IN BOOK y-/ 75 ~GE ~ ~ OF COVENANTS, CONDITIONS AND RESTRICTIONS RUGER RANCH, PHASE 3. Yavapai County, Arizona

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1 .. When Recorded Return Tc. Arizona Land & Ranches.Inc 1570 Plaza West Drive Prescott, Arizona THIS IS A CONFORMED COpy OF INSTRUME~ _ RECORDED ON DAT~/l;~~MEM IN BOOK y-/ 75 ~GE ~ ~ carjenney-co~ &1t4Rt.{. UTY DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS RUGER RANCH, PHASE 3 Yavapai County, Arizona THIS DECLARATION, is made by Transnation Title Insurance Company, an Arizona. corporation, ("Declarant") as trustee under Trust No (the "Trust"), the owner of record of the property herein, and Arizona Land & Ranches, Inc. an Arizona corporation ("Developer"), beneficiary of the Trust, along with their successors, assigns and designees. This Declaration is being recorded to establish a general plan for the development, sale, lease and use of Ruger Ranch Phase 3 (the "Property") in order to protect and enhance the value and desirability of the Property. Declarant declares that all of the Property shall be held, sold and conveyed subject to this Declaration. Declarant hereby authorizes Developer to act as its agent in exercising all Declarant's rights contained herein. By acceptance of a deed or by acquiring any interest in any of the property subject to this Declaration, each person or entity, for himlherself or itself, his/her heirs, personal representatives, successors, transferees and assigns, binds him/herself, his/her heirs, personal representatives, successors, transferees and assigns, to all of the provisions, restrictions, covenants, conditions, rules, and regulations now or hereafter imposed by this Declaration and any amendments thereof. In addition, each such person by so doing thereby acknowledges that this Declaration sets forth a general scheme for the development, sale, lease and use of the Property and hereby evidences his/her interest that all the restrictions, conditions, covenants, rules and regulations contained in this Declaration shall run with the land and be binding on all subsequent and future Owners, grantees, purchasers, assignees, lessees and transferees thereof. Furthermore, each such person fully understands and acknowledges that this Declaration shall be mutually beneficial. prohibitive and enforceable by Declarant, Developer, the Association, and all Owners. Declarant and Developer, their successors, assigns and grantees, covenant and agree that the Parcels and the membership in the Association and the other rights created by this Declaration shall not be separated or separately conveyed, and each membership shall be deemed to be conveyed or encumbered with its respective Parcel even though the description in the instrument of conveyance or encumbrance may refer only to the Parcel.

2 DECLARATION OF COVENANTS, CONDITIONS ANDRESTRICTIONS FOR -.. RUGER RANCH, PHASE 3 TABLE OF CONTENTS Section: 1. DEFINITIONS PROPERTY OWNERS ASSOCIATION Purpose Membership I II. I II I' II' II 4 II II S 2.3 Voting..II 2.4 Quorum Requirement 2.5 Management of the Association : Powers to Conduct Business.... :, Estimated Costs Regular Assessments Special Assessments I Proration of Assessments I I I - " Assessment Liens I I I '" " I I,., t Maintenance I Management I Repairs of Common Area Notice of Noncompliance.. I I '" '" I '" II " II Legal Costs. 11, I I II I,,,, I Variances. "... ~ 2.16 Tran.sition I ",., : " 7 Date. I ". 7 I ARCHITECTURAL AND DESIGN CONTROL 3.1 Architectural Review Committee Approval of Plans Indemnity,.., ~ 4. s. 6. ANNEXATION OF ADDITIONAL PROPERTY 4.1 Developer's Right to Annex Additional Property Declaration of Annexation Sequence of An.nexation., I I,.,... I I ", Disclaimer I I I 9 DE-ANNEXATION.' 5.1 Developer's Right to De-Annex Property GENERAL RESTRICTIONS APPLICABLE TO ALL PAReELS 6.1 Use Restrictions... ". I 6. 2 Structure' s' I I. It, 10-1-

3 I 15 Primary Residences and Guest Houses ~ 11 Temporary Structures, 11 Location of Structures Utility Lines I'., I I" 12 1 Storage, Parking and Repairs 12 Antennas and Generators, 12 Off-Road Vehicles Water and Individual Sewage Systems... ~ 12 Drainage Ea.sements " I 13 Livestock, Poultry and Domestic Animals Re-sale / Additional Subdivisions : 13 No Medical Facilities 14 Churches or Clubs I I. 14 Garbage.,. I I I I" 1.1 I 14 Junkyards, Auto Repair, Second-Hand Business, Material Storage 14 NuisanceActivities 14 Signs, " 14 Easements I I ",., I. 14 Mineral Bxtractlon I' I I" I I. I I 15 Grazing Righ.ts I ~ I" I." I" I'.15.Fencing Environmental Protection "'" ~ II GENERAL PROVISIONS Enforcement I' I I I' I ~ I I 1,1 I.16 Declarant's Exemption ~ 16 Invalidity I Severability I " I., 11.1 '" I 16 Amendments Term It ii-

4 2 1. DEFINITIONS As used.herein, the following terms have the following meanings: 1.1 "Additional Property" means the real property owned by Declarant which is adjacent to or ~ituated within the vicinity of the Property, together with all improvements situated thereon, which Developer may subsequently annex and make part of the Property and which would be subject to this Declaration "Architectural Guidelines" means any additional.guidelines for the construction of any structure or improvement on the Property set forth by the Architectural Review Committee in addition to those set forth in this Declaration. 1.3 "Architectural Review Committee" means the committee appointed by the Association's board of directors, whose purpose is to review the plans for all buildings, walls, fences or other structures prior to construction. 1.4 "Association" means the Blackhawk Property Owners Association, an Arizona nonprofit corporation, as referred to in Section 2 oftbis Declaration. 1.5 "Board" means the board of directors of the Blackhawk Property Owners Association. 1.6 "Common Areas" means all real property, along with any amenities, improvements or facilities located thereon, that are owned, leased or granted to the Association for the cornmon use and enjoyment of its Members (the Owners). Common Areas may include, but are not limited to, interior roadways, easements, parks or any other areas or facilities designated by Declarant to be Common Area and granted to the Association herein Or on the Recorded Plats of the Property for the benefit of its Members. 1.7 "Declarant" means Transnation Title Insurance Company, an Arizona corporation, as Trustee, Trust No. 7384, the owner of record of the Property, acting on behalf of Arizona Land and Ranches, Inc., an Arizona corporation, as Developer and beneficiary of the Trust. The rights and responsibilities of Declarant hereunder shall be exercised and carried out by Arizona Land and Ranches, Inc. 1.8 "Declaration" means this Declaration of Covenants, Conditions, and Restrictions. 1.9 "Developer" means Arizona Land & Ranches, Inc., an Arizona corporation "First Deed of Trust" means any deed of trust or realty mortgage, or agreeme?t for sale made in good faith and for value and properly executed and recorded so as to create a hen on any Parcel or Parcels that is prior to the lien of any other deed of trust or realty mortgage.

5 "Lessee" is any current person or entity holding the lease to the Grazing Rights, along with the rights to certain "pre-existing" registered ground and surface waters used for livestock watering and certain grazing-related facilities situated on the Property as located and defined on the Recorded Plat "Member" means the Owner of record of any Parcel located within the Project as a member of the Blackhawk Property Owners Association "Owner" shall mean and refer to the owner of record, whether one or more persons or entities, of fee or equitable or beneficial title to any Parcel, including Declarant. Owner shall include the purchaser of a Parcel under an executory contract for purchase. The foregoing definition does not include persons or entities that hold an interest in any Parcel solely as security for the performance of an obligation "Parcel" or "Parcels" means a portion of the Project intended for independent ownership and use and designated as a Parcel on the Recorded Plat, either individually or collectively as the case may be as such divisions maybe allowed by law "Property" or "Project" means the real property described on Exhibit "A"(and any amendments thereto), attached to this Declaration, together with all improvements located thereon, and all Additional Property, together with all improvements located thereon, which is annexed and subjected to this Declaration by the Declarant. The Property is initially comprised of "Ruger Ranch Phase 3" as shown on the Recorded Plates) "Ranching" means the raising of cattle, horses. poultry and domestic animals in accordance with the provisions stated in Section 6.12 herein "Recorded Plat" means any Plat of Ruger Ranch Phase 3, as recorded in the official records of Yavapai County, Arizona, and as thereafter may be amended or supplemented, together with all subsequent recorded plats for any Additional Property "Transition Date" means that date specified on or before which the Developer transfers control of the Association to its Members or at such time as one hundred percent (100%) of the Parcels have been sold or earlier, at Developer's option "Trust" means Trust No in the records of Transnation Title Company and any comparable trust inthe records of any successor trustee if Transnation Title Company is-replaced as trustee.

6 2. PROPERTY OWNERS ASSOCIATION. 2.1 Purpose: The Property shall be subject to the Blackhawk Property Owners Association. The purpose of the Association is: (1) To maintain. repair and improve; (a) the common ro.ad;-vays(including snow-removal),gates, fences and roadwaydrainage facilities located on or WIthinthe Property; and (b) any other CommonAreas benefitingthe Property and designated by Declarant for maintenance by the Association. (2) To maintain, repair and improve roadways on land not within the Property that lie within public or private easements, but only if such roadways provide access to the Property from highways and roads maintained by public funds. Nothing stated in subpart 2.1(2) shall be construed to require the Association to maintain the roadways described in that subpart. (3) To enforcethe provisions set forth in this Declaration. DEVELOPER SHALL MAINTAIN THE COMMON AREAS UNTIL THE TRANSITION DATE OF THE ASSOCIATION. 2.2 Membership: Each and every Owner, in accepting a deed or contract for any Parcel, whether or not it shall be so expressed in such deed or contract. automatically becomes a Member of the Association. and agreesto be bound by the terms set forth in this Declaration and such reasonable rules and regulations as may, from time to time, be established by the Association. Membership shall be appurtenant and may not be separated from ownership of the Parcel. The rights and obligations of an Owner and membership in the Association shall not be assigned. transferred, pledged, conveyed or alienated in any way, except upon transfer of ownership of such Parcel, whether by intestate succession, testamentary disposition, foreclosure of a deed of trust or a mortgage, or such other legal processes as are now in effect or as may be hereafter established pursuant to the laws of the State of Arizona. The Association shall be operated and conducted on a strictly cooperative and non-profit basis. Each Owner, as a Member, shall have such voting rights as set forth in this Declaration and in the Association Bylaws. 2.3 Voting: The total number of votes in the Association shall be on the basis of two (2) votes per original Owner, per Parcel, except that the Developer shall have ten (10) votes for each Parcel still owned by Declarant. The total number of Parcels and therefore the total number of votes may also be increased or decreased from time to time by the annexation of Additional Property or the de-annexation of Property, pursuant to Sections 4 and 5 of this Declaration. Unless otherwise specifically provided herein or in the Bylaws, all Association matters requiring a vote of the Members shall be determined by a majority vote (i.e., a majority of the votes cast) so long as the quorum requirements are met. If more than one party is the Owner of a Parcel, there must be unanimous agreement among those who own an interest, otherwise the vote(s) attributable to that Parcel shall not be counted. Any action requiring a vote of the Members may take place one of three ways: 1) In person at a meeting; 2) By written proxy at a meeting; andlor 3) By written mail-in ballot in accordance with the Bylaws. Any division of a Parcel shall be considered a separate Parcel subject to a separate assessment and entitled to a separate 4

7 vote in the Association. At any time that a Parcel, not owned by Declarant, is legally further divided in accordance with this Declaration, the two (2) votes originally available to the original Parcel shall be reallocated to give each Parcel one (1) vote Quorum Requirement: Unless otherwise stated herein or in the Association's Bylaws, the number of votes received by the Association for most voting matters must represent twenty-five percent (25%) of the total number of Members entitled to vote in order to constitute a quorum, whether the votes be cast in person or by proxy at a meeting, or received as written mail-in votes. 2.5 Management of the Association: Developer shall maintain control of the Association and act as its board of directors (the "Board") until the Transition Date when a new Board is elected by the Members. Thereafter, the Members shall elect the Board annually in accordance with the Bylaws. Unless otherwise stated herein or in the Bylaws, and with the exception of those matters requiring a vote of the Members, the Board and such officers as the Board may elect or appoint in accordance with the Articles and Bylaws (as they may be amended from time to time), shall conduct all affairs and exercise the powers of the Association., 2.6 Powers to Conduct Business; The Association shall have the power to borrow and encumber its assets and, in all respects, shall have the powers set forth herein and in the Bylaws, including the power to enter into contracts with third parties to perform all or part of its functions, and to hire its own employees to do so. The Association shall have the power to obtain appropriate insurance, to create reserves, to issue rules and regulations pertaining to the Common Area, and to establish Architectural Guidelines in addition to the provisions contained in this Declaration. 2.7 Estimated Costs: The Association, on an annual basis, make a determination of the estimated costs of insurance, operating costs and the repair and maintenance of roadways, easements and any other designated Common Areas shown on the Recorded Plat or otherwise so designated, including any reserves necessary for future capital expenditures and maintenance. The Association shall furthermore allocate the estimated costs for such insurance, operating costs maintenance and repairs to be included under Regular Assessments. The Association shall prepare an annual budget and also an annual accounting of monies received and disbursed in accordance with the Bylaws. 2.8 Regular Assessments: Each Owner, other than Declarant, shall pay Regular Assessments for normal maintenance, repair, management and reserves for the Common Areas, along with insurance and operating costs for the Association. Such assessments shall be charged to each Member on a uniform flat-fee basis per Parcel owned. The assessments may be collected on a monthly, quarterly or annual basis. or any combination of same as determined b~the Board. The Association shall establish the amount of the regular assessments for the upcommg fiscal year at least thirty (30) days prior to the end of the existing fiscal year. Written notice of the 5

8 assessments shall be sent to every Owner at least sixty (60) days prior to the due date established by the Board. The initial regular assessment shall be $ per Parcel annually. 2.9 Special Assessments: In addition to Regular Assessments, the Association may establish or levy Special Assessments, The Board may levy a Special Assessment to cover the cost of bringing a Parcel (or its Owner or lessee) into compliance with the requirements of this Declaration, the Bylaws, the Articles or rules and regulations established by the Association. The Association may also establish a Special Assessment for the construction, repair, reconstruction, or replacement of a capital improvement of the Common Area or for any other lawful Association purpose or expense, HOWEVER any Special Assessment established for the purpose of such capital expenditures must be approved by a two-thirds (2/3) majority vote of Members meeting a fifty percent (50%) quorum requirement. Special assessments shall be allocated and charged on the same basis per Parcel as Regular Assessments Proration of Assessments: Regular Assessments will be assessed as of the date of recordation of the deed wherein the Owner acquired legal title to the Parcel. All Owners acquiring interest in a Parcel during the calendar year shall be obligated for a pro rata portion thereof. Declarant shall not be responsible for comparable assessments on each Parcel owned by Declarant. However, Developer may be responsible for providing labor,' material and/or monies in sufficient amounts, not to exceed the amount of the normal Parcel assessment for each Parcel owned by Declarant, if necessary in Developer's opinion, to properly fulfill the Association's maintenance responsibilities until the Transition Date or earlier, at Developer's option. Where the holder of a First Deed of Trust, including Declarant, obtains title to the Parcel as a result of trustee's sale, or deed in lieu of foreclosure, of said First Deed of Trust. such acquirer of title, its successors and assigns, shall not be liable for the share of the assessments by the Association chargeable to such Parcel which became due prior to the acquisition of title to such Parcel by such acquirer. Such acquirer shall be responsible, as any Owner, for assessments charged subsequent to the acquisition.' 2.11 Assessment Liens: For each Parcel, the applicable Regular and any Special Assessments, late payment penalties and charges, if any, together with interest, (all as set by the Association), costs and reasonable attorney's fees, shall constitute a lien on the Parcel. Each Owner shall be personally responsible for his or her share of assessments imposed by the Association, This personal obligation or delinquent assessments shall not pass to the O,wn,er's,successor; PROVIDED, HOWEVER, the obligation to pay the same shall be a continuing hen on the applicable Parcel, excepting for the provision~ of Section 2;10 above, relati.ng to deed. of trust beneficiaries and to realty mortgagees. Such hen shall be pnor to all other hens e~ce~hng only ad valorem liens in favor of governmental assessing units or special assessment districts. The Association lien may be foreclosed by the Association in a like manner as a foreclosure, of a real property deed of trust or realty mortgage. The ~ssociation shall have the power to bid on the delinquent Parcel at a foreclosure sale, and acquire, hold, lease, encumber and convey the same. 6

9 7 A suit to recover a money jrdgment for unpaid assessments and charges shall be maintainable by the Association without foreclosing or waiving the lien securing the same Maintenance/ManagementfRepairs of the Common Area: The Association shall take necessary and appropriate-action for the maintenance, repair, replacement, and management of the facilities referred to in Section 2.1(1.a -l.b) above, and shall have the right to enter upon a Parcel, if reasonably necessary, in order to take such action. The Association may take such action as the Association deems appropriate to maintain, repair or manage the facilities referred to in subpart 2.1 (2), above Notice of Noncompliance: In the event the Association determines that any Owner has not complied with the provisions of this Declaration, the Association may, at its option, give written notice to the Owner of the conditions complained of. The Owner shall correct same or, if not readily correctable within fifteen (15) days after notice from the Association, the Owner shall. submit corrective plans proposing its remedy to the condition complained of with fifteen (15) days after notice from the Association. The Association shall approve or disapprove any plans submitted by the Owner and set forth a reasonable time for correction of the condition complained of. In the event such condition is not corrected according to the approved plans, within the allotted time, the Association shall have the right to undertake to remedy such condition or violation complained of. The cost thereof shall be levied as a Special Assessment to such Owner and enforceable by the Association in the same manner any other unpaid assessment. The Association is hereby granted the right of entry on the affected Parcel to so correct the condition or violation complained of Legal Costs: The Declarant, Developer, and/or the Board may cause a lawsuit to be commenced and maintained in the name of the Association against an Owner to enforce the payment of any delinquent assessment or to enforce any' other pertinent provision of this Declaration. Any judgment rendered in any such action shall include the amount of the.delinquency, interest at the rate of twelve percent (12%) per annum from the date of delinquency, the amount of damages proven, court fees, and reasonable attorney's fees which are incurred by the Association as fixed by the court Variances: So long as Developer maintains control of the Association, or owns any Parcel, Developer, in its sole and absolute discretion, may grant a variance to any restriction contained herein, and approve or disapprove any proposed improvement or alteration for any reason, including, but not limited to, aesthetics or potential negative impact on its ability to sell any remaining Property. After the Transition Date, the Board may grant reasonable vanances where strict adherence to these restrictions would cause undo hardship or in cases where the Members of the Association would, in the Board's opinion, benefit from said variance Transition Date: the Developer shall notify the Members (Owners), in writing, of the, Transition Date not less than thirty (30) days prior to said Transition Date. Developer, as the

10 Association's initial Board, shall call a meeting of the Members for the purpose of taking over the operation and control of the Association. Prior to said meeting, the Members shall elect, by a majority of the votes cast by Members meeting a twenty-five percent (25%) quorum, a minimum of three (3) and a maximum of five (5) persons to the Board. The election results shall be announced at the meeting. -So long as Declarant owns any Parcel in the Project at the time of the Transition Date, Developer may exercise its voting rights by casting the number of votes it still retains at the time. Immediately following the transition meeting, the newly elected Board may hold ~eir first meeting for the purpose of electing officers and conducting any other business of the directors, Following the Board meeting, the Association may hold its first annual meeting of the Members. 3. ARCIDTECTURAL AND DESIGN CONTROL 3.1 Architectural Review Committee: The Association shall have an Architectural Review Committee consisting of not less than three (3) nor more than five (5) Members of the Association or Non-Members that are appointed by the Board. The members of the Committee shall incur no liability for their acts or omissions. Until the Transition Date, Developer and/or individuals or entities appointed by the Developer, shall review all plans and sample materials required herein to be submitted to the Committee for approval and exercise all other design _ review powers delegated to the Committee in this Declaration and in the Association Bylaws. 3.2 Approval of Plans: No residence, guest house. barn. garage or other structure, or improvement of any type, including additions or substantial changes to the exterior of an existing residence or other structure, shall be commenced, erected or maintained upon the Property until the plans and specifications have been submitted to and approved by the Architectural Review Committee. A review fee, of $250.00, may be cbarged by the Committee upon submittal of the plans. In the event the Committee fails to approve or disapprove any such proposed plans for improvements or alterations within thirty (30) days of submittal, the plans shall be governed only by the restrictions herein and those set forth in any additional Architectural Guidelines that may have been established by the Committee. Provided, however, the plans shall not be considered to be submitted to the Committee until the completed plans and all required information, including material and color samples have been received by the Committee. The Committee shall have the right to reasonably refuse to approve any plans which are not considered to be aesthetically in harmony with the overall appearance and theme oftbe Project and to consider the effect of the proposed :5truotul'e on the outloo~ from adj.acent or n~ig~boring Parc~ls. The Committee or. i~s assizns shall have the rizht to waive a perticular restriction wherestrict adherence to a provision wou'id cause undo hardship. All Committee approvals and disapprovals shall be in writing. Actions of the Committee shall be by the majority vote of the Committee members. 3.3 Indemnitv: Each OWner who submits a request for approval of an impro~e~ent or alteration of any structure shall indemnify, defend and hold harmless the ASSOCIation, the Board, 8