AMENDED AND RESTATED BYLAWS OF TERRASANO HOMEOWNERS ASSOCIATION 1/6/06 TABLE OF CONTENTS Article/Section Page I. NAME AND LOCATION .........................................1 1.01 Name and Location ....................................1 II. DEFINITIONS ...............................................1 2.01 Definitions ..........................................1 III. MEETING OF MEMBERS AND VOTING .............................1 3.01 Annual Meeting .......................................2 3.02 Special Meetings .....................................2 3.03 Notice and Place of Meetings .........................3 3.04 Quorum ...............................................4 3.05 Proxies ..............................................4 3.06 Membership Classes and Voting Rights..................5 3.07 Action Without Meeting ...............................6 3.08 Conduct of Meetings ..................................6 3.09 Attendance and Participation at Meetings .............6 3.10 Minutes of Meetings ..................................6 3.11 Requirements for Minutes of Meeting ..................7 IV. BOARD OF DIRECTORS: SELECTION, TERM OF OFFICE, MEETINGS, POWERS AND DUTIES ...............................8 4.01 Number ...............................................8 4.02 Term of Office .......................................9 4.03 Notice of Eligibility ...............................10 4.04 Election ............................................10 4.05 Removal; Vacancies ..................................11 4.06 Regular Meetings ....................................12 4.07 Notice to Owners of Regular Meetings ................12 4.08 Special Meetings ....................................13 4.09 Quorum; Notice of Adjourned Meeting .................13 4.10 Open Meetings .......................................14 4.11 Minutes of Meetings .................................14 4.12 Requirements for Minutes of Meetings ................14 4.13 Executive Session ...................................15 4.14 Action Taken Without A Meeting.......................16 -i 4.15 Duties ..............................................16 (a) Maintenance ...................................16 (b) Insurance .....................................16 (c) Discharge of Liens ............................16 (d) Assessments ...................................16 (e) Expenses and Obligations ......................16 (f) Records .......................................16 (g) Supervision ...................................17 (h) Enforcement ...................................17 (i) Financial Audit ...............................17 4.16 Powers ..............................................17 4.17 Prohibited Acts .....................................19 4.18 Compensation ........................................21 4.19 Indemnification of Officers and Directors ...........21 4.20 Reserve Study/Reserve Funds .........................22 4.21 Additional Reserve Study Requirements ...............23 4.22 Notification to Members .............................24 4.23 Complaint of alleged Violation by Executive Board ...25 4.24 Prohibitions on compensation ........................25 4.25 Prohibitions on retaliatory action ..................26 4.26 Prohibitions on contracts and/or goods/services .....26 4.27 Potential Conflict of Interest of candidates ........27 4.28 Potential Conflict of Interest of persons tocommunity manager ...................................27 V. OFFICERS AND THEIR DUTIES ................................28 5.01 Enumeration of Offices ..............................28 5.02 Election of Officers ................................28 5.03 Term ................................................28 5.04 Special Appointments ................................28 5.05 Resignation and Removal .............................28 5.06 Vacancies ...........................................28 5.07 Multiple Offices ...................................28 5.08 Duties ..............................................29 (a) President .....................................29 (b) Vice-President ................................29 (c) Secretary .....................................29 (d) Chief Financial Officer .......................29 5.09 Documents to be Prepared and Distributed to Members .29 5.10 Budget Summary ......................................30 5.11 Distribution of Policies and Practices ..............31 5.12 Additional Budget/Contracting Requirements ..........31 5.13 Ninety (90) Day Review ..............................32 5.14. Financial Statement ................................32 5.15 Distribution of Changes in Project Documents ........33 5.16 Officers and Amendments to the Declaration ..........33 -ii VI. BOOKS AND RECORDS ........................................34 6.01 Inspection by Members ...............................34 6.02 Access to Records by Ombudsman ......................35 6.03 Rules for Inspection/Payment of Costs/Time Limit forDistribution ........................................35 6.04 Prohibition on Access by Members ....................36 6.05 Inspection by Directors ............................36 VII. MISCELLANEOUS ............................................36 7.01 Committees ..........................................36 7.02 Assessments .........................................36 7.03 Amendments ..........................................37 7.04 Transfer of Control from Declarant to Association ...37 7.05 Adoption of Rules of the Association ................39 7.06 Failure to Comply with Governing Documents/ Restrictions ........................................39 7.07 Notice Requirements for Assessment for a CapitalImprovement or Commencement of a Civil Action .......42 7.08 Prohibition on Lien Foreclosure .....................43 7.09 Notice of Fines .....................................43 7.10 Application of Assessment, Fee or Charge ............43 7.11 Definition of the term “Emergency” ..................43 7.12 Conflicts ...........................................43 VIII. MAINTENANCE MANUAL ......................................44 8.01 Adoption by Board of Directors ......................44 8.02 Requirements of Maintenance Manual ..................44 RATIFICATION BY BOARD .........................................45 -iii AMENDED AND RESTATED BYLAWS OF TERRASANO HOMEOWNERS ASSOCIATION The original Bylaws for the TERRASANO Homeowners AssociationInc. were included as Exhibit “D” of the COMMUNITY CHARTER FOR TERRASANO recorded April 4, 2005 in Book 20050404 as InstrumentNo. 0002342 in the Official Records, Clark County, Nevada(“Community Charter”). The Community Charter was amended andrestated to reflect the current requirements of the NevadaRevised Statutes. The original Bylaws are hereby Amendedand Restated as follows in accordance with Article 20 Termination and Amendment of Community Charter, Section 20.2Amendment (a) By the Founder, sub-phrase (ii). ARTICLE I NAME AND LOCATION 1.01 The name of the corporation for which these are theBylaws is “TERRASANO HOMEOWNERS ASSOCIATION”(hereinafterreferred to simply as the "Association"). The principal officeof the Association will be located at the address of the Resident Agent. ARTICLE II DEFINITIONS 2.01 The definitions contained and set forth in the Declaration of Covenants, Conditions, and Restrictions andReservation of Easements for the TERRASANO planned developmentin the City of Las Vegas, Clark County, Nevada, hereinafterreferred to simply as the "Declaration” and are incorporatedherein by reference and made a part hereof as though set forthin full. 1/6/06 1 ARTICLE III MEETING OF MEMBERS AND VOTING 3.01 Annual Meeting. The first (organizational) annualmeeting of the Members will be held within one (1) year from thedate of incorporation or establishment of the Association, and/ornot later than six (6) months after the close of escrow on thesale of the first (1st) Lot in TERRASANO , whichever will firstoccur. The date, time, and place of the first annual meetingwill be set by the Board at the organizational meeting so as tooccur no later than ninety (90) days after the close of theAssociation's fiscal year. Subsequent regular annual meetings ofthe Members will be held within thirty (30) days of the same dayof the same month of each year thereafter, at the same hour of theday. If the day for the annual meeting of the Members is a legalholiday, the meeting will be held at the same hour on the firstday following which is not a legal holiday. If the Owners have not held a meeting for one (1) year, a meeting of the Ownersmust be held on the following March 1. 3.02 Special Meetings. A special meeting of the Members willbe promptly scheduled by the Board of Directors in response to amajority vote of the Board itself, a request by the President or awritten request for a special meeting signed by Membersconstituting at least ten percent (10%) percent of the total votingpower of the Association. The provisions of the Declaration, asrelated to special meetings of the Association, are incorporatedherein by reference and made a part hereof as though set forth infull. The same number of units’ owners may also call a removalelection pursuant to NRS 116.31036. To call a special meetingor removal election, the units’ owners must submit a writtenpetition signed by the required percentage of the total numberof voting members of the Association, pursuant to this sectionand which is mailed, return receipt requested, or served bya process serve to the executive board or the communitymanager for the association. If the petition calls for aspecial meeting, the executive board shall set the date forthe special meeting so that the special meeting is held notless than 15 days nor more than 60 days after the date onwhich the petition is received. If the petition calls for aremoval election and 1/6/062 (a) The voting rights of the units’ owners willbe exercised by delegates or representatives as set forthin NRS 116.31105, the executive board shall set the datefor the removal election so that the removal election is held not less than 15 days or more than 60 days after thedate on which the petition is received; or (b) The voting rights of the units’ owners willbe exercised through the use of secret ballots pursuant toNRS 116.31036, the secret written ballots for the removalelection must be sent in the manner required by NRS116.31036 not less than 15 days nor more than 60 days afterthe date on which the petition is received and theexecutive board shall set the date for the meeting to openand count the secret written ballots so that the meetingis held not more than 15 days after the deadline forreturning the secret written ballots. 3.03 Notice and Place of Meetings. Written notice of each meeting of the Members will be given by, or at the direction ofthe secretary or person authorized to call the meeting, by personaldelivery or mailing a copy of such notice, postage prepaid, atleast fifteen (15) days, but not more than sixty (60) days beforesuch meeting to each institutional lender requesting notice and toeach member, addressed to the Member's Lot Number address lastappearing on the books of the Association, or supplied by suchMember to the Association for the purpose of notice. If the Association offers to send notice by electronic mail, sent byelectronic mail at the request of the Lots’ owner to anelectronic mail address designated in writing by the Lots’sowner. Such notice will specify the time and place of themeeting, and include a copy of the agenda. Notwithstanding anyother provision of law, notice of meetings of the Members willspecify those matters the Board intends to present for action bythe Members. Such notice will also provide notification of theright of the Lot Owner to have a copy of the minutes or asummary of the minutes of the meeting provided to the Lots’owner upon request and, if required by the Board of Directors, upon payment to the Association of the cost of providing thecopy to the Lot’s owner. In addition the notice will also provide notification of the right of the Lot Owner to speak to 1/6/06 3 the Association or Board of Directors, unless the Board ofDirectors is meeting in an executive session. The Agenda for themeeting must consist of (a) a clear and complete statement of thetopics scheduled to be considered during the meeting, includingwithout limitation, any proposed amendment to the Declaration orBylaws, any fees or assessments to be imposed or increased by theAssociation, any budgetary changes and any proposal to remove anofficer of the Association or member of the Board of Directors; (b) a list describing the items on which action may be taken andclearly denoting that action may be taken on those items. In an emergency, the Lot Owners may take action on an item which isnot listed on the agenda as an item on which action may be takenand (c) a period devoted to comments by Lot Owners anddiscussion of those comments. Except in emergencies, no actionmay be taken upon a matter raised under this item of the Agendauntil the matter itself has been specifically included on anAgenda as an item upon which action may be taken pursuant tophrase (b) of the foregoing sentence. Meetings will be held within the Project, or at a meeting placewithin the same county and as close to the Project as possibleInstitutional lenders may designate in writing a representative toattend all meetings, and are hereby authorized to furnishinformation to the Association concerning the status of any loanencumbering a Lot within the Project. 3.04 Quorum. Except as otherwise provided in NRS 116.3109 and NRS 116.31034, and except when the governing documents provide otherwise, aquorum is present throughout any meeting of the association ifthe number of members of the association who are present inperson or by proxy at the beginning of the meeting equals orexceeds 20% of the total number of voting members of theAssociation. 1/6/06 4 3.05 Proxies. At all meetings of Members, each Member mayvote in person or by proxy. All proxies will be in writing andfiled with the secretary before the appointed time of eachmeeting. A Lot’s Owner may give a proxy only to a member ofhis/her immediate family, a tenant of the Lot’s owner whoresides in the common-interest community other Lot’s Ownerwho resides in the common-interest community or to a delegate orrepresentative when authorized pursuant to NRS Chapter 116. If a Lot is owned by more than one (1) person, each Ownerof the Lot may vote or register protest to the casting of votesby the other Owners of the Lot through an executed proxy. A Lot’s Owner may revoke a proxy given pursuant to this sectiononly by actual notice of revocation to the person presiding overa meeting of the Association. Before a vote may be castpursuant to a proxy: (a) the proxy must be dated, (b) the proxymust not purport to be revocable without notice, (c) the proxymust designate the meeting for which it is executed, (d) theproxy must designate each specific item on the agenda of themeeting for which the Lot’s Owner has executed the proxy, except that the Lot’s Owner may execute the proxy withoutdesignating any specific items on the agenda of the meeting ifthe proxy is to be used solely for determining whether a quorumis present for the meeting. If the proxy designates one ormore specific items on the agenda of the meeting for which theLot’s Owner has executed the proxy, the proxy must indicate, for each specific item designated in the proxy, whether theholder of the proxy must cast a vote in the affirmative or thenegative on behalf of the Lot’s Owner. If the proxy does notindicate whether the holder of the proxy must cast in theaffirmative or the negative for a particular item on theagenda of the meeting, the proxy must be treated, with regardto that particular item, as if the Lot’s Owner were presentbut not voting on that particular item and (e) the holder of theproxy must disclose at the beginning of the meeting for whichthe proxy is executed the number of proxies pursuant to whichthe holder will be casting votes. A proxy terminates immediatelyafter the conclusion of the meeting for which it is executed. A vote may not be cast pursuant to a proxy for the election orremoval of a member of the Board unless the proxy is exercisedthrough a delegate or representative authorized pursuant toNRS Chapter 116. The holder of a proxy may not casta vote on behalf of the Lot’s Owner who executed the proxy ina manner that is contrary to the proxy. A proxy is void if theproxy or the holder of the proxy violates any provisions of thisSection 3.05. A proxy may not be used for an election. 1/6/06 5 Every form of proxy or written ballot which provides anopportunity to specify approval, disapproval with respect to anyproposal will also contain a space marked "abstain”. Any form ofproxy or a written ballot distributed by any person to themembership of the Association will afford the opportunity tospecify a choice between approval and disapproval of each matter orgroup of matters to be acted upon, except it will not be mandatorythat a candidate for election to the governing body be named in theproxy or written ballot. The proxy or written ballot will providethat, where the member specifies a choice, the vote will be cast inaccordance with that choice. The proxy will also identify theperson or persons authorized to exercise the proxy and the lengthof time it will be valid. In accordance with Chapter 116 of theNRS, after the Secretary of the Association has registered allproxies to be used at a meeting, upon request for a secret ballotall voting at a meeting of the Association must be by secretballot. If a vote is taken by secret ballot, the secretary willcount, or the president may appoint tellers to count, theballot cast. Only a vote cast in person, by secret ballot or proxymay be counted. 3.06 Membership Classes and Voting Rights. Membership will beheld as provided in the Declaration. Voting rights attributable toLots will not vest until assessments against those Lots have beenlevied by the Association. The Association will have one (1) classof voting membership. Each Owner of a Lot will be entitled one (1) vote for each Lot owned. If a Lot is owned by multipleowners, only one (1) vote may be cast with regard to the Lot. When more than one person holds an interest in any Lot, all suchpersons will be Members, and the vote for such Lot will beexercised as they among themselves determine, in accordance withthe agreement of a majority in interest of the Owners, but in noevent will more than one vote be cast with respect to any Lot. There is majority agreement if any one of the Owners cast the votesallocated to the Lot without protest made promptly to the personpresiding over the meeting by any of the other Owners of the Lot. If only one of several Owners of a Lot is present at a meeting ofthe Association that Owner is entitled to cast all the votes allocated to that Lot. 1/6/06 6 3.07 Action Without Meeting. Any action which may be taken bythe vote of Members at a regular meeting or special meeting, exceptthe election of the Members of the Board of Directors, may be takenwithout a meeting and without prior notice, if authorized by awritten consent setting forth the action so taken, signed byMembers having the requisite number of votes necessary to authorizeor take such action at a meeting at which all Members were present, voted, and filed with the Secretary of the Association. A member or proxy holder may revoke any such consent provided such writtenrevocation is received by the Association prior to the time thatwritten consents of the number of Members required to authorize theproposed actions have been filed with the Secretary of theAssociation. Such revocation will be effective upon its receipt bythe Secretary of the Association. Unless the consent of all Members have been solicited in writing and have been received, prompt notice will be given, in themanner as for annual meetings of Members, to those Members who havenot consented in writing, of the taking of any Association actionapproved by Members without a meeting. Such notice will be givenat least ten (10) days before the consummation of the actionauthorized by such approval with respect to the following: (a) Approval of any reorganization of the Association; (b) Approval required by law for the indemnificationof any person. 3.08 Conduct of Meetings. Meetings of the membership of theAssociation will be conducted in accordance with a recognizedsystem of parliamentary procedure or such parliamentary procedureas the Association may adopt. 3.09 Attendance and Participation at Meetings. A Member, asdefined in the recorded Declaration, may attend any meeting of theAssociation or of the Board of Directors and speak at any suchmeeting. The Board of Directors may establish reasonablelimitations on the time a Member may speak at such a meeting. 3.10 Minutes of Meetings. In accordance with NRS 116.3108, the Secretary or other officer specified in the Bylaws shallcause minutes to be recorded or otherwise taken at each meetingof the Lots’s owners. Not more than 30 days after each suchmeeting, the secretary or other officer specified in the Bylawsshall cause the minutes or summary of the minutes of the meetingto be made available to Lots’ Owners. A copy of the minutes ora summary of the minutes must be provided to any Lots ownerupon request and, if required by the Board, upon payment to theassociation of the cost of providing the copy to the Lot’sowner. 1/6/06 7 3.11. Requirements for Minutes of Meeting. Except as provided in subsection (d), the minutes of eachmeeting of the Lots’ owners must include: (a) The date, time and place of the meeting; (b) The substance of all matters proposed, discussedor decided at the meeting; and (c) The substance of remarks made by any Lot’sowner at the meeting if he requests that the minutesreflect his remarks or, if he has prepared writtenremarks, a copy of his prepared remarks if he submitsa copy for inclusion. (d) The Board may establish reasonable limitationson materials, remarks or other information to be includedin the minutes of a meeting of the Lots’s owners. The Association shall maintain the minutes of each meeting ofthe Lots’s owners until the common-interest community isterminated. A Lot’s owner may record on audiotape or anyother means of sound reproduction a meeting of the Lots’sowners if the Lots’ owner, before recording the meeting, provides notice of his intent to record the meeting to theother Lots’s owners who are in attendance at the meeting. The units’ owners may approve, at the annual meeting ofthe units’ owners, the minutes of the prior annualmeeting of the units’ owners and the minutes of any priorspecial meetings of the units’ owners. A quorum is notrequired to be present when the units’ owners approve theminutes. 1/6/06 8 ARTICLE IV BOARD OF DIRECTORS: SELECTION, TERM OF OFFICE, MEETINGS, POWERS AND DUTIES 4.01 Number. The affairs of this Association will be managedby a Board of three (3) Directors who must be members of theAssociation. The initial three (3) Directors will be appointed byDeclarant and designated in the Articles of Incorporation andwill hold office until their successors are elected at the first (organizational) meeting of the Members. Each Director must be one of the following: (a) the Owner of a Lot in the Project; (b) anofficer, employee, agent, or director of a corporate Owner of aLot; (c) a trustee or designated beneficiary of a trust thatowns a Lot; (d) a member of manager of a limited-liabilitycompany that owns a Lot or (e) a fiduciary of an estate thatowns a Lot. The foregoing may also serve as officers of theAssociation. In all events where the person serving or offeringto serve as an officer of the Association or a member of the Board is not the record Owner of a Lot, he will file proof inthe records of the Association that: (a) he/she is associatedwith the corporate owner, trust, limited-liability company orestate and (b)identifies the Lot or Lots owned by thecorporate owner, trust, limited liability company or estate. In accordance with NRS 116.31034, each member of the Board ofDirectors shall, within 90 days after his/her appointment orelection, certify in writing to the association , on a formprescribed by the Administrator, that he/she has read andunderstands the governing documents of the Association andthe provisions of Chapter 116 of the Nevada Revised Statues tothe best of his/her ability. The Administrator may require theAssociation to submit a copy of the certification of each memberof the executive board of that association at the time the association registers with the Ombudsman pursuant to NRS116.3118. As provided in the Declaration, Declarant shall havethe right to appoint and remove the members of the Board ofDirectors, subject to the following limitations: (a) Not later than sixty (60) days after conveyance byDeclarant of twenty-five percent (25%) of the Lots that may becreated to Lot Owners other than a Declarant, at least one (1) Director and not less than twenty-five percent (25%) of the totalnumber of Directors must be elected by Owners other than Declarant. 1/6/06 9 (b) Not later than sixty (60) days after conveyance offifty percent (50%) of the Lots that may be created to Lot Ownersother than a Declarant, not less than one third (1/3) of the totalnumber of Directors must be elected by Owners other than Declarant. (c) The power reserved to Declarant in this Section 4.01 to appoint or remove a majority of the members of the Boardof Directors will terminate on the earliest of: (i) Sixty (60) days after conveyance by Declarant ofseventy-five percent (75%) of the Lots that may be created to LotOwners other than a Declarant; (ii) Five (5) years after all Declarants have ceased tooffer Lots for sale in the ordinary course of business; or (iii) Five (5) years after any right to add new Lots waslast exercised. Except as otherwise provided in subsection 5 of NRS 116.212, not later than the termination of any period of declarantcontrol, the Lots’ owners shall elect an executive board ofat least three members, at least a majority of whom must beLots’ owners. Unless the governing documents provide otherwise, the remaining members of the executive board don not have tobe unit owners. The executive board shall elect the officers of the association. The members of the executive board and the officers of the association shall take office upon election. 4.02 Term of Office. At the first (organizational) meeting ofthe Association, the Members shall elect three (3) Directors toserve until the first annual meeting. At the first annual meetingand each annual meeting thereafter, the Members shall electthree (3) Directors for a term of one (1) year. The term of office of a Member of the Board of Directors may not exceed two (2) years, except for members who are appointed by the declarant. There is no limitation on the number of terms that a person mayserve as a member of the executive board. In the event that anysuch annual meeting is not held or the Directors not elected atsuch meeting, the Directors may be elected at any specialmeeting of the Association held for that purpose, and allincumbent Directors shall hold their office until their successors are elected. 1/6/06 10 4.03 Notice of Eligibility. Not less than thirty (30) daysbefore the preparation of a ballot for the election of members ofthe Board of Directors, the Secretary shall cause notice to begiven to each of the Owner(s) of a Lot of his/her eligibility toserve as a member of the Board of Directors. Each of the Owner(s) of a Lot who is qualified to serve as a member of the Board ofDirectors may have his/her name placed on the ballot along with thenames of the nominees selected by the members of the Board ofDirectors or a nominating committee as provided for herein. 4.04 Election. The first election of the Board shall be conducted at the first (organizational) meeting of the Association. The election of any member of the Board of Directors must beconducted by secret written ballot. The secretary shall cause asecret ballot and a return envelope to be sent prepaid by UnitedStates mail to the mailing address of each Lot within thecommon-interest community or to any other mailing addressdesignated in writing by the Lot’s Owner. Each Lot’s owner must be provided with at least 15 days after the date the secretballot is mailed to the Lot’s owner to return the secret ballot to the association. A quorum is not required by the election ofany member of the executive board. Only the secret ballots thatare returned to the association may be opened and counted at ameeting of the association. A quorum is not required to bepresent when the secret written ballots are opened and countedat the meeting. The incumbent members of the executive board and each person whose name is placed on the ballot as acandidate for a member of the executive board may not possess, be given access to or participate in the opening or counting ofthe secret written ballots that are returned to the association before those secret written ballots have been opened and countedat a meeting of the association. At such election, the Membersor their proxies may cast, in respect to each vacancy, as manyvotes as they are entitled to exercise under the provisions of theProject Documents. The person receiving the largest number ofvotes shall be elected. Voting for Directors shall be by secretwritten ballot. A Member shall be entitled to cumulate his/hervote for one or more candidates for the Board of Directors if the candidate's name has been placed in nomination prior to voting andif the Member has given notice at the meeting prior to the votingof his/her intention to cumulate votes. If any one Member hasgiven such notice, all Members may cumulate their votes forcandidates in nomination. Votes cast for the election of member of the Board must be counted in public. A proxy may not be usedfor an election. 1/6/06 11 4.05 Removal; Vacancies. Notwithstanding any provision of the Declaration or Bylawsto the contrary, any member of the Board of Directors, otherthan a member appointed by the Declarant, may be removedfrom the Board of Directors, with or without cause, if aremoval election held pursuant to this section the number ofvotes cast in favor of removal constitutes: (a) At least thirty-five percent (35%) of thetotal number of voting members of the Association; and (b) At least a majority of all votes cast inthat removal election. The removal of any member of the executive board must beconducted by secret written ballot unless the declaration ofthe association provides that voting rights may be exercisedby delegates or representatives as set forth in NRS 116.31105. If the removal of a member of the executive board is conducted by secret written ballot: (a) The secretary or other officer specified in thebylaws of the association shall cause a secret writtenballot and a return envelope to be sent, prepaid by UnitedStates mail, to the mailing address of each member withinthe common-interest community or to any other mailingaddress designated in writing by the Lot’s owner. (b) Each Lots’ owner must be provided with at least15 days after the date the secret ballot is mailed to theLots’s owner to return the secret ballot to the association. (c) Only the secret written ballots that are returnedto the association may be counted to determine the outcome. (d) The secret written ballots must be opened andcounted at a meeting of the association. A quorum is notrequired to be present when the secret written ballots areopened and counted at the meeting. (e) The incumbent members of the executive board, including without limitation, the member who is subjectto the removal, may not possess, be given access to orparticipate in the opening or counting of the secretwritten ballots that are returned to the association before those secret written ballots have been opened and countedat a meeting of the association. 1/6/06 12 Any Director appointed by the Declarant may only be removedby Declarant. In the event of death or resignation of aDirector, his successor shall be selected by a majority of theremaining Directors or by a sole remaining Director, and shallserve for the unexpired term of his predecessor. The Members mayelect a Director at any time to fill any vacancy not filled by theDirectors. Any vacancy created by the removal of a Director can befilled only by election of the Members. 4.06 Regular Meetings. Regular meetings of the Board ofDirectors shall be held at least bi-monthly at such place withinthe Project and at such hour as may be fixed from time to time byresolution of the Board. Should said meeting fall upon a legalholiday, then that meeting shall be held at the same time on thenext day which is not a legal holiday. A meeting of the Board ofDirectors must be held at least once every ninety (90) days. The agenda of the meeting of the Board of Directors must comply withthe provisions of subsection 3 of NRS 116.3108. In an emergency, the Board of Directors may take an action on an item which is notlisted on the agenda as an item on which action may be taken. 4.07 Notice to Owner’s of Regular Meetings. Except in anemergency, the Secretary of the Association shall, not less thanten (10) days before the date of a meeting of the Board ofDirectors, cause the notice of the meeting to be given to the LotOwner(s). Such notice must be: (a) Sent prepaid by United States mail to the mailingaddress of each Lot within the common-interest community or to anyother mailing address designated in writing by the Lot Owner(s); or (b) Published in a newsletter or other similar publication that is circulated to each Lot Owner(s). In an emergency, the Secretary of the Association shall, ifpracticable, cause notice of the meeting to be sent prepaid byUnited States mail to the mailing address of each Lot within thecommon-interest community. If delivery of the notice in thismanner is impracticable, the notice must be hand-delivered to eachLot within the common-interest community or posted in a prominentplace or places with the common elements of the Association. The notice of a meeting of the Board of Directors must statethe time and place of the meeting and include a copy of the agendafor the meeting or the date on which and the locations where copiesof the agenda may be conveniently obtained by the Lot Owner(s) ofthe Association. The notice must include notification of the rightof Lot Owner(s) to: 1/6/06 13 (a) Have a copy of the minutes or a summary of theminutes of the meeting provided to the Lot’s owner upon requestand, if required by the Board of Directors, upon payment to theAssociation of the cost of providing the copy to the Lot’sowner. (b) Speak to the Association or the Board of Directors, unless the Board of Directors is meeting in executive session. 4.08 Special Meetings. Special Meetings of the Board ofDirectors shall be held when called by written notice signed by thepresident of the Association or by any two (2) Directors other thanthe president. 4.09 Quorum; Notice of Adjourned Meeting. A majority of thenumber of Directors shall constitute a quorum and be necessary forthe transaction of business, except to adjourn until the time fixedfor the next regular meeting of the Directors. Every act performedor decision made by a majority of the Directors present at a dulyheld meeting at which a quorum is present shall be regarded as theact of the Board. A meeting at which a quorum is initially presentmay continue to transact business, notwithstanding the withdrawalof Directors, if any action taken is approved by at least amajority of the required quorum for the meeting. Notice of the time and place of holding the adjourned meeting need not be given, unless the meeting is adjourned for more than twenty-four (24) hours, in which case personal notice of the time and place shall begiven before the time of the adjourned meeting to the Directors whowere not present at the time of the adjournment, and shall beposted at a prominent place within the Common Area. An explanationof the action taken shall be posted at a prominent place within theCommon Area within three (3) days after the meeting. If the Common Area consists of only an easement or is otherwise unsuitable forposting of such notice or explanation, the Board shall communicatesuch notice or explanation by any means it deems appropriate. 1/6/06 14 4.10 Open Meetings. Any Member of the Association may attendmeetings of the Board of Directors of the Association, except whenthe Board adjourns to executive session to consider matters setforth in Section 4.10. In accordance with NRS 116.31085(4), amember is not entitled to attend or speak at a meeting the Boardof Directors held in executive session. All other meetings of theBoard shall be open to all Members, but Members other thanDirectors may not participate in any discussion or deliberationunless expressly so authorized by a majority of a quorum of theBoard. The period required to be devoted to comments by LotOwner(s) and discussion of those comments must be scheduled forthe beginning of each meeting. 4.11 Minutes of Meetings. The secretary or other officerspecified in the Bylaws shall cause minutes to be recorded orotherwise taken at each meeting of the Board. Not more than thirty (30) days after each such meeting, the secretary or otherofficer specified in the Bylaws shall cause the minutes or asummary of the minutes of the meeting to be made available tothe Lots’ owners. A copy of minutes or a summary of theminutes must be provided to any Lots’ owner upon request and, if required by the Board, upon payment to the Association of thecost of providing the copy to the Lot’s owner. 4.12. Requirements for Minutes of Meeting. Except as provided in subsection (f), the minutes of eachmeeting of the Board must include: (a) The date, time and place of the meeting; (b) Those members of the Board who were presentand those members who were absent at the meeting; (c) The substance of all matters proposed, discussedor decided at the meeting; (d) A record of each member’s vote on any matterdecided by vote at the meeting; and (e) The substance of remarks made by any Lot’sowner who addresses the Board at the meeting if he requeststhat the minutes reflect his remarks or, if he has preparedwritten remarks, a copy of his prepared remarks if hesubmits a copy for inclusion. (f) The Board may establish reasonable limitationson materials, remarks or other information to be includedin the minutes of its meeting. 1/6/06 15 The Association shall maintain the minutes of each meeting ofeach meeting of the Board until the common-interest community isterminated. A Lot’s owner may record on audiotape or anyother means of sound reproduction a meeting of the Board if theLots’ owner, before recording the meeting, provides notice ofhis intent to record the meeting to the members of the Board whoare in attendance at the meeting. 4.13 Executive Session. The Board may meet in executivesession to: (a) consult with the attorney for the Association onmatters relating to proposed or pending litigation if thecontents of the discussion would otherwise be governed by theprivilege set forth in NRS 49.035 to 49.115, inclusive or toenter into, renew, modify, terminate or take any other actionregarding a new contract between the Association and theattorney; (b) discuss the character, alleged misconduct, professional competence, or physical or mental health of acommunity manager or an employee of the association; (c) exceptas otherwise provided hereinafter, discuss a violation ofgoverning documents, including, without limitation, the failureto pay an assessment; (d) discuss the alleged failure of aLot’s owner to adhere to a schedule required pursuant to NRS116.31035 if the alleged failure may subject the Lot’s owner toa construction penalty. The nature of any and all business tobe considered in executive session shall first be announced in open session. The Board shall meet in executive session to hold a hearing on an alleged violation of the Governing Documentsunless the person who may be sanctioned for the allegedviolation, requests in writing that an open hearing beconducted by the executive board. If the person who maybe sanctioned for the alleged violation requests in writingthat an open hearing be conducted, the person: (a) Is entitled to attend all portions of the hearingrelated to the alleged violation, including, withoutlimitation, the presentation of evidence and the testimonyof witnesses; and (b) Is not entitled to attend the deliberations of the executive board. Any matter discussed by the Board when its meets in executivesession must be generally noted in the minutes of the Board ofDirectors. The Board of Directors shall maintain minutes of any decision made concerning al alleged violation and, uponrequest, provide a copy of the decision to the person who wassubject to being sanctioned at the hearing or to his/herdesignated representative. Except as otherwise provided hereinthe Lot Owner(s) is/are not entitled to attend or speak at ameeting of the Board held in executive session. 1/6/06 16 4.14 Action Taken Without a Meeting. The Directors may takeany action in the absence of a meeting which they are required orpermitted to take at a meeting, by obtaining the written approvalof all the Directors. Any action so approved shall have the sameeffect as though taken at a meeting of the Directors. If the Board of Directors resolves by unanimous written consent to take action, an explanation of the action taken shall be posted at a prominentplace or places within the Common Area within three (3) days afterthe written consents of all Directors have been obtained. If the Common Area consists of only an easement or is otherwise unsuitablefor posting the explanation of the action taken, the Board shallcommunicate said explanation by any means it deems appropriate. 4.15 Duties. It shall be the duty of the Board of Directorsto: (a) Maintenance: Maintain the Project in accordancewith the provisions of the Project Documents. (b) Insurance: Procure and maintain insurance as required by the provisions of the Project Documents. (c) Discharge of Liens: Discharge by payment, ifnecessary, any lien against the Common Area and assess the coststhereof to the Member or Members responsible for the existence ofsaid lien. (d) Assessments: Fix, levy, collect, and enforceassessments as set forth in the Project Documents. (e) Expenses and Obligations: Pay all expenses andobligations incurred by the Association in the conduct of itsbusiness including, without limitation, all licenses, taxes, orgovernmental charges levied or imposed against the property of theAssociation. (f) Records: Cause to be kept a complete record of allits acts and affairs and to present a statement thereof to theMembers at the annual meeting of the Members, or at any specialmeeting when such statement is requested in writing by one-fourth(1/4th) of the Members; keep adequate and correct books and recordsof account, minutes of its own proceedings and those of itscommittees, and a record of its Members and the members of theAssociation, giving their names and addresses and classes ofmembership. In accordance with NRS 116.3118, the Associationshall keep financial records sufficiently detailed to enable theAssociation to comply with NRS 116.4109. In addition, allfinancial and other records of the association must be: 1/6/06 17 (1) Maintained and made available for review at thebusiness office of the association or some other suitable location within the county where the common-interestcommunity is situated or, if it is situated in more thanone county, within one of those counties; and (2) Made reasonably available for any units’ ownerand his authorized agents to inspect, examine, photocopyand audit. (g) Supervision: Supervise all officers, agents, andemployees of the Association, and see that their duties areproperly performed. (h) Enforcement: Enforce the provisions of the ProjectDocuments. (i) Financial Audit: Complete an annual audit ofthe financial records of the Association, by a certified publicaccount. In the performance of their duties, the officers and membersof the Board of Directors are fiduciaries and are subject toinsulation from liability provided for Directors of a corporationby the laws of the State of Nevada. The members of the Board are required, in accordance with Nevada Revised Statutes Section116.3103, to exercise the ordinary and reasonable care of Directorsof a corporation, subject to the business-judgement rule. 4.16 Powers. The Board of Directors may do any of thefollowing: (a) Adopt and amend Bylaws, rules and regulations. (b) Adopt and amend budgets for revenues, expenditures and reserves and collect assessments for commonexpenses from the unit owners. (c) Hire and discharge managing agents and otheremployees, agents and independent contractors. (d) Institute, defend or intervene in litigationor administrative proceedings in its own name on behalf ofitself or two or more units owners on matters affecting thecommon-interest community. (e) Make contracts and incur liabilities. 1/6/06 18 (f) Regulate the use, maintenance, repair, replacement and modification of common elements. (g) Cause additional improvements to be madeas a part of the common elements. (h) Acquire, hold, encumber and convey in itsown name any right, title or interest to real estate orpersonal property, but: (1) Common Elements in a condominium or planned community may be conveyed or subjected to asecurity interest only pursuant to NRS 116.3112. (i) Grant easements, licenses and concessionsthrough or over the common elements. (j) Impose and receive payments, fees orcharges for the use, rental or operation of the commonelements, other than the limited common elements describedin subsections 2 and 4 of NRS 116.2102, and for servicesprovided to the units owners. (k) Impose charges for late payments ofassessments. (l) Impose construction penalties whenauthorized pursuant to NRS 116.31035. (m) Impose reasonable fines for violationsof the governing documents of the association only ifthe association complies with the requirements set forthin NRS 116.31031. (n) Impose reasonable charges for thepreparation and recordation of any amendments to theDeclaration or any statements of any unpaid assessmentsand impose reasonable fees, not to exceed the amountsauthorized by NRS 116.4109, for preparing and furnishingthe documents and certificates required by that section. (o) Provide for the indemnification of its officers and Board of Directors and maintain directors and officers liability insurance. 1/6/06 19 (p) Assign its right to future income, including the right to receive assessments for commonexpenses, but only to the extent the Declarationexpressly so provides. (q) Exercise any other powers conferred bythe Declaration or Bylaws. (r) Exercise all other powers that may beexercised in this State by legal entities of the sametype as the Association. (s) Direct the removal of vehicles improperlyparked on property owned or leased by the association, as authorized pursuant to NRS 487.038 or improperlyparked on any road, street, alley or other thoroughfarewithin the Project in violation of the governingdocuments. In addition to complying with therequirements of NRS 487.038 and any requirements in thegoverning documents, if a vehicle is improperly parkedas described in this paragraph, the Association must postwritten notice in a conspicuous place on the vehicle orprovide oral or written notice to the owner or operatorof the vehicle at least 48 hours before the Association may direct the removal of the vehicle, unless the vehicle: (1) Is blocking a fire hydrant, fire lane orparking space designated for the handicapped; or (2) Poses an imminent threat of causing asubstantial adverse effect on the health, safety orwelfare of the units’ owners or residents of the Project. (t) Exercise any other powers necessary andproper for the governance and operation of theAssociation. 4.17 Prohibited Acts. The Board of Directors shall not take any of the following actions except with the vote or writtenconsent of a majority of the voting power of the Association, whichshall include a majority of the votes residing in Members otherthan the Declarant: (a) Entering into a contract with a third person whereinthe third person will furnish goods or services for the Common Areaor the Association for a term longer than one (1) year, with thefollowing exceptions: 1/6/06 20 (1) A management contract, the terms of which havebeen approved by the Federal Housing Administration or U.S. Department of Veterans Affairs (if either of theseentities is the holder, insurer or guarantor of any loanor mortgage on any Lot in the Project); (2) A contract with a public utility company if therates charged for the materials or services are regulatedby the Public Utilities Commission; provided, however, that the term of the contract shall not exceed the shortest term for which the supplier will contract at theregulated rate; (3) Prepaid casualty and/or liability insurancepolicies of not-to-exceed three (3) years durationprovided that the policy permits short-rate cancellationby the insured. (4) Lease agreements for laundry room fixtures andequipment of not-to-exceed five (5) years durationprovided that the lessor under the agreement is not anentity in which the Declarant has a direct or indirectownership interest of ten percent (10%) or more. (5) Agreements for cable television services andequipment or satellite services and equipment of not-toexceed five (5) years duration provided that the supplieris not an entity in which the Declarant has a direct orindirect ownership interest of ten percent (10%) or more. (6) Agreements for sale or lease of burglar alarmand fire alarm equipment, installation, and services ofnot-to-exceed five (5) years duration provided that thesupplier or suppliers are not entities in which theDeclarant has a direct or indirect ownership interest often percent (10%) or more. (b) Incurring, during any fiscal year, any expendituresfor capital improvements to the Common Area aggregate expendituresfor such purposes, in excess of five percent (5%) of the budgetedgross expenses of the Association for that fiscal year. (c) Selling, during any fiscal year, any property of theAssociation having an aggregate fair market value greater than fivepercent (5%) of the budgeted gross expenses of the Association forthat fiscal year. 1/6/06 21 (d) Paying compensation to Directors or to the officersof the Association for services performed in the conduct of theAssociation's business; provided, however, that the Board may causea Director or officer to be reimbursed for expenses incurred incarrying on the business of the Association. (e) Filling a vacancy on the Board of Directors createdby the removal of a Director. In addition, the Board of Directors may not act on behalf ofthe Association to: (1) amend the Declaration; (2) terminate thecommon-interest community; or (3) elect members of the Board ordetermine the qualifications, powers, and duties or terms of officebut, as provided for herein, may fill vacancies in its membershipfor the unexpired portion of any term of a Director. 4.18 Compensation. Except as provided in Paragraph 4.16 (d) hereinabove, no Director shall receive compensation for any servicehe may render to the Association. However, any Director may bereimbursed for his actual expenses incurred in the performance ofhis duties. 4.19 Indemnification of Directors. If a member of an executive board is named as a respondent orsued for liability for actions undertaken in his/her role as amember of the Board, the association shall indemnify him/her forlosses or claims, and undertake all costs of defense, unless itis proven that he/she acted with willful or wanton misfeasanceor with gross negligence. After such proof the Association isno longer liable for the costs of defense and may recover costsalready expended from the member of the Board who so acted. Members of the Board are not personally liable to the victims ofcrimes occurring on the project. Punitive damages may not berecovered against the Association, but may be recovered frompersons whose activity gave rise to the damages. The provisionsof this section do not prohibit the Commission from taking anydisciplinary action against a member of the Board pursuant toNRS 116.745 to 116.795, inclusive. 1/6/06 22 4.20 Reserve Study/Reserve Funds. (a) The Board of Directors shall: (1) At least once every five (5) years, cause to be conducted, a study of the reserves required torepair, replace and restore the major components of the commonelements; (2) At least annually, review the results ofthat study to determine whether those reserves are sufficient; and (3) At least annually, make any adjustmentsto the association’s funding plan which the executive boarddeems necessary to provide adequate funding for the requiredreserves. The study of the reserves required by Section 4.19 must beconducted by a person who holds a permit issued pursuant tosections 2 to 35, inclusive, of this act. The summary of thereserves must include, without limitation: (a) A summary of an inspection of the majorcomponents of the common elements that Association is obligatedto repair, replace, or restore; (b) An identification of the major components ofthe common elements that the Association is obligated to repair, replace or restore which have a remaining useful life of lessthan thirty (30) years; (c) An estimate of the remaining useful life ofeach major component of the common elements identifiedpursuant to paragraph (b); (d) An estimate of the cost of repair, replacement or restoration of each major component of thecommon elements identified pursuant to paragraph (b) duringand at the end of its useful life; and (e) An estimate of the total annual assessment that may be necessary to cover the cost of repairing, replacement, or restoration of the major components of thecommon elements identified pursuant to paragraph (b), aftersubtracting the reserves of the Association as of the date ofthe study, and an estimate of the funding plan that may benecessary to provide the adequate funding for the requiredreserves. 1/6/06 23 3. The results of the study of the reserves required bysubsection 1 must be submitted to the Division not later than 45 days after the date the executive board adopts the resultsof the study. (b) Money in the reserve account of the Associationrequired by paragraph (b) of subsection 2 of NRS 116.3115 maynot be withdrawn without the signatures of at least two (2) membersof the Board of Directors or the signatures of a least one (1) member of the Board of Directors and one (1) officer of theAssociation who is not a member of the Board of Directors. In addition to the foregoing, the signature of the managementagent shall be required to withdraw money from the reserveaccount as noted herein. (c) The Board of Directors shall not expend fundsdesignated as reserve funds for any purpose other than the repair, replacement, and restoration of the major components of thecommon elements. The reserve may be used only for thosepurposes, including, without limitation, repairing, replacing, and restoring roofs, roads, and sidewalks, and must not be usedfor daily maintenance. 4.21. Additional Reserve Study Requirements. Notwithstanding the minimum requirements of the NRS set forthin Section 4.20 herein, the following Additional Reserve StudyRequirements shall apply: 1. A Reserve Study shall be complete once everythree (3) years or after twenty-five percent (25%) of thetotal reserve are used in any fiscal year. 2. Base-Line/Cash-Flow funding is to be used tocalculate reserve funding. 3. The minimum following components must have fundsreserved for but the reserve components are not limitedto: a. Painting of all “no parking” or “fire” curb, fire hydrants and traffic striping every two (2) years. b. All asphalt areas be slurry sealed everyfour (4) years with aggregate type slurry. At the time of each slurry seal, miscellaneous asphaltrepairs shall be done prior to the slurry seal. 1/6/06 24 c. Entry gates shall be painted. Hinges shallbe replaced, if necessary and painted every four (4) years. d. Gate motors, keypads, controllers andsensors are replaced within each ten (10) year period. e. Split-face and plain concrete block wallsare pressure washed and acid washed every four (4) years. Also, after cleaning is completed, all looseblocks and/or mortar shall be repaired. f. Stucco block wall finishes. Touch-up paintshall be applied an annual basis. Complete repaintingand repair, as needed, shall be completed every five (5) years. g. Landscape plants and rocked replacement/ revitalizing shall be completed every ten (10) years. h. Landscape Contingency Fund shall bemaintained at a rate of $100.00 (in 2004 dollars) per Lot every ten (10) years. This Fund shall be used for unexpected and/or emergency items. i. Wrought Iron Painting and Repair shallbe completed every four (4) years. j. Entry monument signs shall be repaired orreplaced, as necessary, every fifteen (15) years. k. Asphalt over-lay of all asphalt areaswithin thirty (30) years. Prior to over-lay allasphalt areas in poor condition must be repaired. l. Concrete sidewalks and curbs are to be replaced as necessary. Reserve for an estimated portion for replacement to occur after thirty (30) years. 4.22 Notification to Members. Members of the Association shall be notified in writing at the time that the pro forma budgetis distributed or at the time of any general mailing to the entiremembership of the Association of their right to have copies of theminutes of meetings of the Board of Directors and how and wherethose minutes may be obtained. 1/6/06 25 4.23 Complaint of alleged Violation by Executive Board. In accordance with NRS Chapter 116: 1. If an executive board receive a written complaint froma Lot’s owner alleging that the executive board has violatedany provision of Chapter 116 or any provision of the governingdocuments of the association, the executive board shall, ifaction is required by the executive board, place the subjectof the complaint on the agenda of the next regularly scheduledmeeting of the executive board. 2. Not later than 10 business days after the date that theassociation receives such a complaint, the executive board or anauthorized representative of the association shall acknowledgethe receipt of the complaint and notify the Lot’s owner that, if action is required by the executive board, the subject matterof the complaint will be placed on the agenda of the nextregularly scheduled meeting of the executive board. 4.24 Prohibitions on compensation. In accordance with NRS 116.31185: 1. Except as otherwise provided subsection 2, a memberof an executive board, an officer of an association or acommunity manager shall not solicit or accept any form ofcompensation, gratuity or other remuneration that: (a) Would improperly influence or would appear toa reasonable person to improperly influence the decisionsmade those persons; or (b) Would result or would appear to a reasonableperson to result in a conflict of interest for thosepersons. 2. Notwithstanding the provisions of subsection 1, a member of an executive board, an officer of an association, a community manager or any person working for a communitymanager shall not accept, directly or indirectly, anygifts, incentives, gratuities, rewards or other items ofvalue from: (a) An attorney, law firm or vendor, or anyperson working directly or indirectly for the attorney, law firm or vendor, which total more than the amountestablished by the Commission by regulation, not to exceed$100.00 per year per such attorney, law firm or vendor; or 1/6/06 26 (b) A declarant, an affiliate of a declarant orany person responsible for the construction of theapplicable community or association which total morethan the amount established by the Commission byregulation, not to exceed $100.00 per year per suchdeclarant, affiliate or person. 4.25 Prohibitions on retaliatory action. In accordance with NRS Chapter 116: 1. An executive board, a member of an executive board oran officer, employee or agent of an association shall not take, direct or encourage another person to take, any retaliatoryaction against a Lot’s owner because the Lot’s owner has: (a) Complained in good faith about any allegedviolation of any provision of Chapter 116 or the governingdocuments of the association; or (b) Requested in good faith to review the books, records or other papers of the association. 4.26 Prohibitions on contracts and/or goods/services. In accordance with NRS Chapter 116: 1. Except as otherwise provided in this section, a memberof an executive board or an officer of the association shall not: (a) On or after October 1, 2003, enter into a contractor renew a contract with the association to provide goodsor services to the association; or (b) Otherwise accept any commission, personal profitor compensation of any kind from the association forproviding goods or services to the association.. 2. The provisions of this section do not prohibit adeclarant, an affiliate of a declarant or an officer, employeeor agent of a declarant or an affiliate of a declarant from: (a) Receiving any commission, personal profit orcompensation from the association, the declarant or anaffiliate of the declarant for any goods or servicesfurnished to the association; (b) Entering into contracts with the association, the declarant or affiliate of the declarant; or (c) Serving as a member of the executive board oras an officer of the association. 1/6/06 27 4.27. Potential Conflict of Interest of candidates. In accordance with NRS 116.31034 5: 5. Each person whose name is placed on the ballot as acandidate for a member of the executive board must (A) Make a good faith effort to disclose anyfinancial, business, professional or personal relationship orinterest that would result or would appear to a reasonableperson to result in a potential conflict of interest for thecandidate if the candidate were to be elected to serve as a member of the executive board. (B) Disclose whether the candidate is a member in “good standing”. For the purposes of this paragraph, acandidate shall not be deemed to be in “good standing” ifthe candidate has any unpaid and past due assessments orconstruction penalties that are required to be paid by theAssociation. The candidate must make all disclosures requiredpursuant to this subsection in writing to the Associationwith his candidacy information. The Association shall distribute the disclosures to each member of the Association with the ballot in the manner established bythe Bylaws of the Association. 4.28. Potential Conflict of Interest of persons tocommunity manager. In accordance with NRS 116.31034 6: 6. Unless a person is appointed by the declarant: (a) A person may not be a member of the executiveboard or an officer of the association if the person, hisspouse or his parent or child, by blood, marriage oradoption, performs the duties of a community manager forthat association. 1/6/06 28 ARTICLE V OFFICERS AND THEIR DUTIES 5.01 Enumeration of Officers. The officers of the Association shall be a president and vice-president, who shall at all times beDirectors, a secretary, and chief financial officer (treasurer) and such other officers as the Board may from time to time createby resolution. In order to qualify to serve as an officer of theAssociation, the person must be the owner of a Lot subject to therecorded Declaration. 5.02 Election of Officers. The election of officers shall take place at the first meeting of the Board of Directors followingeach annual meeting of the Association. 5.03 Term. The officers of the Association shall be elected annually by the Board and each shall hold office for one (1) yearunless the officer resigns, or shall be removed, or otherwisedisqualified to serve. 5.04 Special Appointments. The Board may elect such otherofficers as the affairs of the Association may require, each ofwhom shall hold office for such period, have such authority, andperform such duties as the Board may from time to time determine. 5.05 Resignation and Removal. Any officer may be removed fromoffice by the Board with or without cause. Any officer may resignat any time by giving written notice to the Board, the president, or the secretary. Such resignation shall take effect on the dateof receipt of such notice or at any later time specified therein, and unless otherwise specified therein, the acceptance of suchresignation shall not be necessary to make it effective. 5.06 Vacancies. A vacancy in any office may be filled byappointment by the Board. The officer appointed to such vacancyshall serve for the remainder of the term of the officer he/shereplaces. 5.07 Multiple Offices. After the first (organizational) meeting of the Members of the Association has been held, no personshall simultaneously hold more than one office, except that theoffices of secretary and chief financial officer may be held by thesame person, and except in the case of special offices createdpursuant to Paragraph 5.04 of this Article. 1/6/06 29 5.08 Duties. The duties of the officers are as follows: (a) President. The President shall preside at allmeetings of the Board of Directors; shall see that orders andresolutions of the Board are carried out; shall sign all leases, mortgages, deeds, and other written instruments, and shall co-signall checks and promissory notes. (b) Vice-President. The vice-president shall act in theplace and stead of the president in the event of his absence, inability, or refusal to act, and shall exercise and discharge suchother duties as may be required of him by the Board. (c) Secretary. The secretary shall record all votes andkeep the minutes of all meetings and proceedings of the Board andof the Association, serve notice of meetings of the Board and ofthe Association; keep appropriate current records showing theMembers of the Association together with their addresses, and shallperform such other duties as required by the Board. (d) Chief Financial Officer. The chief financial officer shall receive and deposit in appropriate bank accounts all moniesof the Association and shall disburse such funds as directed byresolution of the Board of Directors; shall co-sign all checks andpromissory notes of the Association; shall keep proper books ofaccount; shall prepare and distribute financial statements to eachMember of the Association as follows. Any of the foregoing duties, included in paragraphs (a) to(d), inclusive, may be delegated to the management agent, afterapproval by a majority of the Board of Directors. 5.09 Documents to be Prepared and Distributed to Members. The Board of Directors of the Association shall, not less thanthirty (30) days or more than sixty (60) days before the beginningof the fiscal year of the Association, prepare and distribute toLot Owner a copy of: (a) The budget for the daily operation of theAssociation. The budget must include, without limitation, theestimated annual revenue and expenditures of the Associationand any contributions to be made to the reserve account ofthe Association. (b) The budget to provide adequate funding for thereserves required by paragraph (b) of subsection 2 of NRS116.3115. The budget must include, without limitation: (1) The current estimated replacement cost, estimated remaining life and estimated remaining useful life ofeach major component of the common elements; 1/6/06 30 (2) As of the end of the fiscal year for which thebudget is prepared, the current estimate of the amount of cashreserves that are set aside, to repair, replace or restore themajor components of the common elements; (3) A statement as to whether the executive board has determined or anticipates that the levy of one ormore special assessments will be necessary to repair, replaceor restore any major component of the common elements or toprovide adequate funding for the reserves designated for thatpurpose; and (4) A general statement describing the proceduresused for the estimation and accumulation of cash reserves pursuantto subparagraph (2), including, without limitation, qualificationsof the person responsible for the preparation of the study ofthe reserves required by NRS 116.31152. 5.10 Budget Summary. In lieu of distributing copies of thebudgets of the Association required by subsection 1, the Boardof Directors may distribute to each Owner of a Lot a summary ofthose budgets, accompanied by a written notice that: (a) The budgets are available for review at the businessoffice of the Association or some other suitable location within the County where the common-interest community issituated or, if it is situated in more than one county, within one of those counties; (b) Copies of the budgets will be provided uponrequest. Within 60 days after adoption of any proposed budget forthe Project, the executive board shall provide a summaryof the proposed budget to each units’ owners and shall seta date for a meeting of the units’ owners to considerratification of the proposed budget not less than 14 daysnor more than 30 days after the mailing of the summaries. Unless at that meeting a majority of all units’ owners, or any larger vote specified in the declaration, reject theproposed budget, the proposed budget is ratified, whetheror not a quorum is present. If the proposed budget isrejected, the periodic budget last ratified by the units’owners must be continued until such time as the units’ owners ratify a subsequent budget proposed by the executiveboard. 1/6/06 31 5.11 Distribution of Polices and Practices. A statement describing the Association's policies and practices in enforcinglien rights or other legal remedies for default in payment of itsassessments against its Members shall be annually delivered to theMembers during the sixty (60) day period immediately preceding thebeginning of the Association`s fiscal year. 5.12. Additional Budget/Contracting Requirements. In addition to the NRS Requirements set forth herein, thefollowing additional Budget/Contracting Requirements shallbe required: a. Signed agreements for each contractor must beexecuted prior to each Budget being approved by theBoard of Directors. b. The following items must be contracted for: 1. Landscape maintenance, weekly. 2. Tree trimming, twice per year. 3. Gate maintenance, monthly. 4. Landscape lighting, monthly. 5. Street sweeping, monthly. 6. Painting, block and stucco repair, asneeded. 7. Sewer and water system check, each year. c. Conduct a formal community evaluation annually(April, May or June), prior to preparing subcontractorcontracts for budget approval. The following componentsmust be evaluated by the Board of Directors: 1. Landscaping of Plants. 2. Landscaping irrigation. 3. Asphalt areas. 4. Concrete areas. 5. Lighting. 6. Sewer and water systems. 1/6/06 32 5.13 Ninety (90) Day Review. At least once every ninety (90) days, the Board of Directors shall review, at a minimum, the following financial information at one of its meetings: (a) A current year to date financial statement ofthe Association; (b) A current year-to-date schedule of revenuesand expenses for the operating account and the reserveaccount, compared to the budget for those accounts; (c) A current reconciliation of the operatingaccount of the Association; (d) A current reconciliation of the reserve account of the Association. (e) The latest account statements prepared bythe financial institutions in which the accounts of the Association are maintained; and (f) The current status of any civil action or claimsubmitted to arbitration or mediation in which the Association is a party. 5.14. Financial Statement. Except as otherwise provided in Subsection 2, the Board ofDirectors shall: (a) If the annual budget of the Association isless than $75,000.00 cause the financial statement of theAssociation to be audited by an independent certified publicaccountant at least once every four (4) fiscal years. (b) If the annual budget of the Association is$75,000.00 or more, but less than $150,000.00, cause thefinancial statement of the Association to be: (1) Audited by an independent certifiedpublic accountant at least once every four (4) fiscalyears; and (2) Reviewed by an independent certifiedpublic accountant every fiscal year for which an auditis not conducted. (c) If the annual budget of the Association is$150,000 or more, cause the financial statement of theAssociation to be audited by an independent certifiedpublic accountant every fiscal year. 1/6/06 33 For every fiscal year for which an audit of the financialstatement of the Association will not be conducted pursuant to this section, the Board of Directors shall causethe financial statement for that fiscal year to be auditedby an independent certified public accountant if, within180 days before the end of the fiscal year, fifteen percent(15%) of the total number of voting members of theAssociation submit a request for such an audit. 5.15 Distribution of Changes in Project Documents. In accordance with NRS Chapter 116, if any change is made tothe Project Documents of the Association, the Secretary shall, within thirty (30) days after the change is made, prepare andcause to be hand-delivered or sent prepaid by United States mailto the mailing address of the Lot Owner(s) or to any other mailingaddress designated in writing by the Lot Owner(s), a copy of thechange that was made. 5.16 Officers and Amendments to the Declaration. In accordance with NRS 116.3106 (1) (e) and the recordedDeclaration, the President is authorized to prepare, executecertify and record Amendments to the Declaration on behalf ofthe Association, after approval by the Board of Directors and theMembers of the Association. The management agent shall coordinatethe preparation and recordation of any Amendment to theDeclaration. 1/6/06 34 ARTICLE VI BOOKS AND RECORDS 6.01 Inspection by Members. Members of the Association shall have access to Association records. The governing documents, themembership register (including names, telephone numbers, mailingaddresses, and voting rights), the financial statement of theAssociation, the budgets of the Association required to be preparedin accordance with these Bylaws, the reserve study required to beprepared in accordance with these Bylaws, and the minutes ofmeetings of the Association, Board, and of committees shall be madeavailable for inspection and copying by any Member of theAssociation, or by his duly appointed representative, at anyreasonable time and for a purpose reasonably related to hisinterest as a Member, at the business office of the Associationor at such other suitable location as the Board may prescribe. In addition to the foregoing, in accordance with NRS 116.31175, the Association shall, upon the written request of a Lot’s Ownermake available all contracts to which the Association is a partyand all records filed with a court relating to a civil orcriminal action to which the Association is a party. The provisions of this section do not apply to: (a) The personnel records of the employees of theAssociation, except for those records relating to thenumbers of hours worked and the salaries and benefits of those employees; (b) The records of the Association relating to anotherLot’s Owner, except those records described in (a); and (c) A contact between the Association and an attorney. In addition, the Board shall maintain a general recordconcerning each violation of the governing documents, otherthan a violation involving a failure to pay an assessement, forwhich the Board has imposed a fine, a construction penalty orany other sanction. The general record: (a) Must contain a general description of the natureof the violation and the type of sanction imposed. If the sanction imposed was a fine or construction penalty, the generalrecord must specify the amount of the fine or constructionpenalty. (b) Must contain the name and address of the personagainst whom the sanction was imposed or any other personalinformation which may be used to identify the person or thelocation of the Lot, if any, that is associated with theviolation. 1/6/06 35 (c) Must be maintained in an organized and convenientfiling system or data system that allows a Lot’s owner tosearch and review the general records concerning violations ofthe governing documents. In accordance with NRS 116.31175, the books, records andother papers of the Association must be maintained for at least10 years. The provisions of this subsection do not apply to: (a) The minutes of a meeting of the Lots’ ownerswhich must be maintained in accordance with NRS 116.3108; (b) The minutes of a meeting of the Board which mustbe maintained in accordance with NRS 116.31083. In addition, the Board shall not require a Lots’ owner topay an amount in excess of $10 per hour to review any books, records, contracts or other papers of the Association pursuantto NRS 116.31175. 6.02 Access to Records by Ombudsman. The Board of Directors shall make available for review by the ombudsman for owners incommon-interest communities: (1) the financial statement of theAssociation, (2) the budgets of the Association required to beprepared in accordance with these Bylaws, and (3) the reservestudy required to be prepared in accordance with these Bylaws. The Board of Directors shall provide the ombudsman for owners incommon-interest communities with a copy of the foregoing itemsin accordance with Section 6.03. 6.03 Rules for Inspection/Payment of Costs/Time Limitfor Distribution. The Board shall establish reasonable rules with respect to: (a) Form of the written notice to be given to thecustodian of the records by the Member desiring to make theinspection. (b) Hours and days of the week when such an inspectionmay be made (“regular working hours”). (c) payment of the cost of reproducing copies ofdocuments requested by a Member. The cost of reproducing copies ofdocuments described in Section 6.1 may not exceed $.25 per page. (d) the time limit for distribution shall not exceed fourteen (14) days after receipt by the custodian of the records ofthe written request. 1/6/06 36 6.04 Prohibition on Access by Members. In accordance with NRS Chapter 116, the right of inspection of the books, records, and documents described in Section 6.02 shall not apply to: (a) The personnel records of the employees of theAssociation; and (b) The records of the Association relating to anotherLot Owner(s). 6.05 Inspection by Directors. Every Director shall have theabsolute right at any reasonable time to inspect all books, records, and documents of the Association and the physicalproperties owned or controlled by the Association. The right ofinspection by a Director includes the right to make extracts andcopies of documents at reasonable charge. ARTICLE VII MISCELLANEOUS 7.01 Committees. The Board of Directors shall appoint anArchitectural Review Committee, as provided in the Declaration, anda Nominating Committee, as provided in the Bylaws. In addition, the Board of Directors shall appoint other committees as deemedappropriate in carrying out its purposes. 7.02 Assessments. Regular and special assessments leviedpursuant to the Project Documents are delinquent fifteen (15) daysafter they become due. If an assessment is delinquent, theAssociation may recover all of the following: (a) Reasonable costs incurred in collecting thedelinquent assessment, including reasonable attorney's fees. (b) A late charge not exceeding ten percent (10%) of thedelinquent assessment or ten dollars ($10.00), whichever isgreater. (c) Interest on all sums imposed in accordance with thesection, including the delinquent assessment, reasonable costs ofcollection, and late charges, at an annual percentage rate not toexceed eighteen percent (18%) interest, commencing thirty daysafter the assessment becomes due. No Owner may waive or otherwiseescape liability for the assessments provided for herein by nonuseof the Common Area or abandonment of his Lot. 1/6/06 37 7.03 Amendments. Prior to close of escrow on the sale of the first Lot, the Declarant may amend these Bylaws. After of sale of the first Lot, these Bylaws may be amended only by the affirmativevote (in person or by proxy) or written consent of Membersrepresenting a majority of the total voting power of theAssociation, which shall include a majority of the votes or writtenconsent of Members other than the Declarant. However, thepercentage of voting power necessary to amend a specific clause orprovision shall not be less than the prescribed percentage ofaffirmative vote required for action to be taken under that clause. 7.04 Transfer of control from Declarant to Association. In addition to any applicable requirement set forth in Section39 of this act, within thirty (30) days after the Members otherthan the Declarant may elect a majority of members of the Board, the Declarant shall deliver to the Association all property of theMembers and the Association held by or controlled by the Declarant, including: (a) The original or a certified copy of the recordedDeclaration of Covenants, Conditions, and Restrictions and anyamendments thereto; a copy of the filed Articles ofIncorporation; articles of association, articles oforganization, certificate of registration, certificate oflimited partnership, certificate of trust or other documentsof organization for the association, the Bylaws; minute booksand other books and records of the Association; and anyRules and Regulations of the Association which may havebeen adopted; (b) an accounting for money of the Association andaudited financial statements for each fiscal year and anyancillary period from the date of inception of the Associationto the date the period of the declarant’s control ends. Thefinancial statements must fairly and accurately report withAssociation's position. (c) A complete study of the reserves of theAssociation, conducted by a person who holds a permit toconduct such a study issued pursuant to sections 2 to 35, inclusive, of this act. At the time the control of the Declarantends, he shall: (a) except as otherwise provided herein, deliver tothe Association a reserve account that contains the Declarant’s share of the amounts then due, and control of the account. If the Declaration was recorded before October 1, 1999, and, at the timethe control of the Declarant ends, he/she has failed to pay his/hershare of the amounts due, the Board of Directors shall authorizethe Declarant to pay the deficiency in installments for a period ofthree (3) years, unless the Declarant and the Board of Directorsagree to a shorter period. 1/6/06 38 (d) Disclose, in writing, the amount by which he/shehas subsidized the Association’s dues on a per Lot basis. (e) The Association's money or control thereof. (f) All of the Declarant's tangible personal propertythat has been represented by the Declarant as property of theAssociation or, unless the Declarant has disclosed in the PublicOffering Statement that all such personal property used in theProject will remain the Declarant's property, all of theDeclarant's tangible personal property that is necessary for, andhas been used exclusively in, the operation and enjoyment of thecommon elements, and inventories of the Project. (g) A copy of any plans and specifications used in theconstruction of the improvements in the Project which werecompleted within two (2) years before the Declaration was recorded. (h) All insurance policies then in force in which theMembers, the Association, or its Directors and Officers are namedas insured persons. (i) Copies of any certificates of occupancy that mayhave been issued with respect to any improvements comprising theProject other than the Lots. (j) Any renewable permits and approvals issued bygovernmental bodies applicable to the Project which are in forceand any other permits and approvals so issued and applicable whichare required by law to be kept on the premises of the Project. (k) Written warranties of the contractor, subcontractors, suppliers and manufacturers for the CommonElements that are still effective. (l) A roster of Owners and Mortgages of Lots andtheir addresses and telephone numbers, if known, as shown on theDeclarant's records. (m) Contracts of employment in which the Associationis a contracting party. (n) any contract for service in which the Association isa contracting party or in which the Association or the Members haveany obligation to pay a fee to the persons performing the services. 1/6/06 39 7.05 Adoption of Rules of the Association. The Board of Directors shall adopt Rules and Regulations of the Associationconsistent with the following requirements of NRS 116.31065: The Rules and Regulations adopted by the Association: 1. Must be reasonably related to the purpose for whichthey are adopted. 2. Must be sufficiently explicit in their prohibition, direction or limitation to inform a person of any action oromission required for compliance. 3. Must not be adopted to evade any obligation ofthe Association. 4. Must be consistent with the Governing Documentsand must not arbitrarily restrict conduct or require theconstruction of any capital improvement by a Member that is notrequired by the Governing Documents of the Association 5. Must be uniformly enforced under the same or similarcircumstances against all Members. Any rule that is not souniformly enforced may not be enforced against any Member. 6. May be enforced by association through theimposition of a fine only if the association complies withthe requirements set forth in NRS 116.31031. 7.06 Failure to Comply with Governing Documents. If a Lots’ Owner, a tenant, or a guest of a Lot’s Owner, violatesany provision of the Governing Documents of the Association, theBoard of Directors may, if the Governing Documents so provide: 1. Prohibit, for a reasonable time, the Lot’sOwner, the tenant, or a guest of the Lot’s Owner, from: (a) Voting on matters related to the common- interest community. (b) Using the Common Elements/Association Property. The Board of Directors may not prohibit the Lot’s Owner, the tenant or the guest of the Lot’s Owner from using anyvehicular or pedestrian ingress to or egress to go to or fromthe Lot including any area used for parking. 1/6/06 40 2. Impose a fine against the Lot’s owner or thetenant or guest of the Lot’s owner for each violation, exceptthat a fine may not be imposed for a violation that is thesubject of a construction penalty pursuant to NRS 116.310305. If the violation poses an imminent threat of causing asubstantial adverse effect on the health, safety or welfareof the units’ owners or residents of the Project, the amountof the fine must be commensurate with the severity of theviolation and must be determined by the Board of Directorsin accordance with the governing documents. If the violation does not pose an imminent threat causing a substantialadverse effect on the health, safety or welfare of the unitsowners or residents of the Project, the amount of thefine must be determined by the Board of Directors inaccordance with the governing documents, but the amountof the fine must not exceed $100 for each violation or a total amount of $1,000.00, whichever is less. The limitations on the amount of the fine do not apply to any interest, chargesor cost that may be collected by the association pursuant tothis section if the fine becomes past due. 3. The Board may not impose a fine pursuant paragraph2 unless: (a) Not less than 30 days before the violation, the person against whom the fine will be imposed has beenprovided with written notice of the applicable provisionsof the governing documents that form the basis of theviolation; (b) Within a reasonable time after the discoveryof the violation, the person against whom the fine will beimposed has been provided with: (1) Written notice specifying the details, of the violation, the amount of the fine, and thedate, time and location for a hearing on theviolation; and (2) A reasonable opportunity to contest theviolation at the hearing. 4. The board must schedule the date, time andlocation for a hearing on the violation so that the personagainst whom the fine will be imposed is provided with areasonable opportunity to prepare for the hearing and to bepresent at the hearing. 1/6/06 41 5. The board must hold a hearing before it mayimpose the fine, unless the person against whom the fine willbe imposed: (a) Pays the fine; (b) Executes a written waiver of the right tothe hearing; or (c) Fails to appear at the hearing after beingprovided with proper notice of the hearing. 6. If a fine is imposed pursuant to paragraph 2 andthe violation is not cured within fourteen (14) days or withinany longer period that may be established by the Board ofDirectors, the violation shall be deemed a continuing violation. Thereafter, the Board of Directors may impose an additional finefor the violation for each seven (7) day period or portionthereof that the violation is not cured. Any additional finemay be imposed without notice and an opportunity to be heard. 7. The Board may appoint a committee, with not lessthan three members, to conduct hearings on violations and toimpose fines pursuant to this section. While acting on behalfof the Board for these limited purposes, the committee and itsmembers are entitled to all privileges and immunities and aresubject to all duties and requirements of the Board and itsmembers. 8. Any past due fine: (a) Bears interest at the rate established bythe Association, not to exceed the legal rate per annum. (b) May include any costs of collecting thepast due fine at a rate established by the association. If the past due fine is for a violation that does notthreaten the health, safety or welfare of the residentsof the common-interest community, the rate established bythe Association for the costs of collecting the past duefine: (1) May not exceed $20.00, if the outstanding balanceis less than $200.00. (2) May not exceed $50.00, if the outstanding balanceis $200.00 or more, but is less than $500.00. 1/6/06 42 (3) May not exceed $100.00, if the outstanding balanceis $500.00 or more, but is less than $1,000.00. (4) May not exceed $250.00, if the outstanding balanceis $1,000.00 or more, but is less than $5,000.00. (5) May not exceed $500.00, if the outstanding balanceis $5,000.00 or more. (c) May include any costs incurred by theAssociation during a civil action to enforce the paymentof the past due fine. 9. As used in this section: (a) “Costs of collecting” includes, withoutlimitation, any collection fee, filing fee, recording fee, referral fee, fee for postage or delivery, and any otherfee or cost that an association may reasonably charge tothe Lot’s owner for the collection of a past due fine. The term does not include any costs incurred by anassociation during a civil action to enforce the paymentof a past due fine. (b) “Outstanding balance” means the amount of apast due fine that remains unpaid before any interest, charges for late payment or costs of collecting the pastdue fine are added. 7.07 Notice Requirements for Assessment for a CapitalImprovement or Commencement of a Civil Action. In accordance with NRS 116.3115 and in addition to Article III, Section 3.03 herein, the Association shall provide written notice to each Member of ameeting at which an assessment for a capital improvement or thecommencement of a civil action is to be considered or action is to be taken on such assessment at least twenty-one (21) calendar daysbefore the date of the meeting. If any civil action in which the Association is a party issettled, the Board of Directors shall disclose the terms andconditions of the settlement at the next regularly scheduledmeeting of the Board of Directors after the settlement hasbeen reached. The Board of Directors may not approve asettlement which contains any terms and conditions that wouldprevent the Board of Directors from complying with theprovisions of this subsection. 1/6/06 43 7.08 Prohibition on Lien Foreclosure. Notwithstanding anylanguage in the recorded Declaration and in accordance with NRS116.31162 (4), the Association may not foreclose a lien by sale forthe assessment of a fine for a violation of the Declaration Bylaws, rules or regulations of the Association, unless theviolation is of a type that threatens the health and welfare of theresidents of the common-interest community. 7.09 Notice of Fines. In accordance with NRS 116.3108 (4), if the Association adopts a policy imposing fines for anyviolations of the governing documents of the association, theSecretary shall prepare and cause to be hand-delivered or sent byprepaid United States mail to the mailing address of each Lot orto any other mailing address designated in writing by the Lot’sowner, a schedule of the fines that may be imposed for thoseviolations. 7.10 Application of Assessment, Fee or Charge. In accordance with NRS 116.31145, the Association may not apply any assessment, fee or other charge that is paid by a Lot Owner toward a fineimposed by the Association against the Lot Owner. 7.11 Definition of the term “Emergency”. In accordance with NRS Chapter 116, the term “emergency”, as used in these Bylaws, shall mean any occurrence or combination of occurrences that: (a) Could not have been reasonably foreseen; (b) Affects the health, welfare, and safety of the LotOwner(s) of the common-interest community; (c) Requires the immediate attention of, and possibleaction by, the Board of Directors; and (d) Makes it impossible to comply with the provisionsof subsection 3 or 4. 7.12 Conflicts. In the case of any conflict between theArticles and these Bylaws, the Articles shall control; and in thecase of any conflict between the Declaration and these Bylaws, theDeclaration shall control. 1/6/06 44 ARTICLE VIII MAINTENANCE MANUAL 8.01 Adoption By Board of Directors. The Directors of the Association, as set forth in the Articles ofIncorporation filed with the Office of Secretary of State, arehereby authorized to meet prior to the organizational meeting ofthe Association, to review and adopt a “Maintenance Manual” forthe purpose of maintenance, repair and replacement of all of theImprovements to the Common Elements within the planneddevelopment. The Minutes of the Special Meeting by the Board ofthe Directors and the Maintenance Manual shall be included within the records of the Association. 8.02. Requirements of Maintenance Manual. The Maintenance Manual shall provide a procedure which setsforth the manner and time for the maintenance, repair and/orreplacement of all of the Improvements to the Common Elementswithin the planned development. 1/6/06 45 RATIFICATION I, the undersigned, do hereby certify: That I am the duly elected and the acting Secretary ofthe TERRASANO HOMEOWNERS ASSOCIATION, a Nevada non-profitcorporation. That the foregoing Bylaws constitute the Amended andRestated Bylaws of said Association, as duly adopted at aspecial meeting of the Board of Directors of the Associationheld on the 6th day of January, 2006. IN WITNESS WHEREOF, I have hereunto subscribed my name this6th day of January, 2006. Secretary 1/6/06 46