FIRST AMENDED AND RESTATED DECLARATION OF VACATION PLAN OF THE TAHOE BEACH AND SKI CLUB

FIRST AMENDED AND RESTATED DECLARATION OF VACATION PLAN OF THE TAHOE BEACH AND SKI CLUB The TAHOE BEACH AND SKI CLUB OWNERS ASSOCIATION, a California non-profit corporation (the Association ) as of this 22 day of June, 2003, hereby amends and restates in its entirety that Declaration of Vacation Plan executed by FN REALTY SERVICES, INC., a California corporation (formerly WELLS FARGO REALTY SERVICES, INC., a California corporation) ( Declarant ), dated July 16, 1984 and recorded on July 23, 1984 in the Official Records of the County of El Dorado, California at Book 2319, Page 158 (the Original Declaration ) to read as follows: R E C I T A L S A. Declarant was the original owner of that certain real property located in the City of South Lake Tahoe, County of El Dorado, State of California comprised of 140 separate living units (each of which is herein called a Unit ) together with related Common Areas (as hereinafter defined) and certain easements appurtenant thereto (the Easements ) commonly known as The Tahoe Beach and Ski Club (the Property ) which is more particularly described in Exhibit A attached hereto and made a part hereof. B. Declarant held legal title to the Property as trustee pursuant to a certain Agreement and Declaration of Trust by and among Declarant (the Original Trustee ), Waystations, Inc., a California corporation (the Developer and/or First Beneficiary ), the Tahoe Beach and Ski Club Owners Association, and the Association s members as a class (the Members ) dated April 25, 1983, and recorded in the Official Records of the County of El Dorado, California, on June 3, 1983, at Book 2176, Page 435 (as amended from time to time, the Trust Agreement ) C. At the direction and under the control of Developer in its capacity as the First Beneficiary under the trust created by the Trust Agreement (the Trust ), Declarant conveyed beneficial interests in the Trust ( Original Vacation Plans ), providing in each Grant Deed of Vacation Plan thereof (the Original Grant Deeds ) that the grantee(s) named therein (the Grantee(s) ) would have certain defined rights to annually occupy a Unit (as defined herein) and to use the Common Areas, the Easements, and the Common Furnishings (as the defined herein) in perpetuity, on a first-come, first-serve reservation basis, for one-week periods. D. Pursuant to Article VII of the Trust Agreement (as amended), with the passage of time and the satisfaction of the terms of the Trust, Trustee subsequently returned title of all except an undivided 733/7,140 interest in the Property to Developer. Developer subsequently converted certain of the original Vacation Plans to undivided fee interests in the Property and those converted original Vacation Plans were removed from the Trust Estate. Developer conveyed undivided fractional fee interests in the Property to the Association s members under original Grant Deeds. The undivided fractional fee interests issued pursuant to such grants were conveyed as both annual and biennial interests known as Regular Vacation Plan(s) and Biennial Vacation Plan(s), respectively, by means of - 1 -

an individually numbered Grant Deed of Vacation Plan. Concurrently, the Grantees that retained only an undivided beneficial interest in the Trust pursuant to their Original Grant Deeds were issued individually numbered Grant Deeds of Vacation Plans evidencing their ownership of the Original Vacation Plan(s) granted by Developer. Thereafter, in July of 1990, following the release of the majority of the Trust Estate, the Original Trustee was replaced by the Association as the Trustee of the Trust. The Trust currently holds legal title to a 733/7,140 interest in the Property for the benefit of the holders of Original Vacation Plans. E. In light of the changed circumstances outlined above, on June 22, 2003, 50 percent (50%) plus 1 of the owners of the Vacation Plans, as members of The Tahoe Beach and Ski Owners Association (the Owners and/or Members ), voted by written ballot to amend and restate the Original Declaration, all in accordance with the procedures for amendment set forth in Article VIII of the Original Declaration. It is the intention of said Owners to replace the Original Declaration in its entirety with the recordation of this Declaration. The Owners action to amend and restate the Original Declaration as set forth herein and the fact that the requisite percentage of affirmative votes required in the Original Declaration was achieved, is attested by the execution of this First Amended and Restated Declaration of Vacation Plan by duly authorized officers of the Association, as required by California Civil Code by Section 1355(a). F. By this Declaration, the Association, on behalf of its Members, intends to establish a common scheme and plan for the use, enjoyment, repair, maintenance, restoration and improvement of the Property and the interests therein conveyed or reserved, and for the payment of taxes, assessments, insurance premiums and other expenses pertaining thereto. NOW, THEREFORE, in furtherance of such intent, the Association hereby declares that the Property is and shall be held, conveyed, hypothecated, mortgaged, encumbered, leased, rented, used, occupied and improved subject to the declarations, limitations, conditions and restrictions set forth in this Declaration, as this Declaration may from time to time be further supplemented, amended or modified and in such other rules and regulations as are instituted pursuant to the provisions of this Declaration and all such declarations, limitations, covenants, conditions and restrictions and rules and regulations are declared to be in furtherance of a plan established for the purpose of enhancing and perfecting the value, desirability and enjoyment of the Property and the interest or interests therein. All such declarations, limitations, covenants, conditions, restrictions and rules and regulations shall constitute covenants running with the land and equitable servitudes and liens, and shall be binding upon and for the benefit of each Vacation Plan and all parties having or acquiring any right, title, interest or estate in the Property including without limitation the heirs, executors, administrators, successors and assigns of any such parties and all subsequent owners and lessees of all or any part of the Property. - 2 -

ARTICLE I DEFINITIONS In addition to other definitions provided for herein, as used herein, the following terms shall have the following meanings: 1.1 Association shall mean the Tahoe Beach and Ski Club Owners Association, a California nonprofit mutual benefit corporation, whose members consist of Owners of Vacation Plan interests. 1.2 Base Assessed Value shall mean the assessed valuation ascribed to the Property by the County Assessor for El Dorado County as of the Lien Date next preceding the close of escrow, as such assessed valuations may be adjusted by the Proposition 13 Percentage. 1.3 Basic Expenses shall mean the estimated aggregate amount of expenses, as set forth in the Budget, to be incurred by the Association during the applicable Fiscal Year: (i) to operate, maintain, improve and repair all Units on the Property, the Common Areas, and the Common Furnishings and to administer the Vacation Plan project and rental operation; (ii) to provide for reserves to ensure payment when due of the cost of capital expenditures relating to the repair or restoration of the Units, the Common Areas, and the repair and replacement of Common Furnishings, and for such other purposes as are required by good business practice (the Reserve Expenses ); and (iii) to provide for a fund to account for the possibility that some Assessments may not be paid on a current basis. 1.4 Board shall mean the Board of Directors of the Association. 1.5 Budget shall mean that document described in Section 4.2(H)(i) hereof. 1.6 Check-In Time and Check-Out Time shall mean the times designated as such in the then current Rules and Regulations. 1.7 Common Areas shall mean all portions of the Property other than (a) the interiors, patios and balconies of the Units and (b) the support Areas. 1.8 Common Furnishings shall mean all furniture, furnishings, appliances, fixtures and equipment, telephone system and all other personal property from time to time owned, leased or held for use by the Association and which are located in or upon the Property. 1.9 Current Assessed Value shall mean, for each Tax Year, the assessed valuation ascribed to the Property by the County Assessor for El Dorado County, California, as of the Lien Date next preceding the commencement of such Tax Year. 1.10 Declarant shall mean FN Realty Services, Inc., a California corporation (formerly Wells Fargo Realty Services, Inc., a California corporation) - 3 -

1.11 Declaration shall mean this instrument, as this instrument may be supplemented, amended or modified from time to time in the manner herein provided. 1.12 Deed of Trust shall mean the instrument securing the note executed by Grantee in connection with the purchase of a Vacation Plan. 1.13 Developer shall mean Waystations, Inc., a California corporation. 1.14 Exchange User shall mean an owner or permitted user of a time period in another timesharing program who occupies a Unit and uses the Common Areas and Common Furnishings pursuant to an Exchange Program. Exchange Program means a service provided by the Association or an independent organization whereby Owners may exchange use of a Vacation Plan for use periods in other locations or whereby Owners may obtain rights to make reservations in another location in exchange for the right of an Exchange User to make a reservation for a Vacation Plan, pursuant to a voluntary program. 1.15 Fiscal Year shall mean the one (1) year period commencing on January 1 of each year which shall be the fiscal year of the Association. 1.16 Grant Deed or Grant Deed of Vacation Plan shall mean that certificate whereby Declarant (as former Trustee) issued Original Vacation Plans, Regular Vacation Plans and Biennial Vacation Plans. 1.17 Lien Date shall mean the date established by the State of California as the date upon which the assessed valuation of real property within the State is determined for purposes of calculating real property taxes for any Tax Year. 1.18 Managing Agent shall mean the agent engaged by the Board of Directors of the Association pursuant to and in the manner provided in Section 4.3 hereof. 1.19 Member shall mean a member of the Association. Each Owner is a Member. 1.20 Original Declaration shall mean the Declaration of Vacation Plan executed by FN Realty Services, Inc., a California corporation (formerly Wells Fargo Realty Services, Inc., a California corporation) dated July 16, 1984 and recorded in the Official Records of the County of El Dorado, California at Book 2819, Page 158 on July 22, 1984. 1.21 Original Grant Deed of Vacation Plan shall mean that certificate whereby Developer conveyed Original Vacation Plans. 1.22 Owner shall mean and includes any and all holders of a Vacation Plan. 1.23 Owner s Season shall mean the Owner s Season designated in the Owner s Grant Deed of Vacation Plan. 1.24 Owner s Unit Type shall mean the Unit Type designated in the Owner s Grant Deed of Vacation Plan. - 4 -

1.25 Permitted User shall mean an Owner s guest or renter occupying a Unit for that Owner s Use Period as may be permitted under this Declaration and the other governing documents of the Association.. 1.26 Proposition 13 Percentage shall mean the percentage increase or decrease, if any, applied by El Dorado County, California, in any Tax Year pursuant to the California Constitution, Article 13A, Section 2, and any other applicable laws, ordinances or rules and regulations, enacted, adopted or promulgated there under, as the same may be amended from time to time. 1.27 Purchase Agreement shall mean the Purchase and Sale Agreement and Escrow Instructions entered into between Declarant or Developer and the person or firm named therein as Buyer (as defined therein) which provided for the sale by Declarant and the purchase by Buyer of one or more Vacation Plan(s). 1.28 Rules and Regulations shall mean the rules and regulations adopted and promulgated from time to time pursuant to Subsection 4.2(D) hereof. 1.29 Season shall mean any one of the following three (3) seasons: the High Season, the Swing Season and the Prime Season, which three quoted terms shall have the meanings given them in the Rules and Regulations, as determined by the Board. 1.30 Service Period shall mean, with respect to each Unit, a period of nights and days, not necessarily consecutive, during the Swing Season reserved for such Unit by the Association as a Service Period. The Managing Agent shall determine which days and nights will comprise the Service Period for each Unit, which determination may be changed from time to time. 1.31 Support Areas shall mean the following portions of the Property: the lobby, front desk, executive offices, baggage area, linen and storage closets, public lavatories and commercial space. 1.32 Tax Year shall mean the one (1) year period beginning July 1 each year and ending June 30 of the following year, or such other tax year established by the State of California for the assessment and collection of real property taxes attributable to the Property. 1.33 Total Tax Expense shall mean the total amount of real property taxes levied against the Property for any Tax Year. 1.34 Trust Agreement shall mean that Agreement and Declaration of Trust by and among FN Realty Services, Inc., a California corporation (formerly Wells Fargo Realty Services, Inc., a California corporation), Waystations, Inc., a California corporation, the Tahoe Beach and Ski Club Owners Association, and the Tahoe Beach and Ski Club Owners Association s members as a class dated April 25, 1983, and recorded in the Official Records of the County of El Dorado, California at Book 2,176, Page 435 on June 3, 1983. - 5 -

1.35 Trustee shall mean the Tahoe Beach and Ski Club Owners Association or any successor trustee under the Trust Agreement. 1.36 Unit(s) shall mean, individually, each of the one-hundred-forty (140) separate living units and the Cabin, identified by number as determined by the Board and also identified by Unit Type. 1.37 Unit Type shall mean the floor plan and/or accommodations associated with each of the Units which include the following: A. Studio shall mean one of the thirty-six (36) regular studio Units located on the Property; B. One-Bedroom shall mean one of the fifty-eight (58) regular onebedroom Units located on the Property; C. Deluxe One-Bedroom shall mean one of the fifteen (15) deluxe onebedroom Units located on the Property; D. Townhouse shall mean one of the twenty-six (26) two-story, onebedroom Units located on the Property; E. Two-Bedroom shall mean one of the four (4) regular two-bedroom Units located on the Property; F. Cabin shall mean the one (1) stand-alone two-story, two-bedroom Unit located on the Property; 1.38 RESERVED 1.39 Use Period shall mean the time period(s) during which an Owner has reserved the use of a Unit of this Owner s Unit Type in accordance with the provisions of this Declaration and the Rules and Regulations. 1.40 Use Week shall mean one of the numbered one (1)-week periods commencing at Check-In Time and ending at Check-Out Time as designated on the Use Week Calendar. 1.41 Calendar shall mean the calendar attached hereto as Exhibit C and made a part hereof, as such Calendar may be supplemented by the Association as provided in Section 4.2(P) hereof. 1.42 Use Year shall mean, with respect to an Original Vacation Plan or a Regular Vacation Plan, a calendar year, commencing January 1 st. With respect to a Biennial Vacation Plans, Use Year shall mean the alternate one (1)-calendar year period commencing in either an even-numbered or odd-numbered calendar year, depending upon the Owner s choice at the time the Biennial Vacation Plan was purchased. Each Biennial Vacation Plan entitles its Owner to only one (1) Use Week every two (2) calendar years. - 6 -

1.43 Vacation Plan(s) shall mean, individually or collectively, the following types of plans: A. Original Vacation Plan shall mean an undivided 1/7,140 beneficial interest in the Trust which entitles its Owner to one Use Week in said Owner s respective Unit Type and Season during each Use Year. For all purposes under this Declaration, each Original Vacation Plan will equal one Vacation Plan. B. Regular Vacation Plan shall mean an undivided 1/7,140 fee interest in the Property, which entitles its Owner to one Use Week in said Owner s respective Unit Type and Season during each Use Year. For all purposes under this Declaration, each Regular Vacation Plan will equal one Vacation Plan. C. Biennial Vacation Plan shall mean an undivided 1/14,280 fee interest in the Property, which entitles its Owner to one Use Week in said Owner s respective Unit type and Season during each even-numbered year or odd-numbered year, depending upon said Owner s choice at the time the Biennial Vacation Plan was purchased. For all purposes under this Declaration, each Biennial Vacation Plan will equal one-half Vacation Plan, and carry exactly one-half the rights and obligations of an Original or Regular Vacation Plan. ARTICLE II RESERVATION RIGHTS, USE RIGHTS AND USE RESTRICTIONS 2.1 Reservation and Use Rights of Owners: Subject to all the terms and conditions contained elsewhere in this Declaration, and in the Rules and Regulations, each Owner shall have the right during each Use Year, for each Vacation Plan owned, to use and occupy a Unit of his Owner s Unit Type assigned to him by the Association and the non-exclusive right to use and enjoy the Common Areas and the Common Furnishings for up to seven (7) nights during his Owner s Season in each Use Year; provided, however, that such Owner shall have reserved such use and occupancy in accordance with the requirements and procedures for the making of reservations set forth in the then-current Rules and Regulations. No use or occupancy by any Owner will be permitted if such Owner is delinquent in the payment of any amounts owed to the Association hereunder. Owner reservation requests for a specific Unit are subject to Unit availability and cannot be guaranteed by the Association. 2.2 Occupancy: No Owner shall occupy a Unit or exercise any other rights of ownership with respect to a Unit other than the rights provided to him in this Article II during any time period other than his Use Period(s) unless expressly authorized by the Owner entitled to occupy the Unit during such time period. Each Owner shall: keep the Unit occupied by him and the Common Furnishings therein in good condition and repair during his Use Period(s); vacate the Unit at the expiration of his Use Period(s); remove all persons and property there from, excluding only the Common Furnishings; leave the Unit and the Common Furnishings - 7 -

therein in good and sanitary condition and repair; and otherwise comply with such checkout and other procedures and regulations as may from time to time be contained in the Rules and Regulations. Any Owner may permit a Unit which he is entitled to occupy to be occupied by other persons (not in excess of the number of occupants permitted by this Declaration or the Rules and Regulations) during his Use Period(s), but such Owner shall be responsible for any loss, damage, destruction or violation of this Declaration or the Rules and Regulations (except on the part of an Exchange User) which occurs during such occupancy as if such owner were occupying the Unit. 2.3 Failure to Vacate: If any Owner or any person, other than an Exchange User, occupying by or under any Owner (the Permitted User ) fails to vacate a Unit at the end of the Owner s Use Period, or otherwise makes unauthorized use or occupancy of a Unit during a period other than the Owner s Use Period, or prevents another Owner, Permitted User or Exchange User (the Detained Owner or Detained User ) from using or occupying a Unit during such other Owner s Use Period, such Owner (the Detaining Owner ) and/or Permitted User (the Detaining User ) shall: (a) be subject to immediate removal, eviction or ejection from the Unit wrongfully used or occupied; (b) be deemed to have waived any notice required by law with respect to any legal proceedings regarding removal, eviction or ejection (to the extent that such notices may be waived under California law); (c) reimburse the Association and the Detained Owner or Detained User for all costs and expenses incurred by him as a result of such conduct, including, but not limited to, costs of alternate accommodations, travel costs, court costs and reasonable attorneys fees incurred in connection with removing, evicting or ejecting the Detaining Owner and/or Detaining User from such Unit, and costs (including reasonable attorneys fees) incurred in collecting such reimbursement; and (d) pay to the Detained Owner and/or the Detained User entitled to use and occupy the Unit during such wrongful occupancy, as liquidated damages in addition to the costs and expenses set forth in Subsection 2.3(c) above, a sum equal to two-hundred percent (200%) of the fair rental value per day of the Unit for each day or portion thereof, including the day of surrender, during which the Detaining Owner and/or Detaining User prevents use and occupancy of the Unit; provided, however, that if the Detaining User is an Exchange User, the Owner whose Use Period was used by the Exchange User shall have no liability pursuant to the provisions of clauses (c) and (d) above. The Association shall be responsible for determining the Fair Rental Value for a Unit and shall base such determination upon the costs of renting comparable accommodations located in the vicinity of the Property. The Association shall use reasonable efforts to attempt to remove such Detaining Owner and/or Detaining User from the Unit, and/or to assist the Detained Owner or Detained User in finding alternate accommodations during such holdover period and to secure, at the expense of the Association, alternate accommodations for any Detained Owner or Detained User which alternate accommodations shall be as near as possible in value to the Detained owner s as Detained User s assigned Unit and the cost thereof shall be assessed to the Detaining Owner (unless the Detaining User was an Exchange User) as a Personal Charge (as hereinafter defined). In the event that the Association, in its sole discretion, deems it necessary to contract for a period in excess of the actual period for which the use is prevented in order to secure alternate accommodation as set forth above, the cost of the entire period shall be assessed to the Detaining owner as a Personal Charge. By accepting - 8 -

any conveyance of a Vacation Interest, each Owner agrees that, in the event of a wrongful occupancy or use by him or his Permitted User, damages would be impracticable or extremely difficult to ascertain and that the measure of liquidated damages provided for herein constitutes fair compensation to those who are deprived of occupancy. If an owner or his Permitted User, by intentional or negligent act renders a Unit uninhabitable for the subsequent Use Period(s), then: (i) such Owner shall be deemed a Detaining owner; (ii) the foregoing provisions of this Section shall apply and; (iii) such Owner shall be liable to the Owner(s) and/or Permitted User(s) entitled to occupy such Unit during such subsequent Use Period(s) just as if such Owner had refused to vacate the Unit at the end of his Use Period(s). For the purposes of this Section, the act or negligence of a Permitted User shall be deemed to be the act of the Owner. 2.4 Use Restrictions: The maximum occupancy of any Unit Type shall be as provided in the Rules and Regulations. Except as required to prevent damage or injury to persons or property in an emergency, no Owner shall make or authorize any alterations, additions or improvements to a Unit or its Common Furnishings, paint, repaint, tile, paper or otherwise refinish or redecorate the inner surfaces of the walls, ceilings, floors, windows or doors bounding any Unit which such owner may from time to time occupy; or remove, alter or replace any portion of the Common Furnishings without the prior written consent of the Association. The right to perform all of the foregoing acts has been delegated to the Association by this Declaration. The foregoing prohibitions, however, shall not modify or affect the obligation of each Owner for the prudent care and ordinary maintenance and upkeep of all property subject to his use. 2.5 Easement for Improvements: The Association, for itself, its successors and assigns, and its and their agents, employees, contractors, subcontractors, and other authorized personnel shall have, for so long as the Association or its successors and assigns shall be required hereunder to manage and maintain the Units, an exclusive easement in gross in, over and through the Units for the repair and maintenance thereof and the Common Furnishings during each Service Period; provided, however, that use of such easement shall not unreasonably interfere with or diminish the rights of Owners, Permitted Users, or Exchange Users to occupy the Units and the Common Area and to use the Common Furnishings. In amplification and not limitation thereof, the Association and its successors and assigns shall have the right during Service Periods and upon giving reasonable notice if a Unit is occupied, to enter such Unit for the purpose of cleaning, maid service, painting, maintenance and repair, and at any reasonably necessary time, whether or not in the presence of an Owner, to enter upon any Unit for the purpose of: A. Making emergency repairs therein; B. Abating any nuisance or any dangerous, unauthorized, prohibited or unlawful activity being conducted or maintained in such Unit; - 9 -

C. Protecting the property rights and welfare of any Owner, Permitted User or Exchange User; or D. For any other purpose reasonably related to the performance by the Association of its duties and obligations under the terms of this Declaration. Such right of entry shall be exercised in such a manner as to avoid any unreasonable or unnecessary interference with the possession, use and enjoyment of the rightful occupancy of such Unit and shall be preceded by reasonable notice to such occupant whenever the circumstances permit. 2.6 Use of Support Areas by the Association: The Association shall, at all times, have the full and complete use of all Support Areas and shall be responsible for maintaining the same in good condition and repair. 2.7 Transfer of Interest: No Owner shall sell, convey, transfer, hypothecate or encumber less than all of his interest in his Vacation Plan. Without limiting the generality of the foregoing, any sale, conveyance, transfer, hypothecation or encumbrance by any Owner of less than all of his interests in his Vacation Plan shall be null, void and of no effect. The transfer of any Vacation Plan shall operate to transfer to the new Owner of the Vacation Plan the interest of the prior Owner in all funds in the hands of the Association even though not expressly mentioned or described in the instrument of transfer and without further instrument of transfer. Upon sale or transfer of his Vacation Plan, either the Owner or purchaser shall notify the Association, as provided in Section 8.3 hereof, of the identity and address of the purchaser or transferee and the date of said sale or transfer. Ownership and use rights of the purchaser or transferee shall not be recognized until said notice is received. 2.8 Separate Encumbrances: Each Owner shall have the right to encumber all, but not less than all, of his Vacation Plan; provided, however, that each security agreement shall provide that any subsequent purchaser shall be deemed to have obtained the Vacation Plan and any inherent use rights subject to all of the provisions of this Declaration. Notwithstanding any other provision of this Declaration, no breach of the provisions herein contained, nor the enforcement of any lien created pursuant to the provisions hereof, shall defeat or render invalid the lien of any secured interest of any Owner s Vacation Plan if a security agreement is filed in the office of the County Recorder of El Dorado County, California, and is executed in good faith and for value. 2.9 Partition and Subordination of Tenancy-in-Common Attributes: A. It is intended that this Declaration alone shall govern all rights with respect to the use, possession, enjoyment, management and disposition of the Vacation Plans and the Property. Accordingly, all rights with respect to the use, possession, enjoyment, management or disposition of a Vacation Plan or the Property which an Owner - 10 -

might otherwise have as a tenant-in-common (including but not limited to any common law or statutory right jointly to use, possess or manage commonly owned property), are hereby unconditionally and irrevocably subordinated to this Declaration for so long as this Declaration shall remain in effect; provided, however, that in the event that an election to terminate this Declaration is made pursuant to Section 8.2 hereof, an Owner shall have the rights specified in therein. B. No Owner or other person or entity acquiring any right, lien or interest in any of the Property shall seek or obtain, through any legal procedures, judicial partition of the Property or the sale thereof in lieu of partition. If, however, any Vacation Plan is owned by two (2) or more persons as tenants-in-common, or as joint tenants or community property, nothing herein contained shall prohibit a judicial sale of the Vacation Plan in lieu of partition as between such co-tenants or joint tenants. 2.10 Protection of Interest: Except as provided in this Section 2.10, no Owner shall permit his Vacation Plan to be subject to any lien (other than the liens of current real property taxes), claim or charge, the enforcement of which may result in a sale or threatened sale of the Vacation Plan of any other Owner or any part thereof or in any interference in the use or enjoyment thereof by any other Owner. In the event of a threatened sale of the Property or the Vacation Plan of any Owner or any part thereof, or should the use and enjoyment of any portion thereof by any Owner be threatened by reason of any lien, claim or charge against the Vacation Plan of any other Owner, or should proceedings be instituted to effect any such sale or interference, any Owner acting on his own behalf or through the Association, or the Association acting on behalf of any one (1) or more Owners (if promptly indemnified to his or its satisfaction), may, but shall not be required to, pay or compromise the lien, claim or charge without inquiry into the proper amount or validity thereof. In such event, the Owner whose interest was subjected to such lien, claim or charge shall forthwith pay the amount so paid or expended to the Owner or the Association, whomsoever shall have paid or compromised the lien, claim or charge, together with such reasonable attorneys fees and related costs as he or it may have incurred. No Owner shall permit his interest in any funds from time to time in possession of the Association to be subjected to any attachment, lien, claim or charge or other legal process and such Owner shall promptly restore any funds held by the Association in respect of his Vacation Plan to the extent depleted by the reason of the assertion of any such attachment, lien, claim, charge or other legal process and shall reimburse the Association for all reasonable attorneys fees or other costs incurred in respect thereof. 2.11 Rental of Units An Owner may rent his or her Use Period, or portion thereof, to a member of the general public for such Owner s own account; provided, however, that an Owner s untimely reservation request shall be honored unless every Unit has been reserved by an Owner or has been rented to a member of the general public as permitted herein prior to the Managing Agent s receipt of such Owner s untimely reservation request. The Association and the Managing Agent shall have the right to rent and exchange unreserved Use Periods, or - 11 -

portions thereof, directly or through agents, to members of the general public for the benefit of the Association, provided such rentals or exchanges are of (i) Use Periods relating to Vacation Plans of Owners who have had their use rights suspended for nonpayment of assessments, (ii) Use Periods relating to Vacation Plans owned by the Association; or (iii) Use Periods, or portions thereof, during Service Periods, to the extent the full Service Period is not necessary for maintenance, as determined by the Managing Agent. 3.1 Membership in Association: ARTICLE III THE ASSOCIATION Each Owner of either an undivided fee interest or a beneficial interest in the Trust shall be a member of the Association (a Member ) and shall remain a Member thereof until he ceases to be an Owner. 3.2 Transfer of Membership: The membership of each Owner in the Association is mandatory, appurtenant to, and inseparable from, his ownership of a Vacation Plan and shall be automatically transferred upon any authorized transfer or conveyance of the ownership of his Vacation Plan to any transferee or grantee and, except as provided herein, said membership shall be non-transferable whether by gift, bequest, assignment or otherwise. 3.3 Voting: The Association shall have two classes of voting membership. All Owners shall be Members, including both Regular Vacation Plan Owners ( Class A-1 ) and Biennial Vacation Plan Owners ( Class A-2 ). Class A-1 Members shall be entitled to one (1) vote for each Regular Vacation Plan owned by them. When more than one person or entity is the Owner of a Regular Vacation Plan, the vote for such Regular Vacation Plan shall be exercised as they among themselves determine, but in no event shall more than one (1) vote be cast with respect to any Regular Vacation Plan. Class A-2 Members shall be entitled to one half (1/2) vote for each Biennial Vacation Plan owned by them. When more than one person or entity is the Owner of a Biennial Vacation Plan, the vote for such Biennial Vacation Plan shall be exercised as they among themselves determine, but in no event shall more than one half (1/2) vote be cast with respect to any Biennial Vacation Plan. Except as otherwise provided in this Declaration, all votes required for action of the Association as set forth in this Declaration shall require a Majority of Owners. 3.4 Board of Directors: The Board of Directors shall be elected and composed as set forth in the Bylaws. 4.1 Powers and Duties Generally: ARTICLE IV MANAGEMENT - 12 -

Administration of the Vacation Plan program, operation, maintenance, repair and restoration of the Units, the Common Area, Property and the Common Furnishings, and any alterations and additions thereto shall be vested in the Association. The Association, acting alone (through its Board, its officers, or other duly authorized representatives) may, subject to the provisions of the Association s Articles of Incorporation, the By-Laws and this Declaration, exercise any and all rights and powers herein enumerated and, except as specifically limited herein, all the rights and powers of a non-profit mutual benefit corporation under the laws of the State of California. Without limitation, the Association shall be empowered to rent for the benefit of the members areas of the Common Area which the Board finds appropriate to be rented to generate income for the Association. 4.2 Specific Powers and Duties of the Association: The management and operation of the Vacation Plan program and the maintenance and repair of each Unit and the Property; the acquisition (by purchase or lease), maintenance, repair and replacement of the Common Furnishings and the administration of the affairs of Owners; and the use and occupancy of the Units and payment, as agent, of expenses and costs enumerated in this Declaration shall be under the direction and control of the Association. The Association shall have the duty to maintain and repair the Property, to acquire (by lease or purchase), maintain, repair and replace Common Furnishings as needed, to administer the Vacation Plan operation and the rental of nonreserved Units as provided herein and to levy, collect and enforce the Assessments (as hereinafter defined) enumerated in this Declaration. The Association shall have the exclusive possession of each Unit during the Service Periods for the performance of maintenance and repairs on such Unit. The Association shall have the power to do all things that are required to be done by it pursuant to this Declaration. Without limitation of the foregoing powers and duties, the Association is expressly authorized in its discretion and on behalf of the Owners to do any or all of the following: A. Maintenance and Repair: To repair, maintain, repaint, furnish or refurnish the Units, Common Area and Common Furnishings or any part thereof; to establish reserves for anticipated costs, including the costs of acquisition and replacement of Common Furnishings; and to acquire and pay for materials, supplies, furniture, furnishings, labor or services which the Association deems necessary or proper for the operation, maintenance and repair of the Property and the Common Furnishings; B. Taxes and Assessments: As agent and not as principal, to pay all taxes and assessments billed to the Association, and other costs affecting or relating to the Vacation Plan operation, the Property or Common Furnishings; and to discharge, contest or protest liens or charges affecting the Property; C. Utilities: To obtain and pay the costs of water, electrical, telephone, cable television, gas, refuse pick-up, garbage disposal and other utility services for the Units and the Property; D. Rules and Regulations: To adopt, publish and enforce, from time to time, Rules and Regulations relating to the possession, use and enjoyment of the Units and - 13 -

the Property, which Rules and Regulations shall be consistent with the provisions of this Declaration; E. Legal and Accounting: To obtain and pay the cost of legal and accounting services as the Association shall deem necessary or proper in the operation of the Vacation Plan program, the maintenance and repair of the Units, Common Area, the Property and the Common Furnishings and the enforcement of this Declaration, the By- Laws and the Rules and Regulations. F. Insurance: To obtain and pay the cost of: (i) Insurance against loss or damage to the Units, the Common Area, the Common Furnishings or the Property and any of the contents thereof, including without limitation machinery used in the service of the Units or Property, by fire and other risks and hazards customarily covered by an insurance policy written on an all risk basis, including, to the extent available at a reasonable cost, earthquake coverage. The stipulated amount of such insurance shall be based on the full replacement costs thereof, and either such stipulated full replacement cost amount shall be updated annually by the Association to reflect the then-current estimated full replacement cost thereof, or an endorsement which provides for full reimbursement for the actual cost of repair or replacement thereof, without deduction for depreciation, shall be procured and maintained by the Association. Such insurance shall name the Association as a co-insured for itself and as agent for each Owner; (ii) Insurance covering the Common Furnishings; (iii) To the extent available at a reasonable cost, insurance against loss of earnings, continuing charges and expenses, and such other risks and hazards customarily covered by business interruption insurance policies. Such business interruption insurance shall be combined with insurance against loss due to extra expenses arising out of operating the Vacation Plan project and the cost of temporary quarters for Owners, Permitted Users and Exchange Users due to damage to the Unit, the Common Furnishings and such other risks and hazards customarily covered by such extra expense insurance policies; (iv) To the extent available at a reasonable cost, Directors and Officers liability insurance, Workers Compensation Insurance and any other insurance deemed necessary or desirable by the Association. Such other policy shall cover such risks, be written by such insurers, and be in such amounts as the Association shall deem necessary and proper under the circumstances. The Association shall cause to be covered by a fidelity bond or insurance providing for a blanket crime endorsement which covers risks associated with dishonest acts being performed by any agent, employee or the Association who may have charge of funds of any Owner, Permitted User, Exchange User, or of the Association, with loss coverage not less than the maximum amount of funds of the Association over which the principle(s) under the bond may reasonably be expected to have control or access at any time. - 14 -

(v) Insurance against loss or liability due to injury to, or destruction of personal property belonging to, Owners, Permitted Unit Users, Exchange Users, and Renters while located within the Property, including without limitation loss due to claims for bodily injury, death and property damage. Such policy or policies shall have coverage with a combined single limit liability of not less than $1,000,000 per occurrence. The Association shall also maintain one or more umbrella liability insurance policies against loss or damage due to such claims with a limit with regard thereto of not less than $5,000,000 per occurrence. All insurance policies obtained by the Association hereunder shall name all Owners (as a class) as additional insureds. Liability insurance shall contain appropriate waivers of subrogation against any Owner or member of such Owner s household, and a provision that no act or omission by an Owner, Permitted User or Exchange User, unless acting within the scope of his authority on behalf of the Association, will void the policy or operate as a condition to recovery by any other person under such policy. G. Levy and Collection of Assessments: To levy, collect and enforce Assessments against the Owners in the manner provided in Articles V and VI hereof in order to pay the expenses of the Vacation Plan operation and to do all things necessary to enforce each Owner s obligations hereunder. H. Financial Statements and Audit. To cause to be regularly prepared financial statements for the Association and copies thereof distributed to all Members as follows: (i) A budget (the Budget ) for the property for each Fiscal Year consisting of at least the following information shall be distributed not less than forty-five (45) days prior to the beginning of the Fiscal Year to which the Budget applies, except the first Fiscal Year with respect to which the Budget shall be distributed as soon as reasonably possible: (a) estimated revenue and expenses on an accrual basis; (b) the amount of the total cash reserves of the Association currently available for replacement or major repair of common facilities and for contingencies; (c) an itemized estimate of the remaining life of, and the methods of funding to defray the costs of repair, replacement or additions to, major components of the Common Areas and Facilities for which the Association is responsible; and (d) a general statement setting forth the procedures used by the governing body in the calculation and establishment of reserves to defray the costs of repair, replacement or additions to major components of the Common Areas and facilities for which the Association is responsible; (ii) A report (the Annual Report ) shall be distributed, within onehundred-twenty (120) days after the end of each Fiscal Year, consisting of the following: (a) a balance sheet as of the last day of such Fiscal Year; (b) an operating (income) statement for such Fiscal Year; (c) a statement of changes in financial position for such Fiscal Year; (d) for any Fiscal Year in which the gross income to the Association exceeds Seventy-Five Thousand Dollars ($75,000), a copy of the review of the annual report prepared in accordance with generally accepted accounting principles by a licensee of the California - 15 -

State Board of Accountancy; and (e) any information required to be reported under of California Corporations Code Section 8322. (iii) If the Annual Report referred to in Subsection 4.2(H)(ii) above, is not prepared by an independent accountant, then it shall be accompanied by the certificate of an authorized officer of the Association that the statement was prepared from the books and records of the Association without independent audit or review; (iv) The governing body shall annually distribute within sixty (60) days prior to the beginning of the Fiscal Year a statement of the Association s policies and practices in enforcing its remedies against Members for defaults in the payment of regular and special Assessments including the recording and foreclosing of liens against Members interests in the Project. I. Bank Accounts: To deposit all funds collected from Owners by the Association in connection with its rights and duties provided herein, as follows: (i) All funds shall be deposited in a General Account with a bank or savings and loan association located in the State of California selected by the Association. Funds deposited in the General Account may be used by the Association only for the purposes for which such funds have been collected. (ii) Funds which the Association shall collect for Reserve Expenses (as defined in and collected pursuant to Section 5.3 hereof) shall, within ten (10) days after deposit in the General Account, be deposited in an interest bearing account with a bank or savings and loan association in the State of California selected by the Association and/or invested in Treasury Bills and/or Certificates of Deposit (said interest bearing bank or savings and loan account or Treasury Bills or Certificates are all herein collectively referred to as the Reserve Account ), and the Association shall keep accurate books and records reflecting the amount in the Reserve Account attributable to each Owner. Funds deposited in the Reserve Account shall be held for the Members benefit and may be used by the Association only for the specific purposes for which such funds have been collected. J. Statements of Status; Project Documents: (i) Within ten (10) days of the mailing of a request by any Owner, Mortgagee, prospective Mortgagee, purchaser or other prospective transferee of a Vacation Plan, to issue a Statement of Status (as defined herein). Such statement, for which a reasonable fee may be charged, shall be binding upon the Association in favor of any person who may rely thereon in good faith. (ii) Within ten (10) days of the mailing of a request by an Owner, to provide such Owner with a copy of the Declaration, the Articles and the Bylaws. (iii) The Association may charge a fee for providing the Statement of Status or the requested documents, which fee shall not exceed the reasonable cost of preparation and/or reproduction of same. - 16 -

K. Cleaning and Maid Service: To provide for cleaning and maid service upon the departure of each Owner, Permitted User or Exchange User from each Unit and during Service Periods so that the Units are maintained in good order and repair. In addition to cleaning and maid service that is normally provided to each Unit, to provide, either upon request or in the Association s discretion, additional cleaning and maid services to Owners for which reasonable fees may be charged. L. Right of Entry: During Service Periods and at any other reasonable time, upon giving reasonable notice if a Unit is occupied, to enter the Unit for the purpose of cleaning, maid service, painting, maintenance and repair, and to enter upon and within any Unit, at any reasonable time, whether or not during a Service Period and whether or not in the presence of any Owner, for the purpose of: (i) making emergency repairs therein; (ii) abating any nuisance or any dangerous, unauthorized, prohibited or unlawful activity being conducted or maintained in such Unit; (iii) protecting property rights and welfare of the other Owners; or (iv) for any other purpose reasonably related to the performance by the Association of its responsibilities under the terms of this Declaration. Such right of entry shall be exercised in such a manner as to avoid any unreasonable or unnecessary interference with the possession, use and/or enjoyment of the Owner, his Permitted User or other occupant of such Unit and shall be preceded by reasonable notice to the Owner, his Permitted User or other occupant thereof whenever the circumstances permit. M. Minutes and Agenda: To make available to the Owners within thirty (30) days following a Board meeting the minutes, or a summary of the minutes, of the meeting, other than in executive session, and to provide each Owner with a copy of a list of the orders of business to be considered at the annual meeting of members not later than thirty (30) days prior to the date for such meeting, which list shall contain the name, address and a brief biographical sketch (if available) of each member nominated to stand for election to the Board. N. Other Necessary Acts: To do all other things or acts deemed by the Association to be necessary, desirable or appropriate for the operation and maintenance of Vacation Plan program and the Property. O. Delegation: To delegate the authority and responsibilities of the Association hereunder to one (1) or more agents, including, without limitation, the Managing Agent provided for in Section 4.3 below. P. Calendar: Attached hereto as Exhibit C is a calendar that identifies the commencement day of all fifty-two (52) Use Weeks for the twelve (12)-year period commencing on the beginning of the first portion of the High Season, 2002 (the Calendar ). Not later than five (5) years prior to the expiration of such calendar, and any supplemental or replacement Calendar provided by the Association pursuant to this Subsection, the Association shall supplement the Calendar by identifying the weeks included in each Season for an additional twelve (12) year period. Q. Roster: The Association shall annually compile a roster of the names and addresses of each Owner (the Roster ). Upon the written request of any Owner, the - 17 -