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Home My WebLink About20060630.tiff OFFICE OF THE SECRETARY OF STATE OF THE STATE OF COLORADO CERTIFICATE I, Ginette Dennis, as the Secretary of State of the State of Colorado, hereby certify that, according to the records of this office, Waterford Hill Homeowners Association is a Nonprofit Corporation formed or registered on 02/08/2006 under the law of Colorado, has complied with all applicable requirements of this office, and is in good standing with this office. This entity has been assigned entity identification number 20061057770 This certificate reflects facts established or disclosed by documents delivered to this office on paper through 02/09/2006 that have been posted, and by documents delivered to this office electronically through 02/13/2006 @ 16:26:37 . I have affixed hereto the Great Seal of the State of Colorado and duly generated, executed, authenticated, issued, delivered and communicated this official certificate at Denver, Colorado on 02/13/2006 @ 16:26:37 pursuant to and in accordance with applicable law. This certificate is assigned Confirmation Number 6415018 . of ' cPL© -.T .IF 4 ' � IS/Id&-- 1876 Secretary of State of the State of Colorado ****************************************End of Certificate**************************************** Notice:A certificate issued electronically from the Colorado Secretary of State's Web site is fully and immediately valid and effective. However, as an option,the issuance and validity of a certificate obtained electronically may be established by visiting the Certificate Confirmation Page of the Secretary of State's Web siz http m Nos.ata co us biz C rttfir atek arc lit'r iii;it I entering the certificate's confirmation number displayed on the certificate, and following the instructions displayed Confirming the issuance ofa certi mate is merel Tonal and is not r ecessary to the valid and effective issuance ofa certii mate For more information,visit our Web site, hnp cos stare en av click Business Center and select"Frequently Asked Questions." CERT_GS.D Revised 09/22/2005 .44 IQ 2006-0630 Colorado Secretary of State -Flied Date and Time: 02/08/2006 11:49 AM Document processing fee Entity Id: 20061057770 If document is filed on paper $125.00 If document is filed electronically $ 25.00 Document number: 20061057770 Fees&forms/cover sheets are subject to change. To file electronically,access instructions for this form/cover sheet and other information or print copies of filed documents,visit www.sos.state.co.us and select Business Center. Paper documents must be typewritten or machine printed. ABOVE SPACE FOR OFFICE USE ONLY Articles of Incorporation for a Nonprofit Corporation filed pursuant to §7-90-301,et seq. and§7-122-101 of the Colorado Revised Statutes(C.R.S) 1. Entity name: Waterford Hill Homeowners Association (The name of a nonprofit corporation may,but need not,contain the term or abbreviation "corporation", "incorporated", "company", "limited", "corp.", "inc.", "co."or"ltd." §7-90-601,C.R.S.) 2. Use of Restricted Words(if any of these terms are contained in an entity name,true ❑ "bank"or"trust"or any derivative thereof name of an entity, trade name or trademark El "credit union" ❑ "savings and loan" stated in this document,mark the applicable ❑ "insurance","casualty","mutual",or"surety" box): 3. Principal office street address: 1719 E. Mulberrty Street (Street name and number) Fort Collins CO 80524 (City) (State) (Postal/Zip Code) United States (Province-if applicable) (Country-if not US) 4. Principal office mailing address: (if different from above) (Street name and number or Post Office Box information) (City) (State) (Postal/Zip Code) (Province—if applicable) (Country-if not US) 5. Registered agent: (if an individual): Barstow Marvin A. (Last) (First) (Middle) (Suffix) OR(if a business organization): 6. The person appointed as registered agent in the document has consented to being so appointed. 7. Registered agent street address: 1719 E. Mulberry Street (Street name and number) Fort Collins CO 80524 (City) (State) (Postal/Zip Code) 8. Registered agent mailing address: (if different from above) (Street name and number or Post Office Box in formation) ARTINC_NPC Page 1 of 3 Rev. 11/16/2005 .4 (City) (State) (Postal/Zip Code) (Province-if applicable) (Country-if not US) 9. If the corporation's period of duration is less than perpetual,state the date on which the period of duration expires: (mm/dd/yjyy) 10. (Optional) Delayed effective date: (nnn/dd/yyyy) 11. Name(s)and address(es)of incorporator(s): (if an individual) Barstow Marin A. (Last) (First) (Middle) (Suffix) OR(if a business organization) 1719 E. Mulberry Street (Street name and number or Post Office Box information) Fort Collins CO 80524 (City) (State (Postal/Zip Code) Unite States (Province—if applicable) (Country—if not US) ro•-•- (if an individual) (Last) (First) (Middle) (Su M OR(if a business organization) (Street name and number or Post Office Box information) (City) (State) (Postal/Zip Code) United States (Province- if applicable) (Country—(f not US) (if an individual) (Last) (First) (Middle) (Suffix) OR(if a business organization) (Street name and number or Post Office Box information) (City) (State (Postal/Zip Code) United States (Province—if applicable) (Country—ifnot US) (If more than three incorporators,mark this box ❑ and include art attachment stating the names and addresses of all incorporators.) ARTINC_NPC Page 2 of 3 Rev. 11/16/2005 • 12.The nonprofit corporation is formed under the Colorado Revised Nonprofit Corporation Act. 13.The corporation will ❑✓ OR will not ❑ have voting members. 14. A description of the distribution of assets upon dissolution is attached. 15. Additional information may be included pursuant to §7-122-102,C.R.S. and other organic statutes. If applicable,mark this box ❑✓ and include an attachment stating the additional information. Notice: Causing this document to be delivered to the secretary of state for filing shall constitute the affirmation or acknowledgment of each individual causing such delivery,under penalties of perjury, that the document is the individual's act and deed, or that the individual in good faith believes the document is the act and deed of the person on whose behalf the individual is causing the document to be delivered for filing,taken in conformity with the requirements of part 3 of article 90 of title 7,C.R.S.,the constituent documents,and the organic statutes, and that the individual in good faith believes the facts stated in the document are true and the document complies with the requirements of that Part,the constituent documents, and the organic statutes. This perjury notice applies to each individual who causes this document to be delivered to the secretary of state,whether or not such individual is named in the document as one who has caused it to be delivered. 16.Name(s)and address(es)of the individual(s)causing the document to be delivered for filing: Martell James A. (Last) (First) (Middle) (Suffix) 300 S. Howes Street (Street name and number or Post Office Box information) Fort Collins CO 80521 (City) (State) (Postal/Zip Code) United States (Province if applicable) (Country—if not US) (The document need not state the true name and address of more than one individual. However((You wish to state the name and address of any additional individuals causing the document to be delivered for filing,mark this box ❑ and include an attachment stating the name and address of such individuals.) Disclaimer: This form,and any related instructions,are not intended to provide legal,business or tax advice, and are offered as a public service without representation or warranty. While this form is believed to satisfy minimum legal requirements as of its revision date, compliance with applicable law, as the same may be amended from time to time,remains the responsibility of the user of this form. Questions should be addressed to the user's attorney. ARTINC_NPC Page 3 of 3 Rev. 11/16/2005 NOTICE: This "image"is merely a display of information that was filed electronically. It is not an image that was created by optically scanning a paper document. No such paper document was filed. Consequently, no copy of a paper document is available regarding this document. Questions?Contact the Business Division. For contact information,please visit the Secretary of State's web site. Click the following links to view attachments Attachment 1 Indemnification, Liability and Distribution ATTACHMENT TO ARTICLES OF INCORPORATION OF WATERFORD HILL HOMEOWNERS ASSOCIATION ARTICLE I. INDEMNIFICATION OF DIRECTORS The Association shall indemnify its Directors to the full extent permitted by Colorado law. ARTICLE II. LIMITATION OF LIABILITY No Director shall be liable to the Association or to its members for monetary damages for breach of fiduciary duty as a Director; except that this provision shall not limit the liability of a Director to the Association for monetary damages for any breach of the Director's duty of loyalty to the Association or to its members, acts or omissions not in good faith, or that involve intentional misconduct or a knowing violation of law or any transaction in which the Director directly or indirectly derived an improper personal benefit. No Director or officer shall be personally liable for any injury to person or property arising out of a tort committed by an employee of the Association unless such Director or officer was personally involved in the situation giving rise to the litigation or unless such Director or officer committed a criminal offense in connection with such situation. The protection afforded in this Article shall not restrict other common law protections and rights that a Director or officer may have. ARTICLE III. DISTRIBUTION OF ASSETS UPON DISSOLUTION Upon dissolution of the Association, the Board of Directors shall provide for the distribution of all assets and liabilities of the Association in the following manner: (a) All liabilities and obligations of the Association shall be paid and discharged or adequate provisions shall be made for payment. (b) All assets held by the Association requiring return, transfer, or conveyance, which condition occurs by reason of dissolution, shall be returned, transferred, or conveyed in accordance with such requirement. (c) Assets received and held by the Association not subject to liabilities, conditions, or use limitations as specified above shall be distributed to the Owners of Lots in equal shares. Any remaining assets may be distributed to such Persons, societies, organizations, governmental entities, political subdivisions, or domestic or foreign corporations, whether for profit or nonprofit, as may be specified in a plan of distribution adopted pursuant to the Nonprofit Corporation Act and which is not inconsistent with these Articles of Incorporation. t , BYLAWS OF WATERFORD HILL HOMEOWNERS ASSOCIATION, INC. (A Nonprofit Corporation) ARTICLE I. NAME AND OFFICE The name of the corporation is Waterford Hill Homeowners Association, Inc., a Colorado nonprofit corporation ("the Association"). The initial office of the Association shall be at 1719 E. Mulberry, Fort Collins, Colorado 80524. The Association may have such other offices within the state of Colorado as the Board of Directors may designate or as the business of the Association may from time to time require. ARTICLE II. PURPOSE, POWERS AND DEFINITIONS 1. Purpose. The Association is formed pursuant to the Colorado Revised Nonprofit Corporation Act, as amended, C.R.S. § 7-121-101, et seq. ("the Nonprofit Corporation Act"), for the purpose of constituting the association pursuant to the Declaration of Covenants, Conditions, and Restrictions for Waterford Hill recorded or to be recorded in the office of the Clerk and Recorder of Weld County, Colorado ("the Declaration"). 2. Powers. The Association shall have the following powers: (a) Exercise all of the powers and privileges and to perform all of the duties and obligations of the Association as set forth in that certain Declaration of Covenants, Conditions and Restrictions for Waterford Hill ("the Declaration") recorded or to be recorded in the office of the Weld County, Colorado, Clerk and Recorder, as the same may be amended from time to time as therein provided. (b) Have and exercise any and all powers, rights, and privileges granted to an association under the Colorado Common Interest Ownership Act, as amended ("CIOA"). (c) Have and exercise any and all powers, rights, and privileges which a corporation organized under the Nonprofit Corporation Act of the State of Colorado by law may now or hereafter have or exercise. 3. Nonprofit. The Association is not organized for profit. No part of the earnings of the Association shall inure to the benefit of or be distributed to the members, Directors, or officers of the Association, or other private Persons, except (a) as provided by the Articles and applicable law; and (b) that the Association shall be authorized and empowered to pay reasonable compensation for services rendered to it and to make payments and distributions in furtherance of the purposes set forth in these Bylaws and the Declaration. 4. Applicability. All present or future members, tenants, or other Persons that might use in any manner the Real Estate which is subject to the Declaration are subject to the provisions of these Bylaws. Acquisition, rental, or occupancy of any of the Real Estate which is subject to the Declaration shall constitute acceptance and ratification of these Bylaws and shall be an agreement to comply with the Declaration and these Bylaws. 5. Definitions. The terms used in these Bylaws are defined by the definition of terms in the Declaration, and any modifications thereto, and in the Colorado Common Interest Ownership Act, as amended, C.R.S. § 38-33.3-101, et seq. ("CIOA"). ARTICLE III. MEMBERS 1. Members. Each person who owns a Lot within the Community shall be a member of the Association as provided in the Declaration. By acquiring title to a Lot within the Community, the owner(s) of the Lot shall be deemed to have consented to become a member of the Association as provided in the Declaration. 2. Voting. There shall be one class of voting members. Each member shall be entitled to vote on all matters submitted to the members for approval as provided in the Declaration. Cumulative voting is not permitted. Notwithstanding the foregoing, until expiration of the period of Declarant control and subject to the limitations of CIOA, the Declarant shall have additional rights as may be provided under CIOA and the Declaration, including the exclusive power to appoint and remove the Board of Directors and the officers of the Association, which exclusive power is established by and shall be governed by the Declaration. 3. Transfer of Interest. No member of the Association may transfer such member's membership or any right arising therefrom, except as appurtenant to the transfer of such member's Lot as provided in the Declaration. 4. Resignation. A member may not resign from the Association. 5. Termination, Expulsion, or Suspension. No member may be expelled or suspended, and no membership in the Association may be terminated or suspended. 6. Qualifications. The membership qualifications, rights, and obligations shall be defined by and comply with the Declaration or any amendments to the Declaration. 2 ARTICLE IV. MEETINGS 1. Annual and Regular Meetings. (a) The Association shall hold a meeting of the voting members annually at a time and date stated or fixed in accordance with a resolution of the board of directors. (b) The Association may hold regular membership meetings at a time and date stated in or fixed in accordance with a resolution of the board of directors. (c) Annual and regular membership meetings may be held in or out of this state at a place stated or fixed in accordance with a resolution of the board of directors. If no place is so stated or fixed, annual and regular meetings shall be held at the Association's principal office. (d) The failure to hold an annual or regular meeting at the time and date determined pursuant to subsection (a) hereinabove shall not affect the validity of any action of the Association and shall not work a forfeiture or dissolution of the Association. 2. Special Meeting. (a) The Association shall hold a special meeting of its members: (I) On call of its board of directors or the person or persons authorized by resolution of the board of directors to call such a meeting; or (2) If the Association receives one or more written demands for the meeting, stating the purpose or purposes for which it is to be held, signed and dated by members holding at least ten percent (10%) of all the votes entitled to be cast on any issue proposed to be considered at the meeting. (a) The record date for determining the members entitled to demand a special meeting pursuant to subsection (a)(2) hereinabove is the date of the earliest of any of the demands pursuant to which the meeting is called, or the date that is sixty (60) days before the date the first of such demands is received by the Association, whichever is later. (b) If a notice for a special meeting demanded pursuant to subsection (a)(2) hereinabove is not given within thirty (30) days after the date the written demand or demands are delivered to an officer of the Association, regardless of the requirements of subsection (d) hereinafter, a person signing the demand or demands may set the time and place of the meeting and give notice. �' 3 (c) Special meetings of the members may be held in or out of this state, at a place stated or fixed in accordance with a resolution of the board of directors. If no place is so stated or fixed, special meetings shall be held at the Association's principal office. (d) Only business within the purpose or purposes described in the notice of the meeting may be conducted at a special meeting of the members. 3. Right to Attend. Notwithstanding the provisions of any of the documents to the contrary, all meetings of the Association shall be open to every member or to any person designated by a member in writing as the member's representative, and all members or designated representatives so desiring shall be permitted to attend, listen and speak at an appropriate time during the deliberations and proceedings; except that the Board of Directors may place reasonable time restrictions on those persons speaking during the meeting, but shall permit a member or a member's designated representative to speak before formal action is taken on any item under discussion, in addition to any other opportunities to speak. A reasonable number of persons shall be provided an opportunity to speak on each side of an issue. 3. Notice of Meeting. (a) The Association shall give to each member entitled to vote at the meeting notice of meetings of members in a fair and reasonable manner. (b) Any notice that conforms to the requirements of subsection (c) hereinafter is fair and reasonable, but other means of giving notice may also be fair and reasonable when all the circumstances are considered. (c) Notice is fair and reasonable if: (1) The Association notifies its members of the place, date, and time of each annual, regular, and special meeting of members no fewer than ten (10) days, or if notice is mailed by other than first class or registered mail, no fewer than thirty ()0) days and no more than sixty (60) days before the meeting date. (2) Notice of an annual or regular meeting includes a description of any matter or matters that must be approved by the members or for which the members' approval is sought. (3) Notice of a special meeting includes a description of the purpose or purposes for which the meeting is called. (d) If an annual, regular, or special meeting of members is adjourned to a different date, time, or place, notice need not be given of the new date, time, or place if 4 the new date, time, or place is announced at the meeting before adjournment. If a new record date for the adjourned meeting is or must be fixed, however, notice of the adjourned meeting must be given to the members of record as of the new record date. (e) When giving notice of an annual, regular, or special meeting of members, the Association shall give notice of a matter a member intends to raise at the meeting if (1) Requested in writing to do so by a person entitled to call a special meeting; and (2) The request is received by the secretary or president of the Association at least ten (10) days before the Association gives notice of the meeting. (0 The notice of any meeting of the members shall be physically posted in a conspicuous place, to the extent that such posting is feasible and practicable, in addition to any electronic posting or electronic mail notices that may be given. The posted notice shall state the time and place of the meeting and the items on the agenda, including the general nature of any proposed amendment to the Declaration or these Bylaws, any budget changes, and any proposal to remove an officer or member of the Board of Directors. (g) The Association is encouraged to provide all notices and agendas in electronic form by posting on a web site or otherwise in addition to printed form. If such electronic means are available, the Association shall provide notice of all regular and special meetings of members by electronic mail to all members who so request and who furnish to the Association their electronic mail addresses. Electronic notice of a special meeting shall be given as soon as possible but at least twenty-four (24) hours before the meeting. 4. Waiver of Notice. (a) A member may waive any notice required by these Bylaws, whether before or after the date or time stated in the notice as the date or time when any action will occur or has occurred. The waiver shall be in writing, be signed by the member entitled to the notice, and be delivered to the Association for inclusion in the minutes or filing with the Association records, but such delivery and filing shall not be conditions of the effectiveness of the waiver. (b) A member's attendance at a meeting: (1) Waives objection to lack of notice or defective notice of the meeting unless the member, at the beginning of the meeting, objects to holding the 5 meeting or transacting business at the meeting because of lack of notice or defective notice; and (2) Waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice unless the member objects to considering the matter when it is presented. 5. Record Date — Determining Members Entitled to Notice and Vote. (a) Members are entitled to notice of any meeting at the close of business on the business day preceding the day on which notice is given or, if notice is waived, at the close of business on the business day preceding the day on which the meeting is held. (b) On the date of the meeting, members who are otherwise eligible to vote are entitled to vote at the meeting. (c) A determination of members entitled to notice of or to vote at a meeting of members is effective for any adjournment of the meeting unless the meeting is adjourned to a date more than one hundred twenty (120) days after the record date for determining members entitled to notice of the original meeting. 6. Action Without Meeting. (a) Any action required or permitted to be taken at a members' meeting may be taken without a meeting, if members entitled to cast a majority of the votes entitled to be cast by all members, agree and consent to such action in writing. (b) No action taken pursuant to this section shall be effective unless writings describing and consenting to the action, signed by members sufficient under subsection (a) hereinabove to take the action and not revoked pursuant to subsection (c) hereinafter, are received by the Association within sixty (60) days after the date the earliest dated writing describing and consenting to the action is received by the Association. Any such writing may be received by the Association by electronic transmitted facsimile or other form of wire or wireless communication providing the Association with a complete copy thereof, including a copy of the signature thereto. Action taken pursuant to this section shall be effective when the last writing necessary to effect the action is received by the Association unless the writings describing and consenting to the action set forth a different effective date. (c) Any member who has signed a writing describing and consenting to action taken pursuant to this section may revoke such consent by a writing signed and dated by the member describing the action and stating the member's prior consent thereto 6 is revoked if such writing is received by the Association before the last writing necessary to effect the action is received by the Association. (d) The record date for determining members entitled to take action without a meeting or entitled to be given notice under subsection (1) hereinafter of action so taken is the date a writing upon which the action is taken pursuant to subsection (a) hereinabove is first received by the Association. (e) Action taken under this section has the same effect as action taken at a meeting of members and may be described as such in any document. (0 In the event action is taken under subsection (a) hereinabove with less than unanimous consent of all members entitled to vote upon the action, the Association or the members taking the action shall promptly, after all of the writings necessary to effect the action have been received by the Association, give notice of such action to all members who were entitled to vote upon the action. The notice shall contain or be accompanied by the same material, if any, that would have been required to be given to members in or with a notice of the meeting at which the action would have been submitted to the members for action. (g) All signed, written instruments necessary for any action taken pursuant to this section shall be filed with the minutes of the meetings of the members. 7. Meetings by Telecommunications. Any or all of the members may participate in an annual, regular, or special meeting of the members by, or the meeting may be conducted through the use of, any means of communication by which all persons participating in the meeting may hear each other during the meeting. A member participating in a meeting by this means is deemed to be present in person at the meeting. 8. Action by Written Ballot. (a) Any action that may be taken at any annual, regular, or special meeting of members may be taken without a meeting if the Association delivers a written ballot to every member entitled to vote on the matter. (b) A written ballot shall set forth each proposed action and provide an opportunity to vote for or against each proposed action. (c) Approval by written ballot pursuant to this section shall be valid only when the number of votes cast by ballot equals or exceeds the number of votes that would be required to approve the matter at a meeting at which the total number of votes cast was the same as the number of votes cast by ballot. (d) All solicitations for votes by written ballot shall: 7 (1) Indicate the number of responses needed to meet the quorum requirements; (2) State the percentage of approvals necessary to approve each matter other than election of directors; (3) Specify the time by which a ballot must be received by the Association in order to be counted; and (4) Be accompanied by written information sufficient to permit each person casting such ballot to reach an informed decision on the matter. (e) A written ballot may not be revoked. (f) Action taken under this section has the same effect as action taken at a meeting of members and may be described as such in any document. ACTION V. VOTING 1. Members List for Meeting and Action by Written Ballot. (a) The Association shall prepare an alphabetical list of the names of all its members who are entitled to notice of, and to vote at, a meeting or to take such action by written ballot. The list shall show the address of each member entitled to notice of, and to vote at, the meeting or to take such action by written ballot and the number of votes each member is entitled to vote at the meeting or by written ballot. (b) If prepared in connection with a meeting of the members, the members list shall be available for inspection by any member entitled to vote at the meeting, beginning the earlier of ten (10) days before the meeting for which the list was prepared or two (2) business days after notice of the meeting is given and continuing through the meeting, and any adjournment thereof, at the Association's principal office or at a place identified in the notice of the meeting in the city where the meeting will be held. The Association shall make the members list available at the meeting, and any member entitled to vote at the meeting, or an agent or attorney of a member entitled to vote at the meeting, is entitled to inspect the list at any time during the meeting or any adjournment. If prepared in connection with action to be taken by the members by written ballot, the members list shall be available for inspection by any member entitled to cast a vote by such written ballot, beginning on the date that the first written ballot is delivered to the members and continuing through the time when such written ballots must be received by the Association in order to be counted, at the Association's principal office. A member entitled to vote at the meeting or by such written ballot, or an agent or attorney of a member entitled to vote at the meeting or by such written ballot, is entitled 8 on written demand to inspect and copy the list during regular business hours, at the member's expense, and during the period it is available for inspection. (c) Failure to prepare or make available the list of members does not affect the validity of action taken at the meeting or by means of such written ballot. 2. Voting Entitlement. (a) Only voting members shall be entitled to vote with respect to any matter required or permitted to be submitted to a vote of the members. (b) Voting members shall be entitled to vote with respect to all matters required or permitted to be submitted to a vote of the members. (c) Each member entitled to vote shall be entitled to vote on each matter submitted to a vote of members as provided in the Declaration and Article III hereinabove. (d) If a membership stands of record in the names of two or more persons, their acts with respect to voting shall have the following effect: (1) If only one votes, such act binds all; and (2) If more than one votes, the vote shall be divided on a prorata basis. (e) The omission or failure of the Association or any member to enforce the covenants, conditions, restrictions, uses, limitations, obligations, or other provisions of the Declaration or Bylaws, or the Rules or Regulations adopted pursuant thereto, shall not constitute or be deemed a waiver, modification, or release, and the Association shall have the right to enforce the same. 3. Proxies. (a) A member entitled to vote may vote or otherwise act in person or by proxy. A proxy shall not be valid if obtained through fraud or misreprsentation. (b) Without limiting the manner in which a member may appoint a proxy to vote or otherwise act for the member, the following shall constitute valid means of such appointment: (1) A member may appoint a proxy by signing an appointment form, either personally or by the member's attorney-in-fact. 9 (2) A member may appoint a proxy by transmitting or authorizing the transmission of a telegram, teletype, or other electronic transmission providing a written statement of the appointment to the proxy or to the Association; except that the transmitted appointment shall set forth or be transmitted with written evidence from which it can be determined that the member transmitted or authorized the transmission of the appointment. (c) An appointment of a proxy is effective against the Association when received by the Association, including receipt by the Association of an appointment transmitted pursuant to subsection (b)(2) hereinabove. An appointment is valid for eleven (11) months unless a different period is expressly provided in the appointment form. (d) Any complete copy, including an electronically transmitted facsimile, of an appointment of a proxy may be substituted for or used in lieu of the original appointment for any purpose for which the original appointment could be used. (e) An appointment of a proxy is revocable by the member. (f) Appointment of a proxy is revoked by the person appointing the proxy attending any meeting and voting in person or signing and delivering to the secretary or other officer or agent authorized to tabulate proxy votes either a writing .-` stating that the appointment of the proxy is revoked or a subsequent appointment form. (g) The death or incapacity of the member appointing a proxy does not affect the right of the Association to accept the proxy's authority unless notice of the death or incapacity is received by the secretary or other officer or agent authorized to tabulate votes before the proxy exercises the proxy's authority under the appointment. (h) Subject to any express limitation on the proxy's authority appearing on the appointment form, the Association is entitled to accept the proxy's vote or other action as that of the member making the appointment. 4. Association's Acceptance of Votes. (a) If the name signed on a vote, consent, written ballot, waiver, proxy appointment, or proxy appointment revocation corresponds to the name of a member, the Association, if acting in good faith, is entitled to accept the vote, consent, written ballot, waiver, proxy appointment, or proxy appointment revocation and to give it effect as the act of the member. (b) If the name signed on a vote, consent, written ballot, waiver, proxy appointment, or proxy appointment revocation does not correspond to the name of a member, the Association, if acting in good faith, is nevertheless entitled to accept the 10 vote, consent, written ballot, waiver, proxy appointment, or proxy appointment revocation and to give it effect as the act of the member if (1) The member is an entity and the name signed purports to be that of an officer or agent of the entity; (2) The name signed purports to be that of an administrator, executor, guardian, or conservator representing the member and, if the Association requests, evidence of fiduciary status acceptable to the Association has been presented with respect to the vote, consent, written ballot, waiver, proxy appointment, or proxy appointment revocation; (3) The name signed purports to be that of a receiver or trustee in bankruptcy of the member and, if the Association requests, evidence of this status acceptable to the Association has been presented with respect to the vote, consent, written ballot, waiver, proxy appointment, or proxy appointment revocation; (4) The name signed purports to be that of a pledgee, beneficial owner, or attorney-in-fact of the member and, if the Association requests, evidence acceptable to the Association of the signatory's authority to sign for the member has been presented with respect to the vote, consent, written ballot, waiver, proxy appointment, or proxy appointment revocation; (5) Two or more persons are the member as co-tenants or fiduciaries and the name signed purports to be the name of at least one of the co-tenants or fiduciaries and the person signing appears to be acting on behalf of all of the co- tenants or fiduciaries; or (6) The acceptance of the vote, consent, written ballot, waiver, proxy appointment, or proxy appointment revocation is otherwise proper under rules established by the Association that are not inconsistent with the provisions of this subsection (b). (c) The Association is entitled to reject a vote, consent, written ballot, waiver, proxy appointment, or proxy appointment revocation if the secretary or other officer or agent authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory's authorization to sign for the member. (d) The Association and its officer or agent who accepts or rejects a vote, consent, written ballot, waiver, proxy appointment, or proxy appointment revocation, in good faith and in accordance with the standards of this section, are not liable in damages for the consequences of the acceptance or rejection. 11 • (e) Association action based on the acceptance or rejection of a vote, consent, written ballot, waiver, proxy appointment, or proxy appointment revocation under this section is valid unless a court of competent jurisdiction determines otherwise. (t) The Association shall be entitled to reject a vote, consent, written ballot, waiver, proxy, appointment or proxy appointment revocation if the secretary or other officer or agent authorized to tabulate votes acting in good faith has reasonable basis for doubt about the validity of the signature on it or about the signatory's authority to sign for the member. The Association and its officers and agents who accept or reject a vote, consent, written ballot, waiver, proxy appointment or proxy appointment revocation in good faith are not liable in damages for the consequences of the acceptance or rejection. Any action of the Association based on the acceptance or rejection of a vote, consent, written ballot, waiver, proxy appointment or proxy appointment revocation, is valid unless a court of competent jurisdiction determines otherwise. 5. Quorum and Voting Requirements. (a) Twenty-five percent (25%) of the votes entitled to be cast on the matter by the members constitutes a quorum of the members for action on that matter. (b) Once a member is represented for any purpose at a meeting, including the purpose of determining that a quorum exists, the member is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting, unless a new record date is or shall be set for that adjourned meeting. (c) If a quorum exists, action on a matter is approved if the votes cast favoring the action exceed the votes cast opposing the action unless a greater number of affirmative votes is required by these Bylaws or the Declaration. 6. Voting Agreements. Two or more members may provide for the manner in which they will vote by signing an agreement for that purpose. A voting agreement created under this section is specifically enforceable. 7. Election of Board Members. Votes for position on the Board of Directors shall be taken by secret ballot and, upon the request of one or more members, a vote on any other matter affecting the Common Interest Community on which all members are entitled to vote, shall be by secret ballot. Ballots shall be counted by a neutral third party or by a member who is not a candidate, who attends the meeting at which the vote is held, and who is selected at random from a pool of two or more such members. The results of the vote shall be reported without reference to names, addresses, or other identifying information. '"` 12 • ARTICLE VI. BOARD OF DIRECTORS es- 1. Powers. All Association powers shall be exercised by or under the authority of, and the business and affairs of the Association managed under the direction of, the board of directors. 2. Qualifications of Directors. A director shall be a natural person who is eighteen (18) years of age or older. A director need not be a resident of this state or a member of the Association. 3. Number of Directors. The board of directors shall consist of not less than one (1) nor more than nine (9) directors. During the period of Declarant control as provided in the Declaration, the number of directors shall be fixed or changed by the Declarant. Thereafter, the number of directors may be fixed or changed from time to time within the range by the voting members. 4. Election, Appointment, and Designation of Directors. All directors, except the initial directors and directors appointed by the Declarant pursuant to the Declaration during the period of Declarant control, shall be elected by the voting members at each annual meeting of the voting members. 5. Terms of Directors. '", (a) The initial term of one-third (1/3) of the directors shall be one (1) year; the initial term of one-third (1/3) of the directors shall be two (2) years; and the initial term of one-third (1/3) of the directors shall be three (3) years. (b) After the expiration of the initial terms of the directors of the Association, directors shall be elected or appointed for terms of three (3) years. (c) The terms of the initial directors of the Association expire at the first meeting at which directors are elected or appointed. (d) A decrease in the number of directors or in the term of office does not shorten an incumbent director's term. (e) The term of a director filling a vacancy expires at the end of the unexpired term that such director is filling. (t) Despite the expiration of a director's term, a director continues to serve until the director's successor is elected, appointed, or designated and qualifies, or until there is a decrease in the number of directors. '�` 13 (g) A director whose term has ended may deliver to the Colorado Secretary of State for filing a statement to that effect. 6. Resignation of Directors. (a) A director may resign at any time by giving written notice of resignation to the Association. (b) A resignation of a director is effective when the notice is received by the Association unless the notice specifies a later effective date. (c) A director who resigns may deliver to the Colorado Secretary of State for filing a statement to that effect. 7. Removal of Directors. Directors appointed by the Declarant pursuant to the Declaration during the period of Declarant control may be removed only by the Declarant. Directors elected by voting members may be removed as follows: (a) The voting members may remove one or more directors elected by them with or without cause. (b) A director may be removed only if the number of votes cast to remove the director would be sufficient to elect the director at a meeting to elect directors. (c) A director elected by voting members may be removed by the voting members only at a meeting called for the purpose of removing that director; and the meeting notice shall state that the purpose, or one of the purposes, of the meeting is removal of the director. (d) An entire board of directors may be removed under subsections (a) through (c) of this section. 8. Vacancy on Board. If a vacancy occurs on a board of directors, including a vacancy resulting from an increase in the number of directors, the Declarant shall fill the vacancy by appointment during the period of Declarant control as provided in the Declaration. Thereafter: (a) The voting members may fill the vacancy; (b) The board of directors may fill the vacancy; or 14 (c) If the directors remaining in office constitute fewer than a quorum of the board of directors, they may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office. 9. Compensation of Directors. Directors shall not receive compensation for service on the board of directors. However, any director may be reimbursed for the actual expenses incurred by the director in the performance of his or her duties. ARTICLE VII. MEETINGS AND ACTION OF THE BOARD 1. Meetings. (a) The board of directors may hold regular or special meetings in or out of this state. (b) The board of directors may permit any director to participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all directors participating may hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting. (C) Notwithstanding any provision in any of the documents to the contrary, all meetings of the Board of Directors are open to every member of the Association and to any person designated by a member in writing as the member's representative, and all members or designated representatives so desiring shall be permitted to attend, listen and speak at an appropriate time during the deliberations and proceedings; except that for regular and special meetings of the Board of Directors, members who are not Board members may not participate in any deliberation or discussion unless expressly so authorized by a vote of the majority of a quorum of the Board of Directors. The Board of Directors may place reasonable time restrictions on those persons speaking during the meeting, but shall permit members or members' designated representatives to speak before the Board takes formal action on any item under discussion, in addition to any other opportunities to speak. The Board of Directors shall provide for a reasonable number of persons to speak on each side of an issue. 2. Action Without Meeting. (a) Any action required or permitted to be taken at a board of directors' meeting may be taken without a meeting if each and every member of the board in writing either: (1) Votes for such action; or /"` 15 (2) Votes against such action or abstains from voting, and waives ^ the right to demand that action not be taken without a meeting. (b) Action is taken under this section only if the affirmative vote for such action equals or exceeds the minimum number of votes that would be necessary to take such action at a meeting at which all of the directors then in office were present and voted. (c) No action taken pursuant to this section shall be effective unless writings describing the action taken and otherwise satisfying the requirements of subsection (a) hereinabove, signed by all directors and not revoked pursuant to subsection (d) of this section, are received by the Association. Any such writing may be received by the Association by electronically transmitted facsimile or other form of wire or wireless communication providing the Association with a complete copy of the document, including a copy of the signature on the document. A director's right to demand that action not be taken without a meeting shall be deemed to have been waived if the Association receives a writing satisfying the requirements of subsection (a) hereinabove that has been signed by the director and not revoked pursuant to subsection (d) hereinafter. Action taken pursuant to this section shall be effective when the last writing necessary to effect the action is received by the Association unless the writings describing the action taken set forth a different effective date. (d) Any director who has signed a writing pursuant to this section may revoke such writing by a writing signed and dated by the director describing the action and stating that the director's prior vote with respect thereto is revoked, if such writing is received by the Association before the last writing necessary to effect the action is received by the Association. (e) Action taken pursuant to this section has the same effect as action taken at a meeting of directors and may be described as such in any document. (f) All signed, written instruments necessary for any action taken pursuant to this section shall be filed with the minutes of the meetings of the board of directors. 3. Notice of Meeting. (a) Regular meetings of the board of directors may be held without notice of the date, time, place, or purpose of the meeting. (b) Special meetings of the board of directors shall be preceded by at least two (2) days' notice of the date, time, and place of the meeting. The notice need not describe the purpose of the special meeting. /"� 16 4. Waiver of Notice. (a) A director may waive any notice of a meeting before or after the time and date of the meeting stated in the notice. Except as provided by subsection (b) hereinafter, the waiver shall be in writing and signed by the director entitled to the notice. Such waiver shall be delivered to the Association for filing with the Association records, but such delivery and filing shall not be conditions of the effectiveness of the waiver. (b) A director's attendance at or participation in a meeting waives any required notice to that director of the meeting unless, at the beginning of the meeting or promptly upon the director's later arrival, the director objects to holding the meeting or transacting business at the meeting because of lack of notice or defective notice and does not thereafter vote for or assent to action taken at the meeting. 5. Quorum and Voting. (a) A quorum of the board of directors consists of a majority of the number of directors in office immediately before the meeting begins. (b) If a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the act of the board of directors unless the vote of a greater number of directors is required by these Bylaws or the Declaration. (c) For purposes of determining a quorum with respect to a particular proposal, and for purposes of casting a vote for or against a particular proposal, a director may be deemed to be present at a meeting and to vote if the director has granted a signed, written proxy to another director who is present at the meeting, authorizing the other director to cast the vote that is directed to be cast by the written proxy with respect to the particular proposal that is described with reasonable specificity in the proxy. Except as provided in this subsection (c), directors may not vote or otherwise act by proxy. (d) A director who is present at a meeting of the board of directors when Association action is taken is deemed to have assented to all action taken at the meeting unless: (1) The director objects at the beginning of the meeting, or promptly upon the director's arrival, to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to any action taken at the meeting: (2) The director contemporaneously requests that the director's dissent or abstention as to any specific action taken be entered in the minutes of the meeting; or 17 (3) The director causes written notice of the director's dissent or abstention as to any specific action to be received by the presiding officer of the meeting before adjournment of the meeting or by the Association promptly after adjournment of the meeting. (e) The right of dissent or abstention pursuant to subsection (d) hereinabove as to a specific action is not available to a director who votes in favor of the action taken. 6. Committees of the Board. (a) The board of directors may create one or more committees of the board and appoint one or more directors to serve on them. (b) The creation of a committee of the board and appointment of directors to it shall be approved by a majority of all the directors in office when the action is taken. (c) Action without meeting, notice, waiver of notice, and quorum and voting requirements of the board of directors apply to committees of the board and their members as well. (d) To the extent specified by the board of directors, each committee of the board shall have the authority of the board of directors, except that a committee of the board shall not authorize distributions; approve or propose to members actions that are required to be approved by members; elect, appoint, or remove any director; amend articles of incorporation; adopt, amend, or repeal bylaws; approve a plan of merger not requiring member approval; or approve a sale, lease, exchange, or other disposition of all, or substantially all, of its property, with or without good will, other than in the usual and regular course of business, subject to approval by members. (e) The creation of, delegation of authority to, or action by a committee does not alone constitute compliance by a director with the standards of conduct described in these Bylaws. (f) Nothing in these Bylaws shall prohibit or restrict the Association from establishing by action of the board of directors one or more committees, advisory boards, auxiliaries, or other bodies of any kind, having such members and rules of procedure as the board of directors may provide, in order to provide such advice, service, and assistance to the Association, and to carry out such duties and responsibilities for the Association, as may be specified by the board of directors; except that if any such committee or other body has one or more members thereof who are entitled to vote on 18 committee matters and who are not then also directors, such committee or other body may not exercise any power or authority of the board of directors. 7. Executive Sessions. The members of the board of directors or any committee thereof may hold an executive or closed-door session and may restrict attendance to board members and such other persons requested by the board during a regular or specially announced meeting or a part thereof. The matters to be discussed at such an executive session shall include only the following matters: (a) Matters pertaining to employees of the Association or involving employment, promotion, discipline, or dismissal of an officer, agent, or employee of the Association. (b) Consultation with legal counsel concerning disputes that are the subject of pending or imminent court proceedings or matters that are privileged or confidential between attorney and client. Upon the final resolution of any matter for which the Board of Directors received legal advice for the concerned pending or contemplated litigation, the Board may elect to preserve the attorney/client privilege in any appropriate manner, or it may elect to disclose such information as it deems appropriate about such matter in an open meeting. (c) Investigative proceedings concerning possible or actual criminal misconduct. (d) Matters subject to specific constitutional, statutory, or judicially imposed requirements protecting particular proceedings or matters from public disclosure. (e) Any matter the disclosure of which would constitute an unwarranted invasion of individual privacy. Prior to the time the members of the board or any committee thereof convene in executive session, the chair of the body shall announce the general matter of discussion as enumerated in subparagraphs (a) through (e) above. No rule or regulation of the board or any committee thereof shall be adopted during an executive session. A rule or regulation may be validly adopted only during a regular or special meeting or after the body goes back into regular session following an executive session. The minutes of all meetings at which an executive session was held shall indicate that an executive session was held and the general subject matter of the executive session. 19 ARTICLE VIII. STANDARDS OF CONDUCT 1. General Standards of Conduct for Directors and Officers. (a) Each director shall discharge the director's duties as director, including the director's duties as a member of a committee of the board, and each officer with discretionary authority shall discharge the officer's duties under that authority in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner the director or officer reasonably believes to be in the best interests of the Association. (b) In discharging duties, a director or officer is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by: (1) One or more officers or employees of the Association whom the director or officer reasonably believes to be reliable and competent in the matters presented; (2) Legal counsel, a public accountant, or another person as to matters the director or officer reasonably believes are within such person's professional or expert competence; or (3) In the case of a director, a committee of the board of directors of which the director is not a member if the director reasonably believes the committee merits confidence. (c) A director or officer is not acting in good faith if the director or officer has knowledge concerning the matter in question that makes reliance otherwise permitted by subsection (b) hereinabove unwarranted. (d) A director or officer is not liable to the Association or its members for any action taken or omitted to be taken as a director or officer, as the case may be, if, in connection with such action or omission, the director or officer performed the duties of the position in compliance with this section. (e) A director, regardless of title, shall not be deemed to be a trustee with respect to the Association or with respect to any property held or administered by the Association, including, without limitation, property that may be subject to restrictions imposed by the donor or transferor of such property. 20 2. Liability of Directors for Unlawful Distributions. (a) A director who votes for or assents to a distribution made in violation of these Bylaws is personally liable to the Association for the amount of the distribution that exceeds what could have been distributed without violating these Bylaws if it is established that the director did not perform the director's duties in compliance with the foregoing section. In any proceeding commenced under this section, a director shall have all of the defenses ordinarily available to the director. (b) A director held liable under subsection (a) hereinabove for an unlawful distribution is entitled to contribution: (I) From every other director who could be held liable under subsection (a) hereinabove for the unlawful distribution; and (2) From each person who accepted the distribution knowing the distribution was made in violation of these Bylaws, the amount of the contribution from such person being the amount of the distribution to that person that exceeds what could have been distributed to that person without violating these Bylaws. ARTICLE IX. DIRECTORS' CONFLICTING INTEREST TRANSACTIONS 1. As used in this section, "conflicting interest transaction" means a contract or other financial relationship between the Association and a director of the Association, or between the Association and a party related to a director, or between the Association and an entity in which a director of the Association is a director or officer or has a financial interest. 2. No loans shall be made by the Association to its directors or officers. Any director or officer who assents to or participates in the making of any such loan shall be liable to the Association for the amount of such loan until the repayment thereof. 3. No conflicting interest transaction shall be void or voidable or be enjoined, set aside, or give rise to an award of damages or other sanctions in a proceeding by a member or by or in the right of the Association solely because the conflicting interest transaction involves a director of the Association or a party related to a director or an entity in which a director of the Association is a director or officer or has a financial interest, or solely because the director is present at or participates in the meeting of the Association's board of directors or of the committee of the board of directors that authorizes, approves, or ratifies the conflicting interest transaction, or solely because the director's vote is counted for such purpose if: (a) The material fact as to the director's relationship or interest and as to the conflicting interest transaction are disclosed or are known to the board of directors or 21 the committee, and the board of directors or the committee, in good faith, authorizes, ''- approves, or ratifies the conflicting interest transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors are less than a quorum; or (b) The material facts as to the director's relationship or interest and as to the conflicting interest transaction are disclosed or are known to the members entitled to vote thereon, and the conflicting interest transaction is specifically authorized, approved, or ratified in good faith by a vote of the members entitled to vote thereon; or (c) The conflicting interest transaction is fair as to the Association. 4. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee which authorizes, approves, or ratifies the conflicting interest transaction. 5. For purposes of this section, a "party related to a director" shall mean a spouse, a descendent, an ancestor, a sibling, the spouse or descendent of a sibling, an estate or trust in which the director or a party related to a director has a beneficial interest, or an entity in which a party related to a director is a director, officer, or has a financial interest. 6. Notwithstanding any other term or provision of the documents, if any c,ontract, decision or other action taken by or on behalf of the Board of Directors would financially benefit any member of the Board of Directors or any person who is a parent, grandparent, spouse, child or sibling of a member of the Board of Directors, or a parent or spouse of any of those persons, that member of the Board of Directors shall declare a conflict of interest for that issue. The member of the Board shall declare the conflict in an open meeting prior to any discussion or action on that issue. After making such declaration, the member may participate in the discussion but shall not vote on that issue. Any contract entered into in violation of this Section is void and unenforceable. This Section shall not be construed to invalidate any provision of the documents that more strictly define conflicts of interest or contain further limits on the participation of members of the Board who may have conflicts of interest. ARTICLE X. LIMITS OF CERTAIN LIABILITIES OF DIRECTORS 1. There shall be no personal liability, either direct or indirect, of any director or officer to the Association or to its members for monetary damages for any breach or breaches of fiduciary duty as director or officer, except that this provision shall not eliminate the liability of a director or officer to the Association or its members for monetary damages for any breach, act, omission, or transaction to which the Nonprofit Corporation Act expressly prohibits the elimination of liability. 's- 22 2. This provision shall not limit the rights of directors or officers of the Association for indemnification or other assistance from the Association. This provision shall not modify, restrict, or otherwise diminish the provisions of C.R.S. § 13-21- 116(2)(b) (concerning elimination of liability of directors, except for willful and wanton acts or omissions); any amendment or successor provision thereto; or any law limiting or eliminating liabilities. 3. Any repeal or modification of the foregoing provisions of this article by the members of the Association or any repeal or modification of the provisions of the Nonprofit Corporation Act which permits the elimination of liability of directors by this article shall not affect adversely any elimination of liability, right, or protection of a director or officer of the Association with respect to any breach, act, omission, or transaction of such director or officer occurring prior to the time of such repeal or modification. ARTICLE XI. INDEMNIFICATION 1. Indemnification Definitions. As used in this article: (a) "Director" means an individual who is or was a director of the Association or an individual who, while a director of the Association, is or was serving at the Association's request as a director, officer, partner, member, manager, trustee, employee, fiduciary, or agent of another domestic or foreign corporation, nonprofit corporation, or other person or of an employee benefit plan. A director is considered to be serving an employee benefit plan at the Association's request if the director's duties to the Association also impose duties on, or otherwise involve services by, the director to the plan or to the participants in or beneficiaries of the plan. "Director" includes, unless the context requires otherwise, the estate or personal representative of a director. (b) "Expenses" includes counsel fees. (c) "Liability" means the obligation incurred with respect to a proceeding to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan), or reasonable expenses. (d) "Official capacity" means, when used with respect to a director, the office of director in the Association and, when used with respect to a person other than a director, the office in the Association held by the officer or the employment, fiduciary, or agency relationship undertaken by the employee, fiduciary, or agent on behalf of the Association. "Official capacity" does not include service for any other domestic or foreign corporation, nonprofit corporation, or other person or employee benefit plan. 23 • (e) "Party" includes a person who was, is, or is threatened to be made a named defendant or respondent in a proceeding. (0 "Proceeding" means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, and whether formal or informal. 2. Authority to Indemnify Directors. (a) Except as provided in subsection (d) hereinafter, the Association shall indemnify a person made a party to a proceeding because the person is or was a director against liability incurred in the proceeding if: (1) The person's conduct was in good faith; and (2) The person reasonably believed: (i) In the case of conduct in an official capacity with the Association, that the conduct was in the Association's best interests; (ii) In all other cases, that the conduct was at least not opposed to the Association's best interests; and (iii) In the case of any criminal proceeding, the person had no reasonable cause to believe the conduct was unlawful. (b) A director's conduct with respect to an employee benefit plan for a purpose the director reasonably believed to be in the interests of the participants in or beneficiaries of the plan is conduct that satisfies the requirement of subsection (2)(ii) hereinabove. A director's conduct with respect to an employee benefit plan for a purpose that the director did not reasonably believe to be in the interests of the participants in or beneficiaries of the plan shall be deemed not to satisfy the requirements of subsection (a)(1) hereinabove. (c) The termination of a proceeding by judgment, order, settlement, or conviction or upon a plea of nolo contendre or its equivalent is not, of itself, determinative that the director did not meet the standard of conduct described in this section. (d) The Association may not indemnify a director under this section: (1) In connection with a proceeding by or in the right of the Association in which the director was adjudged liable to the Association; or 24 (2) In connection with any other proceeding charging that the director derived an improper personal benefit, whether or not involving action in an official capacity, in which proceeding the director was adjudged liable on the basis that the director derived an improper personal benefit. (e) Indemnification permitted under this section in connection with a proceeding by or in the right of the Association is limited to reasonable expenses incurred in connection with the proceeding. 3. Mandatory Indemnification of Directors. The Association shall indemnify a person who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which the person was a party because the person is or was a director, against reasonable expenses incurred by the person in connection with the proceeding. 4. Advance of Expenses to Directors. (a) The Association shall pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of final disposition of the proceeding if: (1) The director furnishes to the Association a written affirmation of the director's good faith belief that the director has met the standard of conduct described in these Bylaws; (2) The director furnishes to the Association a written undertaking, executed personally or on the director's behalf, to repay the advance if it is ultimately determined that the director did not meet the standard of conduct; and (3) A determination is made that the facts then known to those making the determination would not preclude indemnification under this article. (b) The undertaking required by subsection (a)(2) hereinabove shall be an unlimited genera] obligation of the director but need not be secured and may be accepted without reference to financial ability to make repayment. 5. Determination and Authorization of Indemnification of Directors. (a) The Association may not indemnify a director under this article unless authorized in the specific case after a determination has been made that indemnification of the director is permissible in the circumstances because the director has met the standard of conduct set forth in these Bylaws. The Association shall not advance expenses to a director under this article unless authorized in the specific case after the written affirmation and undertaking required by these Bylaws are received and the determination required by these Bylaws has been made. 25 (b) The determination required by subsection (a) hereinabove shall be made: (1) By the board of directors by a majority vote of those present at a meeting at which a quorum is present, and only those directors not parties to the proceeding shall be counted in satisfying the quorum; or (2) If a quorum cannot be obtained, a majority vote of a committee of the board of directors designated by the board of directors, which committee shall consist of two (2) or more directors not parties to the proceeding; except that directors who are parties to the proceeding may participate in the designation of directors for the committee. (c) If a quorum cannot be obtained as contemplated in subsection (b)(1) hereinabove, and a committee cannot be established under subsection (b)(2) hereinabove, or even if a quorum is obtained or a committee is designated, if a majority of the directors constituting such quorum or such committee so directs, the determination required to be made by subsection (a) hereinabove shall be made: (1) By independent legal counsel selected by a vote of the board of directors or the committee in the manner specified in subsection (b)(1) or (b)(2) hereinabove, or if a quorum of the full board cannot be obtained and a committee cannot be established, by independent legal counsel selected by a majority vote of the full board of directors; or (2) By the voting members, but voting members who are also directors and who are at the time seeking indemnification may not vote on the determination. (d) Authorization of indemnification and advance of expenses shall be made in the same manner as the determination that indemnification or advance of expenses is permissible; except that if the determination that indemnification or advance of expenses is permissible is made by independent legal counsel, authorization of indemnification and advance of legal expenses shall be made by the body that selected such counsel. 6. Indemnification of Officers, Employees, Fiduciaries, and Agents. (a) An officer is entitled to mandatory indemnification under this article, in each case to the same extent as a director. (b) The Association shall indemnify and advance expenses to an officer, employee, fiduciary, or agent of the Association to the same extent as to a director. /^'� 26 (c) The Association shall also indemnify and advance expenses to an officer, employee, fiduciary, or agent who is not a director to a greater extent, if not inconsistent with public policy or these Bylaws, general or specific action of the board of directors or voting members, or contract. 7. Insurance. The Association may purchase and maintain insurance on behalf of a person who is or was a director, officer, employee, fiduciary, or agent of the Association or who, while a director, officer, employee, fiduciary, or agent of the Association, is or was serving at the request of the Association as a director, officer, partner, member, manager, trustee, employee, fiduciary, or agent of another domestic or foreign corporation, nonprofit corporation, or other person, or of an employee benefit plan, against liability asserted against or incurred by the person in that capacity or arising from the person's status as a director, officer, employee, fiduciary, or agent, whether or not the Association would have power to indemnify the person against the same liability under this article. Any such insurance may be procured from any insurance company designated by the board of directors, whether such insurance company is formed under the laws of this state or any other jurisdiction of the United States or elsewhere, including any insurance company in which the Association has an equity or any other interest through stock ownership or otherwise. 8. Limitation of Indemnification of Directors. This article does not limit the Association's power to pay or reimburse expenses incurred by a director in connection with an appearance as a witness in a proceeding at a time when the director has not been made a named defendant or respondent in the proceeding. 9. Notice to Voting Members of Indemnification of Director. If the Association indemnifies or advances expenses to a director under this article in connection with a proceeding by or in the right of the Association, the Association shall give written notice of the indemnification or advance to the voting members with or before the notice of the next voting members' meeting. If the next voting member action is taken without a meeting at the instigation of the board of directors, such notice shall be given to the voting members at or before the time the first voting member signs a writing consenting to such action. ARTICLE XII. OBLIGATIONS OF MEMBERS 1. Assessments. Except as otherwise provided in the Declaration, all members shall be obligated to pay the assessments imposed by the Association pursuant to the Declaration. Unless otherwise determined by the Association, the annual assessments and any special assessments which are to be paid in periodic installments shall be paid periodically in advance and shall be due and payable to the Association at its principal office or as the Association may otherwise direct in writing. A member shall be deemed to be in good standing and entitled to vote at any annual meeting or special 1 27 meeting of the members within the meanings of these Bylaws if, and only if, the member shall have fully paid all assessments due against the Lot(s) owned by the member as of the date of the meeting. 2. Evidence of Ownership. Any person becoming an owner of a Lot shall furnish to the Association a copy of the recorded instrument vesting that person with an interest or ownership in the Lot, which copy shall remain in the files of the Association. 3. Registration of Mailing Address. The owner or owners of one Lot shall have one and the same registered mailing address to be used by the Association for the mailing of statements, notices, demands, and all communications, and such registered address shall be the only mailing address of the owner or owners of the Lot. The registered address of an Owner shall be furnished by such member to the Association within fifteen (15) days after the transfer of title or any change of address, and such registration shall be in written form and signed by the owner or owners of each Lot. If no address is registered or if all members cannot agree, then the address of the Lot shall be deemed the registered address for the purposes of these Bylaws until another registered address is furnished as required by this section. If the Lot is the registered address of the member(s), then any notice shall have been deemed to be duly given if delivered to any person occupying that Lot or, if such Lot is unoccupied, if the notice is held and available for the member(s) at the principal office of the Association. ARTICLE XIII. OFFICERS 1. Officers. The Association shall have a president, a secretary, a treasurer, and such other officers as may be designated by the board of directors. An officer shall be a natural person who is eighteen (18) years of age or older. An officer need not be a director or a member of the Association. Officers may be appointed by the board of directors. A duly appointed officer may appoint one or more officers or assistant officers it authorized by the board of directors. The board of directors shall delegate to the secretary or to one or more other persons responsibility for the preparation and maintenance of minutes of the directors' and members' meetings and other records and information required to be kept by the Association and for authenticating records of the Association. The same individual may simultaneously hold more than one office in the Association. 2. President. The president shall be the chief executive officer of the Association. The president shall preside at all meetings of the Association and of the board. The president shall have the general powers and duties that are usually vested in the office of president of a corporation, including, but not limited to, the power to appoint committees from and among the members from time to time as the president may determine to be appropriate to assist in the conduct of the affairs of the Association or as Pek 28 may be established by the board or by the members of the Association at any regular or special meetings. 3. Vice President. The vice president shall have all the powers and authority and perform all functions and duties of the president in the absence of the president or his or her inability for any reason to exercise such powers and functions or to perform such duties. 4. Secretary. The secretary shall keep all minutes of the meetings of the board of directors and the minutes of all meetings of the Association. The secretary shall have charge of all books and papers that the board may direct and shall, in general, perform all the duties incident to the office of the secretary. The secretary shall compile and keep up to date at the principal office of the Association a complete list of the members and their registered addresses as shown on the record of the Association. 5. Treasurer. The treasurer shall have the responsibility for the Association funds and shall be responsible for keeping a full and accurate account of all receipts and disbursements in the books belonging to the Association; provided, however, that when a manager has been delegated the responsibility of collecting and disbursing funds, the treasurer's responsibility shall be to review the accounts of the manager not less often than quarterly. The treasurer shall perform such other duties as from time to time may be assigned by the board of directors or provided for by the declaration. .-. 6. Resignation and Removal of Officers. An officer may resign at any time by giving written notice of resignation to the Association. A resignation of an officer is effective when the notice is received by the Association unless the notice specifies a later effective date. If a resignation is made effective at a later date, the board of directors may permit the officer to remain in office until the effective date and may fill the pending vacancy before the effective date with the provision that the successor does not take office until the effective date, or the board may remove the officer at any time before the effective date and may fill the resulting vacancy. The Declarant may remove any officer during the period of Declarant control pursuant to the Declaration. Thereafter, the board of directors may remove any officer at any time without cause; or the board of directors may make provisions for the removal of officers by other officers. An officer who resigns or is removed or whose appointment has expired may deliver to the Colorado Secretary of State for filing a statement to that effect. 7. Contract Rights With Respect to Officers. The appointment of an officer does not itself create contract rights. An officer's removal does not affect the officer's contract rights, if any, with the Association. An officer's resignation does not affect the Association's contract rights, if any, with the officer. r 29 • .c. ARTICLE XIV. ASSOCIATION RECORDS 1. Association Records. (a) The Association shall keep as permanent records minutes of all meetings of its members and board of directors, a record of all actions taken by the members or board of directors without a meeting, a record of all actions taken by a committee of the board of directors in place of the board of directors on behalf of the Association, and a record of all waivers of notices of meetings of members and of the board of directors or any committee of the board of directors. (b) The Association shall maintain appropriate accounting records. (c) The Association or its agent shall maintain a record of its members in a form that permits preparation of a list of the names and addresses of all members in alphabetical order, showing the number of votes each member is entitled to vote. (d) The Association shall maintain its records in written form or in another form capable of conversion into written form within a reasonable time. (e) The Association shall keep a copy of each of the following records at its principal office: (1) Its Articles of Incorporation; (2) Its Bylaws; (3) Resolutions adopted by its board of directors relating to the characteristics, qualifications, rights, limitations, and obligations of members or any class or category of members; (4) The minutes of all members' meetings and records of all action taken by members without a meeting for the past three (3) years; (5) All written communications within the past three (3) years to members generally as members; (6) A list of the names and business or home addresses of its current directors and officers; (7) A copy of its most recent corporate report delivered to the Colorado Secretary of State; and (8) All financial statements prepared for periods ending during the last three (3) years that a member could have requested under this article. ^ 30 4 I R 2. Inspection of Association Records by Members. es- (a) A member is entitled to inspect and copy, during regular business hours at the Association's principal office, any of the records of the Association described in subsection 1(e) above if the member gives the Association written demand at least five (5) business days before the date on which the member wishes to inspect and copy such records. (b) Pursuant to subsection (e) of this section, a member is entitled to inspect and copy, during regular business hours at a reasonable location specified by the Association, any of the other records of the Association if the member meets the requirements of subsection (c) of this section and gives the Association written demand at least five (5) business days before the date on which the member wishes to inspect and copy such records. (c) A member may inspect and copy the records described in subsection (b) of this section only if: (1) The member has been a member for at least three (3) months immediately preceding the demand to inspect or copy or is a member holding at least five percent (5%) of the voting power as of the date the demand is made; (2) The demand is made in good faith and for a proper purpose; (3) The member describes with reasonable particularity the purpose and the records the member desires to inspect; and (4) The records are directly connected with the described purpose. (d) For purposes of this section: (1) "Member" includes a beneficial owner whose membership interest is held in a voting trust and any other beneficial owner of a membership interest who establishes beneficial ownership. (2) "Proper purpose" means a purpose reasonably related to the demanding member's interest as a member. (e) The right of inspection granted by this section may not be abolished or limited. (f) This section does not affect: 31 (1) The right of a member to inspect records to the same extent as any other litigant if the member is in litigation with the Association; or (2) The power of a court to compel the production of Association records for examination. 3. Scope of Member's Inspection Right. (a) A member's agent or attorney has the same inspection and copying rights as the member. (b) The right to copy records under this article includes, if reasonable, the right to receive copies made by photographic, xerographic, electronic, or other means. (c) The Association may impose a reasonable charge, covering the costs of labor and material, for copies of any documents provided to the member. The charge may not exceed the estimated cost of production and reproduction of the records. (d) The Association may comply with a member's demand to inspect the record of members by furnishing to the member a list of members that was compiled no earlier than the date of the member's demand. 4. Limitations on Use of Membership List. (a) Without consent of the board of directors, a membership list or any part thereof may not be obtained or used by any person for any purpose unrelated to a member's interest as a member. (b) Without limiting the generality of subsection (a) hereinabove, without the consent of the board of directors, a membership list or any part thereof may not be: (1) Used to solicit money or property unless such money or property will be used solely to solicit the votes of the members in an election to be held by the Association; (2) Used for any commercial purpose; or (3) Sold to or purchased by any person. 5. Audit. The books and records of the Association shall be subject to an audit using generally accepted accounting standards; or a review, using statements on standards for accounting and review services, at least once every two years by a person selected by the Board of Directors. Such person need not be a certified public �"� 32 accountant, except in the case of an audit. An audit shall be required under this Section only when both of the following conditions are met: (a) The Association has annual revenues or expenditures of at least Two Hundred Fifty Thousand Dollars ($250,000); and (h) An audit is requested by the members of at least one-third of the Lots. Copies of the audit or review under this Section shall be made available upon request to any member beginning no later than thirty (30) days after the audit or review is completed. ARTICLE XV. AMENDMENT These Bylaws may be amended by vote of a majority of the members voting in person or by proxy at a meeting called for such purpose at which a quorum of the members is present. �"" 33 NOTICE TO CLOSING AGENTS: THIS IS A FEE-ASSESSED SUBDIVISION. CHECK WITH THE HOMEOWNERS ASSOCIATION FOR FEE SCHEDULE. DECLARATION OF COVENANTS,CONDITIONS,AND RESTRICTIONS FOR WATERFORD HILL (a Common Interest Community) THIS DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS FOR WATERFORD HILL is made and entered into this day of , 2006, by SONJA CRAIGHEAD("the Owner"). RECITALS A. The Owner is the owner of that certain real property located in the County of Weld, State of Colorado legally described on Exhibit "A" attached hereto and incorporated herein by reference("the Real Estate"). B. The Owner desires to create a Common Interest Community on the Real Estate, pursuant to the Colorado Common Ownership Act, Section 38-33.3-101, et seq., fnlnradn Revisal Statutes, as it may be amended from time to lime ("the Act"), in which portions of the Real Estate will be designated for separate ownership and the remainder of which will be owned by an Associa- lion of Lot Owners. C. WATERFORD HILL HOMEOWNERS ASSOCIATION (a Colorado nonprofit corporation) has been incorporated under the laws of the State of Colorado for the purpose of exercising the functions herein set forth. ARTICLE I. SUBMISSION OF REAL ESTATE, The Owner hereby publishes and declares that the Real Estate shall be held, sold, conveyed, transferred, leased, subleased, and occupied subject to the following easements, covenants, conditions, and restrictions which shall run with the Real Estate and shall be binding upon and inure to the benefit of all parties having any right, title, or interest in the Real Estate or any portion thereof, their heirs, personal representatives, successors, and assigns. Additionally, the Owner hereby submits the Real Estate to the provisions of the Act. In the event the Act is repealed, the Act on the date this Declaration is recorded in the office of the Clerk and Recorder of Weld County, Colorado, shall remain applicable. ARTICLE II. DEFINITIONS Section 1: "Allocated Interests" shall mean and refer to the Common Expense Liability and votes in the Association. Section 2: "Approval" or "Consent" shall mean securing the prior written approval or consent as required herein before doing, making, or suffering that for which such approval or consent is required. Section 3: "Architectural Control Committee" shall mean and refer to the committee established to review and approve plans for the construction of improvements on Lots as set forth in Article X of this Declaration. Section 4: "Association" or "Lot Owners' Association" shall mean and refer to Waterford Hill Homeowners Association (a Colorado nonprofit corporation), its successors and assigns, organized and existing under the laws of the State of Colorado and specifically Section 38-33.3-301 of the Act. Section 5: "Bylaws" shall mean and refer to any instruments,however denominated,which are adopted by the Association for the regulation and management of the Association, including amendments to those instruments. Section 6: "Common Elements" shall mean and refer to any real estate or real property interests within the Common Interest Community owned by the Association, other than a Lot, the Streets, Fences, and all other assets of the Association. Section 7: "Common Expense Liability" shall mean and refer to the liability for Common Expenses allocated to each Lot pursuant to this Declaration. Section 8: "Common Expenses" shall mean and refer to expenditures made or liabilities incurred by or on behalf of the Association, together with any allocations to reserves. These expenses for the operation of the Common Interest Community include,but are not limited to: (a) Expenses of administering, maintaining, insuring, or replacing the Common Elements. (b) Expenses of maintaining, repairing, improving and replacing the Streets within the Common Interest Community. (c) Expenses of maintaining, repairing, improving, and replacing the Fence along the entire perimeter boundary of the Common Interest Community and along each side of all roads and streets within the Common Interest Community. (d) Expenses declared to be Common Expenses by the Declaration. (e) Expenses agreed upon as Common Expenses by the Association. (f) Such reasonable reserves as may be established by the Association, whether held in trust or by the Association, for repair, replacement, or addition to the Common Elements, Streets and Fences, or any other real or personal property acquired or held by the Association. 2 (g) Reimbursement of the cost of maintaining, repairing, improving and replacing the Fire Facilities, as provided in Article XIV hereinafter. Section 9: "Common Interest Community" shall mean and refer to the Real Estate described on Exhibit A attached hereto and incorporated herein by reference, together with any and all Real Estate added to the Common Interest Community pursuant to Article V hereinafter. Section 10: "Declarant" shall mean and refer to SONJA CRAIGHEAD, or any other Person or group of Persons acting in concert who: (a) As a part of a common promotional plan, offer to dispose of to a Purchaser such Declarant's interest in a Lot not previously disposed of to a Purchaser; or (b) Reserve or succeed to any Special Declarant Right. Section 11: "Declaration" shall mean and refer to this Declaration, including any amendments hereto and also including, but not limited to, plats of the Real Estate recorded in the Clerk and Recorder's office of Weld County, Colorado. Section 12: "Dispose" or "Disposition" shall mean and refer to a voluntary transfer of any legal or equitable interest in a Lot, but the term does not include the transfer or release of a security interest. Section 13: "Documents"shall mean and refer to this Declaration,the Plat, and the Articles of Incorporation, Bylaws, and Rules and Regulations of the Association, as supplemented or amended from time to time. Section 14: "Dwelling" shall mean and refer to a permanent building constructed on a Lot to be occupied by a Single Family for Residential Use and such other purposes as may be permitted pursuant to this Declaration and the Rules and Regulations adopted by the Association. Section 15: "Executive Board" shall mean and refer to the Executive Board of the Association. Section 16: "Fence" shall mean and refer to a three rail whit vinyl fence with electric wire along the top rail as necessary along the entire perimeter boundary of the Common Interest Community, and a three rail white vinyl fence without electric wire along all Streets within the Common Interest Community. Section 17: "Governmental Authority" shall mean and refer to the County; and any governmental entity, agency, authority, or district having jurisdiction over the Common Interest Community; any metropolitan district, special district, or special improvement district within which the Common Interest Community is located; any cooperative or governmentally regulated, supervised or licensed public or private entity that provides utility or quasi-utility services to the Common Interest Community. 3 Section 18: "Identifying Number" shall mean and refer to a symbol or address that identifies only one(1)Lot in the Common Interest Community. Section 19: "Improvements" shall mean and refer to all structures and any appurtenances thereto of every type or kind, including, but not limited to, buildings, outbuildings, swimming pools, patio covers, awnings; painting of any exterior surfaces of any structure, relocation or installation of windows, additions, walkways, outdoor sculptures or artwork, garages, carports, roads, driveways, parking areas, fences, screening walls, retaining walls, stairs, antennas, decks, roofs, fixtures, landscaping hedges, windbreaks, plantings, trees and shrubs, poles, signs, exterior tanks, solar equipment, exterior air conditioning and water softener fixtures. Section 20: "Insurer" shall mean and refer to any governmental agency or authority that insures or guarantees a Mortgage and that has provided written notice of such interest to the Association. Section 21: "Lot" shall mean and refer to a physical portion of the Common Interest Community which is designated for separate ownership or occupancy and the boundaries of which are described in or determined from the Plat. The team"Lot"as used in this Declaration shall have the same meaning as the term"Unit"as used in the Act. Section 22: "Mortgagee" shall mean and refer to any Person who has a security interest in a Lot and who has provided written notice of such interest to the Association. Section 23: "Open Spaces" shall mean and refer to Tracts A, B and C as designated on the Plat. Section 24: "Owner" shall mean and refer to any Person who owns a Lot but does not include a Person having an interest in a Lot solely as security for an obligation. The Declarant is the Owner of any Lot created in the Declaration until that Lot is conveyed to another Person. The term "Owner" as used in this Declaration shall have the same meaning as the term"Unit Owner"as used in the Act. Section 25: "Person" shall mean and refer to a natural person, a corporation, a limited liability company, a partnership, an association, a trust, or any other entity or combination thereof. Section 26: "Plat" shall mean and refer to the Subdivision Plat of the Real Estate, designated as Waterford Hill, recorded in the office of the Clerk and Recorder of Weld County, Colorado, and all recorded supplements and amendments thereto. "Plat" shall include the Plats of any additional Real Estate added to the Common Interest Community pursuant to Article V hereinafter Section 27: "Purchaser" shall mean and refer to a Person, other than the Declarant,who,by means of a transfer, acquires a legal or equitable interest in a Lot,other than: r'^• 4 (a) A leasehold interest in a Lot of less than forty(40) years, including renewal options, with the period of the leasehold interest, including renewal options, being measured from the date the initial term commences; or (b) A Security Interest. Section 28: "Real Estate" shall mean and refer to the Real Estate described on Exhibit A attached hereto and incorporated herein by reference, together with any Real Estate added to the Common Interest Conununity pursuant to Article V hereinafter. Section 29: "Residential Use" shall mean and refer to use of a Dwelling by a Single Family for cooking, eating, sleeping and other usual and customary personal, private, family, domestic household and housekeeping purposes. Section 30: "Rules and Regulations" shall mean and refer to any instruments, however denominated, which are adopted by the Association for the regulation and management of the Common Interest Community, including any amendment to those instruments. Section 31: "Security Interest"shall mean and refer to an interest in real property created by contract or conveyance which secures payment or performance of an obligation. The term includes a lien created by a mortgage, deed of trust, trust deed, security deed, contract for deed, land sales contract, lease intended as security, assignment of lease or rents intended as security, pledge of an ownership interest in an association, and any other consensual lien or title retention contract intended as security for an obligation. "First Security Interest" shall mean and refer to a Security Interest in a Lot prior to all other Security Interests except the Security Interest for real property taxes and assessments made by Weld County, Colorado, or other governmental authority having jurisdiction over the Common Interest Community. Section 32: "Single Family" shall mean and refer to not more than two unrelated persons who for purposes of this definition shall be referred to as the "Primary Occupants"; the issue by blood or adoption of each of the Primary Occupants and their spouses or committed life partners; the parents of each of the Primary Occupants and their spouses or committed life partners; such additional persons who are related to one of the Primary Occupants and who can be reasonably accommodated in the Dwelling occupied by the Primary Occupants. Section 33: "Street" shall mean and refer to all roads and streets within the Common Interest Community as shown on the Plat, which shall be maintained by the Association. Section 34: Unless the context clearly indicates otherwise, other terms defined in the Act shall have the meanings attributable to such terms in the Act. Section 35: Other terms in this Declaration may be defined in specified provisions contained herein and shall have the meaning assigned by such definition. 5 ARTICLE RI. COMMON INTEREST COMMUNITY r•-"- Section 1: Name. The name of the Common Interest Community is WATERFORD HILL. Section 2: Association. The name of the Association is WATERFORD HILL HOMEOWNERS ASSOCIATION. Section 3: Planned Community. The Common Interest Community is a planned community. Section 4: County. The name of every county in which any part of the Common Interest Community is situated is Weld County,Colorado. Section 5: Legal Description. A legal description of the Real Estate included in the Common Interest Community is set forth on Rxhihit A attached hereto and incorporated herein by reference. Additional Real Estate may be added to the Common Interest Community pursuant to Article V hereinafter. Section 6: Maximum Number of tots. The maximum number of Lots that the Declarant reserves the right to create within the Common Interest Community is thirty-five(35). Section 7: Boundaries of I ots. The boundaries of each Lot are set forth on the Plat of the Real Estate. The Plat sets forth the Lot's Identifying Number. Section 8: Allocated Interests. The Common Expense Liability and votes in the Association shall be allocated among the Owner as follows: (a) F ch Owner's share of the Common Expenses shall be a fraction, the numerator of which shall be one(1) and the denominator of which shall be the total number of Lots within the Common Interest Community. (b) Each Owner shall be entitled to one(1)vote for each Lot owned. Section 9: Recording Data. All easements and licenses to which the Common Interest Community is presently subject are shown on the Plat and on Exhibit R attached hereto. In addition, the Common Interest Community may be subject to other easements or licenses granted by the Declarant pursuant to the terms of this Declaration. Section 10: Notice. Notice of matters affecting the Common Interest Community may be given to Lot Owners by the Association or by other Lot Owners in the following manner: notice shall be hand delivered, sent prepaid by United States mail to the mailing address of each Lot or to any other mailing address designated in writing by the Lot Owner to the Association, or sent by electronic mail. Such notice shall be deemed given when hand delivered, when deposited in the United States mail or when sent by electronic mail. 6 ARTICLE IV. ASSOCIATION Section 1: Membership. Every Owner of a Lot which is subject to assessment shall be a Member of the Association. The foregoing is not intended to include Persons who hold an interest merely as security for the performance of an obligation. Membership shall be appurtenant to and may not be separated from ownership of any Lot which is subject to assessment by the Association. Ownership of such Lot shall be the sole qualification for membership. The Association does not contemplate pecuniary gain or profit to the Members thereof, and the specific purposes for which it is formed are as follows: (a)to operate the Common Interest Community known as WATERFORD HILL located in Weld County, Colorado, in accordance with the Act, as amended, and the Colorado Nonprofit Corporation Ad, as amended; (b) to promote the health, safety, welfare, and common benefit of the residents of the Common Interest Community; and (c) to do any and all permitted acts, and to have and exercise any and all powers, rights, and privileges which are granted to a common interest community association under the laws of the State of Colorado, this Declaration, and the Bylaws,Rules and Regulations, and other governing documents of the Association. Section 2: Voting Rights and Assignment of Votes. The effective date for assigning votes to Lots created pursuant to this Declaration shall be the date on which this Declaration is recorded in the records of the Clerk and Recorder of Weld County, Colorado. Section 3: Allocated Tnterests. The Common Expense Liability and votes in the Association allocated to each Lot are set forth as follows: .-. (a) The percentage of liability for Common Expenses shall be allocated on the basis of equal liability for each Lot; and (b) The number of votes in the Association shall be allocated on the basis of one (1)vote for each Lot. Section 4: Authority. The business and affairs of the Common Interest Community shall be managed by the Association. The Association shall be governed by this Declaration and the Articles of Incorporation, Bylaws, and Rules and Regulations of the Association, as amended from time to time. Section 5: Powers. The Association shall have all of the powers, authority, and duties permitted pursuant to the Act necessary and proper to manage the business and affairs of the Common Interest Community. Section 6: Declarant Control. The Declarant, or persons designated by the Declarant, may appoint and remove the officers and members of the Executive Board of the Association for a period of twenty(20) years after this Declaration is recorded in the office of the Clerk and Recorder of Weld County, Colorado. The period of Declarant control as herein set forth is subject to the limitations of Section 38-33.3-303(5) of the Act. Within ninety (90) days after assuming control from the Declarant pursuant to Section 38-33.3-303(5) of the Act, and within ninety(90) days after the end of each fiscal year thereafter, the Association shall make the following information available to Owners upon reasonable notice: 7 (a) The date on which the Association's fiscal year commences; (b) The Association's operating budget for the current fiscal year; (c) A list of the Association's current assessments, including both regular and special assessments; (d) The Association's annual financial statements, including any amounts held in reserve for the fiscal year immediately preceding the current annual disclosure; (e) The results of any financial audit or review for the fiscal year immediately preceding the current annual disclosure; (f) A list of all Association insurance policies including, but not limited to, property, general liability, Association director and officer professional liability, and fidelity policies. Such list shall include the company names, policy limits, policy deductibles, additional named insureds, and expiration dates of the policies listed; (g) All of the Association's Bylaws, Articles of Incorporation, and Rules and Regulations; (h) The minutes of the Executive Board and Member meetings for the fiscal year immediately preceding the current annual disclosure; and (i) The Association's responsible governance policies. The foregoing disclosures shall be accomplished by any one of the following means: posting on an internet web page with accompanying notice of the web address via first class mail or e-mail; the maintenance of a literature table or binder at the Association's principal place of business; mail; or personal delivery. The cost of such distribution shall be accounted for as a Common Expense. Section 7: Executive Board Powers. The Executive Board may act in all instances on behalf of the Association. The Executive Board shall have, subject to the limitations contained in this Declaration and the Act, the powers necessary for the administration of the affairs of the Association and of the Common Interest Community,which shall include,but not be limited to, the following: (a) Adopt and amend Bylaws. (b) Adopt and amend Rules and Regulations. (c) Adopt and amend budgets for revenues, expenditures, and reserves. .-. (d) Collect Common Expense assessments from Lot Owners. 8 (e) Hire and discharge Managers. (f) Hire and discharge independent contractors, employees, and agents, other than Managers. (g) Institute, defend, or intervene in litigation or administrative proceedings or seek injunctive relief for violation of the Documents in the Association's name, on behalf of the Association, or two (2) or more Lot Owners on any matters affecting the Common Interest Community. (h) Make contracts and incur liabilities. (i) Maintain, repair,replace, and improve the Common Elements including,but not limited to,the Streets and Fences. (j) Cause additional improvements to be made as a part of the Conmion Elements. (k) Acquire, hold, encumber and convey in the Association's name, any right, title, or interest to real estate or personal property, but the Common Elements may be conveyed or subjected to a Security Interest only pursuant to this Declaration and the Act. (1) Grant easements for any period of time, including permanent easements, leases, licenses, and concessions through or over the Common Elements, subject to the restrictions and limitations of this Declaration and the Act. (m) Impose and receive a fee or charge for the use, rental, or operation of the Common Elements and for services provided to Lot Owners. (n) Impose a reasonable charge for late payment of assessments and levy a reasonable fine for violation of the Documents. (o) Impose a reasonable charge for the preparation and recordation of supplements or amendments to this Declaration and for statements of unpaid assessments. (p) Provide for the indemnification of the Association's officers and the Executive Board and maintain directors' and officers' liability insurance. (q) Assign the Association's right to future income, including the right to receive Common Expense assessments,but only upon the affirmative vote of the Owners of Lots to which at least fifty-one percent (51%) of the votes in the Association are allocated, at a meeting called for that purpose. (r) Regulate the use of the Common Elements,including the Streets. 9 (s) Exercise any other powers conferred by the Documents. ,r. (t) Exercise any other power that may be exercised in the State of Colorado by a legal entity of the same type as the Association. (u) Exercise any other power necessary and proper for the governance and operation of the Association. (v) By resolution, establish permanent and standing committees of Executive Board members to perform any of the above functions under specifically delegated administrative standards as designated in the resolution establishing the committee. All committees must maintain and publish notice of their actions to Lot Owners and the Executive Board. However, actions taken by a committee may be appealed to the Executive Board by any Lot Owner within forty-five (45) days of publication of a notice. If an appeal is made, the committee's action must be ratified, modified,or rejected by the Executive Board at its next regular meeting. Section 8: Executive Hoard Duties: The Executive Board shall: (a) Maintain accounting records using generally accepted accounting principles; and (b) Adopt policies,procedures and rules and regulations concerning: (i) Collection of unpaid assessments; (ii) Handling of conflicts of interest involving Board members; (iii) Conduct of meetings,which may refer to applicable provisions of the Nonprofit Corporation Code or other recognized rules and principles; (iv) Enforcement of covenants and rules, including notice and hearing procedures and the schedule of fines; (v) Inspection and copying of Association records by Owners; (vi) Investment of reserve funds; and (vii) Procedures for the adoption and amendment of policies, procedures and rules and regulations. Section 9: Professional Management and Contract Termination Provisions. The Association may utilize professional management in performing its duties hereunder. Any agreement for professional management of the Association's business shall have a maximum term of three (3) years and shall provide for termination by either party thereto, without cause and without payment of a termination fee, upon sixty (60) days' prior written notice. Any contracts, licenses, or leases entered into by the Association while there is Declarant control of the 10 Association shall provide for termination by either party thereto, without cause and without payment of a termination fee, at any time after termination of Declarant control of the Association, upon sixty (60) days' prior written notice; provided, however, that any contract entered into at any time by the Association providing for services of the Declarant shall provide for termination at any time by either party thereto, without cause and without payment of a termination fee, upon sixty (60) day's prior written notice. Any contract for management services shall provide for immediate termination by the Association without penalty for cause. The Association shall provide to all Owners at least once per year a written notice stating the name of the Association; the name of the Association's designated agent or management company, if any; and a valid physical address and telephone number for both the Association and the designated agent or management company, if any. The notice shall also include the name of the Common Interest Community, the initial date of recording and reception number at which this Declaration is recorded in the office of the Clerk and Recorder of Weld County, Colorado. If the Association's address, designated agent or management or company changes, the Association shall provide all Owners with an amended notice within ninety(90)days after the change. Section 10: Executive Board I imitations. The Executive Board may not act on behalf of the Association to amend this Declaration, to terminate the Common Interest Community, or to elect members of the Executive Board or determine their qualifications,powers, and duties or terms of office of Executive Board members, but the Executive Board may fill vacancies in its membership for the unexpired portion of any term. Section 11: Indemnification. To the full extent permitted by law, each officer and member of the Executive Board of the Association and each member of the Architectural Control Committee shall be and are hereby indemnified by the Lot Owners and the Association against all expenses and liabilities, including attorney's fees, reasonably incurred by or imposed upon them in any proceeding to which they may be a party or in which they may become involved by reason of their being or having been an officer or member of the Executive Board or Architectural Control Committee of the Association, or any settlement thereof, whether or not they are an officer or a member of the Executive Board or Architectural Control Committee of the Association at the time such expenses are incurred, except in such cases where such officer or member of the Executive Board or Architectural Control Committee is adjudged guilty of willful misfeasance or malfeasance in the performance of his or her duties; provided that in the event of a settlement, the indemnification shall apply only when the Executive Board approves such settlement and reimbursement as being in the best interests of the Association. Section 12: Executive Board Member Education: The Executive Board may authorize, and account for as a Common Expense, reimbursement of Executive Board members for their actual and necessary expenses incurred in attending educational meetings and seminars on responsible governance of associations. The course content of such educational meetings and seminars shall be specific to Colorado and shall make reference to applicable sections of the Act. Section 13: Owner Education. The Association shall provide or cause to be provided education to Owners at no cost on at least an annual basis as to the general operations of the Association and the rights and responsibilities of Owners,the Association, and the Executive Board 11 under Colorado law. The criteria for compliance with this Section shall be determined by the Executive Board. ARTICLE V. ,SPECIAL, DECLARANT RIGHTS AND ADDITIONAL RESERVED RIGHTS Section 1: Special Declarant Rights. Declarant hereby reserves the right for a period of twenty(20) years after this Declaration is recorded in the office of the Clerk and Recorder of Weld County, Colorado, to perform the acts and exercise the rights hereinafter specified ("the Special Declarant Rights"). Declarant's Special Declarant Rights include the following: (a) Completion of Improvements. The right to complete improvements indicated on the Plat. (b) Exercise of Developmental Rights. The right to exercise any Development Right reserved in Article VI of this Declaration. (c) Sales and Marketing. The right to maintain signs within the Common Interest Community advertising Lots within the Common Interest Community for sale. (d) Construction Easements. The right to use easements within the Common Interest Community for the purpose of making improvements within the Common Interest Community or within Real Estate which may be added to the Common Interest Community. (e) Master Association. The right to make the Common Interest Community subject to a master association. (1) Merger. The right to merge or consolidate the Common Interest Community with another Common Interest Community of the same form of ownership. If the Common Interest Community is merged or consolidated with another common interest community, the Common Interest Community may withdraw from the merged or consolidated common interest community without the consent of the other common interest community if the Common Interest Community meets all of the following criteria: (i) The Common Interest Community is a separate platted subdivision; (ii) The Owners are required to pay into two common interest communities or separate owners associations; (iii) The Common Interest Community is or has been a self-operating common interest community or association continuously for at least twenty-five(25)years; (iv) The total number of Owners within the Common Interest Community is fifteen percent (15%) or less of the total number of owners in the merged or consolidated common interest community; r 12 (v) Owners approve the withdrawal by a majority vote and at least seventy-five percent(75%)of the Owners participate in the vote; (vi) Withdrawal of the Common Interest Community would not substantially impair the ability of the remainder of the merged common interest community to enforce existing covenants,maintain existing facilities,or continue to exist. (g) Control of Association and Fxeentive Roard. The right to appoint or remove any officer of the Association or any Executive Board member. (h) Amendment of Declaration. The right to amend the Declaration in connection with the exercise of any Development Rights. (i) Amendment of Plat. The right to amend and supplement the Plat in connection with the exercise of any Development Rights. Section 2: Additional Reserved Rights. In addition to the Special Declarant Rights set forth in Section 1 above, Declarant also reserves the following additional rights ("the Additional Reserved Rights"): (a) Dedications. The right to establish, from time to time, by dedication or otherwise, access, utility, irrigation, and other easements over, across, and upon the Common Elements for purposes including, but not limited to, streets, paths, walkways, drainage, recreation areas, and open spaces, and irrigation of open spaces, and to create other reservations, exceptions, and exclusions over, across, and upon the Common Elements for the benefit of and to serve the Lot Owners and the Association. (b) Ilse Agreements. The right to enter into, establish, execute, amend, and otherwise deal with contracts and agreements for the use, lease, maintenance, improvement, or regulation of Common Elements. (c) Other Rights. The right to exercise any Additional Reserved Right created by any other provision of this Declaration. Section 3: Rights Transferable. Any Special Declarant Right or Additional Reserved Right created or reserved under this Article for the benefit of the Declarant may be transferred to any Person by an instrument describing the rights transferred and recorded in Weld County, Colorado. Such instrument shall be executed by the transferor Declarant and the transferee. ARTICLE VI. RESERVATION OF EXPANSION AND DEVELOPMENT RIGHTS Section 1: Expansion Rights. Declarant expressly reserves the right to subject all or any part of the property described in Exhibit C attached hereto and hereby incorporated herein by reference ("the Development Property") to the provisions of this Declaration. The consent of the existing Lot Owners or Mortgagees shall not be required for any such expansion, and Declarant may proceed with such expansion without limitation, at its sole option. 13 Section 2: Withdrawal Rights. If all or any part of the Development Property is submitted to this Declaration, Declarant expressly reserves the right to withdraw all or any portion of the Development Property from the Common Interest Community by recording a document evidencing such withdrawal in the office of the Clerk and Recorder of Weld County, Colorado. The Real Estate withdrawn from the Common Interest Community shall be subject to whatever easements, if any, are reasonably necessary for access to or operation of the Common Interest Community. Declarant shall prepare and record in the office of the Clerk and Recorder of Weld County, Colorado,whatever documents are necessary to evidence such easements. Section 3: Amendment of the Declaration. If Declarant elects to submit the Development Property, or any part thereof, to this Declaration, Declarant shall record an Amendment to the Declaration containing a legal description of the Development Property, or portion thereof to be submitted to this Declaration, and reallocating the Allocated Interests so that the Allocated Interests appurtenant to each Lot will be apportioned according to the total number of Lots submitted to the Declaration. The Allocated Interests appurtenant to each Lot in the Common Interest Community, as expanded, shall be a fraction, the numerator of which shall be one (1) and the denominator of which shall be the total number of Lots within the Common Interest Community, as expanded. The Amendment may contain additional covenants, conditions, and restrictions applicable only to the Lots and/or Common Elements contained within the Development Property added to the Real Estate by such Amendment. Section 4: Plat. Declarant shall, contemporaneously with the amendment of this Declaration, file a Plat showing the Development Property or portion thereof to be submitted to this Declaration and the Lots and Common Elements created within the Development Property or portion thereof to be submitted to this Declaration. Section 5: Interpretation. Recording of amendments to this Declaration in the office of the Clerk and Recorder of Weld County, Colorado, shall automatically (a) vest in each existing Lot Owner the reallocated Allocated Interests appurtenant to each Owner's Lot; and (b) vest in each existing Mortgagee a perfected Security Interest in the reallocated Allocated Interests appurtenant to the encumbered Lot. Upon the recording of an amendment to this Declaration, the definitions in this Declaration shall automatically be extended to encompass and to refer to the Real Estate, as expanded. The Development Property, or any part thereof, shall be added to and become a part of the Real Estate for all purposes. All conveyances of Lots after such expansion shall be effective to transfer rights in all Common Elements as expanded, whether or not reference is made to any amendment to this Declaration, subject to any restrictions on the use of the Common Elements as set forth in the Amendment to this Declaration adding the Development Property, or any part thereof, to the Real Estate. Reference to this Declaration in any instrument shall be deemed to include all amendments to this Declaration without specific reference thereto. Section 6: Maximum Number of lots. The maximum number of Lots in the Common Interest Community, as expanded, shall not exceed the number set forth in Article III, Section 6, above. Declarant shall not be obligated to expand the Common Interest Community beyond the number of Lots initially submitted to this Declaration. 14 Section 7: Constmction Easement. Declarant expressly reserves the right to perform construction work, store materials on Common Elements, and the future right to control such work and the right of access thereto until its completion. All work may be performed by Declarant without the consent or approval of any Lot Owner or Mortgagee. Declarant has such an easement through the Common Elements as may be reasonably necessary for the purpose of discharging Declarant's obligations and exercising Declarant's reserved rights in this Declaration. Such easement includes the right to construct underground utility lines, pipes, wires, ducts, conduits, and other facilities across the Real Estate for the purpose of furnishing utility and other services to the Development Property. Declarant's reserved construction easement includes the right to grant easements to public, quasi-public, or cooperative utility companies and to convey improvements within those easements. Declarant further reserves the right to construct irrigation improvements within the Common Elements and within any Utility or Access Easement. Section 8: Reciprocal Easements, If all or any part of the Development Property is submitted to but subsequently withdrawn from the Common Interest Community ("the Withdrawn Property"): (i) the Lot Owner(s) of the Withdrawn Property shall have whatever easements are necessary or desirable, if any, for access, utility service, repair, maintenance, and emergencies over and across the Common Interest Community; and (ii) the Lot Owner(s) in the Common Interest Community shall have whatever easements are necessary or desirable, if any, for access, utility service, repair, maintenance, and emergencies over and across the Withdrawn Property. Declarant shall prepare and record in the office of the Clerk and Recorder of Weld County, Colorado, whatever documents are necessary to evidence such easements. Such recorded easement(s) shall specify that the Lot Owners of the Withdrawn Property and the Lot Owners in the Common Interest Community shall be obligated to pay a proportionate share of the cost of the operation and maintenance of any easements utilized by either one of them on the other's property upon such reasonable basis as the Declarant shall establish in the easement(s). Preparation and recordation by Declarant of an easement pursuant to this Section shall conclusively determine the existence, location, and extent of the reciprocal easements that are necessary or desirable as contemplated by this Section. Section 9: Termination of Expansion and Development Rights. The expansion and development rights reserved to Declarant, for itself and its successors and assigns, shall expire twenty(20)years from the date of recording this Declaration in the office of the Clerk and Recorder of Weld County, Colorado, unless the expansion and development rights are (i) extended as allowed by law or (ii) reinstated or extended by the Association, subject to whatever terms, conditions, and limitations the Executive Board may impose on the subsequent exercise of the expansion and development rights by Declarant. Section 10: Transfer of Expansion and Development Rights. Any expansion, development, or withdrawal right created or reserved under this Article for the benefit of Declarant may be transferred to any Person by an instrument describing the rights transferred and recorded in the office of the Clerk and Recorder of Weld County, Colorado. Such instrument shall be executed by the transferor Declarant and the transferee. r 15 ARTICLE VII. ASSESSMENT FOR COMMON EXPENSES Section 1: Personal Obligation of Owners for Common Expenses. The Declarant, for each Lot owned, hereby covenants, and each Owner of any Lot by acceptance of a deed therefore, whether or not it shall be so expressed in such deed, is deemed to covenant and agree to pay to the Association Common Expense assessments imposed by the Association to meet the estimated Common Expenses. Section 2: Purpose of Assessment. The assessments levied by the Association shall be used exclusively to promote the recreation, health, safety, and welfare of the Owners and for the improvement and maintenance of the Common Elements. Section 3: Amount of Assessment. The amount of the assessment for the estimated Common Expenses which shall be paid by each Owner shall be determined by dividing the aggregate sum the Association reasonably determines to be paid by all Owners by the total number of Lots within the Common Interest Community, and the Owner of each Lot shall pay his proportionate share of such aggregate sum. Section 4: Maximum Annual Assessment. Until January 1 of the year immediately following the date of commencement of annual assessments,the maximum annual assessment shall be One Thousand Two Hundred Dollars($1,200)per Lot. (a) From and after January 1 of the year immediately following the date of commencement of annual assessments,the maximum annual assessment may be increased effective January 1 of each year without a vote of the membership in conformance with the rise, if any,of the Consumer Price Index for the Denver/Boulder region (published by the Department of Labor, Washington, D.C.)for the preceding month of July. (b) From and after January 1 of the year immediately following the date of commencement of annual assessments, the maximum annual assessment may be increased above that established by the Consumer Price Index formula by a vote of the Owners for the next succeeding two (2) years, and at the end of each such period of two (2) years, for each succeeding period of two (2) years, provided that any such change shall have the assent of two-thirds (2/3) of the votes of the Owners who are voting in person or by proxy at a meeting duly called for this purpose. The limitations hereof shall not apply to any change in the maximum and basis of the assessments undertaken as an incident to a merger or consolidation in which the Association participates. (c) The Executive Board may fix the annual assessment at an amount not in excess of the maximum. Section 5: Special Assessments for Capital Improvements. In addition to the annual assessments authorized above, the Association may levy, in any assessment year, a special assessment applicable to that year only for the purpose of defraying,in whole or in part, payment of any operating deficit and/or unbudgeted cost, the cost of any construction, reconstruction, repair, or replacement of a capital improvement upon the Common Elements, including fixtures and personal 16 • property related thereto, and the cost of any construction, reconstruction, repair, or replacement of any street or road within the Common Interest Community; provided that any such Special assessment shall have the assent of two-thirds (2/3) of the votes of the Owners who are voting in person or by proxy at a meeting duly called for this purpose. Section 6: Notice and Quomm for any Action Authnri7ed T inder Sections 4 and S. Written notice of any meeting called for the purpose of taking any action authorized under Section 4 or 5 shall be sent to all Owners not less than thirty(30)days nor more than sixty(60)days in advance of the meeting. At the first such meeting called, the presence of Owners or of proxies entitled to cast sixty percent (60%) of all the votes of the Owners shall constitute a quorum. If the required quorum is not present, another meeting may be called, subject to the same notice requirement, and the required quorum at the subsequent meeting shall be one-half(1/2) of the required quorum at the preceding meeting. No such subsequent meeting shall be held more than sixty(60) days following the preceding meeting. Section 7: Tinifom, Rate of Assessment. Both annual and special assessments must be fixed at a uniform rate for all Lots and shall be collected on a monthly basis. Section 8: Date of Commencement of Annual Assessments; Due Dates. The annual assessments provided for herein shall commence as to all Lots on January 1 of the year following the completion of the construction and installation of all streets and utilities within the Real Estate by the Declarant. The Executive Board shall fix the amount of the annual assessment against each Lot at least thirty (30) days in advance of each annual assessment period. Written notice of the annual assessment shall be sent to every Owner subject thereto. Annual assessments shall be collected in twelve(12) equal monthly installments. Section 9: Fxempt Property. The following property subject to the Declaration shall be exempted from the assessments, charges, and liens created herein: (a) All properties to the extent of any easement or other interest therein dedicated and accepted by a municipal or quasi-municipal corporation or other local public utility or authority and devoted to public use. (b) All Common Elements. Section 10: Record of Receipts and Expenditures. The Association shall keep detailed and accurate records in chronological order of all of its receipts and expenditures, specifying and itemizing the maintenance and repair of the Common Elements and any other expenses incurred. Such records shall be available on request for examination by the Lot Owners and others with an interest, such as prospective lenders. Section 11: Notice to Security Interest, Upon the request of a holder of a First Security Interest on a Lot, and upon payment of reasonable compensation therefor, the Association shall report to such party any unpaid assessment or other defaults under the terms of this Declaration which are not cured by the Lot Owner within thirty(30) days after written notice of default given by the Association to the Lot Owner. 17 Section 12: Certificate of Status of Assessments. The Association, upon written request to the Association, and upon payment of a reasonable fee, shall furnish to a Lot Owner or such Lot Owner's designee, to a holder of a Security Interest or its designee, or to a closing agent handling the closing of the sale or financing of the Owner's Lot a statement, in recordable form, setting out the amount of the unpaid Common Expense assessments against the Lot. The statement must be furnished within fourteen (14) business days after receipt of the request and is binding on the Association, the Executive Board, and each Lot Owner. A properly executed certificate of the Association as to the status of assessments on a Lot is binding upon the Association as of the date of its issuance. Omission or failure to fix an assessment or deliver or mail a statement for any period shall not be deemed a waiver, modification or release of a Lot Owner from his or her obligation to pay the same. Section 13: Common Expenses Attributable to Fewer than All Lots. The following Common Expenses may be chargeable to fewer than all Lots: (a) An assessment to pay a judgment against the Association may be made only against the Lots in the Common Interest Community at the time the judgment was entered, in proportion to their Common Expense Liabilities. (b) If a Common Expense is caused by the misconduct of a Lot Owner, the members of such Owner's family, or such Owner's guests, invitees, employees, agents, contractors, subcontractors, or tenants,the Association may assess that expense against that Lot Owner and such Owner's Lot. (c) Fees, charges, taxes, impositions, late charges, fines, collection costs, and interest charged against a Lot Owner pursuant to the Documents and the Act are enforceable as Common Expense assessments against such Owner's Lot. Section 10: Owner's Neg)ipitnee. Notwithstanding anything to the contrary contained in this Declaration in the event that the need for maintenance or repair of the Common Elements or any improvements located thereon is caused by the willful or negligent act, omission, or misconduct of any Lot Owner or by the willful or negligent act, omission, or misconduct of any member of such Lot Owner's family or by a guest, invitee, employee, agent, contractor, or subcontractor of such Lot Owner or any tenant or member of a tenant's family, the costs of such repair and maintenance shall be the personal obligation of such Lot Owner, and any costs, expenses, and fees incurred by the Association for such maintenance,repair, or reconstruction shall be added to and become part of the assessment to which such Owner's Lot is subject and shall be a lien against such Owner's Lot as provided in this Declaration. A determination of the willful or negligent act, omission, or misconduct of any Lot Owner or any member of a Lot Owner's family or a guest, invitee, employee, agent, contractor, or subcontractor of any Lot Owner or tenant or member of a tenant's family and the amount of the Lot Owner's liability therefor shall be determined by the Executive Board after notice to the Lot Owner and the right to be heard before the Executive Board in connection therewith. 18 ARTICLE VIII. LIEN FOR NONPAYMENT OF COMMON EXPENSES Any assessment, charge, or fee provided for in this Declaration or any monthly or other installment thereof which is not fully paid within ten (10) days after the date due shall bear interest at a rate determined by the Executive Board. In addition, the Executive Board may assess a late charge thereon. Any Owner who fails to pay any assessment, charge, or fee of the Association shall also be obligated to pay to the Association, on demand, all costs and expenses incurred by the Association, including reasonable attorney's fees, in attempting to collect the delinquent amount. The total amount due to the Association, including unpaid assessments, fees, charges, fines, interest, late payment penalties, costs, and attorney's fees, shall constitute a lien on the defaulting Owner's Lot as provided in the Act. The Association may bring an action, at law or in equity, or both, against any Owner personally obligated to pay any amount due to the Association or any monthly or other installment thereof and may also proceed to foreclose its lien against such Owner's Lot. An action at law or in equity by the Association against a delinquent Owner to recover a money judgment for unpaid amounts due to the Association or monthly or other installments thereof may be commenced and pursued by the Association without foreclosing or in any way waiving the Association's lien. The Association's lien shall be superior to any homestead exemption now existing or hereafter created by any state or federal law. If any Owner fails to timely pay assessments or any money or sums due to the Association, the Association may require reimbursement for collection costs and reasonable attorneys' fees and costs incurred as a result of such failure without the necessity of commencing a legal proceeding. ARTICLE IX. COMMON ELEMENTS Section 1: Description of Common Elements. The Common Elements within the Common Interest Community shall consist of the following real and personal property, and such additional Common Elements as may be conveyed to the Association in connection with any property which may be added to the Common Interest Community pursuant to the terms of Article V hereinabove: (a) Open Spare. The Common Elements shall include the Open Space. (b) Streets. The Common Elements shall include the Streets which shall be constructed and installed by the Declarant and thereafter maintained, repaired, improved and replaced as necessary by the Association. The Streets shall be dedicated to the public. (c) Fences. The Common Elements shall include a three rail white vinyl Fence to be constructed and installed by the Declarant and thereafter maintained by the Association along each side of the Streets and around the perimeter boundary of the Property. The perimeter boundary Fence may have barbed wire, electric wire, or such other fencing material along the top of the Fence as may be necessary to constitute a"Legal Fence"under the laws of the State of Colorado and to turn away ordinary horses and cattle. (d) IJtilities. The Common Elements shall include, and the Declarant hereby grants to the Association, its successors and assigns, and reserves unto itself, its successors and assigns, a nonexclusive, perpetual Utility Easement thirty (30) feet in width adjacent to all of the 19 Streets and twenty (20) feet in width adjacent to all rear Lot lines as shown on the Plat. The Declarant and the Association shall have the right, at their sole and absolute discretion,to grant and convey Utility Easements to any Person or entity for the installation,construction,maintenance, and repair of utility pipes, conduits, wires, lines, systems, and facilities within the Utility Easement to provide water, sewer, gas,electric, telephone, television, or other utility services to the Lots. Use of the Utility Easement shall not be confined to present utility services available to the Common Interest Community but may be expanded as additional utility services become available. (e) Entrance Signs, and Gates. The Common Elements shall include, and the Declarant hereby grants to the Association, its successors and assigns, and reserves unto itself, its successors and assigns, the right to construct, install, maintain, repair, and improve entrance signs and gates identifying the Common Interest Community. (f) Rifles and Regulations. The Executive Board shall have the right to adopt reasonable Rules and Regulations governing the use of all streets within the Common Interest Community, provided that such Rules and Regulations apply to all Owners, their guests and invitees, in a nondiscriminatory manner. Such Rules and Regulations may include establishing the maximum speed limit for vehicles using the streets and regulations prohibiting on-street parking. The Executive Board shall have the right to assess fines for violations of the Rules and Regulations. Section 2: Owners' Easements of Enjoyment. Each Lot Owner shall have a right and easement of enjoyment in and to the Common Elements, and such easement shall be appurtenant to and shall pass with title to every Lot, subject to the following provisions: (a) The right of the Association to promulgate and publish reasonable Rules and Regulations as provided in this Declaration. (b) The right of the Association to suspend voting rights and the right to use the Common Elements by an Owner for any period during which any assessment against his or her Lot remains unpaid and for a period not to exceed sixty (60) days for any infraction of its published Rules and Regulations;provided,however,that the Association may not prohibit access to any Lot. (c) The right of the Declarant or the Association, acting through its Executive Board, to dedicate or transfer any part of the Common Elements to any public, quasi-public, or cooperative agency, authority,utility, or other entity. (d) The right of the Association to close or limit use of the Common Elements while maintaining,repairing, or making replacements in the Common Elements. (e) The right of the Declarant to add all or any portion of the Development Property to the Common Interest Community and, in connection therewith, to grant to the Owners of Lots within the Development Property easements over and across the Common Elements. (f) The right, but not the obligation, of the Declarant or the Association, acting through its Executive Board, to construct, install, maintain, repair, and improve a gate at the r 20 intersection of any Street within the Common Interest Community and an adjacent public street or road. Section 3: Delegation of I Tce. A Lot Owner may delegate his or her right of enjoyment to the Common Elements to the members of his or her family (as defined in Article II, Section 31 of this Declaration), guests, invitees, and tenants subject to the terms and provisions of the Documents. Section 4. Maintenance by Weld County. In the event the Association shall fail to maintain the Common Elements or the public streets and roads within the Common Interest Community in a reasonable order and condition, the County may serve written notice upon the Association or upon the Owners of Lots setting forth the manner in which the Association has failed to maintain the Common Elements and public streets and roads within the Common Interest Community in a reasonable condition. Such notice shall include demand that the deficiencies of maintenance be cured within thirty(30) days and shall state the date and place of a hearing thereon, which shall be held within fourteen (14) days of the notice. At such hearing, the County may modify the terms of its original notice as to the deficiencies and may give an extension of time within which the deficiencies are to be cured. If the deficiencies set forth in the original notice or in the modification thereof are not cured within said thirty (30) days or any extension thereof, the County, in order to preserve the taxable value of the property within the Common Interest Community and to prevent the Common Elements and streets and roads from becoming public nuisances and public liabilities, may undertake to maintain the same for a period of one(1)year. Before the expiration of said year, the County shall, upon its initiative or upon the written request of the Association, call a public hearing upon notice to the Association and to the Owners of the Lots, at which hearing the e, Association shall show cause why such maintenance by the County shall not, at the election of the County, continue for a succeeding year. If the County shall determine that the Association is ready and able to maintain the Common Elements, streets, and roads within the Common Interest Community in a reasonable manner, the County shall cease to maintain such Common Elements, streets, and roads at the end of said year. If the County shall determine that the Association is not ready and able to maintain the Common Elements, streets, and roads in a reasonable manner, the County may, in its discretion, continue to maintain the Common Elements, streets, and roads during the next succeeding year, subject to a similar hearing and determination each year thereafter. The cost of any maintenance performed by the County shall be paid by the Owners of Lots within the Common Interest Community, and any unpaid assessments shall become a tax lien upon the Lot or Lots of the delinquent Owner or Owners. The County shall file a notice of such lien in the office of the Clerk and Recorder and shall certify such unpaid assessments to the County Treasurer for collection, enforcement, and remittance in the manner provided by law for the collection, enforcement,and remittance of general property taxes. T 21 ARTICLE X. ARCHITECTURAL CONTROL, Section 1: Architectural Control Committer, (a) Membership. The Architectural Control Committee shall consist of three (3) persons. The members of the Architectural Control Committee shall be appointed by the Declarant. At such time as the Declarant is no longer the Owner of one or more Lots within the Common Interest Community (as may be expanded by the Declarant pursuant to the teens of Article V hereinabove), then the members of the Architectural Control Committee shall be appointed by the Executive Board from among the Owners. (b) Purpose. The Architectural Control Committee is established for the purpose of maintaining within the Common Interest Community a consistent and harmonious general character of development and a style and nature of building design and visual appeal consistent with the natural beauty and features of the Common Interest Community. (c) Tenn. Each member of the Architectural Control Committee shall serve at the pleasure of the person or entity appointing such member. In the event of the death or resignation of any member of the Architectural Control Committee, the person or entity that appointed such member shall appoint a successor. (d) Decisions. All decisions of the Architectural Control Committee shall be by a majority vote of those members of the Committee present at a meeting at which a quorum is present. A majority of the members of the Architectural Control Committee shall constitute a quorum. Decisions concerning the approval or denial of an Owner's application for architectural or landscaping changes shall be made in accordance with standards and procedures set forth in this Declaration or in duly adopted Rules and Regulations of the Association and shall not be made arbitrarily or capriciously. (e) Compensation. The members of the Architectural Control Committee shall not be entitled to any compensation for services performed pursuant to this Declaration but shall be entitled to reimbursement by the Association for all costs and expenses incurred in performing their duties pursuant to this Declaration. (f) Delegation. The Architectural Control Committee shall have the power to delegate the responsibility for reviewing any application submitted to the Architectural Control Committee to a professional architect, landscape architect, engineer, or other professional person who is qualified to pass on the issues raised in the application. The Architectural Control Committee shall also have the power to require that the applicant pay the fees reasonably incurred by the Architectural Control Committee in retaining such professional to review the application submitted. (g) Nnnliahility. No member of the Architectural Control Committee shall be liable to the Association or to any Owner or prospective Owner for any loss, damage, or injury arising out of or in connection with the performance of the duties of the Architectural Control 22 • Committee under this Declaration, unless such action constitutes willful misconduct or bad faith on the part of the Architectural Control Committee. Review and consideration of any application submitted to the Architectural Control Committee shall be pursuant to this Declaration, and any approval granted shall not be considered approval of the structural safety or integrity of the improvements to be constructed or conformance of such improvements with building codes,zoning resolutions, subdivision regulations, or other governmental rules and regulations applicable to the Common Interest Community. Section 2: Control. No construction, alteration, addition, modification, exterior decoration, exterior redecoration,or reconstruction of any building, fence,wall, structure, or other improvement within the Common Interest Community shall be commenced or maintained until the plans and specifications thereof shall have been approved by the Architectural Control Committee. Section 3: Submission. Each application for approval shall include the following: (a) Two (2) complete copies of a site plan of the Lot. The site plan shall show the following information with a scale of one (1)inch on the plans for each forty(40) feet of actual distance on the Lot: (1) A building footprint with dimensions from front, rear, and side boundary lines of the Lot. (2) Driveways located or to be constructed on the Lot. (3) Any existing structures on the Lot. (4) Location of improvements with respect to utility lines and facilities. (b) Two (2) complete sets of construction plans and specifications. Said plans and specifications shall include the following minimum information: (1) Floor plans of all levels of any Residence, which plans shall contain sufficient detail to describe the elements of the floor plan design. (2) Total square footage for each level of any Residence. (3) Building elevations on all sides of the proposed structure containing sufficient detail to determine roof form and material, window locations, siding material, and door placements. (4) A written description of the materials to be used in the roof and exterior walls of the structure. (5) The size, type, and material to be incorporated in any fencing to be located on the Lot. 23 (6) The color of any paint, stain, or stucco to be applied to the improvements and the color of the roofing material. Section 4: Appeal. So long as the Declarant has the right to appoint the members of the Architectural Control Committee, decisions of the Committee may be appealed to the Declarant. The decision of the Declarant shall be final. Decisions made on the Architectural Control Committee appointed by the Board may be appealed to the Board pursuant to the following procedure: If the applicant or any Owner (appellant) is dissatisfied with the decision of the Architectural Control Committee to approve or deny any application submitted to it, the Owner may appeal the decision to the Board by giving written notice of appeal to the Board, the Architectural Control Committee and the applicant (if other than the appellant). The notice shall be given within ten (10) days after the decision of the Architectural Control Committee. The Board shall hear and consider the appeal at its next regular meeting following the date notice of appeal is given. The appellant, the applicant (if other than the appellant), and the Architectural Control Committee may have a representative present at the hearing, and shall have the right to present such evidence as may be relevant to the appeal. The Board shall give notice of its decision within ten (10) days after the conclusion of the hearing. If the Architectural Control Committee, the applicant or the appellant is dissatisfied with the decision of the Board, such person or entity may appeal the decision to the Owners. Notice of appeal to the Owners shall be given within ten (10) days of the Board's decision to the Board, the applicant, the appellant (if other than the applicant) and the Architectural Control Committee. The Board shall schedule and give notice of a special meeting of the Owners to consider the appeal, which meeting shall be held not less than ten (10) nor more than sixty(60) days following the date that notice of appeal is given to the Board. If a decision of the Architectural Control Committee is appealed to the Board, the decision shall be upheld and affirmed unless a majority of all directors then in office(regardless of the number of directors actually present at the meeting)vote to reverse and overturn the decision of the Architectural Control Committee. If the decision of the Board is appealed to the Owners, the decision of the Board shall be upheld and affirmed unless a majority of all Owners (regardless of the number of Owners actually present at the special meeting called for the purpose of considering the appeal) vote to reverse and overturn the Board's decision. Section 5: Rules and Guidelines. The Architectural Control Committee may issue rules setting forth procedures for the submission of plans for approval and may also issue guidelines setting forth the criteria that the Architectural Control Committee will use in considering plans submitted to it for approval. The Rules and Guidelines may be amended from time to time by the Architectural Control Committee. Section 6: Review of Plans and Specifications. The Architectural Control Committee shall consider and act upon any and all requests submitted for its approval. The Architectural Control Committee shall approve plans and specifications submitted to it only if it determines that the 24 construction, alteration, or additions contemplated thereby, and in the location as indicated, will comply with this Declaration, will serve to preserve and enhance the values of Lots within the Common Interest Community, and will maintain a harmonious relationship among structures, vegetation, topography, and the overall development of the Common Interest Community. The Architectural Control Committee shall consider the quality of workmanship, type of materials, and harmony of exterior design with other Residences located within the Common Interest Community. Should the Architectural Control Committee fail to approve or disapprove the plans and specifications submitted to it by an Owner of a Lot within thirty (30) days after complete submission of all required documents, then such approval shall not be required; provided,however, that no building or other structure shall be erected or allowed to remain on any Lot which violates any of the covenants or restrictions contained in this Declaration. The issuance of a building permit or license for the construction of improvements inconsistent with this Declaration shall not prevent the Association or any Owner from enforcing the provisions of this Declaration. Approval by the Architectural Control Committee shall be in writing or by endorsement on the plans. Section 7: No Waiver of Future Approval. The approval by the Architectural Control Committee of any proposal or plans and specifications for any work to be done on a Lot shall not be deemed to constitute a waiver of any right to withhold approval or consent to any similar proposals, plans, specifications, drawings, or other matter subsequently or additionally submitted for approval by the same Owner or by another Owner. Section 8: Land Use and Rnilding Type, No building or other structure shall be erected, altered, placed, or permitted to remain on any Lot other than one (1) Single Family, site-built Dwelling per Lot, with attached garage for three (3) automobiles; outbuildings as hereinafter described; and such other structures as may be approved by the Architectural Control Committee. Section 9: Residence Si7e. No Residence shall be erected, altered, or permitted to remain on any Lot of the Common Interest Community unless the ground floor area thereof, exclusive of basements, open porches, and garages, is not less than two thousand two hundred (2,200) square feet for a single-story Residence and a total of two thousand five hundred (2,500) square feet for a multi-level Residence. The square footage of basements, walk-outs, and garden levels shall not be included in determining the square footage of a multi-level Residence. For purposes of this provision, the terms "basement," "walk-out," and "garden level" shall mean any level, a portion of which is constructed below the ground elevation. Section 10: Attached Gnragps. Each Residence shall include an attached, three-car garage. "Three-car garage" shall mean that three (3) motor vehicles may be parked side-by-side in the garage. The garage shall have three (3) standard-size, single-car garage doors or one (1) standard- size, single-car garage door and one (1) standard-size, double-car garage door. Tandem garages in which motor vehicles are parked one behind another shall not be deemed to satisfy the requirement of a three-car garage even though the tandem garage may be capable of accommodating three motor vehicles. Larger garages shall be pu.nitted if approved by the Architectural Control Committee. Section 11: Detached Garages/fh,thuildings. If an Owner desires an additional detached garage, one detached garage or outbuilding may be permitted if approved by the Architectural Control Committee. A detached garage or outbuilding must match the Residence in style, color, 25 and design and shall not exceed one thousand six hundred (1,600) square feet in size. The Architectural Control Committee will consider location impact on other Lots and obstruction of view corridors in reviewing plans for a detached garage. Section 12: Roof. Roof material shall be file; wood fiber; cement shingles; dimensional asphalt singles having a minimum forty (40) year warranty; or other shingles as approved by the Architectural Control Committee. Metal roofs are not permitted. Section 13: Siding. All exteriors shall be brick, masonry, stucco, wood, or top-grade synthetic siding. Brick or other masonry, if used, shall wrap around the front corners of the Residence a minimum of four (4) feet. Synthetic siding may only be installed with adequate backing and in strict conformance to the manufacturer's recommendations and specifications. No log homes shall be permitted. Section 14: Color. All Residences and other structures constructed on any Lot shall be white or earthtone in color as approved by the Architectural Control Committee. Section 15: Building Height. No Residence or other structure constructed upon any Lot shall exceed forty(40) feet in height from the top of the main-floor foundation of such Residence or structure to the highest point on the Residence or structure. The Architectural Control Committee may grant relief from the provisions of this section for good cause shown. Section 16: Onthuildin&s. Except as otherwise permitted in this Declaration, outbuildings, storage sheds, above-ground swimming pools and other buildings, structures and improvements are prohibited. Section 17: Exterior T ighting. Any exterior lighting shall be installed so as to minimize any significant adverse impact on adjacent Lots. Section 18: Driveways. All driveways shall be constructed of asphalt or concrete pavement or other hard surfacing approved by the Architectural Control Committee. Recycled asphalt shall not be permitted. The Owner of each Lot shall install a culvert at the entrance to the Owner's driveway. Driveway culverts shall be double-walled black corrugated polyethylene pipe with flared end sections of a quality equal to or better than "N-12" pipe manufactured by Advanced Drainage Systems. Section 19: Building T oration. Except as otherwise provided in this section, no Residence or other structure shall be constructed or placed upon any Lot nearer to the front Lot line, side Lot line, or rear Lot line than the following minimum setback requirements: (a) Front I ot I Me: No building shall be located on any Lot nearer than fifty (50) feet from the front Lot line. (b) Side T nt Line: No buildings shall be located on any Lot nearer than twenty- five(25) feet to the side Lot line. 26 • (c) Rear I at T ine: No building shall be located on any Lot nearer than twenty- five(25) feet to the rear Lot line. For purposes of this section, building corners, eaves, steps, open porches (roofed or not roofed), or other components of a building shall be considered as part of the building. The Architectural Control Committee or the Executive Board of the Association reserves the right to designate which streets are front streets and which property lines are front Lot lines, side Lot lines, and rear Lot lines. Any"reverse corner Lots" (i.e.,those Lots having streets on two [2] sides of the Lot) shall be required to satisfy the front Lot line setback requirements set forth above on both sides of the Lot abutting such streets regardless of which direction the building thereon faces. The Architectural Control Committee may grant relief from the provisions of this Section for good cause shown. Notwithstanding the foregoing setback requirements, no building or other structure, except fences, shall be constructed, installed, or permitted to remain within any easement. Section 20: Sight Distance at Intersections. No fence,wall,hedge, or shrub planting which obstructs sight lines at elevations less than six (6) feet above the street shall be placed or permitted to remain on any corner Lot unless it is placed at least seventy-five(75) feet from the centerline of both streets. No tree or obstruction shall be permitted to remain on a corner Lot unless the foliage line is maintained to sufficient height to prevent obstruction of sight lines. Section 21: Constnictinn. Construction of a Residence or other structure approved by the Architectural Control Committee shall commence within nine (9) months after approval of the plans and specifications, and the Owner shall thereafter proceed diligently with such construction. The exterior of any such structure shall be completed within six (6) months of the date of commencement of construction. The Architectural Control Committee may grant an extension of the foregoing time periods for good cause and when such extension is requested by the Owner. Each Owner shall provide portable toilet facilities and trash dumpster during construction of the Residence on such Owner's Lot. Section 22: Fences. Any Fence to be constructed on a Lot must be approved by the Architectural Control Committee. If the Owner of a Lot desires: (a) to fence any portion of the perimeter boundary of his or her Lot; or (b) to fence any portion of his or her Lot within one hundred (100) feet of the front property line; or (c) fence any portion of his or her Lot within one hundred (100) feet of a side property line where it abuts an internal Street, the fence shall be a white, three rail vinyl Fence the same as that constructed by the Declarant along the boundary of the Common Interest Community. An Owner may install wire mesh along the inside of a three rail vinyl Fence; except along the street or any Fence constructed within one hundred (100) feet of a street. An Owner may construct a privacy fence around a patio, deck, garden, or other enclosed area, provided that the enclosed area does not exceed three thousand (3,000) square feet. All privacy fences shall be constructed of wood, masonry, or other materials approved by the Architectural Control Committee. No privacy fence may be constructed within twenty-five (25) feet of the side Lot line. No privacy fence of any kind may be constructed nearer the front Lot line than the midpoint of the side of the Residence constructed on the Lot. An Owner may construct a kennel and dog run on the Lot,which dog run may be constructed of chain link fence, provided that the dog run is partially screened from view from other Lots or adjacent streets by a privacy fence or �..� masked by landscaping approved by the Architectural Control Committee. 27 Section 23: Landscaping. Each Lot shall be fully landscaped within twelve (12) months after the issuance of a certificate of occupancy for a Residence on the Lot. Native grasses shall be a permissible form of landscaping. Prior to construction and installation of landscaping, the Owner of each Lot shall swath and bale or mow the Lot as necessary. Upon installation of the landscaping, the Owner shall properly maintain the landscaping, which shall include replacing dead and diseased plans, trees and shrubs. Notwithstanding the foregoing, neither the Architectural Control Committee nor the Board shall have the power to take any enforcement action against any Owner that allows his or her existing landscaping to die: (a) during a period of water use restrictions declared by the jurisdiction in which the Common Interest Community is located, in which case the Owner shall comply with any watering restrictions imposed by the water provider for the Common Interest Community; (b) any enforcement action taken by the Architectural Control Conunittee or Board shall be consistent within the Common Int x st Community and shall not be arbitrary or capricious; and (c) once the drought emergency is lifted, the Owner shall be allowed a reasonable and practical opportunity, as defined by the Board,with consideration of applicable local growing seasons or practical limitations, to reseed and revive turf grass before being required to replace it with new sod. Section 24: Signs. No sign of any character shall be displayed or placed upon any Lot,with the following exceptions: (a) one (1) sign per Lot of not more than six (6) square feet in total area advertising a Lot for sale shall be permitted on any Lot; (b) the Declarant or the Association shall have the right to place a permanent sign at each entrance to the Common Interest Community identifying the development; (c) until such time as the Declarant is no longer the Owner of a Lot, the Declarant or its agents shall have the right to place one or more signs on the Common Interest Community , without limitation of size, offering Lots within the Common Interest Community for sale; and(d) additional signs may be permitted if approved by the Architectural Control Committee. Section 25: Clotheslines. Only retractable clotheslines maybe installed on a Lot. Section 26: Antennas, No antenna or other device for the transmission or reception of television or radio signals or any other form of electromagnetic radiation, including, by example and not limitation, satellite dishes, shall be erected, used, or maintained outdoors on any Lot, whether attached to a building or structure or otherwise, unless approved by the Architectural Control Committee. Antennae exceeding the height of the Residence shall not be permitted. Section 27: Storage Tanks and Containers. No elevated tanks of any kind shall be erected, placed, or permitted to remain on any Lot unless such tanks are screened from view from other Lots and from the streets by fencing or landscaping in a manner approved by the Architectural Control Committee. All air-conditioning, refrigeration, cooling, heating, or other mechanical equipment or system which is located outside of a Residence or other structure on a Lot shall be screened from 28 view from other Lots and from the streets by fencing or landscaping approved by the Architectural Control Committee. Window air-conditioning units and swamp coolers shall not be permitted. Section 28: Damage or nest-motion of Impmvements. In the event any Residence or other structure constructed on a Lot is damaged, either in whole or in part, by fire or other casualty, said Residence or other structure shall be promptly rebuilt or remodeled to comply with this Declaration; or in the alternative, if the Residence or other structure is not to be rebuilt, all remaining portions of the damaged structure, including the foundation and all debris, shall be promptly removed from the Lot, and the Lot shall be restored to its natural condition existing prior to the construction of the Residence or other structure. ARTICLE XI. JNSIIRANCF, Section 1. To Re Obtained by the Association. The Association shall obtain and maintain at all times, to the extent obtainable at reasonable cost, policies involving standard premium rates established by the Colorado Insurance Commissioner and written with companies licensed to do business in Colorado and having a Best's Insurance Report rating of A & XV or better covering the risks set forth below. The Association shall not obtain any policy where: (1) under the terms of the insurance company's charter, bylaws, or policy, contributions or assessments may be made against a Mortgagee or Mortgagee's designee; or (2) by the terms of the carrier's charter, bylaws or policy, loss payments are contingent upon action by the company's board of directors, policyholders, or members; or (3) the policy includes any limiting clauses (other than insurance conditions) which could prevent the Association from collecting insurance proceeds. The types of coverage to be obtained and risks to be covered are as follows: (a) liability Insurance. The Association shall maintain public liability and property damage insurance in such limits as the Board may from time to time determine but not in an amount less than One Million Dollars ($1,000,000) per injury, per Person, per occurrence, and umbrella liability limits of One Million Dollars ($1,000,000) per occurrence covering all claims for bodily injury or property damage. Coverage shall include, without limitation, liability for personal injuries, operation of automobiles on behalf of the Association, and activities in connection with the ownership, operation, maintenance, and other use of the Common Elements. Premiums for liability insurance shall be assessed as a General Common Expense. (b) Workers' Compensation Insurance. The Association shall maintain workers' compensation and employer's liability insurance and all other similar insurance with respect to employees of the Association in the amounts and in the forms now or hereafter required by law. Premiums for Worker's Compensation Insurance shall be assessed as a General Common Expense. (c) Officers' and Directors' Insurance. To the extent such insurance can be obtained at reasonable cost, the Association shall maintain blanket fidelity bonds for all officers, directors, and employees of the Association and all other Persons handling or responsible for funds of or administered by the Association. If the managing agent has the responsibility of handling or administering funds of the Association, the managing agent shall be required to maintain fidelity bond coverage for its officers, employees, and agents handling or responsible 29 for funds of or administered on behalf of the Association. Such fidelity bonds shall name the Association as an obligee and shall not be less than the estimated maximum amount of funds, including reserve funds, in the custody of the Association or the managing agent at any given time during the term of each bond. In no event shall the aggregate amount of such bonds be less than a sum equal to three (3) months' aggregate Common Expense assessments on all Lots plus reserve funds. Such bonds shall contain waivers by the issuers thereof of all defenses based upon the exclusion of Persons serving without compensation from the definition of employees or similar terms or expressions. The premiums on all bonds required hereunder, except those maintained by the managing agent, shall be paid by the Association as a General Common Expense. (d) Other insurance. The Association may obtain insurance against such other risks of a similar or dissimilar nature as shall be deemed appropriate. Section 2. Requirements of insurance. All policies of insurance, to the extent obtainable, shall contain waivers of subrogation and waivers of any defense based on invalidity arising from any acts of an Owner and shall provide that such policies may not be cancelled or modified without at least ten (10) days' prior written notice to the Association. Section 3. Notice to Mortgagees. In the event of any damage, destruction, loss or taking of the Common Elements in excess of Ten Thousand Dollars ($10,000), notice shall be given to all First Mortgagees within ten (10) days after such occurrence. Section 4. Claims. Owners may file claims against the Association's insurance policy to the same extent and with the same affect as if the Owner were an additional named insured. ARTICLE XII. USE RESTRICTIONS Section 1: Trash Collection. The Association, acting through its Executive Board, shall have the right to require that any trash collection within the Common Interest Community be performed by one company and that trash be collected from all Lots by such company on the same day of each week. The Executive Board shall select the trash company based on competitive bids. The cost of trash collection shall be paid by each Owner directly to the trash collection company, and the Association shall not have the duty to assess the cost of trash collection as a Common Expense. Nothing herein contained shall be construed to prohibit an Owner from personally disposing of trash from his Lot. This section shall not apply to a contractor during the construction of a Residence or other improvements on a Lot. The contractor may dispose of trash, rubbish, debris, and other construction materials from the Lot either personally or by contracting with a trash collection company. The trash collection company may remove trash, rubbish, debris, and other construction materials from the Lot during the construction of the Residence as often as the contractor deems appropriate. All dumpsters shall have lid tie-downs to protect them from animals. Section 2: Mineral Fxtrartinn. No mining or extraction of oil, gas, gravel, or other minerals shall be permitted on any Lot. r 30 Section 3: Resubdivision. No Lot maybe further subdivided. This provision shall not be construed to prohibit or prevent the dedication or conveyance of any portion of a Lot as an easement for public utilities. Section 4: Restrictions on Teasing No Lot Owner shall lease his or her Residence to any group of people other than a"single family" as defined in Article II hereinabove nor shall any lease be for a period of less than thirty(30) days. All such leases shall be in writing and shall contain a covenant by the tenant or tenants that their use and occupancy of the Residence pursuant to the terms of the lease are subject to the terms and conditions set forth in this Declaration and that such tenant will abide by the terms contained herein as well as all Rules and Regulations promulgated by the Association. Section 5: Household Pets. No animals shall be permitted within the Common Interest Community except dogs, cats, or other Household Pets, as the same is defined in Section 6 below, may be kept on a Lot, provided the same are not boarded, kept, bred, or maintained for any commercial purposes. No more than three (3) dogs and no more than a total of four(4) adult dogs and adult cats may be kept on any Lot (one dog and three cats; or two dogs and two cats; or three dogs and one cat; or four cats). Dogs and cats shall not be considered adults until they are six (6) months old. Household Pets shall be subject to all Rules and Regulations adopted by the Association and all governmental ordinances or laws applicable to the Common Interest Community. Dogs shall at all times be confined by fence, leash, or under voice command. Each Owner of a pet shall be responsible for the prompt cleanup and removal of such pet's excrement from his or her Lot. No dogs, cats or other Household Pets may be boarded, kept, bred, used, or maintained on any Lot for any commercial purpose. Section 6: T Tse of Common Flements. All use of the Common Elements shall be subject to and governed by the Rules and Regulations adopted by the Association. No damage or waste shall be committed to the Common Elements by Lot Owners, their families, tenants, guests, and invitees. Section 7: Or n,pancy of T nt. In addition to any other restrictions imposed upon Lot Owners by Weld County, Colorado, with regard to the completion of a Residence and notwith- standing the issuance of a temporary or permanent certificate of occupancy for the Residence by the appropriate governmental entity, no Residence shall be occupied until all buildings, fences, walls, structures, and other improvements as are set forth in the plans and specifications submitted to and approved by the Architectural Control Committee shall first be constructed and installed, including, but not limited to, the rough grading of the Lot and the installation of driveways and sidewalks thereon. Section 8: General Prohibition. No use shall be made of an Owner's Lot which will in any manner violate the statutes or rules and regulations of any Governmental Authority having jurisdiction over the use of said Owner's Lot. Section 9: Maintenance of Tots and Improvements. Owners of Lots shall keep or cause to be kept all buildings, fences, and other structures and all landscaping located on their Lot in good repair. Rubbish, refuse, garbage, and other solid, semi-solid, and liquid waste shall be kept within 31 sealed containers, shall not be allowed to accumulate on any Lot, and shall be disposed of in a sanitary manner. No Lot shall be used or maintained as a dumping ground for such materials. All containers shall be kept in a neat, clean, and sanitary condition and shall be stored inside a garage or other approved structure. No trash, litter, or junk shall be permitted to remain exposed upon any Lot and visible from adjacent streets or other Lots. Burning of trash on any Lot shall be prohibited. No lumber or other building materials shall be stored or permitted to remain on any Lot unless screened from view from other Lots and from the streets, except for reasonable storage during construction. Section 10: Nuisance. Nothing shall be done or permitted on any Lot which is or may become a nuisance. No obnoxious or offensive activities or commercial businesses or trades shall be conducted on any Lot, except home occupations as defined and permitted by the applicable zoning resolution of the Governmental Authority having jurisdiction over the Common Interest Community. In addition to any restrictions imposed upon Lot Owners by a Governmental Authority with regard to home occupations or businesses, no Owner shall conduct any business activity or home occupation upon his or her Lot which shall involve the sale or storage of merchandise upon the Lot, the delivery of merchandise or materials to the Lot by commercial vehicles more often than once a month, or the use of more than fifteen percent (15%) of the space within a Residence for such business or home occupation. Notwithstanding the foregoing, the Architectural Control Committee shall have the right to authorize business activities or home occupations upon any Lot that do not meet such requirements, provided that it shall first determine that such home occupation or business shall not unreasonably interfere with the use and enjoyment of the Common Interest Community by other Lot Owners and provided further that the Owner conducting such business activities or home occupation agrees to such reasonable Rules and Regulations as may be imposed upon him or her by the Architectural Control Committee. Section 11: Temporary Strictures. No structure of a temporary character, including, by example and not limitation, trailers, converted trailers, shacks, basements, tents, garages, or accessory buildings, shall be used on any Lot as a Residence, temporarily or permanently. Section 12: Restriction of I Jse. No motor-driven, engine-powered, or other mechanically propelled vehicle, including, by example and not limitation, motorcycles, all-terrain vehicles, and snowmobiles,may be used or operated within or upon any Lot. Section 13: Storage of Vehicles. Boats, campers, snowmobiles, all-terrain vehicles, trailers,machines, tractors, semi-tractors,tractor trailers, trucks(except standard pickup trucks), and inoperative automobiles shall not be stored, parked, or permitted to remain on any street, Lot, or Common Element, except within fully-enclosed garages or within fully-screened, fenced areas approved by the Architectural Control Committee. For purposes of this provision, any disassem- bled or partially disassembled car or other vehicle or any car or other vehicle which has not been moved under its own power for more than one (1) week shall be considered an inoperative automobile subject to the terms of this Section. Section 14: Discharge of Weapons. No person shall discharge, fire, or shoot any gun, pistol, crossbow, bow and arrow, slingshot, or other firearm or weapon whatsoever, including BB guns and pellet guns, within the Common Interest Community. Notwithstanding the foregoing, the 32 r , discharge of firearms or weapons by any member of any law enforcement agency in the course of ,-. such member's official duty shall not be deemed a violation of this provision. Section 15: Disturbing the Peace, No person shall disturb, tend to disturb, or aid in disturbing the peace of others by violent, tumultuous, offensive, disorderly, or obstreperous conduct, and no Owner shall knowingly permit such conduct upon any Lot owned by such Owner. Section 16: Limitations. Notwithstanding any provision in this Declaration, the Bylaws, or the Rules and Regulations of the Association to the contrary, the Association shall not prohibit any of the following: (a) The display of the American flag by an Owner on that Owner's Lot, in a window of the Owner's Dwelling, or on the exterior of the Owner's Dwelling if the American flag is displayed in a manner consistent with the Federal Flag Code (4 USC § 4-10). The Association may adopt reasonable rules regarding the placement and manner of display of the American flag. The Association rules may regulate the location and size of flags and flag poles, but shall not prohibit the installation of a flag or flag pole. The height of a flag pole shall not exceed the height of the Dwelling on the Lot. (b) The display by an Owner of a service flag bearing a star denoting the service of the Owner or a member of the Owner's family as defined in Article II, Section 31 of this Declaration in the active or reserve military service of the United States during a time of war or armed conflict, on the inside of a window or door of the Owner's Dwelling. The Association may adopt reasonable rules regarding the size and manner of display of service flags; except that the maximum dimensions allowed shall be not less than 9 inches by 16 inches. (c) The display of a political sign by an Owner on that Owner's Lot or in a window of that Owner's Dwelling; except that the Association may prohibit the display of political signs earlier than 45 days before the day of an election and later than 7 days after an election day. The Association may regulate the size and number of political signs that may be placed on an Owner's Lot if the Association regulation is no more restrictive than any law or ordinance of any Governmental Authority having jurisdiction over the Property that regulates the size and number of political signs on residential property. If the Governmental Authority that has jurisdiction over the Common Interest Community does not regulate the size and number of political signs on residential property, the Association shall permit at least one political sign per political office or ballot issue that is contest in a pending election, with the maximum dimensions of 36 inches by 48 inches, on an Owner's Lot. "Political sign" means a sign that carries a message intended to influence the outcome and election, including supporting or opposing the election of a candidate, the recall of a public official, or the passage of a ballot issue. (d) The parking of a motor vehicle by an Owner on a driveway or guest parking area in the Common Interest Community if the vehicle is required to be available at designated periods at the Owner's Dwelling as a condition of the Owner's employment and all of the following criteria are met: r` 33 (i) the vehicle has a gross vehicle weight rating of 10,000 pounds or less; (ii) the Owner is a bona fide member of a volunteer fire department or is employed by an emergency service provider as defined in C.R.S. § 29-11-101(1.6); (iii) the vehicle bears an official emblem or other visible designation of the emergency service provider; and (iv) parking of the vehicle can be accomplished without obstructing emergency access or interfering with the reasonable needs of other Owners to use the Streets within the Common Interest Community. (e) The removal by an Owner of trees, shrubs, or other vegetation to create defensible space around a dwelling for fire mitigation purposes, so long as such removal complies with a written defensible space plan created for the Lot by the Colorado State Forest Service, an individual or company certified by a Governmental Authority to create such a plan, or the fire chief; fire marshall, or fire protection district having jurisdiction over the Common Interest Community, and is no more extensive than necessary to comply with such plan. The plan shall be registered with the Association before the commencement of work. The Association may require changes to the plan if the Association obtains the consent of the Person, official or agency that originally created the plan. The work shall comply with applicable Association standards regarding slash removal, stump height,revegetation, and contractor regulations. ,^ ARTICLE XIII. DRAINAGE, Section 1: Acknowledgement. The soils within the state of Colorado consist of both expansive soils and low-density soils which will adversely affect the integrity of the Residence if the Residence and the Lot on which it is constructed are not properly maintained. Expansive soils contain clay minerals which have the characteristic of changing volume with the addition or subtraction of moisture, thereby resulting in swelling and/or shrinking soils. The addition of moisture to low-density soils causes a realignment of soil grains, thereby resulting in consolidation and/or collapse of the soils. Section 2: Moisture. Each Owner of a Lot shall use his or her best efforts to assure that the moisture content of those soils supporting the foundation and the concrete slabs forming a part of the Residence constructed thereon remain stable and shall not introduce excessive water into the soils surrounding the Residence. Section 3: Water Flow. The Owner of a Lot shall not impede or hinder in any way the water falling on the Lot from reaching the drainage courses established for the Lot and the Common Interest Community. Section 4: Action by Owner. To accomplish the foregoing, each Owner of a Lot covenants and agrees, among other things: 34 (a) Not to install improvements, including, but not limited to, landscaping, items related to landscaping, walls, walks, driveways, parking pads, patios, fences, additions to the Residence, outbuildings, or any other item or improvement which will change the grading of the Lot. The installation of such improvements is acceptable so long as the manner of installation is consistent with, and does not change,the grading and drainage patterns of the Lot. (b) To fill with additional soil any back-filled areas adjacent to the foundation of the Residence and in or about the utility trenches on the Lot in which settling occurs to the extent necessary from time to time to maintain the grading and drainage patterns of the Lot. (c) Not to water the lawn or other landscaping on the Lot excessively. (d) Not to plant flower beds (especially annuals) and vegetable gardens adjacent to or within three(3)feet of the foundation and slabs of the Residence. (e) If evergreen shrubbery and grass is used within five (5) feet of the foundation walls, to water the shrubbery and grass by controlled hand watering and to avoid excessive watering. (f) To minimize or eliminate the installation of piping and heads for sprinkler systems within five(5) feet of foundation walls and slabs. (g) To install any gravel beds in a manner which will assure that water will not pond in the gravel areas, whether due to nonperforated edging or due to installation of the base of the gravel bed at a lever lower than the adjacent lawn. (h) To install a moisture bather(such as polyethylene)under any gravel beds. (i) To maintain the gutters and downspouts which discharge water into extensions or splash blocks by assuring that (i) the gutters and downspouts remain free and clear of all obstructions and debris; (ii) the water that flows from the extension or the splash block is allowed to flow rapidly away from the foundation and/or slabs; and (iii) the splash blocks are maintained under sill cocks. (j) To recaulk construction joints opening up between portions of the exterior slabs and garage slabs in order to thereby seal out moisture. Section 5: Disclaimer. The Declarant shall not be liable for any loss or damage to the Residence, any outbuilding, concrete slab, driveway, sidewalk, or other improvement on any Lot caused by,resulting from,or in any way connected with soil conditions on any Lot. 35 ARTICLE XIV. ,SIIRROITNDING AGRICITLTURAI,IISES AND WILDLIFE es` Section 1: Right to Farm. The rural land surrounding the Waterford Hill is intensively used for agriculture, and Owners of Lots within the Common Interest Community must recognize that there are agricultural practices ongoing and which will continue in the agricultural land surrounding the Common Interest Community. Agricultural users of the land should not be expected to change their long-established agricultural practices in order to accommodate the intrusions of urban users into their area. Well-run agricultural activities will generate off-site impacts, including noise from tractors and equipment; dust from animal pens, field work, harvest, and dirt roads; odor from animal confinement, silage, and manure; smoke from ditch burning; flies and mosquitoes; the use of pesticides and fertilizers in the fields, including the use of aerial spraying. Ditches and reservoirs cannot simply be moved "out of the way" of residential development without threatening the efficient delivery of irrigation to fields which is essential to farm production. The rural nature of the Common Interest Community is such that law enforcement response time will be slower than in an urbanized area. Fire protection is provided by volunteers who must leave their jobs and families to respond to emergencies. Children are exposed to different hazards in rural areas than in urban settings. Farm equipment, oil field equipment,ponds, irrigation ditches, electrical pumps, sprinkler systems, high-speed traffic, sand burs, puncture vines, territorial farm dogs, and livestock present real threats to children. Controlling children's activities is important, not only for their safety but also for the protection of the surrounding agricultural interests. Section 2: Wildlife. The Common Interest Community is located in a rural setting where wildlife such as raccoons, skunks, coyotes, deer, and mosquitoes abound and can at times be a nuisance. Deer and antelope may eat grass or hay in the field or which has been stored. The Colorado Division of Wildlife will not be responsible for compensation for loss of grass, hay, or other crops due to wildlife. Geese are attracted to bluegrass, and Owners should consider limiting the amount of bluegrass planted. ARTICLE XV. FIRE PROTECTION Section 1: Districts. The Common Interest Community is located within the North Weld County Water District ("the Water District") and the Ault Fire Protection District ("the Fire District"). The Fire District has its own policies, procedures and requirements concerning fire protection, which are in addition to Weld County and/or the Water District. The Water District will permit the Developer to install fire protection infrastructure including, but not limited to, water lines and fire hydrants ("the Fire Facilities"). Upon fmal approval of the plans and designs for the Fire Facilities by the Water District, the Fire District and Weld County, authorize the construction and installation of the Fire Facilities by the Declarant. Upon approval of the installation of the Fire Facilities by the Water District, the Fire District and Weld County, the Water District will assume responsibility and the Association shall reimburse the Water District for all Costs and Expenses incurred in the maintenance and repair of the Fire Facilities. Section 2: tndemnifipation of Water District. The Declarant, for itself and each Owner of a Lot hereby expressly agrees to and shall release the Water District from any and all liability or claims of any type that could be made against the Water District including, but not limited to, 36 claims for inadequate water pressure, line size, lack of water, improper maintenance, inadequate volume or velocity of flow, or any other item related to the Fire Facilities. ARTICLE XVI. IRRIGATION DITCH An irrigation ditch owned by the North Poudre Irrigation Company ("the Irrigation Company") is located immediately adjacent to and to the north of the Common Interest Community ("the Irrigation Ditch"). The Owners acknowledge that the Irrigation Company may periodically perform maintenance of the Irrigation Ditch, which may include the spraying of chemicals to control weeds or the burning of the ditch. The Fence will be constructed along the north boundary of the property. The Declarant, for itself and all subsequent Owners of Lots within the Real Estate hereby expressly agrees to and shall release the litigation Company from any and all claims which the Developer,the Association, and/or any Lot Owner may have against the Irrigation Company for damage to the Fence including, but not limited to, the burning of the Fence as a result of maintenance activities performed by the Irrigation Company on the Irrigation Ditch, and the adjacent right-of-way. The Declarant recommends that each Owner contact the Irrigation Company to discuss in greater detail the relationship that exists between the Irrigation Company and the Owners. ARTICLE XVII. MORTGAGEE PROTECTION Section 1: Introduction. This Article establishes certain standards and covenants which are for the benefit of the holders, insurers, and guarantors of certain Security Interests. This Article is supplemental to, and not in substitution for, any other provisions of the Declaration, but in the case of conflict,this Article shall control. Section 2: Notice of Actions. The Association shall give prompt written notice to each Mortgagee and Insurer of(and each Lot Owner hereby consents to and authorizes such notice): (a) Any condemnation loss or any casualty loss which affects a material portion of the Common Interest Community or any Lot in which there is a First Security Interest held, insured, or guaranteed by such Mortgagee or Insurer, as applicable. (b) Any delinquency in the payment of Common Expense assessments owed by a Lot Owner whose Lot is subject to a First Security Interest held, insured, or guaranteed by such Mortgagee or Insurer, as applicable,which remains uncured for a period of sixty(60)days. (c) Any lapse, cancellation, or material modification of any insurance policy or fidelity bond maintained by the Association. (d) Any proposed action which would require the consent of a specified percentage of Mortgagees as specified in Section 4 of this Article. (e) Any judgment rendered against the Association. r 37 Section 3: Consent and Notice Required. (a) Document Changes, Notwithstanding any requirement permitted by this Declaration or the Act, no amendment of any provision of this Declaration pertaining to the matters hereinafter listed by the Association or Lot Owners shall be effective without notice to all Mortgagees and Insurers, and the vote of at least sixty-seven percent (67%) of the Lot Owners (or any greater Lot Owner vote required in this Declaration or the Act) and until approved by at least fifty-one percent (51%) of the Mortgagees (or any greater Mortgagee approval required by this Declaration). The foregoing approval requirements do not apply to amendments effected by the exercise of any Special Declarant Rights, Additional Reserved Rights, or Development Right set forth in Articles V and VI of this Declaration: (1) Voting rights. (2) Assessments, assessment liens,or priority of assessment liens. (3) Reserves for maintenance, repair, and replacement of Common Elements. (4) Responsibility for maintenance and repairs. (5) Redefinitions of boundaries of Lots, except that when boundaries of only adjoining Lots are involved, then only those Lot Owners and the Mortgagees holding Security Interests in such Lot or Lots must approve such action. (6) Convertibility of Lots into Common Elements or Common Elements into Lots. (7) Expansion or contraction of the Common Interest Community or the addition, annexation, or withdrawal of property to or from the Common Interest Community, except expansion or contraction by exercise of Development Rights pursuant to Article VI of this Declaration. (8) Insurance or fidelity bonds. (9) Ieasing of Lots. (10) Imposition of any restrictions on a Lot Owner's right to sell or transfer his Lot. (11) A decision by the Association to establish self-management when professional management had been required previously by any Mortgagee. (12) A decision by the Association not to restore or repair the Common Elements after a hazard damage or partial condemnation. 38 (13) Termination of the Common Interest Community after occurrence of substantial destruction or condemnation of the Common Elements. es- (14) Any provision that expressly benefits mortgage holders, insurers, or guarantors. (b) Actions. Notwithstanding any lower requirement permitted by this Declaration or the Act, the Association may not take any of the following actions, other than rights reserved to the Declarant as Special Declarant Rights, Additional Reserved Rights,or Development Rights set forth in Articles V and VI of this Declaration, without the notice to all Mortgagees and Insurers as required by Section 2 above and approval of at least fifty-one percent (51%) (or the indicated percentage)of the Mortgagees: (1) Convey or encumber the Common Elements or any portion thereof without approval by eighty percent(80%)of the Mortgagees. (The granting of easements for public utilities or for other public purposes consistent with the intended use of the Common Elements by the Common Interest Community will not be deemed a transfer within the meaning of this clause.) (2) The termination of the Common Interest Community for reasons other than substantial destruction or condemnation of the Common Elements without approval by sixty-seven percent(67%) of the votes of Mortgagees. (3) The granting of any permits, easements, leases, licenses, or concessions through or over the Common Elements (excluding,however, any utility, road, or other easements serving or necessary to serve the Common Interest Community and excluding any leases, licenses,or concessions for no more than one [1] year). (4) The establishment of self-management when professional management had been required previously by a Mortgagee. (5) A decision by the Association not to restore or repair the Common Elements after a hazard damage or partial condemnation. (6) The merger of the Common Interest Community with any other common interest community. (7) The assignment of the future income of the Association,including its right to receive Common Expense assessments. (c) The Association may not change the period for collection of regularly budgeted Common Expense assessments to other than monthly without the consent of all Mortgagees. (d) The failure of a Mortgagee or Insurer to respond within thirty (30) days to any written request of the Association delivered by certified or registered mail, return receipt 39 requested, for approval of an addition or amendment to the Declaration wherever Mortgagee or Insurer approval is required shall constitute an implied approval of the addition or amendment. Section 4: Tncpertion of Rooks. The Association shall maintain current copies of the Declaration, Bylaws, Rules and Regulations, books and records, and financial statements. The Association shall permit any Mortgagee or Insurer to inspect the books and records of the Association during normal business hours. Section 5: Financial Statements. The Association shall provide any Mortgagee or Insurer who submits a written request a copy of an annual financial statement within ninety (90) days following the end of each fiscal year of the Association. Such financial statement shall be audited by an independent certified public a rountant if: (a) The Common Interest Community contains fifty(50)or more Lots, in which case the cost of the audit shall be a Common Expense; or (b) Any Mortgagee or Insurer requests it, in which case the Mortgage or Insurer shall bear the cost of the audit. Section 6: Enforcement. The provisions of this Article are for the benefit of Mortgagees and Insurers and their successors and may be enforced by any of them by any available means at law or in equity. Section 7: Attendance at Meetings. Any representative of a Mortgagee or Insurer may attend and address any meeting which an Owner may attend. Section 8: Appointment of Tnictee. In the event of damage, destruction, or condemnation of all or a portion of the Common Elements, any Mortgagee may require that such proceeds be payable to a trustee. Such trustee may be required to be a corporate trustee licensed by the State of Colorado. Proceeds will thereafter be distributed pursuant to the Act or pursuant to a condemnation award. Unless otherwise required, the members of the Executive Board, acting by majority vote through the president,may act as trustee. Section 9: Payment of Delinquent Fees. Mortgagees may, jointly or singly, pay taxes or other charges which are in default and which may or have become a charge against the Common Elements and may pay overdue premiums on hazard insurance policies or secure new hazard insurance on the lapse of such a policy for such Association property, and Mortgagees making such payments shall be owed immediate reimbursement therefor from the Association. ARTICLE XVIII. GENERA!, PROVISIONS Section 1: Fnforcement. Enforcement of this Declaration shall be by appropriate proceedings at law or in equity against those persons or entities violating or attempting to violate any covenant, condition, or restriction herein contained. Such judicial proceeding shall be for the purpose of removing a violation, restraining a future violation, for recovery of damages for any violation, or for such other and further relief as may be available. Such judicial proceedings may be 40 prosecuted by an Owner, by the Architectural Control Committee, or by the Association. In the event it becomes necessary to commence an action to enforce or defend this Declaration, the court shall award to the prevailing party in such litigation, in addition to such damages as the Court may deem just and proper, an amount equal to the costs and reasonable attorney's fees incurred by the prevailing party in connection with such litigation. The failure to enforce or to cause the abatement of any violation of this Declaration shall not preclude or prevent the enforcement thereof or of a further or continued violation, whether such violation shall be of the same or of a different provision of this Declaration. For any failure to comply with the provisions of any of the documents, the Association, any Owner, or any class of Owners adversely affected by the failure to comply may seek reimbursement for collection costs and reasonable attorneys' fees and costs incurred as a result of such failure to comply, without the necessity of commencing a legal proceeding. Notwithstanding any other provision of this Declaration, in connection with any claim in which an Owner is alleged to have violated a provision of the documents and in which the court finds that the Owner prevailed because the Owner did not commit the alleged violation: (a) the court shall award the Owner reasonable attorneys' fees and costs incurred in asserting or defending the claim; and (b) the court shall not award costs or attorneys' fees to the Association. In addition, the Association shall not allocate to the Owner's account any of the Association's costs or attorneys' fees incurred in asserting or defending the claim. Section 2: ()oration. This Declaration shall run with the land, shall be binding upon all persons owning Lots and any persons hereafter acquiring said Lots, and shall be in effect in perpetuity unless amended or terminated as provided in the Act. Section 3: Amendment. Except as otherwise provided in this Declaration, this Declaration may be altered or amended at any time by the affirmative vote of the then record Owners of sixty- seven percent (67%) or more of the Lots; provided, however, that provisions of this Declaration granting access to each Lot from a public street, road, or highway may not be amended without the consent of all Owners and all Mortgagees, and provisions of this Declaration pertaining to the maintenance of the Common Elements, including the Streets may not be amended without the consent of Weld County. To the extent this Declaration requires first Mortgagees to approve or consent to any amendment to this Declaration,the Association shall send a dated, written notice and a copy of any proposed amendment by certified mail to each first Mortgagee at its most recent address as shown on the recorded deed of trust or recorded assignment thereof. In addition, the Association shall cause the dated notice, together with information on how to obtain a copy of the proposed amendment, to be printed in full at least twice, on separate occasions at least one week apart, in a newspaper of general circulation in Weld County. A first Mortgagee that does not deliver to the Association a negative response within sixty (60) days after the date of the notice shall be deemed to have approved the proposed amendment. Section 4: Captions. The captions contained in the Documents are inserted only as a matter of convenience and for reference, and in no way define, limit, or describe the scope of the Documents or the intent of any provision thereof. 41 Section 5: Gender. The use of the masculine gender refers to the feminine gender, and vice versa, and the use of the singular includes the plural, and vice versa, whenever the context of the Documents so require. Section 6: Waiver. No provision contained in the Documents is abrogated or waived by reason of any failure to enforce the same, irrespective of the number of violations or breaches which may occur. Section 7: Invalidity. The invalidity of any provision of the Documents does not impair or affect in any manner the validity, enforceability, or effect of the remainder, and if a provision is declared invalid by judgment or court order, all of the other provisions of the Documents shall continue in full force and effect. Section 8: Conflict. The Documents are intended to comply with the requirements of the Act. If there is any conflict between the Documents and the provisions of the Act,the provisions of the Act shall control. In the event of any conflict between this Declaration and any other Document,this Declaration shall control. Section 9: Alternative Dispute Resolution. The Board may adopt protocols that make use of mediation or arbitration as alternatives to or preconditions upon the filing of any litigation between an Owner and the Association in situations that do not involve an eminent threat to the peace, health or safety of the Common Interest Community. Such protocols may specify situations in which disputes shall be resolved by binding arbitration under the Colorado Uniform Arbitration Act. Section 10: Sale of a Tat - Disclosure to Purchaser: Except in the case of a foreclosure sale, the seller of a Lot shall mail or deliver to the purchaser on or before the title deadline, copies of all of the following in the most current form available: (a) The closing agreement executed by the Declarant and the first purchaser of the Lot from the Declarant; (b) The Bylaws and Rules and Regulations of the Association; (c) This Declaration; (d) Minutes of the most recent annual Owners meeting and of any Executive Board meetings that occurred within the six (6)months immediately preceding the title deadline; (e) The Association's operating budget; (0 The Association's annual income and expenditures statement; (g) The Association's annual balance sheet; and 42 (h) A disclosure statement in bold face type that is clearly legible and in substantially the following form: THE BUYER HEREBY ACKNOWLEDGES THAT THE BUYER HAS RECEIVED COPIES OF THE DECLARATION, COVENANTS,BYLAWS,AND RULES AND REGULATIONS OF THE HOMEOWNERS' ASSOCIATION OF THE WATERFORD HILL COMMON INTEREST COMMUNITY, IN WHICH THE PROPERTY IS LOCATED, AND THE BUYER UNDERSTANDS THAT THESE DOCUMENTS CONSTITUTE AN AGREEMENT BETWEEN THE ASSOCIATION AND THE BUYER. BY SIGNING THIS STATEMENT, THE BUYER ACKNOWLEDGES THAT THE BUYER HAS READ AND UNDERSTANDS THE ASSOCIATION'S DECLARATION, COVENANTS, BYLAWS, AND RULES AND REGULATIONS. THE BUYER ALSO UNDERSTANDS THAT BY COMPLETING THIS PURCHASE, THE BUYER IS RESPONSIBLE FOR PAYING ASSESSMENTS TO THE ASSOCIATION. IF THE BUYER DOES NOT PAY THESE ASSESSMENTS, THE ASSOCIATION COULD PLACE A LIEN ON THE PROPERTY AND POSSIBLY SELL IT TO COLLECT THE DEBT. THE BUYER ALSO UNDERSTANDS THAT ANY CHANGE TO THE EXTERIOR OF THE PROPERTY MAY BE SUBJECT TO ARCHITECTURAL REVIEW AND APPROVAL. FAILURE TO SECURE SUCH REVIEW AND APPROVAL COULD BE VIOLATION OF THE DECLARATION AND COULD RESULT IN REMEDIAL ACTION BEING TAKEN BY THE ASSOCIATION. It shall be the responsibility of the Seller to obtain from the Purchaser a signed acknowledgment of receipt of the information and disclosure statement described above, whether such acknowledgment is incorporated in the contract of purchase and sale or otherwise, at the time of closing and to deliver such signed acknowledgment to the Association as soon as is practicable thereafter. The Association shall use its best efforts to accommodate a request by an Owner for documents that are within the Association's control and must be provided to the purchaser pursuant to this section. r 43 IN WITNESS WHEREOF, the Declarant has caused this Declaration to be executed as of the day and year first above written. SONJA CRAIGHEAD STATE OF COLORADO ) )ss: COUNTY OF LARIMER ) The foregoing instrument was acknowledged before me this day of 2006,by SONJA CRAIGHEAD. Witness my hand and official seal. My Commission Expires: Notary Public 44 , EXHIBIT"A" Legal Description of the Real F.state All of Waterford Hill PUD according to the recorded plat thereof, County of Weld, State of Colorado. r A-1 EXHIBIT"B" (Exceptions) 1. Taxes and Assessments not certified to the Treasurer's Office. 2. Any facts, rights, interests or claims which are not shown by the public records but which could be ascertained by an inspection of the land or by making inquiry of persons in possession thereof 3. Easements, or claims of easements, not shown by public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, and any facts which a correct survey and inspection of the land would disclose, and which are not shown by the public records. 5. My lien, or right to a lien, for services, labor or material heretofore or hereafter furnished, imposed by law and not shown by the public records. 6. All taxes and assessments,now or heretofore assessed, due or payable. 7. Right of way for county road and incidental purposes 30 feet wide on either side of section and township lines as established by Order of the Board of County Commissioners for Weld County,recorded October 14, 1889 in Book 86 at Page 273. 8. Reservations by the Union Pacific Railroad Company of(1) oil, coal and other minerals underlying the land, (2) the exclusive right to prospect for, mine and remove oil, coal and other minerals, and (3) the right of ingress and egress and regress to prospect for, mine and remove oil, coal and other minerals, all as contained in Deed recorded on April 9, 1906 in Book 233 at Page 24, and any and all assignments thereof or interests therein. 9. Right of way for Cactus Hill Ditch as evidenced by Statement filed in the Weld County Clerk and Recorder's Office, insofar as the same may affect subject property. 10. Right of way easement for Electric line or system and incidental purposes as granted to Poudre Valley Rural Electric Association, Inc., a Colorado corporation by instrument recorded May 5, 1997 in Book 1604 at Reception No. 2546546, said right of way easement not being specifically defined. 11. Water rights, claims or title to water, whether or not shown by the public records. 12. All matters shown on the map of subject property recorded May 8, 2000 at Reception No. 2766550. B-1 • EXHIBIT"C" Legal Description of the Development Property Lot B, Recorded Exemption RE-2690 of the South Half of the Southeast Quarter and the Northeast Quarter of the Southeast Quarter, Section 31, Township 8 North, Range 67 West of the 6th P.M., Weld County, Colorado. C-1 WATERFORD HILL HOMEOWNERS ASSOCIATION POLICY FOR CONDUCTING ASSOCIATION MEETINGS Effective: , 2006 1. Introduction. The Board of Directors (the "Board") of Waterford Hill Homeowners Association, a Colorado non-profit corporation (the "Association"), acting pursuant to the powers set forth in the Association's Bylaws, Articles of Incorporation, the Declaration of Covenants, Conditions and Restrictions for Waterford Hill Homeowners Association (a Common Interest Community) (the "Declaration") (such documents being collectively being referred to as the "Association Documents"), and the Colorado Common Interest Ownership Act ("CCIOA"), has enacted the following Policy effective as of the date set forth above. Unless the context otherwise indicates, capitalized words and terms shall have the meanings set forth in the Association Documents and, if not defined in the Association Documents, then as set forth in CCIOA. This Policy supersedes any previously adopted Policy on the same subject matter. 2. Policy Purpose. The purpose of this Policy is to emphasize that meetings of the Association's Board and its Members must be conducted in accordance with the Association Documents and applicable law. The Association Documents (in particular, its Bylaws), CCIOA and the Colorado Revised Nonprofit Corporation Act (the "Nonprofit Act") contain numerous provisions governing meetings of the Association's Members and Directors including, without limitation, provisions regarding notices, quorums, proxies, voting and Member participation in the meetings. It is not the intent of this Policy to restate those provisions, but rather to provide overall guidance on the requirements governing the conduct of Association meetings. 3. Member Meetings. 3.1 Governing Documents and Laws. Meetings of the Association's Members shall be conducted in accordance with the requirements of the Association Documents (especially the Bylaws), CCIOA and the Nonprofit Act, to the extent applicable. 3.2 Parliamentary Procedure. Unless otherwise provided in the Association Documents, meetings of the Members shall be conducted in accordance with (a) Robert's Rules of Order Newly Revised, or (b) such other generally recognized rules of parliamentary procedure as may be adopted by resolution of the Board. 3.3 Order of Business. Unless otherwise provided in the Association Documents, or unless a different order of business is set forth in any meeting agenda established by the Board, the order of business at meetings of the Members will be the following: • Establish quorum. • Call meeting to order. • Approval of minutes of prior meeting. • Reports of committees/officers. • Old business. • New business. • Adjournment. 3.4 Meeting Minutes. Minutes of Member meetings will be taken by (a) the Association Secretary, (b) in the absence of the Secretary, any other officer designated by the President, or (c) a representative of the Association's management company, provided that the Secretary must review and sign the minutes prepared by such representative, and further provided that the Secretary is ultimately responsible for the accuracy of the minutes. The minutes will be maintained in the Association's permanent records. 4. Board Meetings. 4.1 Governing Documents and Laws. Meetings of the Association's Board shall be conducted in accordance with the requirements of the Association Documents (especially the Bylaws), CCIOA and the Nonprofit Act, to the extent applicable. 4.2 Parliamentary Procedure. Unless otherwise provided in the Association Documents, meetings of the Board shall be conducted in accordance with (a) Robert's Rules of Order Newly Revised or (b) such other generally recognized rules of parliamentary procedure as may be adopted by resolution of the Board. 4.3 Order of Business. Unless otherwise provided in the Association Documents, or unless a different order of business is set forth in any meeting agenda established by the Board, the order of business at meetings of the Board will be the following: • Establish quorum. • Call meeting to order. • Approval of minutes of prior meeting. • Reports of committees/officers. 2 • Old business. • New business. (including owner input on both sides of an issue that is going to be voted on by the Board) • Adjournment. 4.4 Meeting Minutes. Minutes of Board meetings will be taken by (a) the Association Secretary, (b) in the absence of the Secretary, any other officer designated by the President, or (c) a representative of the Association's management company, provided that the Secretary must review and sign the minutes prepared by such representative, and further provided that the Secretary is ultimately responsible for the accuracy of the minutes. The minutes will be maintained in the Association's permanent records. 4.5 Executive Sessions. Executive or closed-door sessions of the Board shall be conducted in accordance with CCIOA (CRS §38-33.3-308). CERTIFICATION The undersigned, being the duly elected and acting Secretary of the Waterford Hill Homeowners Association (the "Association") certifies that the foregoing Policy for Conducting Association Meetings was approved by the vote of at least a majority of the Association's Directors at a meeting of the Association's Board of Directors held on , 2006. Dated this , 2006. WATERFORD HILL HOMEOWNERS ASSOCIATION, INC., a Colorado nonprofit corporation By: , Secretary 3 WATERFORD HILL HOMEOWNERS ASSOCIATION POLICY FOR HANDLING CONFLICTS OF INTEREST OF EXECUTIVE BOARD MEMBERS Effective: , 2006 1. Introduction. The Board of Directors (the "Board") of Waterford Hill Homeowners Association, a Colorado non-profit corporation (the "Association"), acting pursuant to the powers set forth in the Association's Bylaws, Articles of Incorporation, the Declaration of Covenants, Conditions and Restrictions for Waterford Hill Homeowners Association (a Common Interest Community) (the "Declaration") (such documents being collectively being referred to as the "Association Documents"), and the Colorado Common Interest Ownership Act ("CCIOA"), has enacted the following Policy effective as of the date set forth above. Unless the context otherwise indicates, capitalized words and terms shall have the meanings set forth in the Association Documents and, if not defined in the Association Documents, then as set forth in CCIOA. This Policy supersedes any previously adopted Policy on the same subject matter. 2. Policy Purposes. The purposes of this Policy are: 2.1 To set forth procedures and rules to identify and handle conflict of interest situations involving Board members 2.2. To provide a framework for appropriate education of existing and new Board members as to (a) their responsibilities in terms of timely disclosing conflict of interest situations and (b) the limits CCIOA places upon the participation of a Board member with a conflict of interest; and 2.3 To provide a mechanism for the Board to take up and reconsider any decision or action which may inadvertently be rendered without appropriate disclosure and handling of a Board member conflict of interest. 3. Identification and Disclosure of Conflict of Interest Situations. 3.1. Definition of Conflict of Interest. Unless the Declaration provides a more expansive definition, in which case the Declaration controls, a "conflict of interest" exists pursuant to CCIOA where a contract, decision or other action being considered by the Board would financially benefit: 4 a. Any Board member; or, b. Any person who is a Board member's parent, grandparent, spouse, child, sibling; or, who is the parent or spouse of one of these persons. 3.2 Declaration and Disclosure of Conflict of Interest. A Board member who has a conflict of interest regarding any contract, decision or other action shall declare and disclose the conflict of interest in an open meeting before the Board conducts any substantive discussion of the issue. In making such declaration and disclosure, the affected Board member shall: a. Identify, by agenda item or otherwise with such particularity as necessary to identify the issue in question, the specific pending contract, decision or other action as to which the conflict of interest arises; and b. Describe the person or person(s) among those described above in the definition of "conflict of interest" who would financially benefit from the contract, decision or other action; and c. Disclose the nature and magnitude of the financial benefit that would arise out of or as a function of the Board's decision on the contract, decision or other action. 4. Limits on Participation by Board Member who has disclosed a Conflict of Interest. 4.1 Discussion. Unless the Declaration provides for stricter limits on participation, in which case such stricter limits control, a Board member who has a conflict of interest may, after identifying and disclosing the conflict, participate in the Board's discussion of the pending contract, decision or other action. 4.2 N/cig. A Board member who has a conflict of interest shall not vote on any matter related to consideration of the contract, decision or other action implicated by the conflict of interest. 5. Reconsideration of Decisions Impacted by Improperly Handled Conflict of Interest. 5.1 Effect of Non-Compliance: Any contract, decision or other action of the Board which is adopted subject to a conflict of interest in violation of the • 5 identification, disclosure, and participation limitations set forth above shall be void and unenforceable. 5.2 Reconsideration/Ratification: Where the Board identifies a previous contract, decision or other action which was adopted in violation of the identification, disclosure and participation limits above, the Board shall, at an open meeting, take the matter up for reconsideration. At such meeting: a. The Board member with a conflict of interest shall fully identify and disclose the conflict as provided above; and b. The Board shall discuss the reason(s) why the identification, disclosure or participation limitations above were overlooked or otherwise improperly handled during previous adoption of the decision; and c. The Board shall discuss whether, after having considered the foregoing considerations, the contract, decision or other action should be ratified by a new vote in compliance with this Policy; and d. The Board shall conduct a new vote on the question of ratification, with the Board member(s) affected by the conflict of interest abstaining from participation in such vote, as required by this Policy. 6. Board Member Education. 6.1 Existing Board Members. Upon adoption of this Policy, the Association Secretary shall provide all existing Board members with a copy of this Policy. 6.2 New Board Members. Following adoption of this Policy, the Association Secretary shall promptly provide all new members of the Board elected or otherwise seated on the Board with a copy of this Policy. 6.3 Signed Copies. Each Board member shall sign an acknowledgement that the Board member has received and read this Policy. All such acknowledgements shall be maintained by the Secretary with the books and records of the Association. 6.4 Annual Refresher. At least annually, the Board of Directors shall discuss this Policy and its requirements. 6 CERTIFICATION The undersigned, being the duly elected and acting Secretary of the Waterford Hill Homeowners Association (the "Association") certifies that the foregoing Policy for Handling Conflicts of Interest was approved by the vote of at least a majority of the Association's Directors at a meeting of the Association's Board of Directors held on , 2006. Dated: , 2006. WATERFORD HILL HOMEOWNERS ASSOCIATION, INC., a Colorado nonprofit corporation By: , Secretary 7 WATERFORD HILL HOMEOWNERS ASSOCIATION POLICY REGARDING INSPECTION AND COPYING OF ASSOCIATION RECORDS Effective: , 2006 1. Introduction. The Board of Directors (the "Board") of Waterford Hill Homeowners Association, a Colorado non-profit corporation (the "Association"), acting pursuant to the powers set forth in the Association's Bylaws, Articles of Incorporation, the Declaration of Covenants, Conditions and Restrictions for Waterford Hill Homeowners Association (a Common Interest Community) (the "Declaration") (such documents being collectively being referred to as the "Association Documents"), and the Colorado Common Interest Ownership Act ("CCIOA"), has enacted the following Policy effective as of the date set forth above. Unless the context otherwise indicates, capitalized words and terms shall have the meanings set forth in the Association Documents and, if not defined in the Association Documents, then as set forth in CCIOA. This Policy supersedes any previously adopted Policy on the same subject matter. 2. Policy Purposes. The purposes of this Policy are to: 2.1 Set forth procedures and rules to promote the consistent and predictable handling of requests by Unit Owners for the inspection and copying of Association records; 2.2. Protect the Association and its members from abusive records requests which are not interposed for a proper purpose, which fail to describe with particularity the records sought, or, which seek records not relevant to the stated purpose of a request. 3. Document Retention Policy. 3.1. Compliance with CCIOA. It is the policy of the Association to maintain all records required to be maintained by CCIOA, as well as any additional documents which are designated for retention in any more broadly encompassing provision of the Association Documents. 8 3.2 Form of Records. It is the policy of the Association to maintain the required records in written or electronic form, with a preference given to electronic storage so long as such documents can be easily converted to written form within a reasonable time. For purposes of this section, "reasonable time" shall mean a time period sufficient to allow conversion of documents to written form within five (5) business days from a proper request for review and copying as provided below. 3.3. Protection of Original Documents.It is the policy of the Association that "original" records of the Association shall be appropriately protected from damage, loss or spoliation. As such, "original" documents shall not be subject to unsupervised inspection and review, and the Association will either provide for supervised review of original materials or the provision of photocopies of the requested materials with the requesting Unit owner responsible for reimbursement of the Association's actual cost for duplication expenses. 4. Procedure for Requesting Inspection of Records. 4.3 Document Inspection/Copying Request Form. Any Association Unit Owner seeking to inspect or copy Association records shall submit a request in substantially the form of the attached "Records Inspection/Copying Request" to the Association through its managing agent, if applicable, or if the Association has no acting managing agent, then through the Association's Secretary. The date on which a compliant written request is received by the responsible Association representative shall be deemed the "Date of Request." 4.2 Review of Request. Upon receipt of a written Records Inspection / Copying Request, the Association's managing agent, if applicable, or else the Association's Secretary shall review the request and determine in good faith whether the purpose of the request is proper; whether the request describes the records sought with reasonable particularity; and whether the records sought are relevant to the purpose of the request. In making such determinations, consideration shall be giving to the following: a. Purpose of the Request: The reason stated by the requesting Unit Owner must be such that the request can be considered to have been interposed in good faith and for a proper purpose. For purposes of this section, any request which, on its face, appears to be interposed for purposes of commercial marketing, for direct sales campaigns, to enrich the owner making the request, or which is specifically calculated solely to annoy, harass, or oppress the Association or any Unit Owner or Unit Owners shall not be considered a "proper purpose." 9 b. Description of Materials Sought: A request shall state with reasonable particularity the records sought and their connection with the purpose identified as the reason for the request. For purposes of this section, for example, a request seeking "all association documents related to covenant violations" would not be a request made with reasonable particularity. However, a request identifying specific classifications of documents (such as minutes, decisions, contracts, or policies) that is appropriately limited in time and scope (i.e., seeking records for a specific and pertinent time frame) shall be considered to have been interposed with the required reasonable particularity. c. Relevance: Finally, a request shall seek only documents that are relevant to the stated purpose of the request. In determining whether the materials sought are relevant to the purposes identified in the request, the Association's managing agent, if applicable, or else the Association Secretary shall consider the nexus between the materials and the Unit Owner's stated purpose, as well as any further explanation provided by the requesting Unit Owner. 5. Production of Records for Inspection/Copying. 5.1 Production of Records. The Association shall make the requested records available for inspection or copying within five (5) business days of the Date of Request. In the event that the Association determines some part of the request is improper, it shall nevertheless produce such records as are responsive to the request to the extent such request is proper. The Association shall generally identify any records it has elected to withhold in order to preserve the Attorney Client privilege as contemplated by CCIOA, and in addition, it shall advise the requesting Unit Owner if any part of the request is rejected because the Association believes it seeks records for an improper purposes, or does not identify the records sought with reasonable particularity, or if the records sought are not deemed by the Association as relevant to the stated purpose. 5.2. Where Copies are requested. Where a Unit Owner has requested photocopies of all records requested, the Association's managing agent, if applicable, or otherwise the Association's Secretary shall provide the requesting Unit Owner with a good faith estimate of the approximate number of pages implicated by the request and shall identify the expected cost per page for copies the Unit Owner is expected to be invoiced for reimbursement of the Association for its actual cost in having copies prepared. Prior to any copies being ordered, the Association may at its election require the requesting Unit Owner to prepay the estimated actual per page copying expense. Once copies are prepared and the actual per page copying charges are ascertained, the Association shall credit any such prepayment toward the actual costs, and either collect 10 any shortfall or refund any overage. All copying shall be performed within five (5) business days of the Date of Request. 5.3 Policies related to Inspection. Inspection of Association records may be accomplished by providing either "original" records or photocopies of such records. Where "original" records are to be inspected, this process shall be supervised by the designee of the Association's managing agent, if applicable, or otherwise by the designee of the Association's Secretary. All inspection shall be scheduled to commence within five (5) business days of the Date of Request. Inspections shall occur during business hours and at the time and place designated by the Association. Supervised inspections of "original" Association documents shall not exceed two (2) hours in any single session. Where the Association elects to make photocopies of documents available for inspection instead of originals, a Unit Owner may inspect the same for up to five (5) hours per business day. During records inspections, a Unit Owner may designate certain portions of the records for copying; in which case the policies related to copying specified in Section 5.2 shall apply from the time such records are designated. 6. Other Rights of Inspection/Access to Association Records. This Policy shall not impact, affect, or limit any Unit Owner's rights relative to access to, or inspection and copying of Association records as may exist under Colorado corporate statutes, in litigation proceedings involving the Association and a Unit Owner, or the power of a Court of appropriate jurisdiction to compel production of records on proof by an owner of a proper purpose. CERTIFICATION The undersigned, being the duly elected and acting Secretary of the Waterford Hill Homeowners Association (the "Association") certifies that the foregoing Policy Regarding Inspection and Copying of Association Records was approved by the vote of at least a majority of the Association's Directors at a meeting of the Association's Board of Directors held on , 2006. Dated: , 2006 WA 1'ERFORD HILL HOMEOWNERS ASSOCIATION, INC., a Colorado nonprofit corporation By: , Secretary 11 REQUEST FOR INSPECTION/COPYING OF ASSOCIATION RECORDS Association Member Name: Date: Address: Telephone #: I HEREBY REQUEST THAT WATERFORD HILL HOMEOWNERS ASSOCIATION PROVIDE ACCESS TO THE BOOKS AND RECORDS OF THE ASSOCIATION. I. State the Purpose of the Request. II. Describe with Reasonable Particularity the Books and Records Sought: III. Type of Review: (choose one) [ ] I wish to review records at the Association's location. [ ] I wish to pay for copies of the records I have requested. IV. Certification and Acknowledgement of Association Records Policies: I certify that my request to review the books and records of the Association is for a proper purpose related to my membership in the Association, and that this request is not for a commercial purpose or my personal financial gain or enrichment. I acknowledge and accept the Association's records access and inspection procedures and agree that I have been provided with an opportunity to review the same. I acknowledge and agree that the books and records will be made available to me in accordance with the Colorado Common Interest Ownership Act and only at such time and place as provided by the Association. I agree that I will be responsible to pay the Association's actual cost per page for any records I seek to have copied, and that I may be required to prepay these costs before copies are provided. Member Signature: Date: 12 WATERFORD HILL HOMEOWNERS ASSOCIATION POLICY FOR INVESTMENT OF RESERVE FUNDS Effective: , 2006 1. Introduction. The Board of Directors (the "Board") of Waterford Hill Homeowners Association, a Colorado non-profit corporation (the "Association"), acting pursuant to the powers set forth in the Association's Bylaws, Articles of Incorporation, the Declaration of Covenants, Conditions and Restrictions for Waterford Hill Homeowners Association (a Common Interest Community) (the "Declaration") (such documents being collectively being referred to as the "Association Documents"), and the Colorado Common Interest Ownership Act ("CCIOA"), has enacted the following Policy effective as of the date set forth above. Unless the context otherwise indicates, capitalized words and terms shall have the meanings set forth in the Association Documents and, if not defined in the Association Documents, then as set forth in CCIOA. This Policy supersedes any previously adopted Policy on the same subject matter. 2. Policy Purposes. The purposes of this Policy are to: 2.1 Manage the Association's reserve funds in a prudent manner to promote the preservation of those funds for their intended uses. 2.2 Structure the maturities of investments to ensure the Association will have liquid assets available for its anticipated needs. 2.3 Realize appropriate returns on the Association's investments. 3. Segregated Accounts. All liquid and non-liquid reserve fund investments shall be maintained in an account or accounts separate from the Association's operating account or accounts. 4. Types of Investments. The Board shall invest the Association's reserve funds in one or more of the following types of investments: 4.1 FDIC-insured interest bearing liquid bank accounts (money market deposit accounts) with no more than $100,000 in any one financial institution. 4.2 FDIC-insured certificates of deposit with no more than $100,000 in any one financial institution. 4.3 Money market funds that invest only in United States Treasuries and Treasury-backed securities. 13 4.4 Treasury bills, notes or bonds purchased with the intent to hold to maturity. 4.5 Any other type of investment that is (a) FDIC-insured or guaranteed by the United States government (but only to the extent of such insurance or guarantee), or (b) an obligation of the United States government. 5. Liquidity. The Board shall maintain from time to time a sufficient portion of its reserve funds in one or more liquid accounts to meet required expenditures for repairs or replacement that the Association will incur before its non-liquid assets mature. 6. Laddering of Non-Liquid Investments. The Association's non-liquid investments should be structured with laddered maturity dates so that the investments mature during successive time periods. The length of maturities should be based on market conditions and the Association's anticipated repair and replacement needs. This laddering strategy is intended to provide the Association with the benefit of longer term rates, which are customarily higher than short-term rates, while maintaining sufficient liquidity from time to time to meet the Association's repair and replacement schedule. 7. Investment Advisor. The Board may retain a professional investment advisor to assist in investing its reserve funds pursuant to this Policy. 8. Control of Investments. All reserve fund investments will be made in the name of the Association. Any withdrawal or transfer of reserve funds requires the signatures of at least two Association officers or Board members. The Board will review the periodic account statements sent to the Association for the reserve fund investments at the next Board meeting following the Association's receipt of the statements. CERTIFICATION The undersigned, being the duly elected and acting Secretary of the Waterford Hill Homeowners Association (the "Association") certifies that the foregoing Policy for Investment of Reserve Funds was approved by the vote of at least a majority of the Association's Directors at a meeting of the Association's Board of Directors held on , 2006. Dated this , 2006. WATERFORD HILL HOMEOWNERS ASSOCIATION, INC. By: , Secretary 14 WATERFORD HIL HOMEOWNERS ASSOCIATION POLICY FOR COLLECTION OF UNPAID ASSESSMENTS Effective: , 2006 I. Introduction. The Board of Directors (the "Board") of Waterford Hill Homeowners Association, a Colorado non-profit corporation (the "Association"), acting pursuant to the powers set forth in the Association's Bylaws, Articles of Incorporation, the Declaration of Covenants, Conditions and Restrictions for Waterford Hill Homeowners Association (a Common Interest Community) (the "Declaration") (such documents being collectively being referred to as the "Association Documents"), and the Colorado Common Interest Ownership Act ("CCIOA"), has enacted the following Policy effective as of the date set forth above. Unless the context otherwise indicates, capitalized words and terms shall have the meanings set forth in the Association Documents and, if not defined in the Association Documents, then as set forth in CCIOA. This Policy supersedes any previously adopted Policy on the same subject matter. 2. Policy Purposes. The purpose of this Policy is to emphasize that collection of unpaid Assessments is an important part of governing the Association and such collection must be done in a uniform manner in accordance with the Association Documents and CCIOA. It is the intent of this Policy to provide a framework for the collection of past due Assessments in a timely and efficient manner. 3. Collection of Unpaid Assessments. To assist with the collection of unpaid Assessments in a timely and efficient manner, the Association shall do the following: a. If Assessments are payable monthly, the Association shall send a letter demanding payment to any delinquent Owner owing two months of past due Assessments. The demand letter shall be mailed by regular United States mail within thirty days of the delinquent Owner becoming two months delinquent in the payment of Assessments. A late fee of$100.00 will be assessed against the Owner if Assessments become past due. b. If Assessments are payable annually, the dues are due on January 31st each year. The Association will send out invoices each year on or about the first week in January. The Association will send out a follow-up statement on or about January 31 of each year to those who have not paid. The account is considered past due if all amounts due are not received by the last day of February. A late fee of $100 will be assessed against any owner on March 1st for any past due amounts owed the Association. In 15 addition, the Association may turn over the account to its Legal Counsel and a demand letter will be sent by the Associations' counsel. c. In the event payment is not received from any delinquent Owner within thirty days after the date of the demand letter referenced above, the Association may: i. File an Assessment lien against the delinquent Owner's property; ii. Commence and maintain legal proceedings (lawsuits seeking personal judgments and foreclosure actions) for the recovery of delinquent Assessments, late fees, interest, attorney fees and costs as may be allowed by the Association Documents or CCIOA; iii. Pursue collection of judgments obtained against Owners; and iv. Take all other lawful action necessary to collect delinquent Assessments in accordance with the Association Documents and Colorado law. If the Association fails to follow the procedures set forth above it shall not be construed as any waiver or release of a delinquent Owner's obligation to pay Assessments or the Association's right to collect the Assessments in accordance with the Association Documents and CCIOA. 4. Association's Attorney Fees and Costs. Any delinquent Owner shall be responsible for attorney fees and costs incurred by the Association in the collection of past due Assessments, whether or not a lawsuit is commenced, in accordance with the Association Documents and CCIOA. 16 CERTIFICATION The undersigned, being the duly elected and acting Secretary of the Waterford Hill Homeowners Association (the "Association") certifies that the foregoing Policy for Collection of Unpaid Assessments was approved by the vote of at least a majority of the Association's Directors at a meeting of the Association's Board of Directors held on , 2006. Dated this , 2006. WA I ERFORD HILL HOMEOWNERS ASSOCIATION, INC. By: , Secretary 17 WATERFORD HILL HOMEOWNERS ASSOCIATION POLICY FOR ENFORCEMENT OF COVENANTS AND RULES (INCLUDING NOTICE AND HEARING PROCEDURES AND SCHEDULE OF FINES) Effective: , 2006 1. Introduction. The Board of Directors (the "Board") of Waterford Hill Homeowners Association, a Colorado non-profit corporation (the "Association"), acting pursuant to the powers set forth in the Association's Bylaws, Articles of Incorporation, the Declaration of Covenants, Conditions and Restrictions for Waterford Hill Homeowners Association (a Common Interest Community) (the "Declaration") (such documents being collectively being referred to as the "Association Documents"), and the Colorado Common Interest Ownership Act ("CCIOA"), has enacted the following Policy effective as of the date set forth above. Unless the context otherwise indicates, capitalized words and terms shall have the meanings set forth in the Association Documents and, if not defined in the Association Documents, then as set forth in CCIOA. This Policy supersedes any previously adopted Policy on the same subject matter. 2. Policy Purposes. The purposes of this Policy are to: 2.1 Set forth procedures and rules to promote the consistent enforcement of the Association Documents; 2.2. Provide a framework for mediation of disputes between the Association and Owners, except those related to collection of past due assessments or matters that may require an injunction, restraining order or protection order for the protection of the community; and 2.3 Provide Owners with notice of the schedule of fines for violations of the Association Documents. 3. Mediation. 3.1 . Request for Mediation. In the event of a dispute between the Association and any Owner, except disputes regarding past due assessments or any matter that may require an injunction, restraining order or protection order for the protection of the community, either the Association or an Owner may request mediation by an independent, third-party mediator. A request for mediation (the "Request") must be in writing and mailed to the Association or Owner by U.S. Mail, first class postage prepaid to such address for the recipient shown by the public records. The Request shall be considered effective three days following deposit in the mail. The parties shall make reasonable efforts to select a mediator and schedule mediation of the dispute within thirty days after the effective date of the Request, or such longer time as the parties may agree 18 upon in writing. If the mediation does not occur within thirty days (or longer if so agreed in writing), or the parties are unable to settle the dispute through mediation, the Association or Owner may pursue any other lawful remedy allowed by the Association Documents or Colorado law. 3.2 Mediation Fees and Costs. Fees and costs associated with the mediation, including payment of fees to the mediator, shall be paid as follows: a. The requesting party shall pay the mediator in advance for the first two hours of mediation. b. If the mediation lasts more than two hours, the mediator's fees for time beyond the first two hours shall be divided equally by the Association and Owner(s) and paid at the conclusion of the mediation. c. The Association and any participating Owner may be represented by an attorney at the mediation. Each party shall pay their respective attorney fees associated with the mediation. d. If Owner requests mediation but fails to appear at the date and time scheduled for the mediation, the Owner shall pay all expenses of the Association related to the mediation, including attorney fees and costs, and those expenses shall be assessed against the Owner as part of the Owner's Assessment. 3.3. Continuation of Hearing and Imposition of Fines. A request for mediation shall not suspend or stay any hearing or imposition of fines in accordance with the Fine Policy set forth below. Any fines imposed prior to or after a request for mediation shall remain in place or continue to accrue (in the event of a continuing violation where a daily fine is imposed) pending mediation of the dispute. Unless otherwise agreed at mediation, such fines shall remain legally collectable as Assessments in accordance with the Association Documents and Colorado law. 3.4. Continuation of Legal Proceedings. If a lawsuit for the collection of Assessments or enforcement of the Association Documents is commenced prior to receiving a request for mediation, such request shall not suspend or stay the lawsuit. The lawsuit shall continue forward, in addition to the mediation process described above, unless otherwise agreed upon by the parties in writing. 19 4. Fine Policy, Notice and Hearing Procedures. 4.1 Fine Policy. The Association may levy fines for violations of the Association Documents in accordance with the following notice and hearing procedures. 4.2 Notice of Violation ("Notice"). The Notice of Violation process is as follows: a. The Association or any member of the Association may note a violation. If noted by a member, the member should report the violation in writing to the Association at the Association's address. d. The Board will verify the violation and issue a written Notice to the violating Owner. The Notice will describe the nature of the violation, the time frame for correcting the violation (expressed as a certain number of days after the effective date of the Notice as determined below), and state that the Association may seek to remedy the violation and otherwise protect its rights as specified in the Association Documents and as provided by law. c. The Notice, together with a copy of this Policy, will be sent via U.S. Mail, first class postage prepaid, addressed to the last registered address of the Owner as listed in the Association's records. The Notice will be considered effective two days after it is deposited in the mail. d. The Owner receiving the Notice then has the amount of time specified in the Notice to correct the violation. e. If the violation is not corrected within the specified time, a fine is levied starting on the first day after the time period for correcting the violation expires, subject to the Request for Hearing provisions below. 4.3 Requests for Hearing. Any Owner who believes the Notice was sent in error, or who feels there are mitigating circumstances, has the right to request a hearing before the Board. To request a hearing, the Owner must contact the Association in writing within four days after the effective date of the Notice. The Association's Board shall then set a date for the hearing. If the hearing, for whatever reason, cannot be held prior to the date when the fine is otherwise scheduled to commence, the date the fine begins shall be extended to the day following the hearing. The Board will decide if any potential conflict of interest exists on a case-by-case basis. The purpose of the hearing is 20 to 1) determine if there was a mistake made in issuing the Notice; 2) determine if there are mitigating circumstances; and 3) make arrangements for bringing the violation into compliance over a period of time if warranted. The hearing process will not and cannot be used to determine if a particular provision of the Association Documents is desirable. 4.4 Hearing Procedure. The general procedure for the hearing is as follows: a. The presiding Board member shall (1) establish a quorum, (2) explain the Fine Policy and procedures, and (3) describe the nature of the violation as specified in the Notice. b. The Owner may then provide rebuttal to the Notice using witnesses or any other information deemed relevant and necessary. c. After all testimony and other evidence have been presented, the Board shall decide whether or not the Notice was justified, or whether there were mitigating circumstances. If the Board finds the Notice was justified, a fine shall then be assessed by the Board or mutually agreeable arrangements made with the Owner to ensure correction of the violation and compliance in the future. If the Board finds the Notice was not justified, no fine shall be assessed. 4.5 Fines. If an Owner fails to timely correct a violation, the Board has the right to assess a one-time fine in the amount of$100.00 - $5,000.00 (as the Board deems reasonable and necessary to promote correction of the violation). In addition, the Board may assess daily fines for any continuing or persistent violation in the amount of$15.00 - $25.00 per day (as the Board determines to be reasonable and necessary to promote correction of the violation) until the Owner has corrected the violation. The Owner is responsible for notifying the Association in writing if and when the violation has been corrected. Any daily fine shall continue at the stated rate until the earlier of(a) the date on which the Owner gives written notice of correction, regardless of when the violation was corrected, or (b) 120 days after commencement of the daily fine. 4.6 Injunction. If the violation has not been corrected within 120 days after commencement of a daily fine, or after imposition of a one-time fine, the Association may commence the necessary legal proceedings under the Association Documents or under Colorado law to compel correction of the violation as well as to recover any unpaid fines, court costs, attorney=s fees and other Association expenses arising from the violation. Nothing in this paragraph shall preclude the Association from commencing legal proceedings to correct the violation prior to expiration of the 120 day period. 21 4.7 Collection of Fines. Assessed fines may be billed to the Owner by U.S. Mail, and are legally collectable as Assessments in accordance with the Association Documents and Colorado law. The fines are the personal obligation of the violating Owner and, in addition, constitute a lien against such Owner's property. Furthermore, the violating Owner is responsible for all costs and reasonable attorney fees incurred by the Association as a result of the violation. 4.8 Repeat Violations. A repeat violation is a violation committed by an Owner which is the same as the original violation committed by that Owner; and which occurs within twelve months after the original violation. A repeat violation is considered a continuation of the original violation, and thus an Owner committing a repeat violation is not entitled to the same hearing procedures set forth above. However the Association shall provide Notice of the repeat violation to the Owner in accordance with Section 4.2 above. If the repeat violation has not been corrected within the time period specified in the Notice for correction of the violation, then the fine (which will be determined by the Board and may be up to double the amount of the fine assessed for the original violation) will commence upon the expiration of the correction time period, notwithstanding any other provisions of this Fine Policy to the contrary. An Owner committing a repeat violation shall have no right to a hearing on such repeat violation before the Board. 4.9 Fines Not Exclusive Remedy. Fines levied under this Policy are not the Association's exclusive remedy for addressing a violation. Nothing in this Fine Policy precludes the Association from pursuing any other remedy provided under the Association Documents or under Colorado law for correcting the violation. CERTIFICATION The undersigned, being the duly elected and acting Secretary of the Waterford Hill Homeowners Association (the "Association") certifies that the foregoing Policy for Enforcement of Covenants and Rules (Including Notice and Hearing Procedures and Schedule of Fines) was approved by the vote of at least a majority of the Association's Directors at a meeting of the Association's Board of Directors held on , 2006. Dated this , 2006. WATERFORD HILL HOMEOWNERS ASSOCIATION, INC. By: , Secretary 22 WATERFORD HILL HOMEOWNERS ASSOCIATION PROCEDURES FOR THE ADOPTION AND AMENDMENT OF POLICIES, PROCEDURES AND RULES Effective: , 2006 1. Introduction. The Board of Directors (the "Board") of Waterford Hill Homeowners Association, a Colorado non-profit corporation (the "Association"), acting pursuant to the powers set forth in the Association's Bylaws, Articles of Incorporation, the Declaration of Covenants, Conditions and Restrictions for Waterford Hill Homeowners Association (a Common Interest Community) (the "Declaration") (such documents being collectively being referred to as the "Association Documents"), and the Colorado Common Interest Ownership Act ("CCIOA"), has enacted the following Procedure effective as of the date set forth above. Unless the context otherwise indicates, capitalized words and terms shall have the meanings set forth in the Association Documents and, if not defined in the Association Documents, then as set forth in CCIOA. These Procedures supersede any previously adopted Policy on the same subject matter. 2. Policy Purposes. The purpose of these Procedures is to clarify that the Association's power to adopt and amend policies, procedures and rules (collectively, the "Policies") rests with the Board, while also providing that Owners will receive notice and the opportunity to comment on such Policies before they are adopted or amended. 3. Power to Adopt or Amend. The Board shall have the sole power to adopt and amend the Policies of the Association. 4. Notice to Owners. Except as otherwise required by the Association Documents, prior to the adoption or amendment of Policies, the Board shall provide notice of the proposed adoption or amendment to all Owners. Notice shall be provided by mailing the proposed Policy to each Owner at least 10 days prior to the meeting at which the Board intends to adopt or amend the Policy. Owners may provide written comments or attend the meeting and provide comments prior to the Board's vote. The Board may consider Owner comments, but is not bound to act on those comments. The Board shall have the discretion and final authority to adopt or amend all Policies in accordance with the Association Documents and Colorado law. A copy of all Policies adopted or amended by the Board shall be mailed to all Owners. 23 CERTIFICATION The undersigned, being the duly elected and acting Secretary of the Waterford Hill Homeowners Association (the "Association") certifies that the foregoing Policy for the Adoption and Amendment of Policies, Procedures and Rules was approved by the vote of at least a majority of the Association's Directors at a meeting of the Association's Board of Directors held on , 2006. Dated this , 2006. WATERFORD HILL HOMEOWNERS ASSOCIATION, INC. By: , Secretary 24 WATERFORD HILL HOMEOWNERS ASSOCIATION RESOLUTION FOR COLLECTION OF DELINQUENT ASSESSMENTS Effective , 2006 The Waterford Hill Homeowners Association, a Colorado non-profit corporation (the "Association"), through its Board of Directors, adopts this Resolution to provide for the timely and efficient collection of delinquent assessments as provided for in the (Declaration) and Colorado Common Interest Ownership Act ("CCIOA"). To assist with the collection of delinquent assessments in a timely and efficient manner, the Association grants to "it's Legal Counsel" the authority to exercise reasonable judgment in pursuing and enforcing the Association's assessment collection remedies after receiving written notice from the Association or its managing agent requesting that "IT'S LEGAL COUNSEL" commence collection efforts. Such grant of authority includes, without limitation, the authority: 1. To send demand letters for payment to delinquent unit owners; 2. To file assessment liens; 3. To commence and maintain legal proceedings (lawsuits seeking personal judgments and foreclosure actions) for the recovery of delinquent assessments, late fees, interest, attorney fees and costs as may be allowed by the Declaration or CCIOA; 4. To pursue collection of judgments obtained against unit owners; 5. To enter into settlement agreements with unit owners for the payment of delinquent assessments, late fees, interest, attorney fees and costs as may be allowed by the Declaration or CCIOA, both before and after entry of judgment; and 6. To take all other lawful action necessary to collect delinquent assessments. The Association recognizes that it has the power to decide whether to accept an offer of settlement from a delinquent unit owner either before or after legal proceedings are commenced. The Association wishes to grant "IT'S LEGAL COUNSEL" that power for the limited purpose of collecting delinquent assessments, late fees, interest, attorney fees and costs as may be allowed by the Declaration or CCIOA. In the event a proposed settlement may result in less than full payment to the Association, "IT'S LEGAL COUNSEL" shall have the authority, in the exercise of its reasonable judgment, to settle for not less than ninety percent (90%) of the total amount (assessments, late fees, interest, 25 attorney fees and costs) owed by delinquent unit owners. If"IT'S LEGAL COUNSEL" deems settlement advisable for less than ninety percent (90%) of the total amount owed to the Association, approval for such settlement must be obtained from the Association through its Board of Directors or managing agent. This Resolution shall be effective as of the date set forth above and shall continue until the Association gives "IT'S LEGAL COUNSEL" written notice that it has been amended or revoked. CERTIFICATION The undersigned, being the duly elected and acting Secretary of the Waterford Hill Homeowners Association (the "Association") certifies that the foregoing Resolution for Collection of Delinquent Assessments was approved by the vote of at least a majority of the Association's Directors at a meeting of the Association's Board of Directors held on , 2006. Dated this , 2006. WATERFORD HILL HOMEOWNERS ASSOCIATION, INC. By: , Secretary 26 WATERFORD HILL HOMEOWNERS ASSOCIATION Miscellaneous Policies Effective: , 2006 Introduction. The Board of Directors (the "Board") of Waterford Hill Homeowners Association, a Colorado non-profit corporation (the "Association"), acting pursuant to the powers set forth in the Association's Bylaws, Articles of Incorporation, the Declaration of Covenants, Conditions and Restrictions for Waterford Hill Homeowners Association (a Common Interest Community) (the "Declaration") (such documents being collectively being referred to as the "Association Documents"), and the Colorado Common Interest Ownership Act ("CCIOA"), has enacted the following Policies effective as of the date set forth above. Unless the context otherwise indicates, capitalized words and terms shall have the meanings set forth in the Association Documents and, if not defined in the Association Documents, then as set forth in CCIOA. This Policy supersedes any previously adopted Policy on the same subject matter. 2. Policy Purposes. The purpose of these Policies is to set forth rules and guidelines within the community. A. Lot Maintenance. In addition to any requirements in the Association Documents, each Owner is responsible for the following on any lot that is vacant, or has a home on it but the landscaping is not yet completed: 1. Keeping lots free of trash and other debris; 2. Keeping lots free of any weeds over 10 inches high, including but not limited to weeds around any utility box on the lot; 3. Keeping all weeds or grasses trimmed and edged so they do not grow onto or over any sidewalk adjacent to the lots; 4. Keeping all weeds between the street and sidewalk adjacent to the Owner's lot maintained as set forth above. 5. No Owner shall allow any dumping of any materials (other than piles of dirt), trash or debris of any kind on any empty lot. 6. It is recommended that each lot shall be sprayed with weed-control to avoid further growth of weeds on the lot. 27 7. Each lot may be inspected on the first day of each month year round. If the lot is not in compliance with any one of these conditions set forth above, the Association will contract the work to be done on that lot to bring it into compliance. The association will not be required to send a warning letter or notice to the offending lot owners. 8. The first offense, the owner of the lot will be responsible for paying the cost to the association of the work that was completed. The second offense will be a fine of$200 plus the cost of the work. The third and subsequent offenses will be a fine of$300 plus the cost of the work. All charges will be due and payable to the association within 30 days from the time the invoice is mailed to the owner. B. Late Fees. The association charges late fees of$100 for all past due amounts that are more than 30 days late. C. Pet Control. In addition to any requirements in the Association Documents, each Owner is responsible for: 1. Using a leash to restrain and control pets when not on the Owner's property; 2. Removing pet waste or excrement from all lots, sidewalks, common areas or other property not owned by Owner. D. Trash. The Board of Directors shall determine the vendor who shall be permitted to pickup trash in the neighborhood. The current vendor will be reviewed periodically by the Board. All trash containers must be brought back from the curb the same day as pickup, and stored out of site from the street. E. Signs. The association does not allow signs of any kind to be placed on Common Areas that belong to the association without the express written permission of the association. F. Common Area Fences. Each lot owner is responsible for maintaining and keeping in good repair not only their own fencing, but any common area fencing that borders their property. The Association is not responsible for maintaining or repairing common area fence that borders a lot. G. Common Area Damage. Owners who cause damage to any common area for any reason (or their guests), are responsible for the cost to repair or 28 replace damaged area back to its original condition. This condition will be -- determined by the Board of Directors. 3. Enforcement. If any Owner fails to follow the policies set forth above, the Association may seek any or all remedies under the Association Documents, Colorado law and the Policy for Enforcement of Covenants and Rules (Including Notice and Hearing Procedures and Schedule of Fines) for the Association. CERTIFICATION The undersigned, being the duly elected and acting Secretary of the Waterford Hill Homeowners Association (the "Association") certifies that the foregoing Policy for Enforcement of Covenants and Rules (Including Notice and Hearing Procedures and Schedule of Fines) was approved by the vote of at least a majority of the Association's Directors at a meeting of the Association's Board of Directors held on , 2006. Dated this , 2006. WATERFORD HILL HOMEOWNERS ASSOCIATION, INC. By: , Secretary 29 Hello