ARTICLE I DEFINITIONS

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1 After recording return to: RICHARDS, KIMBLE & WINN, PC 2040 E. Murray Holladay Rd., Suite 106 SLC, UT Amended and Restated Declaration of Protective Easements, Covenants, Conditions, and Restrictions for Highland Estates (also known as Highland Estates Homeowners Association) This Amended and Restated Declaration of Protective Easements, Covenants, Conditions, and Restrictions (the "Declaration") is made on the date evidenced below by the Highland Estates Homeowners Association (the Association ). RECITALS The Association was established to govern the common affairs of the Association s members, to reasonably protect property values of the lots and/or common areas, to help maintain an expected quality of life of its members. A governing Board of Directors and an Architectural Review Committee is further established for the management of the Association. This Amended and Restated Declaration supersedes and replaces the Restrictive Covenants of Highland Estates ( Original Covenants ) recorded as Entry No on March 14, 1972, records of the Summit County Recorder, in its entirety including any amendments or supplements thereto and any previously adopted Bylaws. The Association shall have all of the rights, powers and obligations as set forth in Utah s Community Association Act, 16-6a-101 et seq., as may be amended from time to time. VISION STATEMENT The property owners within Highland Estates desire a certain quality of life, in part, by accessibility to trails and open space. It is the intent of the Declaration to protect and preserve a unique balance of the various home types and the unique nature of large lots. With expansive mountain views and abundant wildlife, the Association will foster and maintain a graceful and aesthetically balanced approach which reflects its members values and rural mountain lifestyle while encouraging energy efficient homes, water conservation and landscaping natural to this unique area. ARTICLE I DEFINITIONS When used in this Declaration, each of the following terms shall have the meaning indicated: 1

2 1.01 ARC shall mean the Architectural Review Committee established pursuant to Article IV of this Declaration Articles shall mean and refer to the Articles of Incorporation of the Association, which are or shall be filed in the Division of Corporations and Commercial Code, State of Utah, as amended from time to time Assessment shall mean the amount which is to be levied and assessed against each Lot and paid by each Owner to the Association for Association expenses, whether annual, special or reimbursement assessments Association shall mean the Highland Estates Homeowners Association, a Utah owners association which may be incorporated as a nonprofit corporation by the Board of Trustees Board or Board of Trustees shall mean the governing Board of Trustees of the Association Bylaws shall mean and refer to the Bylaws of the Association as set forth and embodied in this Declaration in Articles XI and XII Common Areas shall mean all portions or parcels of the designated on the plat map for Highland Estates designated as Common Areas, and shall include any and all amenities, landscaping, and improvements and the like thereon, together with all easements appurtenant thereto as reflected on the plat Declaration shall mean this Amended and Restated Declaration of Protective Easements, Covenants, Conditions, and Restrictions of Highland Estates, Summit County, Utah, as the same may be supplemented or amended from time to time Fines shall mean a charge levied against one or more owners for a violation of the governing documents, policies and rules of the Association Lot shall mean and refer to any of the separately numbered and/or individually described Lots within Highland Estates as designated on the Plat and intended for single family residential use or commercial uses (if any) as provided for in this Declaration and permitted by local ordinance Owner shall mean any person who is the owner of record (as reflected by the Public Records) of a fee or undivided fee interest in any Lot, and any contract purchaser of any Lot. Notwithstanding any applicable theory relating to mortgages, no Mortgagee nor any trustee or beneficiary of a deed of trust or trust deed shall be an Owner unless such party acquires fee title pursuant to foreclosure or sale or conveyance in lieu thereof. Multiple owners of a particular Lot shall be jointly and severally liable as to all responsibilities of an Owner. The term Owner shall also mean member so long as its interpretation is consistent with this Declaration and the Bylaws. 2

3 1.12 Plat shall mean and refer to the subdivision plat covering the Property and recorded in the Public Records of Summit County Property shall mean all land covered by this Declaration as contained in the Attached Exhibit A and as set forth in Article III Reimbursement Assessment shall mean a charge against a particular Owner or the Owner s Lot or Residence as set forth in Section of this Declaration Residence shall mean a structure which is designed, constructed, and intended for use or occupancy as a single family residence on a Lot, together with any and all other improvements located on the same Lot. A Residence may include a traditional mother-in-law apartment within a Residence Single Family Residence shall mean (a) a single individual, doing his/her own cooking and living upon the premises as a separate housekeeping unit, or (b) a collective body of persons doing their own cooking and living together upon the premises as a separate housekeeping unit in a domestic relationship (including those residing in a mother-in-law apartment or the functional equivalent thereof) based upon birth, marriage or other domestic bond as distinguished from a group occupying a boarding house, lodging house, club, fraternity or hotel. ARTICLE II PURPOSE 2.01 Purpose. The purpose of this Declaration is to provide for the preservation of the values of Lots, Common Areas (if any) and Residences within Highland Estates and as described in the above vision statement. In the absence of a provision in this Declaration, local and County ordinances remain in force and effect. It is intended and desired that the easements, covenants, conditions and restrictions contained herein, including any properly adopted amendment hereto, shall run with all lots within the Association (including their successor owners and assigns) as covenants or equitable servitudes, including any common area and/or easement areas shown on the relevant plat map, so that the benefits provided by this document endure over time for the benefit of all lot owners within the Association. Another primary purpose of this Declaration and a function of the Architectural Review Committee is to reasonably protect mountain views for the Residences. ARTICLE III PROPERTY DESCRIPTION 3.01 Submission. The Property which is and shall be held, transferred, sold, conveyed, and occupied subject to the provisions of this Declaration consists of the real property described in Exhibit A hereto located in the City of Park City, Summit County, State of Utah. TOGETHER WITH all easements, rights-of-way, and other appurtenances and rights incident to, appurtenant to, or accompanying such real property, whether or not the same are reflected on the Plat. 3

4 ARTICLE IV ARCHITECTURAL REVIEW COMMITTEE 4.01 Architectural Review Committee. The Owners of the Association shall elect a three-member Architectural Review Committee ( ARC ) under the same procedures for electing the Board. However, the ARC members terms shall be one year. The function of the Committee shall be to reasonably ensure that all current and future improvements to any and structures and all landscaping within the Property harmonize with existing and surroundings structures and that mountain views are reasonably preserved to the extent permitted by this Declaration and County Code. If an ARC is not elected, the Board itself shall perform the duties required of the ARC until such time as it is elected. If an ARC member resigns, the ARC shall appoint his or her replacement. The Board may veto or repeal an ARC decision only by a 2/3 majority vote. If an Owner disagrees with an ARC decision, it may require the Board to review the matter. If the Owner is unsatisfied with the Board s decision, then it may take the issue to the membership which can over-ride the Board decision upon the receipt of at least fifty-one percent (51%) affirmative votes from the entire membership. As used herein, structures shall include buildings, out-buildings, residences, sheds, fences, patios, exterior painting and remodeling projects and anything that changes the appearance or adds an improvement to the exterior of a Lot Submission to ARC. From the date of recording this Declaration, no new structures, remodels or material additions to a structure nor any wall or fence shall be constructed or maintained, and no alterations or refurbishing of the exterior of any structure shall be performed, unless plans and specifications therefore have first been submitted to and approved by the ARC. No building permit application shall be made to the City until after approval of the plans and specifications by the ARC. In the event that the ARC (and/or Board) requires professional review of any plans and specifications to help ensure compliance with the goals and objectives of this Declaration, the submitting owner shall be responsible for such fees and costs, upon prior notice to such owner that a fee will be charged Residential Guidelines. Except as otherwise stated herein including Article VI, the Board shall adopt (with the assistance of the ARC or such task may be entirely dedicated to the ARC), in a separate and distinct document, reasonable residential guidelines setting forth the standards and requirements for all structures and improvements within the Association. Prior to adoption of such guidelines, a Member meeting shall be called to discuss the contents of the guidelines consistent with Utah law. Each owner is on notice that residential guidelines exist and the Board shall make a copy available to the owners upon request. The Board may also post any such guidelines on the Association s website. If multiple copies are requested, the Board may impose a reasonable charge for each new copy of the guidelines. All such guidelines shall be adopted in accordance with Utah law and, once adopted, shall have the full force and effect of this Declaration so long as the guidelines do not conflict with any provision of this Declaration. In such case, the terms of this Declaration shall control. Furthermore, any such guidelines may be amended from time to time to address the changing needs and desires of the community, as approved by the Board and adopted pursuant to Utah law. 4

5 4.04 Standard. The ARC shall have the right to take into consideration the suitability of the proposed improvement, the material of which it is to be built, the harmony thereof with the surroundings, the effect or impairment that such improvements will have on the view of surrounding building sites, and any and all facts which, in the ARC s opinion, shall affect the desirability or suitability of such proposed structure, improvements, or alterations. Issues such as setbacks, height restrictions and commercial zoning activities shall not violate the Synderville Basin Planning Commission s standards Approval Procedure. Consistent with Article VII, Section 7.01, any plans and specifications submitted to the ARC shall be approved or disapproved by it in writing within thirty (30) days after submission; provided, however, that plans and specifications for any replacement structure to be constructed in substantially the same configuration, location, architectural style and to be of substantially the same size as its predecessor shall be approved or disapproved within fourteen (14) days after submission to the ARC for review. In the event the ARC fails to take any action within such specified periods, it shall be deemed to have approved the material submitted. A decision of the ARC may be appealed to the Board consistent with Section 4.01 above Construction. Once begun, any improvements, construction, re-construction, landscaping, or alterations approved by the ARC shall be diligently prosecuted to completion. Construction on all homes/residences must commence within one year of the ARC approval, or such approval will lapse and resubmission of plans and materials will be required Variances. Where circumstances, such as a non-conforming uses, or because of topography, location of property lines, streams or other physical features, hardship or other matters may justify, the Board may, by the affirmative vote of a majority of Board members, along with input from the ARC, allow reasonable variances as to any of the guidelines or covenants, conditions and restrictions contained in this Declaration, but strictly upon such terms and conditions as the Board may require Pre-existing Structures. The occupancy and use of a structure, improvement or Lot which was permissible and existing before the effective date of this Declaration or any existing residential structure which would violate a material provision thereof if presently enforced, may be continued so long as such non-conforming use does not detrimentally affect the health or safety of other persons, or the reasonable use and enjoyment of property of other Owners and so long as there are no additional or materials, structures or alterations to said structures. At such time as additional materials, structures or alterations are proposed, the provisions of the Declaration shall control Liability for Damages. Neither the ARC, the Board or any member thereof shall be held liable for damages by reason of any action, inaction, approval, or disapproval taken or given without malice by such member or the ARC or Board with respect to any request made pursuant to this Article IV. Any approval by the ARC shall not be deemed to be an approval of any Federal, State or Local ordinance or law. 5

6 ARTICLE V HOMEOWNERS OWNERS ASSOCIATION 5.01 Creation and Existence. There is hereby created and/or continued the Highland Estates Homeowners Association ( Association ) with the necessary powers and obligations to govern the common interests of the Owners of Lots within the Association Membership and Good Standing. Every Owner upon acquiring title to a Lot shall automatically become a member of the Association and shall remain a member thereof until such time as such ownership ceases for any reason, at which time the Owner s membership in the Association with respect to such Lot shall automatically cease and the successor Owner shall become a member. Membership in the Association shall be mandatory and shall be appurtenant to and may not be separated from the ownership of a Lot. Notwithstanding anything else in this Declaration or the Association s Bylaws to the contrary, a member who is not current with their assessment obligation, has any outstanding fines, or is in violation of this Declaration, the Bylaws or the Rules and Regulations of the Association, then at the time any vote of the Association is taken, such member is not eligible to vote unless their assessment account, fine or violation is brought current before or at the meeting at issue. In such cases, the total number of Lots or percentages of votes required for an action shall be reduced by the number of members/lots not in good standings (Eligible Vote, as used herein shall mean those in Good Standing by having all assessments and fines paid and in compliance with this Declaration, the Bylaws and the Rules and Regulations of the Association) Purposes and Powers. The Association exists to manage the common affairs of the membership, including the enforcement of this Declaration, the Bylaws, the Rules and Regulations of the Association and any residential or commercial guidelines ( governing documents ). The Association shall have all necessary powers under Utah law to administer and enforce its governing documents; to collect assessments, manage and disburse funds, pay expenses and to take other action of concern to the members Bylaws. The Association has adopted Bylaws which are incorporated into Article XI and XII of this Declaration which control the governance and operational aspects of the Association Nonprofit Corporation. Unless required by Utah law, the Association, by and through its Board, may opt to become or remain a nonprofit corporation. If its nonprofit corporate status lapses, the Board is hereby authorized to reincorporate the Association on its own motion. ARTICLE VI RESIDENTIAL USE RESTRICTIONS 6.01 Use of Common Area, Multi-Use Easements, Utility Easements, Trails, Etc. The multi-use easements, utility easements, trails and similar features located within the Association shall be used only in a manner consistent with their community nature and with the use restrictions applicable to all Lots and Residences as set forth in this Declaration and in the 6

7 Bylaws. If a road or trail is not located as shown on the plat map, there is hereby created an express easement for such road or trail over any private property for so long as such area is used for the purposes permitted by this Declaration. All trails shall remain in an unpaved state yet can be maintained to a degree as determined by the Board. In the event a fence blocks a trail, it does not extinguish any legal easements over said trail. The Association however, by separate policy, shall adopt procedures to govern access to the trails in such situations Residential Use. As set forth in Section 3.01 above, the Property is zoned residential and is restricted to single family residential use pursuant to applicable provisions of Summit County Ordinances and this Declaration. Each Lot, Residence and Owner are subject to the uses and restrictions imposed by such zoning (including any parking restrictions), and no Lot or Residence shall be used, occupied, or altered in violation of such ordinances or so as to create a nuisance or to interfere with the rights of any other Owner. In the event that this residential use or single family use requirement is violated (See Section 1.16 above), the Association retains all enforcement action to cause such use to cease as permitted under this Declaration and Utah law Prohibited Uses and Nuisances. In addition to anything contained herein, the following uses and practices are specifically prohibited, including any additional prohibitions, which may, from time to time, be adopted by the Board pursuant to Article IV of this Declaration: (a) Barns, sheds or other out-buildings, structures of any kind or Residences shall be first approved by the ARC as provided for in this Declaration. (b) The raising of pigs, cows, sheep, goats, or poultry is prohibited. None of the foregoing animals may be kept, maintained or permitted on any Lot or within any Residence or otherwise within the limits of the Association. (c) Other than as stated herein, pets, in quantity and type, are permitted as provided by Summit County Ordinances (as may be amended from time to time). All dogs must be kept within the confines of a Lot unless on a leash in accordance with Summit County Ordinances. Additional and reasonable rules and regulations may be adopted by the Board pursuant to Section of this Declaration as it relates to pets. Any Owner s pet(s) that cause any unpleasantness, mess or unsanitary conditions on another s Lot, shall be promptly cleaned up by the Owner and may be subject to a fine. (d) No trailers, tents, shacks, sheds, or other out-buildings shall be placed upon or used at any time within the Property as a temporary Residence for more than five (5) days unless permitted by the Board for just cause and need. (e) The Owners as of the date of the recording of this Declaration owning motorhomes, campers, boats, boat-trailers, house-trailers, automobiles, trucks, motorhomes, horse trailers, heavy equipment or machinery or other trailers are permitted to be maintained and stored in their current state and location. However, upon the sale of a Lot, all future Owners who desires to store such vehicles and items on their Lot must do so in an ARC approved structure or be reasonably screened from public view. Such screening structure shall be deemed reasonable if no legitimate aesthetic or other 7

8 complaints are raised by the Owners. The primary objective is to create a tidy exterior appearance on each Lot. Except as may be set forth in additional rules and regulations adopted by the Board pursuant to Section of this Declaration, such vehicles and items shall not be parked or stored on streets except as may be necessary for ordinary loading and unloading. Any of the above vehicles or items, or any part thereof, not in actual use or inoperable or unlicensed shall be stored or placed in a garage, behind a fence, or behind the front properly line of the Residence to be best screened from public view as is reasonably possible and deemed adequate by the ARC. (f) Vehicles, whether or commercial or for private use, are permitted as long as they remain in regular use, are registered and legally operable. Noisy, unsafe, inoperable or unsightly vehicles remaining on the Property, however, may be regulated by reasonable rules and regulations. (g) All signage shall comply with Summit County Ordinances regarding signs or the rules and regulations of the Association, whichever is more restrictive, as adopted by the Board pursuant to Utah law, Title 57-8a-101, et seq., as amendment from time to time. (h) There shall be no oil drilling, mining, quarrying, or related operations of any kind permitted upon any Lot or otherwise within the Development. (i) No rubbish, trash or unsightly or dangerous materials shall be stored or allowed to accumulate anywhere in the Property, except in sanitary containers. Rubbish, trash or unsightly materials shall include, but not be limited to bushes, weeds and household waste. Trash, garbage, and other wastes shall be kept in sanitary containers, maintained in a clean and sanitary condition. (j) No external radio, citizen's band, ham radio or any similar transmitting and/or receiving antennas or equipment shall be placed upon any Lot, Residence, or other structure within the Property. Satellite dishes less than 1 meter in diameter are permitted but the ARC shall approve the placement thereof. The placement and location of reception towers and devices within a lot or upon a dwelling is controlled by solely by the ARC in order to have as little visual and aesthetic impact on the neighboring members as possible while maintaining a clear and strong signal. (k) No dwelling, house, or other structure shall be constructed or situated on any of the Lots except in conformity with the "set back" lines (and all other design and planning guidelines) as established in each instance by the Plat, the ARC, and applicable laws and ordinances. (l) As defined by County Ordinance, no noxious weeds are permitted to grow to an unsightly condition as shall be determined by complaining homeowners, the Board or the ARC. All such weeds are to be reasonably maintained and removed. 8

9 6.04 Utilities. All electric, television, cable/satellite television, telephone and other utility line installments and connections from the property line of any Lot to the Residence or structures thereon shall be placed underground Improvements, Structures, Dwellings, Materials and Size. Pursuant to Article IV, all improvements on a Lot, including Residences shall be approved by the ARC, with such approval not to be unreasonably withheld for so long as the proposed improvement, structure or Residence is compatible with the Highland Estates community with respect to materials and aesthetics and the Vision Statement for the Association. The ARC shall make its recommendations to approve or disapprove plans presented to it and the Board shall then make a determination on the matter and the decision shall be communicated to the Owners, with rights of appeal, provided for in Article IV. ARTICLE VII DUTIES AND OBLIGATIONS OF OWNERS 7.01 Maintenance and Repairs. Each Owner shall at the Owner s own cost maintain the Owner s Lot and any improvements and structures constructed thereon in good repair at all times. In the event of the damage or destruction of any Residence or structure, the Owner of the Lot on which such Residence is situated shall either rebuild the same within a reasonable time or shall raze the remains thereof so as to prevent the unsightly appearance and dangerous condition of a partially destroyed building in the Property. In the event of damage or destruction, no dirt mounds or building materials shall remain on the property causing an unsightly or hazardous condition and shall be removed or remedied promptly by the Owner or within a time period established by the ARC. The remodeling, rebuilding, or modification of any Residence exteriors, or parts thereof, which requires a building permit, must be submitted to and approved by the ARC as described above. Further see Article IV Owners Insurance. Each Owner shall be responsible to procure and maintain in force property insurance and liability insurance with respect to the Owner s Lot and Residence as is customary in projects such as the Property Assessments and Rules Observance. Each Owner shall be responsible for the prompt payment of any Assessments provided for in this Declaration and for the observance of the rules and regulations promulgated by the Association. Consistent and in compliance with Section 5.02 of this Declaration, a member who is not current with their assessment obligation, has any outstanding fines, or is in violation of this Declaration, the Bylaws or the Rules and Regulations of the Association, at the time any vote of the Association is taken, is not eligible to vote unless their assessment account, fine or violation is brought current before or at the meeting at issue Transfer of Interests. Except for obligations already accrued, an Owner who retains a security interest in their Property that they have transferred, transfers all of his interests in his Lot 9

10 to another, either voluntarily or by operation of law, shall be relieved of all obligations under this Declaration, following such transfer. ARTICLE VIII PROPERTY RIGHTS, EASEMENTS, TRAIL USE 8.01 Easements, Utility Easements, Trails, Etc. Each Lot shall have a non-exclusive right and irrevocable easement of use and enjoyment in and to the Multi-Use Easement, Utility Easements (as applicable) and Trails, including established Equestrian Trails to be used for their intended purposes. Such right and easement shall pass with title to each Lot and shall in no event be separated there from, including any and all equestrian trails within the Property 8.02 Trails (of all types); Use; Liability. Pursuant to Utah Code (as may be amended from time to time), for so long as a user fee is not imposed to third-party users (excluding regular Association assessments), neither the Association, or any of its member/owners shall be liable to each other, to guests, invitees or trespassers for use of any Trails within the Association. Neither the Association nor any of its members owes a duty of a care to keep the trails safe for entry or use by any other person entering or using the Property for any recreational purpose and no duty exists to give any further warning of a dangerous condition, use, structure or activity on any equestrian trails. Signs may be posted that riders/users of trails do so at their own risk. Regardless, the Association is authorized to purchase liability insurance against injury or death on the trails in the event of a claim made against the Association in an amount deemed appropriate by the Board Limitation on Easement. Each Lot's right and easement of use and enjoyment concerning the Multi-Use Easements, Utility Easement and Trails (hereafter Easements and Trails ) shall be subject to the following: (a) The right of the Association to govern by reasonable rules and regulations the use of the Easements and Trails so as to provide for the enjoyment of the Easements and Trails in a manner consistent with the collective rights of all of the Owners; (b) The right of the Association to dedicate or transfer any part of the Easements or Trails (except as may be located on private property unless the consent of the affected Owner is obtained) to any public agency or authority for such purposes and subject to such conditions as may be agreed to by the Association; provided that such dedication or transfer must first be assented to in writing by the Owners of Lots to which at least sixty percent (60%) of the total votes in the Association appertain. (c) No fencing is permitted by any Owner within the Easement and Trail area unless expressly permitted by the ARC. In such cases, the owner shall be responsible to maintain and repair any fences in good condition. (d) Each Owner, its tenants guests and invitees shall indemnify and hold the 10

11 Association, its Board members and agents harmless from any property or bodily injury, including death, incurred within the Easements and Trails area Utility Easements. Each Lot is subject to appurtenant easements for underground lines for utility purposes under and through the Lots. If any Owner utilizes property within the Owner s Lot that is subject to any such easement, he shall be responsible for the restoration to its former state of any portion of the property that may have been disturbed or damaged as a result. ARTICLE IX INSURANCE 9.01 Liability Insurance. The Board shall procure and maintain a policy or policies (herein called the "Policy") of Public Liability Insurance to insure the Association, the Board, the Managing Agent, any employees of the Association, and the Owners against claims for bodily injury and property damage arising out of the conditions of the Easements and Trails area or activities thereon under a Comprehensive General Liability form. Such insurance shall be for such limits as the Board may decide, but not less than those limits customarily carried in connection with properties of comparable character and usage in Summit County nor less than $1,000,000 for personal injury and property damage arising out of a single occurrence, such coverage to include protection against water damage liability, liability for the property of others and such other risks as shall customarily be covered with respect to property similar in construction, location and use. The Board may procure any additional types and amounts of insurance as it deems appropriate. The policy shall contain a "Severability of Interest" endorsement which shall preclude the insurer from denying the claim of any Owner because of negligent acts of the Association or other Owners and a cross-liability endorsement pursuant to which the rights of the named insured as between themselves are not prejudiced. The policy shall provide that the policy may not be canceled or substantially modified by the insurer unless it gives at least thirty (30) days' prior written notice thereof to each insured. Any such coverage procured by the Board shall be without prejudice to the right of the Owners to insure their personal liability for their own benefit at their own expense Additional Insurance; Further General Requirements. The Board may also procure hazard insurance for any improvements on the Easements and Trails or other insurance which shall insure the Easements and Trails and the Association or the Owners and others against such additional risks as the Board may deem advisable. Insurance procured and maintained by the Board shall not require contribution from insurance held by any of the Owners or their Mortgagees. Each policy of insurance obtained by the Board shall, if reasonably possible, provide: (a) a waiver of the insurer's right of subrogation against the Association, the Owners and their respective directors, officers, agents, employees, invitees and tenants; (b) that it cannot be canceled, suspended or invalidated due to the conduct of any 11

12 particular Owner or Owners; (c) that it cannot be canceled, suspended or invalidated due to the conduct of the Association without a prior written demand that the defect be cured; and (d) that any "no other insurance" clause therein shall not apply with respect to insurance maintained individually by any of the Owners Director and Officer and Fidelity Coverage. The Association may elect to maintain Director and Officer and fidelity coverage to protect against lawsuits against the Board for its decisions and potential dishonest acts on the part of officers, directors, managing agents, and employees of the Association and all others (including volunteers) who handle, or are responsible for handling, funds of the Association. In that event, such fidelity bonds shall: (a) name the Association as an obligee; (b) be written in an amount based upon the best business judgment of the Association and shall not be less than the estimated maximum of funds (including reserve funds) in the custody of the Association or the Managing Agent at any given time during the term of each bond, but in no event be less than a sum equal to three months' Assessments on all Lots plus reserve funds; (c) contain waivers of any defense based upon the exclusion of volunteers or persons who serve without compensation from any definition of "employee" or similar expression; and (d) provide that they may not be canceled or substantially modified (including cancellation for nonpayment of premium) without at least thirty (30) days' prior written notice to the insured Other Insurance Provisions. All insurance required pursuant to this Article IX shall be written by insurers licensed in the State of Utah. Notwithstanding anything in this Article IX to the contrary, any insurance required to be obtained by the Association pursuant to Sections 9.01, 9.02, or 9.03 of this Article IX shall be required only to the extent that such coverage is reasonably obtainable at reasonable rates and is customarily obtained with respect to improvements or facilities having the same or similar characteristics of the Common Areas or risks being insured. ARTICLE X RIGHTS OF MORTGAGEES Title and Mortgagee Protection. A breach of any of the covenants, provisions, or requirements of this Declaration shall not result in any forfeiture or reversion of title or of any other interest in a Lot or any other portion of the Property. A breach of any of the covenants, provisions, or requirements of this Declaration shall not defeat, impair, or render invalid the lien of or other rights under any Mortgage. Unless and until it enters into possession or acquires title 12

13 pursuant to foreclosure or any arrangement or proceeding in lieu thereof, any Mortgagee interested under any Mortgage affecting a Lot or any other portion of the Property shall have no obligation to take any action to comply with, and may not be compelled to take any action to comply with, any of the covenants, provisions, or requirements of this Declaration (other than those, if any, concerning a consent or approval to be given by a Mortgagee, in the event a Mortgagee's failure to give same is wrongful). No amendment to this Declaration shall in any material way affect the rights of any Mortgagee interested under a Mortgage which is in effect at the time of the amendment concerned or the rights of any successor in interest or title to such Mortgagee, either before or after such Mortgagee or its successor enters into possession or acquires title pursuant to foreclosure or any arrangement or proceeding in lieu thereof, unless such Mortgagee has consented in writing to such amendment, which consent shall not be unreasonably withheld Notice of Meetings. The Board shall give to any Mortgagee of a Lot requesting the same, notice of all meetings of the Association; and such Mortgagee shall have the right to designate in writing a representative to attend all such meetings. Clarify difference Board and Association (see page for rule) Right to Examine Association Records. Any Mortgagee shall, upon request, have the same right to inspect the books and records of the Association and receive financial statements as the Owner of the Lot securing the Mortgage. (see rules) 13

14 ASSOCIATION BYLAWS THE ASSOCIATION'S BYLAWS ARE HEREBY EMBODIED IN THIS DECLARATION AS ARTICLES XI, XII AND XIII. THE MISCELLANEOUS PROVISIONS OF ARTICLE XIII OF THIS DECLARATION SHALL BE APPLICABLE TO BOTH THE BYLAW PROVISIONS AND THE PROVISIONS IN THIS DECLARATION. ARTICLE XI BYLAWS - MEMBERSHIP AND VOTING RIGHTS IN THE ASSOCIATION Membership. Every Owner upon acquiring title to a Lot shall automatically become a member of the Association and shall remain a member thereof until such time as such ownership ceases for any reason, at w such Lot shall automatically cease and the successor Owner shall become a member. Membership in the Association shall be mandatory and shall be appurtenant to and may not be separated from the ownership of a Lot Voting Rights. Each Lot shall be assigned one (1) vote to be cast by the member(s) as provided in Article V, Section 5.02, each voting member being in good standing Multiple Owners of a Lot. In the event there is more than one Owner of a particular Lot, the vote relating to such Lot shall be exercised as such Owners may determine between or among themselves, but in no event shall more than the total number of votes appurtenant to such Lot be cast with respect to any issue. A vote cast at any Association meeting or by written consent by any of such Owners, whether in person or by proxy, shall be conclusively presumed to be the entire vote attributable to the Lot concerned unless an objection is made at the meeting or in writing by another Owner of the same Lot, in which event no vote will be counted with respect to such Lot except to determine the presence or absence of a quorum Records of Ownership. Upon request, every Owner shall promptly cause to be duly filed of record the conveyance document (or in the case of a contract buyer, a copy of the sales contract or notice of interest) to him of his Lot and shall file a copy of such conveyance document with the Secretary of the Association, who shall maintain a record of ownership of the Lots Place of Meeting. Meetings of the Association shall be held at such suitable place convenient to the Owners as may be designated by the Secretary of the Association in the notice thereof Annual Meetings. Annual meetings of the membership of the Association shall be held at the time and place determined by the Board as is set forth in the notice to be sent out by the Board in advance of the meeting (See below). 14

15 11.07 Election of Board of Trustees. At the annual meetings, members of the Board of Trustees shall be elected, as needed, pursuant to the provisions of this Declaration. Once a quorum has been established in person or by proxy, a majority vote of those present in person or by proxy, and in good standing, is required to elect a Board member. Cumulative voting is not permitted General Business at the Annual Meeting. Financial and budget reports shall be presented at each annual meeting as well as other business of the Association properly placed before each meeting Special Meetings. The President shall call a special meeting of the Owners as directed by a resolution of the Board or on a petition signed by Owners holding at least twenty percent (20%) of the total votes of the Association and having been presented to the Secretary. No business shall be transacted at a special meeting except as stated in the notice therefore unless consented to by fifty percent (50%) or more of the Owners present, either in person or by proxy at said special meeting and in good standing. The meeting shall be conducted by the Board but follow the agenda of those who called the meeting giving opportunity for those who petitioned for the meeting to express their issues and concerns, if any Notice of Meetings Electronic Notice. The Secretary shall provide a notice of each annual or special meeting stating the purpose thereof as well as the time and place of the meeting to each Owner of record at least ten (10), but not more than fifty (50), days prior to such meeting. The mailing of notice by prepaid U.S. Mail or by delivery in person shall be considered notice served. The Association may provide notice by a designated local newspaper (of which the members have been informed), electronic means, including text messages, or the Association s website. An Owner, however, may require that the Association provide notice to them by regular mail. The method of notice chosen shall take into consideration (1) the most effective way to help ensure that all members are notified, (2) cost and (3) timeliness Electronic Means. Any transaction or action involving the business or affairs of the Association, including but not limited to voting and providing notice or records, may be conducted by electronic means. The Association may accept a vote, consent, written ballot, waiver, proxy appointment, or proxy appointment revocation as the act of the member if the Board does so in good faith and has no reason to believe it is not the act of the member. A writing may be delivered in an electronic medium or by electronic transmission, and may be signed by photographic, electronic, or other means. An electronic record or electronic signature is attributable to a person if it was the act of the person. An electronic signature may consist of a mark, symbol, character, letter, or number or any combination thereof attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record and the same shall be considered the signature of such person. A writing includes any document, record, vote, ballot, proxy, or instrument required or permitted to be transmitted by a Member or by the Association. 15

16 Notice. As stated above, any circumstance where notice is required to be given to the owners, the Association may provide notice by electronic means, including text messages, s, or by an Association website, if the Board deems the notice to be fair and reasonable. A homeowner may require the Association, by written demand, to provide notice to the homeowner by mail. The Board is authorized to promulgate rules and procedures facilitating the implementation of this section as it deems fit from time to time, including requiring members to furnish the Association with a current address Quorum. Owners present in person or by proxy at any membership meeting duly called pursuant to notice shall constitute a quorum at all meetings, both annual and special; provided, however, that such Owners collectively be entitled to cast at least twenty-five percent (25%) of the total Association votes eligible to vote. Once a quorum has been established, it cannot be broken by members leaving the meeting before the conclusion of the meeting Adjourned Meetings. If any meeting of Owners cannot be organized because a quorum is not present, the Owners who are present either in person or by proxy may adjourn the meeting to a time not less than forty eight (48) hours from the time the original meeting was called at which time the requirements for a quorum shall be reduced to ten percent (10%) of the total Association votes eligible to vote. Sundays, State and Federal Holidays shall not be counted in the forty eight (48) hour period Officers. The Association shall have a President, a Vice President, and a Secretary/Treasurer, all of whom shall be elected by and from the Board. The Board may appoint an Assistant Secretary and Assistant Treasurer. Only the offices of Secretary and Treasurer may be filled by the same person. In addition, it may be decided by the Board to allocate Officer positions to Board members based on the needs of the community and the experience of an individual Board member. The officers shall be elected by the Board in an organizational meeting following each annual meeting of Owners at which the new Board has been elected. (a) President. The President shall be the chief executive officer of the Association and shall preside at all meetings of the Association and of the Board. The President shall have all of the general powers and duties that are usually vested in the office of president of an Association such as signing or co-signing checks (as determined by Association policy), negotiating contracts, committing to contracts with the approval of the Board, proposing policies and rules and regulations and contributing to all Board decisions and casting votes on all Board matters. Despite intending on always having an uneven number of Board members, in case of a tie, for whatever reason, the President shall cast the vote to break the tie. (b) Vice President. The Vice President shall take the place of the President and perform his duties whenever the President shall be absent or unable to act. If neither the President nor Vice President is able to act, the Board shall appoint some other member of the Board to do so on an interim basis. The Vice President shall also perform such other duties as shall from time to time be imposed on him by the Board. 16

17 (c) Secretary. The Secretary shall keep the minutes of all meetings of the Board and the minutes of all meetings of the Association. He shall have charge of such books and records as the Board may direct and he/she shall, in general, perform all duties incident to the office of secretary of an Association including co-signing check is so authorized by the Board, and making the records of the Association available to the members and helping prepare records for membership meetings. (d) Treasurer. The Treasurer shall have responsibility for Association funds and shall be responsible for keeping full and accurate accounts of all receipts and disbursements in books belonging to the Association. He/she shall be responsible for the deposit of all money and any other valuable effects in the name and to the credit of the Association in such depositories as may from time to time be designated by the Board Board of Trustees - Duties. The Association, through the Board, is responsible for the maintenance of any Common Areas, easement areas, the determination, imposition and collection of Assessments, the enforcement of the provisions of this Declaration and, in general, the preservation of the residential quality and character of the Property to the benefit and general welfare of the Owners Composition of the Board. The Board shall be comprised of minimum five (5) Trustees, each of whom shall be an Owner (or an officer, director, or agent of an Owner that is not an individual). The Owners may increase the maximum number of Directors to seven (7) or nine (9) at any meeting of Association members, or decrease the number of Directors upon member vote. No such increase or decrease shall be permitted unless stated in the notice of the applicable meeting. Unless the terms are already staggered, then at the first meeting of Owners after the adoption of these Bylaws, two (2) Board members (2) shall be elected to a three-year term, two (2) to a twoyear term, and one (1) to a one-year term. If the membership decides on having more than five (5) Directors, then the Directors shall determine the length of term of the newly created positions based on the number of votes received. In other words, as terms for newly added Directorships are created, the person that received the most votes shall get the longest term. As the terms of Trustees expire, new Trustees shall be elected for three-year terms and shall serve on the Board until their successors are elected. Vacancies on the Board shall be filled by the remaining Trustees from among the Owners and such appointees shall serve until the next annual meeting of Owners when their successors shall be elected for the unexpired term of the Trustees they were appointed to replace Indemnification. The Owners shall indemnify and hold harmless any person who is or was a Trustee, Officer, or member of the ARC of the Association, his heirs and personal representatives, from and against all personal liability and all expenses, including attorney s, fees, incurred, imposed, or arising out of or in settlement of any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, instituted by any one or more Owners, or any other persons or entities, arising from present or prior service in such capacity, other than to the extent, if any, that such liability or expense shall be attributable to willful misconduct or bad faith, provided that in the case of any settlement, the 17

18 Board shall have approved the settlement, which approval is not to be unreasonably withheld. Such right of indemnification shall not be deemed exclusive of any other rights to which any such person may be entitled as a matter of law, by agreement, by vote of the Board or otherwise. The indemnification as contained herein shall be paid by the Association on behalf of the Owners and shall be assessed and collectible from the Owners, should there be no applicable insurance Board Meetings, Quorum, Board Action. The Board may establish the rules and procedures for its meetings, whether regular or special. A majority of current Board members shall constitute a quorum. The action of a majority of those Directors attending a meeting at which a quorum is present shall be sufficient to constitute the action of the Board. Action by consent shall require the unanimous consent of all current Directors Termination of Board Membership. The members may remove any Board member, with or without cause, upon a duly called meeting for that specific purpose. The same threshold required to elect a Board member shall be required for his or her removal. In the event, however, that a Board member misses three (3) meetings, without being excused, in a calendar year, or is more than ninety (90) days delinquent in the payment of their assessments, the remaining Board members, by majority vote, may remove such Board member from office. ARTICLE XII BYLAWS - DUTIES AND POWERS OF THE ASSOCIATION Duties of the Association. Without limiting any other duties which may be imposed upon the Association by its Articles of Incorporation, Bylaws, or the Declaration, the Association, by and through its Board, shall have the obligation and duty to do and perform each and every one of the following for the benefit of the Owners and the maintenance and improvement of the Property: (a) Accept all Owners as members of the Association. (b) Administer/manage/cooperate in working with other entities regarding all Easement and Trail areas conveyed to it, if any. (c) However, the Association has no duty to maintain, repair, replace and landscape the Easement and Trail areas except to keep them in their natural condition and in a functional, natural state, including no obligation for the wear and tear of nature (d) Obtain and maintain in force the policies of insurance required of it by the provisions of the Declaration. (e) To employ a responsible corporation, company, partnership, firm, person, or other entity as the Managing Agent to manage the Easement and Trail areas on such terms and conditions as it deems in the best interests of the Association. 18

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