DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS FOR ISSAQUAH HIGHLANDS RESIDENTIAL PROPERTIES AMENDED AND RESTATED EFFECTIVE JUNE 1, 2012

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1 Prepared By: Hyatt & Stubblefield, P.C Peachtree Center, South Tower 225 Peachtree St reet, N.E. Atlanta, Georgia (404) DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS FOR ISSAQUAH HIGHLANDS RESIDENTIAL PROPERTIES AMENDED AND RESTATED EFFECTIVE JUNE 1, 2012 Grantor(s): Grand-Glacier LLC, a Washington limited liability company Grantee(s): Benefited and Burdened Properties Abbreviated Legal Description: Portions of Sees 22-27, all in T24N, R6E, W.M. King County, WA Additionalleeal description: See Exhibits A, B & F Assessor's Property Tax Parcel and See Exhibit E Account Number(s): Related Documents: ; (1 51 Amendment); (Second Amendment); (Original Declaration), with amendments as listed in Exhibit E DWT v

2 TABLE OF CONTENTS ARTICLE SECTION PAGE PART ONE: INTRODUCTION TO THE COMMUNITY...l Article I Creation of the Communi()' Article II Purpose and Intent Binding Effect....:... 2 Governing Documents... 2 Concepts and Definitions "Architectural Standards" "Area of Common Responsibility" "Articles of Incorporation" or "Articles" "Base Assessment" "Board of Directors" or "Board" "Board District "Builder" "By-Laws" "Class "A" Member" "Class "B" Control Period" "Class "B" Member" "Common Expenses" "Community-Wide Standard" "Covenant To Share Costs" "Declarant" "Exclusive Common Area" "Governing Documents "Home Office Districts"... 4 "Master Plan "Member"... 4 "Mortgage"...4 "Neighborhood; Subneighborhood"...5 "Neighborhood Assessments: Subneighborhood Assessments"...5 "Neighborhood Association"...5 "Neighborhood Expenses; Subneighborhood Expenses"... 5 "Nonresidential Properties"...5 "Owner"...5 "Person"... 5 "Public Records"...:...6 "Residential Association "Residential Common Area"...6 DWT v {100070

3 2.32. "Residential Properties" "Special Assessment" "Specific Assessment" "Supplemental Declaration" "Unit" "Use Restrictions and Rules"...6 PART TWO: CREATION AND MAINTENANCE OF COMMUNITY STANDARDS...6 Article III Use and Conduct Framework for Regulation Rule Making Authority Owners' Acknowledgment and Notice to Purchasers Protection of Owners and Others... 8 Article IV Architecture and Landscaping General Architectural Review... lo 4.3. Standards and Procedures No Waiver of Future Approvals Variances Limitation of Liability Certificate ofcompliance... l5 Article V Maintenance and Repair Maintenance of Area of Common Responsibility Maintenance ofunits Maintenance ofneighborhood Property Responsibility for Repair and Replacement PART THREE: COMMUNITY GOVERNANCE AND ADMINISTRATION...17 Article VI The Residential Association and its Members Function ofresidential Association... l Membership Voting...;...; Board Districts: Neighborhoods...19 Article VII Residential Association Powers and Responsibilities Acceptance and Control of Residential Association Property Maintenance of Area of Common Responsibility Insurance Compliance and Enforcement Implied Rights; Board Authority Indemnification of Officers. Directors and Others Security...28 DWT v

4 7.8. Powers of the Residential Association Relating to Neighborhood Associations Provision of Services Facilities and Services Open to the Public Transfer Fees Use and Consumption Fees Governmental. Health and Wellness. Educational and Religious Interests Design Clearing House Animals and Habitat Educational Involvement and Activities Health and Wellness Programs Recycling Programs Water Management Activities Transportation Systems Management Utility Services...34 Article VIII Residential Association Finances Budgeting and Allocating Common Expenses Budgeting and Allocating Neighborhood Expenses Budgeting for Reserves Special Assessments Specific Assessments Authority To Assess Owners; Time of Payment Obligation for Assessments Lien for Assessments Exempt Property Capitalization of Residential Association...41 PART FOUR: COMMUNITY DEVELOPMENT...41 Article IX Expansion and Contraction of the Community Article X I 0.3. I Expansion by Declarant...42 Expansion by the Residential Association...42 Additional Covenants and Easements...42 Subjection of Property Previously Classified as Nonresidential Effect of Filing Supplemental Declaration...43 Conversion of Residential Property to Nonresidential Property...43 Additional Rights Reserved to Declarant...43 Withdrawal of Property...43 Marketing and Sales Activities...44 Right To Develop...44 Right To Approve Additional Covenants...44 Right To Approve Changes in Community Standards...44 Right To Transfer or Assign Declarant's Rights...45 Exclusive Rights To Use Name of Development DWT v

5 I 0.8. Termination of Rights PART FIVE: PROPERTY RIGHTS WITHIN THE COMMUNITY...45 Article XI Easements Easements in Residential Common Area Easements of Encroachment Easements for Utilities, Etc Easements To Serve Additional Property Easements for Maintenance, Emergency and Enforcement Easements for Lake and Pond Maintenance and Flood Water Easements for Tax-exempt Organizations Easements for Signage..."...49 Article XII Exclusive Common Areas Purpose Designation Use by Others..,...50 Article XIII Party Walls and Other Shared Structures General Rules of Law To Apply Maintenance: Damage and Destruction Right to Contribution Runs With Land Disputes...51 PART SIX: RELATIONSHIPS WITHIN AND OUTSIDE THE COMMUNITY...51 Article XIV Dispute Resolution and Limitation on Litigation Consensus for Residential Association Litigation Alternative Method for Resolving Disputes Claims Mandatory Procedures...52 Article XV Mortgagee Provisions Notices of Action Special FHLMC Provision Other Provisions for First Lien Holders Amendments to Documents No Priority Notice to Residential Association Failure of Mortgagee To Respond Construction of Article XV Amendment by Board...57 ARTICLE XVI Relationships With Other Entities Relationship With Tax-exempt Organizations DWT v ()00070 IV

6 16.2 Environmental Entities Relationship With Other Public or Private Entities Relationship With Nonresidential Properties PART SEVEN: CHANGES IN THE COMMUNITY...S8 Article XVII Changes in Ownership of Units...58 Ar.ticle XVIII Changes in Residential Common Area Condemnation Partition Transfer or Dedication of Residential Common Area...59 Article XIX Amendment of Declaration By Declarant By Members...: Validity and Effective Date Article XX Miscellaneous Exhibits Duration Neighborhood Restrictions Severability Effective Date. This Declaration shall be effective as of July 1, 2011, except that the effective date for the establishment of Board Districts pursuant to Section 6.4(b) shall be ninety (90) days before the first annual meeting following termination of the Class "B" Control Period...62 owr v v

7 Exhibit "A" "B" "C" "Du -TABLE OF EXHIBITS - Subject Matter Land Submitted to Declaration Land Subject to Expansion Use Restrictions and Rules By-Laws of Issaquah Highlands Community Association Page First Mentioned "E" Tax Parcels Nos. and Prior Amendments ' "F" Legal Descriptions of Certain Parcels 42 "G" Map of Board Districts 19 "H" Map of Designated Harrison Street and Grand Ridge Drive Neighborhoods 14 "I" Grand Ridge Drive Supplemental Provisions 13 ''J" Zero Energy Homes (Block 9C) Supplemental Provisions 44 "K" Home Office District Designations 5 DWf J7S2669Sv vi

8 DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS FOR ISSAQUAH HIGHLANDS RESIDENTIAL PROPERTIES [AMENDED AND RESTATED as of _, 2012} THIS AMENDED AND RESTATED DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS ("Declaration") is effective as of July 1, 2011, by Grand-Glacier LLC, a Washington limited liability company, as the successor "Declarant" pursuant to merger as of July 1, 2003 of the original Declarants Grand Ridge Partnership (Limited Partnership), a Washington limited partnership, and Glacier Ridge Partnership (Limited Partnership), a Washington limited partnership. This Declaration amends, restates, supersedes, and replaces in its entirety that certain Declaration of Covenants, Conditions and Restrictions for Issaquah Highlands Residential Properties, originally dated April 28, 1997, and recorded under King County Recording No , as amended and supplemented. Throughout this document, there are diagrammatic summaries to aid the reader's comprehension and use of the Governing Documents. The diagrammatic summaries exist for illustrative purposes only. In the event of a conflict between any diagrammatic summary and the text of any of the Governing Documents, the text shall control. PART ONE: INTRODUCTION TO THE COMMUNITY This Declaration provides a governance structure and a flexible system of standards and procedures for the overall development, administration, maintenance and preservation of Issaquah Highlands as a master planned community of residential, nonresidential, open space and other uses. Article I Creation of the Community 1.1. Purpose and Intent. This Declaration creates a general plan of development for residential portions of the planned community known as Issaquah Highlands. ("Issaquah Highlands" means the community commonly referred to as "Issaquah Highlands," including residential, nonresidential, open space, and other components thereof.) This Declaration provides a flexible and reasonable procedure for the future expansion of the Residential Properties to include additional real property as Declarant deems appropriate and provides for the overall development, administration, maintenance and preservation of the real property now and hereafter comprising the Residential Properties. An integral part of the development plan is the Issaquah Highlands Community Association, an association comprised of all owners of Residential Properties in Issaquah Highlands, which owns, operates or maintains various common areas and community improvements and is primarily responsible for administering and enforcing this Declaration and the other Governing Documents referred to in this Declaration. This document does not and is not intended to create a condominium within the meaning of the Washington Condominium Act, Wash. Rev. Code DWf v

9 1.2. Binding Effect. All property described in Exhibit "A," and any additional property which is made a part of Residential Properties in the future by filing of one or more Supplemental Declarations in the Public Records, shall be owned, conveyed and used subject to all provisions of this Declaration, which shall run with the land and with the title to such property. This Declaration shall be binding upon all Persons having any right, title, or interest in any portion of the Residential Properties, their heirs, successors, successors-in-title, and assigns Governing Documents. Issaquah Highlands Cove rn Jog Uocuments DECLARATION (Recorded in King County, Washinijton land rocords) Sl!lll21s:ms:oml Jks:laDiltsm Recorded upon annexation of each parcel or to designate neighborhood.s or board distric1s May contain additiooal cov manu applicable to specific parcels " L!IC Bah:I UilDIIDd Hula Initial restrie1ions set follh in Declaration May be supplomonted or amended ARTICLES OF! CORPORATION BY-LAWS The Governing Documents create a general plan of development for the Residential Properties. All provisions of the Governing Documents shall apply to all Owners and to all occupants of their Units, as well as their respective tenants, guests and invitees. Any lease on a Unit shall provide that the lessee and all occupants of the leased Unit shall be bound by the terms of the Governing Documents. The Governing Documents may be supplemented by additional covenants, restrictions, and easements applicable to particular Neighborhoods within the Residential Properties. Article II Concepts and Definitions Terms used in the Governing Documents shall generally be given their natural, commonly a'ccepted definitions unless otherwise specified. Capitalized terms shall be defined as set forth below "Architectural Standards": The architectural, design and construction guidelines and review procedures adopted pursuant to Article IV, as they may be amended "Area of Common Responsibility": The Residential Common Area, together with such other areas, if any, for which the Residential Association has or assumes responsibility pursuant to the terms of this Declaration, any Supplemental Declaration or other applicable covenants, contracts, or agreements "Articles of Incorporation" or "Articles'': The Articles of Incorporation of Issaquah Highlands Community Association. DWT v

10 2.4. "Base Assessment": Assessments levied on all Units subject to assessment under Article VIII to fund Common Expenses for the general benefit of all Units, as determined in accordance with Section "Board of Directors" or "Board": The body responsible for administration of the Residential Association, selected as provided in the By-Laws and generally serving the same role as the board of directors under Washington corporate law "Board District": A geographic area within which Class "A" Members residing in that area vote for the election of a single director to the Board, as more particularly described in Section 6.4(a), which Board Districts become effective ninety (90) days before the first annual meeting after the end of the Class "B" Control Period "Builder": Any Person who purchases one or more Units for the purpose of constructing improvements for later sale to consumers, or who purchases one or more parcels of land within the Residential Properties for further subdivision, development, or resale in the ordinary course of such Person's business "By-Laws": The Amended and Restated By-Laws of Issaquah Highlands Community Association, attached hereto as Exhibit "D," as may be amended from time to time in accordance with their terms "Class "A" Member": All Owners, except the Class "B" Member, if any, as more specifically defined in Section "Class ''B" Control Period": The time period during which the Class "B" Member is entitled to appoint a majority of the members of the Board as provided in Section 4.3 of the By-Laws "Class "B" Member": Declarant, so long as the Class "B" membership exists, as more specifically defined in Section "Common Expenses": The actual and estimated expenses incurred, or anticipated to be incurred by the Residential Association for the general benefit of all Owners, including any reasonable reserve, as the Board may find necessary and appropriate pursuant to the Governing Documents. Common Expenses shall not include any expenses incurred during the Class "B" Control Period for initial development or other original construction costs unless approved by Members representing a majority of the total Class "A" vote of the Residential Association "Community-Wide Standard": The standard of conduct, maintenance, or other activity generally prevailing throughout the Residential Properties at any time. Such standard may contain both subjective and objective elements. Subjective elements of the Community-Wide Standard initially are determined by Declarant and shall provide the basis for the objective elements. Objective elements of the Community-Wide Standard shall be established initially by Declarant and may be more specifically defined in the Architectural Standards, the Use Restrictions and Rules, and in Board resolutions. The Community-Wide Standard may evolve as development progresses and as needs and demands change in response to, among other things, shifting demographics, advances in technology, and environmental pressures. DWT l v

11 2.14. "Covenant To Share Costs": That certain Amended and Restated Declaration of Covenants, Conditions and Restrictions and Declaration of Easements and Covenant To Share Costs at Issaquah Highlands, dated April 9, 2010, and recorded under King County Recording No , as may be amended from time to time, which obligates such non-residential owners to share the costs of maintaining certain property described in such Covenant To Share Costs and to obtain architectural approval and comply with use rules, all as set forth in the Covenant to Share Costs. The Covenant to Share Costs amends, restates, supersedes, and replaces, in their entirety, that certain Declaration of Covenants, Conditions, and Restrictions for Issaquah Highlands Commercial and Multi- Family Properties originally dated December 19, 1997, and recorded under King County Recording No , as amended, and that certain Declaration of Easements and Covenant to Share Costs at Issaquah Highlands, dated April 28, 1997, and recorded under King County Recording No , as amended "Declarant": Grand-Glacier LLC, a Washington limited liability company, or any successor, successor-in-title or assign of Declarant who akes title to any portion of the property described in Exhibits "A" or "B" for the purpose of development or sale and who is designated as Declarant in a recorded instrument executed by the immediately preceding Declarant "Exclusive Common Area": A portion of the Residential Common Area primarily benefiting one or more, but less than all, Neighborhoods, as more particularly described in Article XII "Governing Documents": A collective term referring to this Declaration and any applicable Supplemental Declaration, the By-Laws, the Articles, the Architectural Standards, the Use Restrictions and Rules, and the Master Plan, as each may be amended from time to time "Home Office Districts": Any area within the Residential Properties designated as a "Home Office District" by the Board or Declarant in accordance with Exhibit B of the Use Rules (which are attached hereto as Exhibit "C") and which may be used (a) simultaneously as a residence and for carrying on Board-approved professional business activities; or (b) exclusively for carrying on Board-approved professional business activities. Home Office Districts designated as of the date ofthis Amended and Restated Declaration are set forth in Exhibit "K" "Master Plan": The land use plan for the development of the Residential Properties as contained in (a) Grand Ridge Joint Agreement dated June 10, 1996, by and between King County, the City of Issaquah, and Declarant and (b) Grand Ridge Annexation and Development Agreement dated June 19, 1996, by and between the City of Issaquah and Declarant, as amended or supplemented and as may be further amended and/or supplemented through plats or other governmental approvals, which includes all of the property described in Exhibit "A" and all or a portion of the property described in Exhibit "B." Inclusion of property on the Master Plan shall not, under any circumstances, obligate Declarant to subject such property to this Declaration, nor shall the omission of property described in Exhibit "8" from the Master Plan bar its later submission to this Declaration as provided in Article IX "Member": A Person subject to membership in the Residential Association pursuant to Section "Mortgage": A mortgage, a deed of trust, a deed to secure debt, or any other form of. security instrument affecting title to any Unit. A "Mortgagee" shall refer to a beneficiary or holder of a Mortgage. DWT v

12 2.22. "Neighborhood: Subnei iliborhood": A group of Units designated as a separate Neighborhood for purposes of sharing Exclusive Common Areas or receiving other benefits or services from the Residential Association which are not provided to all Units within the Residential Properties. A Neighborhood may be comprised of more than one housing type and may include noncontiguous parcels of property. If the Residential Association provides benefits or services to less than all Units within a particular Neighborhood, then the benefited Units shall constitute a sub-neighborhood for purposes of determining and levying Neighborhood Assessments for such benefits or services. Where the context permits or requires, the term Neighborhood also shall refer to the Neighborhood Committee (established in accordance with the By-Laws) or Neighborhood Association, if any, having concurrent jurisdiction over the property within the Neighborhood. Neighborhood boundaries may be established and modified as provided in Section 6.4. Subareas within a Neighborhood may be created for special services or benefits and assessed on a subarea basis as provided in Section 6.4 ("Subneighborhood"). Neighborhoods created by a Supplemental Declaration prior to the date of this amended and restated Declaration may be referred to a "Supplemental Neighborhoods" for the purpose of sharing Exclusive Common Areas or receiving other benefits or services "Neighborhood Assessments: Subneighborhood Assessments": Assessments levied against the Units in a particular Neighborhood or Neighborhoods or Subneighborhood to fund Neighborhood Expenses or Subneighborhood Expenses, as described in Sections 6.4 and "Neighborhood Association": A condominium association or other owners association, if any, having concurrent jurisdiction with the Residential Association over any Neighborhood. Nothing in this Declaration shall require creation of a Neighborhood Association for any Neighborhood "Neighborhood Expenses; Subneighborhood Expenses": Actual and estimated expenses which the Residential Association incurs or expects to incur for the benefit of Owners of Units within a particular Neighborhood or Neighborhoods or Subneighborhood(s), which may include a reasonable reserve for capital repairs and replacements and a reasonable administrative charge, as may specifically be authorized pursuant to this Declaration or in the Supplemental Declaration(s) applicable to such Neighborhood(s) or Subneighborhood(s)) "Nonresidential Properties": The real property described in Exhibit "A" of the Covenant to Share Costs, together with such additional property as is subjected to the Covenant to Share Costs in accordance with its terms "Owner": One or more Persons who hold record title to any Unit, but excluding in all cases any party holding an interest merely as security for the performance of an obligation. If a Unit is sold under a recorded contract of sale, and the contract specifically so provides, the purchaser (rather than the fee owner) will be considered the Owner "Person": A natural person, a corporation, a partnership, a limited liability company, a trustee, or any other legal entity. DWT v

13 2.29. "Public Records": The public land records of King County, Washington "Residential Association": Issaquah Highlands Community Association, a Washington nonprofit corporation, its successors or assigns "Residential Common Area": All real and personal property, including easements, in which the Residential Association owns, leases or otherwise holds possessory or use rights for the common use and enjoyment of the Owners. The term shall include the Exclusive Common Area "Residential Properties": The real property described in Exhibit "A," together with such additional property as is subjected to this Declaration in accordance with Article IX "Special Assessment": Assessments levied in accordance with Section "Specific Assessment": Assessments levied in accordance with Section "Supplemental Declaration": An instrument filed in the Public Records pursuant to Article IX which subjects additional property to this Declaration, designates Neighborhoods, or imposes, expressly or by reference, additional restrictions and obligations on the land described in such instrument. The term shall also refer to an instrument filed by Declarant pursuant to Section 6.4(a) which designates Board Districts "Unit": A portion of the Residential Properties, whether improved or unimproved, which may be independently owned and is intended for development, use, and occupancy as an attached or detached residence for a single family. The term shall refer to land, if any, which is part of the Unit as well as any improvements thereon. In the case of a building within a condominium or other structure containing multiple dwellings, each dwelling shall be deemed to be a separate Unit. In the case of a single lot which contains a primary residence, as well as a carriage house or similar accessory structure, all structures upon the lot, together, shall be deemed a single Unit. In the case of a parcel of vacant land or land on which improvements are under construction, the parcel shall be deemed to be a single Unit until such time as a subdivision plat or condominium plat is filed of record on all or a portion of the parcel. Thereafter, the portion encompassed by such plat shall contain the number of Units determined as set forth in the preceding paragraph and any portion not encompassed by such plat shall continue to be treated in accordance with this paragraph "Use Restrictions and Rules": The current use restrictions and rules set forth in Exhibit "C," in effect on the date of this amended and restated Declaration, as they may be supplemented, modified, repealed, and expanded pursuant to Article Ill. PART TWO: CREATION AND MAINTENANCE OF COMMUNITY STANDARDS Standards for use and conduct, maintenance and architecture within Issaquah Highlands are what give the community its identity and make it a place that people want to call "home." Yet those standards must be more than a static recitation of "thou shalt not's." This Declaration establishes procedures for rulemaking as a dynamic process which allows the community standards to evolve as the community changes and grows and as technology and public perception change. DWf v ()

14 Article III Use and Conduct 3.1. Framework for Regulation. The Governing Documents establish, as part of the general plan of development for the Residential Properties, a framework of affirmative and negative covenants, easements and restrictions which govern the Residential Properties. However, within that framework, the Board and the Members must have the ability to respond to unforeseen problems and changes in circumstances, conditions, needs, desires, trends and technology which inevitably will affect the Residential Properties, its Owners and residents. Toward that end, this Article establishes procedures for supplementing, modifying, repealing, and expanding the Use Restrictions and Rules set forth in Exhibit "C." 3.2. Rule Making Authority. (a) Board's Authority. Subject to the terms of this Article and the Board's duty to exercise business judgment and reasonableness on behalf of the Residential Association and its Members, the Board may modify, cancel, limit, create exceptions to, or expand the Use Restrictions and Rules. The Board shall send notice by mail to all Owners concerning any such proposed action at least ten (10) business days prior to the Board meeting at which such action is to be considered. Members shall have a reasonable opportunity to be heard at a Board meeting prior to such action being taken. Such action shall become effective, after compliance with subsection (c) below, unless disapproved at a meeting by Members representing more than 50% of the total Class "A" votes in the Residential Association and by the Class "B" Member, if any. The Board shall have no obligation to call a meeting of the Members to consider disapproval except upon receipt of a petition of the Members as required for special meetings in the By-Laws. Upon such petition of the Members prior to the effective date of any Board action under this Section 3.2(a), the proposed action shall not become effective until after such meeting is held, and then subject to the outcome of such meeting. (b) Member's Authority. Alternatively, the Members, at a Residential Association meeting duly called for such purpose, may adopt rules which modify, cancel, limit, create exceptions to, or expand the Use Restrictions and Rules by a vote of Members representing more than 50% of the total Class "A" votes in the Residential Association and the approval of the Class "B" Member, if any. (c) Notice. At least 30 days prior to the effective date of any action taken under subsections (a) or (b) of this Section, the Boad shall send a copy of the new rule or explanation of any changes to the Use Restrictions and Rules to each Owner specifying the effective date. The Residential Association shall provide, without cost, a copy of the Use Restrictions and Rules then in effect to any requesting Member or Mortgagee. The Board may use the forms of notice authorized for notice to Members as set forth in the Bylaws. (d) No Authorization To Change Architectural Standards. Nothing in this Article shall authorize the Board or the Members to modify, repeal or expand the Architectural Standards. In the event of a conflict between the Architectural Standards and the Use Restrictions and Rules, the Architectural Standards shall control. DWT v

15 3.3. Owners' Acknowledgment and Notice to Purchasers. ALL OWNERS ARE GIVEN NOTICE THAT USE OF THEIR UNITS AND THE RESIDENTIAL COMMON AREA IS LIMITED BY THE USE RESTRICTIONS AND RULES AS THEY MAY BE AMENDED, EXPANDED AND OTHERWISE MODIFIED HEREUNDER. EACH OWNER, BY ACCEPTANCE OF A DEED, ACKNOWLEDGES AND AGREES THAT THE USE AND ENJOYMENT AND MARKETABILITY OF HIS OR HER UNIT CAN BE AFFECTED BY THIS PROVISION AND THAT USE RESTRICTIONS AND RULES MAY CHANGE FROM TIME TO TIME. ALL PURCHASERS OF UNITS ARE ON NOTICE THAT CHANGES MAY BE ADOPTED AS PROVIDED IN THIS ARTICLE. COPIES OF THE CURRENT USE RESTRICTIONS AND RULES MAY BE OBTAINED FROM THE RESIDENTIAL ASSOCIATION Protection of Owners and Others. Neither the Board nor the Members shall adopt, pursuant to this Article, any rule in violation of the following provisions, except as may be specifically set forth in this Declaration (either initially or by amendment) or in the initial Use Restrictions and Rules set forth in Exhibit "C": (a) Similar Treatment. Similarly situated Owners shall be treated similarly; provided, the Use Restrictions and Rules may vary by Neighborhood. (b) Displays. Owners' rights to display religious and holiday signs, symbols, and decorations inside structures on their Units of the kinds normally displayed in dwellings located in single-family residential neighborhoods shall not be abridged, except that the Residential Association may adopt time, place, and manner restrictions with respect to displays visible from outside the dwelling. No rules shall regulate the content of political signs; however, rules may regulate the. time, place and manner of posting such signs (including design criteria). (c) Household Composition. No rule shall interfere with the Owners' freedom to determine the composition of their households, except that the Residential Association shall have the power to require that all occupants of a Unit be members of a single housekeeping unit (or in the case of a Unit comprised of a primary residence and an accessory structure suitable for use as a residence, to require that all (i) occupants of the primary residence be members of a single housekeeping unit; and (ii) all occupants of the accessory structure be occupants of a single housekeeping unit, which may or may not be the same housekeeping unit as that which occupies the primary residence) (as opposed to occupying separate rooms or apartments within a Unit or to occupying the Unit in a communal-type arrangement) and to limit the total number of occupants permitted in each Unit on the basis of the size and facilities of the Unit and its fair use of the Residential Common Area. (d) Activities Within Dwellings. No rule shall interfere with the activities carried on within the confines of dwellings, except that the Residential Association may prohibit activities not normally associated with property restricted to residential, home office, or home business use, and it may restrict or prohibit any activities that create monetary costs for the Residential Association or other Owners, t at create a danger to the health or safety of occupants of other Units, that generate excessive noise or traffic, that create unsightly conditions visible outside the dwelling, or that create an unreasonable source of annoyance. owr v

16 (e) Allocation of Burdens and Benefits. No rule shall alter the allocation of financial burdens among the various Units or rights to use the Residential Common Area to the detriment of any Owner over that Owner's objection expressed in writing to the Residential Association, except as provided in Sections 7.11 and Nothing in this provision shall prevent the Residential Association from changing the Residential Common Area available, from adopting generally applicable rules for use of Residential Common Area, or from denying use privileges to those who abuse the Residential Common Area or violate the Governing Documents. This provision does not affect the right to increase the amount of assessments as provided in Article VIII. (f) Alienation. No rule promulgated pursuant to Section 3.2 shall prohibit leasing or transfer of any Unit, or require consent of the Residential Association or Board for leasing or transfer of any Unit; provided, the Residential Association or the Board may require a minimum lease term of up to 12 months, but the Residential Association or the Board may not require a lease term applicable to any condominium unit in contravention of applicable Federal National Mortgage Association requirements. The Residential Association may require that Owners use lease forms approved by the Residential Association but shall not impose any fee on the lease of any Unit greater than an amount reasonably based on the costs to the Residential Association of administering that lease. (g) Abridging Existing Rights. No rule shall require Owners to dispose of personal property which was kept in or on a Unit prior to adoption of such rule and which was in compliance with all rules in force previous to such time, unless otherwise required to be removed by law; provided, this limitation on abridging existing rights shall be subject to the Board's right to restrict or require removal of pets from the Residential Properties in accordance with the Use Restrictions and Rules. The above limitation on abridging existing rights shall apply to any Owner only for as long as he or she remains as Owner of the affected personal property or Unit. The rights granted under this subsection shall not run with title to any Unit. (h) Reasonable Basis. No rule may prohibit any activity, condition, or conduct unless there exists a reasonable basis for the enactment of such rule. For purposes of this subsection, reasonable basis may include, but not be limited to, concerns relating to safety, fair use of Residential Common Area, cost, aesthetics, or the goals of the plan for the development of the Residential Properties. (i) Reasonable Rights To Develop. No rule or action by the Residential Association or Board shall unreasonably impede Declarant's right to develop the Residential Properties. The limitations in subsections (a) through (i) of this Section shall only limit rulemaking authority exercised under Section 3.2; they shall not apply to amendments to this Declaration adopted in accordance with Article XIX. Article IV Architecture and Landscaping 4.1. General. No structure or thing shall be placed, erected, installed or posted on the Residential Properties, and no improvements or other work (including platting, site planning, staking, clearing, excavating, grading and other site work, exterior alterations of existing improvements, or planting or removal of landscaping) ("Work") shall take place within the Residential Properties, except in compliance with this DWT v {)

17 Article and the Architectural Standards. This Article IV shall not apply to Declara t's activities, nor to the Residential Association's activities during the Class "B" Control Period. No approval shall be required to repaint the exterior of a structure in accordance with the originally approved color scheme or to rebuild in accordance with originally approved plans and specifications. Any Owner may remodel, paint or redecorate the interior of his or her Unit without approval. However, modifications to the interior of screened porches, patios, and similar portions of a Unit visible from outside the structure shall be subject to approval. All structures constructed on any portion of the Residential Properties shall be designed by and built in accordance with the plans and specifications of a licensed architect unless otherwise approved by Declarant or its designee in its sole discretion Architectural Review. (a) By Declarant. Each Owner, by accepting a deed or other instrument conveying any interest in any portion of the Residential Properties, acknowledges that, as developer of the Residential Properties and as an Owner of portions of the Residential Properties as well as other real estate within the vicinity of the Residential Properties, Declarant has a substantial interest in ensuring that the improvements within the Residential Properties enhance Declarant's reputation as a community developer and do not impair Declarant's ability to market, sell, or lease its property. Therefore, each Owner agrees that no Work shall be commenced on such Owner's Unit unless and until Declarant or its designee has given its prior written approval for such Work, which approval may be granted or withheld in the sole discretion of Declarant or its designee. In reviewing and acting upon any request for approval, Declarant or its designee shall act solely in Declarant's interest and shall owe no duty to any other Person. Rights reserved to Declarant under this Article shall continue so long as Declarant owns any portion of the Residential Properties, any portion of the property described in Exhibits "A" or "B," or any portion of the Nonresidential Properties, unless earlier terminated in a written instrument executed by Declarant and recorded in the Public Records. Declarant may, in its sole discretion, designate one or more Persons from time to time to act on its behalf in reviewing applications hereunder. Declarant may from time to time, but shall not be obligated to, delegate all or a portion of its reserved rights under this Article to (i) a committee comprised of architects, engineers or other persons who may or may not be Members of the Residential Association, or (ii) an architectural review committee appointed by the Residential Association's Board of Directors (the "ARC").) Any such delegation shall be in writing, specifying the scope of responsibilities delegated, and shall be subject to (i) Declarant's right to veto, in accordance with subsection 4.3(b), any decision which Declarant determines, in its sole discretion, to be inappropriate or inadvisable for any reason; and (ii) Declarant's right to revoke such delegation at any time and reassume jurisdiction over the matters previously delegated (Any such revocation by Declarant shall not invalidate a decision by any delegate; however, Declarant shall be entitled to exercise the veto procedure set forth in subsection 4.3(b).) So long as Declarant has any rights under this Article, the jurisdiction of any of the foregoing entities shall be limited to such matters as Declarant specifically delegates to it. DWT v ()

18 (b) Architectural Review Committee. Upon delegation by Declarant or upon expiration or termination of Declarant's rights under this Article, the Residential Association, acting through the ARC, shall assume jurisdiction over architectural matters hereunder. The ARC, when appointed, shall consist of at least three, but not more than seven, Persons who shall serve and may be removed and replaced in the Board's discretion. The members of the ARC need not be Members of the Residential Association or representatives of Members, and may, but need not, include architects, engineers or similar professionals, whose compensation, if any, shall be established from time to time by the Board. Unless and until such time as Declarant delegates all or a portion of its reserved rights to the ARC or Declarant's rights under this Article terminate, the Residential Association shall have no jurisdiction over architectural matters. (c) Reviewer. For purposes of this Article, the entity having jurisdiction in a particular case shall be referred to as the "Reviewer." (d) Fees: Assistance. The Reviewer may establish and charge reasonable fees payable by applicants for review of applications hereunder and may require such fees to be paid in full prior to review of any application. Such fees may include reasonable costs incurred in having any application reviewed by architects, engineers or other professionals. Declarant and the Residential Association may employ architects, engineers, or other Persons as deemed necessary to perform the review. The Board may include a portion or all of the compensation of such Persons in the Residential Association's annual operating budget as a Common Expense, in lieu of, or in addition to, charging fees payable by applicants for a portion or all of the Residential Association's expenses incurred in compensating such Persons Standards and Procedures. (a) Architectural Standards. Declarant has prepared Architectural Standards, which may contain general provisions applicable to all of the Residential Properties as well as specific provisions which vary from Neighborhood to Neighborhood and include landscape, irrigation or other water conservation measures required by the City of Issaquah. Without limiting the foregoing, Declarant may establish minimum and/or maximum sizes for homes and garages for Grand Ridge Drive and Harrison Streets [which areas are described in Exhibit "F"] or for other areas within the Residential Properties determined appropriate by Declarant by a Supplemental Declaration. The Architectural Standards are intended to provide guidance to Owners and Builders regarding matters of particular concern to the Reviewer in considering applications hereunder. The Architectural Standards are not the exclusive basis for decisions of the Reviewer, and compliance with the Architectural Standards does not guarantee approval of any application. Declarant shall have sole and full authority to amend the Architectural Standards as long as it owns any portion of the Residential Properties or has a right to expand the Residential Properties pursuant to Section 9.1, notwithstanding a delegation of reviewing authority to the ARC; provided, Declarant may delegate the power to amend the Architectural Standards to the ARC.. Upon termination or delegation of Declarant's right to amend, the ARC shall have the authority to amend the Architectural Standards with the Board's consent. Any amendments to the Architectural Standards shall be prospective only and shall not apply to require modifications to or removal of structures previously approved once the approved construction or modification has commenced. There shall be no limitation DWT v

19 on the scope of amendments to the Architectural Standards, and such amendments may remove requirements previously imposed or otherwise make the Architectural Standards less restrictive. The Reviewer shall make the Architectural Standards available to Owners and Builders who seek to engage in development or construction within the Residential Properties. In Declarant's discretion, such Architectural Standards may be recorded in the Public Records, in which event the recorded version, as it may be amended unilaterally from time to time, shall control in the event of any dispute as to which version of the Architectural Standards was in effect at any particular time. (b) Procedures. Prior to commencing any Work within the scope of this Article, an Owner shall submit to the appropriate Reviewer an application for approval of the proposed Work in such form as the Architectural Standards or the Reviewer may specify. Such application shall include plans and specifications ("Plans") showing site layout, structural design, topography, exterior elevations, exterior materials and colors, landscaping, drainage, exterior lighting, irrigation, and other features of proposed construction, as Reviewer requests. The Architectural Standards and the Reviewer may require the submission of such additional information as may be reasonably necessary to consider any application. In reviewing each submission, the Reviewer may consider any factors it deems relevant, including, without limitation, harmony of external design with surrounding structures and environment. Decisions may be based on purely aesthetic considerations. Each Owner acknowledges that determinations as to such matters are purely subjective and opinions may vary as to the desirability or attractiveness of particular improvements. The Reviewer shall, within 30 days after receipt of a completed application and all required information, respond in writing to the applicant or his/her representative at the address (including address) specified in the application. The response may (i) approve the application, with or without conditions; (ii) approve a portion of the application and disapprove other portions; or (iii) disapprove the application. The Reviewer may, but shall not be obligated to, specify the reasons for any objections or offer suggestions for curing any objections. In the event that the Reviewer fails to respond in a timely manner, approval shall be deemed to have been given, subject to Declarant's right to veto approval by the ARC pursuant to this Section. However, no approval, whether expressly granted or deemed granted pursuant to the foregoing, shall be inconsistent with the Architectural Standards, unless a variance has been granted pursuant to Section 4.5. The Reviewer's response to the applicant or his/her representative shall be deemed to have been given at the time of any of the following: (a) if mailed, when the envelope containing the response is deposited with the U.S. Postal Service, (b) if personal delivery, upon actual receipt, (c) ifby overnight delivery service, one business day after providing to the delivery service), at the time of delivery to the applicant, (d) if by fax, at the time of sending subject to confirmation, or (e) if by , when sent to a address provided or used by the applicant. Until expiration of Declarant's rights under this Article, the ARC shall notify Declarant in writing within three business days after the ARC has approved any application relating to proposed Work within the scope of matters delegated to the ARC by Declarant. The notice shall be accompanied by a copy of the application, the ARC's response thereto, and any additional information which Declarant may require. Declarant shall have 1 0 business days after receipt of all documents and notice to veto or modify any such action, in its sole discretion, by written notice to the ARC and the applicant. DWT v ()

20 If construction does not commence on a project for which Plans have been approved within one year after the date of approval, unless the Reviewer grants an extension in writing, approval shall be deemed withdrawn, and it shall be necessary for the Owner to reapply for approval before commencing the proposed Work. Once construction is commenced, it shall be diligently pursued to completion. All Work shall be completed in accordance with approved plans, unless the Reviewer consents to changes in the approved plans and corresponding construction, which consent shall be subject to Declarant's right to veto any approval by the ARC pursuant to this Section. All Work shall be completed within one year of commencement unless otherwise specified in the notice of approval or as set forth below. If approved Work is not completed within the required time, it shall be considered nonconforming and shall be subject to enforcement action. by the Residential Association, Declarant or any aggrieved Owner. Work shall not be deemed complete until the (i) Owner submits to the Reviewer written confirmation that all Work is complete and is in compliance with previously submitted and approved plans, and (ii) Reviewer accepts the same (which shall be deemed accepted if the Reviewer fails to respond within fifteen (15) business days after the Owner submits its written confirmation). The Reviewer may, by resolution, exempt certain activities from the application and approval requirements of this Article, provided such activities are undertaken in strict compliance with the requirements of such resolution. (c) Harrison Street Construction Timelines for Residence. Notwithstanding the foregoing provisions of this Section 4.3, each Owner within the Harrison Street neighborhood (described in Exhibit "F" and shown on Exhibit "H"] shall construct a residence on the Unit within the following schedule: (i) begin construction of foundation work on the residence within thirty-six (36) months after the date of the Owner's closing of the purchase of the Unit(or within 36 months after foreclosure or a deed in lieu of foreclosure of a Lot); and (ii) continuously construct the residence after beginning construction, with all construction of the residence and landscaping completed within eighteen (18) months after beginning construction. Notwithstanding the foregoing, Declarant may extend the required commencement date or completion date by written agreement with any Owner either at the time of the Owner's purchase of the Unit or at anytime thereafter. Further, the Reviewer in its initial approval of the Plans for the residence or subsequently may also extend the date by which construction must commence or be complete. No clearing of the Unit shall occur until Owner obtains a building permit from the City of Issaquah for the residence. Any Owner who does not meet the dates for beginning or ending construction as provided in this section shall pay a fine to the Association of $200/day for each day that commencement or completion is delayed beyond the required dates, unless the Association in its sole discretion elects to waive some or all of the fine. (d) Grand Ridge Construction Timelines for Residence. Notwithstanding the foregoing provisions of this Section 4.3, each Owner within the Grand Ridge Drive neighborhood {described in Exhibit "F" and shown on Exhibit "H"] shall construct a residence on the Unit within the following schedule: (i) begin construction of foundation work on the residence within thirty-six (36) months after the date of the Owner's closing of the purchase of the Unit(or within 36 months after foreclosure or a deed in lieu of foreclosure of a Lot); and (ii) continuously construct the residence after beginning construction, with all construction of the residence and landscaping completed within eighteen (18) months after beginning construction. Notwithstanding the foregoing, Declarant may extend the required commencement date or completion date by written agreement with any Owner either at the time of purchase of the Unit or at anytime thereafter. Further, the Reviewer in its initial approval of the Plans for the residence or subsequently may also extend the date by which construction must commence or be complete. No clearing of the Unit shall occur until Owner obtains a building permit from King DWT v

21 County for the residence. Any Owner who does not meet the dates for beginning or ending construction as provided in this section shall pay a fine to the Association of $200/day for each day that commencement or completion is delayed beyond the required dates, unless the Association in its sole discretion elects to waive some or all of the fine. (e) Zero Energy Homes Construction Timelines for Residence. The timelines for starting and completing construction set forth above in this Section 4.3 shall not apply to the ZEP Project. Instead, the Owner of the ZEP Property [described in Exhibit "F"] shall construct the ZEP Project pursuant to the timelines set forth in the ZEP Development Agreement (defined in Exhibit "J"). If the Owner of the ZEP Property does not meet the completion deadline in the ZEP Development Agreement, then the Residential Association will have the general remedies otherwise authorized under this Declaration or the use rules or Architectural Standards for all other properties that are subject to this Declaration... (t) Provisional Appeal to Board. The ARC appointed in subsection 4.2(b) above is intended as a committee of the Association established by this Declaration, to allow professionals to serve such as architects, landscape architects or engineers, and is not intended to be a committee of the Board of Directors established under the By-Laws. However, despite this express intent, if a court of competent jurisdiction determines that the ARC is a Board committee governed by RCW and consequently must have at least two Board members, then the decisions of the ARC shall be appealable to the Board for a final decision by any Member who believes the provisions of this Article IV were not properly applied. To exercise this right, a written notice of appeal must be received at the office of the Residential Association within ten (10) days after the ARC decision. If an appeal is filed, then the Board shall promptly consider the appeal and give the appellant and other interested parties the opportunity to be heard. The Board's decision on appeal shall be final. If no appeal is timely filed within the I0-day period, then the ARC decision shall be deeined approved by and as the final action of the Board No Waiver of Future Approvals. Each Owner acknowledges that the persons reviewing applications under this Article will change from time to time and that opinions on aesthetic matters, as well as interpretation and application of the Architectural Standards, may vary accordingly. In addition, each Owner acknowledges that it may not always be possible to identify objectionable features of proposed Work until the Work is in progress or completed, in which case it may be unreasonable to require changes to the improvements involved, but the Reviewer may refuse to approve similar proposals in the future. Approval of applications or Plans for any work done or proposed, or in connection with any other matter requiring approval, shall not be deemed to constitute a waiver of the right to withhold approval as to any similar applications, Plans, or other matters subsequently or additionally submitted for approval Variances. The Reviewer may authorize variances from compliance with any of its standards and procedures when it deems appropriate. No variance shall (a) be effective unless in writing; (b) be contrary to this Declaration; or (c) estop the Reviewer from denying a variance in the future. DWT v

22 An applicant may apply for a variance when circumstances such as topography, natural obstructions, hardship, or aesthetic or environmental considerations require, but only in accordance with any procedures, rules and regulations established by the Reviewer. For purposes of this Section, the inability to obtain approval of any governmental agency, the issuance of any permit, or the terms of any financing shall not be considered a hardship warranting a variance. Until expiration of Declarant's rights under this Article, the ARC shall notify Declarant in writing within three business days after the ARC has approved any variance. The notice shall be accompanied by a copy.of the variance approval and any additional information which Declarant may require. Declarant shall have 1 0 business days after receipt of the variance approval and notice, to veto or modify any such variance, in its sole discretion, by written notice to the ARC and applicant Limitation of Liability. Standards and procedures established by. this Article are intended as a mechanism for maintaining and enhancing the overall aesthetics of the Residential Properties but shall not create any duty on the part of the Reviewer (whether Declarant or any other Person) or any other Person. Review and approval of any application pursuant to this Article is made on the basis of aesthetic considerations only, and the Reviewer (whether Declarant or any other Person) shall bear no responsibility for ensuring the structural integrity or soundness of approved construction or modifications, nor for ensuring compliance with building codes and other governmental requirements, nor for ensuring that all dwellings are of comparable quality, value or size or of similar design. Declarant, any other Reviewer, the Residential Association, the Board, any committee, or member of any of the foregoing shall not be held liable for soil conditions, drainage or other general site work, or for any defects in plans revised or approved hereunder, or for any injury, damages, or loss arising out of the manner or quality of approved construction on or modifications to any Unit. In all matters, the Residential Association shall defend and indemnify Declarant, the ARC, and all Persons comprising the ARC, as provided in Section Certificate of Compliance. Any Owner may request that the Reviewer issue a certificate of architectural compliance certifying that there are no known violations, with respect to such Owner's Unit, of this Article or the Architectural Standards. The Residential Association shall either grant or deny such request within 30 days after receipt of a written request and may charge a reasonable administrative fee for issuing such certificates. Issuance of such a certificate shall estop the Residential Association from taking enforcement action with respect to any such violation as to which the Residential Association had notice as ofthe date of such certificate. Article V Maintenance and Repair 5.1. Maintenance of Area of Common Responsibility. The Residential Association shall have such obligations, with respect to maintenance of the Area of Common Responsibility, as are set forth in Section 7.2. DWT v

23 5.2. Maintenance of Units. Each Owner shall maintain his or her Unit and all landscaping and improvements comprising the Unit in a manner consistent with the Governing Documents, the Community-Wide Standard and all applicable covenants, unless such maintenance responsibility is otherwise assumed by or assigned to the Residential Association or a Neighborhood pursuant to any Supplemental Declaration or other declaration of covenants applicable to such Unit Maintenance of Neighborhood Property. Upon resolution of the Board, the Owners within each Neighborhood shall be responsible for paying, through Neighborhood Assessments, the costs of operating, maintaining and insuring certain portions of the Area of Common Responsibility within or adjacent to such Neighborhood. This may include, without limitation, the costs of maintaining any signage, entry features, right-of-way and greenspace between the Neighborhood and adjacent public roads, private streets within the Neighborhood, and lakes or ponds within the Neighborhood, regardless of ownership and regardless of the fact that such maintenance may be performed by the Residential Association; provided, however, all Neighborhoods which are similarly situated shall be treated the same. Any Neighborhood Association shall maintain its common property and any other property for which it has maintenance responsibility in a manner consistent with the Governing Documents, the Community-Wide Standard and all applicable covenants. The Residential Association may assume maintenance responsibility for property required to be maintained by a Neighborhood Association, in addition to that designated by any Supplemental Declaration, either by agreement with the Neighborhood Association or because, in the opinion of the Board, the level and quality of service then being provided is not consistent with the Community-Wide Standard. All costs of maintenance pursuant to this paragraph shall be assessed as a Neighborhood Assessment only against the Units within the Neighborhood to which the services are provided. Provision of services in accordance with this Section shall not constitute discrimination within a class Responsibility for Repair and Replacement. (a) Standards. Unless otherwise specifically provided in the Governing Documents or in other instruments creating and assigning maintenance responsibility, responsibility for maintenance shall include responsibility for repair and replacement, as necessary to maintain the property to a level consistent with the Community-Wide Standard. This Section also shall apply to any Neighborhood Association responsible for common property within the Neighborhood in the same manner as if the Neighborhood Association were an Owner and the common property were a Unit. Additional recorded covenants applicable to any Neighborhood may establish more stringent requirements for insurance and more stringent standards for rebuilding or reconstructing structures on the Units within such Neighborhood and for clearing and maintaining the Units in the event the structures are not rebuilt or reconstructed. (b) Insurance. By virtue of taking title to a Unit, each Owner covenants and agrees with all other Owners and with the Residential Association to carry property insurance for the full replacement cost of all insurable improvements on his or her Unit, less a reasonable deductible, unless either the DWT v

24 Neighborhood Association (if any) for the Neighborhood in which the Unit is located or the Residential Association carries such insurance (which they may but are not obligated to do hereunder). If the Residential Association assumes responsibility for obtaining any insurance coverage on behalf of Owners, the premiums for such insurance shall be levied as a Specific Assessment against the benefited Unit and the Owner. (c) Repair and Replacement After Damage and Destruction. Each Owner further covenants and agrees that in the event of damage to or destruction of structures on or comprising his Unit, the Owner shall proceed promptly to repair or to reconstruct in a manner consistent with the original construction or such other plans and specifications as are approved in accordance with Article IV. Alternatively, the Owner shall. clear the Unit and maintain it in a neat and attractive, landscaped condition consistent with the Community-Wide Standard. The Owner shall pay any costs which are not covered by insurance proceeds. PART THREE: COMMUNITY GOVERNANCE AND ADMINISTRATION Success of the community is dependent upon the support and participation of every Owner in its governance and administration. This Declaration establishes Issaquah Highlands Community Association as the mechanism by which each Owner is able to provide that support and participation. While many powers and responsibilities are vested in the Residential Association's Board of Directors, some decisions are reserved for the Residential Association's membership - the owners of property in the community. Article VI The Residential Association and its Members 6.1. Function of Residential Association. The Residential Association shall be the entity responsible for management, maintenance, operation and control of the Area of Common Responsibility. The Residential Association also shall be the primary entity responsible for enforcing the Governing Documents. The Residential Association shall perform its functions in accordance with the Governing Documents and Washington laws Membership. Every. Owner shall be a Member of the Residential Association. There shall be only one membership per Unit. If a Unit is owned by more than one Person, all co-owners shall share the privileges of such membership, subject to reasonable Board regulation and the restrictions on voting set forth in Section 6.3(a) and in the By-Laws, and all such co-owners shall be jointly and severally obligated to perform the responsibilities of Owners. Membership rights of an Owner which is not a natural person may be exercised by any officer, director, partner or trustee, manager, or member or by the individual designated from time to time by the Owner in a written instrument provided to the Secretary of the Residential Association Voting. The Residential Association shall have two classes of membership, Class "A" and Class "B." Dwr v

25 (a) Class "A". Class "A" Members shall be all Owners except the Class "B" Member, if any. Class "A" Members shall have one equal vote for each Unit in which they hold the interest required for membership under Section 6.2, except that there shall be only one vote per Unit and no vote shall be exercised for any property which is exempt from assessment under Section 8.9. Each Class "A" Member shall be entitled personally to exercise the vote for his or her Unit. In any situation where there is more than one Owner of a Unit, the vote for such Unit shall be exercised as the co-owners determine among themselves and advise the Secretary of the Residential Association in writing prior to the vote being taken. Absent such advice, the Unit's vote shall be suspended if more than one Person seeks to exercise it. (b) Class "B". The sole Class "B" Member shall be Declarant. The Class "B" Member shall not vote on a per Unit basis but shall have such rights including the right to approve, or withhold approval of, actions proposed under this Declaration, the By-Laws and the Articles, as are specified in the relevant sections of this Declaration, the By-Laws and the Articles. After termination of the Class "B" Control Period, the Class "B" Member shall have a right to disapprove actions of the Board and committees as provided in Section 4.19 of the By-Laws. In addition, the Class "B" ember may appoint a majority of the members of the Board of Directors during the Class "B" Control Period, as specified in Section 4.3 of the By-Laws. The Class "B" membership shall terminate upon the earlier of: (i) two years after expiration of the Class "B" Control Period pursuant to Article IV of the By-Laws; or instrument. (ii) when, in its discretion, Declarant so determines and declares in a recorded Upon termination of the Class "B" membership, Declarant shall be a Class "A" Member entitled to Class "A" votes for each Unit which it owns. In recognition of the different character and intended use of the property subject to such Supplemental Declaration, Declarant may, by Supplemental Declaration, create additional classes of membership for the owners of Units within any additional property made subject to this Declaration pursuant to Article IX, with such rights, privileges and obligations as may be specified in such Supplemental Declaration. owr v

26 6.4." Board Districts: Neighborhoods. Components of Association BOARD BOARD DISTRICTS MEMBERS I (a) Board Districts. Effective ninety (90) days before the first annual meeting after the end of the Class "B" Control Period, the six (6) Board Districts as shown in Exhibit "G" are established for the purpose of electing directors to the Board, as further provided in the By-Laws. The boundaries of such Board Districts may be amended from time to time by Declarant, acting alone, at any time prior to the expiration of the Class "B" Control Period. Thereafter, the Board may modify the boundaries of the Board Districts upon a majority of the Class "A" Members voting to ratify the proposed modified Board District boundaries. The Class "A" Members owning Units within each Board District shall vote for the one Board member from that District. All Class "A" members vote for the At-Large Board positions, as further specified in the By-Laws. I BOARD DISTRICTsl :5tabllshed by Section 6.4(o) :ach Board District elects one Director 7 Member Board of Directors I BI>-1 BI>-2 BI>-3 BD-4 BD-S BD1-At Lante I Member Member Member Member Member Member Member Member Member \Board DistriIct 1 \Board District 2 \Board DistriIct 3 Member Member Member Member Member Member Member Member Member \Board DistricIt 4 \Board District 5 \Board DistriIct 6 The Class ''A.. Mem rs residing within each Board District will vote on a separate slate for election of its one director, and additional director(s) are elected at large by all Mcm rs (without regard to Board Districts). DWT v ()()()()70 19

27 (b) Neighborhoods; Subneighborhoods. Prior to the effective date this amended and restated Declaration, certain Units have been grouped into designated Neighborhoods to receive special services or for sharing Exclusive Common Areas, and such Neighborhoods shall continue after the effective date of this amended and restated Declaration unless modified or terminated as provided herein. In addition to such previously designated Neighborhoods, Declarant by Supplemental Declaration may establish additional Neighborhoods or Subneighborhoods and may assign property to a specific Neighborhood or Subneighborhoods (by name or other identifying designation), which Neighborhood may be then existing or newly created. So long as it has the right to subject additional property to this Declaration pursuant to Section 9.1, Declarant may unilaterally create, modify or redesignate Neighborhood or Subneighborhoods boundaries or remove units from or terminate one or more by Supplemental Declaration. After expiration of Declarant's right to subject additional property to this Declaration pursuant to Section 9.1 or at such earlier date as elected by Declarant, the Board and the Owners of the affected Units may create, modify or redesignate Neighborhoods or Subneighborhoods or remove Units from or terminate one or more Neighborhoods or Subneighborhoods as follows. The creation, expansion, reduction or termination of a Neighborhood or Subneighborhood for the purpose of providing special services must be approved by the Board and by the affirmative vote of 67% of the Owners within the Neighborhood or Subneighborhood that is being directly affected (i.e. the Owners of the Units located within the proposed creation, expansion, reduction or termination of a Neighborhood or Subneighborhood). The creation of a Neighborhood or Subneighborhood for the purpose of sharing an new-created Exclusive Common Area, as designated pursuant to Section 12.2, must be approved by the Board and by the affirmative vote of 67% of the Owners within the Neighborhood or Subneighborhood that is being directly affected. The redesignation of an existing Residential Common Area into an Exclusive Common Area for a Neighborhood or Subneighborhood or the reassignment of an Exclusive Common Area must comply with Section The approval of the creation, expansion, reduction or termination of a Neighborhood or Subneighborhood under this paragraph shall be formally noted by the Board in its minutes and/or the Board may elect to record a Supplemental Declaration reflecting the approval under this paragraph. The Board may impose reasonable conditions as part of its approval of a reduction, termination or modification of special services for a Neighborhood or Subneighborhood, if such area is to undertake its own management and provision of.special services, such as requiring the affected owners to obtain appropriate insurance and name the Residential Association and its Board, officers, employees and agents as additional insureds. The Units within a particular Neighborhood or Subneighborhoods may be subject to additional covenants. If, but only if, required by law or Declarant, Owners of Units within a particular Neighborhood or Subneighborhood also shall be members of a Neighborhood Association. Any Neighborhood or Subneighborhood may, upon the affirmative vote, written consent, or a combination thereof, of Class "A" Members representing a majority of the total Class "A" votes attributable to Units in the Neighborhood or Subneighborhood, request that the Residential Association provide an increased level of service or special services for the benefit of Units in such Neighborhood or Subneighborhood. Also, the condominium board of a Neighborhood Association may request that the Residential Association provide an increased level of service or special services for the benefit of Units in such Neighborhood Association. In such event, the Residential Association may, but shall not be obligated to, provide such service or services. If provided, all costs, which may include a reasonable administrative charge in such amount as the Board deems appropriate (provided, any such administrative charge shall apply at a uniform rate per Unit to all Neighborhoods receiving the same DWT h526695v

28 service), shall be assessed against the Units within such Neighborhood as a Neighborhood Assessment or assessed against the Units within such Subneighborhood as a Subneighborhood Assessment. If a Neighborhood Committee, or Subneighborhood Conunittee, or Neighborhood Association exists, it shall communicate all such requests to the Board. [Note: The 37'" Amendment to the original Declaration, which placed all Units in various Neighborhoods, is repealed so that effective with this amended and restated Declaration the only "Neighborhoods" are those receiving special services or sharing Exclusive Common Areas]. NEIGHBORHOODS Created by Declarant when supplemental declaration is filed Board may create Receive special services or higher level of services Article VII Residential Association Powers and Responsibilities 7.1. Acceptance and Control of Residential Association Property. The Residential Association, through action of its Board, may acquire, hold, and dispose of tangible and intangible personal property and real property. Declarant and its designees may convey to the Residential Association personal property and fee title, leasehold or other property interests in any real property, improved or unimproved, described in Exhibits "A" or "B." The Residential Association shall accept and maintain such property at its expense for the benefit of its Members, subject to any restrictions set forth in the deed or other instrument transferring such property to the Residential Association. Upon Declarant's written request, the Residential Association shall reconvey to Declarant any unimproved portions of the Residential Properties originally conveyed by Declarant to the Residential Association for no consideration, to the extent conveyed by Declarant in error or needed by Declarant to make minor adjustments in property lines. DWf l v {)

29 7.2. Maintenance of Area of Common Responsibility. The Residential Association shall maintain, repair, and replace in accordance with the Community-Wide Standard, the Area of Common Responsibility, which shall include, but need not be limited to: Area; (a) all portions of, structures situated upon, and improvements to the Residential Common (b) such portions of any additional property included in the Area of Common Responsibility as may be dictated by this Declaration, any Supplemental Declaration, the Covenant to Share Costs, or any contract or agreement for maintenance thereof entered into by the Residential Association; (c) any property and facilities owned by Declarant and made available, on a temporary or permanent basis, for the primary use and enjoyment of the Residential Association and its Members, such property and facilities to be identified by written notice from Declarant to the Residential Association and to remain a part of the Area of Common Responsibility and be maintained by the Residential Association until such time as Declarant revokes such privilege of use and enjoyment by written notice to the Residential Association; (d) any signage installed on the Residential Properties by Declarant or the Residential Association 'which exceeds that signage mandated or installed by any governmental authority; and (e) any property for which the Residential Association has maintenance responsibilities pursuant to the Covenant to Share Costs. In addition to the above, and notwithstanding anything to the contrary in any Supplemental Declaration recorded in the Public Records prior to the recording of this Amended and Restated Declaration, the Residential Association shall maintain, as a Common Expense, stormwater drain lines or facilities located (a) in the Residential Common Areas and (b) within the boundaries of and/or serving particular Units (but not that portion located within a structure on a Unit) that the Board determines should be maintained by the Residential Association due to safety, prevention of slides, protection of propert'y or for the proper functioning of other components of the stormwater system. The Residential Association shall have access to stormwater drain lines or facilities located within the boundaries of and/or serving particular Units pursuant to the utility easement reserved to the Residential Association in Section The Residential Association may maintain, or perform aesthetic maintenance to, other property which it does not own, including, without limitation, property dedicated to the public, if the Board of Directors determines that such maintenance is necessary or desirable to maintain the Community-Wide Standard. The Residential Association shall not be liable for any damage or injury occurring on, or arising out of the condition of, property which it does not own except to the extent that it has been negligent in the performance of its maintenance responsibilities. The Area of Common Responsibility may, but will not necessarily, include: owr v

30 and (a) landscaping within public rights-of-way within or abutting the Residential Properties; (b) all ponds, streams or wetlands located within the Residential Properties which are part of the stormwater drainage system for the Residential Properties, including improvements and equipment installed in or used in connection with the system. The Residential Association shall maintain the facilities and equipment within the Area of Common Responsibility in continuous operation, except for any periods necessary, as determined in the Board's sole discretion, to perform required maintenance or repairs, unless Members representing 75% ofthe Class "A" votes in the Residential Association and the Class "B" Member, if any, agree in writing to discontinue such operation. Except as provided above, the Area of Common Responsibility shall not be reduced by amendment of this Declaration or any other means except with Declarant's prior written approval as long as Declarant owns any property described in Exhibits "A" or "B." Costs associated with maintenance, repair and replacement of the Area of Common Responsibility shall be a Common Expense; provided, the Residential Association may seek reimbursement from the owner(s) of, or other Persons responsible for, certain portions of the Area of Common Responsibility pursuant to this Declaration, the Covenant to Share Costs, other recorded covenants, or agreements with the owner(s) thereof. Maintenance, repair and replacement of Exclusive Common Areas shall be a Neighborhood Expense assessed to the Neighborhood(s) to which the Exclusive Common Areas are assigned, notwithstanding that the Residential Association may be responsible for performing such maintenance hereunder Insurance. (a) Required Coverages. The Residential Association, acting through its Board or its duly authorized agent, shall obtain and continue in effect the following types of insurance, if reasonably available, or if not reasonably available, the most nearly equivalent coverages as are reasonably available: (i) Blanket property insurance covering "risks of direct physical loss" on a "special form" basis (or comparable coverage by whatever name denominated) for all insurable improvements on the Residential Common Area and within the Area of Common Responsibility to the extent that Residential Association has assumed responsibility in the event of a casualty, regardless of ownership. If such coverage is not generally available at reasonable cost, then "broad form" coverage may be substituted. All property insurance policies obtained by the Residential Association shall have policy limits sufficient to cover the full replacement cost of the insured improvements under current building ordinances and codes; (ii) Commercial general liability insurance on the Area of Common Responsibility, insuring the Residential Association and its Members for damage or injury caused by the negligence of the Residential Association or any of its Members, employees, agents, or contractors while ac'ting on its behalf. If generally available at reasonable cost, such coverage (including primary and any umbrella coverage) shall have a limit of at least $1,000, per occurrence with respect to bodily injury, personal injury, and property damage; provided, should additional coverage and higher limits be DWT v

31 available at reasonable cost which a reasonably prudent person would obtain, the Residential Association shall obtain such additional coverages or limits; (iii) Workers compensation insurance and employers liability insurance, if and to the extent required by law; (iv) Directors and officers liability coverage; (v) Commercial crime insurance, including fidelity insurance covering all Persons responsible for handling Residential Association funds in an amount detennined in the Board's best business judgment but not less than an amount equal to one-sixth ofthe annual Base Assessments on all Units plus reserves on hand. Fidelity insurance policies shall contain a waiver of all defenses based upon the exclusion of Persons serving without compensation; and (vi) determines advisable. Such additional insurance as the Board, m its best business judgment, In addition, the Residential Association shall, if so specified in a Supplemental Declaration applicable to any Neighborhood, obtain and maintain property insurance on the insurable improvements within such Neighborhood which insurance shall comply with the requirements of Section 7.3(a)(i). Any such policies shall provide for a certificate of insurance to be furnished upon request to the Owner of any Unit insured. Premiums for all insurance on the Area of Common Responsibility shall be Common Expenses, except that (i) premiums for property insurance on Units within a Neighborhood shall be a Neighborhood Expense; and (ii) premiums for insurance on Exclusive Common Areas may be included in the Neighborhood Expenses of the Neighborhood(s) to which such Exclusive Common Areas are assigned unless the Board reasonably determines that other treatment of the premiums is more appropriate. (b) Policy Requirements. The Residential Association shall arrange for an annual review of the sufficiency of its insurance coverage by one or more qualified Persons, at least one of whom must be familiar with insurable replacement costs in the metropolitan Seattle area. All Residential Association policies shall provide for a certificate of insurance to be furnished to the Residential Association and, upon request, to any Member insured. Policies may contain a reasonable deductible, and the amount thereof shall not be subtracted from the face amount of the policy in determining whether the policy limits satisfy the requirements of Section 7.3(a). In the event of an insured loss, the deductible shall be treated as a Common Expense or a Neighborhood Expense in the same manner as the premiums for the applicable insurance coverage. However, if the Board reasonably determines, after notice and an opportunity to be heard in accordance with Section 4.24 of the By-Laws, that the loss is the result of the negligence or willful misconduct of one or more Owners, their guests, invitees, or lessees, then the Board may assess the full amount of such deductible against such Owner(s) and their Units as a Specific Assessment. All insurance coverage obtained by the Board shall: DWT v

32 (i) be written with a company authorized to do business in Washington which satisfies requirements of the Federal National Mortgage Association, or such other secondary mortgage market agencies or federal agencies as the Board deems appropriate; (ii) be written in the name of the Residential Association as trustee for the benefited parties. Policies on the Residential Common Areas shall be for the benefit of the Residential Association and its Members. Policies secured on behalf of a Neighborhood shall be for the benefit of the Owners within the Neighborhood and their Mortgagees, as their interests may appear; (iii) not be brought into contribution with insurance purchased by Owners, occupants, or their Mortgagees individually; clause; (iv) (v) contain an inflation guard endorsement; include an agreed amount endorsement, if the policy contains a co-insurance (vi) provide that each Owner is an insured person under the policy with respect to liability arising out of such Owner's interest in the Residential Common Area or membership in the Residential Association; (vii) provide a waiver of subrogation under the policy against any Owner or household member of an Owner; (viii) include an endorsement precluding cancellation, invalidation, suspension, or non-renewal by the insurer on account of any one or more individual Owners, or on account of any curable defect or violation without prior written demand to the Residential Association to cure the defect or violation and allowance of a reasonable time to cure; (ix) include an endorsement precluding cancellation, invalidation, or condition to recovery under the policy on account of any act or omission of any one or more individual Owners, unless such Owner is acting within the scope of its authority on behalf of the Residential Association; and (x) be reviewed by an experienced insurance professional. In addition, the Board shall use reasonable efforts to secure insurance policies which list the Owners as additional insureds and provide: (i) a waiver of subrogation as to any claims against the Residential Association's Board, officers, employees, and its manager, the Owners and their tenants, servants, agents, and guests; (ii) a waiver of the insurer's rights to repair and reconstruct instead of paying cash; (iii) an endorsement excluding Owners' individual policies from consideration under any "other insurance" clause; (iv) an endorsement requmng at least 30 days' prior written notice to the Residential Association of any cancellation, substantial modification, or non-renewal; DWT 17S26695v

33 (v) a cross liability provision; and (vi) a provision vesting in the Board exclusive authority to adjust losses; provided, however, no Mortgagee having an interest in such losses may be prohibited from participating in the settlement negotiations, if any, related to the loss. (c) Restoring Damaged Improvements. In the event of damage to or destruction of Residential Common Area or other property which the Residential Association is obligated to insure, the Board or its duly authorized agent shall file and adjust all insurance claims and obtain reliable and detailed estimates of the cost of repairing or restoring the property to substantially the condition in - which it existed prior to the damage, allowing for changes or improvements necessitated by changes in applicable building codes. Damaged improvements on the Residential Common Area shall be repaired or reconstructed unless the Members representing at least 75% of the total Class "A" votes in the Residential Association, and the Class "B" Member, if any, decide within 60 days after the loss not to repair or reconstruct. If either the insurance proceeds or estimates of the loss, or both, are not available to the Residential Association within such 60-day period, then the period shall be extended until such funds or information are available. However, such extension shall not exceed 60 additional days. No Mortgagee shall have the right to participate in the determination of whether the damage or destruction to the Residential Common Area shall be repaired or reconstructed. If a decision is made not to restore the damaged improvements, and no alternative improvements are authorized, the affected property shall be cleared of all debris and ruins and thereafter shall be maintained by the Residential Association in a neat and attractive, landscaped condition consistent with the Community-Wide Standard. Any insurance proceeds remaining after paying the costs of repair or reconstruction, or after such settlement as is necessary and appropriate, shall be retained by the Residential Association for the benefit of its Members or the Owners of Units within the insured Neighborhood, as appropriate, and placed in a capital improvements account. This is a covenant for the benefit of Mortgagees and may be enforced by the Mortgagee of any affected Unit. If insurance proceeds are insufficient to cover repair or reconstruction, the Board may, without. a vote of the Members, levy Special Assessments to cover the shortfall against those Owners responsible for the premiums for the applicable insurance coverage under Section 7.3(a) Compliance and Enforcement. Every Owner and occupant of a Unit shall comply with the Governing Documents. The Board may impose sanctions for violation of the Governing Documents after notice and a hearing (if required) in accordance with the procedures set forth in Section 4.24 of the By-Laws. Such sanctions may include, without limitation: (a) imposing reasonable monetary fines which shall constitute a lien upon the violator's Unit. (In the event that any occupant, guest or invitee of a Unit violates the Governing Documents and a fine is imposed, the fine shall be assessed against the violator as well as the Owner); DWf l v

34 (b) suspending an Owner's right to vote; (c) suspending any Person's right to use any recreational facilities within the Residential Common Area; provided, however, nothing herein shall authorize the Board to limit ingress or egress to or from a Unit; (d) suspending any services provided by the Residential Association to an Owner or the Owner's Unit if the Owner is more than 30 days delinquent in paying any assessment or other charge owed to the Residential Association; (e) exercising self-help or taking action to abate any violation of the Governing Documents in a non-emergency situation; (f) requiring an Owner, at its own expense, to remove any structure or improvement on such Owner's Unit in violation of Article IV and to restore the Unit to its previous condition and, upon failure of the Owner to do so, the Board or its designee shall have the.right to enter the property, remove the violation and restore the property to substantially the same condition as previously existed, and any such action shall not be deemed a trespass; (g) without liability to any Person, precluding any contractor, subcontractor, agent, employee or other invitee of an Owner who fails to comply with the terms and provisions of Article IV and the Architectural Standards from continuing or performing any further activities in the Residential Properties; and (h) levying Specific Assessments to cover costs incurred by the Residential Association to bring a Unit into compliance with the Governing Documents. In addition, the Board may take the following enforcement procedures to ensure compliance with the Governing Documents without the necessity of compliance with the procedures set forth in Section 4.24 of the By-Laws: (a) exercising self-help in any emergency situation (specifically including, but not limited to, towing vehicles that are in violation of parking rules and regulations); and (b) or both. bringing suit at law or in equity to enjoin any violation or to recover monetary damages In addition to any other enforcement rights, if an Owner fails properly to perform his or her maintenance responsibility, the Residential Association may record a notice of violation in the Public Records or perform such maintenance responsibilities and assess all costs incurred by the Residential Association against the Unit and the Owner as a Specific Assessment. If a Neighborhood Association fails to perform its maintenance responsibilities, the Residential Association may perform such maintenance and assess the costs as a Specific Assessment against all Units within such Neighborhood. Except in an emergency situation, the Residential Association shall provide the Owner or Neighborhood Association reasonable notice and an opportunity to cure the problem prior to taking such enforcement action. owr v ()

35 All remedies set forth in the Governing Documents shall be cumulative of any remedies available at law or in equity. In any action to enforce the Governing Documents, if the Residential Association prevails, it shall be entitled to recover all costs, including, without limitation, attorneys fees and court costs, reasonably incurred in such action. The Residential Association shall not be obligated to take any action if the Board reasonably determines that the Residential Association's position is not strong enough to justify taking such action. Such a decision shall not be construed a waiver of the Residential Association's right to enforce such provision at a later time under other circumstances or estop the Residential Association from enforcing any other covenant, restriction or rule. The Residential Association, by contract or other agreement, may enforce applicable city and county ordinances and permit King County or the City of Issaquah to enforce ordinances within the Residential Properties for the benefit of the Residential Association and its Members. In its actions, inaction, and deliberations while conducting the business affairs of the Residential Association, the Board shall act within the scope of the Governing Documents and in good faith to further the legitimate interests of the Residential Association and its Members. In fulfilling its governance responsibilities, the Board shall, in its deliberations, limit its actions to those reasonably related to the Residential Association's purposes; those reasonably related to or within the Residential Association's powers, as provided by the Governing Documents and as provided by Washington laws; and those that are reasonable in scope. The Board also shall exercise its power in a fair and nondiscriminatory manner and shall adhere to the procedures established in the Governing documents Implied Rights; Board Authority. The Residential Association may exercise any right or privilege given to it expressly by the Governing Documents, or reasonably implied from or reasonably necessary to effectuate any such right or privilege. Except as otherwise specifically provided in the Governing Documents, or by law, all Residential Association's rights and powers may be exercised by the Board without a vote of the membership Indemnification of Officers, Directors and Others. The Residential Association shall indemnify every officer, director, and committee member against all damages and expenses, including counsel fees, reasonably incurred in connection with any action, suit, or other proceeding (including settlement of any suit or proceeding, if approved by the then Board of Directors) to which he or she may be a party by reason of being or having been an officer, director, or committee member, except that such obligation to indemnify shall be limited to the extent indemnification is prohibited under the Articles of Illcorporation and/or Washington law Security. THE RESIDENTIAL ASSOCIATION MAY, BUT SHALL NOT BE OBLIGATED TO, MAINTAIN OR SUPPORT CERTAIN ACTIVITIES WITHIN THE RESIDENTIAL PROPERTIES DESIGNED TO MAKE THE RESIDENTIAL PROPERTIES SAFER THAN THEY OTHERWISE MIGHT BE. THE RESIDENTIAL ASSOCIATION SHALL INCLUDE WITHIN THE COMMON EXPENSES THE COSTS RELATED TO ANY SUCH ACTIVITIES DWT v

36 THAT THE RESIDENTIAL ASSOCIATION INCURS. NEITHER THE RESIDENTIAL ASSOCIATION NOR DECLARANT SHALL IN ANY WAY BE CONSIDERED AN INSURER OR GUARANTOR OF SECURITY WITHIN THE RESIDENTIAL PROPERTIES, NOR SHALL EITHER BE HELD LIABLE FOR ANY LOSS OR DAMAGE BY REASON OF FAILURE TO PROVIDE ADEQUATE SECURITY OR INEFFECTIVENESS OF SECURITY MEASURES UNDERTAKEN. NO REPRESENTATION OR WARRANTY IS MADE THAT ANY SYSTEMS OR MEASURES, INCLUDING ANY MECHANISM OR SYSTEM FOR LIMITING ACCESS TO THE RESIDENTIAL PROPERTIES, CANNOT BE COMPROMISED OR CIRCUMVENTED, NOR THAT ANY SUCH SYSTEMS OR SECURITY MEASURES UNDERTAKEN WILL IN ALL CASES PREVENT LOSS OR PROVIDE THE DETECTION OR PROTECTION FOR WHICH THEY ARE DESIGNED OR INTENDED. EACH OWNER ACKNOWLEDGES, UNDERSTANDS AND COVENANTS TO INFORM ITS TENANTS AND ALL OCCUPANTS OF ITS UNIT THAT THE RESIDENTIAL ASSOCIATION, ITS BOARD AND COMMITTEES, AND DECLARANT ARE NOT INSURERS AND THAT EACH PERSON USING THE RESIDENTIAL PROPERTIES ASSUMES ALL RISKS OF PERSONAL INJURY AND LOSS OR DAMAGE TO PROPERTY, INCLUDING UNITS AND THE CONTENTS OF UNITS, RESULTING FROM ACTS OF THIRD PARTIES Powers of the Residential Association Relating to Neighborhood Associations. The Residential Association shall have the power to veto any action taken or contemplated to be taken by any Neighborhood Association which the Board reasonably determines to be adverse to the interests of the Residential Association or its Members or inconsistent with the Community Wide Standard. The Residential Association also shall have the power to require specific action to be taken by any Neighborhood Association in connection with its obligations and responsibilities, such as requiring specific maintenance or repairs or aesthetic changes to be effectuated and requiring that a proposed budget include certain items and that expenditures be made therefor. A Neighborhood Association shall take appropriate action required by the Residential Association in a written notice within the reasonable time frame set by the Residential Association in the notice. If the Neighborhood Association fails to comply, the Residential Association shall have the right to effect such action on behalf of the Neighborhood Association and levy Specific Assessments to cover the costs, as well as an administrative charge and sanctions Provision of Services. The Residential Association shall be authorized to provide services and facilities to the Issaquah Highlands community and to third parties, including groups and individuals beyond Issaquah Highlands' boundaries. In the Board's discretion, the Residential Association shall be authorized, but not obligated, to enter into and terminate contracts or agreements with other entities, including Declarant or its affiliates; to provide services to and facilities for the Members of the Residential Association and their guests, lessees and invitees; and to charge use and consumption fees for such services and facilities. By way of example, some services and facilities which might be offered include landscape maintenance, pest control service, cable television service, security, caretaker, transportation, fire protection, utilities, and similar services and facilities. DWT v {)

37 7.10. Facilities and Services Ooen to the Public. Certain facilities and areas within the Area of Common Responsibility may be open for the use and enjoyment of the public. Such facilities and areas may include, by way of example, greenbelts; trails and paths; a town center; parks and other neighborhood spots upon which to gather and interact; and roads, sidewalks, medians, and parking lots. Declarant may, at the time the facilities are constructed and made a part of the Area of Common Responsibility, designate such areas and facilities as open to the public, or the Board of Directors may subsequently designate such facilities and areas as open to the public. Declarant, so long as Declarant owns any portion of the property described in Exhibits "A" or "B," and the Board, thereafter, may revoke such public designation at any time in its sole discretion unless a local government, governmental agency, or other agency has accepted a dedication of title and assumed liability for such public area TransferFees. One function of the Residential Association is to provide programs and actlvlties which contribute positively to the Residential Properties' residents and to the region of which the Residential Properties are a part. Therefore, the Residential Association shall have the authority, in its sole discretion, to require that, upon the closing of a sale or transfer of any property which is subject to this Declaration, the seller pay to the Residential Association a transfer fee.. The Residential Association shall have the sole discretion to determine the amount and method of determining any such transfer fee, which may, but is not required to, be determined based upon a sliding scale which varies in accordance with the "Gross Selling Price" of the property or another factor as determined by the Residential Association; provided, however, any such transfer fee shall be equal to an amount not greater than one-tenth of one percent (0.1 0%) of the Gross Selling Price of the property, and similarly situated sellers shall be treated similarly. For the purpose of determining the amount of the transfer fee, the "Gross Selling Price" shall be the total cost to the purchaser of the property excluding taxes and title transfer fees as shown by the amount of tax imposed by Washington and King County. Monies obtained from such transfer fees shall be used by the Residential Association for the benefit of the Issaquah Highlands community as determined in the business judgment of the Board. Such uses may include, without limitation, contributions to one or more tax-exempt organizations. Notwithstanding the above, transfer fees shall not be levied in the following instances: (a) (b) (c) or a Builder; Conveyance of property from Declarant to a Builder or from a Builder to Declarant; Conveyance of property from one Builder to another Builder; Conveyance of property from a Builder to the first owner thereof other than Declarant (d) Conveyance of property to a trust, partnership, corporation, or other entity so long as such entity is and remains wholly-owned by the grantor or by such grantor and the grantor's spouse or children; provided, however, if the immediately preceding conveyance of the property was exempted DWT v

38 from payment of the transfer fee pursuant to this subsection, then this exception shall not apply and the property shall be subject to payment of the transfer fee; (e) Conveyance of property by a grantor or such grantor's estate to the grantor's spouse or children; provided, however, if the immediately preceding conveyance of the property was exempted from payment of the transfer fee pursuant to this subsection, then this subsection shall not apply and the property shall be subject to payment of the transfer fee; (f) Conveyance of an undivided interest in a property by the grantor to any then-existing co-owner(s) of such property; (g) a loan; and A bona fide transfer of property to any institution due to or in lieu of the foreclosure of (h) Conveyance of property to or from Declarant to or from the City of Issaquah or any governmental agency. All transfer fees shall be paid by the seller at the closing of the transfer and shall be a continuing lien upon each property until paid and may be collected by the Residential Association by any means available at law or in equity. Notwithstanding any other provision in this Section 7.11, any property that is subject to the "Covenant for Community for Issaquah Highlands," originally dated May 19, 2003, as amended, restated and recorded under King County Recording No (as may be further amended from time to time, the "Covenant"), and hence is subject to payment of a "Community Enhancement Fee" (as defined and described in the Covenant), is exempt from payment of any transfer fee under this Section Use and Consumption Fees. In its sole discretion, the Residential Association shall have authority to charge use and consumption fees to any Person who uses services or facilities provided by the Residential Association, regardless of whether such Person owns property within the Residential Properties. Prior to providing any such service or facility for which the Residential Association will charge a use or consumption fee, the Residential Association shall notify the potential consumer that a use or consumption fee is applicable to use of the facility or service. The Residential Association shall have the sole discretion to determine the amount of and method of determining any such use or consumption fees. The Residential Association shall use any use or consumption fees it collects to exercise its powers, duties, or authority in accordance with this Declaration or the By-Laws Governmental. Health and Wellness. Educational and Religious Interests. So long as Declarant owns any property described in Exhibits "A" or "B," it may designate sites within the Residential Properties for government, health and wellness, education, or religious activities and places of worship, and interests, including, but not limited to, fire, police, and utility facilities; schools o.r education facilities, libraries; parks; and art facilities, nature studies, museums, and other public facilities. DWT v

39 The sites may include Areas of Common Responsibility and, in such case, the Residential Association shall dedicate and convey those sites which it owns as directed by Declarant, and no approval shall be required. After any such dedication, such sites shall no longer be a portion of the Area of Common Responsibility, unless the Residential Association assumes responsibility for such site pursuant to the terms of this Declaration, any Supplemental Declaration or other applicable covenants, contracts, or agreements. So long as Declarant owns any portion of the property described in Exhibits "A" or "B,'' if Declarant requests that any such dedicated site remain or be made a portion of the Area of Common Responsibility, the Residential Association shall take any action Declarant directs to make such site a portion of the Area of Common Responsibility, and no approval-shall be required Design Clearing-House. The Residential Association may maintain a data bank of and may provide and disseminate to interested Persons information and design alternatives that encourage use of sustainable resources, technologies, and methods Animals and Habitat. The Residential Association shall have the right and power, but not the obligation, to take any actions in accordance with appropriate law and adopt any rules as may be necessary for the control, relocation, or management of wildlife. Specifically, the Residential Association may establish and implement habitat protection and enforcement guidelines. The Residential Association may cooperate, interact, or enter into agreements with environmental entities for the purpose of mitigating the effects of the development of the Residential Properties on the region's wildlife and otherwise executing the powers authorized in this Section. Such guidelines, if any, may address preservation of areas of particular environmental significance, including promoting such preservation by the creation of wildlife linkages and wildlife corridors; minimizing impact on water resources; minimizing conflict between people and nature; and enhancing any habitat which is impacted through construction or human interference. Owners shall be required to comply with such guidelines and restrictions imposed by the Residential Association in accordance with such mitigation plan Educational Involvement and Activities. The Residential Association is specifically empowered, but not obligated, to develop and provide educational programs to Owners and occupants of Issaquah Highlands and others. in the surrounding community. The Residential Association shall have the power to cooperate, interact, and enter into agreements with other entities, including, without limitation, governmental authorities and agencies; quasi-governmental agencies; community associations, tax-exempt and other private entities; and educational institutions or systems, including primary, secondary, community college, and university institutions and systems, in order to provide educational programs. The Residential Association shall have the authority, but not the obligation, to implement and maintain programs, including, without limitation,. home owner instruction programs and programs that reinforce the community's and the individual's responsibilities as stewards of the environment. The Residential Association shall be permitted, at any time, to modify or cancel extstmg education programs which it sponsors or to provide or participate in additional programs. Nothing DWT l v

40 contained herein is a representation as to what educational programs the Residential Association will or will not provide or in which the Residential Association will or will not participate. The Residential Association may provide for such programs or participation in such programs to be funded by the Residential Association, as Common Expenses, or by Owners who request such programs, as Specific Assessments Health and Wellness Programs. The Residential Association is specifically empowered, but not obligated, to implement health and wellness programs for the benefit of the Owners and occupants of Issaquah Highlands and others in the surrounding community. The Board is authorized to provide services for both mental and physical health of such persons, including, without limitation, health education and screening programs. The Residential Association also shall have the power to interact with and enter into agreements with other entities for the provision of services related to health and wellness. The Residential Association shall be permitted, at any time, to modify or cancel existing health or wellness programs which it sponsors or in which it participates or to provide or participate in additional programs. Nothing contained herein is a representation as to what services or programs the Residential Association will or will not provide or in which the Residential Association will or will not participate. The Residential Association may provide for such programs or participation in such programs to be funded by the Residential Association, as Common Expenses, or by Owners who request such programs, as Specific Asse_ssments Recycling Programs. The Residential Association may, but is not obligated to, establish recycling and compost programs and community recycling and compost centers within the Residential Properties. The Residential Association may own recycling and compost equipment. The Residential Association may, but shall have no obligation to, purchase recyclable materials in order to encourage participation in recycling programs. Any income received by the Residential Association as a result of such recycling efforts shall be used to reduce Common Expenses Water Management Activities. The Residential Association is specifically empowered, but is not obligated, to develop and to implement various programs and practices for water conservation and waste water, surface water, ground water, rainwater and other water management activities. The Residential Association shall have the authority to implement and enforce restrictions and standards that insure that the quality and quantity of runoff, plant material absorption, and ground water recharge are as near their natural state as is feasible Transportation Systems Management. (a) Responsibility and Authority. Declarant or the Residential Association shall be authorized, but not obligated, to establish and implement programs, services and activities designed to address transportation issues within the Residential Properties. Such authority may include, but need not be limited to, a public transit system which includes a transit station, connects with public transportation systems serving points outside the Residential Properties, and that organizes and DWT v

41 promotes such activities as van pools, ridesharing, and the use of bicycle and pedestrian trails and paths (hereafter, generally referred to as the "Transportation System"). Declarant or the. Residential Association may establish conunittees, create subsidiary entities (including, but not limited to, entities formed pursuant to Section 50l(c)(3) of the Internal Revenue Code), or contract with third parties for operation and administration of the Transportation System. (b) Transportation Management Association. Declarant or the Residential Association may, but is not obligated to, establish a transportation management association (the "TMA") for the purpose of administering or overseeing operation of the Transportation System, including, but not limited to, pursuing funding or transit subsidies for operation and promotion of the system, coordinating and promoting use of public transportation and transit services, sponsoring and promoting programs and activities designed to reduce vehicular traffic and to promote ridesharing and transit usage by owners and the general public within and outside the Residential Properties, and perfonning related activities. The TMA may be a committee or subsidiary of the Residential Association. (c) Funding of Operation and Maintenance. Costs of operating and maintammg the Transportation System, if established, shall be a part of the Common Expenses; provided, Declarant, the Residential Association, the TMA or their assigns also may charge user fees for use of any component of the Transportation System and seek subsidies or contributions from private or public sources to reduce the costs. Declarant, the Residential Association, the TMA or their assigns shall be authorized to enter into commercially reasonable agreements, as detefj!lined in the Residential Association's business judgment, with any Person to operate all or any portion of the Transportation System on a commercial basis Utility Services. The Residential Association may, but is not obligated to, purchase or otherwise acquire for the benefit of the Members electric power or other utility services from utility providers. The Residential Association shall have the authority to levy Base Assessments, Special Assessments, Specific Assessments, or Neighborhood Assessments to pay the expenses associated with providing such servtces. Article VIII Residential Association Finances 8.1. Budgeting and Allocating Common Expenses. _ The Board shall prepare annual financial statements of the Residential Association consistent with Wash. Rev. Code (3). At least 60 days before the beginning of each fiscal year, the Board shall prepare a budget of the estimated Common Expenses for the coming year, including any contributions to be made to a reserve fund pursuant to Section 8.3. The budget shall also reflect sources and estimated amounts of funds to cover such expenses, which may include any surplus to be applied from prior years, any income expected from sources other than assessments levied against the Units, and the amount to be generated through the levy of Base Assessments and Special Assessments against the Units, as authorized in Section 8.6. DWT v

42 Association Fundig Sources Assessments Base Assessments Special Assessments Specific Assessments User fees Sanctions Declarant's assessment on its property Declarant's contributions, if any Declarant's advances against assessments, if any Capital contributions The Residential Association is hereby authorized to levy Base Assessments equally against all Units subject to assessment under Section 8.6 to fund the Common Expenses. In detennining the Base Assessment rate per Unit, the Board may consider any assessment income expected to be generated from any additional Units reasonably anticipated to become subject to assessment during the fiscal year. Declarant may, but shall not be obligated to, reduce the Base Assessment for any fiscal year by payment of a subsidy (in addition to any amounts paid by Declarant under Section 8.7(b)), which may be either a contribution, an advance against future assessments due from Declarant, or a loan, in Declarant's discretion. Any such subsidy shall be disclosed as a line item in the income portion of the budget. The payment of such subsidy in any year shall not obligate Declarant to continue payment of such subsidy in future years, unless otherwise provided in a written agreement between the Residential Association and Declarant. Within 30 days after the Board adopts a final budget, the Board shall (a) set a date for a meeting of the Owners to consider ratification of the budget, and (b) deliver a written notice to each Owner containing the following: (i) a copy or summary, as detennined by the Board, of the budget; (ii) the amount of the Base Assessment to be levied to the Owners pursuant to such budget; and (iii) notice of the date, time and place of the ratification meeting. The ratification meeting date shall be not less than 14 nor more than 60 days after mailing the notice. Notice shall comply with Wash. Rev. Code, ch , as amended. The budget shall automatically become effective unless disapproved at the meeting by Members representing at least 75% of the total Class "A" votes in the Residential Association (regardless of whether a quorum exists) and by the Class "B" Member, if such exists. The Board may distribute preliminary budgets to Owners or hold additional meetings in addition to the ratification meeting required in this paragraph. DWT v

43 If any proposed budget is disapproved or the Board fails for any reason to determine the budget for any year, then the budget most recently in effect shall continue in effect until a new budget is detennined. The Board may revise the budget and adjust the-base Assessment from time to time during the year, subject to notice requirements and the Members' right to disapprove the revised budget as set forth above. Base Assessment for ZEP Project Affordable Housing Units. For any "affordable housing unit" built within the ZEP Property (i.e. affordable for a household earning 60% or less of King County Median Income), the Base Assessment for such affordable housing unit(s) will be twenty-five percent (25%) of the Base Assessment otherwise due under this Section 8.1 and Section 8.3 for stanqard Units within the Residential Association 8.2. Budgeting and Allocating Neighborhood Expenses. At least 60 days before the beginning of each fiscal year, the Board shall prepare a separate _budget covering the estimated Neighborhood Expenses or Subneighborhood Expenses for each Neighborhood or Subneighborhood established pursuant to Section 6.4 on whose behalf Neighborhood Expenses or Subneighborhood Expenses are expected to be incurred during the corning year. Each such budget shall include any costs for additional services or a higher level of services which the Owners in such Neighborhood or Subneighborhood have approved pursuant to Section 6.4(b) and any contribution to be made to a reserve fund pursuant to Section 8.3. The budget shall also reflect sources and estimated amounts of funds to cover such expenses, which may include any surplus to be applied from prior years, any income expected from sources other than assessments levied against the Units, and the amount required to be generated through the levy of Neighborhood or Subneighborhood and Special Assessments against the Units in such Neighborhood or Subneighborhood. The Residential Association is hereby authorized to levy Neighborhood Assessments or Subneighborhoods Assessments equally against all Units in the Neighborhood or Subneighborhood which are subject to assessment under Section 8.6 to fund Neighborhood Expenses or Subneighborhood Expenses); provided, if so specified in the applicable Supplemental Declaration or if so directed by petition signed by a majority of the Owners within the Neighborhood or Subneighborhood, any portion of the assessment intended for exterior maintenance of structures, insurance on structures, or replacement reserves which pertain to particular structures shall be levied on each of the benefited Units in proportion to the benefit received. Within 30 days after the Board adopts a final Neighborhood or Subneighborhood budget, the Board shall (a) set a date for a meeting of each Neighborhood or Subneighborhood to consider ratification of each Neighborhood or Subneighborhood budget, and (b) deliver a written notice to each Owner with each Neighborhood or Subneighborhood containing the following: (i) a copy or summary, as determined by the Board, of the Neighborhood or Subneighborhood budget; (ii) the amount of the Neighborhood Assessment or Subneighborhood Assessment to be levied to the Owners within the Neighborhood or Subneighborhood pursuant to such budget; and (iii) notice of the date, time and place of the Neighborhood or Subneighborhood ratification meeting(s). All Neighborhood or Subneighborhood ratification meeting dates shall be not less than 14 nor more than 60 days after mailing the notice, which meetings may be held for each Neighborhood or Subneighborhood or may be combined with one or more other Neighborhoods or Subneighborhood for the ratification meeting. The owr l v

44 Neighborhood or Subneighborhood budget and assessment shall become effective unless disapproved at the meeting of the Neighborhood or Subneighborhood by Members representing at least 75% of the total Class "A" votes in the Neighborhood or Subneighborhood to which the Neighborhood Assessment or Subneighborhood Assessment applies (regardless of whether a quorum exists) and by the Class "B" Member, if such exists. The Board may adopt Neighborhood or Subneighborhood budgets and hold ratification meetings for one or more Neighborhood or Subneighborhood budgets at one or more times different than for the overall budget in Section 8.1, so long as the timing meets the requirements of this paragraph. Further, the Board may distribute preliminary Neighborhood or Subneighborhood budgets to Owners or hold additional meetings of Owners in one or more Neighborhoods in addition to the Neighborhood or Subneighborhood ratification meeting(s) required in this paragraph. If the proposed budget for any Neighborhood or Subneighborhood is disapproved or if the Board fails for any reason to determine the budget for any year, then until such time as a budget is determined, the budget in effect for the immediately preceding year shall continue for the current year. The Board may revise any Neighborhood or Subneighborhood budget and the amount of any Neighborhood Assessment or Subneighborhood Assessment from time to time during the year, subject to notice requirements and the right of the Owners of Units in the affected Neighborhood or Subneighborhood to disapprove the revised budget as set forth above Budgeting for Reserves. The Board shall prepare and review at least annually a reserve budget for the Area of Common Responsibility and for each Neighborhood or Subneighborhood for which the Residential Association maintains capital items as a Neighborhood Expense or Subneighborhood Expense. The budgets shall take into account the number and nature of replaceable assets, the expected life of each asset, and the expected repair or replacement cost. The Board shall include in the Common Expense budget adopted pursuant to Section 8.1 or the Neighborhood Expense or Subneighborhood Expense budgets adopted pursuant to Section 8.2, as appropriate, a capital contribution to fund reserves in an amount sufficient to meet the projected need with respect both to amount and timing by annual contributions over the budget period Special Assessments. In addition to other authorized assessments, the Residential Association may levy Special Assessments to cover unbudgeted expenses or expenses in excess of those budgeted. Any such Special Assessment may be levied against the entire membership, if such Special Assessment is for Common Expenses, or against the Units within any Neighborhood or Subneighborhood if such Special Assessment is for Neighborhood Expenses or Subneighborhood Expenses. The Board shall send a notice of the proposed Special Assessment to each Owner at least 14, but not more than 60, days prior to the date on which such proposed Special Assessment would be payable. The Board shall set a date for a meeting of the Owners generally (if a Common Expense) or of the Owners of Units within the applicable Neighborhood (if a Neighborhood Expense) or applicable Subneighborhood (if a Subneighborhood Expense) to consider the proposed Special Assessment. Such date shall be not less than 14 nor more than 30 days after the Board's mailing of a summary of the proposed Special Assessment. Except as otherwise specifically provided in this Declaration, any Special Assessment shall require the affirmative vote or written consent of Members (if a Common Expense) or Owners of Units in the applicable Neighborhood (if a Neighborhood Expense) or applicable Subneighborhood (if a DWT v ()()()()70 37

45 Subneighborhood Expense) representing more than 50% of the total votes allocated to Units which will be subject to such Special Assessment, and the affirmative vote or written consent of the Class "B" Member, if such exists. Special Assessments shall be payable in such manner and at such times as determined by the Board, and may be payable in installments extending beyond the fiscal year in which the Special Assessment is approved Specific Assessments. The Residential Association shall have the power to levy Specific Assessments against a particular Unit as follows: (a) to cover the costs, including overhead and administrative costs, of providing services to such Unit upon request of such Unit's Owner pursuant to any menu of special services which may be offered by the Residential Association (which might include the items identified in Section 7.9). Specific Assessments for special services may be levied in advance of the provision of the requested service; and (b) to cover costs incurred in bringing the Unit into compliance with the Governing Documents, or costs incurred as a consequence of the conduct of the Unit's Owner or occupants, their agents, contractors, employees, licensees, invitees, or guests; provided, the Board shall give the Unit Owner prior written notice and an opportunity for a hearing, in accordance with Section 4.24 of the By- Laws, before levying any Specific Assessment under this subsection (b). The Residential Association may also levy a Specific Assessment against Units within any Neighborhood to reimburse the Residential Association for costs incurred in bringing the Neighborhood into compliance with the provisions of the Governing Documents, provided the Board gives prior written notice to the Owners of Units in the Neighborhood and an opportunity for such Owners to be heard before levying any such assessment Authority To Assess Owners; Time of Payment. Declarant hereby establishes and the Residential Association is hereby authorized to levy assessments as provided for in this Article and elsewhere in the Governing Documents. The obligation to pay assessments shall commence as to each Unit on the first day of the calendar month following: (a) the month in which the Unit is made subject to this Declaration, or (b) the month in which the Board first determines a budget and levies assessments pursuant to this Article, whichever is later. The first annual Base Assessment and Neighborhood Assessment or Subneighborhood Assessment, if any, levied on each Unit shall be adjusted according to the number of months remaining in the fiscal year at the time assessments commence on the Unit. Assessments shall be paid in such manner and on such dates as the Board may establish. The Board may require advance payment of assessments at closing of the transfer of title to a Unit and impose special requirements for Owners with a history of delinquent payment. If the Board so elects, assessments may be paid in two or more installments. Unless the Board otherwise provides, the Base Assessment and any Neighborhood Assessment shall be due and payable in advance on the first day of each fiscal year. If any Owner is delinquent in paying any assessments or other charges levied on his Unit, the Board may require the outstanding balance on all assessments to be paid in full immediately. DWT v <

46 Parcel A of South Expansion Plat Timing of Assessments. Notwithstanding the foregoing, the obligation to pay assessments for Units within the parcel commonly known as "Parcel A of the South Expansion Plat" [described in Exhibit "F"] shall commence on the first day of the calendar month that occurs six (6) months after recording of a final plat or final condominium creating Units on such Parcel A.. The Owner of this parcel will be responsible at its cost to maintain any common area improvements installed on or adjacent to the Parcel (e.g. including trails, landscaping, irrigation, playgrounds) until such time as the Units within Parcel A of the South Expansion Plat commence paying assessments as provided in the preceding sentence. Parcel 1 of WSDOT Property Timing of Assessments. Notwithstanding the foregoing, the obligation to pay assessments for Units within the parcel commonly known as "Parcel A of the South Expansion Plat" [described in Exhibit "F"] shall commence on the first day of the calendar month that occurs six (6) months after recording of a final plat or final condominium creating Units on such Parcel A. Buyer will be responsible at its cost to maintain any common area improvements installed on or adjacent to the Parcel (e.g. including trails, landscaping, irrigation, playgrounds) until s1_.1ch time as the Units within the Property commence paying assessments as provided in the preceding sentence. Lot 1. Division 95 Timing of Assessments.. Notwithstanding the foregoing, the obligation to pay assessments for Units within the parcel commonly known as "Lot 1, Division 95" [described in Exhibit "F"] shall commence on the first day of the calendar month that occurs six (6) months after the City of Issaquah issues a certificate of occupancy for each particular Unit (or the building in which that Unit is located), but in any event assessments for each such Unit shall commence no later than January 1, 2012, whether or not a certificate of occu.pancy has been issued Obligation for Assessments. (a) Personal Obligation. Each Owner, by accepting a deed or entering into a recorded contract of sale for any portion of the Residential Properties, is deemed to covenant and agree to pay all assessments authorized in the Governing Documents. All assessments as to any Unit, together with interest (computed from its due date at a rate of 10% per annum or such higher rate as the Board may establish, subject to limitations of Washington law), late charges as determined by Board resolution, costs, and reasonable attorneys' fees, shall be the personal obligation of each Owner and a lien upon each Unit until paid in full. Upon transfer of title to a Unit, the grantee shall be jointly and severally liable for any assessments and other charges due at the time of conveyance, except as otherwise provided in Section 8.8, with respect to foreclosed mortgages. The Residential Association shall release the Unit's grantor from liability for assessments accruing after the date of the Unit transfer, but the grantor shall continue to be liable for all assessments accruing prior to the date of the transfer. The Board's failure to fix assessment amounts or rates or to deliver or mail each Owner an assessment notice shall not be deemed a waiver, modification, or a release of any Owner from the obligation to pay assessments. In such event, each Owner shall continue to pay Base Assessments and Neighborhood Assessments on the same basis as during the last year for which an assessment was made, if any, until a new assessment is levied, at which time the Residential Association may retroactively assess any shortfalls in collections. No Owner may exempt himself or herself from liability for assessments by non-use of Residential Common Area, abandonment of his or her Unit, or any other means. The obligation to pay assessments is a separate and independent covenant on the part of each Owner. No diminution or DWT v {)

47 abatement of assessments or set-off shall be claimed or allowed for any alleged failure of the Residential Association or Board to take some action or perform some function required. of it, or for inconvenience or discomfort arising from the making of repairs or improvements, or from any other action it takes. The Residential Association shall, upon request, furnish to any Owner liable for any type of assessment a certificate in writing signed by a Residential Association officer setting forth whether such assessment has been paid. Such certificate shall be conclusive evidence of payment. The Residential Association may require advance payment of a reasonable processing fee for issuance of such certificate. (b) Declarant's Option To Fund Budget Deficits. During the Class "B" Control Period, Declarant may satisfy its obligation for assessments on Units which it owns either by paying such assessments in the same manner as any other Owner or by paying the difference between the amount of assessments levied on all other Units subject to assessment and the amount of actual expenditures by the Residential Association during the fiscal year. Unless Declarant otherwise notifies the Board in writing at least 60 days before the beginning of each fiscal year, Declarant shall be deemed to have elected to continue paying on the same basis as during the immediately preceding fiscal year. Regardless of Declarant's election, Declarant's obligations hereunder may be satisfied by cash or by "in kind" contributions of services or materials, or by a combination of these. After termination of the Class "B" Control Period, Declarant shall pay assessments on its unsold Units in the same manner as any other Owner Lien for Assessments. The Residential Association shall have a lien against each Unit to secure payment of delinquent assessments, as well as interest, late charges (subject to the limitations of Washington law), and costs of collection (including attorneys fees). Such lien shall be superior to all other liens, except (a) liens of all taxes, bonds, assessments, and other levies which by law would be superior, and (b) the lien or charge of any first Mortgage of record (meaning any recorded Mortgage with first priority over other Mortgages) made in good faith and for value. Such lien, when delinquent, may be enforced by suit, judgment, and judicial or nonjudicial foreclosure. The Residential Association may bid for the Unit at the foreclosure sale and may use as a credit toward its bid the amount of the delinquent assessment and other charges authorized hereunder. The Residential Association may acquire, hold, lease, mortgage, and convey the Unit. While a Unit is owned by the Residential Association following foreclosure: (a) no right to vote shall be exercised on its behalf; (b) no assessment shall be levied on it; and (c) each other Unit shall be charged, in addition to its usual assessment, its pro rata share of the assessment that would have been charged such Unit had it not been acquired by the Residential Association. The Residential Association may sue for unpaid assessments and other charges authorized hereunder without foreclosing or waiving the lien securing the same. Sale or transfer of any Unit shall not affect the assessment lien or relieve such Unit from the lien for any subsequent assessments. However, sale or transfer of any Unit pursuant to foreclosure of the first Mortgage shall extinguish the lien as to any installments of such assessments due prior to the Mortgagee's foreclosure. The subsequent Owner to the foreclosed Unit shall not be personally liable for assessments on such Unit due prior to such acquisition of title. Unless and until paid by the prior DWT I v

48 Owner, such unpaid assessments shall be deemed to be Common Expenses collectible from Owners of all Units subject to assessment under Section 8.6, including such acquirer, its successors and assigns Exempt Property. The following property shall be exempt from payment of Base Assessments, Neighborhood Assessments, and Special Assessments: (a) All Residential Common Area and such portions of the property owned by Declarant as are included in the Area of Common Responsibility pursuant to Section 7.2; (b) utility; and Any property dedicated to and accepted by any governmental authority or public (c) Property owned by any Neighborhood Association for the common use and enjoyment of its members, or owned by the members of a Neighborhood Association as tenants-in-conunon. In addition, Declarant or the Residential Association shall have the right, but not the obligation, to grant exemptions for any property devoted to church, school, or similar civic purposes or to certain Persons qualifying for tax exempt status under Section 501(c) of the Internal Revenue Code so long as such Persons own property subject to this Declaration for purposes listed in Section 501(c) Capitalization of Residential Association. Upon acquisition of record title to a Unit by the first Owner thereof other than Declarant or a Builder, a contribution shall be made by the purchaser to the working capital of the Residential Association in an amount equal to (a) one-sixth (116) of the annual Base Assessment per Unit for the year in which acquisition occurs if the purchase agreement was fully signed before July 1, 2010, or if the Unit is located within the special or affordable project areas legally described in Exhibit "F" ("Special Project Area") to this Declaration (regardless of the date the purchase agreement was signed), or (b) one-half (1 /2) of the annual Base Assessment per Unit for the year in which acquisition occurs if the purchase agreement was fully signed on or after July 1, 2010 and the Unit is not located in a Special Project Area. This amount shall be in addition io, not in lieu of, the annual Base Assessment and shall not be considered an advance payment of such assessment. This amount shall be deposited into the purchase and sales escrow and disbursed therefrom to the Residential Association for use in covering operating expenses and other expenses incurred by the Residential Association pursuant to this Declaration and the By-Laws. PART FOUR: COMMUNITY DEVELOPMENT This Declaration reserves various rights to Declarant in order to facilitate the smooth and orderly development of the Residential Properties and to accommodate changes in the master plan which inevitably occur as a community the size of Issaquah Highlands grows and matures. DWT v

49 Article IX Expansion and Contraction of the Community 9.1. Expansion by Declarant. Declarant may from time to time subject to the provisions of this Declaration all or any portion of th<? property described in Exhibit "B," by filing a Supplemental Declaration in the Public Records describing the additional property to be subjected. A Supplemental Declaration filed pursuant to this Section shall not require the consent of any Person except the owner of such property, if other than Declarant. Declarant's right to expand the community pursuant to this Section shall expire when all property described in Exhibit "B" has been subjected to this Declaration or 20 years after the recording of this Declaration in the Public Records, whichever is earlier. Until then, Declarant may transfer or assign this right to any Person who is the developer of at least a portion of the real property described in Exhibits "A" or "B." Any such transfer shall be memorialized in a written, recorded instrument executed by Declarant. Nothing in this Declaration shall be construed to require Declarant or any successor to subject additional property to this Declaration or to develop any of the property described in Exhibit "B" in any manner whatsoever Expansion by the Residential Association. The Residential Association may also subject additional property to the provisions of this Declaration by filing a Supplemental Declaration in the Public Records describing the additional property. Any such Supplemental Declaration shall require the affirmative vote of Members representing more than 50% of the Class "A" votes of the Residential Association represented at a meeting duly called for such purpose and the consent of the owner of the additional property, so long as the meeting has a quorum as provided in Section 3.11 of the By-Laws. In addition, so long as Declarant owns property subject to this Declaration or which may become subject to this Declaration in accordance with Section 9.I, Declarant's consent shall be necessary. The Supplemental Declaration shall be signed by the President and Secretary of the Residential Association, by the owner of the property and by Declarant, if Declarant's consent is necessary Additional Covenants and Easements. Declarant may subject any portion of the Residential Properties to additional covenants and easements, including covenants obligating the Residential Association to maintain and jnsure such property and authorizing the Residential Association to recover its costs through Neighborhood Assessments. Such additional covenants and easements may be set forth either in a Supplemental Declaration subjecting such property to this Declaration or in a separate Supplemental Declaration referencing property previously subjected to this Declaration. If the property is owned by someone other than Declarant, then consent of the Owner(s) of such property shall be necessary and shall be evidenced by their execution of the Supplemental Declaration. Any such Supplemental Declaration may supplement, create exceptions to, or otherwise modify the terms of this Declaration as it applies to the subject property in order to reflect the different character and intended use of such property. Declarant has adopted supplemental standards as set forth in Exhibit "I" for the Grand Ridge Drive area DWT v {)

50 (legally described in Exhibit "F" and shown on Exhibit "H"), and as set forth in Ex hibit "J" for the Zero Energy Homes (Block 9) (legally described in Exhibit "F"), 9.4. Subjection of Property Previously Classified as Nonresidential. In the event that any property now or hereafter subjected to the Covenant to Share Costs is converted from nonresidential to residential use, the Covenant to Share Costs by its terms requires that such property automatically shall be subject to the provisions of this Declaration. The owner of such property with the Board's consent, or the Board on its sole signature or Declarant on its sole signature may file a Supplemental Declaration in the Public Records describing the property and confirming that it is subject to the terms of this Declaration (but such property is subject to this Declaration whether or not a Supplemental Declaration is filed). Such Supplemental Declaration shall not require the consent of the Residential Association but shall require the signature of an officer of the Residential Association acknowledging it. In addition, Declarant's prior written consent shall be necessary so long as Declarant owns any property described in Exhibits "A" or "B." This paragraph shall not apply to property converted by Declarant, which property Declarant, in its sole discretion, shall have the authority to subject, or not to subject, to this Declaration in accordance with Section Effect of Filing Supplemental Declaration. Any Supplemental Declaration filed pursuant to this Article shall be effective upon recording in the Public Records unless otherwise specified in such Supplemental Declaration. On the effective date of the Supplemental Declaration, any additional property subjected to this Declaration shall be assigned voting rights in the Residential Association and assessment liability in accordance with the provisions ofthis Declaration Conversio": of Residential Property to Nonresidential Property. In the event that any property now or hereafter subjected to this Declaration is withdrawn from coverage of this Declaration by virtue of being converted from a residential to a nonresidential use, such property shall remain subject to the provisions of the Covenant to Share Costs as a portion of the Nonresidential Properties. Unless a separate cost sharing covenant is entered into by the Residential Association and such withdrawn property, then the withdrawn property thereafter will be automatically obligated to pay an Owner's Assessment (as defined in the Covenant to Share Costs) annually the following amount (which are the amounts effective for the IHCA's fiscal year , and thereafter shall be adjusted by the CPI Index as provided in Section 4.2 of the Covenant to Share Costs): (a) apartments at $558/unit; and (b) retail or commercial at $1.08/rentable square foot. However, as to property withdrawn by Declarant pursuant to Section 10.1 of this Declaration, Declarant may, in its discretion, also withdraw such property from coverage of the Covenant to Share Costs. Article X Additional Rights Reserved to Declarant Withdrawal of Property. So long as it has a right to expand the community by subjecting additional property to this Declaration pursuant to Section 9.1, Declarant reserves the right to amend this Declaration for the purpose of removing any portion of the Residential Properties which has not yet been improved with structures from the coverage of this Declaration. Such amendment shall not require the consent of any owr v

51 Person other than the Owner(s) of the property to be withdrawn, if not Declarant. If the property is Residential Common Area, the Residential Association shall consent to such withdrawal Marketing and Sales Activities. So long as Declarant owns any property subject to this Declaration or which may become subject to this Declaration in accordance with Section 9.1, Declarant and Builders aut orized by Declarant may maintain and carry on upon portions of the Residential Common Area such facilities and activities as, in the sole opinion of Declarant, may be reasonably required, convenient, or incidental to the construction or sale of Units, including, but not limited to, business offices, signs, model units, and sales offices. Declarant and authorized Builders shall have easements for access to and use of such facilities Right To Develop. Declarant and its employees, agents and designees shall have a right of access and use and an easement over and upon all of the Residential Common Area for the purpose of making, constructing and installing such improvements to the Residential Common Area as' they deem appropriate in their sole discretion. Every Person that acquires any interest in the Residential Properties acknowledges and expressly waives any objection that Issaquah Highlands is a master planned community, the development of which is likely to extend over many years, and agrees not to use Residential ssociation funds to protest, challenge or otherwise object to (a) changes in uses or density of property outside the Neighborhood in which such Person holds an interest, or (b) changes in the Master Plan as it relates to property outside the Neighborhood in which such Person holds an interest. Every Person shall abide by and is subject to the Master Plan. Each Person consents to construction of 30% of the Units within Issaquah Highlands as affordable housing, as defined and required in the Master Plan Right To Approve Additional Covenants. No Person shall record any declaration of covenants, conditions and restrictions, or declaration of condominium or similar instrument affecting any portion of the Residential Properties without Declarant's review and written consent, which consent Declarant may grant or withhold in its sole discretion. Any attempted recordation without such consent shall result in such instrument being void and of no force and effect unless subsequently approved by written consent signed by Declarant and recorded in the Public Records Right To Approve Changes in Comn:tunity Standards. So long as Declarant owns property subject to this Declaration or which may become subject to this Declaration in accordance with Section 9.1, no amendment to or modification of any Use Restrictions and Rules or Architectural Standards shall be effective without prior notice to and the written approval of Declarant. Declarant may grant or withhold such approval in its sole discretion. DWT v

52 Right To Transfer or Assign Declarant's Rights. Any or all of the special rights and obligations of Declarant set forth in this Declaration or the By-Laws may be transferred in whole or in part.to other Persons; provided, the transfer shall not reduce an obligation nor enlarge a right beyond that which Declarant has under this Declaration or the By- Laws. No such transfer or assignment shall be effective unless it is in a written instrument signed by Declarant and recorded in the Public Records. Upon any such transfer or assignment, Declarant shall be released from those obligations set forth in this Declaration or the By-Laws that are transferred to other Person(s). From and after date of the transfer, Declarant shall have no liability related to any of its obligations set forth in this Declaration for those rights and obligations that have been transferred to other Person(s), provided that the transferee assumes such obligations pursuant to a written agreement. The foregoing sentence shall not preclude Declarant from permitting other Persons to exercise, on a one-time or limited basis, any right reserved to Declarant in this Declaration where Declarant does not intend to transfer such right in its entirety, and in such case it shall not be necessary to reeord any written assignment unless necessary to evidence Declarant's consent to such exercise. Further, Declarant from time to time by recording a Supplemental Declaration may terminate some or all of its rights under this Declaration that are retained or exercised so long as Declarant owns any land listed on Exhibit "A" or Exhibit "B" even if Declarant thereafter continues to own land listed on Exhibit "A" or Exhibit "B." Exclusive Rights To Use Name of Development. No Person shall use the name "Issaquah Highlands" or any derivative of such name in any printed, electronic, or promotional material without Declarant's prior written consent. However, Owners may use the name "Issaquah Highlands" in printed or promotional matter where such term is used solely to specify that particular property is located within Issaquah Highlands and the Residential Association shall be entitled to use the words "Issaquah Highlands" in its name Termination ofrights. Rights contained in this Article X shall not terminate until the earlier of (a) 40 years from the date this Declaration initially was recorded in the Public Records, or (b) recording by Declarant of a written statement that all sales activity has ceased. This Article X shall not be amended unless Declarant approves such amendment. PART FIVE: PROPERTY RIGHTS WITHIN THE COMMUNITY The nature of living in a planned community, with its wide array of properties and development types and its ongoing development activity. requires the creation of special property rights and provisions to address the needs and responsibilities of the Owners, Declarant, the Residential Association, and others within or adjacent to the community. DWT v

53 Article XI Easements Easements in Residential Common Area. Declarant grants to each Owner a nonexclusive right and easement of use, access, and enjoyment in and to the Residential Common Area, subject to: (a) The Governing Documents and any other applicable covenants; (b) Any restrictions or limitations contained in any deed conveying such property to the Residential Association; (c) The Board's right to: {i) Adopt rules regulating use and enjoyment of the Residential Common Area, including rules limiting the number of guests who may use the Residential Common Area; (ii) Suspend the right of an Owner to use recreational facilities within the Residential Common Area (A) for any period during which any charge against such Owner's Unit remains delinquent, and (B) for a period not to exceed 30 days for a single violation or for a longer period in the case of any continuing violation of the Governing Documents after notice and a hearing pursuant to Section 4.24 of the By-Laws; {iii) Dedicate or transfer all or any part of the Residential Common Area or to remove a portion of the Residential Common Area from the Declaration, subject to such approval requirements as may be set forth in this Declaration; (iv) Impose reasonable membership requirements and charge reasonable admission or other use fees for the use of any recreational facility situated upon the Residential Common Area; (v) Permit, limit, or regulate use of any recreational facilities situated on the Residential Common Area by persons other than Owners, their families, lessees and guests upon payment of use fees established by the Board; (vi) Permit use of any Neighborhood's Exclusive Common Area by Owners of Units in other Neighborhoods in accordance with Section 12.3; (vii) Mortgage, pledge, or hypothecate any or all of its real or personal property as security for money borrowed or debts incurred; (d) The rights of certain Owners to the exclusive use of those portions of the Residential Common Area designated "Exclusive Common Areas," as described in Article XII; and (e) The right of the Board or Declarant to designate certain areas and facilities within the Area of Common Responsibility as open for the use and enjoyment of the public in accordance with Section Any Owner may extend his or her right of use and enjoyment to members of his or her family, lessees, and social invitees, as applicable, subject to reasonable regulation by the Board. An Owner DWf l v

54 who leases his or her Unit shall be deemed to have assigned all such rights to the lessee of such Unit for the period of the lease Easements of Encroachment. Declarant grants reciprocal appurtenant easements of encroachment, and for maintenance and use of any permitted encroachment, between each Unit and any adjacent Residential Common Area and between adjacent Units due to unintentional placement or settling or shifting of the improvements constructed, reconstructed, or altered thereon (in accordance with the terms of these restrictions) to a distance of not more than three feet, as measured from any point on the common boundary along a line perpendicular to such boundary; provided, no such easement of encroachment shall materially. reduce the capacity to use the burdened property for its intended purposes by any Person having the right to use such property. However, in no event shall an easement for encroachment exist if such encroachment occurred due to willful and knowing conduct on the part of, or with the knowledge and consent of, the Person claiming the benefit of such easement Easements for Utilities. Etc. (a) Association and Utility Easements. Declarant reserves for itself, so long as Declarant owns any property described in Exhibit "A" or "B" of this Declaration, and grants to the Residential Association and all utility providers, perpetual non-exclusive easements throughout all of the Residential Properties (but not through or under a structure) to the extent reasonably necessary for the purpose of: (i) installing utilities and infrastructure to serve the Residential Properties, cable and other systems for sending and receiving data or other electronic signals, security and similar systems, walkways, pathways and trails, drainage systems, street lights and signage on property which Declarant owns or within public rights-of-way or easements reserved for such purpose on recorded plats; (ii) inspecting, maintaining, repairing and replacing the utilities, infrastructure and other improvements described in Section 11.3(a)(i); and (iii) access to read utility meters. (b) Recorded Specific Easements. Declarant also reserves for itself the non-exclusive right and power to grant and record in the Public Records such specific easements as may be necessary, in Declarant's sole discretion, in connection with the orderly development of any property described in Exhibits "A" and "B." Such easement shall be utilized so as not to interfere unreasonably with improvements constructed upon any Unit, the building envelope for any unimproved Unit, the anticipated building envelope for any undeveloped Unit, or any Owner's reasonable use of such Owner's Unit. (c) Property Restoration. All work associated with exercising the easements described in subsections (a) and (b) of this Section shall be performed in such a manner as to minimize interference, to the extent reasonably possible, with the use and enjoyment of the property burdened by the easement. Upon completion of the work, the Person exercising the easement shall restore the property, to the extent reasonably possible, to its condition prior to commencement of the work. Exercise of these DWT v

55 easements shall not extend to permitting entry into the structures on any Unit, nor shall it unreasonably interfere with the use of any Unit and, except in an emergency, entry onto any Unit shall be made only after reasonable notice to the Owner or occupant Easements To Serve Additional Property. Declarant hereby reserves for itself and its duly authorized agents, successors, assigns, and mortgagees, an easement over the Residential Common Area for the purposes of enjoyment, use, access, and development of the property described in Exhibit "B," whether or not such property is made subject to this Declaration. This easement includes, but is not limited to, a right of ingress and egress over the Residential Common Area for construction of roads and for connecting and installing utilities on such property. Declarant agrees that it and its successors or assigns, as owners of the property described in Exhibit "B," shall be responsible for any damage caused to the Residential Common Area as a result of vehicular traffic connected with development of such property. Declarant further agrees that if the easement is exercised for permanent access to such property and such property or any portion thereof benefiting from such easement is not made subject to this Declaration, Declarant, its successors or assigns, as owners of the property described in Exhibit "B," shall enter into a reasonable agreement with the Residential Association to share the cost of any maintenance which the Residential Association provides to or along any roadway providing access to such Property Easements for Maintenance. Emergency and Enforcement. Declarant reserves for itself and grants to the Residential Association easements over the Residential Properties as necessary to enable the Residential Association to fulfill its maintenance responsibilities under Section 7.2 and such other provisions as provide for or permit maintenance to be performed by the Residential Association or Declarant. The Residential Association and Declarant shall also have the right, but not the obligation, to enter upon any Unit for emergency, security, and safety reasons, to perform maintenance and to inspect for the purpose of ensuring compliance with and enforce the Governing Documents. Such right may be exercised by Declarant, any member of the Board, the duly authorized agents and assignees of the Board or Declarant, and all emergency personnel in the performance of their duties. Except in an emergency situation, entry shall only be during reasonable hours and after notice to the Owner Easements for Lake and Pond Maintenance and Flood Water. Declarant reserves for itself and grants to the Residential Association and the successors, assigns, and designees of Declarant and the Residential Association, the nonexclusive right and easement, but not the oblig tion, to enter upon bodies of water and wetlands located within the Area of Common Responsibility to (a) install, operate, maintain, and replace pumps to supply irrigation water to the Area of Common Responsibility; (b) construct, maintain, and repair structures and equipment used for retaining water; and (c) maintain such areas in a manner consistent with the Community Wide Standard. Declarant, the Residential Association, and their successors, assigns and designees shall have an access easement over and across any of the Residential Properties abutting or containing bodies of ater or wetlands to the extent reasonably necessary to exercise their rights under this Section. DWT I v

56 Declarant further reserves for itself and grants to the Residential Association and the successors, assigns and designees of Declarant and the Residential Association, a perpetual, nonexclusive right and easement of access and encroachment over the Residential Common Area and Units (but not the dwellings thereon) adjacent to or within 1 00 feet of bodies of water and wetlands within the Residential Properties, in order to (a) alter in any manner and generally maintain the bodies of water and wetlands within the Area of Common Responsibility; and (b) maintain and landscape the slopes and banks pertaining to such areas. Declarant also reserves for itself and its successors, assigns, and designees, a perpetual, nonexclusive right and easement of access and encroachment over the Residential Common Area adjacent to or within I 00 feet of bodies of water and wetlands within the Residential Properties, in order to temporarily flood and back water upon and maintain water over such Residential Common Area. All persons entitled to exercise these easements shall use reasonable care in and repair any damage resulting from the intentional exercise of such easements. Nothing herein shall be construed to make Declarant or any other Person liable for damage resulting from flooding due to hurricanes, heavy rainfall, or other natural occurrences Easements for Tax-exempt Organizations. Tax-exempt organizations designated or established by Declarant or the Residential Association shall have nonexclusive easements over the Area of Common Responsibility to the extent necessary to carry out their responsibilities Easements for Signage. This Declaration hereby reserves, grants and establishes for the benefit of Declarant and the Association a non-exclusive easement to enter and install maintain, repair, replace and operate entry, neighborhood and other signage, landscaping, lighting, monuments, and related improvements over portions of the Residential Properties or the Nonresidential Properties (collectively "Signage Easements"). The Signage Easem nts and improvements thereon are Residential Common Areas and may be designated as Exclusive Common Areas pursuant to this Declaration. No improvements shall be located within the Signage Easements without the approval of the Board. Article XII Exclusive Common Areas Puroose. Certain portions of the Residential Common Area may be designated as Exclusive Common Area and reserved for the exclusive use or primary benefit of Owners and occupants within a particular Neighborhood or Neighborhoods. By way of illustration and not limitation, Exclusive Common Areas may include entry features, recreational facilities, landscaped medians and cui-de-sacs, lakes and other portions of the Residential Common Area within a particular Neighborhood or Neighborhoods. All costs associated with maintenance, repair, replacement, and insurance of an Exclusive Common Area shall be a Neighborhood Expense allocated among the Owners in the Neighborhood(s) to which the Exclusive Common Areas are assigned Designation. Initially, any Exclusive Common Area shall be designated as such in the deed conveying such area to the Residentil Association or on the subdivision plat relating to such Residential Common owr v {}

57 Area; provided, however, any such assignment shall not preclude Declarant from later assigning use of the same Exclusive Common Area to additional Units or Neighborhoods, so long as Declarant has a right to subject additional property to this Declaration pursuant to Section 9.1. Thereafter, a portion of the Residential Common Area may be assigned as Exclusive Common Area, and Exclusive Common Area may be reassigned upon approval of the Board and the affirmative vote of Members representing a majority of the total Class "A" votes in the Residential Association, including a majority of the Class "A" votes within the Neighborhood(s) directly affected (i.e., Neighborhoods within which the Exclusive Common Area is being designated or from which it is being redesignated) by the proposed assignment or reassignment. As long as Declarant owns any property subject to this Declaration or which may become subject to this Declaration in accordance with Section 2J., any such assignment or reassignment shall also require Declarant's written consent Use by Others. The Residential Association may, upon approval of a rnajonty of the members of the Neighborhood Committee or board of directors of the Neighborhood Association for the Neighborhood(s) to which any Exclusive Common Area is assigned, permit Owners of Units in other Neighborhoods to use all or a portion of such Exclusive Common Area upon payment of reasonable user fees, which fees shall be used to offset the Neighborhood Expenses attributable to such Exclusive Common Area. Article XIII Party Walls and Other Shared Structures General Rules oflaw To Apply. Each wall, fence, driveway or similar structure built as a part of the original construction on the Units or Parcels (for purposes of this Article, the term "Parcel" shall be defined as it is in the Covenant to Share Costs, and the term "Owner" shall 'mean an Owner, as defined in this Declaration, or an Owner, as defined in the Covenant to Share Costs, whichever is appropriate) which serves or separates any two adjoining Units or any adjoining Unit and Parcel shall constitute a party structure. To the extent not inconsistent with the provisions of this Section, the general rules of law regarding party walls and liability for property damage due to negligence or willful acts or omissions shall apply thereto Maintenance: Damage and Destruction. Cost of reasonable repair and maintenance of a party structure shall be shared equally by the.owners whose property the party structure serves or separates. If a party structure is destroyed or damaged by fire or other casualty, then to the extent that such damage is not covered by insurance and repaired out of the proceeds of insurance, any Owner whose property the party structure serves or separates from other property may restore it. Other Owners whose property the party structure serves or separates from other property shall contribute to the restoration cost in equal proportions. However, such contribution will not prejudice the right to call for a larger contribution from the other users under any rule of law regarding liability for negligent or willful acts or OmlSSlOnS. DWT v

58 13.3. Right to Contribution Runs With Land. The right of any Owner to contribution from any other Owner under this Section shall be appurtenant to the land and shall pass to such Owner's successors-in-title Disputes. Any dispute arising concerning a party structure shall be handled in accordance with the provisions of Article XIV. PART SIX: RELATIONSHIPS WITHIN AND OUTSIDE THE COMMUNITY Growth and success of Issaquah Highlands as a community in which people enjoy living, working, and playing require good faith efforts to resolve disputes amicably, attention to and understanding of relationships within the community and with our neighbors, and protection of the rights of others who have an interest in the community. Article XIV Dispute Resolution and Limitation on Litigation Consensus for Residential Association Litigation. Except as provided in this Section, the Residential Association shall not commence a judicial or administrative proceeding without the approval of Members representing at least 75% of the total Class "A" votes in the Residential Association. This Section shall not apply, however, to (a) actions brought by the Residential Association to enforce the Governing Documents (including, without limitation, foreclosing liens); (b) imposition and collection of assessments; (c) proceedings involving challenges to ad valorem taxation; (d) claims initiated by the Residential Association against any contractor, vendor, or supplier of goods or services arising out of a contract for services; (e) counterclaims brought by the Residential Association in proceedings instituted against it; or (f) actions brought by the Residential Association to enforce prohibition or restriction of activities that create a danger to the health or safety of occupants of other Units. This Section shall not be amended unless such amendment is approved by Declarant and by the percentage of.votes, and pursuant to the same procedures, necessary to institute proceedings as provided.above. Prior to the Residential Association's or any Member's commencing any judicial or administrative proceeding to which Declarant is a party and wh ch arises out of an alleged defect in the Residential Properties or any improvement constructed upon the Residential Properties, Declarant shall have the right to be heard by the Members, 'or the particular Member, and to access, inspect, correct the condition of, or redesign any portion of the Residential Properties, including any improvement as to which a defect is alleged. In addition, the Residential Association or the Member shall notify the Builder who constructed such improvement prior to retaining any other expert as an expert witness or for other litigation purposes Alternative Method for Resolving Disputes. Declarant, the Residential Association, its officers, directors, and committee members, all Persons subject to this Declaration, any Builder, and any Person not otherwise subject to this Declaration who agrees to submit to this Article (each such entity being referred to as a "Bound Party") DWT v

59 agree to encourage the amicable resolution of disputes involving the Residential Properties, without the emotional and financial costs of litigation. Accordingly, each Bound Party covenants and agrees to use good faith efforts to resolve those claims, grievances or disputes described in Sections 14.3 ("Claims") using the procedures set forth in Section 14.4 prior to filing suit in any court Claims..Unless specifically exempted below, all Claims arising out of or relating to interpretation, application or enforcement of the Governing Documents, or the rights, obligations and duties of any Bound Party under the Governing Documents or relating to the design or construction of improvements on the Residential Properties shall be subject to the provisions of Section Notwithstanding the above, unless all parties thereto otherwise agree, the following shall not be Claims and shall not be subject to the provisions of Section 14.4: (a) any suit by the Residential Association or Declarant against any Bound Party to enforce the provisions of Article VIII; (b) any suit by the Residential Association or Declarant to obtain a temporary restraining order or injunction (or equivalent emergency equitable relief) and such other ancillary relief as the court may deem necessary in order to maintain the status quo and preserve the Residential Association's ability to act under and enforce the provisions of Article III or Article IV; (c) any suit by an Owner to challenge the actions of Declarant, the Residential Association, the ARC, any covenants committee, or any other committee with respect to enactment and application of standards or rules or the approval or disapproval of plans pursuant to the provisions of Article III or Article IV; (d) any suit between Owners, which does not include Declarant or the Residential Association as a party, if such suit asserts a Claim which would constitute a cause of action independent of the Governing Documents; (e) any suit in which any indispensable party is not a Bound Party; and (f) any suit as to which any applicable statute of limitations has expired or would expire within 180 days of giving the Notice required by Section 14.4(a), unless the party or parties against whom the Claim is made agree to toll the statute of limitations as to such Claim for such period as may reasonably be necessary to comply with this Article. With the consent of all parties thereto, any of the suits set forth in subsections (a) through (f), above, may be submitted to the alternative dispute resolution procedures set forth in Section Mandatory Procedures. (a) Notice. Any Bound Party having a Claim ("Claimant") against any other Bound Party ("Respondent") (individually, a "Party," or collectively, the "Parties") shall notify each Respondent, Declarant, so long as Declarant has the right to subject property to this Declaration pursuant to Section.2.J., and the Residential Association in writing (the "Notice"), stating plainly and concisely: DWT v

60 in the Claim; arises); (i) (ii) (iii) The nature of the Claim, including the Persons involved and Respondent's role The legal basis of the Claim (i.e., the specific authority out of which the Claim Claimant's proposed remedy; and (iv) That Claimant will meet within 14 days with Respondent to discuss in good faith ways to resolve the Claim. (b) Negotiation and Mediation. (i) The Parties shall make every reasonable effort to meet in person and confer for the purpose of resolving the Claim by good faith negotiation. If requested in writing, accompanied by a copy of the Notice, the Board may appoint a representative to assist the Parties in negotiation. (ii) If the Parties do not resolve the Claim within 30 days of the date of the Notice (or within such other period as may be agreed upon by the Parties) ("Termination of Negotiations"), Claimant shall have 30 additional days to submit the Claim to mediation under the auspices of any King County dispute resolution center or such other independent agency providing similar services upon which the Parties may mutually agree. (iii) If Claimant does not submit the Claim to mediation within such time, or does not appear for the mediation, Claimant shall be deemed to have waived the Claim, and Respondent shall be released and discharged from any and all liability to Claimant on account of such Claim; provided, nothing herein shall release or discharge Respondent from any liability to any Person other than Claimant. (iv) Any settlement of the Claim through mediation shall be documented in writing by the mediator and signed by the Parties. If the Parties do not settle the Claim within 30 days after submission of the. matter to the mediation, or within such other time as determined by the mediator or agreed to by the Parties, the mediator shall issue a notice of termination of the mediation proceedings ("Termination of Mediation"). The Termination of Mediation notice shall set forth that the Parties are at an impasse and the date that mediation was terminated. Upon Termination of Mediation, the Claimant shall thereafter be entitled to sue in any court of competent jurisdiction or to initiate proceedings before any appropriate administrative tribunal on the Claim. Each Party shall bear its own costs of the mediation, including attorneys fees, and each Party shall share equally all charges rendered by the mediator. If the Parties agree to a resolution of any Claim through negotiation or mediation in accordance with Section 14.4 and any Party thereafter fails to abide by the terms of such agreement, then any other Party may file suit or initiate administrative proceedings to enforce such agreement without the need to comply again with the procedures set forth in Section In such event, the Party taking action to enforce the agreement shall be entitled to recover from the non-complying Party (or if more than one non-complying Party, from all such Parties pro rata) all costs incurred in enforcing such agreement, including, without limitation, attorneys' fees and court costs. DWT v ()()()()70 53

61 Article XV Mortgagee Provisions The following provisions are for the benefit of holders, insurers and guarantors of first Mortgages on Units in the Residential Properties. The provisions of this Article apply to both this Declaration and to the By-Laws, notwithstanding any other provisions contained therein Notices of Action. An institutional holder, insurer, or guarantor of a first Mortgage who provides a written request to the Residential Association (such request to state the name and address of such holder, insurer, or guarantor and the street address of the Unit to which its Mortgage relates, thereby becoming an "Eligible Holder"), will be entitled to timely written notice from the Residential Association of: (a) Any condemnation loss or any casualty loss which affects a material portion of the Residential Properties or which affeets any Unit on which there is a first Mortgage held, insured, or guaranteed by such Eligible Holder; (b) Any delinquency in the payment of assessments or charges owed by a Unit subject to the Mortgage of such Eligible Holder, where such delinquency has continued for a period of 60 days, or any other violation of the Governing Documents relating to such Unit or the Owner or Occupant which is not cured within 60 days; (c) Any lapse, cancellation, or material modification of any insurance policy maintained by the Residential Association; or (d) Holders. Any proposed action which would require consent of a specified percentage of Eligible Special FHLMC Provision. So long as required by the Federal Home Loan Mortgage Corporation, the following provisions apply in addition to and not in lieu of other provisions of this Declaration. Unless at least 67% of the first Mortgagees or Members representing at least 67% of the total Residential Association vote consent, the Residential Association shall not: (a) By act or omission seek to abandon, partition, subdivide, encumber, sell, or transfer all or any portion of the real property comprising the Residential Common Area which the Residential Association owns, directly or indirectly (the granting of easements for utilities or other similar purposes consistent with the intended use of the Residential Common Area shall not be deemed a transfer within the meaning of this subsection); (b) Change the method of determining the obligations, assessments, dues, or other charges which may be levied against an Owner of a Unit (a decision, including contracts, by the Board or provisions of any declaration subsequently recorded on any portion of the Residential Properties regarding assessments for Neighborhoods or other similar areas shall not be subject to this provision where such decision or subsequent declaration is otherwise authorized by this Declaration); (c) By act or omission change, waive, or abandon any scheme of regulations or enforcement pertaining to architectural design, exterior appearance or maintenance of Units and the DWT v

62 Residential 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 (e) Use hazard insurance proceeds for any Residential Common Area losses for other than the repair, replacement, or reconstruction of such property. First Mortgag es may, jointly or singly, pay taxes or other charges which are in default and which may or have become a charge against the Residential Common Area and may pay overdue premiums on casualty insurance policies or secure new casualty insurance coverage upon the lapse of a Residential Association policy, and first Mortgagees making such payments shall be entitled to immediate reimbursement from the Residential Association Other Provisions for First Lien Holders. To the extent not inconsistent with Washington law: (a) Any restoration or repair of the Residential Properties after a partial condemnation 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 of first Mortgages on Units to which more than 50% of the votes of Units subject to Mortgages held by such Eligible Holders are allocated. (b) Any election to terminate the Residential Association after substantial destruction or a substantial taking in condemnation shall require the approval of the Eligible Holders of first Mortgages on Units to which more than 50% of the votes of Units subject to Mortgages held by such Eligible Holders are allocated Amendments to Documents. The following provisions do not apply to amendments to the Use Restrictions and Rules or the Architectural Standards constituent documents or termination of the Residential Association as a result of destruction, damage, or condemnation pursuant to Section 15.3(a) and.(hl, or to the addition of land in accordance with Article IX. (a) Termination of Residential Association. Consent of Members representing at least 67% of the Class "A" votes and of Declarant, so long as it owns any land subject to this Declaration, and the approval of the Eligible Holders of first Mortgages on Units to which at least 67% of the votes of Units subject to a Mortgage held by Eligible Holders appertain, shall be required to terminate the Residential Association. (b) Amendment of Governing Documents. Consent of Members representing at least 67% of the Class "A" votes and of Declarant, so long as it owns any land subject to this Declaration, and the approval of Eligible Holders of first Mortgages on Units to which more than 50% of the votes of Units subject to a Mortgage held by Eligible Holders appertain, shall be required materially to amend any owr v

63 provisions of the Declaration, By-Laws, or Articles of Incorporation, or to add any material provisions thereto which establish, provide for, govern, or regulate any of the following: Area; (i) (ii) (iii) (iv) (v) (vi) voting; assessments, assessment liens, or subordination of such liens; reserves for maintenance, repair, and replacement of the Residential Common insurance or fidelity bonds; rights to use the Residential Common Area; esponsibility for maintenance and repair of the Residential Properties; (vii) expansion or contraction of the Residential Properties or the addition, annexation, or withdrawal of Residential Properties to or from the Residential Association; (viii) (ix) boundaries of any Unit; leasing Units; (x) imposition of any right of first refusal or similar restriction of the right of any Owner to sell, transfer, or otherwise convey his or her Unit; (xi) establishment of self-management by the Residential Association where professional management has been required by an Eligible Holder; or (xii) any provisions included in this Declaration, By-Laws, or Articles of Incorporation which are for the express benefit of holders, guarantors, or insurers of first Mortgages on Units No Priority. No provision of this Declaration or the By-Laws gives or shall be construed as giving any Owner or other party priority over any rights of the first Mortgagee of any Unit in the case of distribution to such Owner of insurance proceeds or condemnation awards for losses to or a taking of the Residential Common Area Notice to Residential Association. Upon request, each Owner shall be obligated to furnish to the Residential Association the name and address of the holder of any Mortgage encumbering such Owner's Unit 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 the Residential Association does not receive a DWT l v

64 written response from the Mortgagee within 30 days of the date of the Residential Association's request, provided such request is delivered to the Mortgagee by certified or registered mail, return receipt requested Construction of Article XV. Nothing contained in this Article shall be construed to reduce the percentage vote that must otherwise be obtained under this Declaration, the By-Laws, or Washington law for any of the acts set out in this Article Amendment by Board. Should the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Department of Housing and Urban Development, or the Department of Veterans Affairs hereafter eliminate any of their respective requirements which necessitate the provisions of this Article or make any such requirements less stringent, the Board, without the approval of the Owners or any Mortgagees may cause an amendment to this Article to be recorded to reflect such changes. ARTICLE XVI Relationships With Other Entities Relationship With Tax-exempt Organizations. Declarant or the Residential Association may create, enter into agreements or contracts with, or grant exclusive or non-exclusive easements over the Area of Common Responsibility to non-profit, taxexempt organizations, the operation of which confers some benefit on the Residential Properties, the Residential Association, or Issaquah Highlands residents. The Residential Association may contribute money, real or personal property, or services to such entity. Any such contribution shall be a common expense and included as a line item in the Residential Association's annual budget. For the purposes of this Section, a "tax-exempt organization" shall mean an entity which is exempt from federal income taxes under the Internal Revenue Code ("Code"), such as, but not limited to, entities which are exempt from federal income taxes under Sections 501(c)(3) or 501(c)(4), as the Code may be amended from time to time. The Residential Association may maintain multiple use facilities within the Residential Properties for temporary use by tax-exempt organizations. Such use may be on a scheduled or "firstcome, first-served" basis. A reasonable maintenance and use fee may be charged for the use of such facilities Environmental Entities. As long as Declarant owns any property described in Exhibits "A" or "B," Declarant shall have the right to enter into agreements with environmental entities for the purpose of observing, maintaining, or preserving environmentally sensitive areas located within the Residential Common Areas and monitoring or conducting such natural resource, habitat preservation or other environmental programs or plans which may be implemented within the Residential Properties. Entities designated by Declarant shall have the right to enter the Residential Common Areas and perform environmental activities owr v

65 subject to reasonable time, place, and manner restrictions adopted by the Residential Association. The Residential Association shall have the right to enter into agreements with environmental entities with the consent of Declarant as long as Declarant owns any property described in Exhibits "A" or "B" and thereafter in the Board's discretion Relationship With Other Public or Private Entities. Declarant, so long as Declarant owns any portion of the property described in Exhibits "A" or "B," and the Residential Association are specifically authorized to enter into cooperative agreements with public and private entities for the use of facilities, sharing of services and costs, and development of programs and procedures for the benefit of Issaquah Highlands and the surrounding community. Use of Residential Association funds for such purposes is specifically authorized. Without limiting the foregoing, the Residential Association is authorized to exercise all rights and perform any obligations, including but not limited to maintenance of common areas or other property, conducting and enforcing architectural review, administering and enforcing cost sharing for maintenance and other shared costs, and administering and enforcing use rules set forth in any declaration of covenants, easement, cost sharing agreement or covenant, or other recorded document to the extent provided or allowed in or reasonably related to such document Relationship With Nonresidential Properties. Issaquah Highlands is comprised of nonresidential property (apartment buildings and retail and commercial properties) as well as property subject to this Declaration, which may be characterized generally as residential. Some areas or services within Issaquah Highlands benefit the Nonresidential Properties as well as the Residential Association's Members. In addition to the authority in Section 16.3, the Residential Association is authorized to enter into agreements and covenants, including the Covenant to Share Costs, with the owners of the Nonresidential Properties and other third parties to allocate responsibilities related to such shared property or services and the expenses associated therewith. Further, the Residential Association is authorized to exercise all rights and perform any obligations, including but not limited to architectural review, enforcement of cost sharing and use rules, set forth in the Covenant to Share Costs to the extent provided or allowed in or reasonably related to the Covenant to Share Costs. PART SEVEN: CHANGES IN THE COMMUNITY Communities such as Issaquah Highlands are dynamic and constantly evolving as circumstances, technology, needs and desires, and laws change, as the residents age and change over time, and as the surrounding community changes. Issaquah Highlands and its governing documents must be able to adapt to these changes while protecting the things that make Issaquah Highlands unique. Article XVII Changes in Ownership of Units Any Owner desiring to sell or otherwise transfer title to his or her Unit shall give the Board at least seven days' prior written notice of the name and address of the purchaser or transferee, the date of such transfer of title, and such other infonnation as the Board may reasonably require. The transferor shall continue to be jointly and severally responsible with the transferee for all obligations of the Unit Owner, including assessment obligations, until the date on which such notice is received by the Board, DWT v

66 notwithstanding the transfer of title. Any Owner who transfers title to a Unit may be subject to a transfer fee levied pursuant to Section Article XVIII Changes in Residential Common Area Condemnation. If any part of the Residential Common Area shall be taken (or conveyed in lieu of and under threat of condemnation by the Board acting on the written direction of Members representing at least 67% of the total Class "A" votes in the Residential Association and of Declarant, as long as Declarant owns any property subject to this Declaration or which may be made subject to this Declaration in accordance with Section 9.1) by any authority having the power of condemnation or eminent domain, each Owner shall be entitled to written notice of such taking or conveyance prior to disbursement of any condemnation award or proceeds from such conveyance. Such award or proceeds shall be payable to the Residential Association to be disbursed as follows: (a) If the taking or conveyance involves a portion of the Residential Common Area on which improvements have been constructed, the Residential Association shall restore or replace such improvements on the remaining land included in the Residential Common Area to the extent available, unless within 60 days after such taking Declarant, so long as Declarant owns any property subject to this Declaration or which may be made subject to this Declaration in accordance with Section 9.1, and Members representing at least 75% of the total Class "A" vote of the Residential Association shall otherwise agree. Any such construction shall be in accordance with plans approved by the Board. The provisions of Section 7.3(c) regarding funds for restoring improvements shall apply. (b) If the taking or conveyance does not involve any improvements on the Residential Common Area, or if a decision is made not to repair or restore, or if net funds remain after any such restoration or replacement is complete, then such award or net funds shall be disbursed to the Residential Association and used for such purposes as the Board shall determine Partition. Except as permitted in this Declaration, the Residential Common Area shall remain undivided, and no Person shall bring any action to partition any portion of the Residential Common Area without the written consent of Declarant and all Owners and Mortgagees. This Section shall not prohibit the Board from acquiring and disposing of tangible personal property nor from acquiring and disposing of real property which may or may not be subject to this Declaration Transfer or Dedication of Residential Common Area. Declarant, so long as Declarant owns any portion of the property described in Exhibits "A" or "8," or the Residential Association, with the consent of the Class "8" Member, if such exists, may dedicate portions of the Residential Common Area to King County, Washington, the City of Issaquah, or to any other local, state, or federal governmental or quasi-governmental entity. owr v

67 Article XIX Amendment of Declaration ByDeclarant. Declarant may unilaterally amend this Declaration if such amendment is necessary (a) to bring any provision into compliance with any applicable governmental statute, rule, regulation, or judicial determination; (b) to enable any reputable title insurance company to issue title insurance coverage on the Units; (c) to enable any institutional or governmental lender, purchaser, insurer or guarantor of mortgage loans, including, for example, the Federal National Mortgage Association or Federal Home Loan Mortgage Corporation, to make, purchase, insure or guarantee mortgage loans on the Units; or (d) to satisfy requirements of any local, state or federal governmental agency. However, any such amendment shall not adversely affect title to any Unit unless the Owner consents in writing. In addition, so long as Declarant owns property described in Exhibits "A" or "B" for development as part of the Residential Properties, it may unilaterally amend this Declaration for any other purpose, provided the amendment has no material adverse effect upon any right of any Owner By Members. Except as otherwise specifically provided above and elsewhere in this Declaration, this Declaration may be amended only by the affirmative vote or written consent, or any combination thereof, of Members representing 67% of the total Class "A" votes in the Residential Association, including 67% of the Class "A" votes held by Members other than Declarant, and the consent of Declarant, so long Declarant owns any property subject to this Declaration or which may become subject to this Declaration in accordance with Section 9.1. In addition, approval requirements set forth in Article XV shall be met, if applicable. Notwithstanding the above, the percentage of votes necessary to amend a specific clause shall not be less than the prescribed percentage of affirmative votes required for action to be taken under that clause Validity and Effective Date. No amendment may remove, revoke, or modify any right or privilege of Declarant or the Class "B" Member without written consent of Declarant or the Class "B" Member, respectively (or the assignee of such right or privilege). If an Owner consents to any amendment to this Declaration or the By-Laws, it will be conclusively presumed that such Owner has the authority to consent, and no contrary provision in any Mortgage or contract between the Owner and a third party will affect the validity of such amendment. Any amendment shall become effective upon recording in the Public Records, unless a later effective date is specified in the amendment. Any procedural challenge to an amendment must be made within six months of its recordation or such amendment shall be presumed to have been validly adopted. In no event shall a change of conditions or circumstances operate to amend any provisions of this Declaration. DWT v

68 Article XX Miscellaneous 20.1 Exhibits. Exhibits "A" and "B" attached to this Declaration are incorporated by this reference, and amendment of such exhibits shall be governed by this Article. All other exhibits are attached for informational purposes and may be amended as provided therein or in the provisions of this Declaration which refer to such exhibits Duration. This Declaration shall be enforceable by Declarant, the Residential Association, any Owner, and their respective legal representatives, heirs, successors, and assigns, for a term of 40 years from the date this Declaration is recorded in the Public Records. After such time, this Declaration shall be extended automatically for successive 10-year periods, unless an instrument is recorded in the Public Records within the year preceding any extension. Such instrument would agree to amend, in whole or in part, or terminate this Declaration, in which case this Declaration shall be amended or terminated as specified in such instrument; provided, provision must be made for an organization to continue to perform duties imposed by plats, by other documents, or otherwise by Jaw. Any such agreement to terminate this Declaration must be signed by Members representing at least 67% of the then total Class "A" votes in the Residential Association (such requirement shall not apply to termination of the Residential Association as a result of destruction, damage, or condemnation pursuant to Section 15.3(a) and.qill.. Any such agreement to amend this Declaration, in whole or in part, must comply with the requirements of Section Notwithstanding this, if any provision of this Declaration is unlawful, void, or voidable by reason of applicability of the rule against perpetuities, such provision shall expire 21 years after the death of the last survivor of the now living descendants of Elizabeth II, Queen of England. Nothing in this Section shall be construed to permit termination of any easement created in this Declaration without the consent of the holder of such easement Neighborhood Restrictions. In the event of a conflict between or among the Governing Documents and any additional covenants or restrictions applicable to particular Neighborhoods within the Residential Properties, or the provisions of any other articles of incorporation, by-laws, rules or policies governing any Neighborhood, the Governing Documents shall control. Nothing in this Section shall preclude any Supplemental Declaration or other recorded covenants applicable to any portion of the Residential Properties from containing additional restrictions or provisions which are more restrictive than the provisions of this Declaration. The Residential Association may, but shall not be required to, enforce any such recorded covenants,. restrictions or other instruments applicable to any Neighborhood and may levy assessments in accordance with Section 8.5 to reimburse the Residential Association for expenses incurred in taking such enforcement action. DWT v

69 20.4 Severability. If any provision of this Declaration is determined by judgment or court order to be invalid, or invalid as applied in a particular instance, such determination shall not affect the validity of other provisions or applications Effective Date. This Declaration shall be effective as of July 1, 2011, except that the effective date for the establishment of Board Districts pursuant to Section 6.4(b) shall be ninety (90) days before the first annual meeting following termination of the Class "B" Control Period. IN WITNESS WHEREOF, the undersigned Declarant has executed this Declaration the date first above written. GRAND-GLACIER LLC, a Washington limited liability company EXHIBITS: Exhibit A Exhibit B Exhibit C Exhibit D Exhibit E. Exhibit F Exhibit G Exhibit H Exhibit I Exhibit J Exhibit K By PORT BLAKELY COMMUNITIES, a Washington corporation, its Manager A -;.AA. By: ---- = Tim Diller, Vice President, Asset Management Land Submitted to Declaration Land Subject to Expansion Use Restrictions and Rules Amended and Restated Bylaws List of Tax Parcel Numbers and Prior Amendments Legal Descriptions of Certain Areas Map of Board Districts Map of Designated Harrison Street and Grand Ridge Drive Neighborhoods Grand Ridge Drive Supplemental Provisions Zero Energy Homes (Block 9C) Supplemental Provisions Home Office District Designations DWT l v

70 STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) On this _J_ day of Jlt\f\ Q,2011, before me, a Notary Public in and for the State of Washington, personally appeared TIM DILLER, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed this instrument, on oath stated that he was authorized to execute the instrument, and acknowledged it as the Vice President, Asset Management, of Port Blakely Communities, Inc., the Washington corporation that is the manager of GRAND-GLACIER LLC, a Washington limited liability company, to be the free and voluntary act and deed of said limited liability company for the uses and purposes mentioned in the instrument. IN WiTNESS WHEREOF, I have hereunto set my hand and official seal the day and year first above written. NOT Y PUBLIC in and for the Statof Washi gton, residing at k1/k'iaao My appointment expires 1 l D. - \ 7 l 5 Print Name: L--ffleik C b ;v1e/ DWT v ()()

71 EXHffiiT "A" LAND SUBMITTED TO DECLARATION [LEGAL DESCRIPTION OF PROPERTY SUBJECT TO DECLARATION OF CCRS FOR RESIDENTIAL ASSOCIATION] All property covered by the following recording numbers and prior Amendments to Declaration are as follows (and each Amendment lists the tax parcel #s affected): , ; ; ; , , ; ; ; , , ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; and Declaration of Covenants, Conditions and Restrictions for Issaquah Highlands Residential Properties, dated April 28, 1997 and recorded under King County Recording No , as amended by the First Amendment dated December 12, 1997, and recorded under King County Recording No , the Second Amendment dated December 14, 1998 and recorded under King County Recording No , the Third Amendment dated August 9, 1999, and recorded under King County Recording No , the Fourth Amendment dated October 11, 1999, and recorded under King County Recording No , the Fifth Amendment dated October 30, 2000, and recorded under King County Recording No , and the Sixth Amendment dated November 19,2001, and recorded under King County Recording No the Seventh Amendment dated November 26, 2001, and recorded under King County Recording No , and the Eighth Amendment dated January. 10, 2002, and recorded under King County Recording No , the Ninth Amendment dated November 19, 2002, and recorded under King County Recording No , the Tenth Amendment dated November 20, 2002, and recorded under King County Recording No , th e Eleventh Amendment dated November 25, 2002 and recorded under King County Recording No , the Twelfth Amendment dated April 25,2003 and recorded under King County Recording No , the Thirteenth Amendment dated June 25, 2003 and recorded under King County Recording No , the Fourteenth Amendment dated July 17, 2003 and recorded under King County Recording No , the Fifteenth Amendment dated November 17, 2003 and recorded under King County Recording No ; the Sixteenth Amendment dated November 17, 2003 and recorded under King County Recording No ; the Seventeenth Amendment dated February 4, 2004 and recorded under King County Recording No ; the Eighteenth Amendment DWT v Exhibit A- I

72 dated June 7, 2004 and recorded under King County Recording No ; the Nineteenth Amendment dated June 17, 2004 and recorded under King County Recording No ; the Twentieth Amendment dated August 18, 2004 and r orded under King County Recording No ; the Twenty-First Amendment dated October 25, 2004 and recorded under King County Recording No , the Twenty-Second Amendment dated November 17, 2004 and recorded under King County Recording No ; the Twenty-Third Amendment dated December 1, 2004 under King County Recording No ; the Twenty-Fourth Amendment dated June 1, 2005 under King County Recording No ; the Twenty-Fifth Amendment dated September 19, 2005 under King County Recording No ; the Twenty-Sixth Amendment dated November 7, 2005 under King County Recording No ; the Twenty-Seventh Amendment dated November 14, 20Q5, the Twenty-Eighth Amendment dated March 30, 2006 under King County Recording No ; the Twenty- Ninth Amendment dated October 16, 2006 under King County Recording No ; the Thirtieth Amendment dated November 1, 2006 under King County Recording No ; the Thirty-First Amendment dated December 12, 2006 under King County Recording No ; the Thirty-Second Amendment dated July 19,2007 under King County Recording No ; the Thirty-Third Amendment dated September 6, 2007 under King County Recording No ; the Thirty-Fourth Amendment dated Apri110, 2008 under King County Recording No ; the Thirty-Fifth Amendment dated June 10, 2008 under King County Recording No ; the Thirty-Sixth Amendment dated September 18, 2008 under King County Recording No , the Thirty-Seventh Amendment dated November 17, 2008 under King County Recording No , the Thirty-Eighth Amendment dated December 17, 2008 under King County Recording No and Notice of Amendments of By-Laws of Issaquah Highlands Community Association dated October 28, 2008 under King County Recording No ; and the Thirty-Ninth Amendment dated November 23,2009 under King County Recording No and Notice of Amendments of By-Laws of Issaquah Highlands Community Association dated October 28,2008 under King County Recording No ; Fortieth Amendment dated AprilS, 2010, under King County Recording No ; Forty-First Amendment dated November 12, 2010, under King County Recording No ; Forty-Second Amendment dated December 22, 2010, under King County Recording No ; Forty-Third Amendment dated March 22, 201 I, under King County Recording No ; Forty-Fourth Amendment dated March 22, 2011, under King County Recording No ; First Amendment dated December 13, 2011, under King County Recording no ; and Second Amendment dated December 13, 2011 under King County Recording No (collectively "Declaration"). DWT v Exhibit A- 2

73 EXHIBIT "8" LAND SUBJECT TO EXPANSION The following areas may be subjected to the Declaration pursuant to Section 9.I: Annexation Area Grand Ridge Annexation Area as annexed under City of Issaquah Ord adopted 6/17/96, and legally described in Exhibit 1-C of the Grand Ridge Joint Agreement between King County, City of Issaquah and the Declarant, dated June 10, 1996, a Memorandum of which is recorded under King County recording number ("Grand Ridge Joint Agreement") except the following: Areas which are subject to the Term Deed of Development Rights, Conservation Easement, Covenants, Obligations and Conditions for City Open Space under recording number , as it may be amended from time to time; Portions of the annexation area which are not owned by the Declarant. Expansion Areas The Grand Ridge Joint Agreement identifies Expansion Areas which may be acquired by the Declarant in the future, which then could become part of the Grand Ridge project and subject to the Declaration upon completion of the steps and conditions set forth in the Grand Ridge Joint Agreement. Other Areas Any other portion of the geographic area of King County located southeast of Duthie Hill Road or Issaquah-Fall City Road and north of 1-90 which Declarant determines appropriate for inclusion within the Declaration. DWT v Exhibit B

74 EXHIDIT''C" USE RESTRICTIONS AND RULES owr v Exhibit C

75 ISSAQUAH HIGHLANDS LIVING' GREEN"' ISSAQUAH HIGHLANDS USE RESTRICTIONS AND RULES ("RULES") FOR RESIDENTIAL PROPERTIES Adopted: Januaty 30,20tJJ Amended: March 1.8,2002 (Breed Bon Policy), Section 2 (b) Amended: November 25,2002 (Fee/Fine Schedule for Delinquent Payments),Section 6 Amended: May 26, 2004 (Fee/Fine Schedulefor Rules Violations),Section 7 Amended: July 27, 2005 (Signage}, Section 2 (bb} and (Antennas and Dishes),Section 2{aa} and 4 (c} Amended: September 27, 2006 (Private Parle Rules,Section 8; Irrigation Equipment Tampering Section 4(b.1.}; Home Office District Slgnage,Section 3,Change verbiage to Semi-Annual. pgs.1.0 _and 1.3} Amended: 9/1.2/07 (Fertilizer, Pesticide and Dumping) Section 2(h}, (Trash) Section 20}, (Physical Disturbances; Tree Topping} Section 2(s},(Outside Items, Retractable Clothes Lines},Section 2(v},(Signage} Section 2(bb},(Basketball Hoops)Section 2(cc}, Amef!ded; Apri/3, 2009 {Trash _CDns,Section 20); Clotheslines,Section 2(v}; Real Estate Slgnage Z(bb); Basketball Hoops,Section l(cc); Declc Storage 2{dd); Fee/Fine Schedulefor Rules Violations},Section 7} Amended: November 24,201.0 (Trash cans,section 2(/) Amended: March ll., (ACH Policy C) Amended April 26,201.2 (generol restatement} Pacd of31

76 TABLE OF CONTENTS 1. General P Restrictions (a) Vehicles and Equipment P. 4 (b) Animals P. 4 (c) Nuisances P. S (d) Violation of laws P. S (e) Burning P. s (f) Noise P. s (g) Fireworks P. S (h) Fertilizers,Pesticide and Dumping P. S (i) Hazardous Chemicals;Environmental Compliance P. 6 {j) Trash P. 6 (k) Drainage P. 6 (II Subdivision P. 6 (m) Bodies of Water P. 7 (n) Timesharing P. 7 (o) Firearms P. 7 (p) Fuel Storage P. 7 (q) Wildlife P. 7 (r) Physical Disturbance; Tree Topping P. 7 (s) Garage and Carports P. 9 (t) Trails P. 9 (u) Outside Items P. 9 (v) Galvanized, Copper or Treated Materials P. 9 (w) Moss Control P. 9 (x) Water Conservation; Lawn Irrigation P. 9 (y) Commune and Rooming House P. 10 (z) Antennas and Dishes P. 10 (aa) Signage P. 10 (bb) Basketball backboards P. 11 (cc) Decks, Patios,Porches P Prohibitions (a) Disrepair P. 12 (b) Water Withdrawal P. 12 (c) Unauthorized accessing of and/or tampering with IHCA irrigation equipment P. 12 (d) Antennae or Dishes P. 12 (e) View Obstruction P. 12 (f) Critical Area Buffer Encroachment P. 12 (g) Storm Detention Ponds P Leasing of Units P. 13 S. Enforcement of Rules P. 13 Exhibits. (A} (B) (C) Pit Bull Policy Trade or Business & Home Office Districts Use Rules for Private Parks in Issaquah Highlands Pago l orji P. 14 P. 15 P. 19 P. 2Z

77 Policies. (A) {B) 29(C) Community Association Assessment & Late Fee Policy.... Violation Fine Schedule ACH Policy P. 23 P. 24 P. 29 P. 31 Paa 3 ofll

78 These Use Restrictions and Rules ("Rules") apply to the Residential Properties within Issaquah Highlands as defined in the Declaration of Covenants, Conditions and Restrictions [Amended and Restated effective 2012] recorded under King County recording No ("Declaration"). Capitalized terms not defined in these Rules have the same meaning as in the Declaration. These current Rules incorporate the Use Restrictions and Rules attached at Exhibit C to the recorded Declaration as well as all amendments which may be hereafter adopted. Any significant communication or complaint should be registered in writing and directed to community manager(s). Complaints should include all pertinent data. All land uses within the Residential Properties shall conform to the requirements of and the restrictions set forth in these Rules, as they may be amended,modified,repealed or limited pursuant to Article Ill of the Declaration. 1. General. The Residential Properties shall be used only for access to the Residential Properties and the Nonresidential Properties, for the provision of utility services to the Residential Properties and the Nonresidential Properties,and for residential, recreational, and related purposes (which may include, without limitation, an information center or a sales office for any real estate broker retained by Declarant, offices for any property manager retained by the Residential Association, or business offices for Declarant or the Residential Association) consistent with this Declaration and any Supplemental Declaration and the Master Plan. Except as specifically provided in these Rules, Units shall be used for single family residential purposes only (along with those business activities allowed in Exhibit B to these Rules. 2. Restrictions. The following activities within the Residential Properties are restricted such that they may be undertaken only as (and if) permitted under these Rules, or as expressly permitted by, and then subject to such conditions as may be imposed by,the Board of Directors: (a) Vehicles and Equipment. Parking commercial vehicles or equipment, mobile homes, recreational vehicles, golf carts, boats and other watercraft, trailers, stored vehicles or inoperable vehicles are not allowed in places other than enclosed garages; except that construction, service and delivery vehicles shall be exempt from this provision for such period of time as is reasonably necessary to provide service or to make a delivery to a Unit or the Residential Common Area; (b) Animals. Raising,breeding or keeping animals,livestock, or poultry of any kind is not allowed, except that a reasonable number of dogs, cats, or other usual and common household pets may be permitted in a Unit,subject to the Board's authority to establish rules and regulations with respect to keeping such pets and to establish "pet-free zones," as described in Exhibit A to these Use Rules; however, those pets which are permitted to roam. free, or, in the sole discretion of the Board, make objectionable noise, endanger the health or safety of, or constitute a nuisance or inconvenience to the occupants of other Units shall be removed on the Board's request. If the pet owner fails to honor such request,the Board Pac ooi

79 may remove the pet. Dogs shall be kept on a leash or otherwise confined in a manner acceptable to the Board whenever outside the dwelling. Pets shall be registered, licensed and inoculated as required by taw. See Exhibit A for Rules Regarding Pit Bulls. (c) Nuisances. No activity is allowed which emits foul or obnoxious odors outside the Unit or creates noise or other conditions which disturb the peace or threaten the safety of the occupants of other Units; pursuit of hobbies or other activities which cause an unclean, unhealthy or untidy condition to exist outside enclosed structures on the Unit are not allowed; and no noxious or offensive plants, animals, devices or activities are allowed which in the Board's reasonable determination may cause embarrassment, discomfort, annoyance, or nuisance to persons using the Residential Common Area or to the occupants of other Units; (dl Violation of Laws. No activity is allowed which violates local, state or federal laws or regulations; however, the Board shall have no obligation to take enforcement action in the event of a violation; (e) Burning. Outside burning of trash, leaves, debris or other materials is not allowed, except during the normal course of constructing a dwelling on a Unit; wood burning stoves are prohibited. Per ARC Guidelines, outdoor recreational fires are allowed only in professionally manufactured fire pits and cooking devices. Manufactured fire pits must have spark arrestors. No permanent, in-ground fire pit installations are allowed after July 27, Homeowners must have proper fire suppression equipment on hand, such as a garden hose, shovel with bucket of sand, or fire extinguisher at all times during any fire. Adult supervision of fires is required. (f) Noise. No use or discharge of any radio, loudspeaker, horn, whistle, bell, or other sound device is allowed that would be audible to occupants of other Units, except alarm devices used exclusively for security purposes; (g) Fireworks. No use or discharge of firecrackers and other fireworks is allowed; (h) Fertilizers. Pesticide and Dumping. Dumping grass clippings, leaves or other debris, petroleum products, fertilizers,or other potentially hazardous or toxic substances in any drainage ditch, stream, pond, or lake, or elsewhere within the Residential Properties is not allowed, except that controlled or slow-release, low phosphorus fertilizers may be applied to landscaping on Units provided that care is taken to minimize runoff. Such fertilization must be done in accordance with any environmental handbook or guidelines prepared pursuant to or in connection with the implementation of the Master Plan. The Homeowner's Manual for the Residential Properties ("Homeowners Manual") suggests Best Pago ofji

80 Management Practices for fertilization and pesticide and herbicide application, which are practices for managing these substances safely,effectively,and responsibly. Homeowners may not apply pesticides (including, but not limited to herbicides, insecticides and fungicides) to any portion of the Residential Common Area, or any other Residential Association-owned property. The Residential Association, pursuant to the procedures in Policy B attached, may levy a fine per incident. In addition, violators may be subject to applicable civil or criminal penalties. (i) Hazardous Chemicals; Environmental Compliance. Hazardous chemicals or substances must be stored, used and disposed of in a manner which prevents them from getting into the environment, including soil, creeks, wetlands, streets, storm drains, storm detention ponds and sewer systems. Any use or discharge in violation of any environmental manual or guidelines prepared pursuant to or in connection with the implementation of the Master Plan; 0) Trash 1. Any trash (grey),recycling (blue), or yard waste (green) containers and/or bags must be stored indoors during non-pickup hours. 2. Trash cans may only be placed at the curb/street for pickup 12 hours prior to and 12 hours after pickup time. 3. The ARC will consider variance requests in accordance with the variance policy in section 4.5 of the Declaration under the following circumstances: a. Topography b. Natural Obstructions c. Hardship (k) Drainage. Obstruction or rechanneling drainage flows after location and installation of drainage swales, storm sewers, or storm drains is not allowed, except that Declarant and the Residential Association shall have such right; so long as the exercise of such right shall not materially diminish the value of or unreasonably interfere with the use of any Unit without the Owner's consent; (I) Subdivision. Subdivision of a Unit into two or more Units, or changing the boundary lines of any Unit after a subdivision plat including such Unit has been approved and filed in the Public Records is not allowed; except Declarant shall be permitted to subdivide, combine, replat, or adjust boundaries for Units which it owns. Further, with the consent of the Reviewer (in accordance with Article IV of the Declaration), the appropriate jurisdiction, and any owner of other affected property,which each of the foregoing may withhold in its sole discretion, an Owner may change a boundary line to correct an error in the setting of such boundary line or to revise the boundary line in accordance with improvements constructed in inappropriate locations; Pace6 ofji

81 (m) Bodies of Water. No swimming, boating, use of personal flotation devices, or other active use of ponds,streams or other bodies of water within the Residential Properties or other portions of Issaquah Highlands is allowed. The Residential Association shall not be responsible for any loss,damage, or injury to any person or property arising out of any use of any,ponds, streams or other bodies of water; (n) Timesharing. No use is allowed of any Unit for operation of a timesharing, fraction-sharing, or similar program whereby the right to exclusive use of the Unit rotates among participants in the program on a fixed or floating time schedule over a period of years, except that Declarant and its assigns may operate such a program with respect to Units which it owns; (o) Firearms. No discharge of firearms is allowed; provided, the Board shall have no obligation to take action to prevent or stop such discharge; (p) FuelStorage. No on-site storage of gasoline, heating, or other fuels is allowed, except that a reasonable amount of fuel may be stored on each Unit for emergency purposes and operation of lawn mowers and similar tools or equipment, and the Residential Association shall be permitted to store fuel for operation of maintenance vehicles, generators, and similar equipment. This provision shall not apply to any underground fuel tank if approved or allowed by the ARC pursuant to Article IV of the Declaration or if allowed by the architectural guidelines; (q) Wildlife. No capturing, trapping or killing wildlife within the Residential Properties is allowed, except in circumstances posing an imminent threat to the safety of persons using the Residential Properties; (r) Physical Disturbance; Tree Topping. No activity is allowed which would materially disturb or destroy vegetation, wildlife, wetlands, or air quality within the Residential Properties or which use excessive amounts of water or which result in unreasonable levels of sound or light pollution. Street trees shall not be topped or limbed or otherwise disturbed without the City of Issaquah's prior written approval. Removing. Altering or Installing Trees on Private Land. Per ARC Guidelines, homeowners wishing to remove trees, top trees or install trees on their own lots must follow the procedures outlined by the Architectural Review Committee (ARC) and submit an application prior to doing any work with the following exceptions: Homeowners may prune trees on their own lots without application to the ARC Homeowners may replace dead or dying trees on their own lots with the same type of tree in the same location without application to the ARC. Pag 7 of31

82 Fallen Trees on Private Land. By deciding to purchase next to a wooded area with trees, the homeowner is assumed to know the inherent risks of trees falling on to their property. Homeowners are advised to maintain adequate insurance coverage to cover property damage and the costs for removal of fallen trees from their property. In the event of a fallen tree on to the homeowner's lot, the homeowner may remove the fallen tree immediately in conjunction with filing their insurance claim. The cost to remove a fallen tree is the responsibility of the owner of the land where the fallen tree lies,unless caused by negligent care of the fallen tree by the neighboring owner. Trees on Common or Public Land. No resident may add alter or remove any trees in the Residential Common Areas, wetlands, parks, sensitive areas or on private land without advance written approval of the ARC and/or the appropriate governmental agency. Violators of the rules are subject to fines and penalties in accordance with the Residential Association's established policies and procedures, including Policy B attached to these Rules. In addition, the homeowner in violation is responsible for all costs and fines levied by any governmental agencies. Hazardous Trees on Public Land. Hazardous trees, defined as dead, declining or trees oriented in such a way as to create a potential danger to property or people may be eligible for removal or alteration. View enhancement or view maintenance is not a valid reason for tree removal or alteration. IHCA Trees. IHCA trees are located in the medians,streetscapes and Residential Association-owned land and parks, shall be maintained by the Residential Association. Removal and cost assessment decisions for Residential Association trees shall be made by the Residential Association Board. Removal costs may be paid by either the Residential Association,the applicable Neighborhood in which the trees are located,or levied as a specific ssessment to the impacted Owner(s). For questions regarding Residential Association trees or to report a hazardous tree, contact a Community Manager. Hazardous Trees Located on City or County Land. These trees require prior approval of the relevant governing body before they can be touched. To determine whether a hazardous tree is on Residential Association, City or County land, please contact a Community Manager. Requests for Residential Association involvement for tree removal on City or County land must be made in writing to a Community Manager. The request must include the tree(s) location(s), description of the tree(s) and reason for removal. The Community Manager will evaluate the written request(s), inspect the tree(s) and respond to the homeowner in writing with a decision. The Residential Association will contact the City or County, as applicable, to obtain the necessary permission(s). The Residential Association may arrange for the tree evaluation and/or removal using the Residential Association's approved arborist and/or tree service, as required.

83 In the event that the City or County gives permission for removal but will not pay for. the removal cost, all removal costs, including permits, shall be paid by the requesting homeowner(s). This includes the cost for a tree evaluation by a certified arborist or professional tree service,regardless of whether or not permission is granted to remove the tree(s). Any consideration to enlarge a financial impact to encompass more than just the requesting homeowner(s) will be subject to the Architectural Review Committee (ARC) approval on a case by case basis. (s) Garage and Carports. Conversion of any carport or garage to finished space for use as an apartment or other integral part of the living area on any Unit is not allowed without prior approvalpursuant to Article IV of the Declaration; (t) Trails. Operation of motorized vehicles on pathways or trails maintained by the Residential Association is not allowed; (u) Outside Items. No construction, erection, or placement of any thing, permanently or temporarily, on the outside portions of the Unit is allowed, whether such portion is improved or unimproved, except in strict compliance with the provisions of Article IV (architectural review) of the Declaration. This shall include, without limitation, signs, swing sets and similar sports and play equipment (except backboards and portable basketball hoops are governed by Section 2(cc) below); Clotheslines of any type or style are not allowed within Issaquah Highlands; Garbage cans and recycle bins must meet the requirements of Section 2(j) above; Garden bins are allowed with approved screening;. The following are not allowed: woodpiles, above-ground swimming pools and similar structures, antennas,satellite dishes,or other apparatus for the transmission or reception of television, radio,satellite, or other signals of any kind are allowed (except for antennas allowed per 2(z) below). No hedges, walls, dog runs, animal pens, or fences of any kind are allowed unless approved by the ARC under Article IV of the Declaration; (v) Galvanized. Copper or Treated Materials. No use is allowed of galvanized or copper materials on the exterior of any house or roof or treated roof materials, including without limitation the use of galvanized or copper house gutters, house flashings, or road drainage culverts. (w) Moss Control. No use is allowed of moss control materials or agents or treated roofing materials in contravention of the Best Management Practices for use of such materials set forth in the Homeowners Manual; (x) Water Conservation; Lawn Irrigation. No use or activity is allowed in contravention of water conservation measures set forth in the Homeowners Manual or plat conditions such as landscaping standards, irrigation standards, or other water conservation measures. Lawn or landscaping irrigation systems which irrigate more than 2,000 square feet, other than low volume or drip systems, must comply with the Issaquah Highlands Water Conservation Standards and obtain a city permit.

84 (y) Commune and Rooming House. No use is allowed of a Unit as a dwelling where the occupants occupy the Unit in a manner other than as a single housekeeping unit (as opposed to occupying separate rooms or apartments within the Unit or to occupying the Unit in a communal-type arrangement); and (z) Antennas and Dishes. Standard 1V antennas and satellite dishes one meter in diameter or less shall be permitted at Issaquah Highlands; however, such over-the-air reception devices shall comply with all Architectural Standards or other applicable rules or use restrictions adopted by the architectural review committee, the Board, or the Residential Association, pertaining to the means, method,and location of 1V antenna and satellite dish installation. Declarant or the Residential Association shall have the right without obligation, to erect an aerial, satellite dish, or other apparatus for a master antenna, cable, or" other communication system for the benefit of all or a portion of Issaquah Highlands, should any master system or systems be utilized by the Residential Association and require such exterior apparatus. (aa) Signage. No signage may be displayed in windows or be posted on the Residential Properties,except as otherwise expressly provided in these Rules. Holiday signs. Holiday signs, decorations, and lights or political signs may be neatly displayed during seasonal time lines only on the homeowner's lot. Signs may not exceed dimensions of 18" x 24". Signs, decorations, and lights may be installed 30 days prior to the holiday and must be removed within 14 days after the holiday. Political signage. One Political Sign shall be permitted on a Jot at a time; provided, the, Political Sign shall (i) not be more than five (5) square feet in size, (ii) be a maximum height of four (4) feet if posted in the ground of lot, (iii) be of professional quality and design, and (iv) not obstruct line of sight nor any traffic or traffic signals and signage. For the purposes of this Section 2 (aa), the term "Political Sign" means a sign which advocates for one particular candidate, political party or ballot measure. Political Signs may not be placed on the exterior of a lot and/or in a home any sooner than thirty (30) days before the date of a regular or special election and must be removed within three (3) days following the election. No Political Signs shall be placed on common areas, facilities or grounds. For Sale or Rent. One professionally printed real estate "For Sale", "For Sale by Owner", or "For Rent" sign may be posted within the lot for a residential sale following industry standards for sign size, with a realtor T-Bar, and appropriate attached flyer box. Approved signage for units located without street frontage may be posted on the streetscape nearest the unit (e.g. Divisions 22,25, 42,SO, etc.). If there are more than 6 (six) listings on a T-Bar and a box is not available, then Owner should contact the IHCA office to coordinate postings. In addition to the signs allowed in the preceding three sentences, one sign, not to exceed 9" x 24", may be staked in the front of or placed in the window of the unit for sale or rent. Except as allowed by this paragraph, other types of "For Sale by Owner'' or "For lease/rent" yard or window signs are prohibited. Homeowners are responsible for repairs or damage to the lawn or irrigation system related to any sign installation. Open house PocoiO orjl

85 sandwich boards and directional locator signs may be placed in rights of way, but may only be used on the day of the open house for the duration of that day's showing. Crofton Springs, Concord Commons, The Terraces, Crofton at Village Green, West Highlands Park, Villaggio and similar neighborhoods will erect and maintain professionally manufactured Real Estate Yard Arm Signage at the entrances to the neighborhood. Realtors may display brochures in the attached flyer boxes. Signs may not be posted on the mailboxes, parks, main entrance, boulevards, or at other common areas, except as otherwise provided in this Section 2(aa). Garage sale and estate sale signage is prohibited except for community:wide garage sale events sponsored by the events staff. Garage sales are only permitted during the community-wide events. In the event of any conflict with the signage provisions in this section 2(aa) and Exhibit B for trade or business and home office districts,exhibit B shall control. (bb) Basketball backboards may be attached to the house or garage when not visible from the street (e.g.garages on alleys,side-entry garages on courtyards). Fixed freestanding or portable basketball backboards (Hoops) are allowed if the following requirements are met: The Unit on the Residential Property where the Hoop is located is not an apartment,condominium or townhome; The Hoop has bottom weight sufficient to eliminate any significant risk of tipping; The Hoop is kept reasonably clean and in good working order,with a net fully intact, at all times; The Hoop is used only between 9:00am and 8:00pm; Does not violate any noise or nuisance rules;and During December through March (inclusive), the Hoop must be stored out of sight and removed after each use. During April to November (inclusive), the Hoop is not required to be removed and stored after each use, but all other requirements listed above for the Hoop shall be met.

86 (cc) Decks.Patios.Porches Properties: Decks, patios, and porches are not to be used as storage areas. They MUST be kept neat and orderly. Permissible items to be displayed or used on balconies, patios, and porches i clude outdoor furniture, planters, and BBQ grills. Furniture used on decks and patios should be limited to a type especially designed and manufactured for outdoor use and kept in good repair. 3. Prohibitions. The following shall be prohibited within the Residential (a) Disrepair. No structures, equipment or other items are allowed on the exterior portions of a Unit which are rusty, dilapidated or otherwise fallen into disrepair; (b) Water Withdrawal. No sprinkler or irrigation systems or wells of any type are allowed which draw upon water from lakes, creeks,streams, rivers, ponds,wetlands, canals, or other ground or surface waters within the Residential Properties, except that Declarant. and the Residential Association shall have the right to draw water from such sources; (c) Unauthorized accessing of and/or tampering with IHCA irrigation equipment including controllers, valves, and all other hardware is prohibited. Violator will be responsible for any damages caused and subject to a fine up to a $1,000 per occurrence. The following sign will be placed on all field equipment: "This device is the property of Issaquah Highlands Community Association. Unauthorized persons accessing or tampering with this controller are subject to a $1,000 IHCA fine and/or possible criminal prosecution by the City of Issaquah under RCW 9A ". (d) Antennae or Dishes. Exterior antennas, aerials, satellite dishes, or other apparatus for the transmission of television, radio, satellite, or other signals of any kind measuring more than one meter in diameter (or such as size as may be allowed by preemptive federal or state laws) are prohibited;and (e) View Obstruction. No portion of a tree, shrub, or other landscaping feature is allowed that is located on a Unit and obstructs or interferes with an aesthetically pleasing view, as determined in the sole discretion of the Reviewer under Article IV of the Declaration, from any other Unit or the Common Area. However, the Residential Association shall have no obligation to enforce this provision or to remedy any violation of this provision. Notwithstanding the foregoing, no street trees shall be topped, limbed or disturbed without the City of Issaquah's prior approval. (f) Critical Area Buffer Encroachment. No encroachment is allowed into a Critical Area Buffer or a Building Setback line as described on title or through other Issaquah Pogol2 of31

87 Highlands documents, no insecticides or herbicides are allowed within the Building Setback Lines, and only fertilizers specified in the Homeowners Manual shall be allowed within the Building Setback Line. (g) Storm Detention Ponds. For properties adjacent to a Storm Detention Pond, no bigleaf maple,alder or willow trees shall be allowed on the lot. 4. Leasing of Units. "Leasing," for purposes of this Paragraph, is defined as regular, exclusive occupancy of a Unit by any person, other than the Owner, for which the Owner receives any consideration or benefit,including, but not limited to, a fee, service, gratuity, or emolument. All leases shall be in writing. The Board may require a minimum lease term, which requirements may vary from Neighborhood to Neighborhood. Notice of any lease, together with such additional information as may be required by the Board,shall be given to the Board by the Unit Owner within 10 days of execution of the lease. The Owner must make available to the lessee copies of the Declaration,Bylaws,and these Use Restrictions and Rules. 5. Enforcement of Rules. Each Owner, by virtue of being ultimately responsible for ensuring compliance with the Rules will be liable for any violations of the Rules by the Owner or its guests, tenants, visitors, agents, employees, or family members and any fines assessed therefore. Any occupant that violates these Rules also shall be liable for any fines assessed against the unit (in addition to the Owner being liable). Any reported violations of rules will be investigated, where possible, via phone call, communication or physical inspection prior to written notice of violation. Fines assessed against an Owner must be paid to the Residential Association within ten days of the date of writter:"notice of the violation (but deferred until completion of any hearing under Section 4.24 of the Bylaws, if applicable) and the fine assessed therefore. If an Owner fails to pay a fine when due,such overdue fine will be treated and is enforceable as a delinquent assessment under Article VIII of the Declaration. Failure to comply with the rules and regulations set forth herein may result in enforcement actions outlined in Policies A-C attached. In the event of any conflict between the enforcement procedures in this Section 5 and Section 4.24 of the Bylaws, the Bylaws shall control. ' 1 13 of 31

88 EXHIBITS TO USE RESTRICTIONS AND RULES EXHIBIT A: Rules Regarding Pit Bulls EXHIBIT B: Trade or Business & Home Office Districts EXHIBIT C: Use Rules for Private Parks in Issaquah Highlands l'llgel4 orll

89 EXHIBIT A to Use Restrictions and Rules Policy regarding Pit Bulls Adopted on January 25, 2002 Effective Date on March 1,2002 For purposes of this Policy, the term "pit bull dog" means any of the following:staffordshire Bull Terrier; American Staffordshire Terrier;American Pit Bull Terrier; any dog which has been registered at any time as a Pit Bull Terrier; any dog which has the appearance of being predominantly of the breed of dogs know as Staffordshire Bull Terrier, American Staffordshire Terrier, American Pit Bull Terrier. A dog shall be deemed to have the "appearance of being predominantly of the breed of dogs" named herein if the dog exhibits the physical characteristics which substantially conform to the standards established by the American Kennel Club or the United Kennel Club for any of these breeds. Keeping Pit Bulls is Prohibited: No resident of Issaquah Highlands shall own or possess a pit bull dog within the boundaries of Issaquah Highlands, except as specifically permitted by the Grandfather Exception of this policy. Grandfather Exception: Pit bull dogs residing in Issaquah Highlands as of the date of adoption of this Policy shall be permitted to remain in Issaquah Highlands if and only if the owner of the dog complies with the following requirements: Notice of Ownership subject to Grandfather Exemption: The Owner of a pit bull dog seeking to keep the dog in Issaquah Highlands pursuant to the Grandfather Exception shall provide the following information in writing to the Residential Association within 30 days after adoption of this policy: the name, sex, and age of the dog. Any pit bull dog found in Issaquah Highlands which is not registered with the Residential Association in accordance with this rule shall not be protected by the Grandfather Exception and shall be immediately and permanently removed from Issaquah Highlands. Prohibition on Transfer within Issaquah Highlands: No person shall sell, trade or otherwise transfer ownership or possession of a pit bull dog to another person residing within Issaquah Highlands unless the recipient resides in the same household and on the same premises as the owner of the dog. Spaying or Neutering: Any pit bull dog kept in Issaquah Highlands pursuant to the Grandfather Exception shall be spayed or neutered when it reaches the age of six months. Any pit bull dog which is subject to the Grandfather Exception which has not been spayed or neutered and is over the age of six months at the time of the adoption of this policy shall be spayed or neutered within 30 days after adoption of this policy. The owner of any pit bull dog in Issaquah Highlands shall provide to the Residential Association a copy of a veterinarian's certification of spaying or neutering in accordance with this policy. Pagelo(JI

90 Leash and Muzzle Required: Except when inside an owner's residence, inside the owner's fenced yard- 6 foot minimum height with no gaps and under direct supervision of the owners or kept in a kennel constructed and maintained as set forth below,any pit bull dog in Issaquah Highlands shall be (1) restrained on a secure leash which complies with applicable requirements of the City of Issaquah leash law,(2) muzzled by a humane muzzle (which allows the dog to pant and drink water but sufficient to prevent the dog from biting persons or other animals),and (3) under the physical.control of a person capable of controlling the dog. Confinement: Except when inside an owner's residence or when the pit bull is inside the owner's fenced yard- 6 foot minimum height with no gaps and under direct supervision of the owners, or on a leash and muzzle (as set forth above),any pit bull dog in Issaquah Highlands must be confined in a securely enclosed pen or kennel which (1) has secure sides and a secure top attached to the sides,(2) has a secure floor attached to the sides unless the sides are embedded in the ground to a depth of at least two feet,(3) is closed by a lock or other mechanism sufficient to prevent the dog or a child from opening the door, and which is adequately lighted and ventilated and kept in a clean and sanitary condition. Any pen or kennel must comply with applicable zoning and building regulations and the rules and regulations enforced by the Issaquah Highlands Architectural Review Committee. No pit bull dog shall kept on a rope,chain or be leashed to an inanimate object such as a tree, stake,post or building. No pif bull dog shall be kept on a porch,patio or in any part of a house or structure which would allow the dog to exit the building on its own volition. No unsupervised pit bull dog shall be kept in a house or structure when the windows are open or when window or door screens are the only obstacles preventing the dog from escaping. The windows may remain open within the home while the owners are present with the pit bull dog. The owner must take reasonable precaution that the pit bull dog does not have the ability to push through any screen within the house. liability Insurance: Any owner of a pit bull subject to the Grandfather Exception shall submit written proof,in the form of a letter from the owner's insurance broker or carrier, that the owner has insurance providing liability coverage covering any injury or damage caused by the pit bull dog. Such insurance shall have minimum annual coverage limits of $250,000 per occurrence and $250,000 in the aggregate. The owner of the pit bull dog shall submit such a letter annually establishing that such coverage is being maintained continuously by the owner. Compliance with GovernmentalRegulations: All dogs in Issaquah Highlands,including pit bull dogs subject to the Grandfather Exception,shall be maintained in compliance with applicable regulations of the City of Issaquah (and King County) regarding leash laws,pet license requirements and rabies vaccinations. Enforcement: The Residential Association is not assuming responsibility for enforcement of applicable governmental regulations. Any person observing a violation of leash laws, pet licensing requirements,regulations regarding dangerous dogs as defined in RCW ch or Pag<l6 orji

91 other rules adopted by a government agency should contact King County Animal Control at In the event of a violation of this Policy regarding the restrictions on keeping pit bull dogs in Issaquah Highlands,the Board of Directors or its designee shall have the discretion to impose sanctions appropriate to the severity of the violation. The sanctions may include warning notices, fines and/or permanent expulsion of the dog from Issaquah Highlands. In the event that a pit bull dog subject to the Grandfather Exception bites a person or another animal or instigates a fight with another dog, the Board,in its discretion, may order that the pit bull dog be immediately and permanently removed from Issaquah Highlands. Enforcement shall be conducted in accordance with the following procedures: In the event of a violation of this Policy, the owner of the pit bull dog shall be notified by the Residential Association in writing of the violation and proposed penalty. Such notice shall be delivered by mail or by delivery to the residence ofthe owner. If the owner of the pit bull dog disputes either the fact that a violation has occurred or the proposed penalty, the owner shall submit a written notice of appeal pursuant to Section 4.24 of the Bylaws (to the Covenants Panel if then existing or otherwise to the Board) within ten (10) calendar days of the issuance of the notice of violation. The appeal shall explain the factual basis of the appeal. If no appeal is filed, the proposed penalty shall be deemed accepted by the owner of the pit bull dog and it shall be enforced in accordance with the CCR. If an appealis filed, the hearing shall be held by the Covenants Panel if then existing or otherwise to the Board of Directors, consistent with Section 4.24 of the Bylaws, as soon as reasonably possible after the appeal is submitted. The Covenants Panel or Board, as applicable, shall consider all evidence submitted at the appeal and render a written decision,which may sustain, modify or overturn the notice of violation or proposed penalty. The decision, if by the Covenants Panel, may be appealed to the Board. The Board's decision shall be final. NOTES: The Board of Directors reserves the power to expand, modify or repeal this Policy at any time. The Board of Directors intends to appoint an advisory committee of residents of Issaquah Highlands to consider adoption of additional and/or supplemental policies regarding the proper maintenance of dogs within Issaquah Highlands. Nothing in this Policy shall be construed as an assumption of liability or responsibility for activities within Issaquah Highlands or as a modification of Section 7.7 of the Declaration of Covenants, Conditions and Restrictions for the Issaquah Highlands Residential Properties, which provides, in part: THE RESIDENTIAL ASSOCIATION MAY,BUT SHALL NOT BE OBLIGATED TO,MAINTAIN OR SUPPORT CERTAIN ACTIVITIES WITHIN.THE RESIDENTIAL PROPERTIES DESIGNED TO MAKE THE RESIDENTIAL PROPERTIES SAFER THAN THEY MIGHT OTHERWISE BE. THE RESIDENTIAL ASSOCIATION SHALL Paae 17 orji

92 INCLUDE WITHIN THE COMMON EXPENSES THE COSTS RELATED TO ANY SUCH ACTIVITIES THAT THE RESIDENTIAL ASSOCIATION INCURS. NEITHER THE RESIDENTIAL ASSOCIATION NOR DECLARANT SHALL IN ANY WAY BE CONSIDERED AN INSURER OR GUARANTOR OF SECURITY WITHIN THE RESIDENTIAL PROPERTIES, NOR SHALL EITHER BE HELD LIABLE FOR ANY LOSS OR DAMAGE BY REASON OF FAILURE TO PROVIDE ADEQUATE SECURITY OR INEFFECTIVENESS OF SECURITY MEASURES UNDERTAKEN. The Declaration authorizes the Board to establish rules and regulations regarding keeping pets and to establish pet-free zones,in which pets shall not be permitted either within a Unit or upon the Residential Common Area, or both, as determined in the Board's sole discretion. Pets shall be prohibited in pet-free zones unless expressly authorized by, and then subject to such conditions as the Board may impose. The Board shall establish any pet-free zones in accordance with procedures adopted by the Board;

93 EXHIBIT 8 to Use Restrictions and Rules Trade or Business Home Office District Trade or Business: No business, trade,moving sale, rummage sale,or similar activity in or at a Unit is allowed (unless such activity is conducted within a "Home Office District," as described below), except that an Owner or occupant residing in a Unit may conduct business activities within the Unit so long as: (i) existence or operation of the business activity is not unreasonably, as determined in the Board's sole discretion, apparent or detectable by sight, sound, or smell from outside the Unit; (ii) the business activity conforms to all land use and regulatory requirements for the Residential Properties; (iii) the business activity does not involve excessive, as determined in the Board's sole discretion, regular visitation of the Unit by clients,customers,suppliers,or other business invitees or door-to-door solicitation of residents of the Residential Properties; and (iv) the business activity is consistent with the residential character of the Residential Properties and does not threaten security of other residents, as may be determined in the Board's sole discretion. The terms "business" and "trade," as used in this provision, shall be construed to have their ordinary, generally accepted meanings and shall include,without limitation,any occupation, work, or activity undertaken on an ongoing basis which involves the provision of goods or services to persons other than the provider's family and for which the provider receives a fee,compensation,or other form of consideration, regardless of whether: (i) such activity is engaged in full or part-time, (ii) such activity is intended to or does generate a profit,or (iii) a license is required. All home businesses are required to submit an application to thboard of Directors for approval prior to starting business activity. Public notice will be given in the next available edition of the Connections newspaper offering Issaquah Highlands Residents the opportunity to express their opinion regarding the business application. Upon receipt of public comment, all business applications will be reviewed by the Residential Business Application Review Committee (RBARC), if then existing (or by the Board if no RBARC). The RBARC (if in existence) will provide the Board, (at their next scheduled meeting), with feedback and recommendations regarding reviewed applications. The Board, at their sole discretion, will render a decision whether or not to approve the business. Leasing a Unit shall not be considered a business or trade within the meaning of this subsection. This subsection shall not apply to any activity conducted by Declarant or a Builder approved by Declarant with respect to its development and sale of the Residential Properties or its use of any Units which it owns within the Residential Properties, including the operation of a timeshare or similar program; Home Office Districts. Declarant hereby reserves the right to designate areas of the Residential Properties as "Home Office Districts." Declarant's designation of an area as a "Home Office District" shall occur prior to any Unit's being sold by Declarant or its assignee in such area. Otherwise, the Board may designate an area as a Home Office District only with the prior written approval of Class "A" Members representing 90% of the total Class "A" votes attributable to Units located within such area. 1'11& 19 orji

94 Notwithstanding anything to the contrary in this Declaration, a Unit located in a Home Office District may be used for the following purposes: (a) (b) simultaneously as a residence and for carrying on Board-approved professional business activities;or exclusively for carrying on Board-approved professionalbusiness activities. An application which describes the proposed business activity and the number of employees, shows an on-site parking plan, contains terms and conditions of operations and any other information required by the Board,must be submitted to the Board for approval prior to any Unit's being utilized for an approved professional business activity. Such application may be approved or denied in the Board's sole discretion. If the conditions of an approved application have not beencomplied with,i the Board's sole determination,the Board may rescind such approval. Board-approved professional business activities include, but are not limited to, the practice of law; the offering of accounting services; architectural, medical, dentalor engineering offices; computerbased telecommunications and research operations; literary,artistic or craft activities; the provision of education; cafes or restaurants, retail shops or bed and breakfasts if limited and compatible with the particular neighborhood. The Board reserves the right to prohibit retroactively an approved business activity if the Board determines such activity becomes a nuisance. The Board also reserves the right from time to time to designate some activities which shall not be prohibited. Sufficient off-street parking on a Unit must be provided to accommodate the customary number of employees,customers and visitors to the Unit. Designation as a Home Office District shall not relieve any Unit in such area from complying with all architectural controls and construction and design criteria which would be applicable to such Unit in the absence of such designation, unless the Reviewer expressly allows an exemption or modification of those controls or criteria. All signage for Home Occupation units and Convertible Accessory units must comply with the City of Issaquah's municipalcodes and sign permit requirements. All fees and costs associated with signage are the responsibility of the applicant. "Home Occupation" is a business carried on as a secondary, incidental or accessory use being conducted entirely within a residential dwelling,an accessory dwelling or in a building accessory thereto. "Convertible Accessory Unit" is a ground related unit whose ground floor can switch between residential and non-residential uses. Furthermore,unlike Home Occupancy, the business and residential owner do not have to be the same person(s),though the owner of the business or the residence works or lives on-site. Home Occupation units are allowed one 2 square foot wall sign. Convertible Accessor-Y units are allowed signage as follows: one 4 square foot wall/window sign; one pedestrian oriented sign; and one moveable sign. Home Occupation signs may be located in a window or on the door or wall of the frontal plane of the building. Pedestrian oriented signs may be hung perpendicular to the building and shall be on the frontage which contains a pedestrian entrance to Park Drive or Katsura Street, 10th Avenue NE and High Street and may be up to 4 square feet on the side of the Unit that fronts a I'IOJ 20 of31

95 street. Signs may identify the business as well as include a logo and/or artwork related to the business, but shall not contain other advertising matter. One moveable sign may be displayed outside the Right of Way; no outside moveable sign storage is allowed. Members are required to contact the City for additional details and signage requirements. Requests for signage must be submitted in advance to the Architectural Review Committee for review and approvalprior to installation. Neon signs, which are not blinking, flashing, intermittent, or garish, are allowed when illuminated signs are permitted by the City. In the event of any conflict with the signage provisions in this Exhibit B and in section 2{aa) of the Use Rules, this Exhibit B shall control. Paaoll of31

96 EXHIBIT C to the Use Rules Use Rules for Private Park Use at Issaquah Highlands 1. Cleanup. The User shall clean up all litter,trash,and any other debris and restore the Parks to a clean and orderly condition within 24 hours after the conclusion of any Event or activity. 2. Damage Repair. The User shall reimburse IHCA for the cost of any repair or replacement of landscaping or other facilities within the Parks that occurs during the use of the Parks. 3. Prohibitions. The following are prohibited: a) Use of illegal drugs or controlled substances; b) Lewd or immoral conduct; c) Rowdiness, brawling or fighting; d) Gambling; e) Sale of liquor or consumption of liquor by minors; f) Excessively loud noises or music;and g) Use of kegs or party balls except as provided in item (4) 4. Alcohol. Alcoholic beverages are not permitted without a banquet permit. Caterers with a Class Ilicense,however,may post a Class I license in lieu of a banquet permit. 5. Supervision. The User shall designate one or more supervisors (21+ years of age) to be present at all times during an Event or activity,and shall provide the IHCA with a cell phone number and other contact information for that representative. 6. Parking. A parking control must be submitted and approved by the City of Issaquah if traffic is modified for the event or activity. 1' ooi

97 POLICIES FOR ASSESSMENT/FINE PAYMENT AND ENFORCEMENT POLICY A: Community Association Assessment & Late Fee Policy POLICY B: Violation fine Schedule POLICY C: Assessment Payment Policy l'llltlj of31

98 POLICY A Residential Association Assessment & Late Fee Policy (Readopted by resolution of IHCA BOD, 2012] Reference: Governing documents of the Issaquah Highlands Community Association; 1) Articles of Incorporation of Issaquah Highlands Community Association- Article 4 2) Declaration of Covenants,Conditions,& Restrictions for Issaquah Highlands Residential Properties (CC&Rs)- Article VIII 3) Summary of Issaquah Highlands Governance Structure- Article 13 4) By-Laws of Issaquah Highlands Community Association- Article IV 5) Issaquah Highlands Community Association Architectural Review Committee Guidelines,Criteria,and Procedures (ARCs)- Section II The successful operation of the Residential Association is to the benefit of all homeowners. This success relies, in part, on the timely collection of dues and other assessments. To insure that dues and other assessments are collected in a timely manner, the Issaquah Highlands Community Association Board of Directors (The Board), by Board decision November 25, 2002 adopted the following policies, revised from the original January 30,2001policies. This policy incorporates and/or supersedes all prior policies, but in no way negates any specific stipulations in the governing documents. I. AnnualBase Assessments: a) AMOUNT: The amount of base assessments to be paid annually by each homeowner will be computed as stipulated in sections 8.1and 8.2 of the CC&Rs. b) PAYMENT: Dues are to be paid in advance, in semi-annual increments, on or before the first day of the first month and the first day of sixth month of the fiscal year. (Fiscal years run July 1 through June 30; Assessments payable July 1 and January 1) Statements for these semi-annual billings are sent on the later of 30 days prior to due date or immediately after the annual budget has been approved. Subsequent statements for accounts with unpaid balances will be mailed by the 1 51 of each subsequent month following date due. Owners with monthly amounts due for townhome or condominium expenses and managed by the Residential Association, pay a combined total of Residential Association amounts together with neighborhood amounts,all due on or before the first of each month. Statements are sent for monthly accounts with unpaid balances by the 11 1 h of each month. Either semi-annual payers or monthly payers may opt to pay through monthly automatic bank withdrawal. Pac :ra ofji

99 c) PRE-PAYMENT: Additional installments may be pre-paid. However, should the amount of the assessment be increased effective during the period for which pre-payments have been made, the homeowner will be responsible for paying the additional amount when assessed and due. d) COMMENCEMENT: Base Assessments for the balance of the current fiscal year will begin on the day in which closing documents for purchase of home are signed. e) PRORATION: When a home is sold, prorating of base assessments already paid to the Residential Association must be accomplished between the buyer and seller at closing of escrow on home via escrow settlement. f) TRANSFER OF ACCOUNT: When a home is sold the seller and/or seller representative must notify the Residential Association in writing of the date of closing. and the name(s) of the buyer(s) within 7 calendar days of the closing. II. Special Assessments: Upon levying any specialassessments in accordance with section 8.4 of the CC&Rs, the Board will establish installment amounts and payment due dates. Prorating of pre-payments and transfers of accounts will be handled as stated in the preceding items I (e) and l(f). Any Special assessments, along with terms of assessment shall be reflected within homeowner statements. Ill. Specific Assessments: When the Board finds it necessary to assess a specific assessment against a homeowner in accordance with section 4.24 the of By-Laws, section 8.5 of the CC&Rs, and/or section II of the ARCs, the specific assessment(s) as well as terms of such assessments shall be reflected in homeowner statements, and payable on or before the date established by the Board. There shall be no prorating and/or transfers of the specific assessments upon the sale of a home. IV. Maintenance Assessments: Should the Board find it appropriate to take action in accordance with section 8.5 of the CC&Rs, the cost of such maintenance will be a specific assessment and billed to the homeowner through homeowner statements as with other types of assessments. This type of assessment shall be due and payable on or before the first day of the month following mailing of statement. The will be no prorating and/or transferring of maintenance assessments. Pa; 2of31

100 V. Implementation/Collection Responsibility: It shall be the responsibility of the Residential Association Executive Director or such other managing agent selected by the Board to implement and collect assessments as directed by the Board. The Executive Director will report to the Board or such other sub-committee of the Board as established by the Board on a monthly basis the status of all outstanding accounts. VI. Non-Payment/Late Payment Ramifications: a) LATE FEE/INTEREST: A late fee equal to $50.00 shall be charged on any unpaid assessment 10 days following the payment due date and additional late fees are charged thereafter at the intervals set forth in the "Collection Procedure" chart below until the assessment is paid in full in accordance with Section 8.7 of the CC&Rs and/or subsequently implemented Consent to Actions by the Board. Additionally, interest shall be due the Residential Association at a rate of 18% per annum from the due date of the assessment on all balances over 40 days past due. All late fees and interest become a lien on the property and a personal debt liability in the same manner as assessments, as set forth in CC&Rs. b) NSF CHECKS: c) VOTING RIGHTS: d) PRIVILEDGES: Should a check be returned due to insufficient funds, the check will be re-deposited as allowed by bank policies and procedures with a $50.00 administrative fee charged to the account for each return. NSF Administrative fees become a lien on the property and a personal debt liability in the same manner as assessments, as set forth in CC&R's. Late fees/interest charges shall apply to all accounts delinquent due to an NSF checks. Following notice and any hearing and decision under Section 4,24 of the By-Laws, if any unpaid assessment reaching 30 days past due, then all owner voting rights shall be suspended until such a time as all assessments and outstanding late fees/interest,attorney fees and costs or other amounts specified in Section 8.7 of the Declaration have been paid in full. Unless an alternate payment schedule has been established and implemented with the consent of the Board, all owner rights to utilize, athletic courts, parks, and other amenities belonging to and/or funded by the Residential Association shall be suspended, following notice under section 4.24 of the By-laws, effective on the date payments become 30 days past due. Privileges will remain suspended until payment is made in full or until payment plan has been approved and implemented.

101 e) PAYMENT PLANS: When the financial situation of a homeowner necessitates an alternate payment plan, a temporary monthly payment schedule may be approved. The amount of monthly payments will be established to accommodate the homeowner and which will bring the account current as soon as possible. Prior to acceptance of an alternative payment plan by the Board, the homeowner will be required to sign an agreement outlining the temporary payment schedule. All pplicable late fees and/or interest will continue to accrue and become a part of the payment plan until such a time that all balances are paid in full. f) LEGAL ACTION: Assessments constitute a personal debt and the Residential Association may, on accounts 90 days past due or more, turn the account over to a collection agency and/or legal counsel to obtain a judgment against the homeowner. All fees associated with the actions of such agency or counsel shall be added to the outstanding balance and become a lien on the property and a personal debt liability in the same manner as assessments, as set forth in CC&Rs. g) PROPERTY LIEN: Should assessments remain unpaid for 40 days or more, the Board shall automatically file a lien against the property in accordance with CC&R's. h) FORCLOSURE: Non payment of assessments for 120 days or more, which include but are not limited to non-payment of dues, fees, interests, may result in foreclosure of the Residential Association's automatic lien, as provide by the CC&R's. HOMESTEAD PROTECTION: As required by the State of Washington, homeowners are hereby notified that the Homestead Protection provided by Chapter 6.13, Revised Code of Washington, shall not apply in the event of an execution or forced sale in satisfaction a/judgments obtained on debts secured by the Issaquah Highlands Community Association lien. Collection Procedure for Assessments: Except where necessary, the Executive Director will,without further direction from the Board, implement notice and collection action based on the followin_g late Fee Schedule,based on number. of day of delinquency (a) from the due date for payment of assessments [assessments are due and payable on the due date without any required notice) or (b) after delivery of notice for late fees or enforcement for matters other than payment of assessments: l'llg 27of31.

102 Delinquency Action 10 Days Late Fee(s) $ Days after hearing and decision Voting Rights Suspended per Bylaws Sec 4.24 Services and Privileges Suspended 40 Days Late Fee(s) $50.00 Legal Lien ecorded against property and demand of payment letter from Attorney. All related legal expense associated with collection of past due assessments payable by unit owner. Interest may be due the Association at a rate of 18% per annum from the due date of the assessment on all balances over 40 days past due. 70 Days Late Fee(s) $ Days Late Fee(s) $ Days Commencement of foreclosure & all related legal expense associated with collection of past due assessments payable by unit owner. Every 30 days following 100 Days Late Fee (s) $150.00/month COLLECTION PROCEDURE EXCEPTION: As required by Jaw, upon receipt of Notice of Bankruptcy proceedings, all collection efforts for amounts due up to the date of filing will cease. The Board will investigate and pursue legal collection of past due funds through bankruptcy process. Assessments for current/future dues will be invoiced and payable as stated above for all amounts unrelated to the bankruptcy proceedings Page 18 ooi

103 POLICY 8 Violation Fine Schedule [Adopted by resolution of IHCA BOD December 17, 2008] [Readopted by resolution of IHCA BOD, 2012) Notice of Violation If an Owner or occupant of any Unit is violating the Declaration, Use Rule or other Goveming Document, then the Board or its designee may deliver written notification to a Unit Owner or occupant setting forth the following: (a) the specific violation; (b) the required compliance and corrective action ("Compliance"); (c) the sanction to be imposed if Compliance does not occur; and (d) stating the Owner's right within 10 days after receipt of the notice either to file an appeal or make arrangements with the Board or its designee in writing to accomplish Compliance. Any appeal must be submitted in writing to the Covenants Panel (if then existing) or otherwise to the Board, outlining the reasons for the appeal. Appeals are governed by Section 4.24 of the Bylaws. The "Due Date" for Compliance means one of the following, as applicable: (i) completion of Compliance within I 0 days after the notice of violation if the Owner does not file an appeal within the I 0-day period; (ii) if the Owner made arrangements with the Board or its designee, then expiration of the date for Compliance set by the Board or its designee; or (iii) if the Owner filed a timely appeal, then expiration of the time allowed for Compliance as set forth in the final appeal decision (or within 10 days after the appeal decision if no time for Compliance is set forth in the appeal decision). If Compliance is not fully completed by the Due Date, then the owner is subject to fines as follows: I st Fine: 2nd Fine: 3rd Fine: $50 if Compliance is not completed by the Due Date. Additional $100 if Compliance is not completed within 30 days after the Due Date. Additional $150 fine if Compliance is not completed within 45 days after the Due Date. 4th Fine and Additional Sanctions: If the Owner has not completed Compliance within 60 days after the Due Date, then the Owner will be subject to any additional or escalating fines that may be adopted by the Board. Further, the following privileges shall be suspended: use of an y h r lt of 31

104 common area or recreational facilities; any services provided the by Residential Association to the Owner; suspension of the Owner's right to vote. A legal lien may be recorded against the Owner's property and a demand of payment letter delivered by an attorney for the Residential Association for any and all unpaid fines. The Owner in violation shall be liable for all expenses incurred by the Residential Association including all legal and collection costs Violations will remain on an Owner's record for two years, and will be used to determine the assessment of escalating fines if such fines are adopted by the Board. Violations will be removed from an owner's record after two years ifthere are no further violations during that period. Page30 of31

105 POLICY C IHCA Assessment Payment Policy (Adopted by Resolution of the IHCA BOD March 2;2011) Effective July 1,2011, (a) all new units joining the IHCA from the time they are first sold to an owner other than a builder and (b) any existing unit within the IHCA that is sold to a new owner, the IHCA assessments must be remitted via ACH {direct debit). l'llco31 orji

106 EXHffiiT non BYLAWS OF ISSAQUAH ffighlands COMMUNITY ASSOCIATION DWT v {)00070 Exhibit D

107 AMENDED AND RESTATED BY-LAWS OF ISSAQUAH HIGHLANDS COMMUNITY ASSOCIATION [Effective June 1, DWT v

108 ARTICLE SECTION TABLE OF CONTENTS Article I Name, Principal Office, and Defmitions...! 1.1. Name... l 1.2. Principal Office...1 Article II Defmitions...l 2.1. "Area of Common Responsibility." "Board of Directors" or "Board." "Board District." "Builder."...:...: 'Class "A" Member." "Class "B" Control Period." "Class "B" Member."...' "Common Expenses." "Declarant." "Declaration." "Governing Documents.": "Member." "Mortgage." "Neighborhood; Subneighborhood." "Neighborhood Expenses; Subneighborhood Expenses."...' "Owner." : "Person." "Public Records." "Residential Association." "Residential Common Area." "Residential Properties." "Special Assessment." "Specific Assessment." "Unit."... 5 Article III Residential Association: Membership, Meetings, Quorum, Voting, Proxies Membership Place ofmeetings Annual Meetings Special Meetings...: Notice of Meetings Waiver of Notice Adjournment of Meetings Voting Proxies..., Majority Quorum...10 owr v

109 3.12. Conduct ofmeetings... ll Action Without a Meeting... II Meetings Held by Telephone or Similar Communications Equipment Article IV Board of Directors: Number, Powers, Meetings A. Composition and Selection Governing Body; Composition... II 4.2. Number of Directors Directors During Class "B" Control Period Nomination and Election Procedures Election and Term of Office Removal of Directors and Vacancies B. Meetings Organizational Meetings Regular Meetings Special Meetings WaiverofNotice Meetings Held by Telephone or Similar Communications Equipment Quorum of Board of Directors Compensation Conduct of Meetings Open Meetings Action Without a Meeting C. Powers and Duties Powers Duties Right of Class "B" Member To Disapprove Actions Management Accounts and Reports Borrowing Right To Contract Enforcement (e) Covenants Panel. The Board may appoint a Covenants Panel consisting of five (5) or seven (7) Class "A" Members. Acting in accordance with the provisions of the Declaration, these By-Laws, and resolutions the Board may adopt, the Covenants Panel, if established, shall be the hearing tribunal of the Residential Association and shall conduct all hearings held pursuant to this Section Article V Officers Officers...: Election and Term of Office Removal and Vacancies Powers and Duties Resignation Agreements, Contracts, Deeds, Leases, Checks, Etc DWT vl ()()()070 ll

110 5.7. Compensation...' Article VI Committees; Task Forces and Member Advisory Committees General Executive Committee. The officers of the Board, along with any additional director appointed by the Board, may serve as an Executive Committee and may act on behalf of the Board to the extent provided by resolution or ratification of the Board. Any action taken by the Executive Committee shall be reported promptly to the other Board members Task Forces; Member Advisory Committees In addition to formal Board committees, the Board may establish from time to time one or more task forces, advisory committees and/or ad hoc committees (collectively "Advisory Committee") comprised of Members, residents or others, as the Board deems appropriate to perform such tasks and to serve for such periods as the Board may designate by resolution. Each Advisory Committee shall operate in accordance with the terms of such resolution. Advisory Committees may but shall not be required to include one or more directors. Advisory Committee members shall be appointed, and may be removed, by the Board acting in its discretion. No Advisory Committee shall have any authority to bind or commit the Board or the Residential Association, but rather the purpose shall be to advise or make recommendations to the Board for action, in the Board's discretion Neighborhood and Subneighborhood Committees Article VII Miscellaneous Fiscal Year Parliamentary Rules Conflicts Books and Records Notices Amendment...33 Exhibit 1 Map ofboard Districts owr vl lll

111 AMENDED AND RESTATED BY-LAWS OF ISSAQUAH HIGHLANDS COMMUNITY ASSOCIATION THESE AMENDED AND RESTATED BY-LAWS OF ISSAQUAH HIGHLANDS COMMUNITY ASSOCIATION ("By-Laws") are effective as of, 2012, by Grand-Glacier LLC, a Washington limited liability company, as the successor "Declarant". pursuant to merger as of July 1, 2003 of the original Declarants Grand Ridge Partnership (Limited Partnership), a Washington limited partnership, and Glacier Ridge Partnership (Limited Partnership), a Washington limited partnership. These By-Laws amend, restate, supersede, and replace in their entirety those certain Amended and Restated By-Laws of Issaquah Highlands Community Association, attached as Exhibit "D" to and recorded with that certain Declaration of Covenants, Conditions and Restrictions for Issaquah Highlands Residential Propert!es [Amended and Restated Effective July I, 2011, dated July 1, 2011,, and recorded under King County Recording No Name. Article I Name, Principal Office, and Defmitions The name of the corporation 1s Issaquah Highlands Community Association (the "Residential Association") Principal Office.. The principal office of the Residential Association shall be located in King County, Washington. The Residential Association may have such other offices, either within or outside of Washington, as the Board may determine or as the affairs of the Residential Association may require. Article II Definitions The terms used in these By-Laws generally shall be given their natural, commonly accepted definitions unless otherwise specified. Unless the context indicates otherwise, capitalized terms shall be defined as set forth below or, if not set forth below, as defined in the Declaration "Area of Common Responsibility." The Residential Common Area, together with such other areas, if any, for which the Residential Association has or assumes responsibility pursuant to the terms of the Declaration, any Supplemental Declaration or other applicable covenants, contracts, or agreements. DWT vl

112 2.2. "Board of Directors" or "Board." The body responsible for administration of the Residential Association, selected as provided in these By-Laws and generally serving the same role as the board of directors under Washington corporate law. 2.3 "Board District." Districts established under Section 6.4(b) of the Declaration, whereby Members within each Board District shall vote on a separate slate of candidates for the election of the Board member for that District "Builder." Any Person who purchases one or more Units for the purpose of constructing improvements for later sale to consumers, or who purchases one or more parcels of land within the Residential Properties for further subdivision, development, or resale in the ordinary course of such Person's business "Class "A" Member." All Owners, except the Class "B" Member, if any, as more specifically defined in Section "Class "B" Control Period." The period of time during which the Class "B" Member ts entitled to appoint a majority of the members of the Board as provided in Section "Class "B" Member." Declarant, so long as the Class "B" membership exists, as more specifically defined in Section "Common Expenses." The actual and estimated expenses incurred, or anticipated to be incurred by the Residential Association for the general benefit of all Owners, including any reasonable reserve, as the Board may find necessary and appropriate pursuant to the Governing Documents. Common Expenses shall not include any expenses incurred during the Class "B" Control Period for initial development or other original construction costs unless approved by Members representing a majority of the total Class "A" vote of the Residential Association. DWT v

113 2.9. "Declarant." Grand-Glacier, LLC, a Washington limited liability company, or any successor, successor-in-title or assign of Declarant who takes title to any portion of the property described in Exhibits "A" or "B" for the purpose of development or sale and who is designated as Declarant in a recorded instrument executed by the immediately preceding Declarant "Declaration." Declaration of Covenants, Conditions, and Restrictions for Issaquah Highlands Residential Properties, recorded in the Public Records, as amended and restated, and as may be further amended and supplemented from time to time "Governing Documents." A collective term referring to the Declaration and any applicable Supplemental Declaration, these By-Laws, the Articles, the Architectural Standards, the Use Restrictions and Rules, and the Master Plan, as each may be amended from time to time "Member." A Person subject to membership in the Residential Association pursuant to Section 3.8. After termination of the Class "B" membership, any reference to "Member" shall mean the Class "A" Members "Mortgage." A mortgage, a deed of trust, a deed to secure debt, or any other form of security instrument affecting title to any Unit. A "Mortgagee" shall refer to a beneficiary or holder of a Mortgage "Neighborhood; Subneighborhood." A group of Units designated as a separate Neighborhood for purposes of sharing Exclusive Common Areas or receiving other benefits or services from the Residential Association which are not provided to all Units within the Residential Properties. A Neighborhood may be comprised of more than one housing type and may include noncontiguous parcels of property. Further, subareas within a Neighborhood may be created for special services or benefits and assessed on a subarea basis as provided in Section 6.4 ("Subneighborhoods''). Where a Subneighborhood has been established pursuant to Section 6.4, references to "Neighborhood" shall include such Subneighborhood. Where the context permits or requires, the term Neighborhood or Subneighborhood shall also refer to the Neighborhood Committee or Subneighborhood Committee (established DWT v

114 in accordance with these By-Laws) or Neighborhood Association, if anyhaving concurrent jurisdiction over the property within the Neighborhood "Neighborhood Expenses: Subneighborhood Expenses." The actual and estimated expenses which the Residential Association incurs or expects to incur for the benefit of Owners of Units within a particular Neighborhood or Neighborhoods, which may include a reasonable reserve for capital repairs and replacements and a reasonable administrative charge, as may specifically be authorized pursuant to the Declaration or in the Supplemental Declaration(s) applicable to such Neighborhood(s). Where a ubneighborhood has been established pursuant to Section 6.4 of the Declaration, references to "Neighborhood Expenses" shall include the expenses attributable to such Subneighborhood "Owner." One or more Persons who hold the record title to any Unit, but excluding in all cases any party holding an interest merely as security for the performance of an obligation. If a Unit is sold under a recorded contract of sale, and the contract specifically so provides, the purchaser (rather than the fee owner) will be considered the Owner "Person." A natural person, a corporation, a partnership, a limited liability company, a trustee, or any other legal entity "Public Records." The public land records of King County, Washington "Residential Association." Issaquah Highlands Community Association, a Washington nonprofit corporation, its successors, or asstgns "Residential Common Area." All real and personal property, including easements, in which the Residential Association owns, leases or otherwise holds possessory or use rights for the common use and enjoyment of the Owners. The term shall include the Exclusive C9mmon Area, as defined in the Declaration "Residential Properties." The real property described in Exhibit "A," together with such additional property as is subjected to the Declaration in accordance with Article IX of the Declaration. DWT v

115 2.22. "Special Assessment., Assessments levied in accordance with Section 8.4 of the Declaration "Specific Assessment." Assessments levied in accordance with Section 8.5 of the Declaration "Unit." A portion of the Residential Properties, whether improved or unimproved, which may be independently owned and is intended for development, use, and occupancy as an attached or detached residence for a single family. The term shall refer to the land, if any, which is part of the Unit as well as any improvements thereon. In the case of a building within a condominium or other structure containing multiple dwellings, each dwelling shall be deemed to be a separate Unit. In the case of asingle lot which contains a primary residence, as well as a carriage house or similar accessory structure, all structures upon the lot, together, shall be deemed a single Unit. In the case of a parcel of vacant land or land on which improvements are under construction, the parcel shall be deemed to be a single Unit until such time as a subdivision plat or condominium plat is recorded in the Public Records on all or a portion of the parcel. Thereafter, the portion encompassed by such plat shall contain the number of Units determined as set forth in the preceding paragraph and any portion not encompassed by such plat shall continue to be treated in accordance with this paragraph. Article III Residential Association; Membership, Meetings, Quorum, Voting, Proxies 3.1. Membership. The Residential Association shall have two classes of membership, Class 11 A" and Class "B," as more fully set forth in the Declaration, the terms of which pertaining to membership are incorporated by this reference Place of Meetings. Meetings of the Residential Association shall be held at the principal office of the Residential Association or at such other suitable place convenient to the Members as the Board may designate, either within the Residential Properties or as convenient as possible and practical. DWT v

116 3.3. Annual Meetings. Regular annual meetings of the Members shall be set by the Board so as to occur within 60 days before or following the end of the Residential Association's fiscal year on a date and at a time set by the Board Special Meetings. The President may call special meetings of the Members. In addition, it shall be the duty of the President to call a special meeting of the Members if so directed by resolution of the Board or upon a petition signed by Members representing at least 10% of the total Class "A" votes of the Residential Association. ' 3.5. Notice of Meetings. Written or printed notice stating the place, day, and hour of any meeting of the Members shall be delivered by regular or express mail, private carrier, personal delivery, or electronic network posting to each Member entitled to vote at such meeting, not less than l 0 nor more than 50 days before the date of such meeting (or other time periods mandated by law), by or at the direction of the President or the Secretary or the officers or persons calling the meeting. In the case of a special meeting or when otherwise required by statute or these By- Laws, the purpose or purposes for which the meeting is called shall be stated in the notice. No business shall be transacted at a special meeting except as stated in the notice. (a) Consent to Notice By . If notice is provided to Members by , it is effective only with respect to Members who have: (i) consented in writing or by to receive notices transmitted by ; and (ii) designated in the consent the message format that is accessible to the recipient, and the address, location, or system to which these notices may be ed. A Member who has consented to receipt of ed notices may revoke the consent by delivering (by mail, facsimile or ) a revocation to the Residential Association. In addition, the consent of any Member shall be revoked if the Residential Association is unable to transmit by two (2) consecutive notices given by the Residential Association in accordance with the Member's consent, and this inability becomes known to the Secretary of the Residential Association or other person responsible for giving the notice. The inadvertent failure by the Residential Association to treat this inability as a revocation does not invalidate any meeting or other action. (b) Delivery of Notice By . Notice provided by to a Member who has consented to receive notice by such means is effective when it is ed to an address designated by the recipient for that purpose. (c) Delivery of Notice by Posting to Electronic Network. The Residential Association may provide notice of the time and place of any meeting of the Members by owr vl

117 posting the notice on an electronic network (such as a listserv), provided that the Residential Association also delivers to the Member notice of the posting by mail, facsimile, or {pursuant to the recipient's consent to receive notices by ), together with comprehensible instructions regarding how to obtain access to the posting on the electronic network. (d) Deliverv of Notice by Other Means. If mailed, the notice of a meeting shall be deemed to be delivered when deposited in the United States mail addressed to the Member at his or her address as it appears on the records of the Residential Association, with postage prepaid. Notice by personal delivery is effective when delivered. Notice by facsimile is effective the same day as verified; provided that any verification that occurs after 5 p.m. on a business day, or at any time on a Saturday, Sunday or holiday, will. be deemed to have occurred as of 9 a.m. on the following business day Waiver of Notice. Waiver of notice of a membership meeting shall be deemed the equivalent of proper notice. Any Member may, in writing, waive notice of any membership meeting, either before or after such meeting, which writing may also be by executed by the Member. For purposes ofthese Bylaws, "executed" means: (a) a writing that is signed; or (b) an transmission that is sent with sufficient information to determine the sender's identity. Attendance at a meeting by a Member shall be deemed waiver by such Member of notice of the time, date, and place thereof, unless such Member specifically objects to lack of proper notice at the time the meeting is called to order. Attendance at a special meeting also shall be deemed waiver of notice of all business transacted at such meeting unless an objection on the basis of lack of proper notice is raised before the business is put to a vote Adjournment of Meetings. If any meeting of the Residential Association cannot be held because a quorum is not present, a majority of the Members who are present at such meeting may adjourn the meeting to a time not less than five nor more than 30 days from the time the original meeting was called. At the reconvened meeting, if a quorum is present, any business may be transacted which might have been transacted at the meeting originally called. If a time and place for reconvening the meeting is not fixed by those in attendance at the original meeting or if for any reason a new date is fixed for reconvening the meeting after adjournment, notice of the time and place for reconvening the meeting sha11 be given to Members in the manner prescribed for regular meetings. The Members present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment, notwithstanding the withdrawal of enough Members to leave less than a quorum, provided that any action taken is approved by at least a majm;ity of the votes required to constitute a quorum. DWf vl ()()()070 7

118 3.8. Voting. (a) General. The Residential Association shall have two classes of membership, Class "A" and Class "B." (i) Class "A". Class "A" Members shall be all Owners except the Class "B" Member, if any. Class "A" Members shall have one equal vote for each Unit in which they hold the interest required for membership under Section 6.2 of the Declaration, except that there shall be only one vote per Unit and no vote shall be exercised for any property which is exempt from assessment under Section 8.9 of the Declaration. All Class "A" votes shall be cast as provided in Section 3.8 (a)(iii) below. (ii) Class "B". The sole Class "B" Member shall be Declarant. The Class "B" Member shall not vote on a per Unit basis but shall have such rights including the right to approve, or withhold approval of, actions proposed l1nder the Declaration, these By- Laws and the Articles, as are specified in the relevant sections of the Declaration, these By- Laws and the Articles. After termination of the Class "B" Control Period, the Class "B" Member shall have a right to disapprove actions of the Board and committees as provided in Section In addition, the Class "B" Member may appoint a majority of the members of the Board during the Class "B" Control Period, as specified in Section 4.3. The Class "B" membership shall terminate upon the earlier of: (A) two years after expiration- of the Class "B'' Control Period pursuant to Article IV of these By-Laws; or (B) a recorded instrument. when, in its discretion, Declarant so determines and declares in Upon termination of the Class "B" membership, Declarant shall be a Class "A" Member entitled to Class "A" votes for each Unit which it owns. (iii) Exercise of Voting Rights. Except as otherwise specified in the Declaration or these By-Laws, the vote for each Unit owned by a Class "A" Member shall be exercised by the Unit Owner. Subject to Washington law and such limitations as the Board may impose with respect to particular votes, Members may vote by mail, by electronic transmission (such as or "web voting"), in person, or by proxy on any matter calling for a vote of the Members. In any situation where a Member is entitled personally to exercise the vote for his or her Unit, and there is more than one Owner of such Unit, the vote for such Unit shall be exercised as the co-owners determine among themselves and advise the Secretary of the Residential Association in writing prior to the vote being taken. Absent such advice, the Unit's vote shall be suspended if more than one Person seeks to exercise it. DWT v ()()0070 8

119 (b) Board Districts. Declarant has established six (6) Board Districts for the purpose of electing directors to the Board, along with one (I) at-large Board positions. The boundaries of such Board Districts may be amended from time to time by Declarant, acting alone, at any time prior to the expiration of the Class "B" Control Period. Thereafter, the Board may modify the boundaries of the Board Districts upon a majority of the Class "A" Members voting to ratify the proposed modified Board District boundaries. The Class "A" Members owning Units within each Board District shall vote for the Board member from that District, plus the at-large Board positions. (c) Amendment of Voting Provisions. The provisions of these By-Laws regarding Voting contained in this Section 3.8 shall be amended only in accordance with this Section 3.8(c), rather than in accordance with Section 7.6, to the extent Section 7.6 and this Section are inconsistent. (i) By Declarant. Declarant may unilaterally amend this Section if such amendment is necessary (A) to bring any provision into compliance with any applicable governmental statute, rule, regulation, or judicial determination; (B) to enable any reputable title insurance company to issue title insurance coverage on the Units; (C) to enable any institutional or governmental lender, purchaser, insurer or guarantor of mortgage loans, including, for example, the Federal National Mortgage Association or Federal Home Loan Mortgage Corporation, to make, purchase, insure or guarantee mortgage loans on the Units; or (D) to satisfy the requirements of any local, state or federal governmental agency..however, any such amendment shall not adversely affect the title to any Unit unless the Owner shall consent in writing. In addition, so long as Declarant owns property described in Exhibits "A" or "8" of the Declaration for development as part of the Residential Properties, it may unilaterally amend this Section for any other purpose, provided the amendment has no material adverse effect upon any right of any Owner. (ii) By Members. Except as otherwise specifically provided above, this Section may be amended only by the affirmative vote or written consent, or any combination thereof, of Members representing 75% of the total Class "A" votes in the Residential Association, including 75% of the Class "A" votes held by Members other than Declarant, and the consent of Declarant, in its sole discretion, so long as Declarant owns any property subject to the Declaration or which may become subject to the Declaration in accordance with Section 9.1 of the Declaration. In addition, the approval requirements set forth in Article XV of the Declaration shall be met, if applicable. Notwithstanding the above, the percentage of votes necessary to amend a specific clause shall not be less than the prescribed percentage of affirmative votes required for action to be taken under that clause. (iii) Declarant and Class "B" Member Rights. No amendment of this Section may remove, revoke, or modify any right or privilege of Declarant or the Class "B" 9 DWT v l

120 Member without the written consent of Declarant or the Class "B" Member, respectively (or the assignee of such right or privilege) Proxies. On any matter as to which a Member is entitled personally to cast the vote for his Unit, such vote may be cast in person, by mail, by electronic transmission (such as or "web voting"), or by proxy, subject to the limitations of Washington law relating to use of general proxies and subject to any specific provision to the contrary in the Declaration or these By-Laws. Every proxy shall be in writing specifying the Unit for which it is given, executed by the Member or his duly authorized attorney-in-fact, dated, and filed with the Secretary of the Residential Association prior to the meeting for which it is to be effective. For these purposes, ''executed" means: (a) a writing that is signed; or (b) an transmission that is sent with sufficient information to determine the sender's ability. Unless otherwise specifically provided in the proxy, a proxy shall be presumed to cover all votes which the Member giving such proxy is entitled to cast, and in the event of any conflict between two or more proxies purporting to cover the same voting rights, the later dated proxy shall prevail, or if dated as of the same date, both shall be deemed invalid. Every proxy shall be revocable and shall automatically cease upon conveyance of any Unit for which it was given, upon receipt by the Secretary of written notice of revocation of the proxy or of the death or judicially declared incompetence of a Member who is a natural person, or 11 months from the date of the proxy, unless a shorter period is specified in the proxy. 3.I 0. Majority. As used in these By-Laws, the term "majority" shall mean those votes, Owners, or other group as the context may indicate totaling more than 50% of the total eligible number. 3. l 1. Quorum. A quorum shall be required for the transaction of any business, or the holding of any Association vote, at a meeting. For those votes, including elections, held outside of a meeting, except as otherwise required by law, a quorum shall not be required.. Except as otherwise provided in these By-Laws or in the Declaration, the presence in person or by proxy of Members representing at least l 0% of the total Class "A" votes in the Residential Association shall constitute a quorum at all meetings of the Residential Association. Members voting by proxy, mail or electronic transmission shall be deemed present for all purposes of quorum, count of votes, and percentages of total voting power present. If at any meeting there is not a quorum of at least 10%, then the meeting may be rescheduled or reconvened in the manner provided in Section 3.7, and at such reconvened meeting the required quorum shall be reduced to 5% of the total Class "A" votes in the Residential Association. DWT S4v

121 3.12. Conduct ofmeetings. The President shall preside over all meetings of the Residential Association, and the Secretary shall keep the minutes of the meetings and record in a minute book all resolutions adopted and all other transactions occurring at such meetings Action Without a Meeting. Any action required or permitted by law to be taken at a meeting of the Members may be taken without a meeting, without prior notice and without a vote if written consent specifically authorizing the proposed action is signed by all of the Members entitled to vote with respect to the subject matter thereof. Such consents shall be signed within 60 days after the Residential Association's receipt of the consent having the earliest date, dated and delivered to the Residential Association at its p1lncipal place of business in the State of Washington. Such consents shall be filed with the minutes of the Residential Association and shall have the same force and effect as a vote of the Members at a meeting Meetings Held by Telephone or Similar Communications Eguioment. Meetings of the Members may be conducted by conference telephone or similar communications equipment by means of which all persons participating in the meeting can _ hear each other at the same time and participation by such means shall constitute presence in person at a meeting. Article IV Board of Directors: Number, Powers, Meetings A. Composition and Selection Governing Body; Composition. The affairs of the Residential Association shall be governed by a Board of Directors, each of whom shall have one equal vote. Except with respect to directors appointed by the Class "B" Member, the directors shall be Class "A" Members or residents; provided, however, no Owner and resident representing the same Unit may serve on the Board at the same time. A "resident" shall be any natural person 18 years of age or older whose principal residence is a Unit within the Residential Properties. In the case of a Member which is not a natural person, any offi er, director, partner, member, or trust officer of such Member shall be eligible to serve as a director unless otherwise specified by written notice to the Residential Association signed by such Member; provided, no Member may have more than one such representative on the Board at a time, except in the case of directors appointed by the Class "B" Member. DWT v

122 4.2. Number of Directors. The Board shall consist of seven or nine directors, of which six shall be elected from Board Districts, as provided in Sections 4.3 and 4.5 below. Any directors in excess of the six directors from Board Districts shall be At Large directors elected by all Class "A" Members. If the Board is increased to nine diredors from the seven director positions on the date of these amended and restated By-Law, then the Board thereafter shall retain the right to reduce the number of directors to seven, but the reduction shall re uce the term of any existing At Large director, and hence the effective date of the reduction to seven directors shall occur at the end of the fiscal year when the term of two of the At Large directors are expmng Directors During Class "B" Control Period. Subject to the provisions of Section 4.5, the directors shall be selected by the Class "B" Member acting in its sole discretion and shall serve at the pleasure.of the Class "B" Member until the first to occur of the following (which shall be the end of the Class "B" Control Period): (a) when 75% of the total number of Units permitted by the Master Plan for the property described in Exhibits "A" and "B" of the Declaration have certificates of occupancy (or final inspections if no certificate of occupancy is issued for such structure) issued thereon and have been conveyed to Persons other than Builders; (b) (c) December31,2017;or when, in its discretion, the Class "B" Member so determines Nomination and Election Procedures. (a) Nominations and Applications for Candidacy. At least sixty (60) days prior to each election of directors, the Board shall appoint a Nominating Committee consisting of a chairman, who shall be a Board member; and three or more Class..A" Members or representatives of Class "A" Members that are not Board members, to nominate one or more candidates for each director position to be filled from within a Board District or At Large position to be voted upon at the next director election. The Board shall also establish such other rules and regulations as it deems appropriate to conduct the nomination of directors in a fair, efficient and cost-effective manner. The members of the Nominating Committee shall be appointed by the Board prior to delivery of the notice of any election and will serve a term ending upon the election, unless the Board determines to have a term of one year and until their successors are appointed. In selecting Members to be on the Nominating Committee, the Board shall not select a Member who is a spouse or relative of a sitting Board director or who (or whose spouse or relative) has served on the Board within the past 3 years. The Members comprising the Nominating DWT v

123 Committee shall be announced in the notice of each election and the Board shall designate an opening and closing date for qualified candidates (i.e. a Member or resident over 18 years of age, as provided in Section 4.1) to submit their names to the Nominating Committee. Any person qualified to be a candidate may submit his/her name to be considered by the Nominating Committee during the nomination period. The Nominating Committee also may solicit potential candidates in addition to those submitting their name. The Nominating Committee shall nominate separate slates for the director(s) to be elected at large by all Class "A" Members, and for the single director to be elected by the Class "A" Members residing within each respective Board District. The Nominating Committee may nominate a single candidate or multiple candidates for each Board District and for each At Large Board position [i.e. the Nominating Committee may nominate a single candidate for some Board Districts and multiple candidates for other Board Districts, or a single candidate for some At Large positions and multiple candidates for other At Large positions]. The Nominating Committee may nominate one or more persons from the committee itself, but any committee member shall recuse him/herself from discussion or voting on that member's selection to the slate of candidates. If at least thirty {30) days prior to the date of the election a person submits a nomination with signatures of support of at least {a) five percent (5%) of the Class "A" Members within the Board District for a District position or (b) one percent (1%) of all Class "A" Members for an At Large position, then the Nominating Committee shall place that person on the slate of candidates. In making its nominations, the Nominating Committee shall use reasonable efforts to nominate candidates with varied backgrounds, interests in the community and experience, including consideration of the following ("Criteria"): Residency in Issaquah Highlands for at least twelve (12) months; Prior service on Issaquah Highlands task forces or advisory committees or volunteer efforts; "Prior service or experience with non-profit or community organizations; Experience, expertise or training in areas of need or relevance for the Residential Association, such as financial literacy; General reputation and character for important. board qualities such as leadership, integrity, collaboration, judgment and knowledge; and/or Other relevant factors. Each candidate shall be given a reasonable, uniform opportunity to communicate his or her qualifications to the Class "A" Members and to solicit votes. The slate of candidates selected by the Nominating Committee may be appealed to the Board for a final decision by any Member (including any Board member) who believes the Criteria were not reasonably applied with regard to one or more of the nominated candidates. To exercise this right, a written notice of appeal must be received at the office of the DWT vl

124 Residential Association within ten (I0) days after the slate of candidates is distributed to the Members. If an appeal is filed, then the Board shall promptly consider the appeal and give the appellant and other interested parties the opportunity to be heard. The Board's decision on appeal shall be final. If no appeal is timely filed within the 10-day period, then the slate of candidates selected by the Nominating Committee shall be deemed approved by and as the final action of the Board. (b) Election Procedures. Each Member may cast the vote assigned to his or her Unit for each position to be filled from the slate of candidates on which such Member is entitled to vote, i.e. for the single director being elected from that Members Board District and for any At Large director positions. There shall be no cumulative voting. Directors may be elected to serve any number of consecutive terms Election and Term of Office. Notwithstanding any other provision of these By-Laws: (a) Intentionally Deleted [since more than 25% of the Units are owned by Class "A" Members other than Builders as of the date of these Amended and Restated Bylaws). (b) Intentionally Deleted [since more than 50% of the Units are own.ed by Class "A" Members other than Builders as of the date of these Amended and Restated Bylaws]. (c) As of the date of these Amended and Restated Bylaws, the Board consists of seven (7) directors. Until the happening of the event described in subsection (d) below, three (3) of the seven (7) directors, who serve as At Large directors, shall be elected by the Class "A" Members and the remaining four (4) directors shall be appointed by the Class "B" Member. The directors elected by the Class "A" Members shall not be subject to removal by the Class "B" Member and are elected for a term of two (2) years or until the happening of the event described in subsection (d) below, whichever is shorter. If such directors' terms expire.prior to the happening of the event described in subsection (d) below, then the Board shall determine if such directors shall continue serving or if successors shall be elected to serve until the happening of the event described in subsection (d) below. (d) Within 90 days after termination of the Class "B" Control Period, the Class "A" Members shall be entitled to elect a majority of the seven (7) directors. One of the Class "B" Member director appointees shall resign and the Board shall call for an election at large by the Class "A" Members of a fourth (4 1 h) director to the Board [i.e. joining the three Class "A" Member directors previously elected under subsection (c) above], which new director shall serve until the second (2"d) annual meeting after termination of the Class "B" Control Period, and thereafter such director position will serve a two (2) year term, except to the extent provided in subsection (e)(ii) below. The remaining three (3) directors shall be appointees of the Class "B" Member. The newly elected fourth (4 1 h) director representing the Class "A" Members shall not be subject to removal by the Class "B" Member. DWT v

125 (e) Effective at the first annual meeting after the termination of the Class "B" Control Period, the Board shall continue to consist of seven (7) directors, but with six (6) directors elected by the Class "A" Members, one from each of the six (6) Board Districts shown on Exhibit 1, with the Class "A" Members electing a single director from their respective District, and one (1) director appointed by the Class "B" Member to serve as the At Large director. The Board in the future may elect to increase the number of directors to nine (9), in which event the additional two (2) positions shall be At Large directors. [if the annual meeting would otherwise be held less than sixty (60) days after the termination of the Class "B" Control Period, then the Board shall reschedule the annual meeting to a date that is at least sixty (60) days after the termination of the Class "B" Control Period to allow for the determination of District directors and the nomination of directors as provided in Section 4.4 and this Section 4.5]. Until termination of the Class "B" membership, the Class "B" Member shall appoint the one (I) At Large director. After termination of the Class."B" membership, the Class "A" Members will elect the At Large director, as provided below. In order to provide for an orderly transition and staggered terms, the following director terms of office and procedures will apply in order to establish the future election sequence for the seven (7) directors by electing each year three (3) District directors and electing the one (1) At Large director in alternating years,: (i) three (3) ofthe four (4) existing Class "A" Member directors ("Existing Directors") [i.e. that were previously elected under subsections (c) and (d) above] shall continue to serve until the second annual meeting after the termination of the Class "B" Control Period, even if the term of one or more of those Existing Directors would otherwise expire at the first annual meeting after the termination of the Class "B" Control Period, as provided in subsection (ii) below. (ii) At least sixty (60) days prior to the first annual meeting after the termination of the Class "B" Control Period, three (3) of the Existing Directors shall be designated as the director from the District in which they reside as follows: the most recently elected Existing Director [i.e. elected under subsection (d)] shall be the District director from his/her Board District, and two (2) of the three (3) remaining Existing Directors shall be the District director from the Board District in which they reside, respectively, to be determined by lottery conducted by the Board. The terms of these three (3) District Directors shall be extended and expire at the second annual meeting after the termination of the Class "B" Control Period. The term of the remaining 4 1 h Existing Director shall end at the first annual meeting after the termination of the Class "B" Control Period. (iii) at the first annual meeting after the termination of the Class "B" Control Period, three (3) new directors shall be elected by the Class "A" Members, with one new director to reside in and represent one of the remaining three (3) Districts [i.e. the Districts not represented by the three (3) Existing Director under subsection (e)(ii) above]. These three (3) new District directors shall each serve a term of two (2) years. DWT vl

126 (iv) Until tennination of the Class "8 11 membership, the Class "B" Member shall appoint the one (l) At Large director. Upon tennination of the Class "B" membership, the director appointed by the Class "B" Member shall resign and the remaining directors shall be entitled to appoint a new At Large director to serve until the next annual meeting, at which time the Class "A" Members shall be entitled to elect- the At Large director to fill such position for a tenn of two (2) years. Except as provided in subsection (e)(i) above for Existing Directors to implement the transition to District directors, upon the expiration of the tenn of office of each director elected by the Class "A" Members, the Class "A" Members entitled to elect such director shall be entitled to elect a successor to serve a tenn of two (2) years or until their respective successors have been elected. The following diagram illustrates Board composition. The diagrammatic summary exists for illustrative purposes only. In the event of a conflict between the diagram and the text of any of the Governing Documents, the Governing Documents shall control. (Remainder of page intentionally left blank.) DWT l vl

127 Composition of Board of Directors Initial Within 30 Days of When 25% of Units 2 Sold to Homeowners 3 Within 30 Days of When 50% of Units 2 Sold to Homeowners 3 At least 180 Days prior to Tennination of Class "B: Control Period Within 90 Days after Tennination ofclass "B" Control Period First Annual Meeting After Tennination of Class "B" Control Period 4 Tennination ofclass "B" Membership Class "B" Class "B" Class "B" Class "A" Class "A" Class "A" Class "A" Class "A" Class "A" Class "B" Class "A" Class "A" Class "A" Class "A" Class "A" Class "B" Class "B" Class "A" Class "A" Class "A" Class "A" Class "B" Class "B" Class "A" Class "A" Class "A" Class "B" Class "B" Class "B" Class "A" Class "A" Class "B" Class "B" Class "A" Class "A" Class "B" Class "B" Class "B" Class "A" 1 Class "A"= Class "A" Members. 2 Percentage based upon total number of Units pennitted by Master Plan for property described in Exhibits "A" and "B." 3 Sales to builders not counted. 4 Create 6 Board Districts, with 6 elected by Class "A" Members from their respective Board Districts and I At Large appointed by Class "B" Member until the end of the Class "B" membership [2 years after tennination of Class "B" Control Periodl 4.6. Removal of Directors and Vacancies. Any director may be removed, with or without cause, by the vote of Class "A" Members holding a majority of the votes entitled to be cast for the election of such director at a meeting where a quorum is present. For purposes of voting to remove a director under this Section 4.6, the quorum requirement is as follows: (a) for removal of a director from a Board District, quorum shall require a majority of the Class "A" Members of the Board District whose director is subject to the removal vote; and (b) for removal of an At Large director, the quorum shall require 10% of the Class "A" Members. Any director whose removal is sought shall be given notice prior to any meeting called for that purpose. Upon removal of a DWT vl

128 director, a successor shall be elected by the Class "A" Members entitled to elect the director so removed to fill the vacancy for the remainder of the term of such director. Any director elected by the Class "A" Members who has three consecutive unexcused absences from Board meetings, or who is more than 30 days delinquent in the payment of any assessment or other charge due the Residential Association, may be removed by a majority of the directors present at a regular or special meeting at which a quorum is present, and the Board may appoint a successor to fill the vacancy for the remainder of the term. In the event of the death, disability, or resignation of a director, the Board may declare a vacancy and appoint a successor to fill the vacancy until the next annual meeting, at which time the Members entitled to fill such directorship may elect a successor for the remainder of the term. Any vacancy of a director from a Board District which the Board appoints shall be selected from among the Class "A" Members within the Board District represented by the director who vacated the position. Any vacancy of an At Large director which the Board appoints may be selected from any Board District. This Section shall not apply to directors appointed by the Class "B" Member. The Class "B" Member shall be entitled to appoint a successor to fill any vacancy on the.board resulting from the death, disability, resignation, or removal of a director appointed by the Class "B" Member. B. Meetings Organizational Meetings. The first meeting of the Board following each annual meeting of the membership shall be held within 10 days thereafter at such time and place the Board shall fix Regular Meetings. Regular meetings of the Board may be held at such time and place a majority of the directors shall determine, but at least four such meetings shall be held during each fiscal year with at least one per quarter. Notice of the time and place of a regular meeting shall be communicated to directors not less than four days prior to the meeting; provided, however, notice of a meeting need not be given to any director who has signed a waiver of notice or a written consent to holding of the meeting Special Meetings. Special meetings of the Board shall be held when called by written notice signed by the President or Vice President or by any two directors. The notice shall specify the time and place of the meeting and the nature of any special business to be considered. The notice DWT v\

129 shall be given to each director by: (i) personal delivery; (ii) first class mail, postage prepaid; (iii) telephone communication, either directly to the director or to a person at the director's office or home who would reasonably be expected to communicate such notice promptly to the director; or (iv) facsimile, or electronic network posting. All such notices shall be given at the director's telephone number, fax number, electronic mail address, or sent to the director's address as shown on the records of the Residential Association. Notices sent by first class mail shall be deposited into a United States mailbox at least seven business days before the time set for the meeting Notices given by personal delivery, telephone, or electronic network posting or other device shall be delivered or transmitted at least 72 hours before the time set for the meeting, and are effective when received. (a) Consent to Notice by . If notice is provided to directors by , it is effective only with respect to directors who have: (i) consented in writing or by to receive notices transmitted by ; and (ii) designated in the consent the message. format that is accessible to the recipient, and the address, location, or system to which these notices may be ed. A director who has consented to receipt of ed notices may revoke the consent by delivering (by mail, facsimile or ) a revocation to the Residential Association. The consent of any director is revoked if the Residential Association is unable to transmit by two (2) consecutive notices given by the corporation in accordance with the director's consent, and this inability becomes known to the Secretary of the Residential Association or other person responsible for giving the notice. The inadvertent failure by the Residential Association to treat this inability as a revocation does not invalidate any meeting or other action. (b) Delivery of Notice by . Notice provided by to a director who has consented to receive notice by such means is effective when it is ed to an address designated by the recipient for that purpose. (c) Delivery of Notice by Posting to Electronic Network. The Residential Association may provide notice of the time and place of any special meeting of the Board by posting the notice on an electronic network (such as a listserv), provided that the Residential Association also delivers to the director notice of the posting by , facsimile, or (pursuant to the recipient's consent to receive notices by ), together with comprehensible instructions regarding how to obtain access to the posting on the electronic network WaiverofNotice. The transactions of any meeting of the Board, however called and noticed or wherever held, shall be as valid as though taken at a meeting duly held after regtilar call and notice if (a) a quorum is present, and (b) either before or after the meeting each of the directors not present has executed a written waiver of notice, a consent to holding the meeting, or an approval of the minutes. The waiver of notice or consent need not specify the purpose of the meeting. For these purposes, "executed" means: (aa) a writing that is signed; or (bb) an transmission that is sent with sufficient infonnation to determine the sender's identity. DWT vl

130 Notice of a meeting also shall be deemed given to any director who attends the meeting without protesting before or at its commencement about the lack of adequate notjce Meetings Held by Telephone or Similar Communications Equipment. Members of the Board or any committee designated by the Board ay participate in a meeting of the Board or committee by means of conference telephone or similar communications equipment, by means of which all persons participating in the meeting can hear each other at the same time. Participation in a meeting pursuant to this subsection shall constitute presence in person at such meeting Quorum of Board of Directors. At all meetings of the Board, a majority of the directors shall constitute a quorum for the transaction of business, and the votes of a majority ofthe directors present at a meeting at which a quorum is present shall constitute the decision of the Board, unless otherwise specifically provided in these By-Laws or the Declaration. A meeting at which a quorum is initially present may continue to transact business, notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting. If any meeting of the Board cannot be held because a quorum is not present, a majority of the directors present at such meeting may adjourn the meeting to a time not less than five nor more than 30 days from the date of the original meeting. At the reconvened meeting, if a quorum is present, any business which might have been transacted at the meeting originally called may be transacted without further notice Compensation. Directors shall not receive any compensation from the Residential Association for acting as such unless approved by Members representing a majority of the total Class "A" votes in the Residential Association at a regular or special meeting of the Residential Association. Any director may be reimbursed for expenses incurred on behalf of the Residential Association upon approval of a majority of the other directors. Nothing herein shall prohibit the Residential Association from compensating a director, or any entity with which a director is affiliated, for services or supplies furnished to the Residential Association in a capacity other than as a director pursuant to a co.ntract or agreement with the Residential Association, provided that such director's interest was made known to the Board prior to entering into such contract and such contract was approved by a majority of the Board, excluding the interested director Conduct of Meetings. The President shall preside over all meetings of the Board, and the Secretary shall keep a minute book of Board meetings, recording all Board resolutions and all transactions and proceedings occurring at such meetings. DWT v

131 4.15. Open Meetings. Subject to the provisions of Section 4.16, all meetings of the Board shall be open to all Owners, but attendees other than directors may not participate in any discussion or deliberation unless permission to speak is requested on their behalf by a director. In such case, the President may limit the time any such individual may speak. Notwithstanding the above, upon the affirmative vote of a majority of the directors to assemble in an executive session, the President may adjourn any meeting of the Board and reconvene in executive session, and may exclude persons other than directors, to consider personnel matters; consult with legal counsel or consider communications with legal counsel; discuss pending transactions or matters where disclosure would affect negotiations; and discuss likely or pending litigation or mediation or matters involving possible liability of an Owner to the Residential Association. The motion to adjourn must state specifically the purpose for the executive session. The meeting minutes shall contain a reference to the stated purpose for the executive session. The provisions of this Section shall not require the disclosure of information in violation oflaw Action Without a Meeting. Any action to be taken at a meeting of the directors or any action that may be taken at a meeting of the directors may be taken without a meeting if a consent in writing or by transmission, setting forth the action so taken, is executed (as defined herein) by all of the directors, and such consent shall have the same force and effect as a unanimous vote. For these purposes, "executed" means: (a) a writing that is signed; or (b) an transmission that is sent with sufficient information to determine the sender's identity. C. Powers and Duties Powers. The Board shall have all of the powers and duties necessary for the administration of the Residential Association's affairs and for performing all responsibilities and exercising all rights of the Residential Association as set forth in the Declaration, these By-Laws, the Articles, and as provided by law. The Board may do or cause to be done all acts and things which the Declaration, Articles, these By-Laws, or Washington law do not direct to be done and exercised exclusively by the membership generally Duties. The duties of the Board shall include, without limitation: (a) preparing and adopting, in accordance with the Declaration, an annual budget and establishing each Owner's share of the Common Expenses and any Neighborhood Expenses or Subneighborhood Expenses; DWT v

132 (b) levying and collecting such assessments from the Owners; (c) providing for the operation, care, upkeep, and maintenance of the Area of Common Responsibility; (d) designating, hiring, and dismissing the personnel necessary to carry out the rights and responsibilities of the Residential Association and where appropriate, providing for the compensation of such personnel and for the purchase or leasing of equipment, supplies, and materials to be used by such personnel in the performance of their duties; (e) depositing all funds received on behalf of the Residential Association in a bank depository which it shall approve, and using such funds to operate the Association; provided, any reserve funds may be deposited, in the directors' business judgment, in depositories other than banks; (f) Declaration; making and amending use restrictions and rules m accordance with the (g) opening of bank accounts on behalf of the Residential Association and designating the signatories required; (h) making or contracting for the making of repairs, replacements, additions, and improvements to or alterations. of the Residential Common Area in accordance with the Declaration and these By-Laws; (i) enforcing by legal means the provisions of the Declaration, these By-Laws, and the rules adopted by it and bringing any proceedings which may be instituted on behalf of or against any Owners concerning the Residential Association; provided, the Residential Association shall not be obligated to take action to enforce any covenant, restriction or rule which the Board in the exercise of its business judgment determines is, or is likely to be construed as, inconsistent with applicable law, or in any case in which the Board reasonably determines that the Residential Association's position is not strong enough to justify taking enforcement action; (j) obtaining and carrying property and liability insurance and fidelity insurance, as provided in the Declaration, paying the cost thereof, and filing and adjusting claims, as appropriate; (k) paying the cost of all services rendered to the Residential Association and all taxes or assessments on all personal property the Residential Association owns and all Residential Common Area; (1) keeping books with detailed accounts of the receipts and expenditures of the Residential Association; DWT l vl

133 (m) making available to any prospective purchaser of a Unit, any Owner, and the holders, insurers, and guarantors of any Mortgage on any Unit, current copies of the Declaration, the Articles of Incorporation, the By-Laws, rules and all other books, records, and financial statements of the Residential Association as provided in Section 7.4; (n) permitting utility suppliers to use portions of the Residential Common Area reasonably necessary to the ongoing development or operation of the Residential Properties; (o) indemnifying a director, officer or committee member, or former director, officer or committee member of the Residential Association to the extent such indemnity is required by Washington law, the Articles of Incorporation or the Declaration; (p) assisting in the resolution of disputes between Owners and others without litigation, as set forth in the Declaration; and (q) establishing, adopting, and making available to Owners a schedule of fines for violations of the Governing Documents Right of Class "B" Member To Disapprove Actions. So long as the Class "B" membership exists, the Class "B" Member shall have a right to disapprove any action, policy or program of the Residential Association, the Board and any committee which, in the sole judgment of the Class "B" Member, would tend to impair rights of Declarant or Builders under the Declaration or these By-Laws, or interfere with development or construction of any portion of the Residential Properties, or diminish the level of services being provided by the Residentia.l Association. (a) The Class "B" Member shall be given prior written notice of all meetings and proposed actions approved at meetings (or by written consent in lieu of a meeting) of the Residential Association, the Board or any committee. Such notice shall be given by certified mail, return receipt requested, or by personal delivery at the address the Class "B" Member has registered with the Secretary of the Residential Association, or by electronic transmission to such address for receipt of electronic transmissions as the Class "B" Member may provide to the Board, which notice complies as to the Board meetings with Sections 4.8, 4.9, 4.10, and 4.11 and which notice shall, except in the case of the regular meetings held pursuant to the By-Laws, set forth with reasonable particularity the agenda to be followed at such meeting; and (b) The Class "B" Member shall be given the opportunity at any such meeting to JOin in or to have its representatives or agents join in discussion from the floor of any prospective action, policy, or program which would be subject to the right of disapproval set forth herein. DWT vl

134 No action, policy or program subject to the right of disapproval set forth herein shall become effective or be implemented until and unless the requirements of subsections (a) and {b) above have been met. The Class "B" Member, its representatives or agents shall make its concerns, thoughts, and suggestions known to the Board or the members of the subject committee. The Class "B" Member, acting through any officer or director, agent or authorized representative, may exercise its right to disapprove at any time within 10 days following the meeting at which such action was proposed or, in the case of any action taken by written consent in lieu of a meeting, at any time within 10 days following receipt of written notice of the proposed action. This right to disapprove may be used to block proposed actions but shall not include a right to require any action or counteraction on behalf of any committee, or the Board or the Residential Association. The Class "B" Member shall not use its right to disapprove to reduce the level of services which the Residential Association is obligated to provide or to prevent capital repairs or any expenditure required to comply with applicable Jaws and regulations Management. The Board may employ for the Residential Association a general manager or executive director ("Manager") and other employees of the Residential Association and/or retain a third party professional management agent or agents ("Managing Agent") at such compensation as the Board may establish, to perfonn such duties and services as the Board shall authorize. The Board may delegate such powers as are necessary to perfonn the Manager's or Managing Agent's assigned duties, but shall not delegate policymaking authority or those duties set forth in Sections 4.18(a) {with respect to adopting an annual budget), 4.18(b), 4.18(f), 4.18(g) and 4.I8(i). Declarant or an affiliate of Declarant may be employed as the Manager or retained as the Managing Agent. The Board may delegate to one of its members authority to act on behalf of the Board on all matters relating to the duties of the Managing Agent or Manager, if any, which might arise between meetings of the Board. The Residential Association shall not be bound, either directly or indirectly, by any management contract executed during the Class "B" Control Period unless such contract contains a right of tennination exercisable by the Residential Association, with or without cause and without penalty, at any time after tennination of the Class "B" Control Period upon not more than 90 days' written notice Accounts and Reports. The following management standards of perfonnance shall be followed unless the Board by resolution specifically detennines otherwise: DWT v

135 (a) accrual accounting, as defined by generally accepted accounting principles, shall be employed; (b) principles; accounting and controls shall confonn. to generally accepted accounting (c) cash accounts of the Residential Association shall not be commingled with any other accounts; (d) no remuneration shall be accepted by the Manager or Managing Agent from vendors, independent contractors, or others providing goods or services to the Residential Association, whether in the form of commissions, finder's fees, service fees, prizes, gifts, or otherwise; anything of value received shall benefit the Residential Association; (e) any financial or other interest which the Manager or Managing Agent may have in any finn providing goods or services to the Residential Association shall be disclosed promptly to the Board; (t) commencing at the end of the quarter in which the first Unit is sold and closed, financial reports shall be prepared for the Residential Association at least quarterly containing: (i) an income statement reflecting all income and expense activity for the preceding period on an accrual basis; (ii) preceding period; a statement reflecting all cash receipts and disbursements for the (iii) a variance report reflecting the status of all accounts in an "actual" versus "approved" budget format; (iv) a balance sheet as of the last day of the preceding period; and (v) a delinquency report listing all Owners who are delinquent in paying any assessments at the time of the report and describing the status of any action to collect such assessments which remain delinquent (any assessment or installment thereof shall be considered to be delinquent on the 15th day following the due date unless otherwise specified by Board resolution); and (g) an annual report consisting of at least the following shall be made available to all Members within 120 days after the close of the fiscal year: (i) a balance sheet; (ii) an operating (income) statement; and (iii) a statement of changes in financial position for the fiscal year. Such annual report shall be prepared on an audited basis by an independent public accountant; provided, upon written request of any holder, guarantor or insurer of any first Mortgage on a Unit, the Residential Association shall provide an audited financial DWT vl

136 statement. During the Class "B" Control Period, the annual report shall include certified financial statements Borrowing. The Residential Association shall have the power to borrow money for any legal purpose; provided, the Board shall obtain Member approval in the same manner provided in Section 8.4 of the Declaration for Special Assessments if the proposed borrowing is for the purpose of making discretionary capital improvements and the total amount of such borrowing, together with all other debt incurred within the previous 12-month period, exceeds or would exceed l 0% of the budgeted gross expenses of the Residential Association for that fiscal year. During the Class "B" Control Period, no Mortgage lien shall be placed on any portion of the Residential Common Area without the affirmative vote or written consent, or any combination thereof, of Members representing at least 51% ofthe total Class "A" votes in the Residential Association and the Class "B" Member's consent Right To Contract. The Residential Association shall have the right to contract with any Person for the performance of various duties and functions. This right shall include, without limitation, the right to enter into common management, operational, or other agreements with trusts, condominiums, cooperatives, or Neighborhood or Subneighborhood and other owners or residents associations, within and outside the Residential Properties; provided, any common management agreement shall require the consent of a majority ofthe total number of directors of the Residential Association Enforcement. In addition to such other rights as are specifically granted under the Declaration, the Board shall have the power to impose reasonable monetary fines, which shall constitute a lien upon the Unit of the violator, and to suspend an Owner's right to vote for violation of any duty imposed under the Declaration, these By-Laws, or any Residential Association rules. In addition, the Board may suspend any services provided by the Residential Association to an Owner or the Owner's Unit if the Owner is more than 30 days delinquent in paying any assessment or other charges owed to the Residential Association. In the event that any occupant, tenant, employee, guest or invitee of a Unit violates the Declaration, By-Laws, or a rule and a fine is imposed, the fine shall be assessed against both the Owner (and the occupant if different than the Owner) to be paid within the time period set by the Board. The failure of the Board to enforce any provision of the Declaration, By-Laws, or any rule shall not be deemed a waiver of the right of the Board to do so thereafter. (a) Notice. Prior to imposition of any sanction hereunder or under the Declaration, the Board or its delegate shall serve the alleged violator with written notice describing (i) the nature of the alleged violation, (ii) the proposed sanction to be imposed, (iii) a period of not less than I 0 days within which the alleged violator may present a written DWT v

137 request for a hearing to the Board or the Covenants Panel, if one has been appointed pursuant to Article VI, and (iv) a statement that the proposed sanction shall be imposed as contained in the notice unless a challenge is begun within I 0 days of the notice. If a timely request for a hearing is not made after notice of a proposed sanction is given, the sanction stated in the notice shall be imposed; provided the Board or the Covenants Panel may, but shall not be obligated to, suspend any proposed sanction if the violation is cured within the 10-day period. Such suspension shall not constitute a waiver of the right to sanction future violations of the same or other provisions and rules by any Person. If an Member has consented to notice under Section 3.5(a) above, then notice under this Section 4.24 may be by , as well as by personal delivery or mail. In the event that, in an emergency situation, the Board enforces any provision of the Dec1aration, these By-Laws, or the rules of the Residential Association by self-help, in accordance with subsection (d), the Board shall provide notice of the self-help action to the alleged violator within five days of taking such action. Such notice shall describe (i) the nature of the alleged violation, (ii) the self-help action taken, and (iii) any Specific Assessment to be levied for the expenses associated with taking such action. (b) Hearing. If a hearing is requested within the allotted 10-day period, the hearing shall be held before the Covenants Panel, or if none has been appointed, then before the Board in executive session. The alleged violator shall be afforded a reasonable opportunity to be heard. Prior to the effectiveness of any sanction hereunder, proof of proper notice shall be placed in the minutes of the meeting. Such proof shall be deemed adequate if a copy of the notice, together with a statement of the date and manner of delivery, is entered by the officer, director, or agent who delivered such notice. The notice requirement shall be deemed satisfied if the alleged violator or its representative appears at the meeting. The minutes of the meeting shall contain a written statement of the results of the hearing and the sanction, if any, imposed. (c) Appeal. Following a hearing before the Covenants Panel, the violator shall have the right to appeal the decision to the Board. To exercise this right, a written notice of appeal must be received by the Manager or Managing Agent, President, or Secretary of the Residential Association within I 0 days after the hearing date. (d) Additional Enforcement Rights. Notwithstanding anything to the contrary in this Article, the Board may elect to enforce any provision of the Declaration, these By-Laws, or the rules of the Residential Association by self-help in an emergency situation (specifically including, but not limited to, the towing of vehicles that are in violation of parking rules) or, following compliance with the dispute resolution procedures set forth in Article XIV of the Dec1aration, if applicable, by suit at law or in equity to enjoin any violation or to recover monetary damages or both, without the necessity of compliance with the procedure set forth above. In any such action, to the maximum extent permissible, the Owner or occupant responsible for the violation of which abatement is sought shall pay all costs, including owr vl

138 reasonable attorney's fees actually incurred. Any entry onto a Unit for purposes of exercising this power of self-help shall not be deemed as trespass. (e) Covenants Panel. The Board may appoint a Covenants Panel consisting of five (5) or seven (7) Class "A" Members. Acting in accordance with the provisions of the Declaration, these By-Laws, and resolutions the Board may adopt, the Covenants Panel, if established, shall be the hearing tribunal of the Residential Association and shall conduct all hearings held pursuant to this Section Interpretations and Determinations under By-Laws. The Board shall have the authority to interpret the provisions of these By-Laws and make determinations to resolve ambiguities, conflicts in terms or provisions or matters not directly covered by the provisions herein Officers. Article V Officers The officers of the Residential Association shall be a President, Vice President, Secretary, and Treasurer. The President and Secretary shall be elected from among the members of the Board; other officers may, but need not be members of the Board. The Board may appoint such other officers, including one or more Assistant Secretaries and one or more Assistant Treasurers, as it shall deem desirable, such officers to have such authority and perform such duties as the Board prescribes. Any two or more offices may be held by the same person, except the offices of President and Secretary Election and Term of Office. The Board shall elect the officers of the Residential Association at the first meeting of the Board following each annual membership meeting, to serve until their successors are elected Removal and Vacancies. The Board may remove any officer whenever in its judgment the best interests of the Residential Association will be served, and may fill any vacancy in any office arising because of death, resignation, removal, or otherwise, for the unexpired portion of the term Powers and Duties. The officers of the Residential Association each shall have such powers and duties as generally pertain to their respective offices, as well as such powers and duties as may be specifically conferred or imposed by the Board. The President shall be the chief executive officer of the Residential Association. The Treasurer shall have primary responsibility for the preparation of the budget as provided for in the Declaration and may delegate all or part of DWT v

139 the preparation and notification duties to a finance committee, Manager or Management Agent, or both. The President or the Secretary may prepare, execute, certify, and record amendments to the Governing Documents on behalf of the Residential Association after required approvals are obtained Resignation. Any officer may resign at any time by g.vmg written notice to the Board, the President, or the Secretary. Such resignation shall take effect on the date of the receipt of such notice or at any later time specified therein, and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective Agreements, Contracts, Deeds, Leases, Checks, Etc. All agreements, contracts, deeds, leases, checks, and other instruments of the Residential Association shall be executed by at least two officers or by such other person or persons as may be designated by Board resolution Compensation. Compensation of officers shall be subject to the same limitations as compensation of directors under Section Article VI Committees; Task Forces and Member Advisory Committees 6.1. General. The Board may appoint such committees, as it deems appropriate to perform such tasks and to serve for such periods as the Board may designate by resolution. Each committee, shall operate in accordance with the terms of such resolution. Committee members shall be appointed, and may be removed, by the Board acting in its discretion. Except as may be provided in the resolution creating the committee, and unless it shall consist of at least two (2) or more Board directors, no Board committee shall have the authority to take final action on behalf of the Board on any matter, and, in any event, no Board committee shall have the authority of the Board to amend, alter or repeal these By- Laws; elect, appoint, or remove any member of any such committee or any director or officer of the Residential Associationamend the Articles of Incorporation; adopt a plan of merger or adopt a plan of consolidation with another corporation; authorize the voluntary dissolution of the Residential Association or revoke proceedings therefor; adopt a plan for the distribution of the assets of the Residential Association not in the ordinary course of business; or amend, alter, or repeal any resolution of the Board which by its terms provides that it shall not be amended, altered or repealed by such committee. The designation and appointment of any owr vi

140 such committee and the delegation of authority to it shall not operate to relieve the Board or any individual director of any responsibility imposed upon it, him, or her by law Finance Committee. The Board may establish a Finance Committee to assist the Treasurer, who shall serve as Chair of the Finance Committee, in preparation of the budget, as provided in Section 5.4 of these By-Laws, and other financial matters as determined by the Board Executive Committee. The officers of the Board, along with any additional director appointed by the Board, may serve as an Executive Committee and may act on behalf of the Board to the extent provided by resolution or ratification of the Board. Any action taken by the Executive Committee shall be reported promptly to the other Board members. 6.4 Task Forces ; Member Advisory Committees. In addition to formal Board committees, the Board may establish from time to time one or more task forces, advisory committees and/or ad hoc committees (collectively "Advisory Committee") comprised of Members, residents or others, as the Board deems appropriate to perform such tasks and to serve for such periods as the Board may designate by resolution. Each Advisory Committee shall operate in accordance with the terms of such resolution. Advisory Committees may but shall not be required to include one or more directors. Advisory Committee members shall be appointed, and may be removed, by the Board acting in its discretion. No Advisory Committee shall have any authority to bind or commit the Board or the Residential Association, but rather the purpose shall be to advise or make recommendations to the Board for action, in the Board's discretion. 6.5 Neighborhood and Subneighborhood Committees. If a Neighborhood or Subneighborhood has been created as provided in Section 6.4 of the Declaration, then in addition to any other committees appointed as provided above, each Neighborhood or Subneighborhood which has no formal organizational structure or association may elect, by the vote of at least 51% of the Owners of Units within the Neighborhood or Subneighborhood, to establish a Neighborhood Committee or Subneighborhood Committee and the members of the Committee to determine the nature and extent of services, if any, to be provided to the Neighborhood or Subneighborhood by the Residential Association in addition to those provided to all Members of the Residential Association in accordance with the Declaration. Further, the Board may create and appoint members to a Neighborhood Committee or Subneighborhood Committee if a committee has not been formed by the Owners but Board determines such a committee would be beneficial. A Neighborhood Committee or Subneighborhood Committee may advise the Board on any other issue, but shall not have the authority to bind the Board. Such Neighborhood Committees or Subneighborhood Committee, if established by a vote of the Owners, shall consist of three (3) Members elected by the Owners of Units within the Neighborhood or Subneighborhood (comprised of the three (3) Members receiving the most votes), unless the 30 DWT v

141 committee is increased to five (5) Members by the vote of at least 51% of the Owners of Units within the Neighborhood or Subneighborhood. The election period for any election under this Section 6.5 shall not exceed two (2) months. If the Board creates the Neighborhood Committee or Subneighborhood Committee, then the Board shall determine the number of Members to serve and shall appoint the Members of the Committee Neighborhood Committee or Subneighborhood Committee members shall be elected by the Members or appointed by the Board, as applicable, for staggered terms of two years or until their successors are elected; provided, the terms of one or more members of a Neighborhood Committee or Subneighborhood Committee may be reduced to one year or extended to three years on a one-time basis in order to establish staggered terms among the Neighborhood Committee or Subneighborhood Committee members, and elections or appointments, as applicable, will be held annually for the expiring term(s). In the case of a vacancy caused by resignation, removal, or any other reason, the Board, upon recommendation of the remaining members of the Neighborhood Committee or Subneighborhood Committee, shall appointment a replacement to fill the remaining term of the committee member whose position has been vacated. Any director elected to the Board that resides in a Neighborhood or Subneighborhood, as applicable, that has a Neighborhood Committee or Subneighborhood Committee shall be an ex officio but non-voting member of the Neighborhood Committee or Subneighborhood Committee. If any Neighborhood or Subneighborhood Committee has failed to meet for a period of at least twelve (12) consecutive months, then the Board may declare the Neighborhood or Subneighborhood Committee abandoned, and any future committee for such Neighborhood or Subneighborhood shall be re-established, if at all, in the manner provided in this Section for the initial establishment of a Neighborhood or Subneighborhood Committee. Further, if the Neighborhood Committee or Subneighborhood Committee was originally established by the Board, then the Board may abolish the Neighborhood Committee or Subneighborhood Committee, but such abolition shall not preclude the right of the owners to elect a Neighborhood Committee or Subneighborhood Committee thereafter. In the conduct of its duties and responsibilities, each Neighborhood Committee and Subneighborhood Committee shall abide by the notice and quorum requirements applicable to the Board under Sections 4.8, 4.9, 4.10, and Meetings of a Neighborhood Committee. or Subneighborhood Committee shall be open to all Owners of Units in the Neighborhood or Subneighborhood and their representatives. Members of a Neighborhood Committee or Subneighborhood Committee may act by unanimous written consent in lieu of a meeting. The Neighborhood Committee or Subneighborhood Committee may elect a Chairperson, or if no such election has taken place, then the Board may appoint a Chairperson from among the members of the Neighborhood Committee or Subneighborhood Committee. In the event of dispute between a Neighborhood Committee or Subneighborhood Committee and a third party, the Board shall have the right but not obligation to represent tlte committee in negotiations, dispute resolution, and/or to commence or defend litigation involving the Units and Owners within the Neighborhood. owr vi

142 Article VII Miscellaneous 7.1. Fiscal Year. The fiscal year of the Residential Association shall be July 1 to June 30 unless the Board establishes a different fiscal year by resolution Parliamentary Rules. Except as may be modified by Board resolution, Robert's Rules of Order (current edition) shall govern the conduct of Residential Association proceedings when not in conflict with Washington law, the Articles of Incorporation, the Declaration, or these By-Laws Conflicts. If there are conflicts between the provisions of Washington law, the Articles of Incorporation, the Declaration, and these By-Laws, the provisions of Washington law, the Declaration, the Articles of Incorporation, and the By-Laws (in that order) shall prevail Books and Records. (a) Inspection by Members and Mortgagees. The Board shall make available for inspection and copying by any holder, insurer or guarantor of a first Mortgage on a Unit, any Member, or the duly appointed representative of any of the foregoing at any reasonable time and for a purpose reasonably related to his or her interest in a Unit: the Declaration, By- Laws, and Articles of Incorporation, including any amendments, the rules of the Residential Association, the membership register, books of account, and the minutes of meetings of the Members, the Board, and committees. The Board shall provide for such inspection to take place at the office of the Residential Association or at such other place within the Residential Properties as the Board shall designate. (b) Rules for Inspection. The Board shall establish rules with respect to: (i) (ii) (iii) notice to be given to the custodian of the records; hours and days of the week when such an inspection may be made; and payment of the cost of reproducing documents requested. (c) Inspection by Directors. Every director shall have the absolute right at any reasonable time to inspect all books, records, and documents of the Residential j\ssociation and the physical properties owned or controlled by the Residential Association. The right of inspection by a director includes the right to make a copy of relevant documents at the expense of the Residential Association. nwr vl

143 7.5. Notices. Except as otherwise provided in the Declaration or these By-Laws, all notices, demands, bills, statements, or other communications under the Declaration or these By-Laws shall be in writing and shall be deemed to have been duly given if delivered personally or if sent by United States mail, first class postage prepaid or electronically as follows: (a} if to a Member, at the address which the Member has designated in writing and filed with the Secretary or, if no such address has been designated, at the address of the Unit of such Member, or if the Member has consented to notice pursuant to Section 3.5(a) above, then at the electronic address designate by the Member; or (b) if to the Residential Association, the Board, or the Manager or Managing Agent, at the principal office of the Residential Association or the Manager or Managing Agent or at such other address as shall be designated by notice in writing to the Members pursuant to this Section Amendment. (a) By Class "B" Member. The Class "B" Member may unilaterally amend these By-Laws at any time and from time to time if such amendment is necessary (i) to bring any provision into compliance with any applicable governmental statute, rule or regulation, or judicial determination; (ii} to enable any reputable title insurance company to issue title insurance coverage on the Units; or (iii) to enable any institutional or governmental lender, purchaser, insurer or guarantor of mortgage loans, including, for example, the Federal National Mortgage Association or Federal Home Loan Mortgage Corporation, to make, purchase, insure or guarantee mortgage loans on the Units; provided, however, any such amendment shall not adversely affect the title to any Unit unless the Owner shall consent thereto in writing. So long as the Class "B" membership exists, the Class "B" Member may unilaterally amend these By-Laws for any other purpose, provided the amendment has no material adverse effect upon any right of any Member. (b) By Members Generally. Except as provided above, these By-Laws may be amended only by the affirmative vote or written consent, or any combination thereof, of Members representing 51% of the total Class "A" votes in the Residential Association, and consent of the Class "B" Member, if.such exists. In addition, the approval requirements set forth in Article XV of the Declaration shall be met, if applicable. Notwithstanding the above, the percentage of votes necessary to amend a specific clause shall not be less than the prescribed percentage of affirmative votes required for action to be taken under that clause. (c) Validity and Effective Date of Amendments. Amendments to these By-Laws shall become effective upon recordation in the Public Records, unless a later effective date is specified therein. Any procedural challenge to an amendment must be made w.ithin six months of its recordation or such amendment shall be presumed to have been validly adopted. owr vl

144 In no event shall a change of conditions or circumstances operate to amend any provisions of these By-Laws. No amendment may remove, revoke, or modify any right or privilege of Declarant or the Class "B" Member without the written consent of Declarant, the Class "B" Member, or the assignee of such right or privilege. IN WITNESS WHEREOF, the undersigned Class "B" Member has executed the within and foregoing Amended and Restated By-Laws of Issaquah Highlands Community Association effective on the date first above written. GRAND-GLACIER LLC, a Washington limited liability company By PORT BLAKELY COMMUNITIES, a Washington corporation, its Manager By: Exhibit 1 Map of Board Districts DWT vl

145 STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) On this day of, 2011, before me, a Notary Public in and for the State of Washington, personally appeared, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed this instrument, on oath stated that he was authorized to execute the instrument, and acknowledged it as the, of Port Blakely Communities, Inc., the Washington corporation that is the manager of GRAND-GLACIER LLC, a Washington. limited liability company, to be the free and voluntary act and deed of said limited liability company for the uses and purposes mentioned in the instrument. IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year first above written. NOTARY PUBLIC in and for the State of Washington, residing at My appointment expires Print Name: DWT vl

146 Exhibit I Map of Board Districts DWf S4vl Exhibit I

147 EXHIBIT 1 MAP OF BOARD DISTRICTS PAGE 1 of4 = Board District Dcsignarion

148 EXHIBIT 1 MAP OF BOARD DISTRICTS PAGE 2 of4 ;Board District Designation WSDOT EXPANSION AREA

149 EXHIBIT 1 MAP OF BOARD DISTRICTS PAGE 3 of4 =Board District Designation North Sewage Lift Station (2080 NE Ne.,.,ton Street),.,.... )!,.: ;,: I:.:

150 EXHIBIT 1 MAP OF BOARD DISTRICTS PAGE 4 Board Disrricl Designation i, Ill

151 EXHffiiT "E" TAXPARCELNUMBERSOFPROPERTY SUBJECT TO DECLARATION OF CCRS FOR RESIDENTIAL ASSOCIATION (TAX NUMBERS CONTAINED WITHIN DOCUMENT RECORDING! , ; ; ; , , ; ; ; , , ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ;and DWT v Exhibit E

152 EXHIBIT "F" LEGAL DESCRIPTION OF CERTAIN PARCELS 1. Parcel 1, WSDOT Property Parcel I, City of Issaquah Short Plat, Boundary Line Adjustment & Lot Consolidation, NO. SPII-00001, recorded march 11,2011, Volume 279, Pages 33 through 35, Recording No. 20 II , records of King County, Washington. 2. Parcel A of South Expansion Plat Parcel A, City of Issaquah Boundary Line Adjustment No. LLA09-00IIH, recorded in Volume 266 of Surveys, Pages 75 through 77, Recording No , records of King County, Washington. 3. Lot 1, Division 95 (Special Project Area) That portion of Lot 1, City of Issaquah Boundary Line Adjustment No. LLA05-007IH, as recorded July 25, 2005 under Recording No , records of King County, Washington, bounded on the East by the West Right-of-Way margin ofn.e. Magnolia Street and bounded on the North, South and West by the public right-of-way dedicated to the City oflssaquah by Deed under Recording No , records of King County, Washington. 4. Harrison Street Neighborhood Lots 1 through 10 Division 70 of the Final Plat of Issaquah Highlands Divisions 70 and 75 as filed in Volume 211 of Plats, Pages 7 through 13, Records of King County, Washington under Recording No and except that portion conveyed to the City of Issaquah, by deed recorded under Recording No Lots 11 through 19, City of Issaquah Boundary Line Adjustment No. LLA IH, according to Survey recorded June 25, 2003 in Volume 161 of Surveys at Page(s) 10, loa and JOB under Recording No , in King County, Washington. Lots I through 14 and Lot 17 of the Final Plat of Issaquah Highlands Division 71 as filed in Volume 224, pages 95 through 100, records of King County, Washington under AFN Lots 15 and 16 of City of Issaquah Boundary Line Adjustment No. LLA IH, according to Survey recorded July 25, 2005, in Volume 190 of Surveys at Page(s) 146 under Recording No , in King County, Washington. Lots I through 9 Division 72, Lots I through 26, Division 73, Lots 1 through 13 and 16 through 19, Division 74 of the Final Plat oflssaquah Highlands Divisions 72, 73 and 74 as filed in Volume 230 of Plats, Pages 89 through 98 Records of King County, Washington under Recording No Lot A of King County Boundary Line Adjustment No. LLA07-006IH, Washington under Recording No Grand Ridge Drive Neigh orbood Parcels J, K, N, R, S, V, King County Boundary Line Adjustment NO. L99L0008, according to Survey recorded in January 3, 2000 in Volume 134 of Surveys at Pages 214, 214A through 2141, under Recording NO , in King County, Washington. DWT v Exhibit F- 1

153 Lots 2, 3, 4, 6, 7, 9, 10, 11, 12, King County Boundary Line Adjustment No. L04L0032, according to Survey recorded October 13, 2004 in Volume 177 of Surveys, Pages 292 through 297, under Recording No , in King County, Washington. Lots 9, 10, 11, King County Boundary Line Adjustment NO; L03L0012, according to Survey recorded in January 15, 2004 in Volume 166 of Surveys at Pages 245 through 258, under Recording NO , in King County, Washington. Lots 1, 2, 3, 4, King County Short Plat S90S0233 as filed in Volume 220 of Surveys, page(s) 086 through 089, under Recording No , records of King County, Washington. Lots 1 and 2, King County Short Plat S90S0238 as filed in Volume 220 of Surveys, page(s) 108 through 111, under Recording No , records of King County, Washington. Lots l, 2, 3, 4, King County Short Plat S90S0235 as filed in Volume 220 of Surveys, page(s) 094 through 097 under Recording No records of King County, Washington. Lots 1, 2, 3, 4, King County Short Plat S90S0234 as filed in Volume 220 of Surveys, page(s) 090 through 093, under Recording No , records of King County, Washington.. Lots 1, 2, 3, 4, King County Short Plat S90S0237 as filed in Volume 220 of Surveys, page(s) 104 through 107 under Recording No , records of King County, Washington. Lots 1, 2, 3, 4, King County Short Plat S90S0236 as filed in Volume 220 of Surveys, page(s) 100 through 103 under Recording No , records of King County, Washington. 6. ZEP Property (Special Project Area) Lots 1-10 and Tracts A, B, and C of the Replat of Vista Park Block 9C recorded in Volume 254 of Plats, Pages 95 through 97, on May 18, 2010 under King County Auditor's File No , in King County, Washington. DWT v Exhibit F- 2

154 EXHmiT "G" MAP OF BOARD DISTRICTS DWf v Exhibit G

155 EXHIBIT G MAP OF BOARD DISTRICTS PAGE 1 of4 =Board District Designation West Highlands Park

156 EXHIBIT G MAP OF BOARD DISTRICTS PAGE2 of4 = Board District Designation WSDOT EXPANSION AREA

157 EXHIBIT G MAP OF BOARD DISTRICTS PAGE 3 of4 North Sewage Lift Station (2080 NE NeMon Street) ; Board District Designation, &.: ' I ::::

158 EXHIBIT G MAP OF BOARD DISTRICTS PAGE 4 of4 Board District Designation

159 EXHIBIT "H" MAP OF HARRISON STREET AND GRAND RIDGE DRIVE NEIGHBORHOODS Harrison Street andgrandridge Drive Neighborhood owr v ()()()()70 ' Exhibit H