in executive session to hold a hearing on an alleged violation of the governing documents of the Association, unless the Person who

may be sanctioned for the alleged violation requests in writing that the hearing be conducted by the Board at an open meeting. The Person who may be sanctioned for the

alleged violation is entitled to attend the hearing and testify concerning the alleged violation, but the Person may be excluded by the Board from any other portion of the hearing, including, without limitation, the deliberations of the Board. Except as otherwise provided in this subsection 3.03(m), any matter discussed by the Board when it meets in executive session must be generally noted in the minutes of the meeting of the Board. The Board shall maintain minutes of any decision made pursuant to this subsection 3.03(m) concerning an alleged violation and, upon request, provide a copy of the decision to the

Person who was subject to being sanctioned at the hearing or to his designated representative. Except as otherwise provided in this subsection 3.03(m), an Owner is not entitled to attend or speak at a meeting of the Board held in executive session.

Minutes. The Secretary of the Assodation shall cause minutes to be (n) recorded or otherwise taken at each meeting of the Board. Not more than thirty (30) days

after each such meeting, the Secretary shaH cause the minutes or a summary of the minutes of the meeting to be made available to the Owners. A copy of the minutes or a summary of the minutes must be provided to any Owner upon request and, if required by the Board, upon payment to the Association of the cost of providing the copy lathe Owner. The minutes of each meeting of the Board must include: (i) the date, time, and place of the meeting; (H) those members of the Board who were present at and those members who were absent from the meeting; (ih) the substance of all matters proposed, discussed, or decided at the meeting; (iv) a record of each member's vote on any matter decided by vote at the meeting; and (v) the substance of remarks made by any Owner who addresses the

Board at the meeting if he requests that the minutes reflect his remarks or, ii he has prepared written remarks, a- copy of his prepared remarks if he submits a copy for inclusion. Notwithstanding the forgoing, the Board may establish reasonable limitations on materials, remarks, or other information to be included In the minutes of its meetings. The Association shall maintain the minutes of each meeting of the Board until the common-interest community is terminated.

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3.04 Action by Directors Without a Meeting. Any action required or permitted to be taken at a meeting of the Board may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, is signed by all Directors and such consent is filed with the minutes of the proceedings of the Board.

3.05 Resignations. Any Director may resign at any time by giving written notice of his or her resignation to the Association. Any such resignation shall take effect at the time specified therein, or if the time when it shall become effective is not specified therein, it shall take effect immediately upon its receipt by the President or the Secretary, and

unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. In addition, any Director, other than a Director appointed by the Declarant, whose assessments are more than forty-five (45) days delinquent or who is absent from three (3) consecutive meetings of the Board shall be deemed to have submitted an immediate resignation. A written resignation shall not be required nor shall the acceptance of any such resignation be necessary to make it effective. Any Director who is deemed to resign from the Board due to delinquent assessments or excessive absences may thereafter only serve on the Board if he or she cures any delinquency, otherwise meets the requirements of an Owner in good standing, and is re-elected or reappointed in accordance with the terms of these Bylaws and the Act.

3.06 Vacancies. A vacancydue to death, resignation, removal, ordisqualUication may be filled for the unexpired portion of the term thereof by a majority of the Directors then in office, although less than a quorum, or by a sole remaining Director. Vacancies resulting from an increase in the number of Board positions must be filled by vote of the Members. If at anytime, by reason of death or resignation or other cause, the Association has no Directors in office, then any officer or any Member or an executor, administrator, trustee, or guardian of a Member may call a special meeting of Members for the purpose of filling vacancies in the Board. If one or more Directors shall resign from the Board, effective at a future date, a majority of the Directors then in office, including those who have so resigned, shall have the power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective.

ARTICLE IV OFFICERS

4.01 Officers. The Association shall have the following officers: a President, a Secretary, and a Treasurer. At the discretion of the Board, the Association may also have

one or more Vice Presidents, one or more Assistant Vice Presidents, one or more Assistant Secretaries, and one or more AssistantTreasurers. Anytwo or more offices may

be held by the same person. An Owner or an employee, partner, manager, member, director, trustee, beneficiary, fiduciary, officer, or agent of an Owner may be an officer. In all events where the Person serving as an officer is not the record Owner, the Person shall file proof in the records of the Association that: (a) states thatthe Person is associated with

13

the Owner; and (b) identifies the Lot(s) owned by the Owner. Unless a Person is appointed by the Declarant, a Person may not be an officer of the Association if the Person, his or her spouse, or his or her parent or child, by blood, marriage or adoption, performs the duties of a community manager for the Association.

4.02 Election and Term of Office. The officers of the Association shall be elected annually by the Board. Each such officer shall hold office until his or her successor

is duly elected or until his or her earlier death or resignation or removal in the manner hereinafter provided.

4.03 Agents; Managers. In addition to the officers mentioned in Section 4.01 hereof, the Board may, subject to the provisions of the Declaration, appoint such agents or community managers as the Board may deem necessary or advisable, each of which agents or managers shall have such authority and perform such duties as are provided in these Bylaws or as the Board may from time to time determine, including the delegation

to such agents or managers of any of the powers of the Board or the officers of the Association. The Board may delegate to any officer or to any committee the power to appoint orremove any such agents or managers. Except as otherwise provided in the Act, any Person so appointed must hold either a permit to engage in property management pursuant to NRS Chapter 645 or a certificate for the management of a common-interest community issued by the Real Estate Division of the Nevada Department of Business and Industry.

4.04 Removal. Any officer may be removed, with or without cause, at any time by resolution adopted by a majority of the Board. 4.05 Resignations. Any officer may resign at any time by giving written notice of his or her resignation to the Board, the President, or the Secretary. Any such resignation shall take effect at the times specified therein, or if the time when it shall become effective is not specified therein it shall take effect immediately upon its receipt by the Board, the President, orthe Secretary, and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

4.06 VacancIes. A vacancy in any office due to death, resignation, removal, disqualificatIon, or any other cause may be filled for the unexpired portion of the term thereof by the Board.

4.07 President. The President shall be the chief executive officer of the Association and shall have, subject to the control of the Board, general and active supervision and direction over the business and affairs of the Association and over its several officers. The President shall: (a) preside at all meetings of the Members and at all meetings of the Board; (b) make a report of the state of the business of the Association at each annual meeting of the Members; (c) see that all orders and resolutions of the Board ace carried nto effect; (ci) sign, with the Secretary or an AssSstant Secretary, any 14

certificates forthe Association; (e) have the right to sign, execute, and deliver in the name of the Association all deeds, mortgages, bonds, contracts, or other instruments authorized by the Board, except in cases where the signing, execution, ordelivery thereof is expressly

delegated by the Board or by these Bylaws to some other officer or agent of the Association or where any of them are required by law otherwise to be signed, executed, or delivered; and (f) have the right to cause the corporate seal, if any, to be affixed to any instrument that requires it. In general, the President shall perform all duties incident to the office of the President and such other duties as from time to timemay be assigned to him or her by the Board.

4.08 Vice President. Any Vice Presidents shall have such powers and perform such duties as the President or the Board may from time to time prescribe and shall perform such other duties as may be prescribed by these Bylaws. At the request of the President, or in case of his or her absence or inability to act the Vice President shall perform the duties of the President and when so acting shalt have all the powers of and be subject to all the restrictions upon the President.

4.09 Secretary. The Secretary shall: (a) record all the proceedings of the meetings of the Members, the Board, and any committees, in one or more books kept for that purpose; (b) see that all notices are duly given in accordance with the provisions of

these Bylaws or as required by law; (c) be the custodian of all contracts, deeds, documents, all other indicia of title to properties owned by the Association, and of its other corporate records (except accounting records) and of the corporate seal, if any, and affix such seal to all documents the execution of which on behalf of the Association under its seal is duly authorized; (d) sign, with the President or a Vice President, certificates for the

Association; (e) have charge of the membership records; and (f) see that the books, reports, statements, certificates, and all other documents and records required by law are properly kept and filed. In general, the Secretary shall perform afl duties incident to the office of Secretary and such other duties as from time to time may be assigned to him or her by the President or the Board.

4.10 Treasurer. If required by the Board, the Treasurer shall give a bond for the faithful discharge of his or her duties in such sum and with such surety or sureties as the

Board shall determine. The Treasurer shall: (a) have charge and custody of and be responsible for all funds, securities, notes, and valuable effects of the Association; (b) receive and give receipt for moneys due and payable to the Association from any sources whatsoever; (c) deposit all such moneys to the credit of the Association or otherwise as the Board or the President shall direct in such banks, trust companies, or other depositories as shall be selected in accordance with the provisions of Section 1004 of these Bylaws; (d) cause such funds to be disbursed by checks or drafts on the authorized depositories of the Association signed as provided in Section 10.04 of these Bylaws; (e) be responsible for the accuracy of the amounts of and cause to be preserved proper vouchers for all moneys so disbursed; (f) have the right to require from time to time reports or statements

giving such information as he or she may desire with respect to any and all financial transactions of the Association from the officers or agents transacting the same; (g) render El.' RS¼IB•Ii(,,I'o,,t IH.P7LW'NTAL;

15

to the President or the Board whenever they, respectively, shall request him or her so to do an account of the financial condition of the Association and of all his or her transactions as Treasurer; and (h) upon request, exhibitor cause to be exhibited at all reasonable times

the cash books and other records to the President or any of the Directors of the Association. In general, the Treasurer shall perform alt duties incident to the office of Treasurer and such otherduties as from time to time may be assigned to him or her by the President or the Board.

4.11 Assistant Officers. Any persons elected as assistant officers shall assist in the performance of the duties of the designated office and such other duties as shall be assigned to them by any Vice President, the Secretary, or the Treasurer, as the case may be, or by the Board or the President.

ARTICLE V COMMITTEES

The Board, by resolution adopted by a majority of the whole Board, may constitute one (1) or more committees, which shall in each case consist of one (1) or more of the Directors, and at the discretion of the Board, such officers or other Persons who are not Directors. The Board may designate one (1) or more Directors, officers, or other Persons who are not Directors as alternate members of any committee who may replace any absent or disqualified member at any meeting of the committee. Each such committee shall have and may exercise such powers as the Board may determine and specify in the respective

resolutions appointing them; provided, however, that unless all of the members of any committee shall be Directors, such committee shall not have authority to exercise any of the powers of the Board in the management of the business and affairs of the Association,

A majority of all the members of any such committee may fix its rules of procedure, determine its action, fix the time and place of its meetings, and specify what notice thereof, if any, shall be given, unless the Board shall otherwise by resolution provide. Any member

of a committee may resign therefrom at any time by giving written notice of his or her resignation to the President or the Secretary. Any such resignation shall take effect at the time specified therein, or if the time when it shall become effective is not specified therein,

it shall take effect immediately upon its receipt by the President or the Secretary, and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Any vacancy in a committee shall be filled by the vote of a majority of the whole Board. The Board, by resolution adopted by a majority of the whole

Board, may, with or without cause, dissolve any committee and, with or without cause, remove any member thereof.

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ARTICLE VI NOTICE AND HEARING

6.01 Notice of Violation. In the event of an alleged violation of the Declaration, these Bylaws, or the Rules and Regulations of the Association, and after written notice of such alleged failure has been delivered to the Member or other Person alleged to be in violation, the Board shall have the right, after affording an opportunity for an appropriate hearing as hereinafter provided, to take any of the remedial measures availabie to the Board under the Declaration or these Bylaws.

6.02 Opportunity for Hearing. The Board shall set a date, time, and place for the hearing on any alleged violation of the Declaration, these Bylaws, the Rules and Regulations or any other governing documents of the Association and shall notify the Member or other Person who is alleged to have committed the violation in writing of the date, time, and place set for the hearing. The Board shall meet in executive session to hold a hearing on an alleged violation of the governing documents of the Association, unless the Person who may be sanctioned for the alleged violation requests in writing that the hearing be conducted by the Board at an open meeting. The Person who may be sanctioned for the alleged violation is entitled to attend the hearing and testify concerning the alleged violation, but the Person may be excluded by the Board from any other portion of the hearing, including, without limitation, the deliberations of the Board. Except as otherwise provided in this Section, no Owner may attend or speak at a meeting of the Board held in executive session. Except as otherwise provided in this Section, any matter discussed by the Board when it meets in executive session must be generally noted in the minutes of the meeting of the Board. The Board shall maintain minutes of any decision made pursuant to this Section concerning an alleged violation and, upon request, provide a copy of the decision to the Person who was subject to being sanctioned at the hearing or to his designated representative.

ARTICLE VII SEAL A corporate seal shall not be requisite to the validity of any instrument executed by or on behalf of the Association. Nevertheless, if in any instance a corporate seal is used, the same shall be in the form of a circle and shall bear the full name of the Association and the year and state of incorporation or words and figures of similar import.

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ARTICLE VIII INDEMNIFICATION OF DIRECTORS AND OFFICERS

8.01 Indemnification. The Association shall indemnify any Person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, by reason of the fact that the Person is or was a Director, officer, employee, servant, or agent of the Association against expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement actuallyand reasonably incurred by such Person in connection wth such action, sua, or proceeding and undertake all costs of defense, until and un'ess it is proved that the Person acted with willful or wanton misfeasance or with gross negligence and provided that the Person acted in good faith and in a manner that the Person reasonably believed to be in or not opposed to the best interests of the Association, and with respect to any criminal action or proceeding, had no reasonable cause to believe that its conduct was unlawful. After such proof that the Person acted with willful or wanton misfeasance or with gross negligence or that the Person did not act in good faith, did not reasonably believe its actions were in or not opposed to the best interests of the Association, or had no reasonable cause to beUeve that its conduct was unlawful, the Association shall no longer liable for the cost of defense, and may recover costs already expended from the Person who so acted. The termination of any action, suit, or proceeding by judgment, order, sett)ernent, conviction, or upon a plea of nob contendere or its equivalent shall not of itself create a presumption that the Person did not act in good faith or in a manner that

the Person reasonably believed to be in or not opposed to the best interests of the Association, or with respect to any criminal action or proceeding, had reasonable cause to believe that the Person's conduct was unlawful. Board members shall not be personally liable to the victims of crimes that may occur on the Property. Punitive damages may not be recovered against the Association but may be recovered from Persons whose activity gave rise to the damages.

8.02 Determination. Any indemnification that the Association has elected to provide underthis Article VIII (unless ordered by a court) shall be made by the Association only as authorized in the specific case by a determination that indemnification of the officer, Director, employee, servant, or agent is proper In the circumstances because it has met the applicable standard of conduct set forth in Section 5.01. Such determination shall be made: (a) by the Board by a majority vote of a quorum consisting of Directors who were not parties to such action, suit, or proceeding; or (b) if such a quorum is not obtainable, or even if obtainable and a quorum of disinterested Directors so directs, by independent legal

counsel in a written opinion; provided, however, that if a Director, officer, employee, servant, or agent of the Association has been successful on the merits or otherwise ri the defense of any action, suit, or proceeding referred to in Section 8.01, or in defense of any

claim, issue, or matter therein, then to the extent that the Association has elected to provide indemnification, it shall automatically be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by it in connection therewith without the 18

necessity of any such determination that it has met the applicable standard of conduct set forth in Section 8.01.

8.03 Payment in Advance. Expenses incurred in defending a civil or criminal action, suit, or proceeding may, upon action by the Board in accordance with Section 8.02,

be paid by the Association in advance of the final disposition of such action, suit, or proceeding upon receipt of an undertaking by or on behalf of the Director, officer, employee, servant, or agent to repay such amount unless it shall ultimately be determined that it is entitled to be indemnified by the Association as authorized in this Article VIII.

8.04 Insurance. The Board shall purchase and maintain insurance on behalf of

any Person who is or was a Director, officer, employee, servant, or agent of the Association against any liability asserted against it or incurred by it in any such capacity or arising out of its status as such, whether or not the Association would have the power to indemnify it against such liability hereunder or otherwise.

8.05 Other Coverage. The indemnification provided by this Article VIII shall not be deemed exclusive of any other rights to which anyone seeking indemnification nay be entitled under the Declaration, any agreement, vote of the Members, vote of disinterested

Directors, Nevada law, or otherwise, both as to action in its official capacity and as to action in another capacity while holding such office, and may continue as to a Person who has ceased to be a Director, officer, employee, servant, or agent and may inure to the benefit of the heirs and personal representatives of such a Person.

ARTICLE IX PROHIBITED ACTS OF DIRECTORS, OFFICERS, AND AGENTS

9.01 Compensation! Conflicts of Interest. Except as otherwise provided in this Section 9.01, a Director or officer of the Association shall not: (a) enter into a coniract or renew a contract with the Association to provide goods or services to the Association; or (b) otherwise accept any commission, personal profit, or compensation of any kind from the Association for providing goods or services to the Association. The foregoing provision does not prohibit the Declarant, an affiliate of the Declarant, or an officer, employee, or agent of the Declarant or an affiliate of a Declarant from receiving any commission, personal profit, or compensation from the Association, the Declarant, or an affiliate of the Declarant for any goods or services furnished to the Association, entering into contracts with the Association, the Declarant, or an affiliate of the Declarant, or serving as a Director or as an officer of the Association. In addition, a Director, officer, community manager, or other agent of the Association shall not solicit or accept any form of compensation, gratuity, or other remuneration that would improperly influence or would appear to a reasonable person to improperly influence the decisions made by those Persons or would result or would appear to a reasonable person to result in a conflict of interest for those Persons. Unless a Person is appointed by the Declarant, a Person may not be a member of the 19

Board or an officer of the Association if the Person, his or her spouse, or his or her parent or child, by blood, marriage or adoption, performs the duties of a community manager for the Association.

9.02 Alleged Misconduct If the Board receives a written complaint from an Owner alleging that the Board has violated any provision of the Act or any provision of the Declaration, these Bylaws, or other governing documents of the Association, the Board shall, if action is required by the Board, place the subject of the complaint on the agenda of the next regularly scheduled meeting of the Board. Not laterthan ten (10) business days after the date that the Association receives such a complaint, the Board or an authorized representative of the Association shall acknowledge receipt of the complaint and notify the Owner that, if action is required by the Board, the subject of the complaint will be placed on the agenda of the next regularly scheduled meeting of the Board.

9.03 RetaliatoryAction Prohibited. A Director, officer, employee, orotheragent of the Association shall not take, direct, or encourage another Person to take any retaliatory action against an Owner because that individual has: (a) complained in good faith about any alleged violation of any provision of the Act or the governing documents of the Association; or(b) requested in good faith to review the books, records, orother papers of the Association. ARTICLE X MISCELLANEOUS

10.01 Execution of Contracts. Except as otherwise required by law or by these Bylaws, any contract or other instrument may be executed and delivered in the name of the Association and on its behalf by the President or any Vice President. In addition, the Board may authorize any other officer or officers or agent or agents to execute and deliver any contract or other instrument in the name of the Association and on its behalf, and such authority may be general or confined to specific instances as the Board may by resolution determine. The Association shall not, without the consent of a majority of the Members entitled to vote, enter into a contract for goods or services for a term of more than one (1)

year, except: (a) a contract with a public utility company if the rates charged for the materials or service are regulated by the Nevada Public Service Commission (provided, however that the term of the contract shall not exceed the shortest term for which the supplier will contract at the regulated rate); (b) prepaid casualty and liability insurance policies of no greaterthan three (3) years duration; or(c) a management contract approved by the Veterans Administration or the Federal Housing Administration.

10.02 Attestation. Any Vice President, the Secretary, or any Assistant Secretary may attest the execution of any instrument or document by the President or any other duly authorized officer or agent of the Association and may affix the corporate seal, if any, in

20

witness thereof, but neither such attestation nor the affixing of a corporate seal shall be requisite to the validity of any such document or instrument.

10.03 Checks, Drafts. All checks drafts, orders for the payment of money, bills of lading, warehouse receipts, obligations, bills of exchange, and insurance certificates shall be signed or endorsed (except endorsements for collection for the account of the Association or fordeposit to its credit, which shall be governed by the provisions of Section 10.04) by such officer or officers or agent or agents of the Association and in such manner as shall from time to time be determined by resolution of the Board.

10.04 Deposits. All funds of the Association not otherwise employed shall be deposited from time to time to the credit of the Association or otherwise as the Board or the President shall direct in general or special accounts at such banks, trust companies, savings and loan associations, or other depositories as the Board may select or as may be selected by any officer or officers or agent or agents of the Association to whoni power in that respect has been delegated by the Board. For the purpose of deposit and for the purpose of collection for the account of the Association, checks, drafts, and other orders

for the payment of money that are payable to the order of the Association may be endorsed, assigned, and delivered by any officer or agent of the Association. The Board

may make such special rules and regulations with respect to such accounts not inconsstent with the provisions of these By'aws as it may deem expedient.

10.05 Fiscal Year. The fiscal year of the Association shall correspond with the caiendar year.

10.06 Severability. Each of the provisions of these Bylaws shall be deemed independent and severable, and the invalidityor partIal invalidity of any provision orportion thereof shall not affect the validity or enforceability of any other provision.

10.07 Priorities,Inconsistencies. lfthereareconflictsorinconsistenciesbetween these Bylaws and the Declaration, the terms and provisions of the Declaration shall prevail.

Any provision contained in the Declaration, these Bylaws, or the other governing documents of the Association that violates the provisions of the Act shall be deemed to conform with the Act by operation of law.

ARTICLE Xl AMENDMENTS These Bylaws may be repealed, altered, or amended by the affirmative vote of the

Board and sixty-seven percent (67%) of the Members entitled to vote and such other persons as required by the Declaration. If any change is made to these Bylaws or any of the other governing documents of the Association, the Secretary of the Association shall, within thirty (30) days after the change is made, prepare and cause to be hand-delivered 21

or sent prepaid by United States mail to the mailing address of each Lot or to any other mailing address designated in writing by the Lot Owner, a copy of the change that was made.

22

CERTIFICATE OF SECRETARY I, the undersigned, do certify that:

I am the duly elected and incumbent Secretary of Montara Homeowners Association, a Nevada nonprofit corporation; and 1.

2.

The foregoing Bylaws constitute the Bylaws of the Association as duly adopted by the Board of Directors of the Association by consent dated .5 e 2004. DATED this

'

day of

ic/2tc- '.2004. Pthricia L. Shaw

23

PUBLIC OFFERING STATEMENT FOR

MONTARA 1.

The Declarant (Developer). Canyon Desert Homes, LLC, a Nevada limited liability company (the "Declarani'), is engaged in the development of a planned community (the Community) in Clark County, Nevada. The Community lies on a tract of land located near the intersection of Tropicana Avenue and Grand Canyon Drive (the "Property"). The Declarant's principal address is 4535 West Russell Road, Suite 1, Las Vegas, Nevada 89118. 2.

The Community. The development of the Community is in its preliminary stages. The chosen name for the Community is 'Montara." Construction on the Property commenced on or about December 2003. The Community will consist of single-family

residential dwellings. The residential dwelling units themselves will vary in size and configuration. There will be certain common elements (the Common Elements") in the Community. Declarant anticipates that the Common Elements will include, without limitation, private streets and landscaped areas. 3.

Phased Development. It is anticipated that the Property will be developed in phases, and all construction should be completed by the year 2006. The maximum total number of residential Lots on the Propertywill be one hundred five (105). Declarant makes no representation regarding the order in which the Lots will be developed or that they will be developed. Development of the Property will be governed by one (1) or more final maps (the 'Maps") and general plans which have been approved by governmental bodies. The Maps have been or will be recorded in the Official Records of the Recorder of Clark County, Nevada, and include, without limitation, the following: Plat Book No.

Plat Page No.

Recording Date

Official Records Book / Instrument No.

115

0099

March 15, 2004

20040315/01275

All construction will be undertaken in conformance with the plans and the recorded Maps as they may be amended from time to time.

4. Scope of Ownership. By purchasing a Lot within the Community, each purchaser is acquiring a separate freehold estate, as separately shown, numbered and designated on the Map. 5. Planned Development. By purchasing a Lot within the Community, the purchaser is also a member of Montara Homeowners Association (the 'Association"), and IIwMeIt.n%,a II5 07 MONTAkAbpi

as such is subject to the Declaration of Covenants, Conditions, and Restrictions for Montara, recorded on August 24, 2004, in Book 20040824 as Instrument 01751 in the Official Records of Clark County, Nevada (the Declaration'). The use of the Property within the Community is subject to the restrictions contained in the Declaration and any Rules and Regulations now or hereafter promulgated by the Association thereunder. 6.

Governing Documents. Attached hereto as Exhibit '1" are copies of the

Declaration and the Associations Articles of Incorporation and Bylaws, together with any amendments thereto. Attached hereto as Exhibit '2' is a copy of the Association's current financial statement, if any, and the Association's current budget. There are no services or subsidies being provided by Declarant that are not reflected in the budget. Attached hereto as Exhibit "3' is a copy of the Association's Rules and Regulations, if any. 7.

The Purchase and Sale Agreement. If you elect to purchase a specific Lot or Lots, a purchase and sale contract will be prepared and an escrow will be opened. 8.

Developmental Rights. The Community will be subject to the rights of the Declarant to expand the Community by the annexation and development of additional properties. Declarant's rights of annexation are set forth in the Declaration. The right to

annex and develop additional property is elective, not mandatory, and there is no assurance additional property will be developed and brought into the Community. If Declarant elects to develop additional property: a.

The maximum total number of Lots within the Community will be one

hundred five (105). However Declarant makes no warranty or representation that all one hundred five (105) will be built. b.

All of the additional Lots will be for residential use only.

c.

The additional Lots, buildings and other improvements may differ in architectural style, quality of construction, size and configuration.

d.

There may or may not be additional Common Elements or Limited Common Elements dedicated and conveyed to the Association. There is no assurance of the type or character of any improvements to any additional Common Elements.

e.

If Declarant elects to annex and develop additional property, there is no assurance as to the location of any building or other improvement

that may be constructed or made within any part of the additional property. f.

H

v!M H

I.

There is no assurance that all restrictions in the Declaration affecting use, occupancy and alienation of Lots will apply to the additional Lots created pursuant to any developmental right exercised by Declarant.

7MDNTARAWaJ. Off..go..pd

2

g.

9.

In the event Declarant does not elect to exercise any developmental right, any assurance made in this Paragraph 8 shall not apply.

Capitalization of Association. a.

Initial Capitalization.

At the close of escrow for the purchase of each Lot from the Declarant, each purchaser will be required to contribute to the capital

account of the Association the amount of one hundred ten dollars ($11000), which amount is not an advance payment of annual or monthly assessments but represents an amount equal to one-sixth

(1/6) of the amount of the annual assessment levied by the Association for the Lot being purchased. b.

Annual Assessment. Each Lot Owner is responsible to pay an annual assessment for ownership in the Community. The assessment will be determined on an annual basis as set forth in the Declaration. The assessment wifi

be paid in one (1) or more installments at such frequency as the Association's Board of Directors may from time to time determine in its sole and absolute discretion, The initial annual assessment is anticipated to be fifty-five dollars ($55.00) per month per Lot. There are no current or expected fees or charges to be paid by Lot Owners for the use of Common Elements and other facilities related to the Community except for the annual assessment. 10. Warranties. The Developer hereby excludes each of the expresswarranties set forth in NRS 116.4113 and, to the fullest extent allowed bylaw, the Developer excludes all implied warranties setforth in NRS 116.4114 and reserves to itselfany and all defenses it may have against providing such warranties. The period for commencing any action against Developer for breach of any obligations or warranties arising under NRS 116.4113

or 116.41 14 shall be, and hereby is limited to, two (2) years after the cause of action accrues. No express warranty is made by the Declarant, nor may the purchaser rely upon any express warranty, except as set forth on attached Exhibit 4." 11. Cancellation Right Pursuant to NRS 116.4108, unless the prospective purchaser or his agent has personally inspected the Lot to be purchased, a purchaser may cancel his contract for sale upon written notice to the Declarant by midnight of the fifth (5th) calendar day following the date of execution of the contract.

H aBa,l WSd H(..OI5(1 MONTAflAw.N•

O

3

12.

Litigation. There are no unsatisfied judgments or pending suits against the Association, nor are there any pending suits material to the Community of which the Declarant has actual knowledge. 13. Special Declarant Rights. The Declarant has the right to maintain sales offices, management offices, model dwelling units, and signs upon the Common Elements advertising the Community and individual Lots and such other special declarant's rights as may be set forth in the Declaration. 14. No obligation. Declarant, in its sole and absolute discretion, may accept or reject any offer to purchase a Lot. This Public Offering Statement is not, and shall not be construed to be, an offer by Declarant or any other person for the sale of a Lot. 15.

Buyer Information. BEFORE YOU PURCHASE PROPERTY IN A COMMON-INTEREST

COMMUNITY DID YOU KNOW:

1. YOU ARE AGREEING TO RESTRICTIONS ON HOW YOU CAN USE YOUR

PROPERTY? These restrictions are contained in a document known as the Declaration of Covenants, Conditions and Restrictions (the CC&Rs") that should be provided for your review before making your purchase. The CC&Rs become a part of the title to your property. They bind you and every future owner of the property whether or not you have read them or had them explained to you. The CC&R's, together with other 'governing documents (such as association bylaws and rules and regulations), are intended to preserve the character and value of properties in the community, but may also restrict what you can do to improve or change your property and limit how you use and enjoy your property. By purchasing a property encumbered by CC&Rs, you are agreeing to limitations that could affect your lifestyle and freedom of choice. You should review the CC&R's and other governing documents before purchasing to make sure that these limitations and controls are acceptable to you. 2. YOU WILL HAVE TO PAY OWNERS ASSESSMENTS FOR AS LONG AS YOU OWN YOUR PROPERTY? As an owner in a common-interest community, you are responsible for paying your share of expenses relating to the Common Elements,

such as landscaping, shared amenities and the operation of any homeowner's association. The obligation to pay these assessments binds you and every future owner of the property. Owners' fees are usually assessed by the homeowner's association and due monthly. You have to pay dues whether or not you agree with the way the association is managing the property or spending the assessments. The executive board of the association may have the power to change and increase

the amount of the assessment and to levy special assessments against your propertyto meet extraordinary expenses. In some communities, major components of the community such as roofs and private roads must be maintained and replaced ws}

pd

4

by the association. If the association is not well managed or fails to maintain adequate reserves to repair, and replace and restore Common Elements, you may be required to pay large, special assessments to accomplish these tasks.

3. IF YOU FAIL TO PAY OWNERS ASSESSMENTS, YOU COULD LOSE YOUR HOME? If you do not pay these assessments when due, the association usually has the power to collect them by selling your property in a nonjudicial foreclosure sale. If fees become delinquent, you may also be required to pay penalties and the

association's costs and attorney's fees to become current. If you dispute the obligation or its amount, your only remedy to avoid the loss of your home may be to file a lawsuit and ask a court to intervene in the dispute.

4. YOU MAY BECOME A MEMBER OF A HOMEOWNER'S ASSOCIATION THAT HAS THE POWER TO AFFECT HOW YOU USE AND ENJOY YOUR

PROPERTY? Many common-interest communities have a homeowner's association. In a new development, the association will usually be controlled by the

developer until a certain number of units have been sold. After the period of developer control, the association may be controlled by property owners like yourself who are elected by homeowners to sit on an executive board and other

boards and committees formed by the association. The association! and its executive board, are responsible for assessing homeowners for the cost of operating the association and the common or shared elements of the community and for the day to day operation and management of the community. Because homeowners sifting on the executive board and other boards and committees of the association may not have the experience or professional background required to

understand and carry out the responsibilities of the association properly, the association may hire professional managers to carry out these responsibilities. Homeowner's associations operate on democratic principles. Some decisions require all homeowners to vote, some decisions are made by the executive board

or other boards or committees established by the association or governing documents. Although the actions of the association and its executive board are

governed by state laws, the CC&Rs and other documents that govern the common-interest community, decisions made by these persons will affect your use and enjoyment of your property, your lifestyle and freedom of choice, and your cost

of living in the community. You may not agree with decisions made by the association or its governing bodies even though the decisions are ones which the association is authorized to make. Decisions may be made by a few persons on the executive board or governing bodies that do not necessarily reflect the view of the majority of homeowners in the community. If you do not agree with decisions made by the association, its executive board or other governing bodies, your remedy is typically to attempt to use the democratic processes of the association to seek the election of members of the executive board or other governing bodies that are more responsive to your needs, If persons controlling the association or its management are not complying with state laws or the governing documents, your remedy is typically to seek to mediate or arbitrate the dispute and, if mediation or arbitration II .WMO\O 'Wd IMpdl7 MOl.rrAR*p.]bI.

a pd

5

is unsuccessful, file a lawsuit and ask a court to resolve the dispute. In addition to your personal cost in mediation or arbitration, or to prosecute a lawsuit, you may be responsible for paying your share of the association's cost in defending againstyour claim. There is no government agency in this state that investigates or intervenes to resolve disputes in homeowner's associations.

5. You ARE REQUIRED TO PROVIDE PROSPECTIVE BUYERS OF YOUR

PROPERTY WITH INFORMATION ABOUT LIVING IN YOUR COMMON-INTEREST COMMUNITY? The law requires you to provide to a prospective purchaser of your property, before you enter into a purchase agreement, a copy of the community's governing documents, including the CC&Rs, association bylaws, and rules and regulations, as well as a copy of this document.

You are also required to provide a copy of the association's current financial statement, operating budget and information regarding the amount of the monthly assessment for common expenses, including the amount set aside as reserves for the repair, and replacement and restoration of Common Elements. You are also required to inform prospective purchasers of any outstanding judgments or lawsuits pending against the association of which you are aware. You are also required to provide a copy of the minutes from the most recent meeting of the homeowner's

association or its executive board. For more information regarding these requirements, see Nevada Revised Statutes 116.4103 and 116.4109.

6. YOU HAVE CERTAIN RIGHTS REGARDING OWNERSHIP IN A COMMON-INTEREST COMMUNITY THAT ARE GUARANTEED YOU BY THE STATE? Pursuant to provisions of chapter 116 of Nevada Revised Statutes, you have the right: (a) To be notified of all meetings of the association and its executive board, except in cases of emergency. (b) To attend and speak at all meetings of the association and its executive board, except in some cases where the executive board is authorized to meet in closed, executive session. (c) To request a special meeting of the association upon petition of at least 10 percent of the homeowners. (d) To inspect, examine, photocopy and audit financial and other records of the

association. (e) To be notified of all changes in the community's rules and regulations and other actions by the association or board that affect you. 7. QUESTIONS? Although they may be voluminous, you should take the time to read and understand the documents that will control your ownership of a property

in a common-interest community. You may wish to ask your real estate professional, lawyer or other person with experience to explain anything you do not understand. You may also request assistance from the ombudsman for owners in common-interest communities, Nevada Real Estate Division, at ((702) 486-4033).

Fl:'WMflfli,,Wj 'd h€ ,,MowrMApI, Olk,thfl..'

6

16. This Public Offering Statement is current as of __________________ 200_. Recent developments regarding Nevada Revised Statutes 116.4103 may not be reflected in this Statement.

Receipt of this Public Offering Statement with all attached exhibits is hereby acknowledged this .day of _________________ 200_. Buyer___________________________ Date_________________ Buyer___________________________ Date_________________

Address_________________________

Time______________

LI'WMBD:,

H4I,AO' NTARNTht O]3.pd

7

Exhibit "1" Declaration, Articles of Incorporation, & Bylaws

H WMB'D! Wd OlSU1

P.tli Olk,Th!3pd

Receipt/Conformed Copy Reque S t

FST

or PiERtCR4 TITLE CNPOU cc

N/C: 0.00

APN: 163-19-803-001 thru 163-19-803-108 [Er ances Ce ne

Clark Coun y ecorder

WI-lEN RECORDED RETURN TO:

W000SURY, MORRIS & BROWN Tot N. Green Valley Pkwy., Suite 125 Henderson, Nevada 89074 Affn: Rodney S. Woodbury, Esq.

DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS FOR MONTARA

TABLE OF CONTENTS

ARTICLE I. Recitals

1.01 Real Property 1.02 Planned Community 1.03 Owners Association 1.04 The Development 1.05 Covenants Running With Land 1.06 Declaration

.2

ARTICLE II. Definitions

2

2.01 "Act"

2 2

2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09 2.10 2.11 2.12 2.13 2.14 2.15 2.16 2.17 2.18 2.19 2.20

"Annexable Area" "Architecture Committee" "Articles" "Assessment" "Association" "Association Property" "Board" "Bylaws" 'Common Area" 'Declarant" 'Design Guidelines "Development' "Eligible Holder" . "Improvement" "Lessee

2 2 2

2 2 2

2 2 3

3 3 3

3 3

"Lot

3

"Member" "Mortgage" "NRS" 2.21 "Owner' 2.22 "Party Wails' 2.23 "Perimeter Walls" 2.24 "Person 2.25 'Property" 2.26 "Record. "Recording," or "Recorded" 2.27 Residence' 2.28 "Rules and Regulations" 2.29 Site Development Plan" X.SW.WflCbD W'dH,,w7 MONTARACC&R7.flI

ii

3 3 3

3 3 3

4 4 4 4 4 4

2.30 "Subdivision Map

4

ARTICLE Ill.

Property and Property Rights . .4 .4 3.01

Description of the Property

3.02 No Representations or Warranties

3.03 Lots 3.04 Association Property 3.05 Special DeclaranVs Rights

.4 .5 .6 11

ARTICLE IV. Owners' Association; Membership and Voting Rights

4.01 Association 4.02 Membership Rights 4.03 Control of Association 4.04 Meetings of Members 4.05 Duties of the Association 4.06 Powers and Authority of the Association 4.07 Claim Notification and Resolution Procedure 4.0S Required Consent of Owners for Legal Action 4.09 Indemnification 4.10 Diseased Trees

4.11 PerimeterWalls 4.12 Rules 4.13 Breach of Rules, Regulations, or Restrictions 4.14 Fines and Penalties

4.15 LiabilityofMembersofBoard

12 12 12 12 15 15 18

22 26 27 29 29 29 30

30 32

ARTICLE V. Covenant for Maintenance Assessments

5.01 Assessments 5.02 Purpose of Assessments 5.03 Regular Assessments 5.04 Special Assessments 5.05 Notice of Special Assessments; Time for Payment 5.06 Commencement of Assessments 5.07 Unpaid Assessments 5.08 Mortgage Protection 5.09 EffectofAmendmentson Mortgages 5.10 AnnualAssessments Paid By Declarant

I.RSWCP\O S,7MON1AP*CC&.7-M,d

32 32 32 33

35 35 35

35 36 36

37

ARTICLE VI. Permitted Uses and Restrictions

6.03 Commercial or Other Non-Residential Uses

37 37 37 37

6.04 Utility Service.

38

6.06 6.06 6.07 6.08 6.09 6.10 6.11 6.12 6.13 6.14 6.15 6.16 6.17 6.18 6.19 6.20 6.21 6.22 6.23 6.24

38 38 38 39 39 39 39 39 39

6.01 Improvements and Use

6.02 Animals Nuisances Garbage Antennae, Satellite Dishes and Solar Collectors Signs Equipment and Machinery Laundry Propane Tanks Landscaping Vehicle Parking Leases Resubdivision Improvements Taxes Rules and Regulations Hazardous Substances Party Walls Exterior Holiday Decorations Sight Visibility Zones and View Obstructions Compliance with Governmental Requirements. U. S. Flag

41 41 41 41

41 41

42 42 42 43 43

ARTICLE VII. Architecture Committee 7.01 Establishment of Committee

7.02 Members of Committee 7.03 Architectural Design Guidelines 7.04 Landscape Standards 7.05 RevIew of Proposed Improvements 7.06 Meetings of the Committee 7.07 No Waiver of Future Approvals . 7.08 Compensation of Members 7.09 Inspection of Work 7.10 NonliabihtyofComrnittee Members. 7.11 Variances 7.12 7.13 7.14

Ob'igations with Respect to Zoning and Subdivisions Indemnification of Architecture Committee Construction Schedules and Penalties )]7MoNTApArc&R 7.

lv

43 43 44 44 44 45 46 46 46 46 47 4$ 48 48 48

ARTICLE VIII. Mortgagee Provisions

8.01 Notices of Action 8.02 Special Provision 8.03 Other Provisions for First Mortgages 8.04 No Priority 8.05 Notice to Association 8.06 Amendment by Board 8.07 AppilcabUity 8.08 Failure of Mortgagee to Respond

49 49 50 50 51 51 51 51 51

ARTICLE IX. Annexation

901 Annexation of Additional Property by Association 9.02 Annexation by Declarant 9.03 Procedure for AnnexaUon 9.04 Deannexation

52 52 52 52 52

ARTICLE X. General Provisions 10.01 Term 10.02 Resale of Lots 10.03 Lease of Property 10.04 Amendment 10.05 Enforcement and Nonwaiver 10.06 Notices 10.07 Construction 10.08 State Law 10.09 Priorities, Inconsistencies

53 53 53 54 56 57 57 57 58

V

DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS FOR MONTARA

THIS DECLARATION (the 'Declaration") is madethis3dayof 4u905* 2004, by Canyon Desert Homes, LLC, a Nevada limited liability company (the "Ueclarant").

ARTICLE I.

Recitals 1.01 Real Property. Declarant is the ownerof certain real property located entirely in Clark County, Nevada, more particularly described in Exhibit "A" attached hereto (the Property"). The Property shall include any additional real property that may from time to time be annexed thereto. 1.02 Planned Community. Declarant desiresto develop the Propertyand, if Declarant so elects, the adjacent land described in Section 2.02 (the Annexable Area) as a residential

community and to establish covenants, conditions, and restrictions relating to the use, enjoyment, maintenance, improvement, and occupancy of the Property. The residential community shall be developed as a planned community underageneral plan of development pursuant to theAct (as hereinafterdefined) and shall be named Montara (the 'Development'). If the entireAnnexable Area is annexed as provided herein, the planned communitywill consist

of up to a maximum of one hundred five (105) Lots (as hereinafter defined).

1.03 Owners Association. Declarant desires to establish Montara Homeowners Association, a Nevada nonprofit corporation (the "Association"), forthe purpose of maintaining and administering the Common Areas (as hereinafterdefined) of the Property, administering

and enforcing these covenants, conditions, and restrictions, and collecting and disbursing funds pursuant to Assessments and charges established by these covenants, conditions, and restrictions. Each Lot shall have appurtenant to it a membership in the Association. 1.04 The Development. Declarant contemplates developing the Property, constructing the Development, and conveying the Association Property (as hereinafter defined) to the Association in a planned multi-phase development. Although Declarant contemplates completing all phases of the Development and subjecting the Annexable Area to this Declaration, there is no guarantee that any or all of the phases of the Development or that any or all of the Annexable Area will be developed by Declarant.

1.05 Covenants Running With Land. This Declaration shall runwith the Property and all parts and parcels thereof and shall be binding on all parties having any right, title, or interest in the Property and their heirs, successors, successors-in-title, and assigns and on the Association and all of its successors in interest and shall inure to the benefit of each ownerormemberthereof. Each of the limitations, easements, uses, obligations, covenants, conditions, and restrictions imposed hereby shall be deemed to be and construed as equitable HSwMFCIk,L$w! Wd

MONTARMCC&P.7.pP

servitudes enforceable by any of the owners of any portion of the Property subject to this Declaration against any other owner, tenant, oroccupant of the Property or portion thereof similarly restricted by this Dedaration.

1.06 Declaration. Declarant hereby declares that all of the Property shall be held, sold, conveyed, hypothecated, encumbered, leased, rented, used, occupied, and improved subject to the foiSowing easements, restrictions, covenants, and conditions, which are for the purpose of protecting the value and desirability of the Property.

ARTICLE II.

Definitions In addition to the terms elsewhere defined herein, the following terms shall have the following meanings whenever used in this Declaration.

2.01 "Act" shall mean the Nevada Common Interest OwnershipAct, NRS 116.1101 et seq.

2.02 "Annexable Area" shall mean the real propertydescribed in Exhibit B" hereto.

2.03 "Architecture Committee" shall mean the committee created by Article VII of this Declaration. 2.04 "Articles" shall mean the articles of incorporation of the Association as may be amended from time to time.

2.05 "Assessment" shall mean those Assessments set forth in Article V of this Declaration. 2.06 "Association" shall mean Montara Homeowners Association, a Nevadanonprofa corporation, and its successors and assigns.

2.07 "Association Property" shall mean alt property, real and personal, owned, licensed, or leased by the Association, including, without limitation, the Common Area.

2.08 "Board" shall mean the Board of Directors of the Association. 2,09 "Bylaws" shall mean the Bylaws of the Association as maybe amended from time to time. 2.10 "Common Area" shall mean afl rea' property (inchiding tmproven,entsthereto) designated as common elements on the Site Development Plan (as hereinafter defined) or any Subdivision Map of the Property, that is now or hereafter owned, licensed, or leased ftflwMoIc1D w],d

M1TARAc&R7-1]d

2

bythe Association, including private streets, if any, easements, landscaped areas, arid other such property.

2.11 "Declarant" shall mean Canyon Desert Homes, LLC, a Nevada limited liability company, and its successors and assigns.

2.12 "Design Guidelines" shall mean the guidelines adopted by the Architecture Committee as set forth in Article VII. 2.13 "Development" shall mean the residential community referred to as Montara being developed by Declarant as a planned community pursuant to the Act.

2.14 "Eligible Holder" shall mean the Persons(as hereinafterdefined) described in Article VIII of this Declaration. 2.15 "Improvement" shall mean the buildings, structures, improvements, roadways, parking areas, lighting fixtures, fences, walls, hedges, plantings, planted trees and shrubs, swimming pools, patios, decks, outbuildings, athletic facilities, and all other structures or landscaping of every type and kind upon the Property.

2.16 "Lessee" shall mean any Person who rents, leases, or subleases any Lot from an Owner (as hereinafter defined) or a Person in privity with an Owner. 2.17 "Lot1' shall mean each of the lots, with the exception of the Common Area, shown on the Site Development Plan or any Subdivision Map of the Property, and all Improvements erected, constructed, or located thereon. 2.18 "Member' shall mean each of those O'ners who are members of the Association.

2.19 "Mortgage" shall mean a mortgage ordeed of trust that encumbers any Lot

2.20 "NR$" shall mean the Nevada Revised Statutes. 2.21 "Owner" shall mean the record owner, whetherone ormore persons orentities, of a fee simple title to any Lot including contract sellers but excluding those having such interest merely as security for the performance of an obligation. 2.22 "PartyWalls" shall mean those walls, otherthan PerimeterWalls (as hereinafter defined), located anywhere on the Development that form Lot boundaries.

2.23 "Perimeter Walls" shall mean those walls, if any, which are located entirely on Association Property.

F4

1TARA\CC&k-2-

3

2.24 "Person" shall mean a person, partnership, corporation, trustee, orother legal entity. 2.25 "Property" shall mean that real property located entirely in Clark County, Nevada,

more particularly described in Exhibit "A" attached hereto. The Property shall include any additional real property that may from time to time be annexed thereto.

2.26 "Record, "Recording," or "Recorded" shall mean to file, the filing, or filed of record a legal instrument in the Office of the Recorder of Clark County, Nevada, or such other place as may be designated as the official location for recording deeds, plats, and similar documents affecting title to real property in Clark.

2.27 "Residence" shall mean and refer to any dwelling constructed on a Lot in accordance with all local, state, and federal laws and this Declaration. 2.28 "Rules and Regulations" shall mean the rules and regulations adopted by the Board pursuant to Section 4.12 of this Declaration. 2.29 "Site Development Plan" shall mean the general plot plan of the Development attached hereto as Exhibit 'C."

2.30 "Subdivision Map" shall mean that certain Final Map of Grand Canyon Residential Recorded on March 15,2004, in Book 115 of Plats, Page 0099 (Off cial Records

Book 20040315, Instrument 01275) and any other map(s) or plat(s) of the Development Recorded or to be Recorded in the Office of the Recorder of Clark County, Nevada.

ARTICLE lit.

Property and Property Rights 3.01 Description of the Property. The Property shall consist of the Lots and the Common Area. 3.02 No Representations orWarranties. No representations orwarranties of any kind, express or implied, other than the standard warranty required by VA and FRA, have been given or made by Declarant or its agents or employees in connection with the Property orany portion thereof, orany lmprovementthereon, its physical condition, zoning, compliance with applicable laws, or fitness for intended use, or in connection with the subdivision, sale, operation, maintenance, cost of maintenance, taxes, or regulation thereof as a common-interest

community, except as specifically and expressly set forth in this Declaration and except as may be filed by Declarant from time to time with any governmental authority. To the extent permitted by law, the Association, each and every Owner, and their successors and assigns hereby waive, and Declarant hereby expressly disclaims and excludes, any and all express and implied warranties created by NRS 116.4113, NRS 116.4114, and otherapplicable laws, WSWWO,D, W,'L l—,w7 MOrnARACCa7%l,l

4

including, without limitation, any implied warranty of quality, merchantability, fitness for a particular purpose, habitability, and workmanship. By virtue of obtaining its ownership interest in the Property or any portion thereof, the Association and each and every Owner hereby covenant and agree thatthe period forcommencing any action against Declarantfor breach of any obligations or warranties arising under NRS 116.4113 or 1 16.4114 shall be two (2) years after the cause of action accrues.

3.03 Lots. ReciDrocal Easements. Each Lot and its Ownershall havean easement (a) and the same is hereby granted by the Declarant over all adjoining parcels for the purpose of accommodating anyencroachmentdueto engineering errors, errors in original construction, settlement or shifting of the land, or any other cause; provided, however, that in no event

shall an easement for encroachment be created in favor of an Owner or Owners if the encroachment dccurred due to construction or alteration by the Owner (except Declarant) or the negligence or willful misconduct of the Owner. In the event a structure on any Lot is partially or totally destroyed and then repaired or rebuilt, the Owners of each Lot agree that minor unintentional encroachments over adjoining Lots not to exceed one (1) foot shall be permitted and that there shall be easements for the maintenance of the encroachments so long as they shalt exist. Association Easements. There are hereby reserved to the Association (b) such easements across the Propertyas are necessary to perform the duties and obligations of the Association.

Utilities Easement. There is hereby granted in favor of Declarant, the (c) Association, and their respective licensees an easement across each Lot for purposes of installing, facilitating, maintaining, repairing, replacing, or inspecting sewer, drainage, underground power lines, cable television systems, or other utiUties over, under, and across the Property. Emergency Repairs Easement. In additionto all othereasements reserved (d) or granted herein, there is hereby reserved to the Association an easement across each Lot as is necessary to permit a reasonable right of entry onto each Lot for the purpose of performing emergency repairs or to do other work reasonably necessary for the proper maintenance of the Development.

Maintenance Obligation of Owners. It shall be the duty of each Owner (e) at its sole costand expense, subject to Section 4.05(d) and the provisions of this Declaration requiring approval of the Architecture Committee, to maintain, repair, replace, and restore (including any maintenance, repairs, replacement, orrestoration required as a result of any damage ordestruction of the Property bycasualtyorotherwise) any Residence, Improvements, and landscaping located on its Lot and the Lot itself in a neat, sanitary, and attractive condition

and in accordance with the Rules and Regulations of the Association, all as determined

5

by the Board in its sole and absolute discretion. The foregoing obligation of the Owners shall include, without limitation, the obligation to irrigate and maintain, at their sole cost and expense and in accordance with the foregoing standards, any landscaping and other Improvements located on any portion of the Lots designated on any Subdivision Map as a Sight Visibility Zone, Sight Visibility Zone Easement, Sight Visibility Restriction Zone, or the like that are not otherwise maintained by the Association pursuant to Section 4.05(d). If any Owner shall permit any Residence, Improvements, or the Lot to fall into disrepair or to become unsafe, unsightly, orunattractive orotherwise violate this Declaration, the Association

shall have the right to seek any remedies at law or in equity it may have. In addition, the Board shall havethe right, but notthe duty, if such unacceptable maintenance is not corrected within thirty (30) days of written notice from the Association (or such longer period if reasonably

necessary under the circumstances, provided the owner is diligently performing such maintenance or repairs), to enterupon such Owners Lot and make such repairs and perform such maintenance and charge the costs thereof to Owner. Such costs shall be enforced, including penalty fees and costs, as an Assessment on the Lot pursuant to Article V hereof.

(f)

Insurance Obliciations of Owners. Each Owner shall insure the Residence

and Improvements on its Lot against loss ordamage by fire or by any other casualty in an amount as near as practical to the full replacement value of the Residence and pertinent Improvements, without deduction for depredation or coinsurance.

3.04 Association Property. Conveyance of Association Property. The Declarant hereby covenants (a) for itself, its successors, and assigns, at the time of the conveyance of the twelfth (12th) Lot in the Property to an Owner not the Declarant, that it will convey title to the Association Property to the Association free and clear of all encumbrances and liens, except utility easements, covenants, conditions, and reservationsthen of record, including, without limitation,

those set forth in this Declaration. Similar conveyances shall be made to the Association at the time of the conveyance to an Owner not the Declarant of the first (1st) Lot in each subsequent phase of the Development. If the Development is developed in separate phases and the Declarant or any successor Declarant constructs Common Area that is added to Property after the date on which the Owners other than the Declarant may elect a majority of the members of the Board, the Declarant or successor Declarantwho is constructing such additional Common Area shall, before conveying the additional Common Area to the Association

and to the extent, but only to the extent, required by the Act, deliver to the Association a study of the reserves for the additional Common Area that satisfies the requirements of the Act. To the extent, but only to the extent, required by the Act, the Declarant or successor Declarant who is constructing such additional Common Area shall be responsible for: (a) paying all expenses related to the additional Common Area that are incurred before the conveyance of the additional Common Area to the Association; and (b) except as otherwise provided in the Act, delivering to the Association that Declarant's or successor Declarant's share of the amount specified in the reserve study prepared and delivered pursuant to this subsection 3.04(a). As used in this subsection 3.04(a), "successor Declarant" includes,

w]!t.wntoNTARA\cC&R.1.

6

without limitation, any successorDeclarantwho does not control the Association established by the initial Declarant.

Declarant's Right to Inspect Prior to Conveyance. At any time prior (b) to conveyance by Declarant to the Association of the Association Property with respect to any given phase of the Development, Declarant shall have the right, but not the obligation, after providing reasonatñe noticeto the Association, to cause, from time to time, an independent

third party approved by Declarant and the Association to conduct inspections and tests of all or any parts of the Common Area in order to ascertain the physical condition of the Improvements thereon and determine whether maintenance, repairs, or replacements of anysuch improvements are indicated, lithe Declarant causes any such tests orinspections to be conducted, it shall pay all costs thereof, restore the affected portion of the Property to its condition immediately priorto the inspections and tests, and indemnifythe Association and Owner(s) of any affected unit(s) from any damage resulting therefrom. The Declarant mayhave a representative accompanythe inspector if it so elects. The Declarant shall provide the Association with copies of any written reports describing the results of any such inspections

or tests. The third party inspector, the Declarant, and its respective representatives shall have such rights of entry on, over, under, across, and through the Property as may be reasonably necessary to exercise the rights described in this subsection 3.04(b). Common Area Ownership. The Common Area shall be owned by the (c) Association in fee simple or licensed or leased to the Association for the use, enjoyment, and convenience of the Owners and shall contain any roadways, walkways, landscaped areas, recreational areas, parking areas, storage and trash areas, utility easements, all PerimeterWalls, and all other areas of the Property not a partof the Lots and notdedicated for public use. Each Lot and its Owner shall have an easement over all of the Common Area, and such easement is hereby granted, transferred, and conveyed to all Owners by the Declarantiorthe benefit of the Lots, the Owners, and each of them, and fortheir respective families, guests, and invitees for all of the foregoing purposes. In furtherance of the establishment of this easement, the individual deeds to the Lots may, but shall not be required to, set forth the foregoing easements.

Use. Each Member or Lessee who resides on the Property and their (d) respective families, guests, and invitees who reside with them shall be entitled to use the Common Area subject to the following: the right of theAssociation to charge reasonable dues, use fees, (i) and otherfees forthose facilities orameriitiesforwhich fees are norniafly charged orassessed;

the right of the Association to suspend the rights to the use of (ii) any Association Property by any Memberor Lessee and their families, guests, and invitees for any period during which any Assessment against the Members property remains past due and unpaid, and after notice and hearing by the Board, the right of the Association to invoke any remedy set forth in Article V of this Declaration;

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7

the right of the Association to require that security deposits be made and deposited with the Association to secure all sums payable to the Association and to guarantee performance of all duties due and owing or to become due and owing to the Association; (Hi)

the rightof the Association to allowthe general pubhc, orcertain (iv) segments thereof, to use any Association Property, and in the discretion of the Board, to charge use orotherfees thereforsubjectto subsection (i) above provided thatthe Association may not charge fees for access to public parks, public sport fields, or other public facilities: such rights to use the Association Property as may have been (v) granted by the Association to others; such covenants, conditions, and restrictions as may have been (vi) imposed by the Association or prior owners on the Association Property;

(vu) such rules and regulations forthe use of theAssociation Property as may be imposed by the Association from time to time; and (vHi)

the right of Declarant to use the Common Area for sales,

development, and related activities pertaining to the Development. Maintenance of Association Property. The Association shall be responsible (e) for all of the costs and maintenance of the Association Property. The Association may at anytime and without any approval of the Owners being required:

(i)

reconstruct, repair, replace orrefinish any Improvement, structure,

fixture, or facility located on the Common Area or any portion thereof;

construct, reconstruct, repair, replace, or refinish any road (ii) improvement or surface upon any portion of the Common Area; replace injured and diseased trees or other vegetation on the (Hi) Common Area and planttrees, shrubs, and ground coverto the extent that the Board deems necessary for the conservation of water and soil and for aesthetic purposes;

(iv)

place and maintain upon any such area such signs, naticers,

and lights as the Board may deem appropriate lorthe properidentification, use, and regulation thereof;

remove all papers, debris, and refuse from the Common Area, (v) wash or sweep paved areas as required, and clean and relamp lighting fixtures as needed;

(vi)

repaint striping, markers, directional signs, and similardevices

as necessary; WJ H,l7 MONTh PACC&R7

(vii) maintain, repair, and replace, as necessary, the PerimeterWalls; notwithstanding the foregoing, Ownersof Lots bounded by PerimeterWalls shall be responsible

for all aesthetic maintenance and repair of that side of the Perimeter Walls bounding the Owners' respective Lots; (vHi)

pay all real estate and personal propertytaxes and Assessments

on the Common Area; pay all electrical, water, gas sewer, trash collection, telephone. (ix) and other utility charges or fees for services furnished to the Common Area and all water charges or fees for services furnished to the Lots;

(x)

pay for and keep in force at the Associations expense public

liability, casualty, and fire insurance with companies acceptable to the Association in amounts

and with limits of liability required pursuant to any other recorded document affecting the Property, such insurance to name the Association, the Owners, or both as named insureds; and do all such otherand furtheracts thatthe Board deems necessary (xi) to preserve and protect the Common Area and the beauty thereof in accordance with the general purposes for use and enjoyment of the Property described in this Declaration;

The Board shall be the sole judge as to the appropriate maintenance of all portions of the Common Area. Nothing herein shall be construed so as to preclude the Association from delegating its powers set forth above to a manager. lmprovementson Common Area. Anyother provision of this Declaration (f) to the contrary notwithstanding, until Declarant has sold ninety percent (90%) of the Lots, no land within the Common Area may be improved byany Improvement, used, oroccupied except in such manner as shall have been approved by Declarant in its sole and absolute discretion. Declarant maydelegate its rightto grant such approvalsto the Board. No approval shall be granted that would be in contravention of the zoning or other local regulation then in effect for the area in question.

Damages. Each Owner or Lessee shall be liable to the Association for any damage to theAssociation Propertythat may be sustained by reason of the negligent or intentional misconduct of such Owner or Lessee or of its family, guests, or invitees. If the Lot, the ownership or leasing of which entitles the Owner or Lessee thereof to use the Association Property, is owned or leased jointly or in common, the liability of all such joint or common Owners or Lessees shall be joint and several. The amount of such damage may, in addition to any other rights or remedies, be assessed against such Person's real

(g)

and personal propertyon orwithin the Property, including the leasehold estate of any Lessee,

and may be collected as provided in Article V below for the collection of Assessments.

W'IH'']1 MQbflARMCc&R i9

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Damage and Destruction. In the case of destruction of or damage to (h) the Association Property by fire or other casualty, the Board shall have the following rights and privileges. Libertvto Reconstruct, lithe costto repair or replace the Association (i) Property, over and above all insurance proceeds, is less than twenty thousand dollars ($20,000), the Board may, without the consentof the Members, determineto repairorreplacethe damaged

property with property substantially the same as those that were destroyed or damaged.

Decision to Reconstruct. If the cost to repair or replace the (U) Association Property, over and above all insurance proceeds, is equal to or greater than twentythousand dollars ($20,000) and the Board deterrninesto rebuild anyAssociation Property

destroyed or damaged in the form substantially the same as those that were destroyed or damaged, itshall prepare plans and obtain bids following the notice proceeding fora special Assessment as set forth in Article V hereof. The Board shall submit the plans and bids to the Members for approval, which approval shall require the affirmative vote of sixty-seven percent (67%) of the Members entitled to vote. The Board will modify the plans until the required vote is obtained or the restoration becomes subject to subsection 3.03(h)(i) or (iii) hereof. If approved, the Board shall cause the repairs or replacementsto be done and assess the Members for the costs as a special Assessment. (Hi)

Decision Not to Reconstruct. If the Board determines notto rebuild

anyAssociation Property so destroyed or damaged orto build facilities substantiallydifferent from those that were destroyed ordamaged, it shall submit its decision to the Members for their approval or disapproval, which approval shall require the consent of eighty percent (80%) of the Members entitled to vote. If the Members elect to approve the decision, the Board shall act accordingly; but if the Members do not approvethe decision, the Board shall proceed to repairorrebuild the damaged ordestroyed facility pursuantto subsection 3.03(h)(i) or (ii) hereof. (iv)

Damage DurinQ Declarant Control Period. Should any Association

Property become destroyed or damaged before Declarant has sold all of the Lots, the Association shall rebuild or repair such Association Property in a manner consistent with its original condition as constructed by Declarant. Damage or Destruction by Owner. In the event any portion of the Common Area is damaged ordestroyed by an Owner, a Lessee, or any of their respective guests, tenants, licensees, or agents! the Board may repairsaid damaged area. In the event the Board determines to repair said damage, the amount necessary for such repairs shall be paid by the Owner or Lessee, upon demand, to the Board. If said amounts are not immediately paid, they shall be deemed to be Assessments, and the Board may enforce collection of same in the same manner as provided in Article V hereof for collection and enforcement of Assessments.

(v)

1

3.05 Special Declarant's Rights. Declarant and its agents shall havethefollowing rights and privileges, all of which shall terminate immediately upon the sale by Declarant of the last Lot within the Property: Easementfor Reøairs. A nonexclusive easementoverthe Association (a) Propertyforthe purpose of making repairsto the Association Property and the Lots if access thereto is not reasonably available;

Easement for Sales. A nonexclusive easement over the Association (b) Property (which easement shall extend to the sales agents, customers, prospective customers, guests, and representatives of Declarant)for sales, display, access, ingress, egress, exhibits, and other purposes deemed useful by Declarant and its agents in advertising and promoting the sale of Lots (including the erection of signs, flags, and banners) until all Lots are sold by Declarant. Notwithstanding the foregoing or anything to the contrary in this Declaration, Declarant and its affiliates reserve the right to continue to use one (1) or more Lots and the Residences constructed thereon as model Lots and Residences for other communities developed by Declarantorits affiliates pursuantto sale-leaseback orothersimilararrangements even after Declarant sells the last Lot in the Property to an Owner other than Declarant, in which case the foregoing easement and rights respecting the Association Property shall continue in full force and effect. In exercising the foregoing easement and rights, Declarant shall not unreasonably interfere with the rights and enjoyment of the Owners; Easement for Develonment. A nonexclusive easement overthe Association (c) Property (which easement shall be in favor of Declarant and its agents, contractors, and licensees)foraccess, ingress, and egress over, in, upon, under, and across the Association Property, including, but not limited to, the right to store materials thereon and to make such otheruse thereof as may be reasonable, necessary, or incidental to Declarant's development of the Property; provided, however, that no such rights or easements shall be exercised in such a mannerasto reasonably interfere with the occupancy, use, enjoyment, oraccess by any Owner;

(d)

Right to Lease. The right to lease any unsold Lot;

Transient Commercial Use. The rightto use any LotorResidencethat (e) it owns, or directly or indirectly has an interest in, for a Transient Commercial Use during the period that it is offering Lotsor Residencesforsale, if the Lot is properlyzoned forTransient Commercial Use, any license required by applicable governmental authorities governing such use is obtained, and the use otherwise complieswith the requirements setfcrth in the

Act. As used herein, the phrase "Transient Commercial Use" means the use of a Lot or Residence, for remuneration, as a hostel, hotel, inn, motel, resort, vacation rental, or other form of transient lodging if the term of the occupancy, possession, or use of the Lot or Residence is for less than thirty (30) consecutive calendar days- The term "remuneration means any compensation, money, rent, or other valuable consideration given in return for the occupancy, possession, or use of a Lot or Residence; and

II

Other Rights. Each of the developmental rights and special declarant's (f) rights set forth in NRS 116.039 and 116.089.

ARTICLE IV.

Owners' Association; Membership and Voting Rights

4.01 Association. Organization. TheAssociation isa nonprofit Nevada corporation created (a) for the purposes, charged with the duties, and vested with the powers prescribed by law or set forth in its Articles and Bylaws or in this Declaration. Neither the Articles nor Bylaws shall forany reason be amended orotherwise changed or interpreted so as to be inconsistent with this Declaration.

Successor Associations. In the event the Association is dissolved at (b) any time this Declaration is in force or effect, a nonprofit unincorporated association shall automatically and without further action or notice be formed to succeed to all the rights and duties of the Association. The successor unincorporated association shall be governed bythe laws of the State of Nevada and, to the extent not inconsistenttherewith, bytheArticles and Bylaws of the Association as if theywere created forthe purpose of governing the affairs of an unincorporated association. In theevent an unincorporated association isfornied pursuant

to this subsection 4.01(b), the appropriate officers of the Association or the successor association shaD take all reasonable efforts to restore or reincorporate the Association as a nonprofit Nevada corporation. 4.02 Membership Rights. Only Owners, including Declarant, shall be Members of the Association. Each Ownershall automatically be a Mernberof the Association without the necessity of any further action on its part, and membership in the Association shall be appurtenant to and shall run with the property ownership interest that qualifies the Owner to membership in the Association. Membership in the Association may not be severed from orin anywaytransfen-ed, pledged, mortgaged, oralienated exceptwith the title to the property ownership interest that qualifies the Owner thereof to membership and then only to the transferee of titleto the property interest. Anyattempt to make a prohibited severance, transfer, pledge, mortgage, or alienation shall be void. Subject to subsection 4.03(d) and Section 5.07 hereof and as set forth in the Articles, each Member shall be entitled to one (1) vote for each Lot owned by that Member.

4.03 Control of Association. Period of Declarant Control of Association. Notwithstanding anyother (a) provision of this Declaration or of the Bylaws, and subject to subsection (b) below, there shall be a period during which Declarant shall control the Association, and Declarant or a Person designated by Declarant may appoint and remove all or same of the officers and 2

directors of the Association. The period of Declarant control of the Association terminates no later than the earlier of: (i) sixty(60) days afterthe conveyance by Declarantof seventy-five percent (75%) of the Lots that may be created within the Property to Owners otherthan the DecI a rant;

five (5) years after the Declarant has ceased to offer Lots for (ii) sale in the ordinary course of its business; or (UI)

five(S) years afterany rightto annex new Lots was last exercised

by Deciarant. Provided, however, that Declarant may, but is not obligated to, voluntarily surrender the right to appoint and remove officers and Board members as provided herein before the termination period setforth above, provided that Declarant may require that specified actions of the Association orthe Board may require Declarant approval priorto becoming effective. Such surrender of rights shall only be by a recorded instrument. Composition of the Board. Not laterthan sixty (60) days afterconveyance (b) by Declarantof twenty-five percent (25%) of the Lots that may be created within the Property

to Owners other than Declarant, at least one (1) member of the Board and not less than twenty-five percent (25%) of the members of the Board must be elected by Owners other than Declarant. Not later than sixty (60) days after conveyance by Declarant of fifty percent (50%) of the Lots that may be created within the Property to Owners other than Declarant, not less than thirty-three and one-third percent (33-1)3%) of the members of the Board must be elected by Owners other than Declarant. Not later than the termination of any period of Declarant's control, the Ownersshall elect the Board, which shall consist of at least three (3) members, at least a majority of whom must be Owners.

Removal of Board Members. Notwithstanding any provision of this (c) Declaration orthe Bylaws to the contray, the Owners, by a two-thirds (2/3) vote of all Persons entitled to vote at any meeting of the Owners at which a quorum is present, may remove any member of the Board with or without cause, other than a member appointed by the Declarant. The removal of any member of the Board must be conducted by secret written ballot. A vote may not be cast pursuant to a proxy for the removal of any Board member. The Secretary of the Association shall cause a secret ballot and a return envelope to be sent, prepaid by United States mail, to the mailing address of each Lotwithin the Development

or to any other mailing address designated in writing by the Lot Owner. Each Owner must be provided with at least fifteen (15) days after the date the secret written ballot is mailed to the Owner to return the secret written ballot to the Association. Only the secret written ballots that are returned to the Association may be counted to determine the outcome. The secretwritten ballots must be opened and counted at a meeting of the Association. Aquorum is not required to be present when the secret written ballots are opened and counted at the meeting. The incumbent members of the Board, including, without limitation, the member H:SmW1CD, W",d l,.V)1 MDNTAM'CC&B 7—

13

who is subject to the removal, may not possess, be given access to, or participate in the opening or counting of the secret written ballots that are returned to the Association before those secret written ballots have been opened and counted at a meeting of the Association. Joint or Common OwriershiD. If any property interest, ownership of (d) which entitles the Owner thereof to vote, is held jointly or in common by more than one (1) Person, the vote or votes to which such property interest is entitled shall also be held jointly or in common in the same manner. However, the vote or votes for such property interest shall be cast, if at all, as a unit, and neither fractional votes nor split votes shall be allowed. Inthe event joint or common Owners are unable to agree among themselves as to howtheir vote or votes shall be cast as a unit, they shall lose the right to cast their vote or votes on the matter in question. In the event more than one vote is castfora particular membership, none of the votes shall be counted, and all such votes shall be deemed void. Any joint or common Owner shall be entitled to cast the vote or votes belonging to the joint or common Owners unless anotherjoint or common Owner shall have delivered to the Secretary of the Association prior to the time for casting such vote a written statement to the effect that the Owner wishing to cast the vote or votes has not been authorized to do so by the otherjoint or common Owner or Owners. ProxyVoting. Except as otherwise provided in this subsection 4.03(e), (e) votes allocated to a Lot may be cast pursuant to a proxy executed by the Owner thereof. An Owner maygive a proxyonlyto a memberof his immediatefamily, histenantwho resides in the Development, another Owner who resides in the Development, or any other Person permitted by the Act. If a Lot is owned by more than one (1) Person, each Owner of the Lot may vote or register protest to the casting of votes by the otherOwners of the Lotthrough an executed proxy. An Owner may revoke a proxy only by actual notice of revocation to the person presiding overa meeting of the Association. Before a vote may be cast pursuant toa proxy: (I) the proxy must bedated; (H)the proxy mustnot purportto be revocablewithout notice; (Hi)the proxymustdesignate the meeting forwhich it is executed; (iv) the proxy must designate each specific item on the agenda of the meeting forwhich the Owner has executed the proxy, except that the Owner may execute the proxy without designating any specific items on the agenda of the meeting if the proxy is to be used solely fordetermining whether a quorum is present for the meeting (If the proxy designates one (1) or more specific items on the agenda of the meeting forwhich the Owner has executed the proxy, the proxy must indicate, for each specific item designated in the proxy, whetherthe holderof the proxy must cast a vote in the affirmative or the negative on behalf of the Owner. If the proxy does not indicate whether the holder of the proxy must cast a vote in the affirmative or the negative for a particular item on the agenda of the meeting, the proxy must be treated, with regard to that particular item, as if the Owner were present but not voting on that particular item); and (v) the holder of the proxy must disclose at the beginning of the meeting for which the proxy is executed the numberof proxies pursuant to which the holderwiii be casting votes. A proxy terminates immediately afterthe conclusion of the meeting forwhich it is executed. A vote may not be cast pursuant to a proxy for the election or removal of a member of the Board. The holder of a proxy may not cast a vote on behalf of the Owner who executed

H

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iI p7 MON TA Rk ICC &R.7.flI

14

the proxy in a manner that is contrary to the proxy. A proxy is void if the proxy or the holder of the proxy violates any provisions of this subsection 4.03(e).

(f)

Cumulative Voting. Voting shall not be cumulative.

4.04 Meetings of Members. Meetings of the Members of the Association shall be conducted as provided in the Bylaws. 4.05 Duties of the Association. Subjectto and in accordance with this Declaration, the Association shall have and perform each of the following duties for the benefit of the Members of the Association:

(a)

Members. The Association shall accept all Owners as Members.

Recreation and ODen Space Areas and Common Area. The Association (b) shall accept, own, operate, and maintain all recreation and open space and Common Area that may be conveyed, leased, licensed, or otherwise enjoyed by it, together with all

Improvements of whatever kind and forwhatever purpose that may be located in said areas. The Association shall accept, own, operate, and maintain all other property easements or rights of use, whether real orpersonal, forwhich the Association, the Members, orthe Property receive any benefits, whether aesthetic or tangible.

Title to Property Upon Dissolution. The Association shall pay over or (c) convey, upon dissolution of the Association the assets of the Association to one or more exempt organizations of the kind described in Section 501(c) of the Internal Revenue Code of 1986, as amended from time to time. Renairand Maintenanceof Association Property. Subjecttothe provisions (d) of this Declaration pertaining to damage and destruction of Association Property and

condemnation, the Association shall paint, maintain, repair, and replace the Common Area, including any Improvements thereon, and anyotherAssociation Property enjoyed by, owned by, licensed to, or leased to the Association, together with the front-yard landscaping of all Lots in the Development, or shall contract for such maintenance, repair, and replacement

to assure maintenance thereof, in a clean, sanitary and attractive condition reasonably consistentwith prudent property management practices, the Association's budget, and any manuals governing such maintenance, repair, and replacement as may from time to time be adopted by the Board. The Board shall determine, in its sole discretion, the level and frequency of such maintenance. (e)

Payment of Taxes. The Associauon shall pay all real and personal property

taxes and othertaxes and assessments levied upon orwith respectto anyAssociation Property to the extent that such taxes and assessments are not levied directly upon the Members. The Association shall have all rights granted by law to contest the legality and the amount

of such taxes and assessments.

15

Insurance. The Association shall, at its sole cost and expense, obtain (f) and maintain in effect policies of insurance of such kind and in such amounts as the Board, in its opinion, deems adequate or desirable, but in no event less than that required by law, including the requirements of NRS 116.3113 and, so long as the Federal National Mortgage Association (FNMA") or the Government National Mortgage Association ("GNMA") holds a security interest in a Lot, the requirements of FNMA orGNMA. Without limitingthegenerality of the preceding sentence, during any time Declarant is the ownerof more than five(S) Lots such policies of insurance shall include: Fire and extended coverage insurance on all Improvements owned (i) by or leased to the Association in an amount not less than one hundred percent (100%)

of the aggregate full insurable value, meaning actual replacement cost exclusive of the costs of excavations, foundations, and footings. Such insurance shall insure the Association and any mortgagees, as theirinterests mayappear. As to each such policythatwill not be thereby voided or impaired, the Association herebywaives and releases all claims against the Board

and Declarant, and the officers, agents, and employees of each of them, with respect to any loss covered by such insurance, whether or not caused by negligence or breach of any dutyoragreement bysaid Persons, but onlyto the extent that insurance proceeds are received in compensation for the loss. If the foregoing exculpatory clause is held to be invalid, then the liability of the insurance companyshall be primary, and the liabilityof the Board, Declarant, and the officers, agents, and employees of the Board and of Declarant shall be secondary; Liability insurance, with limits in amounts reasonablydeterrnined (ii) by the Board, insuring against liabilityforbodily injury orpropertydamage arising from activities of the Association or with respect to the Association Property, including, if obtainable, a cross-liability endorsement insuring each insured against liability to each other insured. The liability insurance policies referred to above shall name as separately protected insureds Declarant, the Association, the Board and each of its members, theArchitecture Committee and each of its members, and the manager of the Property, if any, and such policies may also name some or all of the respective officers, employees, and agents of the foregoing;

Workers compensation insurance to the extent necessary to (iii) comply with all applicable laws; A fidelity bond in an amount determined by the Board naming (iv) the members of the Board and such other Persons as may be designated by the Board as principals and the Association as obligee; and Such other insurance, including indemnity and otherbonds, as (v) the Board shall deem necessary or desirable to carrying out the Association's functions. The Association shall be deemed trustee of the interests of all Members in all insurance proceeds and shall, subjecttothe requirements of law, including NRS 116.31133,116.31135

and any successor statutes, have full power to receive, hold, and disburse such proceeds.

16

Architecture Committee. The Board shall appointand remove members (g) of the Architecture Committee as provided in Article VII hereof and ensure that at all reasonable

times there is available a duly constituted and appointed Architecture Committee.

(h)

Enforcement. The Association shall enforce, in its own behalf and on

behalf of all Owners, all of the covenants, conditions, and restrictions setforth in this Declaration under an irrevocable agency ('Much is hereby granted) coupled with an interest as beneficiary of said covenants, conditions, and restrictions and as assignee of Declarant. TheAssociation

shall perform all other acts, whether or not anhere expressly authorized, as may be reasonably necessary to enforce any of the provisions of the Rules and Regulations or the Design Guidelines.

(j)

Long-Term Financing. The Association may! subject to compliance

with NRS 116.3112, execute mortgages and deeds of trust, both construction and permanent, for construction of facilities, including improvements, on property owned by orleased to the

Association. Such financing may be effected through conventional mortgages or deeds of trust, the issuance and sale of development orother bonds, or in any otherform ormanner as may be deemed appropriate bythe borrower, whetherthat be DeclarantortheAssociation. The mortgage, deed of trust, or other security interest given to secure repayment of such debt may consist of a first lien or a second orotherjuniorlien, as shall be deemed appropriate by such borrower, whetherthat be Declarant orthe Association, on the Improvementorother facilityto be constructed, togetherwith such underlying and surrounding lands as Declarant

or the Association, as the case may be, deems appropriate. The debt secured by such mortgage, deed of trust, orother security instrument may be retired from revenues generated

by dues, use fees, Assessments of the Members of the Association, or otherwise or any combination thereof as may be deemed appropriate by Declarant or the Association, as the case may be, but subject to the limitations imposed by this Declaration and the Act.

Annual Financial Review. Within one hundred twenty (120) days of (j) the end of the Associations fiscal year, the Association shall, at its own cost, conduct an annual financial review of the accounts of the Association. In addition, the Association may in the Board's discretion and at its own cost, from time to time commission an independent certified public accountant to conduct an audit of the accounts of the Association.

Books and Records. Except as otherwise provided in this subsection (k) 405(k), the Board shall, upon the written request of an Owner, make available for review during the regular working hours of the Association, the books, records, and other papers of the AssociationS including, without limitation, all contracts to which the Association is a party and all records filed with a court relating to a civil orcriminai action to which theAssociation

is a party. The provisions of this subsection 4.05(k) do not apply to the personnel records of the employees of the Association (exceptforthose records relating to the numberof hours worked and the salaries and benefits of those employees), the records of the Association relating to another Owner (except for the general records concerning violations described below), or a contract between the Association and an attorney. The Board shall maintain a general record concerning each violation of the governing documents of the Association, 17

other than a violation involving a failure to pay an Assessment, forwhich the Board has imposed

a fine, a construction penalty, or any other sanction. The general record: (I) must contain a general description of the nature of the violation and the type of the sanction imposed, and if the sanction imposed was a fine or construction penalty, must specify the amount of the fine or construction penalty; (ii) must not contain the name or address of the Person against whom the sanction was imposed or any other personal information which may be used to identify the Person orthe location of the Lot or Residence, if any, that is associated with the violation; and (Hi) must be maintained in an organized and convenient filing system or data system that allows an Owner to search and review the general records concerning violations of the governing documents of the Association. The books, records, and other papers of the Association must be maintained for at leastten (10) years (otherthan minutes

of Association membership and Board meetings, which must be maintained until the common-interest community is terminated) or such other period as the Act may from time to time mandate. The Board shall not require an Owner to pay an amount in excess often dollars($1 0) perhourto review any books, records, contracts, orotherpapers of the Association

pursuant to the provisions of this subsection. Financial Records. The Board shall make available for review at the (I) business office of the Association or some other suitable location in Clark County, Nevada, the financial statement of the Association, the budgets of the Association, and the study of the reserves of the Association required to be conducted pursuant to subsection 5.03(b)

of this Declaration. The Board shall provide a copy of any of the records required to be maintained pursuant to this subsection 4.050) to an Ownerorthe Ombudsman forOwners in Common-Interest Comrnunitieswithin fourteen (14) days afterreceiving a written request therefor. The Board may charge a fee to cover the actual costs of preparing a copy, but notto exceed twenty-five cents ($0.25) per page. The Association shall keep financia! records sufficiently detailed to enable the Association to comply with NRS I 16.4109 and other provisions of the Act. All financial and other records of the Association must be maintained and made

availablefor review at the business office of theAssociation orsonieothersuitab!e location within Clark County, Nevada and made reasonably available foranyOwnerand his authorized agents to inspect, examine, photocopy, and audit at the Owner's expense.

(m) Other. The Association shall carry out all duties of the Association set forth in the Rules and Regulations, the Articles, the Bylaws, or other governing documents of the Association.

4.06 Powers and Authority of the Association. The Association shall have all of the powers of a nonstock, nonprofit corporation organized under the laws of the State of Nevada in operating forthe benefit of its members, including, without limitation, all of the powers setforth in NRS 116.3102, subjectonlyto such limitations upon the exerciseof such powers as are expressly set forth in the Articles, the Bylaws, or this Declaration. It shall have the powerto do any and all lawful thingswhich may be authorized, required, or permitted to be done under and by virtue of this Declaration and to do and perform any and all acts that may be necessary or properfororincidental to the exercise of anyof the express powers

H

rLI

W,d H{p7 MTA

I8

of the Association for the peace, health, comfort, safety, or general welfare of the Owners. Without in any way limiting the generality of the foregoing, the Association and the Board shalt have the following powers and authority to exercise in their discretion: Right of Entrvand Enforcement. Subjectto any limitations or restrictions imposed by FNMA, which are incorporated herein bythis reference, the Board and its agents and representatives shall have the power and r%ghtto enter upon any Lot and the Improvements thereon without liability to any Owner for the purpose of enforcing any of the provisions of this Declaration orforthe purpose of maintaining and repairing the Improvements located on said Lot as provided in this Declaration or if the Ownerthereof fails to maintain and repair

(a)

any portion of a Lot as required by this Declaration. The Association shall also have the power and authority from time to time in its own name, on its own behalf, or on the behalf of any Owner or Owners who consent thereto to commence arid maintain actions and suits to restrain and enjoin any breach orthreatened breach of this Declaration and to enforce, by mandatory injunction or otherwise, all of the provisions of this Declaration. The costs of any such action orsuit, including reasonable attorneys' fees, shall be paid to the prevailing

party as part of its judgment. Civil Actions. Except as otherwise provided in Section 4.08 and this (b) subsection 4.06(b), the Association maycommence a civil action onlyupon a vote orwritten agreement of the Members holding at least a majority of the voting poweroftheAssociation.

The Association shall provide written notice to each Owner of a meeting at which commencement of a civil action is to be considered at least twenty-one (21) days before the meeting. The provisions of this subsection do not applyto a civil action that is commenced: (i)to enforce the payment of an Assessment; (U) to enforce the provisions of the Declaration, Bylaws, or Rules and Regulations; (Ui) to proceed with a counterclaim; or (iv) to protectthe

health, safety and welfare ot the Members. If a civil action is commenced pursuant to this subsection withoutthe required vote or agreement, the action must be ratified in accordance with the Act. Construction DefectActions. Notwithstanding anything in this Declaration (c) to the contrary, before initiating any action, amending a complaint to add a cause of action, or institution or amending any other Claim (as defined in Section 4.07 hereof) involving any construction defect (as defined in NRS 40615) against the Declarant Parties (as defined in Section 4.07 hereof) oranyof them, the Association and any Owner(s) pursuing orbringing such action oramendment must firsttimely comply in all respects with the claim notification,

resolution, and approval procedures set forth in Sections 4.07 and 4.08 hereof and the requirements of NRS Chapter4O, including, without limitation, giving written noticeto Declarant

by certified mail, return receipt requested, in strict compliance with NRS 40.645, providing the Declarant Parties with the opportunity to inspect the alleged defects, damages, and/or injuries, determine the nature, extent, and cause thereof, and take corrective action and/or make settlement offers with respect thereto, and submitting any Claim to mediation and/or arbitration in accordance with Section 4.07 hereof. If the Residence, Lot, Common Area, and/or appurtenance that is the subject of the Claim is covered by a warranty or contract of insurance issued by an insurerauthorized bythe State of Nevada to issue such a warranty 19

or contract, the claimant(s) must diligently pursue the Claim underthe warranty orcontract. The claimant and the Declarant may agree in writing to extend the periods prescribed by this Declaration and/or NRS Chapter 40.

(d) Easements and Rights-of-Way. The Board shall have the power to grant and convey to any third party easements, licenses, and rights-of-way, in, on, over, or under any Common Area conveyed or otherwise transferred to the Association or under its jurisdiction, subject to the conditions contained in NRS 116.3112. EmDlovnient of Manager. The Board shall have the power to employ, (e) bywritten agreement and at its sole cost and expense, the services of a communityrnanager or management company, subject to the direction and control of the Board, to manage and carry out the affairs of the Association and to the extent consistentwith the laws of the State of Nevada and upon such conditions as are otherwise deemed advisable by the Board, to delegate to the manager any of the powers of the Board orthe officers of the Association. In no event shall any management agreement be fora term greaterthan one (1) year, except with the approval of a majority of the Members, and any such agreement shall provide for termination bythe Association without penaltyon a maximum of thirty (30) dayswritten notice. Except as otherwise provided in the Act, any Person so appointed must hold eithera permit to engage in property management pursuant to NRS Chapter 645 or a certificate for the management of a common-interest community issued by the Real Estate Division of the Nevada Department of Business and Industry.

Services. The Board shall have the power, by written agreement and (f) at its sole cost and expense, to provide forand engage the services of others forthe maintenance, protection, and preservation of theAssociation Property, including the Common Area, such as grounds keepers, painters, plumbers, and such other maintenance personnel, as the nature and characterof the CommonArea may require and including any such necessary personnel as the nature and character of any recreational facilities within the Common Area may require; provided, however, that no contract for such services shall be for a duration of more than one (1) year, except with the approval of a majority of the Members, and any such agreement shall provide for termination without penalty on a minimum of ninety (90) days written notice. Utilities. The Board shall have the power to contract, use, and pay for (g) utility services to the Association Property.

Other Pronerty. The Board shall have the power to acquire and hold, (h) as trustee for the benefit of the Members, tangible and intangible personal property and to dispose of the same by sale or otherwise. Mergers. TheAssociation shall have the power, to the extent permitted (i) by NRS § 116.2121, to participate in mergers and consolidations with other nonprofit corporations organized for the same purposes as the Association.

20

(j)

Dedication. The Board shall have the power to dedicate any of the

Association Propertyto an appropriate public authority for public use, provided that any such dedication shall complywith MRS 116.3112, and that such dedication is subjectto the existing

easements and rights of use of all of the Members. Delegation. The Board may delegate any of its powers to any committees, (k) officers, or employees as it deems necessary and proper.

Construction on Association Property. Subjectto approval by Declarant (I) as long as Declarant owns any portion of the Property orAnnexeable Area, the Board shall have the power to construct new Improvements or additions to the Association Property or demolish existing Association Property or Improvements.

(m) Maintenance of Entry and Exit Measures. The Board shall have the power to implement measures regulating entrance and exit at all points of entry and exit to orfrom the Property, which mayor may not be guarded. The installation ormaintenance of gates or traffic access devices shall not create any presumption with regard to security or protection of persons or property either within or adjacent to the Property nor any duty whatsoeveron the part of the Declarant, theAssociation, ortheirrespective officers, directors, managers, employees, agents, or contractors to provide such security or protection. Conveyances. The Board shall have the power to grant and convey (n) to any Person real property and interests therein, including fee title, leasehold estates, easements, rights of way, mortgages, and deeds of trust, out of, in, on, over, or under any Association Property for the purpose of constructing, erecting operating, maintaining, or repairing thereon, therein or thereunder

(i)

parks, parkways, or other recreational facilities;

(ii)

roads, streets, ways, driveways, trails, and paths;

(iii)

lines, cables, wires, conduits, pipelines, orotherdevicesforutility

purposes; sewers, water systems, storm waterdrainage systems, sprinkler (iv) systems, and pipelines; and

(v)

any similarpublic, quasi-public, or private improvenientsorfacilities.

Nothing above contained, however, shall be construed to permit use or occupancy of any land, Improvement, orotherfacility in a waythat would violate applicable zoning oruse and occupancy restrictions imposed thereon by other provisions of this Declaration or by city, county, or other applicable public agency.

2I

(o) Legal and Accounting Services. The Board shall have the power, by written agreement and at its sole cost and expense, to retain and payforlegal and accounting services necessary orproperin the operation of theAssociation, the operation and management

of the Association Property, the enforcement of the Rules and Regulations, or in the performance of any other duty, right, power, or authority of the Association. Association Property Services. The Board shall have the powerto pay (p) forwater, sewer, garbage removal, electricity, telephone, gas, snow removal, landscaping, gardening, and all other utilities, services, and maintenance for the Association Property.

Other Areas. The Board shall have the power to maintain and repair easements, roads, roadways, rights of way, parks parkways, median strips, sidewalks, paths, trails, ponds, lakes, entry details, entry houses, Perimeter Walls, or other Common Area whether owned by or eased to the Association and to contribute toward the costof operation and maintenance of private roads, if any, and any other Improvements or other facilities owned by or leased or licensed to the Association.

(q)

Recreational Facilities. The Board shall have the powerto operate and (r) maintain any and all types of facilities owned by or leased to the Association for both active and passive recreation within the Common Area including, but not limited to: swimming pools; community clubs; picnic areas; parks and playgrounds; trails for hiking and bicycles; lakes and ponds for swimming, fishing, and other water sports; and other similar and dissimilar recreati?nal facilities. OtherServices and Properties. The Board shall have the powerto obtain (s) and pay for any other property and services and to pay any other taxes or assessments that the Association or the Board is required to secure or to pay for pursuant to applicable law, the Rules and Regulations, the Articles, or the Bylaws.

(t)

Contracts. The Board shall havethe power, at its sole cost and expense,

to enter into contracts with Declarant and other Persons, on such terms and provisions as the Board shall determine, to operate and maintain any Common Area and Improvements thereon orto provide any service to the Property (including, but not limited to, cable television and laundry facilities).

4.07 Claim Notification and Resolution Procedure. All actions or claims (i) by the Association against any one (1) or more of Declarant, its builders, general contractors, subcontractors, suppliers, design professionals, or brokers, or their agents, employees or representatives (collectively, the Declarant Parties"), (U) by any Owner(s) against any one (1) or more of the Declarant Parties, or (Ui) by both the Association and any Owner(s) against any one (1) or more of the Declarant Parties, relating to or arising out of the Development, the Declaration oranyother Developmentdocuments, the use orcondition of the Development, orthe design orconstruction of oranycondition on oraffecting the Development, including, but not limited to, construction defects (as defined in MRS 40.615, as may be amended),

Hna'cI,\D, WSI HO7 MOfTARA\CC&R,-1 —

surveys, soils conditions, grading, specifications, installation of Improvements (including, but not limited to, Residences), orwhich allege negligence orothertortious conduct, breach of contract, or breach of implied orexpress warranties as to the condition of the Development orany Improvements (collectively, 'Claim(s)") shall be subjectto the provisions of this Section 4.07 and Section 4.08 below. Declarant and each Owner acknowledge that the provisions setforth in this Section 4.07 and Section 4.08 shall be binding upon current and future Owners

and upon the Association, whether acting for itself or on behalf of any Owner(s). Notice. Any Person (including the Association) with a Claim shall, at (a) least sixty (60) days prior to initiating any action with respect thereto, notify the Declarant Parties in writing of the Claim, which writing shall describe in reasonable detail the nature of the Claim and any proposed remedy (a 'Claim Notice"). Any Claim Notice the subject matterof which is a construction defect Claim must also strictly complywith all the requirements

of NRS Chapter 40, including, without limitation, those specified in NRS 40.645.

(b)

Right to Inspect and Right to Corrective Action. Within a reasonable

period after receipt of the Claim Notice, which period shall not exceed sixty (60) days, Declarant and the claimant shall meet at a mutually acceptable place within the Developmentto discuss

the Claim. At such meeting or at such other mutually agreeable time, the Declarant Parties shall have full access to the property that is the subject of the Claim and shall have the right to conduct inspections, testing, and/ordestructive or invasive testing of the same in a manner deemed appropriate by Declarant (provided the Declarant Parties shall repair or replace any property damaged or destroyed during such inspection or testing), which rights shall continue until such time as the Claim is resolved as provided in this Section 4.07. The parties shall negotiate in good faith in an attempt to resolve the Claim. If Declarant or any other Declarant Party with Declarants approval elect to take any corrective action, they shall be provided full access to the Development and the property which is the subject of the Claim to take and complete corrective action.

No Additional Obligations; Irrevocability and Waiver of Right. Nothing (c) setforth in Section 4.07(b) shall be construed to impose any obligation on Declarantto inspect,

test, repair, or replace any tern of the Development for which Declarant is not otherwise obligated underapplicable law or any limited warranty provided by Declarant in connection with the sale of the Development and/or the Improvements constructed thereon. The right of the Declarant Parties to enter, inspect, test, repair, and/or replace reserved hereby shall be irrevocable and may not be waived orotherwise terminated, except by a writing executed and recorded by Declarant in the Official Records of Clark County, Nevada.

Mediation. If the parties cannot resolve the Claim pursuant to the (d) procedures described in Section 4.07(b) above, the matter shall be submitted to mediation pursuantto the mediation procedures adopted bythe American Arbitration Association (MA"), except as such procedures are modified by the provisions of this Section 4.07(d) or any successor to the AM or any other entity offering mediation services that is acceptable to the parties. No person shall serve as a mediator involving any Claim in which the person has anyfinancial or personal interest in the result of the mediation, except upon written consent 23

of all parties. Prior to accepting any appointment, the prospective mediator shall disclose anycircunistances likelyto create a presumption of bias orto prevent a promptcommencement of the mediation process. No litigation or other action shall be commenced against any of the Declarant Parties without complying with the procedures described in this Section 4.07(d). In the event that a statute of limitations period would expire prior to the conclusion of any mediation, any party is permitted to file litigation to promptly seek an orderstayirig the matter until the mediation process shall be completed. Nothing in this mediation section shall be interpreted to construe, grant, confer, extend, or modify any of the parties rights under law, except as otherwise provided in this section. Position Memoranda; Pie-Mediation Conference. Within ten (10) (i) days of the selection of the mediator, each party shall submit a brief memorandum setting forth its position with regard to the issues that need to be resolved. The mediator shall have the rightto schedule a pre-mediation conference, and all parties shall attend unless otherwise agreed. The mediation shall be commenced within ten (10) days following the submittal of the memoranda and shall be concluded within fifteen (15) days from the commencement of the mediation, unless the parties mutually agree to extend the mediation period. The mediation shall be held in Clark County, Nevada orsuch other place as is mutually acceptable by the parties.

Conduct of Mediation. The mediator has discretion to conduct (ii) the mediation in the mannerin which the mediator believes is mostappropriateforreaching a settlement of the Claim. The mediator is authorized to conduct joint and separate meetings with the parties and to make oral and written recommendations for settlement. Whenever necessary, the mediator mayalso obtain expert advice concerning technical aspects of the Claim, provided the parties agree and assume the expenses of obtaining such advice. The mediator does not have the authority to impose a settlement on the parties.

Exclusion AQreement. Any admissions, offers of compromise, or settlement negotiations or communications at the mediation shall be excluded in any subsequent dispute-resolution forum. (Hi)

Parties Permitted at Sessions. Persons other than the parties, (iv) their representatives and witnesses, if any, and the mediator may attend mediation sessions onlywith the permission of both parties and the consent of the mediator. Information disclosed by the parties or by witnesses in the course of the mediation while serving in such capacity

shall be confidential. There shall be no stenographic record of the mediation process. Expenses. The expenses of witnesses for either side shall be (v) paid by the party producing such witnesses. All otherexpenses of the mediation, including, but not limited to, the fees and costs charged by the mediator and the expenses of any witnesses or the cost of any proof or expert advice produced at the direct request of the mediator, shall be borne equally by the parties, unless they agree otherwise. Each party to the mediation shall bear its own attomeys' fees and costs in connection with such mediation.

Wd }SO7 MONTAtA\Cc&p ,

4

Arbitration. Should mediation pursuant to Section 4.07(d) above not (e) be successful in resolving any Claim, such Claim shall be resolved by binding arbitration in accordance with the Commercial Arbitration Rules of the IMA as modified oras otherwise provided in this Section 4.07(e). The parties shall cooperate in good faith to attemptto cause all necessary and appropriate parties to be included in the arbitration proceeding. Subject to the limitations imposed in this Section 4.07(e), the arbitrator shall have the authority to try all issues, whether of fact or law. (i)

Place. The proceedings shall be heard in Clark County, Nevada.

Arbitration. A single arbitrator shall be selected in accordance (ii) with the rules of the AAA from panels maintained by the AAA with experience in relevant real estate matters orconstruction. The arbitrator shall not have any relationship to the parties or interest in the Development. The parties to the Claim shall meet to select the arbitrator within ten (10) days after service of the initial complaint on all defendants named therein. Commencement and TiminQ of Proceeding. The arbitratorshall (Hi) promptly commence the proceeding at the earliest convenient date in light of all of the facts and circumstances and shall conduct the proceeding without undue delay.

Pre-hearing Conferences. The arbitrator may require one (1) (iv) or more pre-hearing conferences. Discovery. The parties shall be entitled onlyto limited discovery, (v) consisting of the exchange between the parties of only the following mailers: (i)witness lists; (ii) expertwitness designations; (iii) expert witness reports; (iv) exhibits; (v) reports of testing

or inspections of the property subject to the Claim, including but not limited to, destructive or invasive testing; and (vi) trial briefs. The parties shall also be entitled to conduct further tests and inspections as provided in Section 4.07(b) above. Any other discovery shall be permitted by the arbitrator upon a showing of good cause or based on the mutual agreement of the parties. The arbitrator shall oversee discovery and may enforce all discovery orders in the same manner as any trial court judge.

Limitation on Remedies/Prohibition on the Award of Punitive (vi) Damages. The arbitratorshall not have the powerto award punitive orconsequential damages. As further provided below, the right to punitive and consequential damages is waived by the parties. The arbitrator shall have the powerto grant all otherlegal and equitable remedies and award compensatory damages in the proceeding. Motions. The arbitratorshall have the powerto hearand dispose of motions, including motionsto dismiss, motionsforjudgrnenton the pleadings, and summary judgment motions, in the same manner as a trial court judge, except the arbitratorshall also have the power to adjudicate summarily issues of fact or law, including the availability of remedies, whether or not the issue adjudicated could dispose of an entire cause of action (vH)

or defense.

I•SfllOl 'A

Mc.TTMAcc&p.7..d

(viii) Arbitration Award. The arbitrators award may be enforced as provided form the Uniform Arbitration Act, NRS 38.015, et seq., or such similarlawgoverning enforcement of awards in a trial court as is applicable in thejurisdiction in which the arbitration is held. WAIVERS. NOTICE: BYACCEPTANCE OFA DEED OR BYACQUIRING ANY OWNERSHIP INTEREST IN ANY PORTION OFTHE DEVELOPMENT, EACH PERSON,

(f)

FOR HIMSELF, HIS HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS, TRNSFEREES AND ASSIGNS, AGREES TO HAVEANYCLAIM RESOLVEDACCORDING To THE PROVISIONS OF THIS SECTION 4.07 AND WAIVES THE RIGHT TO PURSUE ANY CLAIM IN ANY MANNER OTHER THAN AS PROVIDED IN THIS SECTION 4.07.

THE ASSOCIATION, EACH OWNER, AND DECLARANT ACKNOWLEDGE THAT BY AGREEING TO RESOLVE ALL CLAIMS AS PROVIDED IN THIS SECTION 407, THEY ARE GIVING UP THEIR RESPECTIVE RIGHTS TO HAVE SUCH CLAIMS TRIED BEFORE AJURY.THEASSOCIATION, EACHOWNER,ANDDECLARANTFURTHERWAIVETHEIR RESPECTIVE RIGHTS TO AN AWARD OF PUNITIVE AND CONSEQUENTIAL DAMAGES

RELATING TO ANY CLAIM. BY ACCEPTANCE OF A DEED OR BY ACQUIRING ANY OWNERSHIP INTEREST IN ANY PORTION OF THE DEVELOPMENT, EACH OWNER HAS VOLUNTARILY ACKNOWLEDGEDTHAT HE IS GIVING UP ANY RIGHTS HE MAY POSSESS TO PUNITIVE AND CONSEQUENTIAL DAMAGES ORTHE RIGHTTOATRIAL BEFORE A JURY RELATING TO A CLAIM. (g)

Statutes of Limitation. Nothing in this Section 4.07 shall be considered

to toll, stay, reduce or extend any applicable statute of limitations. Required Consentof Declarant to Modify. Neitherthis Section 4.07 nor (h) Section 4.08 below may be amended, except in accordance with Section 10.04 of this Declaration and with the express written consent of the Declarant.

4.08 Required Consent of Owners for Legal Action. Notwithstanding anything to the confrarycontained in this Declaration, any Claim instituted bythe Association against any one (1) or more of the Declarant Parties shall have first been approved by Owners representing seventy-five per cent (75%) of the votes of the Association present in person or by proxy at a meeting duly called for such purpose. (a)

Notice to Owners.

Priorto obtaining the consent of the Owners in accordance with (I) Section 4.08, the Association must provide written notice to all Owners which notice shall (at a minimum) include: (1) a reasonably detailed description of the nature of any Claim against the Declarant Parties or anyof them; (2) a description of the attempts of the Declarant Parties to correct such Claim and the opportunities provided to the Declarant Parties to correct such

Claim; (3) a certification from an engineer licensed in the State of Nevada that such Claim

26

is valid along with a description of the scope of work necessary to cure such Claim and a resume of such engineer; (4) the estimated cost to repair such Claim; (5) the name and professional background of the attorney proposed to be retained bythe Association to pursue such Claim and a description of the relationship between such attorney and member(s) of the Board of Directors (if any); (6) a description ofthe fee arrangement between such attorney and the Association; (7) the estimated attorneys' fees and expert fees and costs necessary to pursue the Claim and the source of the funds which will be used to pay such fees and expenses, (8) the estimated time necessary to conclude the Claim; and (9) an affirmative staternentfrom the Board of Directors thatthe Claim is in the best interestof the Association and its Members. Inthe eventthe Association recovers anyfundsfromthe Declarant Parties (or any other Person) to repair a Claim, any excess funds remaining after repair of (U)

such Claim shall be paid into the Association's reserve fund. Notification to Prospective Purchasers. In the eventthatthe Association (b) commences any Claim, all Owners must notify prospective purchasers in writing of such Claim, disclose to such prospective purchasers in writing the information required by NRS 40688, and provide such prospective purchasers with a copy of the notice received from the Association pursuant to Section 4.08(a).

4.09 Indemnification. Indemnification. The Association shall indemnify any Person who was (a) or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, by reason of the fact that the Person is or was a Director, officer, employee, servant, or agent of the Association against expenses (including attorneys fees), judgments, fines, and amounts paid in seft lement actually and reasonably incurred by such Person in connection with such action, suit, or proceeding and undertake all costs of defense, until and unless it is proved thatthe Person acted with willful orwanton misfeasance orwith gross negligence and provided that the Person acted in good faith and in a manner that the Person reasonably believed to be in ornotopposed to the best interests of theAssociation, and with respectto anycriminal action or proceeding, had no reasonable cause to believe that its conduct was unlawful.

After such proof that the Person acted with willful or wanton misfeasance or with gross negligence orthatthe Person did not actin good faith, did not reasonably believe its actions were in or not opposed to the best interests of the Association, or had no reasonable cause to believe that its conduct was unawful, the Association shall no longer liable for the cost of defense and may recover costs already expended from the Person who so acted. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nob contendere or its equivalent shall not of itself create a presumption that the Person did not act in good faith or in a manner that the Person reasonably believed to be in ornot opposed to the best interests of the Association, orwith respectto any criminal

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action or proceeding, had reasonable cause to believethatthe Person's conductwas unlawful. Board members shall not be personally liable to the victims of crimes that may occur on the Property. Punitive damages may not be recovered against the Association butmay be

recovered from Persons whose activity gave rise to the damages. Determination. Any indemnification that the Association has elected (b) to provide underthis Section 4.09 (unless ordered by a court) shall be made bythe Association only as authorized in the specific case by a determination that indemnification of the officer, director, employee, servant, or agent is proper in the circumstances because it has met the

applicable standard of conduct set forth in subsection 4.09(a). Such determination shall be made: (i) by the Board by a majority vote of a quorum consisting of directors who were not parties to such action, suit, or proceeding; or (U) if such a quorum is not obtainable, or even if obtainable and a quorum of disinterested directors so directs, by independent legal counsel in a written opinion; provided, however, that if a director, officer, employee, servant, or agent of the Association has been successful on the merits or otherwise in the defense of any action, suit, or proceeding referred to in subsection 4.09(a), or in defense ofany claim, issue, or matter therein, then to the extent that the Association has elected to provide indemnification, it shall automatically be indemnified against expenses (including attomeys fees) actually and reasonably incurred by it in connection therewith without the necessity of any such determination that it has met the applicable standard of conduct set forth in subsection 4.09(a). Payment in Advance. Expenses incurred in defending a civil orcriminal action, suit, or proceeding may, upon action by the Board in accordance with subsection 4.09(b), be paid by the Association in advance of the final disposition of such action, suit, or proceeding upon receipt of an undertaking byoron behalf of the director, officer, employee, servant or agentto repay such amount unless it shall ultimately be determined that it is entitled (c)

to be indemnified by the Association as authorized in this Section 4.09. Insurance. The Board shall purchase and maintain, at its sole costand (d) expense, insurance on behalf of any Person who is or was a director, officer, employee, servant, or agent of the Association against any liability asserted against it or incurred by it in any such capacity or arising out of its status as such, whether or not the Association would have the power to indemnify it against such liability hereunder or otherwise. (e) Other CoveraQe. The indemnification provided by this Section 4.09 shall not be deemed exclusive of any other rights to which anyone seeking indemnification

may be entitled under this Declaration, any agreement, vote of the Members, vote of disinterested directors, Nevada law, or otherwise, both as to action in its official capacity and as to action in another capacity while holding such office, and may continue as to a Personwho has ceased to be a director, officer, employee, servant, oragent and may inure to the benefit of the heirs and personal representatives of such a Person.

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4.10 Diseased Trees. The Association may enter upon any part of the Property at any time to inspect for, prevent, and control diseased and insect infested trees and other plant life. If any diseased or insect infested trees orother plant life are found, the Association may spray, remove diseased trees and otherplant life, ortake such other remedial measures as it deems expedient. The costthereof applicableto privately owned property maybe levied by the Association as a special Assessment against such privately owned property.

4.11 Perimeter Walls. The Association may enter upon any part of the Property at anytime to inspect for, prevent, orcontrol damage to any PerimeterWalls and to maintain, repair, or replace, as necessary, the PerimeterWalls. Owners of Lots bounded by a Perimeter

Wall shall be responsible for the cost of maintenance to Perimeter Walls as set forth in subsection 3.04(e)(vD) hereof. Notwithstanding theforegoing, an Ownercausing anydamage to any PerimeterWalls by its acts shall be solely responsible and liablefor any maintenance, repair, or replacement, as required, and for any cost or liability necessary to repair such

damaged Perimeter Walls. 4.12 Rules. The Board may, from time to time and subject to the provisions of this Declaration, propose, enact, and amend rules and regulations to be known as the "Rules and Regulations" that relate to the management, operation, and control of the Association or the Common Area. The Rules and Regulations shall become effective and binding on all Owners only after adoption by the Board, whereupon such Rules and Regulations shall have the sameforce and effect as if theywere setforth in and were a partof this Declaration. The Rules and Regulations mayconcern, but need not be limited to, mafters pertaining

to use of the Common Area; signs; collection and disposal of refuse; minimum standards of maintenance of property; parking and traffic restrictions; imitations on maintenance of landscaping or other Improvements on any property; standards for Residences; limitations on the type of furniture fixtures, equipment, and other objects maintained on Lots in view of other Owners; limitations on the numberand type of animals that may be allowed on the Property; and any other subject or matterwithin thejurisdiction of the Association as provided in this Declaration. The Rules and Regulations may restrict and govern the use ofthe Common Area by any Member or Lessee, by the family of such Member or Lessee, or by any invitee,

licensee, orguestof such MemberorLessee. Declarant retainsthe rightto establish rules relating to the use of any portion of the Common Area owned by it until annexation and conveyance to the Association, and the Association may incorporate such rules in its Rules and Regulations. The Rules and Regulations adopted by the Board: (i) must be reasonably related to the purpose forwhich theyare adopted; (U) must be sufficiently explicit in their prohibition, direction, orlimitationto inform a Person of any action oromission required forcompliance; (iH) must not be adopted to evade any obligation of the Association; (iv) must be consistent with this Declaration and the other governing documents of the Association and must not arbitrarily restrict conduct or require the construction of anycapital improvement by an Owner that is not required by the governing documents of the Association; (v) must be uniformly

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enforced underthesameorsimflarcircurnstancesagainstallowners(anyruleorregulation that is not so uniformly enforced may not be enforced against any Owner); and (vi) may be enforced bythe Association through the imposition of a fine only if the Association complies with the requirements set forth in Section 4.14 hereof and the Act.

A copy of the Rules and Regulations, as they may be from time to time adopted, amended, or repealed, shall be mailed or otherwise delivered to each Owner and may, but are not required to, be recorded.

4.13 Breach of Rules, Regulations, or Restrictions. In the event of a breach of any provision of the Rules and Regulations or of any of the restrictions contained in this Declaration by an Owner, its family, guests, employees, invitees, licensees, or Lessees, the Board, for and on behalf of itself and all other Owners, shall have the right to enforce the obligations of each Owner to obey the Rules and Regulations or the restrictions of this Declaration in any mannerprovided by law or in equity, including, but not limited to, appropriate

hiring of legal counsel, the pursuing of legal action, suspension of the Owners right to use the Common Area, and/orsuspension of the Owners voting rights; provided, however, such suspension fora nonrecurring violation of the Rules and Regulations may not be fora period in excess of thirty (30) days, after notice and hearing as herein provided. Subject to Section 4.14 below and in addition tothe other remedies herein set forth, including, without limitation, assessing the cost of repair of any damage resulting from a violation of the Rules and Regulations, the Board, by rnajorityvote, may lew a fine against such Owner, after appropriate notice and hearing as herein provided. In the eventthatthe Board determines that a violation

has occurred and that a penalty shall be imposed, the determination of the Board shall be final, provided that a reasonable opportunityfor a hearing before the Board has been provided to the Owner. In the event legal counsel is retained or legal action is instituted by the Board pursuant to this Section, any settlement priorto judgment orany judgment rendered in any such action shall include, without limitation, costs of collection, courtcosts, and reasonable

attorneys' fees.

4.14 Fines and Penalties. Except as otherwise provided in this Section 4.14, if an Owner or a tenant or guest of an Owner violates any provision of this Declaration, the Rules and Regulations, or any other governing documents of the Association, the Board may: (a) prohibit, fora reasonable time, the Ownerorthe tenant orguest of the Ownerfrom voting on matters related to the Development and/or using the Common Area, provided, however, thatthe foregoing provision does not prohibit, norshall the Board orthe Association do anything to prohibit, any Ownerorthe tenant orguest of any Ownerfrom using anyvehicular or pedestrian ingress or egress to go to or from the Owner's Lot or Residence, including

anyarea used for parking; and/or(b) impose a fine againstthe Ownerorthetenantorguest of the Owner for each violation, except that a fine may not be imposed for a violation that is the subject of a construction penalty pursuant to Section 7.14 hereof or the Act (since, for the purposes hereof, a construction penalty is not considered to be a fine but instead a separate and distinct penalty). Any fine must be commensurate with the seventy of the violation but must not exceed one hundred dollars ($1 00) foreach violation or a total amount

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of five hundred dollars ($500), whichever is less. The limitations on the amount of the fine do not applyto anyinterest, charges, orcoststhat may be collected by theAssociation pursuant to this Section if the fine becomes past due. The Board may not impose a fine pursuant to the foregoing provisions, unless, not lessthan thirty (30) days beforethe violation, the Person againstwhomthefine will be imposed had been provided with wriften notice of the applicable provisions of the governing documents that form the basis of the violation, and, within a reasonable time after the discovery of the violation, the Person has been provided withwritten notice specifying the detailsoftheviolation, the amount of the fine, and the date, time, and location fora hearing on the violation, together with a reasonableopportunityto contest the violation atthe hearing. The Board mustschedule the date, time, and location forthe hearing on the violation so that the Person againstwhom the fine will be imposed is provided with a reasonable opportunity to prepare for the hearing and to be present at the hearing. The Board must hold a hearing before it may impose the

fine, unless the Person against whom the fine will be imposed pays the fine, executes a written waiverof the right to the hearing, orfails to appearatthe hearing after being provided with proper notice of the hearing. Ifafine is imposed pursuant to theforegoing provisions and the violation is not cured within fourteen (14) days, or within any longer cure period that may be established by the Board, the violation shall be deemed a continuing violation. Thereafter, the Board may impose an additional fine for the violation for each seven (7) day period or portion thereof that the violation is not cured. Any additional fine may be imposed without notice and an opportunity to be heard.

If the Association adopts a policy imposing fines for any violations of the governing documents of the Association, the Secretary of the Association shall prepare and cause to be hand-delivered or sent prepaid by United States mail to the mailing address of each Lot or to any other mailing address designated in writing by the Lot Owner, a schedule of the fines that may be imposed for those violations. Any fine imposed shall be a special Assessment against the applicable Owner and Lot enforceable in accordance with this Declaration and the Act. The Association may not foreclose a lien by sale based on a fine or penalty for a violation of the governing documents oftheAssociation, unless the violation threatens the health, safety, orwelfare of the residents of the Development or the penalty is a construction penalty imposed for failure to adhere to a schedule required or established pursuant to Section 7.14 hereof or the Act. Any past due fine shall bear interest at the rate established by the Association (not to exceed the legal rate per annum), shall include any costs of collecting the past due fine

at the rate established by the Association, and shall include any costs incurred by the Association during a civil action to enforce the payment of the past due fine. If the past due fine is for a violation that does not threaten the health, safety, or welfare of the residents of the Development, then the rate established by the Association for the costs of collecting the past due fine may not exceed the applicable rate established by NRS 116.31031 The 31

phrase 'costs of collecting" includes, without limitation, any collection fee, filing fee, recording fee, referral fee, fee for postage or delivery, and any other fee or cost that the Association may reasonablycharge to the Ownerforthecollection of the past due fine butdoes not include any costs incurred by the Association during a civil action to enforce payment of the past due fine.

The Board may appointa committee, with not lessthan three (3) members, to conduct hearings on violations and to impose fines pursuant to this Section. While acting on behalf of the Board for those limited purposes, the committee and its members are entitled to all privileges and immunities and are subject to all duties and requirements of the Board and its members.

The provisions of this Section establish the minimum procedural requirements that the Board must follow before it may impose a fine and do not preempt any provisions of the governing documents that provide greater procedural protections.

4.15 Liability of Members of Board. No rnemberof the Board shall be personally liableto anyof the other Board members, to the Members, orto any other Person, including Declarant, for any error or omission of the Association, its representatives and employees, or the Architecture Committee, provided that such Board member has, upon the basis of such information as may be possessed by him or her, acted in good faith.

ARTICLE V.

Covenant for Maintenance Assessments 5.01 Assessments. The Owner of any Lot, by acceptance of a deed therefor, covenants and agrees to pay to the Association annual Assessments and special Assessments, such Assessments to be established and collected as herein provided. The annual Assessment,

special Assessment, late fees, interest, costs, and reasonable attorneys fees shall be a charge on the Lot and shall be a continuing lien upon the Lot against which each such Assessment is made from thetime the Assessment becomes due until paid. If an Assessment is payable in installments, the full amount of the Assessment is a lien from the time the first installment thereof becomes due. EachAssessment, togetherwith late fees, interest, costs,

and reasonable attorneys' fees, shall also be the personal obligation of the Owner of the Lot from the time when the Assessment becomes due until paid. The personal obligation for delinquent Assessments shall not be extinguished upon the sale or the conveyance of a Lot, but any purchaserof a Lot shall not be liable for any unpaid Assessments orfee greater than the amounts setforth in a statement of unpaid Assessments described in Section 5.07.

5.02 Purpose of Assessments. The Assessments levied by the Association shall be used exclusively to promote the recreation, health, safety, and welfare of the residents of the Property, forthe improvement and maintenance of the Common Area and the front-yard

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landscaping on the Lots in the Development, and for the daily operating expenses of the Association.

5.03 RegularAssessments. Annual Assessment. The Board shall fix the annual Assessment at (a) an amount sufficient to coverthe estimated budget of the Association priorto the beginning of each fiscal year. The Board may increase the annual Assessment by up to fifteen percent (15%) of the previous years annual Assessment without the consent of the Owners. The Board shall, not less than thirty (30) days or more than sixty(60) days before the beginning of each fiscal year of the Association, prepare and distribute to each Owner a copy of the budgetforthe daily operation of the Association. The budget must include, without limitation, the estimated revenue and expenditures of the Association for the coming year and any contributions to be made to the reserve funds established by subsection 5.03(b) hereof. In lieu of distributing copies of the budget, the Board may distribute summaries of the budget, accompanied by a written notice thatthe budget is available for reviewatthe business office of the Association or some other suitable location within Clark County, Nevada and that copies

of the budget will be provided upon request. Reserve. The annual Assessment of the Association shall, in addition (b) to being sufficient to cover anticipated expenses, include adequate reserves for the repair, replacement, and restoration of the major components of the Common Area. The reserve funds may be used only for those purposes and not for daily maintenance. Money in the reserve accounts may not be withdrawn without the signatures of at least two (2) members of the Board or the signatures of at least one (1) member of the Board and one (1) officer of the Association who is not a member of the Board.

The Board shall, not less than thirty (30) days or more than sixty (60) days before the beginning of the fiscal yearof the Association prepare and distribute to each Owner a copy of the reserve budget. In lieu of distributing copies of the reserve budget, the Board may distribute summaries of the budget, accompanied by a written notice that the budget is available for review at the business office of the Association or some other suitable location within Clark County, Nevada and that copies of the bucigetwill be provided upon request. The reserve budget must include, without limitation: (i)the current estimated replacement cost, estimated remaining life, and estimated useful life of each majorcomponent

of the Common Area; (U) as of the end of the fiscal yearfor which the budget is prepared, the current estimate of the amount of cash reserves that are necessary, and the current amount of accumulated cash reserves that are set aside, to repair, replace, or restore the major components of the Common Area; (iii) a general statement describing the procedures used for said estimation and accumulation of cash reserves, including, without limitation, the qualifications of the Person responsible for the preparation of the study of the reserves required by this subsection; and (iv) a statement as to whether the Board has determined

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or anticipates that the levy of one or more special Assessments will be required to repair, replace, orrestore any majorcomponentofthe Common Area orto provide adequate reserves for that purpose. The Board shall cause to be conducted at least once every five (5) years,

a study of the reserves required to be maintained by this subsection, review the results of that study at least annually to determine if those reserves are sufficient, and make any adjustments itdeems necessaryto maintain the required reserves. The study of the reserves must be conducted by a person who is qualified by training and expetience to conduct such a study, including, without limitation, a member of the Board, an Owner, or the community manager of the Association who is so qualified. The study of the reserves must include, without limitation: (i) a summary of an inspection of the major components of the Common Area that the Association is obligated to repair, replace, or restore; (ii) an identification of the majorcomponents of the CommonAreathatthe Association is obligated to repair, replace, or restore which have a remaining useful life of less than thirty (30) years; (iU) an estimate of the remaining useful life of each major component so identified; (iv) an estimate of the cost of repair, replacement, or restoration of each major component so identified; and (v) an estimate of the total annual Assessments that may be required to coverthe cost of repair, replacement, orrestoration of the majorcornponents so identified after subtracting the reserves of the Association as of the date of the study. The results of the study of reserves required by this subsection must be submitted to the Nevada Real Estate Commission not laterthan forty-five (45) days after the date the Board adopts the results of the study.

Increases of Annual Assessment. The annual Assessment may not (c) be increased by more than fifteen percent (15%) of the annual Assessment forthe previous yearwithout a vote or written consent of fifty-one percent (51%) of the Members; provided,. however, thatfollowing the termination of the Declarant control period described in subsection 4.03(a) hereof, any such increase shall have the vote orwritten consent of: (i) fifty-one percent

(51%) ofthe Members, and (ii)fifty-one percent(51 %)ofthe Membersotherthan Declarant.

Budget Ratification. The Board shall, within thirty (30) days after the adoption of any proposed budget, provide a summary of the budget to all Owners and shall set a date for a meeting of Owners to consider and ratify the budget not less than fourteen (14) nor more than thirty (30) days after the mailing of the summary. Unless a majority of all Owners at the meeting reject the budget (whetheror not a quorum is present), the budget is ratified. If the budget is rejected, the budget last ratified shall continue to be the budget for the Association.

(d)

Inadequacy of Annual Assessment. In the Board's sole and absolute (e) discretion, should the annual Assessment be inadequate for any reason, including, without limitation, nonpayment of any Members annual Assessment, to provideforthe Association's costs and expenses, the Board mayat any time and from time to time levyfurtherAssessments

in the same manner as described in subsection (a) of this Section 5.03.

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Financial Statement. A financial statement for the Association shall be prepared each fiscal year, which shall include a balance sheet showing the profit and loss of the Association and the funds held in reserve by the Association. (1)

Initial Contribution. In addition to the allocable portion of the monthly (g) installment of the regular Assessment for the month escrow closes on the sale of a Lot by Declarantto an Ownerotherthan Declarant, each Owner shall be required to make at close of escrow an initial capital contribution to the Association. The initial capital contribution shall be equalto twice the monthly instailmentof annual Assessments allocable to the Owner's

Lot. This initial capital contribution is not an advance payment on the Owner's annual Assessments and is not refundable to the Owner or its successors or assigns.

5.04 Special Assessments. In addition to the annual Assessments authorized above, the Board may levy special Assessments forthe purposeof construction, reconstruction, repair, or replacement of a capital Improvement upon the Common Area, including fixtures and personal property related thereto. Any such Assessment must be approved bya majority

of the Members. The Association shall provide written notice to Owners of any meeting at which an Assessment for capital Improvements is to be considered at least twenty-one (21) calendardays before the meeting. Except only as otherwise specifically provided herein or in the Act, fines and construction penalties may also be imposed and enforced as special Assessments pursuant to Sections 4.14 and 7.14 respectively.

5.05 Notice of Special Assessments; Time forPayment. The Association may, in its discretion, give written notice of special Assessments to each Owner, which notice shall specify the amount of the special Assessment and the date or dates of payment of the same. No payment shall be due fewer than fifteen (15) days after the written notice has been given. Failure of the Association to give notice of the special Assessment shall not affect the liability of the Owner of any Lot, but the date when payment shall become due in such a case shall be deferred to a date fifteen (15) days afterthe notice shall have been given. 5.06 Commencement of Assessments. Annual Assessments shall commence with respectto each Lot in the original Propertyon the first (1 SI) day of the month immediately following thefirst(1 St) close of escrowforthe sale by Declarantto an Ownerotherthan Declarant

of a Lot in the original Property. Annual Assessments shall so commence with respect to each Lot in anyAnnexable Area annexed to the Property in accordance with Article IX hereof on the first (13) day of the month immediately following the first close of escrow for the sale by Declarantto an Ownerotherthan Declarant ofa Lot inthat portion oftheAnnexableArea so annexed.

5.07 UnpaidAssessments. TheamountofanydelinquentAssessment,whether regular or special, assessed against any Lot, a late payment charge of ten dollars ($10), plus interest on such Assessment and late payment charge at a rate notto exceed eighteen percent (18%) per annum simple interest, and the costs of collecting such Assessment, late

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payment charge, and interest, including reasonable attorneys' fees, shall be a lien upon the Lot assessed from the time the Assessment becomes due until paid. If an Assessment is payable in installments, the full amount of the Assessment is a lien from the time the first installment thereof becomes due. Such lien shall be prior to any declaration of homestead, and except as provided in Section 5.08 hereof, such lien shall survive and not be affected bythe conveyance of the Lot subject to the delinquentAssessmentto a third-party purchaser. Such lien shall be created in accordance with NRS 116.3116 and shall be foreclosed in the mannerprovided form NRS 116.31 162to 116.31168 asis noworhereaftermaybein effect. The Association, upon written request shall furnish to an Owner a statement setting forth the amount of unpaid Assessments. If the interest of the Owner is real estate or if a lien for the unpaid Assessments may be foreclosed under the Act, the statement must be in recordable form. The statement must be furnished within ten (10) business days after receipt of the request at a reasonable fee and is binding on the Association, the Board of Directors, and every Owner. In addition to foreclosure of the Assessment lien, the Association may, but is not obligated to, bring an action to recoverjudgment against the Member personally obligated to pay the delinquent regularor special Assessment after having provided to that Member thirty (30) days' written notice of the delinquency. The Board may suspend the voting rights inthe Association and rightto use any of the recreational facilities of the Common Area of any Owner during any period any Assessment due from such Owner is unpaid. lnthe event an Assessment is past due more than fifteen (15) days, the Board may declare immediately due and payable the total amount assessed against the Owner and the Lot forthatfiscal year. The Association may notforeclose a lien by sale based on a fine orpenalty fora violation ofthis Declaration, the Bylaws, the Rules and Regulations, orothergoverning documents of the Association, unless the violation threatens the health, safety, or welfare of the residents of the Development or the penalty is a construction penalty imposed for failure to adhere to a schedule required or established pursuant to Section 7.14 hereof or the Act. 5.08 Mortgage Protection. Notwithstanding any other provision of this Declaration, no lien created under this Article V or under any other Article of this Declaration, nor any lien arising by reason of any breach of this Declaration, northe enforcement of any provision of this Declaration, shall defeat or renderinvalid the rightsof the beneficiary underany Recorded

Mortgage of first and senior priority now or hereafter upon a Lot, made in good faith and forvalue, perfected beforethe date on which the Assessment soughtto be enforced became delinquent. However, afterthe foreclosure of any such first Mortgage, such Lot shall remain subject to this Declaration and shall be liable for all regular Assessments and all special Assessments levied subsequentto the date six (6) months prior to the institution olan action to foreclose on any such first Mortgage.

5.09 Effect of Amendments on Mortgages. Notwithstanding the provisions of Section 10.04 hereof, no amendment of Section 5.08 of this Declaration shall affectthe rights of any beneficiary whose Mortgage has senior priority as provided in Section 5.08 and who

does not join in the execution thereof, provided that its Mortgage is Recorded in the real property records of Clark County, Nevada, prior to the Recordation of such amendment;

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provided, however, that after foreclosure or conveyance in lieu of foreclosure, the property that was subject to such Mortgage shall be subject to such amendment.

5.10 Annual Assessments Paid ByDeclarant. Declarant shall pay allAssessments on all Lots owned by Declarant (but not on any Lots in any Annexable Area until both of the following shall occur: (a) such Annexable Area is actually annexed to and becomes a part of the Property; and (b) the first day of the month following the close of the first sale by Declarant to an Owner other than Declarant of a Lot within that particular portion of the Annexable Area); including those Lots owned by Declarantthat have not been sold to Owners other than Declarant; provided, however, that Declarant may receive as a credit the costs or value of any maintenance or repair performed by Declarant on the Association Property.

ARTICLE VI.

Permitted Uses and Restrictions In additionto all of the covenants contained herein, the use of the Property and each Lot therein is subject to the following:

6.01 Improvements and Use. Except as expressly provided herein, the Lots shall be used exclusively for single-family residenttal purposes. Timesharing is prohibited. No mobile home may be placed or located on any Lot.

6.02 Animals. No animals of any kind shall be raised, bred, or kept on any Lot, except that a reasonable number of dogs, cats, or other household pets may be kept on a Lot provided that they are not kept, bred, or maintained for any commercial purpose nor in violation of any applicable local ordinance or any other provision of this Declaration. A "reasonable number" shall ordinarily mean three (3) or fewer pets per Lot. All pets within the Property shall be leashed or otherwise under the direct control of the pet ownerwhen not within an enclosed area of a Lot. It shall be the absolute duty and responsibility of each Owner or Lessee to remove any solid animal waste immediately after such animals have used any portion of the Common Area or any public property in the vicinity of the Property and within a reasonable time (as determined bythe Board in its discretion) aftersuch animals have used any portion of the Owner's Lot. No pet shall be permitted to be kept within any portion of the Property if it makes excessive noise or is otherwise determined by the Board to be a nuisance. If a pet is determined to be a nuisance, the Board may give notice to the Owneror Lessee to resolve the offending problem within seventy-two (72) hours, and if the problem is not resolved during that period of time, order the removal of the pet.

6.03 Commercial orOther Non-Residential Uses. No commercial, professional, industrial, institutional, or other non-residential use, including Transient Commercial Uses (as defined in subsection 3.05(f)) and residential day care facilities, shall be conducted on any Lot without the written approval of the Board, except such temporary uses as shall be permitted by Declarant while the Development is being constructed and Lots are being sold

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by Declarant. Any owner wishing to conduct any commercial, institutional, or other nonresidential uses on any Lot shall first apply to the Board for approval of such use and shall provide to the Board any information deemed necessary bythe Board to evaluatethe impacts

of such use on the neighborhood. The Board shall determine if such use diminishes the residential characterof the Lotor neighborhood or imposes a nuisance on the neighborhood. The decision of the Board shall be final and conclusive. The Board may review, and repeal, any such approval from time to time at the discretion of the Board if, in the opinion of the Board, the use has changed or increased to a level not consistent with the original approval. This provision may not be amended or deleted without the approval of all of the Members.

6.04 Utility Service. No lines, wires, or other devices for the communication or transmission of electric current or power, including telephone, television, and radio signals, shall be erected, placed, or maintained anywhere in or on any Lot unless the same shall be contained in conduits or cables installed and maintained underground or concealed in, under, or on buildings or other structures approved in writing by the Board. All temporary utility outlets shall be installed and maintained in accordance with applicable provisions of the Rules and Regulations. No provision hereof shall be deemed to forbid the erection of the temporary power ortelephone installations incident to the construction of approved buildings

or structures.

6.05 Nuisances. No noxious, illegal, or offensive activity shall be carried out on or upon any Lot or any part of the Property, nor shall anything be done thereon that may be or may become an annoyance or nuisance, public or private, to the neighborhood, that shall in any way interfere with the quiet enjoyment of each of the Owners of their respective Lots, or that shall in any way increase the rate of insurance for the Association or for the Owners.

6.06 Garbage. No rubbish, trash, garbage, or other waste shall be kept except in sanitary containers. All equipment for the storage or disposal of such materials shall be kept in a clean and sanitary condition and shall be enclosed so as notto be visible from any public street or from any other Lot or the Common Area.

6.07 Antennae, Satellite Dishes and Solar Collectors. No Owner may erect or maintain a television or radio receiving ortransmitting antenna, satellite dish orsimilarimplemnent

or apparatus, or solar collector panels or equipment upon any Lot unless such apparatus is erected and maintained in such a way that it is screened from public viewalong the public street right-of-way directly in front (and to the side, in the case of a corner Lot) of the house erected on such Lot; and no such apparatus shall be erected withoutthe priorwritten consent of the Architecture Committee. The Architecture Committee, as designated in this Declaration, shall have the absolute authority to determinewhetheran accessory is adequately screened

from public view. The provisions of this Section 6.07 and the authority of the Architecture

Committee in this matter shall be subject to any regulations issued by the Federal Communications Commission and any other applicable governmental authority.

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6.08 Signs. No signsotherthan one (1) sign of customary and reasonable dimensions advertising a Lot for sale or lease shall be displayed on any Lot so that it is visible from any other Lot, public street, or the Common Area without prior written consent of the Board. No signs shall be displayed on the Common Area except signs approved by the Board.

6.09 Equipment and Machinery. No power equipment or hobby shops shall be permitted on the Property except with prior written approval of the Board. No equipment, machinery, junk, debris, building materials, orsimilar maffershall be placed, stored, orkept in or on any Lot, parking area, or street within or adjoining the Property. 6.10 Laundry. Outside clotheslines or other outside facilities for drying or ailing clothes shall not be erected, placed, or maintained on any Lot. No washing machine ordryer shall be kept on any Lot, except within a Residence, without the prior written approval of

the Board. 6.11 Propane Tanks. Only propane tanks used in connection with barbecue grills shall be permitted on any Lot; provided, however, that such tanks are in compliance with all applicable codes and laws.

6.12 Landscaping. Within one (1) year after the close of escrow for the sale of a Lot from Declarant to an Owner other than Declarant, the Owner, at his sole expense, shall complete landscaping on all portions of the Lot, including, but not limited to, side and rear yards. Prior to installation, all landscaping Improvements must be approved by the Architectural Committee in accordance with Article VII hereof No trees, shrubs, plants, landscaping, orirrigation may be planted, nstalled, orrnaintained on any Lotwithinfivefeet (5') of the lesidence. All Lots, landscaping, driveways, and exteriors must be kept neat and tidy at all times. No landscape trimmings shall be placed for removal on or near any public road within the Property or in a place upon the Lot where they are visible from any other Lot or the Common Area.

6.13 Vehicle Parking. Owner and Occuoant Parking; Priorities. It is the intent of this Subsection (a) to limit on-street parking within the Property. Accordingly, except only as otherwise specifically provided herein, each Ownerand the occupants of his Residence shall park all of theirvehicles first within the garage and then on the driveway of the Owner's Lot; provided, however, that

the numberof vehicles parked on any Lotshall notexceed the maximum numberofvehicles that the garage and driveway were designed to accommodate (e.g., if a Residence has a two (2) car garage and a driveway designed to accommodate two (2) additional cars, then no more than four (4) cars may be parked on the Lot). Garage doors must be kept closed at all times, except as reasonably required for ingress and egress to and from the garage. Except only as otherwise specifically provided herein, only after all parking areas firstwithin the garage and then on the driveway are full shall an Owner be allowed to park a vehicle on the streets within the Project. In addition, no Owner shall park, store, or keep anhere

MONTARACC&P.7.I

within the Property any vehicle or vehicular equipment, mobile or otherwise, deemed to be a nuisance by the Board, in its sole and absolute discretion. Guest Parking. Notwithstanding the provisions of Subsection 6.13(a), Persons otherthan Owners and occupants of the Property, including, without limitation, their guests, invitees, and licensees, may parktheirvehicles on the streets of the Propertybetween the hours of 7:00 am. and 10:00p.m. Pacific Standard Time. During timesotherthanthese hours, including overnight stays, vehicles of such otherpersons must be parked in accordance with the provisions of Subsection 6.13(a).

(b)

(c) CamDers. Boats. RVs, Trailers and Non-PassengerVehicles. No campers, boats, trailers, trailercoaches, camptrailers, recreational vehicles, camper units, house/cars, motor homes, mobile homes, aircraft, jet skis, wave runners, four-wheelers, off-road vehicles, buses, recreational trailers, non-passenger vehicles, or any other similar vehicles, rolling stock, equipment, implements, oraccessories shall be stored or kept anywhere on the Property

unless the same are fully enclosed within the garage located on a Lot or located behind the side yard wall or screened gate on a Lot, and otherwise adequately screened from view, all as determined by the Board in its sole and absolute discretion. The screened portion of the gate may not exceed the height of the adjoining wall. The height of the vehicle may exceed the height of the screened gate.

(d) Commercial Vehicles. No large commercial vehicles, including, but not limited to, any dump truck, cement mixer truck, oil or gas truck, or delivery truck, shall be kept or stored on any Lot unless approval of the Board is granted. For purposes of this Subsection 6.13(d), "large commercialvehicle" shall mean any vehicle largerthan a nineteen (19)foot vanor three-quarter(3/4) ton pickup truck that bears commercial insignia, names, or other common indicia indicating that the vehicle is used for commercial purposes, all as determined by the Board in its sole and absolute discretion. Large commercial vehicles that are temporarily parked on any Lot for the sole purpose of serving such Lot are exempt from this restriction. The Board shall have the absolute authorityto grant approval forstoring or keeping a large commercial vehicle on a Lot. Any Ownerwishing to keep a large commercial vehicle on any Lot shall apply forapproval to the Board, and shall provide such information

as the Board, in its sole authority, may require. The Board mayfrom time to time in its sole discretion review the approval to keep a large commercial vehicle on any Lot to determine if the vehicle complies with the intent of the original approval. Upon an adverse determination by the Board, any vehicle shall be removed or otherwise brought into compliance with the requirements of this Section 6.13. (e) Disabled. Inooerable and Unregistered Vehicles. Subjectto the provisions of subsection 6.13(f) regarding emergencyrepairs, no disabled, inoperable orunregistered vehicles, campers, boats, trailers, recreational vehicles, or other types of non-passenger vehicles, equipment, implements, or accessories may be kept or stored anywhere within the Property unless located behind the side yard wall orscreened gale of a Lot and otherwise adequately screened from view, all as determined by the Board in its sole and absolute discretion. 40

Vehicle Maintenance. No dismantling, assembling or maintenance of motor vehicles, boats, trailers recreational vehicles, or other machinery, implements, (f)

accessories orequipmentshall be permitted in the streets within the Property, or in anyparking area, drivewayoryard adjacentto a street, orthat is not screened from view, excepttemporarily

for a period not to exceed forty-eight (48) hours to accommodate emergency repairs. (g) Authority to Review. The Board shall have the absolute authority to determine from time to time whethera vehicle or accessory is operable, adequatelyscreened from public yiew, and otherwise in compliance with the provisions of this Section 6.13. Upon an adversedeterrnination bythe Board, the vehicleoraccessoryshall be removed orotherwise

brought into compliance with this Section 6.13. Parking Rules and Reciulations. The Board may adopt rules and regulations (h) consistent with this Section 6.13 to further regulate vehicle parking in the Property.

6.14 Leases. Any lease of a Lot shall be in writing and be of a term of at least six (6) months shall expressly provide that such lease is subject in all respectstothis Declaration,

and that any failure of the Lessee to comply with any provisions of this Declaration shall constitute a default under such lease. The Owner of a leased Lot shall be responsible for all Assessments, penalties, and costs imposed on said Lot. Subject to Section 3.05, no Lotor Residence may be leased for hot& ortransient purposes orforanyTransient Commercial Use. Subject to Section 3.05, no portion of a Lot less than the entire Lot may be leased for any period.

6.15 Resubdivision. No Lot shall be resubdivided, except by Declarant, norshall less than an entire Lot be sold.

6.16 Improvements. All Lot Improvements otherthan Improvements installed or constructed by Declarant, including any species of plant material and placement of plants, shall be subject to the control and approval of the Architecture Committee as set forth in Article VII of this Declaration.

6.17 Taxes. Each Owner shall pay when due and before delinquency all taxes, Assessments, levies, fees, and all otherpublic charges and utilityfees and chargesof every kind and nature imposed upon or assessed against its Lot. 6.18 Rules and Regulations. The Board is hereby expressly authorized to establish all rules and regulations as it shall deem necessaryforthe purpose of implementing, enforcing,

and administering the purposes of this Declaration. 6.19 Hazardous Substances. No activity shall be permitted on any Lot orthe Common Area that, in the sole opinion of the Board, will create oremit offensive, hazardous, or excessive

quantities of dust, dirt, ash, smoke, noise, fumes, odors, or vibrations or create risk of fire, explosion, or other hazards or is not in harmony and consistent with the Property. Activities

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prohibited hereunder include, but are not limited to, activities that result in the disposal of hazardous substances in anyforrn upon the Property. Forthe purposes of this Declaration, the term "Hazardous Substance shall mean any product, substance chemical, material, orwaste whose presence, nature, quantity, or intensity of existence, use, manufacture, disposal

transportation, spUl, release, or effect, either by itself or in connection with other materials expected to be found upon any Lot, is either: (i) potentially injurious to the public health, safety, or welfare or the environment or the Property; (H) regulated or monitored by any governmental authority; or (iii) a basis for liability of Declarant or any Owner to any governmental

agency or third party under any applicable state or common law principle. 6.20 PartyWalls. Owners of Party Walls shall share equally the responsibility and cost of all maintenance, repair, or replacement, as necessary, of their respective Party Walls. Notwithstanding the foregoing, an Ownercausing anydamageto any Party Walls by its acts shall be solely responsible and liable forany maintenance, repair, or replacement, as required,

and for any cost or liability necessary to repair such damaged Party Walls.

6.21 Exterior Holiday Decorations. Lights or decorations may be erected on a Lot in commemoration or celebration of publicly observed holidays provided that such lights or decorations do not unreasonably disturb the peaceful enjoyment of Owners of adjacent Lots by illuminating bedrooms, creating noise orattracting sight-seers. Holidaydecorations or lights for any publicly observed holiday between December 1 and December31 of any year, may not be displayed before November15 ofanyyear. Forother holidays, decorations or lights may not be displayed more than two (2) weeks in advance of the holiday. All lights

and decorations that are not permanent fixtures of a Lot which are part of the original construction orhave been properly approved as permanent improvements bythe Architecture Committee shall be removed within thirty (30) days afterthe holiday has ended. The Board shall have the right, upon thirty (30) days prior written notice to designate a party to enter upon any Lot and summarily remove exterior ights or decorations displayed in vioiation of

this provision. The Board, and the individuals removing the lights and decorations, shall not be liable to the Ownerfortrespass, conversion, ordamages of any kind except intentional misdeeds and gross negligence.

6.22 SightVisibilityzones and View Obstructions. Nowalls, fences, trees, shrubs, landscaping, orothersight-restricting objects or Improvements of any kind, otherthan traffic control devices, shall be constructed, installed, or encroach upon or over any area of the Property (whether on the Common Area oron any Lot) designated on the Site Development Plan or any Subdivision Map of the Property as a Sight Visibility Zone, Sight Visibility Zone Easement, Sight Visibility Restriction Zone, or the like, unless such object or Improvement is maintained at no more than twenty-four inches (24) in height. Compliance with the foregoing sight visibility restriction shall be determined by the Association and/or Clark County (the "County") in their sole and absolute discretion. Due to the safety hazard which may result to vehicular and pedestrian traffic as a result of any violation of the foregoing sight visibility restriction, the Association and/orthe County shall have the rightto immediately enter upon

any Lot, with or without the Lot Owner's permission, and remove any such violation. 42

Additionally no vegetation, Improvement or otherobstruction shall be planted, constructed, or maintained on any Lot in such location or of such height as to unreasonably obstruct the view from any other Lot. Each Owner or Resident of a Lot shall be responsible for periodic trimming, pruning and thinning of all hedges, shrubs and trees located on his Lot so as to not unreasonably obstruct the view of other Owners or Residents, If an Owner or Resident fails to perform necessarytrimming, pruning orthinning, the Association shall havethe right, but not the obligation, after Notice and Hearing, to enter upon such Lot for purposes of performing such work and to charge the Owner of the Lot a Special Assessment for any costs incurred for performing or having such work performed. Each Owner, by accepting a deed to a Lot, hereby acknowledges that any construction orinstallation by Declarant may impair the view of such Owner, and hereby consents to such impairment. 6.23 Compliance with Governmental Requirements. Anyviolation of the conditions, restrictions, or other requirements set forth on the Subdivision Map or otherwise imposed on the Property by the County or other applicable governmental authorities, as the same may be amended or modified from time to time, by any Owner or occupant of the Property, or by any of their respective guests, licensees or invitees, shall be deemed a violation of the Declaration enforceable in accordancewith the Declaration to the fullest extent permitted by law. This provision shall not be construed to impose upon the Association any obligation to enforce civil or criminal laws, ordinances, or regulations of any governmental authority.

6.24 u.s. Flag. An Owner is entitled to display the flag of the United States (the 'Flag') in a mannerthat is consistentwith the Federal Flag Code and theAct. The Association may adopt Rules and Regulations that prohibit the display of the Flag in a manner that is inconsistent with the Federal Flag Code or the Act. As used in this Section, "Federal Flag Code" means the rules and customs pertaining to the display and use of the Flag which are codified in 4 U.S.C. § Sto 10, inclusive, asaltered, modified, orrepealed bythe President of the United States pursuant to 4 U.S.C. § 10, and any additional rules pertaining to the display and use of the Flag which are prescribed by the President pursuant to 4 U.S.C. § 10.

ARTICLE VII.

Architecture Committee 7.01 EstablishmentofCommittee. There shall beanarchitecture and landscape control committee (the "Architecture Committee'), established forthe purpose of enforcing

the architectural standards of the community and approving or disapproving plans for Improvements proposed for the Lots. No Improvement shall be erected, altered, added onto or repaired on a Lot until plans and specifications showing the nature, kind, shape, colors, materials, and location of the Improvement have been submitted to and approved in writing by the Architecture Committee, provided, however, that Improvements erected, altered, added onto or repaired on the Property by Declarant shall be exemptfrom the provisions

of this Article VII.

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7.02 Members of Committee. The Architecture Committee shall consist of three (3) members, all of whom shall first be appointed by Declarant. The Architecture Committee may also designate substitute membersto act as substitutes on the Architecture Committee

in the event of absence or disability of any member. Each member of the Architecture Committee shall hold office until such time as he or she has resigned or has been removed orhis orhersuccessorhas been appointed, as provided herein. Members of the Architecture Committee may be removed at any time with or without cause. Until ninety percent (90%) of all Lots have been sold, Declarant shall have the sole power to appoint and remove the

members of the Architecture Committee. Thereafter, the Board shall have the power to appoint and remove all members of the Architecture Committee and to determine the number of members of the Architecture Committee; provided, however, thattheArchitecture Committee shall at no time consist of less than three (3) members. MembersoftheArchitecture Committee

need not be Members of the Association.

7.03 Architectural Design Guidelines. Priorto conveyance of the first Lot to an Owner other than the Declarant, the Declarant may, in its sole discretion and without the consent of anyone, adopt, amend or repeal design guidelines (the "Design Guidelines"), which shall interpret and implement the provisions of this Declaration, set forth fees to be charged, and promulgate procedures and design and construction criteria to be followed in submitting proposals to the Architecture Comrrüttee. Thereafter, theArchitecture Committee shall have the rightto and may in its discretion, subjectonlyto approval of the Board, adopt,

amend or repeal the Design Guidelines. No such actions shall affectany priorArchitecture Committee approval. A copy of the Design Guidelines as they may from time to time be adopted, amended, or repealed, certified by any member of the Architecture Committee, shall be maintained at the office of the Association and shall be availablefor inspection and copying by any Memberat any reasonable time during the business hours of the Association. The following minimum standards and restrictions shall apply to all Improvements made on the Property: all Improvements shall be constructed in full compliance with all applicable (a) zoning laws, building codes, and other laws, ordinances, and regulations applicable to the construction, use, and occupancy of Improvements; and

(b)

all Improvements shall be constructed in accordance with the Design

Guidelines. 7.04 Landscape Standards. Upon adoption of the Design Guidelines, theArchitecture Committee shall, as part of the Design Guidelines, establish guidelines for plant and landscaping

material that shall reflect desert landscaping to the extent practicable. Such guidelines may restrict the species and placement of any tree, plant, bush, ground cover, or other growing thing planted or placed on the Property. The Architecture Committee may adopt a list of approved plant species that may be altered or augmented from time to time.

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7.05 Review of Proposed Improvements. Whenever in this Declarationorin any supplemental declaration the approval of the Architecture Committee is required, it shall have the right to consider afl of the plans and specifications forthe Improvement or proposal

in question and all other facts that in its sole discretion are relevant. Except as provided in Section 7.01, pilorto commencementof construction of any Improvement upon the Property, the plans and specifications thereforshall be submitted to the Architecture Committee, and

construction or placement thereof may not commence unless and until the Architecture Committee has approved such plans and specifications in writing. The Architecture Comrniflee shall consider and act upon any and all plans and specifications submitted for its approval pursuant to this Declaration and perform such otherduties assigned to it bythis Declaration

or as from time to time shall be assigned to it by the Board, including the inspection of construction or placement in progress to assure its conformancewith plans and specifications approved bythe Architecture Conirnittee. The Architecture Committee shall approve plans and specifications submitted for its approval only if it deems thatthe construction, alterations,

or additions contemplated thereby in the locations indicated will not be detrimental to the surrounding area orto the Propertyas a whole, thatthe appearance of anystructure affected

thereby will be in harmony with the surrounding structures, and that the upkeep and maintenancethereforvll not become a burden on the Association. The ArchitectureCommittee may condition its approval of plans and specifications on such changes therein as it deems appropriate and may require submission of additional plans and specifications or other information prior to approving or disapproving the material submitted. The Architecture Committee may also issue standards orguidelines regarding anything relevantto its functions, including, but not limited to, minimum standards and procedures forthe submission of plans and specifications forapproval. The Architecture Committee, in its sole discretion, may require a reasonable fee to accompany each application for approval, which shall be used to cover the Architecture Committee and its members' reasonable costs. TheArchitecture Committee may require such detail in plans and specifications submitted for its review and such other information as it deems proper. The Architecture Committee may establish such deadlines and schedules as it deems necessaryorappropriate underthe circumsances for completion

of the design, commencement of construction, partial or final completion of construction, and/or issuance of a permit necessary for the occupancy of any Lot or portion thereof, any Residence orportion thereof, and/orany lmprovementto any Lotor Residence theconstruction, installation, alteration, orrepairoverwhich it has jurisdiction. Anything herein to thecontrary notwithstanding, neitherthe Association northe Architecture Committee may: (a) unreasonably

restrict, prohibit or otherwise impede the lawful rights of a an Owner to have reasonable access to his Lot or Residence; or (b) unreasonably restrict, prohibit, or withhold approval for an Ownerto add to a Lotor Residence, Improvements such as ramps, railings, or elevators

that are necessary to improve access to the Lot or Residence for any occupant who has a disability, additional locks to improve the security of the Lot or Residence, or shutters to improve the security of the Lot or Residence or to aid in reducing the costs of energy for the Lot orResidence. Anyimprovementoralteration made pursuantto the foregoing sentence that is visible from any other portion of the Development must be installed, constructed, or added in accordance with the procedures setforth in this Article VII, the Design Guidelines,

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and elsewhere in the governing documents of the Development and must be selected or designed to the maximum extent practicable to be compatible with the style of the Development.

7.06 Meetings of the Committee. The Architecture Committee shall meet from time to time as necessary to perform its duties hereunder, but such meetings shall be held at least annually. The vote of a majority of all of the members of the Architecture Commiftee orthe written consent of a majorityof all of the members of the Architecture Committee taken without a meeting shall constitute an act of the Architecture Committee. The Architecture Committee mayfrom timeto time by resolution adopted in writing, delegate its duties, except forthegranting ofvariances pursuantto Section 7.11, orretaintheservices ofa professional engineer, architect, designer, inspector or other Person to assist in the performance of its duties.

7.07 No Waiver of Future Approvals. The approval orconsertt of the Architecture Committee to any plans or specifications for any work done or proposed or in connection with any other matter requiring the approval or consent of the Architecture Committee shall not be deemed to constitute a waiver of any right to withhold approval or consent as to any plans or specifications or other matter whatsoever subsequently or additionally submitted for approval or consent by the same or a different Person.

7.08 Compensation of Members. Except to the extent prohibited by the Act or otherapplicable law, the Association shall have the right, but not the obligation, to reasonably compensate members of the Architecture Committee for services rendered and reimburse them for expenses incurred in the performance of theirduties hereunder. Such compensation,

if any, may distinguish between professional and volunteer members of the Architecture Committee and shall be determined: (a) by Declarantwhile it has the rightto appointor remove the members of the Architecture Committee pursuantto Section 7.02 hereof; and (b)thereafter

by the Board.

7.09 Inspection of Work. Comnleted Work. Inspection of completed work and correction of defects (a) therein shall proceed as follows:

Upon the completion of any Improvement for which approved (I) plans orspecifications are required underthis Declaration, the Owner shall givewritten notice of completion to the Architecture Committee within fifteen (15) days of completion. Within such reasonable time as theArchitecture Committee may (ii) set, but not to exceed thirty (30) days thereafter, the Committee or its duly authorized

representative may inspect such Improvement. If the Committee finds that such work was not done in strict compliance with all approved plans and specifications submitted orrequired to be submitted fonts priorapproval, it shall notifythe Owner in writing of such noncompliance

HShWMHICI(,,Dl

MOICARkCCkRC

within such period, specifying in reasonable detail the particulars of noncompliance, and shall require the Owner to remedy the same. If, upon the expiration of thirty (30) days from the date of such (Hi) notification, the Owner shall have failed to remedy such noncompUance, the Architecture Committee shall notify the Board in writing of such failure. Upon notice and hearing before the Board, the Board shall issue a ruling determining whether there is a noncompliance, and if such noncompliance is found to exist, the Board shall determine the estimated cost of correcting or removing the same. The Owner shall remedy or remove the same within a period of not more than forty-five (45) days from the date of announcement of the Board ruling. If the Owner does not comply with the Board's ruling within such period, the Board, at its option, may eitherremove the noncomplying Improvementorremedythe noncompliance, and the Owner shall reimburse the Association upon demand for all expenses incurred in connection therewith. If such expenses are not promptly repaid by the Owner to the Association, the Board shall levy a special Assessment against such Owner and the Improvement in question

and the Lot upon which the Improvement is situated for reimbursement, and the special Assessment shall constitute a lien upon such Lot and Improvement. If for any reason after receipt of said written notice of completion (iv) from the Owner, the Architecture Committee fails to notify the Ownerof any noncompliance within the period provided in subsection 7.09(a)Oi) hereof, the Improvement shall be deemed to be in accordance with said approved plans and specifications.

Work in Progress. The Architecture Committee may inspect all work (b) in progress and give notice of noncompliance as provided above in subsection 7.09(a)Oi). If the Owner denies that such noncompliance exists, the procedures set out in subsection 7.O9(a)(iii) shall be followed, except that, pending resolution of the dispute, no furtherwork shall be done that would hamper correction of the noncompliance if the Board should find

that such noncompliance exists.

7.10 Nonliability of Committee Members. Neitherthe Architecture Committee norany memberthereof northe Board norany memberthereof shall be liabletotheAssociation or to any Owner or to any other Person for any loss, damage, or injury arising out of or in any way connected with the performance of the Architecture Committee's or the Board's

respective duties under this Declaration, except for the willful misconduct or bad faith of the Architecture Committee or its members or the Board or its members, as the case may be. Except insofar as its duties may be extended with respect to a particular area by a supplemental declaration filed by Declarant, the Architecture Committee shall review and

approve or disapprove all plans and specifications submitted to it for any proposed Improvement, including the construction, alteration, or addition thereof or thereto, solely on the basis of aesthetic considerations and the overall benefitordetriment thatwould result to the surrounding area and the Property generally. In granting its approval or disapproval to plans and specifications for a proposed Improvement, the Architecture Committee shall take into consideration the aesthetic aspects of the architectural designs, landscaping, color

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47

schemes, exteriorfinishes, and materials and sirnilarfeatures. The approval of the Architecture Committee shall not be construed to be, nor shall the Architecture Committee be responsible for, approval of the structural safety, engineering soundness, or conformance with zoning,

building, or other codes that may be applicable. 7.11 Variances. TheArchitecture Committee mayauthorize variaricesfrom compliance with any of the architectural provisions of this Declaration or any supplemental declaration, including restrictions upon height, bulk, size, shape, land area, placement of structures, setbacks, building envelopes, colors, materials, or similar restrictions when circumstances such as topography, natural obstructions, hardship, or aesthetic or environmental considerations

may, in its sole and absolute discretion, warrant. Such variances must be consistent with any and all applicable laws. Such variances must be evidenced in writing and must be signed by at least a majorityof all of the members of the Architecture Gommiftee. If such a variance is granted, noviolation of the covenants, conditions, orrestrictions contained in this Declaration or any supplemental declaration shall be deemed to have occurred with respectto the matter

for which the variance was granted. The granting of such a variance shall not operate to waive any provisions of this Declaration, the Design Guidelines, or any supplemental declaration forany purpose exceptasto the particularpropertyand particular provision and in the particular

instance covered by the variance.

7.12 Obligations with Respect to Zoning and Subdivisions. The Architecture Committee shall require all Persons to complyfullywith the zoning and masterplan designations and anyspecial use permits and with all applicable federal, state, and local laws, regulations, and ordinances insofarasthe same are applicable and as the same may hereafterbe amended

from time to time. 7.13 Indemnification ofArchitecture Committee. The members of the Architecture Committee shall be deemed the appointed agents of the Board, and the Architecture Commfttee

is hereby authorized to carry out and adhere to the provisions of thisArticle VII. The Owners hereby collectively agreethat the members of the Architecture Committee shall be indemnified and held harmless forany liability, damages, orotherobligation (including reasonable attorneys' fees) resulting from the reasonable and prudent exercise of their duties as members of the Architecture Committee as specified in this Article VII.

7.14 Construction Schedules and Penalties. Each Owner shall adhere to any schedule required orestablished bytheAssociation, the Association'sArchitecture Committee, orthis Declaration forthe completion of the design, commencement of construction, completion

of construction, and/or issuance of a permit necessary for the occupancy of the Owners Lot orany portion thereof, the Owner's Residence orany portion thereof, and any Improvement to the Owner's Lot or Residence, including, without limitation, the landscaping schedule set forth in Section 6.12 hereof. If, afterexpiration of any deadline setforth in any such schedule, a required performance has not been completed, theAssociation may, afterthe Owner receives notice of the alleged violation which informs him that he has a right to a hearing on the alleged violation, assess and enforce against the Owner and the Owner's Lot a construction penalty

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of up to one hundred dollars ($100) per day for each day after the applicable deadline that such performance has not been completed, or such other amount as may be set forth in a contract between the Owner and the Association or in a document related to the Development

that is recorded before the date on which the Owner acquirs title to the Lot. Each Owner by acquiring title to any interest in a Lot thereby acknowledges thatthatthe damage to other Owners and the Association from such failure shall be difficult to determine and that said one hundred dollar($1 00) perday sum represents a reasonable estimation of said damages. Any construction penaltyor sum so assessed shall be a special Assessment and continuing lien against the applicable Owner and Lot enforceable in accordance with this Declaration and theAct. The Association mayforeclose its lien by sale based on any construction penalty imposed forfailure to adhere to a schedule required orestablished hereunder or pursuant to this Section or the Act. If, after construction has commenced, the Association or the Architecture Committeefinds that construction is not progressing continuously, as evidenced by a cessation of laborfora period in excess of twenty (20) days, the Association may initiate or re-initiate the accrual of the foregoing special Assessment against such Lot and its thenOwner. The accrual of such special Assessment may be initiated regardless of whether the deadlineforcompletion of construction orissuanceof an occupancy permit haspassed. Such special Assessment shall continue to accrue until the Association or the Architecture Committee finds that construction is again progressing in a diligent manner. For purposes hereof, any construction penalty or special Assessment imposed or enforced pursuant to this Section shall not be deemed to be a fine.

ARTICLE VIII.

Mortgagee Provisions The following provisions are for the benefit of holders, insurers, and guarantors of first Mortgages on Lots. The provisions of this Article apply to both this Declaration and to the Bylaws notwithstanding any other provisions contained therein. 8.01 Notices of Action. An institutional holder, insurer, orguarantorof afirst Mortgage who provides written request to the Association (such requestto state the name and address of such requestor and the street address of the Lot to which its interest relates, thereby becoming an 'Eligible Holder') will be entitled to timely written notice of: Any condemnation loss oranycasualty loss that affects a material portion (a) of the Property or that affects any Lot on which there is a first Mortgage held, insured, or guaranteed by such Eligible Holder;

Any delinquency in the payment of Assessments or charges owed by (b) an Owner of a Lot subject to the Mortgage of such Eligible Holder when such delinquency has continued for a period of sixty (60) days, or any other violation of this Declaration or

the Bylaws relating to such Lot or the Owner that is not cured within sixty (60) days. Notwithstanding this provision, any holderof a first Mortgage is entitled to written notice upon

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request from the Association of any default in the performance by an Owner of a Lot of any obligation under this Declaration or the Bylaws that is not cured within sixty (60) days; Any lapse, cancellation, or material modification of any insurance policy (c) maintained by the Association; or

Any proposed action that would require the consent of a specified (d) percentage of Eligible Holders. 8.02 Special Provision. Unless at least sixty-seven percent (67%) of the Eligible Holders and voting Members representing at least sixty-seven percent (67%) of the total Association consent, the Association shall not: By act or omission seek to abandon, partition, subdivide, encumber, (a) sell, ortransfer all orany portion of the real property comprising the Common Area that the Association ownsdirectly oriridireetly. The granting of easements forpublic utilities orother sirnilarpurposes consistentwith the intended uses of the Common Area shall not bedeemed a transfer within the meaning of this subsection;

(b) Change the method of deterrniningthe obligations, Assessments, dues, or other charges that may be levied against an Owner of a Lot; By act or omission change, waive, or abandon the Subdivision Map (c) orthis Declaration orchange, waive, orabandon any scheme of regulations orenforcement relating to architectural design, exterior appearance, or maintenance of the Lots and the Common Area. The issuance and amendment of architectural standards, procedures, rules and regulations, or use restrictions shall not constitute a change, waiver, or abandonment within the meaning of this provision; (d)

Fail to maintain insurance as required by this Declaration; or

Use hazard insurance proceeds for any Common Area lossesforother (e) than the repair, replacement, or reconstruction of such property. First Mortgagees may, jointly or singly, pay taxes or other charges that are in default and that may or have become a charge against the Common Area and may pay overdue premiums of property insurance policies, or secure new property insurance coverage upon the lapse of an Association policy, and first Mortgagees making such payments shall be entitled to immediate reimbursement from the Association.

8.03 Other Provisions for First Mortgages. To the extent possible underNevada law:

H5W?BICIi,!,\D W..W thfl7 MQNTAMCC&R.1.

Any restoration or repair of the Property after a partial condemnation (a) or damage due to an insurable hazard shall be performed substantially in accordance with this Declaration and the original plans and specifications unless the approval is obtained of the Eligible Holders on Lots to which at least fifty-one percent (51%) of the votes of Lots subject to Mortgages held by such Eligible Holders are allocated. Any election to terminate the Association after substantial destruction (b) or a substantial taking in condemnation shall require the approval of the Eligible Holders on Lots to which at least fifty-one percent (51%) of the votes of Lots subject to Mortgages held by such Eligible Holders are allocated.

Any election to terminate the Association other than for the causes (c) described in subsection 8.03(b) shall require the approval of the Eligible Holders on Lots to which at least sixty-seven percent (67%) of the votes of the Lots subject to the mortgages held by such Eligible Holders are allocated.

8.04 No Priority. No provision of the Declaration or the Bylaws gives or should be construed as giving any Owneroranotherparty priorityoverany rights of the first Mortgagee of any Lot in the case of distribution to such Ownerof insurance proceeds or condemnation

awards for losses to or a taking of the Common Area. 8.05 Notice toAssociation. Upon request, each Ownershall be obligated to furnish to the Association the name and address of the holder of any Mortgage encumbering such Owner's Lot.

8.06 Amendment by Board. Should the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation subsequently delete any of its respective requirements that necessitate the provisions of this Article or make any such requirements less stringent, the Board, without the approval of the Owners, may Record an amendment to this Article to reflect such changes. 8.07 Applicability. Nothing contained in this Article shall be construed to reduce the percentage vote that must otherwise be obtained under this Declaration, the Bylaws, or Nevada law for any of the acts set out in this Article.

8.08 Failure of Mortgagee to Respond. Any Mortgagee who receives a written request from the Board to respond to or consent to any action shall be deemed to have approved such action if theAssociation does not receive a written response from the Mortgagee

within thirty (30) days of the date of such Mortgagee's receipt of the Association's request, provided such request is delivered to the Mortgagee by certified or registered mail, return receipt requested.

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ARTICLE IX.

Annexation 9.01 Annexation of Additional Property by Association. Upon the approval of two-thirds (2/3) or more of the Members of the Association, the owner of any real property who desires to subject that property to the covenants, conditions, and restrictions of this Declaration and subject that property to the jurisdiction of the Association may Record a Declaration of Annexation, which shall extend the covenants, conditions, and restrictions of this Declaration to such property.

9.02 Annexation by Declarant. If, so long as Declarant owns any portion of the Property, Declarant desires to develop additional phases in the Annexable Area in its sale and absolute discretion, such additional phases orany portion thereof may be added to the Property, be subjected to this Declaration, and be included within the jurisdiction of the Association by action of Declarant without the consent of the Members or Eligible Holders. Declarant makes no representation or warranty that any or all of the Annexable Area will be subdivided into Lots, annexed into the Development and thereby subjected to the provisions of this Declaration, or improved with Residences orother Improvements and expressly hereby disclaims any such representation orwat-ranty. However! priorto any annexation, all Common

Area Improvements in each the phase being annexed will be substantially completed.

9.03 Procedure for Annexation. Any annexation may be accomplished by the Recording of a Declaration of Annexation, which shall state that Owners of Lots in the Annexable Area shall also be Members. At the time of Recording of the Declaration of Annexation, Declarant shall also by deed or assignment, as the case may be, transfer to the Association the Association Property in the area being annexed. The obligation of an Ownerto pay Assessments orfees to the Association and the right of an Ownerto exercise voting rights in the Association in any Annexable Area shall not commence until both of the following occur: (a) such portion of the Annexable Area containing the Lot owned by the Owner is actually annexed to and becomes a part of the Property; and (b) the first day of the month following the close of the first sale of a Lot by Declarant to an Owner other than Declarant in that particular portion of the Annexable Area.

9.04 Deannexation. Declarant may delete all or any portion of the phase of development from coverage of this Declaration and the jurisdiction of the Association so long as Declarant is the owner of all of that phase and provided that: the Notice of Deannexation is Recorded in the same manner as the (a) applicable Declaration of Annexation was Recorded; (b)

Declarant has not exercised any rights to vote with respectto any portion

of such phase;

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(c)

Assessments have not yet commenced with respect to any portion of

(d)

no Lot has been sold in such phase to a member of the general public;

such phase; and

the Association has not made any expenditures or incurred any obligation (e) respecting any portion of such phase.

ARTICLE X.

General Provisions 10.01 Temi. This Declaration, including all of the covenants, conditions, and restrictions hereof, shall run until the date fifty(50)years hereafter, unless amended as herein provided. Afterthe datefrfty(50)years hereafter, this Declaration, including all such covenants, conditions, and restrictions, shall be automatically extended for successive periods of ten (10) years each, unless amended orextinguished by a written instrument executed by at leasttwo thirds (2/3) of the Owners and recorded in the Official Records of the County Recorder of Clark County, Nevada.

10.02 Resale of Lots. The seller of any Lot shall furnish to the purchaser before execution of any contract for the sale of the Lot or otherwise before conveyance: (a)

a copyof this Declaration, the Articles, Bylaws, and Rules and Regulations;

a statement setting forth the amount of the annual Assessments for (b) common expenses and any unpaid Assessment of any kind currently due from the selling Owner; and (c)

a copy of the current operating budget of the Association.

The selling Lot Owner shall also at such time notify the Association of the proposed sale and provide the Association with the name and address of the new Owner and the proposed date of sale. Nothing in this Section 10.02 shall be construed to require any approval by the Association of the sale of any Lot.

10.03 Lease of Property. In the eventan Owner rents orleases any Lot, the Ownershall provide the Lessee with a copy of this Declaration, the Articles, Bylaws, Rules and Regulations, any Design Guidelines adopted by the Architecture Committee, and a list of the members of the Board. The lease or other agreement with the Lessee shall provide that the Lessee shall abide bythe provisions of this Declaration, the Articles, Bylaws, Rules and Regulations, (a)

HRSo w!HO7MONTA

and any Design Guidelines adopted by the Architecture Committee and that the lease is subject to such provisions. The Association may, after notice to the Owner of the Lot and in addition to any other rights or remedies it may have at law or equity, enforce against the Lessee those remedies setforth in this Declaration and may evictthe Lessee if within a twelve (12) month period the Lessee commits three or more material violations of this Declaration,

the Articles, Bylaws, Rules and Regulations, or any Design Guidelines adopted by the Architecture Committee regardless of whether such violations are cured. (b) Any Owner renting or leasing its Lot shall notifythe Association of such arrangement and provide the Association with the name of the Lessee and the term of the Lease for occupancy. In the event the Association engages an attorney or takes any legal (c) action against a Lessee for violation of this Declaration, the Owner as well as the Lessee shall be subject to the costs and expenses set forth in subsection 10.05W) hereof.

10.04 Amendment. (a) Maioritv Vote. Exceptas provided in subsection 1004(c), no amendment of this Declaration shall be effective unless adopted by a majority of the Members. Notwithstanding the foregoing, the consent of sixty-seven percent (67%) of the Members entitled to vote and of Declarant, so long as the Declarant owns any land subject to this Declaration, and the approval of Eligible Holders on Lots to which at least fifty-one percent (51%) of the votes of Lots subject to a Mortgage shall be required to materially amend any provisions of this Declaration, the Bylaws, Articles, orto add any material provisions thereto that establish, provide for, govern, or regulate any of the following: (I)

voting;

(ii)

Assessments, Assessment liens, orsubordination of such liens;

(Hi)

reservesforniaintenance, repair, and replacementoftheCommon

(iv)

insurance or fidelity bonds;

(v)

rights to use the Common Area;

(vi)

responsibility for maintenance and repair of the Property;

Area;

(vii) expansion or contraction of the Property or the annexation or withdrawal of real property to or from the jurisdiction of the Association;

(viii)

boundaries of any Lot;

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(ix)

leasing of Lots;

(x)

imposition of any restrictions on an Owner's right to sell ortransfer

its Lot;

establishment of self-management by the Association after professional management has been required by an Eligible Holder; (xi)

(xii) any provisions in this Declaration, the Bylaws, or Articles that are for the express benefit of Eligible Holders, guarantors, or insurers of first Mortgages on Lots; (xiii)

reallocation of interests in the Common Area; or

(xiv)

convertibility of Lots into Common Area or vice versa.

Recording of Amendment. Every amendrnentof this Declaration must (b) be Recorded in the Official Records of the Clark County Recorder, and no amendment of this Declaration shall be effective until executed and so Recorded. Every amendment must be indexed in the grantee's index in the name of the Association and in the grantor's index in the name of the party executing the amendment. Every amendment of this Declaration must be prepared, executed, Recorded, and certified on behalf of the Association by the officer of the Association designated in the Bylaws for that purpose, or in the absence of such designation, by the President of the Association.

Persons Entitled to Amend. This Declaration may be amended in (c) accordance with NRS § 116.2109, 116.2110 by Declarant for the purpose of exercising any developmental rights as set forth in this Declaration. Restrictions on Amendment. Except to the extent expressly permitted (d) or required by the provisions of the Act, no amendment may change the boundaries of any particular Lot, the allocated interests of a particular Lot. or the uses to which a particular Lot is restricted in the absence of the consent of the Ownerof the Lot affected and theconsent of a majority of the Owners of the remaining Lots. No action to challenge the validity of an amendmentadopted bytheAssociation pursuantto NRS § 116.2117 maybe brought more than one (1) year after the amendment is recorded. DeclarantAmendment. Notwithstanding any provision of this Declaration (e) to the contrary, for so long as Declarant owns any portion of the Property, but no later than five (5) years from Recordation of this Declaration, Declarant may unilaterally amend this Declaration by Recording a written instrumentsigned by Declarant in order to correcttechnical errors, for clarification, and to conform this Declaration to the requirements of the County, the Veterans Administration, the Departmentof Housing and Urban Development, the Federal Housing Administration, the Federal Home Loan Mortgage Corporation, FNMA, GNMA, or other applicable governmental authority. \SVflIO\CIiDl HD7 MONTAMCC&R7.qd

55

(fl

Delivery of Amendments to Owners. If any change is made to this Declaration or any of the other governing documents of the Association, the Secretary of the Association shall, within thirty (30) days after the change is made, prepare and cause to be hand-delivered or sent prepaid by United States mail to the mailing address of each Lot or to any other mailing address designated in writing by the Lot Owner, a copy of the change that was made.

10.05 Enforcement and Nonwaiver. (a) Rightof Enforcement. Subjectto NRS Chapter38 and exceptasotherwise provided herein, any Owner (at its own expense), Declarant, and the Board shall have the right to enforce, by any proceeding at law or in equity and including arbitration proceedings and other forms of mediation all of the restrictions, conditions, covenants, reservations, liens, and charges now or hereafter imposed by the provisions of this Declaration against any property within the Property and the Owners thereof. Such right of enforcement shall include both damages for and injunctive relief against the breach of any such provision. The right of any Owner to so enforce such provisions shall be equafly applicable without regard to whether the property (or other interest) of the Owner seeking such enforcement orthe property (orotherinterest)whereon orwith respect to which a violation of such provision is alleged is initiallysetforth on ExhibitaAa or is hereafter subjected to this Declaration pursuant

to Article IX hereof. Violation as a Nuisance. Every act oromission by which any provision (b) of this Declaration is violated in whole or in part is hereby declared to be a nuisance and may be enjoined orabated by any Owner (at its own expense), by Declarant, or bythe Board, whetheror notthe relief sought is for negative or affirmative action. However, only Declarant, the Board, and the duly authorized agents of either of them may enforce by self-helpany of the provisions of this Declaration and then only if such self-help is preceded by reasonable

notice to the Owner in question. (c)

Violation of Law. Anyviolation of anyfederal, state, orlocal law, ordinance, orregulation pertainingto the ownership, occupancy, or use of any propertywithin the Property

is hereby declared to be a violation of this Declaration and subject to all of the enforcement

procedures set forth herein. This provision shall not be construed to impose upon the Association any obligation to enforce civil orcriminal laws, ordinances, orregulations ofany governmental authority. (d) Remedies Cumulative. Each remedy provided by this Declaration is cumulative and not exclusive. Nonwaiver. The failure to enforce any provision of this Declaration at (e) any time shall not constitute a waiver of the right thereafter to enforce any such provision or any other provision herein.

H!),fl7 MONTARA'CC&R.7.

56

Attorneys Fees. In the eventthe Board engages legal counsel ortakes (f) any legal action, including, but not limited to, arbitration proceedings pursuantto NRS Chapter 38, to enforce the provisions of this Declaration, it shall be entitled to its costs, including reasonable attorneys fees, incurred in connection therewith.

10.06 Notices. Any notice or communication to be given under the terms of this Declaration shall be in writing and shall be personally delivered orsent byfacsimile, overnight delivery, or registered or certified mail, return receipt requested. Notice shall be effective:

(a) if personally delivered, when delivered; (b) if by facsimile, on the day of transmission thereof on a properfacsimile machine with confirmed answerback; (c) if byovernightdelivery, on the day after delivery thereof to a reputable overnight courier service; and (d) if mailed, at midnight on the third (3rd) business day afterdeposit in the mail! postage prepaid. Notices shall be addressed to the Person at the address given by such Person to the Association for the purpose of service of notices or to the residence of such Person if no address has been given to the Association. Such address may be changed from time to time by notice in writing given by such Person to the Association.

10.07 Construction. Restrictions Severable. Each of the provisions of this Declaration shall (a) be deemed independentand severable, and the invalidityorpartial invalidityofanyprovision or portion thereof shall not affect the validity or enforceability of any other provision.

(b)

Singular Includes Plural. Unless the context requires a contrary

construction, the singularshall include the plural and the plural the singular; and the masculine,

feminine, or neuter shall each include the masculine, feminine, and neuter. Captions. All captions and titles used in this Declaration are intended (c) solelyforconvenience of reference and shall not enlarge, limit, orotherwise affectthatwhich is set forth in any of the Sections or Articles hereof. Liberal Construction. It is the intention of Declarantthatthis Declaration (d) be liberally construed to promote the purpose of a well-planned community, reserving to

Declarant the rights necessary to develop the Property and to insure the integrity of the interrelated land uses. 10.08 State Law. The provisions of this Declaration shall be governed and interpreted

according to the laws of the State of Nevada.

I/I I/f I/I ft

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10.09 Priorities, Inconsistencies, if there are conflicts or inconsistencies between this Declaration and either the Articles or the Bylaws, the terms and provisions of this Declaration shall prevail. Any provision contained in this Declaration the Bylaws, or the other governing documents of the Association that violates the provisions of the Act shall be deemed to conform with the Act by operation of law.

Declarant has executed this Declaration this 3 day of lLusf 2004. DECLARANT Canyon Desert Homes, LLC, a Nevada limited liability company

By: y7-It ) Michel J. Galatlo /

L./

STATE OF NEVADA) ss:

COUNTY OF CLARK)

On the 3 dayof ApcF 2004, before me, a Notary Public in and for said County and State! personallyppeared Michael J. Galatio, known (or proved) to me to be the Manager of Canyon Desert Homes, LLC, a Nevada limited liability company, who acknowledged to me that he executed the within instrument.

'a

22 Notary /

—rn---rI nviieotNo.9620321

'%j5' MIE*eS1.2®B

MONTABACC&LC-

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EXHIBIT "A"

Legal Description of the Property Lot One-hundred-three (103) through Lot One-hundred-five (105), inclusive, and Lot One (1) through LotThree (3), inclusive, Villa La Mora Avenue in Montara as shown by Mapthereof on file in Book 115 of Plats, Page 0099 in the office of the County Recorder, Clark County, Nevada.

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Exhibit "B" Legal Description of the Annexable Area Phase II: Lot Four (4) through Lot Twelve (12), inclusive, and Lot Ninety-four (94) through Lot Onehundred-two (102), inclusive, Villa La Mora Avenue in Montara as shown by Map thereof on file in Book 115 of Plats, Page 0099 in the office of the County Recorder, Clark County, Nevada.

Phase Ill: Lot Thirteen (13) through Lot Eighteen (18), inclusive, and Lot Eighty-eight (88) through Lot Ninety-three (93), inclusive, Villa La Mora Avenue in Montara as shown by Map thereof on file in Book 115 of Piats, Page 0099 in the office of the County Recorder, Clark County, Nevada.

Phase IV: Lot Nineteen (19) through Lot Twenty-four (24), inclusive, and Lot Eighty-two (82) through Lot Eighty-seven (87), inclusive, Villa La Mora Avenue in Montara as shown by Map thereof on file in Book 115 of Plats, Page 0099 in the office of the County Recorder, Clark County, Nevada.

Phase V: Lot Twenty-five (25) through Lot Thirty-four (34), inclusive, and Lot Eighty (80) through Lot Eighty-one (81), inclusive, Villa La Mora Avenue, Villa Pescara Street and Villa Lorena Avenue

in Montara as shown by Map thereof on file in Book 115 of Plats, Page 0099 in the office of the County Recorder, Clark County, Nevada.

Phase VI: Lot Thirty-five (35) through Lot Forty (40), inclusive, and Lot Seventy-four (74) through Lot Seventy-nine (79), inclusive, Villa Lorena Avenue in Montara as shown by Map thereof on file iii Book 115 of Plats, Page 0099 in the office of the County Recorder, Clark County, Nevada.

Phase VII: Lot Forty-one (41) through Lot Forty-six (46), inclusive, and Lot Sixty-eight (68) through Lot Seventy-three (73), inclusive, Villa Lorena Avenue in Montara as shown by Map thereof on file in Book 115 of Plats, Page 0099 in the office of the County Recorder, Clark County, Nevada.

Exhibit "B" Legal Description of the Annexable Area (Cont'd) Phase VIII: Lot Forty-seven (47) through Lot Fifty-two (52), inclusive, and Lot Sixty-two (62) through Lot Sixty-seven (67), inclusive, Villa Lorena Avenue in Montara as shown by Map thereof on file in Book 115 of Plats, Page 0099 in the office of the County Recorder, Clark County, Nevada.

Phase IX: Lot Fifty-three (53) through Lot Sixty-one (61), inclusive, Villa Lorena Avenue in Montara as shown by Map thereof on file in Book 115 of Plats, Page 0099 in the office of the County Recorder, Clark County, Nevada.

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Exhibit "3" Rules and Regulations

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Exhibit "4" Express Warranties

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