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HomeMy WebLinkAboutLand Use Case.118 E Cooper Ave.0076.2006.ASLU118 E COOPER FINAL REVIEW PUD AGRMT I 273512471005 0076.2006.ASLU 1 " A \ U-0,,-00«-Le \ SCAWAJE-b 3 h P 4 7 .. City of Aspen Community Development Department CASE NUMBER 0076.2007.ASLU PARCEL ID NUMBER 2735-124-71-005 PROJECT ADDRESS 118 E Cooper Ave. PLANNER Joyce Allgaier CASE DESCRIPTION Final review- Condo Documents-PUD Agreement REPRESENTATIVE David Fiore DATE OF FINAL ACTION CLOSED BY Amy DeVault .. 4 +4» + 7€ I OP*%16* C Eile Edit Record tgavigate Perm Reports Format Lab tie}p i Main Custom Fidela Feel Actors ParceIs Rogting S'atus Fee Summar! Routing!11:toly Attachments i ~ € ~ Pefrnit Type ·:,slu A:pen land Ute 2004 Permit # 0076,2006,ASLU . i 21 ~ Addfes: 118 E COOPER AVE Apt/'Suite U C CRy ASPEN State i CO iE Zip :81611 W W 1 * 1 Permit Information ' 2 ~ M asker Permit ~...~:.ya,i:i.I:·.9 1 Roijting Queue .aslu06 Applied 14'-4.006 if i p'/4.,Dt 5 Status ,pending F Appfoved 1 ¢D ~ «' i Description FINEREGEW (ONDO-DOCUMENTS-PUDAGREEMENT Issued i ~Avr.*<'.'.A+4~44,« 1 Final i :~ Submitted 'DAVID FIORE 920-0815 Clock ~Running Days , 0 Expire- 12/17'i.007 1 35 1 W Ownet Last Name LITTLEREDSKIHAUS LLC Fiist Name I118 E COOPER AVE IASPEN CO 81611 Phorie I 370] 925·7123 1 4 0 *rier 1 s Applicant? 1 Applicant Last Name LITTLE PED 51 1 HAUS LLC F ~ First Name ~ '18 E COOPER As. E -- .ASPEN Co 81611 f Phone !370)925·7123 Clttt #27380 Lender ! Last Name Fint Name 2 Phc,r·ie E nter the master pemit mmber . "¥CY . Record 1 of 1 - Tab G .. DECLARATION OF CONDOMINIUM FOR LITTLE RED RESIDENCE PITKIN COUNTY COLORADO {00053419/ 1} i .. TABLE OF CONTENTS ARTICLE 1 - DEFINITIONS -1- Section 1.1 ",Act" Section 1.2 "Allocated Interest" -1- Section 1.3 "Allocation" or "Allocated Use Periods" -1- Section 1.4 "Annual Assessments" -2- Section 1.5 "Assessment Period" -2- Section 1.6 "Assessments" -2- Section 1.7 "Association" -2- Section 1.8 "Association Documents" -2- Section 1.9 "Building -2- -2- Section 1.10 "Bylaws" Section 1.11 "Club Affiliation Agreement". -2- Section 1.12 "Club Points" -2- Section 1.13 "Club Resorts" ...-2 - Section 1.14 "Common Elements" -2- Section 1.15 "Common Expense(s)" -3- Section 1.16 "Condominium Map" or "Map" -3- Section 1.17 "Declarant" -3- Section 1.18 "Declaration" -4- Section 1.19 "Default Assessments" ...-4 - Section 1.20 "Director" ...-4 - Section 1.21 "Eligible Mortgagee" -4- Section 1.22 "Exchange Program" -4- Section 1.23 "Exchange Users" -4- Section 1.24 "Executive Board" -4- Section 1.25 "First Mortgage" -4- Section 1.26 "First Mortgagee" -4- Section 1.27 "Fractional Ownership Interest" -4- Section 1.28 "General Common Elements" -5- Section 1.29 - 5 - Section 1.30 "Management Agreement" Section 1.31 "Managing Agent" -5- Section 1.32 "Maximum Rate" -5- Section 1.33 "Member" -5- Section 1.34 "Membership Interest" -5- Section 1.35 "Mortgage" -5- Section 1.36 "Mortgagee" -5- Section 1.37 "Owner" ...-5 - Section 1.38 "Permissible Mortgage(s)" -5- Section 1.39 "Personal Assessments" ...- 5 - Section 1.40 "Plan of Fractional Ownership" -6- Section 1.41 " -6- Section 1.42 "Project" -6- Section 1.43 "Property".. -6- Section 1.44 "PUD Plan" -6- Section 1.45 "Records" -6- Section 1.46 -6- Section 1.47 "Special Assessments" -6- Section 1.48 "Successor Declarant" -6- Section 1.49 "Unit" -6- Section 1.50 "Use Year". -6- ARTICLE 2 - PURPOSE AND PLAN -7- Section 2.1 Purpoqp -7- Section 2.2 Intention of Declarant..............................................................................................................- 7 - {00053419 / 1} ii .. Section 2.3 Development and Uqp -7- Section 2.4 Plan of Fractional Ownership -7- ARTICLE 3 - IMPOSITION OF COVENANTS -7- Section 3.1 Submission of Property ... 7 - Section 3.2 -7- Section 3.3 Final Plat -8- Section 3.4 Covenants Running with the Land -8- ARTICLE 4 - DIVISION OF PROJECT INTO CONDOMINIUM OWNERSHIP ... 0 - Section 4.1 Division into Units. -8- Section 4.2 Delineation of Unit Boundaripq -8- Section 4.3 Inseparability of Unit -9- Section 4.4 Nonpartitionability of Common Elements...............................................................................- 9 - ARTICLE 5 - CONDOMINIUM MAP - 10 - Section 5.1 Condominium Mar - 10 - Section 5.2 Amendmpnt - 10 - ARTICLE 6 - OWNERS' PROPERTY RIGHTS IN COMMON ELEMENTS.. - 10 - Section 6.1 General Common Elements...................................................................................................- 10 - Section 6.2 parking -11- ARTICLE 7 - MEMBERSHIP AND VOTING RIGHTS IN ASSOCIATION - 11 - Section 7.1 Declarant Control -11- Section 7.2 Association Membership -11- Section 7.3 Membprqhip -11- Section 7.4 Voting Rights -11- Section 7.5 Election of Dirertnrq - 12 - Section 7.6 Fairness Standard - 12 - Section 7.7 Voting by Association Memherq - 12 - Section 7.8 Ownefs and Association's Address for Notices - 12 - ARTICLE 8 - ASSOCIATION DUTIEq -13- Section 8.1 Association Management Duties Section 8.2 Reserve Accnimt -13- Section 8.3 Owner's Negligence -15- Section 8.4 Delegation of Management and Maintenance Duties Section 8.5 Acquiring and Disposing of Real and Personal Property - 16 - Section 8.6 Cooperation with Other Entities or Organizations - 16 - Section 8.7 Issuance of Rules and Regulations Section 8.8 Enforcement of Association Documents - 17 - Section 8.9 Identity of Executive Board and Managing Agent Section 8.10 Implied Rights.......................................................................................................................- 18 - Section 8.11 Books and Records ofthe Association Section 8.12 Compliance with Liquor Laws - 18 - Section 8.13 LIMITATION OF LIABILITY OF ASSOCIATION - 19 - Section 8.14 Indemnification ofDirectors and Officers - 19 - Section 8.15 Financial Statements..............................................................................................................- 19 - ARTICLE 9 - ASSESSMENTS -20- Section 9.1 Covenant of Personal Obligation of Assessments Section 9.2 Purpose of Assessments -20- Section 9.3 Annual Assessments ............................................................................................................. - 21 - 9.3.1 Commencement of Assessmentq -21- 9.3.2 Amount of Total Annual Assessmentq -21- 9.3.3 Apportionment ofAnnual Assessmentq -21- 9.3.4 Annual Fll,rlget -22- Section 9.4 Special Assessments -22- Section 9.5 Personal Assessmentq -22- Section 9.6 Default Assessments.................................. ............................................................................ - 23 - Section 9.7 Due Dates for Assessment Payments - 23 - Section 9.8 Declarant's Obligation to Pay Assessmentq - 23 - {00053419 / 1} iii .. Section 9.9 Lien for Assessments.............................................................................................................-23 - Section 9.10 Effect ofNonpayment of Assessmentq -24- Section 9.11 Successor's Liability for Assessment• - 25 - Section 9.12 Waiver of Homestead Exemption; Subordination of Association's Lien for Assessments.... - 25 - Section 9.13 Statement of Status ofAssessments -26- Section 9.14 Lieng -27- ARTICLE 10 - MAINTENANCE RESPONSIBILITY -27- Section 10.1 Responsibility of the Association -27- Section 10.2 No Work or Alterations by Owners -27- ARTICLE 11- INSURANCE AND FIDELITY BONDq -27- Section 11.1 General Insurance Provisiong -27- Section 11.2 Cancellation -28- Section 11.3 Policy Provisiong -28- Section 11.4 Insurance Proceeric -28- Section 11.5 Association polirieq -29- Section 11.6 Insurer Obligatinn -29- Section 11.7 Repair and Replacement -29- Section 11.8 Common Expenqpq -30- Section 11.9 Fidelity Insuranre -30- Section 11.10 Worker's Compensation Insurance -30- Section 11.11 Other Insurance -30- ARTICLE 12 - CONVEYANCES AND TAXATION OF FRACTIONAL OWNERSHIP INTERESTS....- 30 - Section 12.1 Contracts to Convey Entered into Prior to Recording - 30 - Section 12.2 Contracts to Convey and Conveyances Subsequent to Recording -30- Section 12.3 Conveyance Deemed to Describe an Undivided Interest in Common Elements...................- 31 - Section 12.4 Separate Tax Assessments.. -31- ARTICLE 13 - MECHANICS' LIENS -32- Section 13.1 Mechanics' Lieng -32- ARTICLE 14 - USE RESTRICTIONS -32- Section 14.1 Use of I Initq - 32 - Section 14.2 Commercial liqpq -32- Section 14.3 Residential Uses - 32 - Section 14.4 Conveyance of Units - 33 - Section 14.5 Use ofCommon Elementq -33- Section 14.6 Prohibition of Increases in Insurable Risks and Certain Activities - 33 - ARTICLE 15- EASEMENTS .... - 34 - Section 15.1 Easement of Enjoyment -34- Section 15.2 Delegation of I Tqp -34- Section 15.3 Permitted Exceptions.............................................................................................................- 34 - Section 15.4 Easements for Encroachments...............................................................................................- 34 - Section 15.5 Utility Easementq -34- Section 15.6 Reservation of Easements, Exceptions and Exclusions.........................................................- 35 - Section 15.7 Emergency Access Easement Section 15.8 Maintenance Easement -36- Section 15.9 Drainage Easement -36- Section 15.10 Easements of Access for Repair, Maintenance, and Emergencies -36- Section 15.11 Declarant's Rights Incident to Construction and Marketing..................................................- 36 - Section 15.12 Right of Declarant and Association to Own Units andto Use Common Elements...............- 36 - Section 15.13 Remodeling Easement...........................................................................................................- 37 - Section 15.14 Reservation for Relocation, Combination, Subdivision or Resignation of Units..................- 37 - Section 15.15 Easements Deemed Created -37- ARTICLE 16 - ASSOCIATION AS ATTORNEY-IN-FACT -37- Section 16.1 Appointment -37- Section 16.2 General Authority -38- ARTICLE 17 - DAMAGE OR DESTRUCTION -38- Section 17.1 The Role ofthe Executive Board...........................................................................................- 38 - {00053419 / l} iv .. Section 17.2 Estimate of Damages or Destruction -38- Section 17.3 Repair and Reconstruction -38- Section 17.4 Funds for Repair and Reconstruction -39- Section 17.5 Insurance Proceeds Sufficient to Repair -39- Section 17.6 Insurance Proceeds Insufficient to Repair; Special Assessment Remedies for Failure to Pay Special Asse«ment -39- Section 17.7 Repairq -40- Section 17.8 Notice of Damage or Destruction.......................................................................................... -40- ARTICLE 18 - OBSOLESCENCF -40- Section 18.1 Adoption of Plan; Rights of Owners -40- Section 18.2 Sale of Obsolete Unitq -40- ARTICLE 19 - CONDEMNATION -41- Section 19.1 Consequences ofCondemnation - 41 - Section 19.2 Complete Taking -41- Section 19.3 Partial Taking -41- Section 19.4 Reorganization - 42 - Section 19.5 Repair and Reconstruction. -42- Section 19.6 Notice of Condemnation - 42 - Section 19.7 Limitations on Actions of Association ARTICLE 20 - OTHER ASSOCIATION MATTERS - 42 - Section 20.1 Association Mattprq - 42 - Section 20.2 Enforcement of Association Documents - 43 - Section 20.3 Architectural Control - 43 - Section 20.4 Limit on Timesharing - 43 - Section 20.5 Acknowledgments .. - 44 - ARTICLE 21 - DECLARANT'S RIGHTS REGARDING TRANSFER.. - 45 - Section 22.1 Restriction on Declarant Powers .. -45- Section 22.2 Term - 46 - Section 22.3 Amendment - 46 - Section 22.4 Unilateral Amendment Rights Reserved by Declarant..........................................................- 46 - Section 22.5 Recording of Amendmentq - 46 - Section 22.6 Enforcement -46- Section 22.7 Severability.. - 47 - Section 22.8 Conflict of Provisionq - 47 - Section 22.9 Nonwaiver -47- Section 22.10 Number and Gender -47- Section 22.11 Captiong - 47 - Section 22.12 Exhibitq -47- ARTICLE 23 - PLAN OF FRACTIONAL OWNERSHIP - 47 - Section 23.1 Right to Submit Units to a Plan of Fractional Ownership -47- Section 23.2 Conveyance by Purchager -48- Section 23.4 Legal Description of a Fractional Ownership Intern.qt -48- Section 23.5 Administration and Management - 49 - Section 23.6 Acceptance; Enforcement; Indemnification - 49 - Section 23.7 Right of First Refusal to Purchase Fractional Ownership Interests Section 23.8 Limitation on Transfers by Ownerq - 51 - Section 23.9 Declarant's Right to Repurchase Fractional Ownership Interest upon Abandonment of Plan of Fractional Ownership by Declarant Section 23.10 - 51 - Section 23.11 - 52 - Section 23.12 - 52 - Section 23.13 - 52 - Section 23.14 - 52 - Section 23.15 - 53 - Section 23.16 - 53 - Section 23.17 - 53 - {00053419/ 1} V .. Section 23.18 Declarant's Right to Rent Unitq - 53 - 23.18.1 - 53 - EXHIBIT A - 56 - EXHIBIT B... - 57 - EXHIBIT C -58- {00053419/ 1} vi .. DECLARATION OF CONDOMINIUM FOR LITTLE RED RESIDENCE THIS DECLARATION OF CONDOMINIUM FOR LITTLE RED RESIDENCE (this "Declaration") dated as of , 2006, shall be effective upon recordation and is made by Little Red Ski Haus, LLC ("Declarant"). Declarant is the owner of certain real property in Pitkin County, Colorado, more particularly described on Exhibit A attached and made part of this Declaration by this reference (the "Property"). Declarant hereby makes the following grants, submissions and declarations for the respective Property that it owns: ARTICLE 1 - DEFINITIONS The following words, when used in this Declaration, shall have the meanings designated below unless the context shall expressly provide otherwise: Section 1.1 "Act" means the Colorado Common Interest Ownership Act as set forth in Article 33.3, Title 38 of the Colorado Revised Statutes, as amended and supplemented from time to time. Section 1.2 "Allocated Interest" means the interest allocated to each Unit expressed as a fraction as set forth in Exhibit B attached hereto and incorporated herein by reference. Allocated Interests govern voting rights, assessment obligations and ownership interests for all Units. Section 1.3 "Allocation" or "Allocated Use Periods" means those periods of time allocated to each Owner as designated in the deed or other instrument of conveyance. Each Fractional Ownership Interest shall carry with it an Allocation consisting of the rights to the use, occupancy and possession of a Unit for seven (7) days in accordance with the Association Documents. Initially, each Allocation shall be identified by a number, letter, name, symbol or color, or by any combination thereof, which identifies the specific Allocated Use Periods per year for each Fractional Ownership Interest. An Allocation may also be identified by a specific week number, a specific number of weeks, a type of week (whether fixed, floating, holiday or otherwise), by specific seasons or by any other method, formula or description established in the deed of conveyance, in the Association Documents. Allocated Use Periods may be fixed time periods, floating time periods that require the Owner to reserve use in accordance with procedures adopted by the Association, time periods that are related to holidays or time periods that rotate periodically on a predetermined calendar or schedule. Use of Allocated Use Periods may be subject to compliance with reservation procedures adopted by the Executive Board. Declarant reserves the right, for as long as it owns one or more Fractional Ownership Interests, to change the method of identification of each Allocation. {00053419 / 1} -1. .. Section 1.4 "Annual Assessments" means that portion of the Assessments levied pursuant to Section 9.3 below. Section 1.5 "Assessment Period" means the period of time from January 1 through December 31 of each year. Section 1.6 "Assessments" means the Annual, Special, Personal and Default Assessments levied pursuant to Article 9 below. Assessments are also referred to as a Common Expense Liability under the Act. Section 1.7 "Association" means Little Red Residence Association, Inc., a Colorado nonprofit corporation, and its successors and assigns. Section 1.8 "Association Documents" means the basic documents creating and governing the Project, including, but not limited to, this Declaration, the articles of incorporation and Bylaws, the Map and any procedures, rules, regulations or policies relating to the Project adopted under such documents by the Association or the Executive Board. Section 1.9 "Building" means the building (including all fixtures and improvements contained within it) located on the Property. Section 1.10 "Bylaws" means the Bylaws of the Association. Section 1.11 "Club Affiliation Agreement" The agreement that provides Owners with the benefits of the Exchange Program to access Club Resorts and Exchange Users access to the Little Red Residence. Section 1.12 "Club Points" means the unit of use assigned to a Fractional Ownership Interest that enables the Owner to access the Exchange Program benefits. Each Owner shall annually be assigned an allocation of Club Points to represent the use rights associated with the Owner's Fractional Ownership Interest. Section 1.13 "Club Resorts" means those resorts, improvements, facilities and amenities whose assets are available from time to time to Boutique Club International, Inc. for the purpose of providing accommodations and the related vacation and travel benefits to club members. The initial Club Resorts are The Vanderbilt Residence Club, located in Newport, Rhode Island, USA and The Little Red Residence located in Aspen, Colorado, USA. Other resorts under consideration for inclusion in BCI are located in Costa Rica; however, Boutique Club International, Inc. is not obligated to include any such resort in Boutique Club International, Inc. nor does Boutique Club International, Inc. make any guarantee that resorts in such locations or any other location shall be included in Boutique Club International, Inc. Section 1.14 "Common Elements" means all of the Project, including the Property, except the Units. Common Elements include General Common Elements and Limited Common Elements. Common Elements also include, but are not limited to, tangible and intangible personal property including membership rights, licenses, and other beneficial use rights {00053419/ 1} -2- .. designated by Declarant or acquired by the Association as Common Elements and existing for the use of one or more of the Owners. The use of the Common Elements, including General Common Elements, are subject to such limitations, rules and regulations as designated by the Executive Board. Section 1.15 "Common Expense(s)" means and includes expenditures made or liabilities incurred by or on behalf of the Association for the benefit of the Project and any one or more of its Owners, Members, guests and invitees, including, but not limited to, the following: 1.15.1 Expenses of administration, insurance, operation and management, repair or replacement of the Project except to the extent such repairs and replacements are the individual responsibility of an Owner as delineated in Section 10.2 below; 1.15.2 Allocations to the Reserve Account; 1.15.3 Expenses declared Common Expenses by the provisions of this Declaration or the Bylaws. 1.15.4 All sums lawfully assessed against the Fractional Ownership Interests by the Executive Board; 1.15.5 Expenses agreed upon as Common Expenses by the Members of the Association; 1.15.6 Expenses required to be paid by the Owners in accordance with the terms of this Declaration pursuant to the Management Agreement(s) for the maintenance of the Project; and 1.15.7 Uncollected Personal Assessments and Default Assessments. Section 1.16 "Condominium Map" or "Map" means and includes any engineering survey or surveys of the Property locating the Units in the Building and the Building on the Property (subject to any lot line adjustments), and depicting the floor plans of the Units both vertically and horizontally, together with other drawings or diagrams and information regarding the Property as may be included in the discretion of the Declarant, as recorded by Declarant in the Records. Section 1.17 "Declarant" means Little Red Ski Haus, LLC, a Colorado Limited Liability Company, and its successor and assigns. No party other than Little Red Ski Haus, LLC shall exercise the rights and privileges reserved herein to Declarant unless such party shall receive and record in the Records, a written instrument from Little Red Ski Haus, LLC assigning or transferring all or a portion of such rights and privileges. {00053419 / 1} -3- .. Section 1.18 "Declaration" means this Declaration of Condominium for Little Red Residence, together with any exhibits, supplements or amendments to this Declaration, recorded in the Records. Section 1.19 "Default Assessments" means that portion of the Assessments levied pursuant to Section 9.6 below. Section 1.20 "Director" means a member of the Executive Board. Section 1.21 "Eligible Mortgagee" means a holder o f a First Mortgage on a Fractional Ownership Interest who has submitted a written request that the Association notify it of any proposed action requiring the consent of a specified percentage of Eligible Mortgagees. Section 1.22 "Exchange Program" means the system of exchange created by contract between the Declarant, Association, or other authorized party and a third party timeshare exchange company whereby an Owner who has elected to participate in such Exchange Program may exchange their allocated Club Points for use of periods of time in other resorts, or for other benefits, with companies participating in the Exchange Program. Owners are automatically enrolled in the Exchange Program. Participation in an Exchange Program is voluntary, and shall not affect the use of Fractional Ownership Interests reserved in accordance with the rules and regulations within the Association Documents. Section 1.23 "Exchange Users" means the persons authorized by virtue of an Owner's participation in an Exchange Program for the use and occupancy of the Fractional Ownership Interest. The Executive Board may prescribe certain rules, regulations and limitations governing use of the Fractional Ownership Interest by Exchange Users. Section 1.24 "Executive Board" means the governing body o f the Association, as provided in this Declaration and in the articles of incorporation and Bylaws. Section 1.25 "First Mortgage" means a Pre-Existing Mortgage and/or a Mortgage which has priority of record over all other recorded liens except those liens made superior by statute (such as general ad valorem tax liens and special assessments). Section 1.26 "First Mortgagee" means the Mortgagee holding a First Mortgage. Section 1.27 "Fractional Ownership Interest" means an undivided, fee ownership interest (expressed as a fraction) as tenant-in-common in a Unit together with an Allocation allowing Owners exclusive right to possession, use and occupancy of a Unit during Allocation Use Periods pursuant to the Association Documents. A Fractional Ownership Interest shall be an undivided 1/52nd interest in a Unit, which carries with it the right to the use, occupancy and possession of a Unit for seven (7) nights in accordance with the Association Documents. Fractional Ownership Interests may but need not be identified by one or more letters, numbers, symbols, names or colors, or any combinations thereof. Fractional Ownership Interests may be identified in advance of the transfer of Fractional Ownership Interests or may be identified upon transfer. At a minimum, a Fractional {00053419 / 1} -4- .. Ownership Interest transferred to and owned by an Owner must be identified by the undivided fee ownership interest in a specific Unit. A Fractional Ownership Interest is a time share estate under Colorado law. Section 1.28 "General Common Elements" means the Common Elements, except for the Limited Common Elements. Section 1.29 "Lodging Rules and Relrulations" means the rules, regulations, policies and procedures administered by the Reservation Service Provider by which Owners reserve and schedule use of Units during the Use Year. Section 1.30 "Management Agreement" means any contract or arrangement entered into for purposes of discharging the responsibilities of the Executive Board relative to the operation, maintenance and management of the Project. Section 1.31 "Managing Agent" means a person, firm, corporation or other entity employed or engaged as an independent contractor by the Association pursuant to a Management Agreement to perform management services for the Project. Section 1.32 "Maximum Rate" shall mean the interest rate established by the Executive Board from time to time which shall not exceed the maximum rate allowed by law. Section 1.33 "Member" shall mean a member of the Association. Section 1.34 "Membership Interest" shall mean the rights and privileges associated with being a Member of the Association. Section 1.35 "Mortgage" means any unpaid and outstanding mortgage, deed of trust or other security instrument recorded in the Records, which secures financing for the construction or development of the Project or which encumbers a Fractional Ownership Interest. Section 1.36 "Mortgagee" means any person or entity named as a mortgagee or beneficiary under any Mortgage, or any successor to the interest of any such person under such Mortgage. Section 1.37 "Owner" means any record owner, whether a natural person or persons, or an entity, of a fee simple title interest in and to any Fractional Ownership Interest. Section 1.38 "Permissible Mortgage(s)" means any Mortgage of the Declarant or, if consented to in advance by the Declarant, of an Owner, recorded in the Records. Section 1.39 "Personal Assessments" means that portion of the Assessments levied pursuant to Section 9.5 below. {00053419 / 1} -5- .. Section 1.40 "Plan of Fractional Ownership" means the system of mutual use rights and obligations created and established by this Declaration for Owners of Fractional Ownership Interests. Section 1.41 "Pre-Existing Mortgage" means a Mortgage that was of record prior to this Declaration. Section 1.42 "Proiect" means the Property (hereinafter defined) and all improvements thereon subject to the Plan of Fractional Ownership. Section 1.43 "Property" means the real property described in the attached Exhibit A (subject to any and all lot line adjustments), specifically excluding, however, the portion designated as the Restaurant as set forth on the Condominium Map, Section 1.44 "PUD Plan" means the Planned Unit Development Plan for Little Red Ski Haus recorded , under Book 66 at Page 7. Section 1.45 "Records" shall mean the official, public records of the O ffice of the Clerk and Recorder of Pitkin County, Colorado. Section 1.46 "Restaurant" shall mean the area designated as such on the Condominium Map. The Restaurant shall be specifically excluded from the Property which Declarant is submitting to the provisions of the Act. The Restaurant shall be made available to Owners on a limited-use basis by separate agreement. Section 1.47 "Special Assessments" means that portion of the Assessments levied pursuant to Section 9.4 below. Section 1.48 "Successor Declarant" means any party or entity to whom Declarant assigns any or all of its rights, obligations or interest as Declarant, as evidenced by an assignment or deed of record executed by both the assigning Declarant and the transferee or assignee and recorded in the Records, designating such party as a Successor Declarant. Upon such recording, Declarant's rights and obligations under this Declaration shall cease and terminate to the extent provided in such document. Section 1.49 "Unit" means the physical portion of the Building designated for separate ownership or occupancy. Section 1.50 "Use Year" means the twelve month period during which an Owner may redeem their annually allocated Club Points to reserve the use and occupancy of a Fractional Ownership Interest. Except for an Owner's initial Use Year, which may be pro-rated based upon the time of purchase of a Fractional Ownership Interest, each Use Year for each Owner will commence on January 1 and end on December 31. Each capitalized term not otherwise defined in this Declaration or in the Map shall have the same meanings specified or used in the Act. {00053419 / 1} -6- .. ARTICLE 2 - PURPOSE AND PLAN Section 2.1 Purpose. The purpose of this Declaration is to create a condominium project on the Property known as "Little Red Residence" (the "Project") pursuant to the Act. The Project shall be entirely situated within the County of Pitkin, State of Colorado. Section 2.2 Intention of Declarant. Declarant desires to: (i) establish a uniform plan for the sale, ownership, use, maintenance, repair, replacement and refurbishment of the Property including individual condominium units, (ii) create the Plan of Fractional Ownership permitting and providing for the use and occupancy of short-term accommodations by Owners and guests, and (iii) make unoccupied Units available to the general public for short-term rental. Section 2.3 Development and Use. The Project consists of the Building which is comprised of twelve (12) Units (without the creation of Fractional Ownership Interests). The Project shall consist of residential and commercial usage and shall be subject to the Plan of Fractional Ownership that will allow the sale and ownership of undivided Fractional Ownership Interests in the Units. No additional condominium units may be established on the Property by subdivision of existing Units, conversion of non- condominium space, or otherwise, except as provided herein and as provided by applicable land use regulations. Section 2.4 Plan of Fractional Ownership. Declarant may commit the Units to a Plan of Fractional Ownership as described in Article 23 hereof. The Plan of Fractional Ownership will provide for the creation of undivided fee ownership interests (to be known as Fractional Ownership Interests) in the Units. ARTICLE 3 - IMPOSITION OF COVENANTS Section 3.1 Submission of Property. To accomplish the purposes and intentions recited herein, except as specifically reserved in Section 3.2, Declarant hereby submits the Property, together with all improvements, appurtenances and facilities relating to or located on the Property now and in the future, to the provisions of the Act, and hereby imposes upon all of the Property the covenants, conditions, restrictions, easements, reservations, rights-of-way and other provisions of this Declaration, and Declarant hereby declares that all of the Property shall be held, sold, conveyed, encumbered, leased, rented, occupied and improved, subject to the provisions of this Declaration. Section 3.2 Reservation of Restaurant. The Restaurant shall be made available to Owners on a limited-use basis by separate agreement. The area designated as the Restaurant on the Condominium Map is intentionally and specifically excluded from the property which is submitted to the provisions of the Act pursuant to these Declarations. Neither the {00053419 / 1} -7- .. Association nor any Owner shall receive an Allocated Interest in the Restaurant, nor shall the Restaurant be considered in any way a part of the Common Elements. Section 3.3 Final Plat. The Property is subject to the Final Plat of Filing No._, recorded , at Reception No. in the Records. Section 3.4 Covenants Running with the Land. All provisions of this Declaration shall be deemed to be covenants running with the land or equitable servitudes, as the case may be. The benefits, burdens and other provisions contained in this Declaration shall be binding upon and shall inure to the benefit of Declarant, all Owners and their respective heirs, executors, administrators, personal representatives, successors and assigns. ARTICLE 4 - DIVISION OF PROJECT INTO CONDOMINIUM OWNERSHIP Section 4.1 Division into Units. As of the recording of this Declaration, the Project is hereby divided into twelve (12) Units which shall be the maximum number of Units created. Each Unit is subject to a Plan of Fractional Ownership whereby each Unit is further subdivided into fifty-two (52) Fractional Ownership Interests for a total of Six Hundred Twenty Four (624) Fractional Ownership Interests. Section 4.2 Delineation of Unit Boundaries. Each Unit shall be delineated and designated by an identifying number, name, symbol, letter, or color (or a combination thereof) on the Map, and shall be deemed bounded by the imaginary plane extending along the perimeter walls, perimeter ceilings, and are described as follows: (a) Upper Horizontal Boundary. The horizontal or sloping plane or planes of the unfinished lower surfaces of the ceiling bearing structure surfaces, beams, and rafters and of closed fireplace dampers, extended to an intersection with the vertical perimeter boundaries. (b) Lower Horizontal Boundary. The horizontal plane or planes of the undecorated or unfinished upper surfaces of the floors, extended to an intersection with the vertical perimeter boundaries and open horizontal unfinished surfaces oftrim, sills, and structural components. (c) Vertical Perimeter Boundaries. The planes defined by the inner surfaces of the studs and framing of the perimeter walls; the unfinished inner surfaces of poured concrete walls; the unfinished surfaces of the interior trim, fireplaces, and thresholds along perimeter walls and floors; the unfinished (inner/outer) surfaces of closed windows and closed perimeter doors; and the innermost unfinished planes of all interior bearing studs and framing of bearing walls, columns, bearing partitions, and partition walls between separate Units. (d) Inclusions. Each Unit will include the spaces and Improvements lying within the boundaries described in (a), (b), and (c) above and will also include the spaces and the Improve- ments within those spaces containing any space heating, water heating, and air conditioning apparatus, all electrical switches, wiring, pipes, ducts, conduits, smoke detector systems and tele- {00053419 / 1} -8- .. vision, telephone, electrical receptacles, and light fixtures and boxes serving that Unit exclusively. The surface of the foregoing items will be the boundaries of that Unit, whether or not those items are contiguous to the Unit. (e) Exclusions. Except when specifically included by other provisions of this Section, the following are excluded from each Unit: the spaces and Improvements lying outside of the bound- aries described in (a), (b), and (c) above; and all chutes, pipes, flues, ducts, wires, conduits, skylights, and other facilities running through or within any interior wall or partition for the purpose of furnishing utility and similar services to other Units and Common Elements or both. (f) Noncontiguous Portions. Certain Units may include special portions, pieces, or equipment such as air conditioning compressors, meter boxes, utility connection structures, and storage portions situated in buildings or structures that are detached or semi-detached from the buildings containing the principal occupied portion of the Units. This special equipment and storage portions are a part of the Unit even though they are not contiguous with the residential portions. Section 4.3 Inseparability of Unit. Except as provided in Article 23 of this Declaration, no part of a Unit or of the legal rights comprising ownership of a Unit may be partitioned or separated from any other part thereof during the period of condominium ownership prescribed in this Declaration. All rights with respect to the use, possession, enjoyment, management or disposition of a Unit (including any Fractional Ownership Interest in a Unit) which an Owner might otherwise have as a tenant-in-common (including, but not limited to, any common law or statutory right jointly to use, possess or manage commonly owned property) are hereby unconditionally and irrevocably subordinated to this Declaration for so long as this Declaration shall remain in effect; provided, however, that in the event that an election to terminate this Declaration is made pursuant to any provision of this Declaration or the Act, an Owner shall have the rights specified in this Declaration and the Act. Section 4.4 Nonpartitionability of Common Elements. Subject to the provisions of this Article and Article 5 below, the Common Elements shall be owned in common by all of the Owners and shall remain physically undivided. No Owner shall bring any action for partition or division of the Common Elements. By acceptance of a deed or other instrument of conveyance or assignment to a Fractional Ownership Interest, each Owner of the Fractional Ownership Interest shall be deemed to have specifically waived such Owner's right to institute or maintain a partition action or any other cause of action designed to cause a division of the Common Elements, and this Section may be pleaded as a bar to the maintenance of such an action. Any Owner who shall institute or maintain any such action shall be liable to the Association and hereby agrees to reimburse the Association for the Association's costs, expenses and reasonable attorneys' fees in defending any such action. Such amounts shall automatically become a Default Assessment determined and levied against such Owner's Fractional Ownership Interest and enforced by the Association in accordance with Article 8 below. {00053419 / 1} -9- .. The granting of easements by the Executive Board for public utilities, for access by pedestrians or for other purposes not inconsistent with the intended use of the Common Elements shall not be deemed a transfer requiring any consent of the Owners. ARTICLE 5 - CONDOMINIUM MAP Section 5.1 Condominium Map. The Map shall be filed for recording in the Records prior to the conveyance of any Fractional Ownership Interest to a purchaser. The Map shall show the location of the Building on the Property; the floor and elevation plans; the location of the Units within the Building; the Unit designations; designation of Common Elements, including Limited Common Elements; and such other information as Declarant may deem necessary or appropriate in its discretion. The Map shall also designate the Restaurant which shall specifically be excluded from the Property submitted to the provisions of the Act. The Map shall contain a certificate of a registered professional engineer or licensed architect or a licensed land surveyor certifying that the Map substantially depicts the location and the horizontal and vertical boundaries of the Building and the Units, the dimensions and, if Declarant directs, the square foot areas of the Units. Each supplement or amendment shall set forth a like certificate when appropriate. The Map shall further contain such other information, certifications and depictions as may be required under Section 38-33.3-209 of the Act. Section 5.2 Amendment. Declarant reserves the right to amend or supplement the Map, from time to time, to the fullest extent permitted under the Act or as permitted by this Declaration. ARTICLE 6 - OWNERS' PROPERTY RIGHTS IN COMMON ELEMENTS Section 6.1 General Common Elements. Every Owner and the family members, guests, tenants and licensees of each Owner shall have a perpetual right and easement of access over, across and upon the General Common Elements for access to and from the Unit for the use of such General Common Elements, which right and easement shall be appurtenant to and pass with the transfer of title to such Fractional Ownership Interest; provided, however, that such right and easement shall be subject to the following: 6.1.1 The covenants, conditions, restrictions, easements, reservations, rights-of- way and other provisions contained in this Declaration, the Condominium Map, and the Bylaws and rules and regulations of the Association; and 6.1.2. The right of the Declarant or the Association, as the case may be, to regulate from time to time the use of the Common Elements. Any redesignation of the boundaries of the General Common Elements or Limited Common Elements shall be approved by the Executive Board. {00053419 / 1} - 10 - .. Section 6.2 Parking. Conveyance of ownership of a Fractional Ownership Interest specifically shall not include the conveyance or granting of any rights or license to park or maintain vehicles on the Property. Parking shall be on the street in accordance with the Municipal Code for the City and Townsite o f Aspen, State of Colorado. ARTICLE 7 - MEMBERSHIP AND VOTING RIGHTS IN ASSOCIATION Section 7.1 Declarant Control. There shall be a period of Declarant control of the Association during which the Declarant may appoint and remove the officers and members of the Executive Board. The Declarant will transfer control of the Association upon the earliest to occur of the following events: (i) sixty (60) days after the sale by the Declarant of seventy-five percent (75%) of the Units (as either whole-ownership on Fractional Ownership Interests); (ii) two (2) years after the Declarant has ceased to offer Units or Fractional Ownership Interests for sale in the ordinary course of business; or, (111) upon the Declarant voluntarily relinquishing control by a written instrument. Any such voluntary relinquishment of control may require, for the duration of the period of Declarant control, that specified actions of the Association or the Executive Board shall be subject to the prior written consent of the Declarant. As long as the Declarant retains control of the Association, no person may record any amendment to this Declaration or the other Association Documents or similar instrument affecting any portion of the Little Red Residence without the Declarant's written consent thereto, and any attempted recording without compliance herewith shall result in such or similar instrument being void and of no force and effect unless subsequently approved by a recorded consent signed by the Declarant. Section 7.2 Association Membership. Every Owner shall be a Member of the Association and shall remain a Member for the period of the Owner's ownership of a Fractional Ownership Interest. No Owner, whether one or more persons, shall have more than one Membership Interest per Fractional Ownership Interest owned, but all of the persons owning a Fractional Ownership Interest shall be entitled to rights of membership and of use and enjoyment appurtenant to ownership of a Fractional Ownership Interest. Joint owners of a Fractional Ownership Interest shall, however, be required to coordinate usage rights as Owners in accordance with the provisions of Article 23 and as provided below. If title to a Fractional Ownership Interest is held by more than one person or by a legal entity, such Owner(s) shall designate one person as their Member representative and appoint such person as their proxy, as more fully described in this Declaration and the Bylaws or as otherwise required by applicable law. Membership in the Association shall be appurtenant to, and may not be separated from, ownership of a Fractional Ownership Interest. Section 7.3 Membership. There shall be one class of Membership Interest in the Association consisting of all Owners of Fractional Ownership Interests in the Project. Section 7.4 Voting Rights. Members of the Association may exercise such voting rights with respect to Fractional Ownership Interests owned by the Members, subject to and in accordance with the provisions below and those of the Bylaws. Each Member of the Association, shall have one (1) vote per Fractional Ownership Interest represented by such Member for the purpose of matters relating to the Property or the Project as a whole. {00053419 / 1} - 11 - .. Section 7.5 Election of Directors. 7.5.1 The Executive Board shall consist of three (3) to seven (7) Directors, as determined from time to time by the Executive Board. The initial Executive Board shall consist of three (3) Directors, selected by the Declarant. 7.5.2 The first annual meeting of the Members shall be held within one year after the closing of escrow for the first sale of a Fractional Ownership Interest in the Project. At the first annual meeting of Members, the Executive Board shall be elected. Section 7.6 Fairness Standard. The Directors of the Executive Board, the officers of the Association and the Association shall have the duty to represent the interests of all Owners in a fair and just manner on all matters that may affect any or all of the Owners. In upholding their duties, the Directors of the Executive Board, the officers and the Association shall be held in their decisions to the standards of good faith and reasonableness with respect to such matters, taking into account the effect, if any, of the matter on the Project as a whole. Section 7.7 Voting bv Association Members. To the extent a matter is required by this Declaration, the Bylaws or the Act to be submitted to the vote of the Members of the Association, all Members shall be entitled to participate in the vote on such matters. Section 7.8 Owner's and Association's Address for Notices. All Owners of a Fractional Ownership Interest shall have one and the same mailing address to be registered with the Association and used by the Association or other Owners for notices, demands and all other communications regarding Association matters. The Owner or Owners of a Fractional Ownership Interest shall furnish such address to the Secretary of the Association within five (5) days after transfer of title to the Fractional Ownership Interest to such Owner or Owners. Such registration shall be in written form and signed by all of the Owners of the Fractional Ownership Interest or by such persons as are authorized by law to represent the interests of all Owners of Fractional Ownership Interest. Notwithstanding the foregoing, the Association shall be entitled to rely upon any such registration or other notice of a change in address of the Owners of the Fractional Ownership Interest which is signed by less than all of the Owners of such Fractional Ownership Interest. If no address is registered or if all of the Owners cannot agree, then the address set forth in the deed to the Fractional Ownership Interest shall be deemed their registered address until another registered address is furnished as required under this Section. Any notice delivered to a First Mortgagee in accordance with the terms of this Declaration shall be sent to the address for such party specified in the First Mortgage unless the First Mortgagee notifies the Association in writing of a different address. All notices and demands intended to be served upon the Executive Board shall be sent to the following address or such other address as the Executive Board may designate from time to time by notice to all of the Owners: Little Red Ski Haus, LLC {00053419/ 1} - 12 - .. Attn: David R. Fiore 118 E. Cooper Avenue Aspen, CO 81611 With a copy to: Western Peak, LLC Attn: David R. Fiore P.O. Box 4320 Basalt, CO 81621 Michael Murphy, CEO Boutique Club, LLC 800 Second Avenue, Fifth Floor New York, NY 10017 All notices given in accordance with this Section shall be sent: (a) by personal delivery, which shall be effective upon receipt; (b) by overnight courier service, which shall be effective one (1) business day following timely deposit with the courier service; or (c) regular, registered or certified mail, postage prepaid, which shall be effective three (3) days after deposit in the U.S. mail. ARTICLE 8 - ASSOCIATION DUTIES Section 8.1 Association Management Duties. Subject to the rights and obligations of Declarant and other Owners as set forth in this Declaration, the Association shall be responsible for the administration and operation of the Project, for the exclusive management, control, maintenance, repair, replacement and improvement of the Property (including facilities, furnishings and equipment related thereto), and shall keep the same in good, clean, attractive and sanitary condition, order and repair. The expenses, costs and fees of such management, operation, maintenance and repair by the Association shall be part of the Assessments, and, subject to the budget approval procedures of 9.3.4 below, prior approval of the Members shall not be required in order for the Association to pay any such expenses, costs and fees. The Executive Board with the approval of the Members representing a majority of the total votes entitled to be cast on Association matters shall have the authority to lease or license any Common Elements to others for all purposes permitted in this Declaration and by applicable law; provided, however, that any such lease or license shall require the lessee or licensee to pay all costs and expenses, including costs of maintenance, repair and replacement, resulting from its use of such Common Elements. Section 8.2 Reserve Account. 8.2.1 Within one (1) year following Declarant's sale and conveyance of ten percent (10%) of the Fractional Ownership Interests, the Association shall establish and maintain, as part of its budget and out of the installments of the Annual Assessments, adequate {00053419 / 1} - 13 - .. reserve accounts for the periodic and ongoing maintenance, repair or replacement of the Property (the "Reserve Account"). 8.2.2 In connection with the Reserve Account, the Executive Board shall: (a) Review a current reconciliation of the Association's Reserve Account on an annual basis. (b) Review, on at least an annual basis, the current year's actual reserve revenues and expenses compared to the current year's budget. (c) Review an income and expense statement for the Association's Reserve Account on at least an annual basis. 8.2.3 The signatures of at least two persons, who shall be Directors, or one officer who is not a Director and a Director, shall be required for the withdrawal of monies from the Association's Reserve Account. 8.2.4 The Executive Board shall not expend Reserve Account funds for any purpose other than the repair, restoration, replacement, or maintenance of, or litigation involving the repair, restoration, replacement, or maintenance of, major components which the Association is obligated to repair, restore, replace, or maintain and for which the Reserve Account was established. However, the Executive Board may authorize the temporary transfer of money from a Reserve Account to the Association's general operating fund to meet short-term cash-flow requirements or other expenses, provided the Executive Board has made a written finding, recorded in the Executive Board' minutes, explaining the reasons why the transfer is needed, and describing when and how the money will be repaid to the Reserve Account. The transferred funds shall be restored to the Reserve Account within one year of the date of the initial transfer, except that the Executive Board may, upon making a finding supported by documentation that a temporary delay would be in the best interests of the Association, temporarily delay the restoration. The Executive Board shall exercise prudent fiscal management in maintaining the integrity of the Reserve Account, and shall, if necessary, levy a Special Assessment to recover the full amount of the expended funds within the time limits required by this subsection. The Executive Board may, at its discretion, extend the date the payment on the Special Assessment is due. Any extension shall not prevent the Executive Board from pursuing any legal remedy to enforce the collection of an unpaid Special Assessment. 8.2.5 When the decision is made to use reserve funds or to temporarily transfer money from the Reserve Account to pay for litigation, the Association shall notify the Members of the Association of that decision in the next available mailing to all Members, and of the availability of an accounting of those expenses. The Association shall make an accounting of expenses related to the litigation on at least a quarterly basis. The accounting shall be made available for inspection by Members of the Association at the Association's office. {00053419 / 1} - 14 - .. 8.2.6 At least once every five years, the Executive Board shall cause to be conducted a reasonably competent and diligent visual inspection of the Property that the Association is obligated to repair, replace, restore, or maintain, as part of a study (the "Reserve Study") of the Reserve Account Requirements (as defined below). The Executive Board shall review this Reserve Study annually and shall consider and implement necessary adjustments to the Executive Board' analysis of the Reserve Account Requirements as a result of that review. The Reserve Study shall at a minimum include: (a) Identification of the major components that the Association is obligated to repair, replace, restore, or maintain which, as of the date of the Reserve Study, have a remaining useful life of less than thirty (30) years. (b) Identification of the probable remaining useful life of the components identified in paragraph (a) as of the date of the Reserve Study. (c) An estimate of the cost of repair, replacement, restoration, or maintenance of the components identified in paragraph (a) during and at the end of their useful life. (d) An estimate of the total annual contribution necessary to defray the cost to repair, replace, restore, or maintain the components identified in paragraph (a) during and at the end of their useful life, after subtracting total reserve funds as of the date of the Reserve Study. 8.2.7 As used in this Section 8.2, "Reserve Account Requirements" means the estimated funds which the Executive Board has determined are reasonably required to be available at a specified point in time to repair, replace, or restore those major components which the Association is obligated to maintain. Section 8.3 Owner's Negligence. If maintenance, repair or replacement of all or any portion of the Property is required due to the negligent, grossly negligent, reckless or willful act or omission of an Owner, any member of an Owner's family, or an Owner's guests, invitees or tenants, then the expenses incurred by the Association for such maintenance, repair or replacement shall be a personal obligation of such Owner and shall be treated as a Default Assessment pursuant to Section 9.6. To the extent that the area in need of maintenance, repair or replacement is due to the act or omission of an Owner, any member of an Owner's family, or an Owner's guests, invitees or tenants, other than ordinary wear and tear, then such Owner shall be liable to the Association for the amount of any applicable insurance deductible(s) and for any amounts in excess of insurance proceeds; provided, however, if such area is not covered by insurance the expenses incurred by the Association for such maintenance, repair or replacement shall be a personal obligation of such Owner and shall be treated as a Default Assessment pursuant to Section 9.6. {00053419 / 1} - 15 - .. Section 8.4 Delegation of Management and Maintenance Duties. The Executive Board may delegate all or any part of its powers and duties to one or more Managing Agents, including, but not limited to, Declarant or affiliates of Declarant or either of them. A Management Agreement entered into by the Executive Board may be terminated by the Executive Board only by a majority vote thereof. Notwithstanding the delegation by the Executive Board to a Managing Agent, the Executive Board shall not be relieved of its responsibilities under this Declaration. Notwithstanding any provisions contained in this Declaration to the contrary, it is the intent of this Declaration that the Executive Board shall not be able to independently terminate any Management Agreement pursuant to Section 38-33.3-305 of the Act without a vote of a majority of the Directors of the Executive Board and a vote of Members representing a majority or more of the total number of votes entitled to be cast on Association matters. Section 8.5 Acquiring and Disposing of Real and Personal Property. The Association may acquire, own, hold, encumber and convey in its own name, any right, title, or interest to real property and tangible and intangible personal property, including without limitation, membership rights, services and benefits for the use, enjoyment, security, comfort and convenience of Members and any group thereof and may dispose of the same by sale or otherwise. Such interests shall not be transferable except with the transfer of a Fractional Ownership Interest. A conveyance of a Fractional Ownership Interest shall transfer ownership of the transferor's beneficial interest in such property without any reference thereto. Each Owner may use such property in accordance with the purposes for which it is intended, without hindering or encroaching upon the lawful rights of other Owners. Portions of the Common Elements may be conveyed or subjected to a security interest by the Association if agreed to by Members entitled to cast at least sixty-seven percent (67%) o f the votes in the Association. Section 8.6 Cooperation with Other Entities or Organizations. The Association may contract or cooperate with any public or private, profit or non-profit entities or organizations as convenient or necessary to provide services and privileges for the benefit of Members, and to fairly allocate costs among the parties utilizing such services and privileges which may be administered by the Association or such other organizations, for the benefit of Members and their family members, guests, tenants and invitees. The costs associated with such efforts by the Association (to the extent not chargeable to other organizations) shall be a Common Expense. Section 8.7 Issuance of Rules and Regulations. The Executive Board may, by a majority of the voting Directors, make and amend reasonable rules and regulations governing the use and rental of the Units. The Executive Board may, by a majority of the voting Directors, make and amend reasonable rules and regulations governing the use and operation of the Common Elements. Notwithstanding the foregoing, any such rules and regulations shall not be inconsistent with the terms of this Declaration, including, but not limited to Article 14. In addition, such rules and regulations shall, when applied to each o f the Units considering the use of such Unit, be equitable and reasonable. {00053419 / 1} - 16 - .. Section 8.8 Enforcement of Association Documents. 8.8.1 This Declaration and the Bylaws constitute a general scheme benefiting each Unit and the Property as a whole and may be enforced by Declarant, the Association or an aggrieved Owner. A violation of any of the provisions of this Declaration causes irreparable damage to the Property. Therefore, subject to the terms and conditions of this Section 8.8 and except as otherwise expressly provided elsewhere in this Declaration, Declarant, the Association and any aggrieved Owner may prosecute a proceeding at law or in equity against anyone violating or attempting to violate the provisions of this Declaration, including, without limitation, an action for a temporary restraining order, preliminary injunction and permanent injunction. Failure by the Association or any Owner to enforce any covenant or restriction herein contained shall in no event be deemed a waiver of the right to do so thereafter. 8.8.2 The Association may recover from anyone violating or attempting to violate any provision of this Declaration reasonable attorneys' fees and other legal costs incurred by the Association in successfully enforcing the provision, regardless of whether suit is initiated. If such person is an Owner, the amount of the fees and costs constitute a lien against the Owner's Fractional Ownership Interest, which may be foreclosed in accordance with Section 9.10. In addition, if any Owner fails to comply with this Declaration, the Bylaws or the rules and regulations of the Association, the Association may: (i) temporarily suspend the Owner's right to use or enjoy the Common Elements, and (ii) impose other appropriate measures; provided, however, that before imposing any of those measures (other than late charges, interest and reasonable collection costs relating to delinquent payments), the Executive Board will promulgate rules and regulations relating to those measures including provisions affording a defaulting Owner notice of the claimed default and an opportunity to be heard by the Executive Board prior to the imposition of the disciplinary measure. 8.8.3 Before an aggrieved Owner may prosecute any proceeding at law or in equity enforcing the provisions of this Declaration or the Bylaws or seeking other relief relating to a violation or attempted violation of the provisions of this Declaration or the Bylaws, the Owner will first give written notice to the Executive Board specifying the violation or attempted violation of the provisions of this Declaration or the Bylaws, the facts and circumstances surrounding the violation, and the name of the person alleged to have violated or attempted to violate the provisions of this Declaration or the Bylaws. The Executive Board may initiate a proceeding in law or in equity to enforce the provisions of this Declaration or the Bylaws, to prevent a violation or to obtain relief for damage to the Common Elements resulting from the violation, or may otherwise enforce the provisions of this Declaration. The aggrieved Owner may exercise any of its rights under subsection 8.8.1 if: (i) the violation or attempted violation results or would result in direct and immediate physical damage to the Owner's Unit, or (ii) the Association fails to enforce or cause enforcement of the violated provisions of this Declaration or the Bylaws within sixty (60) days after the Executive Board receives the Owner's notice. {00053419 / 1 } -17- .. Section 8.9 Identity of Executive Board and Managing Agent. From time to time, but no less than annually, the Association shall mail to each Owner a notice containing the names and addresses of the Directors of the Executive Board and the Managing Agent(s), if any. Section 8.10 Implied Rights. The Association may exercise any and all other rights or privileges given to it by this Declaration, or by the other Association Documents, or as may otherwise be given to it by law, and every other right or privilege reasonably to be implied from the existence of any right or privilege given to the Association in the Association Documents or reasonably necessary to effectuate any such right or privilege. Section 8.11 Books and Records of the Association. The Executive Board, directly or through its Managing Agent(s), as the case may be, shall keep detailed, accurate records of the receipts and expenditures affecting the Property and shall maintain such other books and records as may be required under the Act. Owners and Mortgagees may inspect the records of receipts and expenditures of the Managing Agent(s) or the Executive Board at convenient weekday business hours. In addition, the other books, records and papers of the Association, including this Declaration, the articles of incorporation and the Bylaws, as well as any Management Agreement and any rules and regulations of the Association, shall be available for inspection by any Owner or Mortgagee at all times during convenient weekday business hours. Unless a shorter time is required by law, inspection shall require three (3) days advance, written notice. Section 8.12 Compliance with Liquor Laws. To the extent necessary to comply with applicable requirements of the Liquor Code of the State of Colorado, and recognizing the rights reserved in the following paragraph to the Declarant, and the Executive Board, directly or through its Managing Agent, shall be and is hereby authorized to exercise directly or to grant to third parties exclusive possession, control, right and license to sell, serve and deliver all types of alcoholic beverages of every kind and character (including but not limited to the exclusive right to grant exclusive possession, control, right and license to a licensee or licensees to provide room service) to and within all Units and all Common Elements. The exercise or grant of such exclusive right shall not be deemed to preclude, prevent or prohibit other uses of the Common Elements or the Units not in conflict with such exclusive right. Notwithstanding the foregoing, the Declarant reserves for itself, its express successors, transferees, designees, agents, assigns and co-licensees, the exclusive right to provide room service, a restaurant and/or bar in and within the Project, including the exclusive right to sell, serve and deliver all types of alcoholic beverages of every kind and character to and within all Units and Common Elements. The exercise or grant of such exclusive rights shall not be deemed to preclude, prevent or prohibit other uses of the Common Elements or the Units not in conflict with such exclusive rights. Grantees of any interest in the Project by acceptance of any deed, lease or license, shall be and are hereby bound by such reservations of rights. {00053419/ 1} - 18 - .. Section 8.13 LIMITATION OF LIABILITY OF ASSOCIATION. NOTWITHSTANDING THE DUTY OF THE ASSOCIATION TO MAINTAIN AND REPAIR THE PROPERTY, AND EXCEPT TO THE EXTENT COVERED BY ASSOCIATION INSURANCE AS DESCRIBED IN ARTICLE 11, THE ASSOCIATION SHALL NOT BE LIABLE TO OWNERS FOR INJURY OR DAMAGE, OTHER THAN FOR THE COST OF MAINTENANCE AND REPAIR, CAUSED BY ANY LATENT CONDITION OF THE PROPERTY TO BE MAINTAINED AND REPAIRED BY THE ASSOCIATION OR CAUSED BY THE ELEMENTS OR OTHER OWNERS OR PERSONS. IN NO EVENT SHALL THE ASSOCIATION OR ITS DIRECTORS, OFFICERS, AGENTS OR MEMBERS, OR THE DECLARANT OR ITS DIRECTORS, OFFICERS, MANAGERS, AGENTS OR MEMBERS BE LIABLE TO ANY OWNER OR MEMBER OR ANY OF THEIR GUESTS, INVITEES, SUCCESSORS, HEIRS OR LEGAL REPRESENTATIVES FOR ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES OF ANY KIND WHATSOEVER. Section 8.14 Indemnification of Directors and Officers. To the extent permitted by law and consistent with the articles of incorporation and Bylaws, the Association shall indemnify every Director, officer, employee and agent of the Association and every person who serves at the request of the Association as a manager, director, officer, employee, fiduciary or agent of any other foreign or domestic corporation or of any partnership, joint venture, trust, or other enterprise or employee benefit plan against any liability asserted against or incurred by such person in any such capacity or arising out of that person's capacity as such. The indemnification permitted under this Section shall not extend, in any event, to any act or omission occurring prior to the date of incorporation of the Association, nor shall it extend to any act or omission resulting from the willful or wanton behavior or gross negligence of such person. In the event of a settlement, indemnification shall be provided only in connection with such matters covered by the settlement as to which the Association is advised by counsel that the person to be indemnified has not been culpable of such acts or omissions whether resulting from willful or wanton behavior or gross negligence in the performance of such person's duties for the Association. The foregoing rights shall not be exclusive of other rights to which such Director or officer or other person may be entitled. All liability, loss, damage, cost, and expense arising out of or in connection with the foregoing indemnification provisions shall be treated and handled by the Association as a Common Expense. Section 8.15 Financial Statements. The Association shall have the power and duty to cause to be regularly prepared financial statements for the Association and copies thereof to be distributed to all Owners as provided in this Section. 8.15.1 The budgets prepared in accordance with Section 9.3 below shall be distributed to Owners not less than forty-five (45) days nor more than sixty (60) days before the beginning of each fiscal year, except the first fiscal year with respect to which the budget shall be distributed as soon as reasonably possible. The advance budget shall contain at least the following information: {00053419 / 1} - 19 - .. (a) Estimated revenue and expenses on an accrual basis; (b) The balance of the Reserve Account; (c) An itemized estimate of the remaining life of major components of the Property and the methods of funding to defray reserve expenses; and (d) A general statement setting forth the procedures used by the Executive Board in the calculation and establishment of the Reserve Account. 8.15.2 An annual report as defined by this Section shall be distributed within 120 days after the end of each fiscal year. The annual report shall be prepared by a certified public accountant in any fiscal year in which the gross income to the Association exceeds $75,000.00. If the annual report is not prepared by a certified public accountant, the annual report shall be accompanied by the certificate of the person preparing the annual report that the annual report was prepared without audit from the books and records of the Association. The annual report is a report to the Owners consisting of: (a) A balance sheet relating to the Association as of the last day of the fiscal year; (b) An operating statement for such fiscal year; (c) A statement of changes in financial position for such fiscal year; and (d) A list of the names, mailing addresses and telephone numbers of the members of the Executive Board. ARTICLE 9 - ASSESSMENTS Section 9.1 Covenant of Personal Obligation of Assessments. Declarant, by creating the Units pursuant to this Declaration, and every other Owner, by acceptance of the deed or other instrument of transfer of his Fractional Ownership Interest (whether or not it shall be so expressed in such deed or other instrument of transfer), is deemed to personally covenant and agree, with the Association, and hereby does so covenant and agree to pay to the Association Assessments consisting of the: (a) Annual Assessments, (b) Special Assessments, (c) Personal Assessments and (d) Default Assessments applicable to the Owner's Fractional Ownership Interest. No Owner may waive or otherwise escape personal liability for the payment of the Assessments provided for in this Declaration by not using the Common Elements or the facilities contained in the Common Elements or by abandoning or leasing his Fractional Ownership Interest. Section 9.2 Purpose of Assessments. Assessments shall be used to pay expenses of the Association for the purpose of improving, operating, maintaining, and servicing the {00053419 / 1} -20- .. Property and of the facilities located on the Property. Proper uses of the Assessments shall include, but are not limited to, the following: 9.2.1 The Budget (as defined hereinafter); 9.2.2 Personal Assessments and Default Assessments that are the responsibility of the Owners by the provisions of this Declaration but that are delinquent and unpaid; 9.2.3 Carrying out all other powers, rights and duties of the Association specified in the Association Documents or the Act; and 9.2.4 Generally, addressing any other expenses necessary to meet the primary purposes of the Association. Section 9.3 Annual Assessments. 9.3.1 Commencement of Assessments. All of the Fractional Ownership Interests shall be allocated Annual Assessments immediately after Declarant sales and conveys the first Fractional Ownership Interest in the Project to an Owner who purchases such interest for consideration other than for services rendered. 9.3.2 Amount of Total Annual Assessments. Annual Assessments shall be based upon the Association's estimate of expenditures and liabilities needed by it to provide for the administration and performance of its duties during such fiscal year together with a reasonable contingency and an allocation to the Reserve Account for replacement, repair and refurbishment of the Property. If surplus funds remain after payment of or provision for the Property and any prepayment of or provision for reserves, the Executive Board may, in its discretion, apply to or for the benefit of Owners, the surplus funds: (a) into the Reserve Account, (b) toward the following year's expenses, (c) toward a credit to Owners against future Assessments, (d) as a refund to Owners or (e) any combination of the foregoing. 9.3.3 Apportionment of Annual Assessments. The total Annual Assessment for any fiscal year of the Association shall be allocated on the same basis as each Owner's Fractional Ownership Interest in the Unit; meaning, by way of example and not of limitation, that for a Unit divided into Fractional Ownership Interests constituting a 1 /52 share of such Unit, then each Owner of a Fractional Ownership Interest therein shall bear 1/52 of the total Annual Assessment with respect to such Unit, subject to the following adjustments: (a) To the extent any Common Expense relating to the Common Elements disproportionately benefits any Owner or group of Owners, the Executive Board may, by a majority of the voting Directors, adjust the Assessment for such Common Expense in such proportion as may be appropriate. {00053419/ 1} -21- .. (b) The Executive Board may assess and prorate Common Expenses among Owners on the same basis as charged to the Association by any third party. 9.3.4 Annual Budget. (a) On an annual basis, the Executive Board shall formulate a proposed budget for the Association pertaining to the Property (the "Budget"). The Executive Board shall deliver the Budget within thirty (30) days after the adoption thereof, to Owners. The Executive Board shall also set a date for the meeting of all Members of the Association to consider ratification of the Budget not less than fourteen (14) nor more than sixty (60) days after mailing or other delivery of the Budget. If any proposed Budget does not exceed one hundred twenty percent (120%) of the Budget for the preceding year, then at a meeting set pursuant to the preceding sentence, unless sixty-seven percent (67%) of the Members of the Association reject the Budget, such proposed Budget is ratified, whether or not a quorum is present. If any proposed Budget exceeds one hundred twenty percent (120%) of the Budget for the preceding year, then at a meeting set by the Executive Board, if a majority of the Members of the Association approve the Budget, such proposed Budget is ratified, whether or not a quorum is present. If the Association Budget is rejected by the Members of the Association in the foregoing manner, the Budget last ratified must be continued until such time as the Members of the Association ratify a subsequent Budget proposed by the Executive Board. (b) The Executive Board shall levy and assess the Association's Annual Assessments in accordance with the annual Budget. Section 9.4 Special Assessments. In addition to the Annual Assessments authorized above, the Executive Board may at any time and from time to time determine, levy, assess and collect in any fiscal year (without the vote of the Members of the Association, except as provided in the Act and in this Section below) a Special Assessment applicable to that particular fiscal year (and for any such longer period as the Executive Board may determine) against all of the Owners with respect to the Property for the purpose of defraying, in whole or in part, the unbudgeted costs, fees and expenses of any construction, reconstruction, repair, demolishing, replacement, renovation or maintenance of the Project or of any facilities located on the Project, specifically including any fixtures and personal property related to it. Any amounts determined, levied and assessed in connection with the Property pursuant to this Declaration by a majority of the voting Directors of the Executive Board shall be assessed to the Owners of Fractional Ownership Interests. Notwithstanding any other provision contained in this Section, Special Assessments shall not, in the aggregate, exceed fifteen percent (15%) of the annual Budget for the applicable fiscal year. This Section shall not apply to Special Assessments levied and assessed in connection with reimbursing the Association for costs incurred in bringing an Owner into compliance with the provisions of the Association Documents. Section 9.5 Personal Assessments. The Executive Board may from time to time determine, levy, assess and collect Personal Assessments against or from any Owner for personal {00053419 / 1} - 22 - .. charges incurred or created by such Owner and for which the Association is or may be responsible for payment. Personal Assessments may include, but not be limited to, personal charges billed to the Owner through the Association or Managing Agent such as ski passes, health charges, food and beverage charges, room service charges and other similar charges and expenses for individual services, benefits, privileges and products acquired at or through the Project which is billed to a personal account of the Owner. Notwithstanding contrary language contained in this Declaration, all Owners shall be subject to the provisions of this paragraph 9.5. Section 9.6 Default Assessments. The Executive Board may from time to time determine, levy, assess and collect Default Assessments against or from any Owner for personal charges incurred or created by such Owner and for which the Association is or may be responsible for payment. Default Assessments may include, but not be limited to, all monetary fines or other charges imposed or assessed against an Owner pursuant to the Association Documents or any expense of the Association which is the obligation of an Owner pursuant to the Association Documents, including those expenses which are the responsibility of an Owner under Section 8.3 hereof. Section 9.7 Due Dates for Assessment Payments. Unless otherwise determined by the Executive Board, the Annual Assessments and any Special Assessments which are to be paid in installments shall be paid periodically in advance (no less frequently than annually and no more frequently than quarterly) and shall be due and payable to the Association at its office or as the Executive Board may otherwise direct in any Management Agreement, without notice (except for the notices required by this Article 9), on the first day of each Assessment Period. Personal Assessments and Default Assessments are due upon receipt of a billing statement. The Executive Board may as a condition of occupancy require Owners of a Fractional Ownership Interest to provide a credit card or other payment assurance prior to permitting personal charges. If any payment of Assessments shall not be paid within thirty (30) days after it shall have become due and payable, then the Executive Board may assess a "late charge" on the installment in an amount of fifteen percent (15%) of the amount outstanding or such other charge which does not exceed any limitations established by applicable law, as the Executive Board may fix by rule from time to time as provided in the Bylaws to cover the extra expenses involved in handling such delinquent Assessment installment. Section 9.8 Declarant's Obligation to Pay Assessments. Declarant shall be obligated to pay the Annual, Special, Default and Personal Assessments (including installments thereof) on each Fractional Ownership Interest owned by it. Section 9.9 Lien for Assessments. The Annual, Special, Personal and Default Assessments (including installments of the Assessments) arising under the provisions of this Declaration (together with any and all interest, costs, late charges, expenses and reasonable attorneys' fees, including legal assistants' fees, which may arise under the provisions of Section 9.10 below) shall be burdens running with, and a perpetual lien in favor of the Association upon the specific Fractional Ownership Interest to which such {00053419 / 1} -23 - .. Assessments apply. To further evidence such lien upon a specific Fractional Ownership Interest, the Association or its Managing Agent or designee may, but shall not be obligated to prepare a written lien notice setting forth the description of the Fractional Ownership Interest, the amount of Assessments on the Fractional Ownership Interest unpaid as of the date of such lien notice, the rate of default interest as set by the Bylaws and Section 9.10 below, the name of the Owner or Owners of the Fractional Ownership Interest, and any and all other information that the Association may deem proper. Any such lien notice shall be signed by a Director of the Executive Board, an officer of the Association, or a Managing Agent and shall be recorded in the Records. Any such lien notice shall not constitute a condition precedent to or delay the attachment of the lien, but such lien is a perpetual lien upon the Fractional Ownership Interest and attaches without notice at the beginning of the first day of any period for which any Assessment is levied. Section 9.10 Effect of Nonpayment of Assessments. If any Assessment (or any installment of the Assessment) is not fully paid within thirty (30) days after the same becomes due and payable, then as often as the same may happen: (i) interest shall accrue at the Maximum Rate on any amount of the Assessment which was not paid within such 30-day period or on the amount of Assessment in default, whichever shall be applicable, accruing from the due date until date of payment; (ii) the Association may declare due and payable all unpaid installments of the Annual Assessment or any Special Assessment otherwise due during the fiscal year during which such default occurred, as well as any Personal Assessments and Default Assessments; (iii) the Association may thereafter bring an action at law or in equity, or both, against any Owner personally obligated to pay the same; and (iv) the Association may proceed to foreclose its lien against the particular Fractional Ownership Interest in the manner and form provided by Colorado law for foreclosure of real estate mortgages. An action at law or in equity by the Association against an Owner to recover a money judgment for unpaid Assessments (or any installment thereof) may be commenced and pursued by the Association without foreclosing or in any way waiving the Association's lien for the Assessments. If any such Assessment (or installment thereof) is not fully paid when due and if the Association commences such an action (or counterclaims or cross- claims for such relief in any action) against any Owner personally obligated to pay the same, or proceeds to foreclose its lien against the particular Fractional Ownership Interest, then all unpaid installments of Annual and Special Assessments, all Personal Assessments and all Default Assessments (including any such installments or Assessments arising during the proceedings of such action or foreclosure proceedings), any late charges under Section 9.7 above, any accrued interest under this Section, the Association's costs, expenses and reasonable attorneys' fees (including legal assistants' fees) incurred for any such action and/or foreclosure proceedings shall be assessed by the court as part of the costs of any such action or foreclosure proceedings and shall be recoverable by the Association from any Owner personally obligated to pay the same and from the proceeds from the foreclosure sale of the particular Fractional Ownership Interest in satisfaction of the Association's lien. {00053419 / 1} - 24 - .. Foreclosure or attempted foreclosure by the Association of its lien shall not be deemed to estop or otherwise preclude the Association from again foreclosing or attempting to fureclose its lien for any subsequent Assessments (or installments thereof) which are not fully paid when due or for any subsequent Default Assessments. The Association shall have the power and right to bid in or purchase any Fractional Ownership Interest at foreclosure or other legal sale and to acquire and hold, lease or mortgage the Fractional Ownership Interest, and to convey or otherwise deal with the Fractional Ownership Interest acquired in such proceedings. Section 9.11 Successor's Liability for Assessments. Notwithstanding the personal obligation of each Owner of a Fractional Ownership Interest to pay all Assessments on the Fractional Ownership Interest, and notwithstanding the Association's perpetual lien upon a Fractional Ownership Interest for such Assessments, all successors in interest to the fee simple title of a Fractional Ownership Interest, except as provided in Section 9.12 and Section 9.13 below, shall be jointly and severally liable with the prior Owner or Owners of the Fractional Ownership Interest for any and all unpaid Assessments, interest, late charges, costs, expenses and attorneys' fees against such Fractional Ownership Interest, without prejudice to any such successor's right to recover from any prior Owner any amounts paid thereon by such successor. However, such successor in interest shall be entitled to rely upon the existence and status of unpaid Assessments, interest, late charges, costs, expenses and attorneys' fees as shown upon any certificate issued by or on behalf of the Association to such named successor in interest pursuant to the provisions of Section 9.13 below. Section 9.12 Waiver of Homestead Exemption: Subordination of Association's Lien for Assessments. By acceptance of the deed or other instrument of transfer of a Fractional Ownership Interest, each Owner irrevocably subordinates the homestead exemption provided by Part 2, Article 41, Title 38, Colorado Revised Statutes, as amended, to the Association's perpetual lien for collection of Assessments. The Association's perpetual lien on a Fractional Ownership Interest for Assessments shall be superior to all other liens and encumbrances except the following: 9.12.1 Real property ad valorem taxes and special assessment liens duly imposed by a Colorado governmental or political subdivision or special taxing district, or any other liens made superior by statute; 9.12.2 To the extent permitted under the Act, the lien of any First Mortgage, including any and all advances made by the First Mortgagee and notwithstanding that any of such advances may have been made subsequent to the date of the attachment of the Association's liens. With respect to the foregoing subsection 9.12.2, to the extent permitted under the Act, any First Mortgagee who acquires title to a Fractional Ownership Interest by virtue of foreclosing the First Mortgage or by virtue of a deed or assignment in lieu of such a foreclosure, or any purchaser at a foreclosure sale of the First Mortgage, will take the Fractional Ownership Interest free of any claims for unpaid Association Assessments, {00053419 / 1} - 25 - .. interest, late charges, costs, expenses and attorneys' fees against the Fractional Ownership Interest which accrue prior to the time such First Mortgagee or purchaser acquires title to the Fractional Ownership Interest, and the amount of the extinguished lien may be reallocated and assessed to all Owners of Fractional Ownership Interests as a Common Expense at the direction of the Executive Board. All other persons not holding liens described in Section 9.11 above and obtaining a lien or encumbrance on any Fractional Ownership Interest after the recording of this Declaration shall be deemed to consent that any such lien or encumbrance shall be subordinate and inferior to the Association's future liens for Assessments, interest, late charges, costs, expenses and attorneys' fees, as provided in this Article 9, whether or not such consent is specifically set forth in the instrument creating any such lien or encumbrance. A sale or other transfer of any Fractional Ownership Interest, including but not limited to a foreclosure sale, except as provided in Section 9.9 above and except as provided in Section 9.14 below, shall not affect the Association's lien on such Fractional Ownership Interest for Assessments, interest, late charges, costs, expenses and attorneys' fees due and owing prior to the time such purchaser acquires title and shall not affect the personal liability of each Owner who shall have been responsible for the payment thereof. Further, no such sale or transfer shall relieve the purchaser or transferee of a Fractional Ownership Interest from liability for, or the Fractional Ownership Interest from the lien of any Assessments made after the sale or transfer. Section 9.13 Statement of Status of Assessments. Upon fourteen (14) calendar days written request (furnished in the manner described below for the response to such request) to a Managing Agent, the Executive Board or the Association's registered agent and payment of a reasonable fee set from time to time by the Executive Board, any Owner, or with the consent of any Owner any prospective purchaser of a Fractional Ownership Interest shall be furnished, by personal delivery or by certified mail, first class postage prepaid, return receipt requested, to the inquiring party (in which event the date of posting shall be deemed the date o f delivery) a statement of the Owner's account setting forth: 9.13.1 The amount of any unpaid Assessments, interest, late charges, costs, expenses and attorneys' fees then existing against a particular Fractional Ownership Interest; 9.13.2 The amount of the current installments of the Annual Assessment and the date that the next installment is due and payable; 9.13.3 The date of the payment of any installments of any Special Assessments then existing against the Fractional Ownership Interest; and 9.13.4 Any other information deemed proper by the Association. Upon the issuance of such a certificate signed by a member of the Executive Board, by an officer of the Association, or by a Managing Agent, the information contained therein shall {00053419 / 1} -26- .. be conclusive upon the Association as to the person or persons to whom such certificate is addressed and who rely on the certificate in good faith. Unless such a statement of status of Assessments is delivered as described above within said fourteen (14) calendar day period, the Association shall have no right to assert a priority lien upon the Fractional Ownership Interest over the inquiring party's interest for unpaid Assessments which were due as of the date of the request. Section 9.14 Liens. Except for Annual, Special, Personal and Default Assessment liens as provided in this Declaration, mechanics' liens (except as provided in Article 13 below), tax liens and judgment liens and other liens validly arising by operation of law and liens arising under Permissible Mortgages, there shall be no other liens obtainable or permissible against the Property or against the interest of any Fractional Ownership Interest. ARTICLE 10 - MAINTENANCE RESPONSIBILITY Section 10.1 Responsibility ofthe Association. The Association, without the requirement of approval of the Owners, but subject to Section 9.3 above, shall maintain and keep in repair, replace and improve, as a Common Expense, the Property, including the Common Elements and the interior of the Units, and also including the furniture, fixtures and utilities located within the Common Elements or within the Units. Section 10.2 No Work or Alterations by Owners. No Owner, other than Declarant or its agents during such time as Declarant shall own one or more Fractional Ownership Interests, shall perform or cause to have performed any work, actions or alterations upon the Property, the Common Elements, the interior of any Unit, nor any of the furniture, fixtures and utilities located therein. ARTICLE 11 - INSURANCE AND FIDELITY BONDS Section 11.1 General Insurance Provisions. The Association shall maintain, to the extent reasonably available: 11.1.1 Property insurance on the Property, including the Common Elements and the Units, for fire and other broad form covered causes of loss. The total amount of insurance must be not less than the full insurable replacement costs of the insured property less applicable deductibles at the time the insurance is purchased and at each renewal date, exclusive of land, excavations, foundations, paving areas, landscaping, personal property and other items normally excluded from property policies. In all insurance policies obtained hereunder, the Association shall be named as the agent for each of the Owners, including the Declarant. {00053419 / 1} -27- .. 11.1.2 Commercial general liability insurance against claims and liabilities arising in connection with the ownership, existence, use or management of the Common Elements, Units and the Association, in an amount determined by the Association, but not less than two million dollars ($2,000,000) in respect to bodily injury or death to any number of persons arising out of one accident or disaster, or for damage to property, and if higher limits shall at any time be customary to protect against tort liability such higher limits shall be carried. The Owners (as a group) shall be included as additional insureds but only for claims and liabilities arising in connection with the existence, use or management of the Property. The insurance shall cover claims of one or more insured parties against other insured parties. 11.1.3 The Association may carry such other and further insurance that the Executive Board considers appropriate. Section 11.2 Cancellation. If the insurance described in Section 11.1 above is not reasonably available, or if any policy of such insurance is cancelled or not renewed without a replacement policy therefor having been obtained, the Association promptly shall cause notice of that fact to be hand delivered or sent prepaid by U.S. mail to all Owners. Section 11.3 Policy Provisions. To the extent reasonably obtainable, insurance policies carried pursuant to Section 11.1 above must provide that: 11.3.1 Each Owner is an insured person under the policy with respect to liability arising out of such Owner's interest in the Common Elements or membership in the Association; 11.3.2 Except as provided in Section 11.5, the insurer waives its rights of subrogation under the policy against any Owner, member of his household, guest or invitee to the extent o f the coverage obligation in subsection 11.1.1; 11.3.3 With respect to the coverage in subsection 11.1.1, no act or omission by an Owner, unless acting within the scope of his authority on behalf of the Association, will void the policy or operate as a condition to recovery by any other person under such policy; and 11.3.4 If, at the time ofa loss under the policy, there is other insurance in the name of an Owner covering the same risk covered by the policy, the Association's policy provides primary insurance to the extent of the coverage obligation in subsection 11.1.1. Section 11.4 Insurance Proceeds. Excluding any business interruption proceeds, any loss covered by the property insurance policy described in Section 11.1 above must be adjusted with the Association or the Managing Agent acting on behalf of the Association, but the insurance proceeds for that loss shall be payable to any insurance trustee, including but not limited to the Managing Agent, designated for that purpose by the Executive Board or to the Association as directed by the Executive Board, and not to any holder of a security interest. The insurance trustee or the Association shall hold any insurance proceeds in trust {00053419 / 1} -28- .. for the Owners and Mortgagees as their interests may appear. Subject to the provisions of Section 11.7 below, the proceeds must be disbursed first for the repair or restoration of the damaged property, and the Association, Owners and Mortgagees are not entitled to receive payment of any portion of the proceeds unless - there is a surplus of proceeds after the damaged property has been completely repaired or restored or the regime created by this Declaration is terminated. Section 11.5 Association Policies. The Association may adopt and establish written nondiscriminatory policies and procedures relating to the submittal of claims, responsibility for deductibles and any other matters of claims adjustment. To the extent the Association settles claims for damages to the Property or the Common Elements, it shall have the authority to assess negligent Owners causing such loss or benefiting from such repair or restoration all or any equitable portion of the deductibles paid by the Association. Section 11.6 Insurer Obligation. An insurer that has issued an insurance policy for the insurance described in Section 11.1 above shall issue certificates or memoranda of insurance to the Association and, upon written request, to any Owner or Mortgagee. Unless otherwise provided by statute, the insurer issuing the policy may not cancel or refuse to renew it until thirty (30) days after notice of the proposed cancellation or nonrenewal has been mailed to the Association and to each Owner and Mortgagee to whom a certificate or memorandum of insurance has been issued at their respective last-known addresses. Section 11.7 Repair and Replacement. 11.7.1 Any portion of the Common Elements for which insurance is required under this Article which is damaged or destroyed must be repaired or replaced promptly by the Association unless: (a) The regime created by this Declaration is terminated; (b) Repair or replacement would be illegal under any state or local statute or ordinance; (c) Sixty-seven percent (67%) of the Members of the Association and all directly, adversely affected Owners agree in writing not to rebuild; or (d) Prior to the conveyance of any Unit to a person other than Declarant, the Mortgagee holding a Mortgage on the damaged portion of the Common Elements rightfully demands all or a substantial part of the insurance proceeds. 11.7.2 The cost of repair or replacement in excess of insurance proceeds and reserves is a Common Expense. If all damaged Common Elements are not repaired or replaced, the insurance proceeds attributable to the damaged Common Elements must be used to restore the damaged area to a condition compatible with the remainder of the Project, and except to the extent that other persons will be distributees, the remaining {00053419 / 1} -29- .. insurance proceeds must then be distributed to all the Owners or Mortgagees, as their interests may appear, in proportion to their respective Fractional Ownership Interests. Section 11.8 Common Expenses. Premiums and, subject to Sections 8.3 and 14.6, deductibles for insurance that the Association acquires and other expenses connected with acquiring such insurance are Common Expenses. Section 11.9 Fidelity Insurance. Fidelity bonds shall be maintained by the Association to protect against dishonest acts on the part of its officers, directors and employees and on the part of all others who handle or are responsible for handling the funds belonging to or administered by the Association, including the Managing Agent in an amount not less than the amounts required by law. The Association shall also secure and maintain, or require to be secured or maintained by any parties handling the collection, deposit, transfer or disbursement of Association funds, fidelity insurance with aggregate coverage not less than that required by law. In addition, all funds and accounts of the Association being held by a Managing Agent or other third persons shall be maintained in accordance with applicable law. Section 11.10 Worker's Compensation Insurance. If the Association has employees, the Association shall obtain worker's compensation or similar insurance with respect to its employees in the amounts and forms as may now or hereafter be required by law. Section 11.11 Other Insurance. The Association may also maintain insurance to the extent reasonably available and in such amounts as the Executive Board may deem appropriate on behalf of Directors and officers against any liability asserted against a Director or officer or incurred by him in his capacity of or arising out of his status as a Director or officer. The Association may obtain insurance against such other risks, of a similar or dissimilar nature, as it shall deem appropriate with respect to its responsibilities and duties. ARTICLE 12 - CONVEYANCES AND TAXATION OF FRACTIONAL OWNERSHIP INTERESTS Section 12.1 Contracts to Convey Entered into Prior to Recording. A contract or other agreement for the sale of a Fractional Ownership Interest entered into prior to the filing for record of the Condominium Map and this Declaration in the Records, may legally describe such Fractional Ownership Interest in substantially the manner set forth in Section 12.2 below and may indicate that the Condominium Map and this Declaration are to be recorded. Section 12.2 Contracts to Convey and Convevances Subsequent to Recording. Subsequent to the recording of the Condominium Map and this Declaration, contracts to convey, instruments of conveyance of Fractional Ownership Interests and every other instrument affecting title to a Fractional Ownership Interest shall be in substantially the following form with such omissions, insertions, recitals of fact, or other provisions as may be required under the Act or by the circumstances or appropriate to conform to the {00053419 / 1} -30- .. requirements of any governmental authority or any usage or requirement of law with respect thereto: Fractional Ownership Interest No. _ consisting of an undivided interest in Unit of LITTLE RED RESIDENCE, according to the Declaration of Condominium for LITTLE RED RESIDENCE, recorded , 200_, at Reception No. as amended and supplemented from time to time and according to the Map for LITTLE RED RESIDENCE recorded , 200_, in Plat Book at Page , Reception No. as amended and supplemented from time to time, all in the Office of the Clerk and Recorder of Pitkin County, Colorado, together with the perpetual use of 7 seven days per year for each 1/52nd interest owned in accordance with the Association Documents for LITTLE RED RESIDENCE. Section 12.3 Convevance Deemed to Describe an Undivided Interest in Common Elements. Every instrument of conveyance, Mortgage, or other instrument affecting the title to a Fractional Ownership Interest which legally describes the Fractional Ownership Interest substantially in the manner set forth in Section 12.2 above shall be construed to describe the Fractional Ownership Interest and together with all fixtures and improvements contained in it (unless any such fixtures or improvements shall be Common Elements), and to incorporate all the rights incident to ownership of a Fractional Ownership Interest and all the limitations of ownership as described in the covenants, conditions, restrictions, easements, reservations, rights-of-way and other provisions contained in this Declaration, including the easement ofenjoyment to use the Common Elements. Section 12.4 Separate Tax Assessments. Upon the recording of this Declaration and the filing of the Condominium Map for record in the Records, Declarant shall deliver a recorded copy of this Declaration and the Map to the Assessor of Pitkin County, Colorado, as provided by law, which notice shall set forth the descriptions of the Units, so that thereafter all taxes, assessments and other charges by the State or any governmental or political subdivision or any special improvement district or any other taxing agent or assessing authority shall be assessed against and collected on each Unit, each of which shall be carried on the tax records as a separate and distinct parcel for that purpose. For the purpose of such assessment against the Units, valuation of the Common Elements shall be apportioned among the Units in proportion to the Ownership Interest in the Common Elements appurtenant to such Units. Accordingly, the Common Elements shall not be assessed separately but shall be assessed with the Units as provided pursuant to Colorado Revised Statutes Subsection 38-33.3-105(2). The lien for taxes assessed to the Owner or Owners of a Unit shall be confined to such Unit. No forfeiture or sale of any Unit for delinquent taxes, assessments or other governmental charges shall divest or in any way affect the title to any other Unit. {00053419 / 1} -31- .. ARTICLE 13 - MECHANICS' LIENS Section 13.1 Mechanics' Liens. Subsequent to the filing of the Map and recording of this Declaration or at any time thereafter, no Owner other than Declarant or its agents shall cause labor to be performed or materials to be furnished which shall be the basis for the filing of a lien against a Unit or against any interest in the Common Elements. Each Owner shall indemnify and hold harmless each of the other Owners and the Association from and against any and all liability or loss arising from the claim of any mechanic's lien for labor performed or for materials furnished in work on such Owner's Unit against the Fractional Ownership Interests of another Owner in such Unit, against the Fractional Ownership Interests of any other Units of another Owner, or against the Common Elements, or any part thereof. ARTICLE 14 - USE RESTRICTIONS Section 14.1 Use of Units. Residential uses and commercial uses are contemplated within the Project, and any functions, activities and uses permitted under applicable zoning or other laws, rules or regulations are expressly allowed, subject to the restrictions set forth in Section 14.3 pertaining to residential uses. All Owners will be subject to the rules and regulations of the Association. Section 14.2 Commercial Uses. Commercial uses permitted within the Project are limited to sales and marketing activities for Fractional Ownership, the operation of a restaurant and/or bar, the providing of room service for the Units, and the providing of amenities and services customarily provided by a lodge or hotel. The commercial uses permitted within this Section may be amended upon a majority vote of the Executive Board with the approval of the Members representing a majority of the total votes entitled to be cast on Association matters at a meeting of the Members called for that purpose. The Executive Board may, with the approval of the Declarant as long as Declarant owns an interest in the Project, regulate commercial uses by rules and regulations governing specific uses, operating hours, music amplification, lighting, noise, heat, vibration and other matters that might cause unreasonable disturbance for occupants of the Units. All Units shall be used only for the uses as specified within the PUD Plan, and in conformity with all other zoning laws, ordinances and regulations. Owners of Units may rent or lease such Units to others for these purposes. Amendments to rules and regulations governing commercial uses shall require the approval of a majority of the Executive Board. Section 14.3 Residential Uses. All Units in the Project may be used for dwelling and lodging purposes in conformity with all zoning laws, ordinances and regulations. Notwithstanding the foregoing, Units may be used by Declarant as a sales office, management office, rental management office, storage facility and/or such other uses as may be permitted under the Act. Amendments to rules and regulations governing residential uses shall require the approval of a majority of the Directors of the Executive Board. {00053419 / 1} - 32 - .. There shall be no limitation on rental of Units or Fractional Ownership Interests by Owners provided that Owners provide the Managing Agent reasonable advance written notice of such rental. Any permitted rental shall be subject to the Association Documents, including, without limitation, these Declarations and the Association's rules and regulations. Section 14.4 Convevance of Units. All Units, whether or not the instrument of conveyance or assignment shall refer to this Declaration, shall be subject to the covenants, conditions, restrictions, easements, reservations, rights-of-way and other provisions contained in this Declaration, as the same may be amended from time to time. Section 14.5 Use of Common Elements. There shall be no obstruction of, nor shall anything be kept or stored by any Owner or other party on any part of the Common Elements without the prior written approval of the Association. Nothing shall be altered on, constructed in or removed by any Owner or other party from the Common Elements without the prior written approval of the Association. Section 14.6 Prohibition of Increases in Insurable Risks and Certain Activities. Nothing shall be done or kept in any Unit or in or on the Common Elements, or any part thereof, which would result in the cancellation of the insurance on all or any part of the Project or, taking into account the particular use involved, in an increase in the rate of the insurance on all or any part of the Project over what the Association, but for such activity, would pay, without the prior written approval of the Association. Nothing shall be done or kept in any Unit or in or on the Common Elements which would be in violation of any statute, rule, ordinance, regulation, permit or other imposed requirement of any governmental body having jurisdiction over the Property. No damage to or waste of the Common Elements shall be committed by any Owner, or by any member of the Owner's family, or by any guest, lessee, invitee or contract purchaser of any Owner, and each Owner shall indemnify and hold the Association and the other Owners harmless against any and all loss resulting from any such damage or waste caused by the grossly negligent, reckless or intentional act or omission of such Owner, the members of the Owner's family, or the Owner's guests, lessees, invitees or contract purchasers. To the extent that the loss resulting from any damage or waste is due to the negligent act or omission of an Owner, any member of an Owner's family, or an Owner's guests, invitees or tenants, then such Owner shall be liable to the Association for the amount of any applicable insurance deductible(s) and for any amounts in excess of insurance proceeds; provided, however, if such damage or waste is not covered by insurance the Owner shall indemnify and hold the Association and the other Owners harmless against any and all loss resulting from any such damage or waste. Failure to so indemnify shall be a default by such Owner under this Section, and such amount to be indemnified shall automatically become a Default Assessment determined and levied against such Owner. At its own initiative or upon the written request of any Owner (and if the Association determines that further action by the Association is proper), the Association shall enforce the foregoing indemnity as a Default Assessment as provided in Article 9 above. {00053419 / 1} - 33 - .. ARTICLE 15 - EASEMENTS Section 15.1 Easement of Eniovment. Every Owner shall have a nonexclusive easement for the use and enjoyment of the General Common Elements, which easement shall be appurtenant to and shall pass with the title to every Fractional Ownership Interest, subject to the easements set forth in this Article 15. Section 15.2 Delegation of Use. Any Owner may delegate, in accordance with the Association Documents, the Owner's right of enjoyment in the Common Elements to the Owner's tenants, employees, family, guests, employees, and invitees. The Executive Board may adopt rules and regulations limiting the number of guests and invitees (who are not occupying a Unit with the Owner thereof) that may use the Common Elements at the invitation of an Owner at any one time. The Executive Board may also establish reasonable rules and regulations governing occupancy limits in the Units. Section 15.3 Permitted Exceptions. The Property shall be subject to any easements as shown on any recorded plat affecting the Property and as shown on the recorded Condominium Map. The recording data for recorded easements, licenses and other title matters (collectively, "Permitted Exceptions") appurtenant to or included in the Property or to which any parts of the Property may become subject is set forth on the attached Exhibit C. Section 15.4 Easements for Encroachments. The Project, and all portions of it, are subject to easements hereby created for encroachments between Units and the Common Elements as follows: 15.4.1 In favor of the Association so that it shall have no legal liability when any part of the Common Elements encroaches upon a Unit; 15.4.2 In favor of each Owner so that the Owner shall have no legal liability when any part of the Unit associated with his or her Fractional Ownership Interest encroaches upon the Common Elements or upon another Unit; 15.4.3 In favor of all Owners, the Association and the Owner of any encroaching Unit for the maintenance and repair of such encroachments. Encroachments referred to in this Section include, but are not limited to, encroachments caused by error in the Condominium Map, by settling, rising or shifting of the earth, or by changes in position caused by repair or reconstruction of any part of the Project. Such encroachments shall not be considered to be encumbrances upon any part of the Project. Encroachments may also include those created by remodeling or reconstruction provided such work is performed in accordance with plans approved by the Executive Board. Section 15.5 Utility Easements. There is hereby created for use by third parties providing services to the Project a general easement upon, across, over, in and under all of the {00053419 / 1} - 34 - .. Property for ingress and egress and for installation, replacement, repair and maintenance of all utilities, including but not limited to water, sewer, gas, telephone, electricity and cable or other communication systems. By virtue of this easement, it shall be expressly permissible and proper for the companies providing electrical, telephone and other communication services to erect and maintain the necessary equipment on the Property and to affix and maintain electrical, communications and telephone wires, circuits and conduits under the Property, all in order to serve the Property. Any utility company using this general easement shall use its best efforts to install and maintain the utilities provided without disturbing the uses of the Owners, the Association and Declarant; shall prosecute its installation and maintenance activities as promptly as reasonably possible; and shall restore the surface to its original condition as soon as possible after completion of its work. Should any utility company furnishing a service covered by the general easement request a specific easement by separate recordable document, Declarant or the Executive Board shall have, and are hereby given, the right and authority to grant such easement upon, across, over or under any part or all of the Property without conflicting with the terms hereof. The easements provided for in this Section shall in no way affect, avoid, extinguish or modify any other recorded easement on the Property. The easements provided herein shall be subject to such limitations as may be imposed by the Executive Board with regard to, among other things, location and placement of lines and equipment, conditions and hours of work and temporary storage of materials and equipment. No person or entity shall install any equipment, lines or fixtures to the exterior of the Building that is subject to this Declaration whether on railings, balconies, exterior walls or roof, without the express written consent o f the Executive Board. Section 15.6 Reservation of Easements. Exceptions and Exclusions. Declarant reserves for itself and its successors and assigns and hereby grants to the Association the concurrent right to establish from time to time by declaration or otherwise, utility and other easements within the Common Elements for purposes including but not limited to paths, walkways, recreation areas, ducts, shafts, flues, and conduit installation areas, consistent with the condominium ownership of the Project for the best interest of the Owners or any group thereof and the Association. Section 15.7 Emergency Access Easement. A general easement is hereby granted to all police, sheriff, fire protection, ambulance and all other similar emergency agencies or persons to enter upon the Property in the proper performance of their duties. {00053419 / 1} - 35 - .. Section 15.8 Maintenance Easement. An easement is hereby granted to the Association and any Managing Agent and their respective officers, agents, employees and assigns upon, across, over, in, under and through the Units and the Common Elements and a right to make such use of the Units and the Common Elements as may be necessary or appropriate to perform the duties and functions which they are obligated or permitted to perform pursuant to this Declaration. Section 15.9 Drainage Easement. An easement is hereby reserved to Declarant and its successors and assigns and granted to the Association and its officers, agents, employees, successors and assigns to enter upon, across, over, in and under any portion of the Project for the purpose of changing, correcting or otherwise modifying the grade or drainage channels of the Property so as to improve the drainage of water on the Property. Section 15.10 Easements of Access for Repair, Maintenance. and Emergencies. Some of the Common Elements are or may be located within the Units or may be conveniently accessible only through the Units. The Association shall have the irrevocable right, to be exercised by the Association as the Owners' agent, to have access to each Unit and to all Common Elements from time to time during such reasonable hours as may be necessary for the maintenance, repair, removal or replacement of any of the Common Elements therein or accessible therefrom or for making emergency repairs therein necessary to prevent damage to the Common Elements or to any Unit. In addition, an easement is hereby created for such Common Elements as they currently exist within the Units. Subject to the provisions of Section 8.3 above, damage to the interior of any part of a Unit resulting from the maintenance, repair, emergency repair, removal or replacement of any of the Common Elements or as a result of emergency repair within another Unit at the instance of the Association or of Owners shall be a Common Expense. Section 15.11 Declarant's Rights Incident to Construction and Marketing. Declarant, for itself and its successors and assigns, hereby retains a right and easement of ingress and egress over, in, upon, under, across and through the Property and the right to store materials on the Property and to make such other use of the Property as may be reasonably necessary or incident to the complete construction and sale of the Project, including, but not limited to, materials, equipment, machinery, sales offices and directional and marketing signs; provided, however, that no such rights shall be exercised by Declarant in such a way as to unreasonably interfere with the occupancy, use, enjoyment or access by any Owner, or family members, guests, employees or invitees of an Owner. Declarant, for itself and its successors and assigns, hereby retains a right to maintain any Unit(s) as sales offices, management offices or models for marketing and sales of Fractional Ownership Interests within this Project from time to time so long as Declarant, or any Successor Declarant, continues to be an Owner or lessee of such Unit. The use by Declarant of any Unit as a model, office or other use shall not affect the Unit's designation on the Map as a separate Unit. Section 15.12 Right of Declarant and Association to Own Units and to Use Common Elements. An easement is hereby reserved by Declarant for itself and its successors and assigns and granted to the Association and its officers, agents, employees, successors and assigns to {00053419 / 1} -36- .. maintain offices, storage areas, conference areas and recreational areas for use by the Association within the Common Elements, subject to all rules and regulations established under this Declaration and the Association Documents. Section 15.13 Remodeling Easement. Declarant, for itsel f and its successors and assigns, retains a right and easement in and about the Building for the construction and installation of any duet work, additional plumbing or other additional services or utilities in the Common Elements or in connection with the improvement or alteration of any Unit, including the right of access to such areas of the Common Elements or Units as is reasonably necessary to accomplish such improvements. Section 15.14 Reservation for Relocation. Combination. Subdivision or Resignation of Units. Declarant hereby reserves to itself an easement and right-of-way over, upon and across the Property for construction, utilities, drainage, and for use of the Common Elements as may be reasonably necessary or incident to the construction of improvements on the Property; provided, however, that no such rights shall be exercised by Declarant in a way which unreasonably interferes with the occupancy, use, enjoyment, or access to the Project by the Owners. The location of these easements and rights-of-way may be made certain by Declarant or the Association by instruments recorded in the Records. Section 15.15 Easements Deemed Created. All conveyances of Fractional Ownership Interests hereafter made, whether by Declarant or otherwise, shall be construed to grant and reserve the easements contained in this Article 15, even though no specific reference to such easements or to this Article 15 appears in the instrument for such conveyance. ARTICLE 16 - ASSOCIATION AS ATTORNEY-IN-FACT Section 16.1 Appointment. Each and every Owner hereby irrevocably constitutes and appoints the Association as such Owner's true and lawful attorney-in-fact in such Owner's name, place and stead for the purpose of dealing as a fiduciary on behalf of the Owners collectively, with the Project upon its damage, destruction, condemnation or obsolescence as provided below in Articles 17, 18, and 19. In addition, the Association, or any insurance trustee or substitute insurance trustee designated by the Association or if the power to appoint an insurance trustee has been delegated to the Managing Agent, the Managing Agent, is appointed as attorney-in-fact under this Declaration for the purpose of purchasing and maintaining insurance and appointing an insurance trustee under Article 11 above, including: (a) the collection and appropriate disposition of the proceeds of such insurance; (b) the negotiation of losses and the execution of releases of liability; (c) the execution of all documents; and (d) the performance of all other acts necessary to accomplish such purpose. The Association, or any insurance trustee, shall hold or otherwise properly dispose of any insurance proceeds in trust for the Owners and their Mortgagees, as their interests may appear. Acceptance by any grantee of a deed or other instrument of conveyance from Declarant or from any Owner shall constitute appointment of the attorneys-in-fact as provided above. Notwithstanding any other provision of this Declaration to the contrary, the Association may exercise its authority as attorney-in-fact {00053419 / 1} -37- .. for any purpose permitted pursuant to this Declaration only if, in each and every instance where such exercise is so permitted, the Executive Board approves the exercise of such authority by the affirmative vote of a majority of the voting Directors. If the Executive Board fails to so approve any exercise of authority as attorney-in-fact, the Association shall have such authority as it may have pursuant to the Act. Each Owner's appointment of the Association as attorney-in-fact as provided in this Section is a power coupled with an interest, and no further document or instrument is necessary to evidence the Association's appointment. Section 16.2 General Authority. As attorney-in- fact, the Association shall have full and complete authorization, right and power to make, execute and deliver any contract, assignment, deed, waiver or other instrument with respect to the interest of any Owner which may be necessary or appropriate to exercise the powers granted to the Association as attorney-in-fact. ARTICLE 17 - DAMAGE OR DESTRUCTION Section 17.1 The Role of the Executive Board. In the event of damage to or destruction of all or part of the Common Elements or other Property covered by insurance written in the name of the Association under Article 11, the Executive Board shall arrange for and supervise the prompt repair and restoration of the damaged areas of the Project, including, without limitation, the floor coverings, fixtures, appliances, furnishings, equipment or other personal property supplied or installed by Declarant. To the extent that the damage or destruction is due to the act or omission of an Owner, any member of an Owner's family, or an Owner's guests, invitees or tenants, then such Owner shall be liable to the Association in accordance with Section 8.3 above. Section 17.2 Estimate of Damages or Destruction. As soon as practical after an event causing damage to or destruction of any part of the Project, the Association shall, unless such damage or destruction shall be minor, obtain an estimate or estimates that it deems reliable and complete of the costs of repair and reconstruction of that part of the Project damaged or destroyed. "Repair and reconstruction" as used in this Article 17 shall mean restoring the damaged or destroyed part of the Project to substantially the same condition in which it existed prior to the damage or destruction, with each Unit and the Common Elements having substantially the same vertical and horizontal boundaries as before. Section 17.3 Repair and Reconstruction. As soon as practical after obtaining estimates, the Association shall diligently pursue to completion the repair and reconstruction of the part of the Project damaged or destroyed. As attorney-in-fact for the Owners, the Association may, subject to statutory requirements for the approval of Special Assessments, take any and all necessary or appropriate action to effect repair and reconstruction, and no consent or other action by any Owner shall be necessary in connection with that action. {00053419 / 1} -38- .. Section 17.4 Funds for Repair and Reconstruction. The proceeds received by the Association from any casualty or hazard insurance shall be used for the purpose of repair, replacement and reconstruction. Section 17.5 Insurance Proceeds Sufficient to Repair. In the event o f damage or destruction due to fire or other disaster, the insurance proceeds, if sufficient to reconstruct the improvements, shall be applied by the Association as attorney-in-fact to such reconstruction, and the improvements shall be promptly repaired and reconstructed. The Association shall have full authority, right and power as attorney-in-fact to cause the repair and restoration of the improvements. Assessments for Common Expenses shall not be abated during the period of insurance adjustments and repair and reconstruction. Section 17.6 Insurance Proceeds Insufficient to Repair; Special Assessment Remedies for Failure to Pay Special Assessment. If the insurance proceeds are insufficient to repair and reconstruct the improvements, such damage or destruction shall be promptly repaired and reconstructed by the Association as attorney-in-fact, using the proceeds of insurance and the proceeds of a Special Assessment to be made against all of the Owners and their Fractional Ownership Interests. Any such Special Assessment shall be a Common Expense in accordance with Section 9.4 above. The Association shall have full authority, right and power as attorney-in-fact to cause the repair, replacement or restoration of the improvements using all of the insurance proceeds for such purpose, notwithstanding the failure of an Owner to pay the Special Assessment. Any Assessment provided for in this Section shall be a debt of each Owner and a lien on the Owner's Fractional Ownership Interest and may be enforced and collected as provided in Article 9 above. In addition, the Association as attorney-in-fact shall have the absolute right and power to sell the Fractional Ownership Interest of any Owner refusing or failing to pay such Special Assessment within the time provided, and if not so paid, the Association shall cause to be recorded a notice that the Fractional Ownership Interest of the delinquent Owner shall be sold by the Association as attorney-in-fact pursuant to the provisions of this Section. The delinquent Owner shall be required to pay to the Association the costs and expenses for filing the notice, interest at the Maximum Rate on the amount of the Special Assessment and all reasonable attorneys' fees. The proceeds derived from the sale of such Fractional Ownership Interest shall be used and disbursed by the Association as attorney-in-fact in the following order: 17.6.1 For payment of real property ad valorem taxes, special assessment liens duly imposed by a governmental subdivision and customary expenses of sale; 17.6.2 For payment of the balance of any priority lien granted to the Association by law; 17.6.3 For payment of unpaid Association Assessments, interest, costs, late charges, expenses and attorneys' (and legal assistants') fees; {00053419 / 1} -39- .. 17.6.4 For payment of any other junior liens or encumbrances affecting the Fractional Ownership Interest in the order of and to the extent of their priority; and 17.6.5 For payment of the balance remaining, if any, to the Owner of the Fractional Ownership Interest. Section 17.7 Repairs. All repairs and reconstruction contemplated by this Article 17 shall be performed substantially in accordance with this Declaration, the Map and the original plans and specifications for the Project, unless other action is approved by the Association in accordance with the requirements of this Declaration and the other Association Documents. Section 17.8 Notice of Damage or Destruction. In the event that any portion of the Project encompassing more than one Unit is substantially damaged or destroyed by fire or other casualty, then written notice of the damage or destruction shall be given by the Association to each Owner and First Mortgagee of the affected Units within a reasonable time following the event of casualty damage. ARTICLE 18 - OBSOLESCENCE Section 18.1 Adoption of Plan; Rights of Owners. The Members of the Association representing sixty-seven percent (67%) or more of the total number of votes entitled to be cast on Association matters may agree that the Project is obsolete and adopt a written plan for the renewal and reconstruction thereof. Written notice of the adoption of such a plan shall be given to all Owners and a copy of such plan shall be recorded in the Records, and the expense of renewal and reconstruction shall be payable by all of the Owners as a Common Expense. Section 18.2 Sale of Obsolete Units. The Members o f the Association representing sixty- seven percent (67%) or more of the total number of votes entitled to be cast on Association matters may agree that the Units are obsolete and that the Project should be sold. In such instance, the Association shall immediately record in the Records, a notice setting forth such fact or facts, and upon the recording of such notice by the Association, the Project shall be sold by the Association, as attorney-in-fact for all of the Owners, free and clear of the provisions contained in this Declaration, the Condominium Map and the articles of incorporation and Bylaws. Unless otherwise agreed in writing by all the Owners, the sale proceeds (and any insurance proceeds under Article 17 above) shall be divided amongst the Owners based upon the number of Fractional Ownership Interests owned at such time, and such proceeds shall be paid into separate accounts, each such account representing one Fractional Ownership Interest, as the case may be. Each such account shall be in the name of the Association, and shall be further identified by the Unit designation and the name of the Owner and designated as an agency account. From each separate account the Association, as attorney-in-fuct, shall use and disburse the total amount of such accounts, without contribution from one account to another, for the same purposes and in the same order as is provided in Sections 17.6.1 through 17.6.5 above. {00053419 / 1} -40- .. ARTICLE 19 - CONDEMNATION Section 19.1 Consequences of Condemnation. If, at any time or times during the continuance of the Project pursuant to this Declaration, all or any part of the Project shall be taken or condemned by any public authority, sold or otherwise disposed of in lieu or in avoidance of condemnation, then all compensation, damages or other proceeds of condemnation, the sum of which is referred to as the "condemnation award" below, shall be payable to the Association, and the provisions of this Article 19 shall apply. Section 19.2 Complete Taking. In the event that the entire Project is taken or condemned, sold or otherwise disposed of in lieu or in avoidance of condemnation, the condominium ownership pursuant to this Declaration shall terminate, subject to the provisions of Section 19.7 below. The condemnation award shall be paid to the Association for the use and benefit of the Owners and the Mortgagees as their interests may appear. Such award shall be apportioned among the Owners and the Mortgagees based upon the number of Fractional Ownership Interests owned at such time, provided, however, that if a standard different from the value of the Project as a whole is employed to measure the condemnation award in the negotiation, judicial decree or otherwise, then in determining such apportionment the same standard shall be employed. The Association shall, as soon as practical, determine the share of the condemnation award to which each Owner and Mortgagee is entitled, and such shares shall be paid into separate accounts and disbursed as soon as practical for the same purposes and in the same order as is provided in Sections 17.6.1 through 17.6.5 above. Section 19.3 Partial Taking. In the event that less than the entire Project is taken, condemned, sold or otherwise disposed of in lieu or in avoidance of condemnation, the condominium ownership under this Declaration shall not terminate. Each Owner of a Fractional Ownership Interest so taken or condemned (and Mortgagee holding an interest in such Owner's Fractional Ownership Interest) shall be entitled to a share of the condemnation award to be determined under the following provisions. The condemnation award shall be paid to the Association for the use and benefit of the Owners and the Mortgagees as their interests may appear. As soon as practical, the Association shall reasonably and in good faith allocate the condemnation award between compensation, damages or other proceeds, and shall apportion the amounts so allocated among the Owners, unless otherwise required under the Act, as follows: 19.3.1 The total amount allocated to a taking of or injury to the Common Elements shall be apportioned to the Association; 19.3.2 The total amount allocated to severance damages shall be apportioned to the Owners and Mortgagees of Fractional Ownership Interests which were not taken or condenlned; {00053419 / 1} -41- .. 19.3.3 The respective amounts allocated to the taking of or injury to a particular Unit shall be apportioned to the Owner and Mortgagees of Fractional Ownership Interests therein; and 19.3.4 The total amount allocated to consequential damages and any other takings or injuries shall be apportioned as the Association determines to be equitable under the circumstances. If an allocation of the condemnation award is already established in negotiation, judicial decree or otherwise, then in allocating the condemnation award, the Association shall employ such allocation. Distribution of apportioned proceeds shall be made by checks payable jointly to the respective Owners and their respective Mortgagees. Section 19.4 Reorganization. In the event a partial taking results in the taking of a Unit, the Owners of any Fractional Ownership Interests thereof shall automatically cease to be members of the Association. Thereafter, subject to the provisions of Section 19.7 below, the Association shall reallocate the ownership, voting rights and Assessment ratios determined in accordance with this Declaration according to the same principles employed in this Declaration at its inception and shall submit such reallocation to the Owners of the remaining Fractional Ownership Interests therein for the amendment of this Declaration. Section 19.5 Repair and Reconstruction. Any repair and reconstruction necessitated by condemnation shall be governed by the procedures contained in Article 18 above. Section 19.6 Notice of Condemnation. In the event that any portion of the Project shall be made the subject matter of any condemnation or eminent domain proceeding or is otherwise sought to be acquired by a condemning authority, then timely written notice of such condemnation shall be given by the Association to each Owner and First Mortgagee. Section 19.7 Limitations on Actions of Association. Except as provided by statute, in case of condemnation, the Association may not take any of the actions specified in Sections 20.1 through 20.6 below if such actions are rejected by (a) Members of the Association representing sixty-seven percent (67%) or more of the total number of votes entitled to be cast on Association matters, and (b) non-Declarant Owners representing sixty-seven (67%) or more of the total number of votes entitled to be cast on Association matters by non- Declarant Owners. ARTICLE 20 - OTHER ASSOCIATION MATTERS Section 20.1 Association Matters. Each Owner, by accepting a deed to a Fractional Ownership Interest, recognizes that: (a) the Project is subject to the Association Documents, (b) by virtue of his ownership of a Unit or Fractional Ownership Interest (pursuant to Article 23), he has become a Member of the Association, (c) such Owner is subject to any rules and regulations of the Association, and (d) pursuant to the Association Documents, an Owner is a Member of the Association and is entitled to all of the benefits {00053419 / 1} - 42 - .. and subject to all of the burdens of such membership. Each Owner, by accepting a deed to a Fractional Ownership Interest, acknowledges that he has received a copy of the Declaration and the articles of incorporation, Bylaws and rules and regulations of the Association. Each Owner agrees to perform all of his obligations as a Member of the Association as they may from time to time exist, including, but not limited to, the obligation to pay Assessments as required under the Association Documents, including the Declarations. Section 20.2 Enforcement of Association Documents. 20.2.1 The Association shall have the power, subject to the primary power of the Executive Board of the Association, to enforce the covenants and restrictions contained in the Association Documents, but only as said covenants and restrictions relate to the Project, and to collect Assessments on behalf of the Association. 20.2.2 This Declaration is intended to supplement the Association Documents as they apply to the Property. In addition to all of the obligations which are conferred or imposed upon the Association pursuant to this Declaration and the Bylaws or articles of incorporation of the Association, the Association shall be subject to all of the obligations imposed upon it pursuant to the Association Documents. The Association and all committees thereof shall also be subject to all superior rights and powers that have been conferred upon the Association pursuant to the Association Documents. The Association shall take no action in derogation of the rights of, or contrary to the interests of, the Association. Section 20.3 Architectural Control. 20.3.1 No addition, change or alteration to the Common Elements, and no interior, exterior or structural addition, change or alteration to any Unit shall be permitted by any owner other than the Declarant. Section 20.4 Limit on Timesharing. Each Owner acknowledges that Declarant intends to create Fractional Ownership Interests with respect to Units within the Proj ect. Other than the right to create Fractional Ownership Interests as contemplated by this Declaration (specifically including, without limitation, the Plan of Fractional Ownership) granted and reserved to (a) Declarant, (b) Declarant's affiliates (defined as person or entities controlling, controlled by or under common control with Declarant), and (c) Declarant's successors, transferees and specific assigns, and their respective officers, agents, employees, and assigns, no Unit shall be used for the operation of a timesharing, fraction- sharing, interval ownership, private fractional ownership, membership program, vacation, exchange network or system or similar program whereby the right to exclusive use of the Unit is alternated or scheduled among participants in the program on a fixed or floating time schedule over a period of years whether by written, recorded agreement or otherwise, without the written consent of Declarant. Unless specifically granted Declarant's rights hereunder, purchasers of Units or Fractional Ownership Interests from Declarant, and all {00053419 / 1} -43- .. subsequent purchasers thereafter, are restricted by the timesharing limitations set forth in this Section. This Section shall not prohibit an Owner of a Fractional Ownership Interest from granting exclusive use of a Unit to its employees or clients for no consideration. Section 20.5 Acknowledgments. Each Owner is hereby advised of the following matters affecting the Project, Aspen Ski Resort, and the Town of Aspen and the Owners' use and enjoyment thereof: 20.5.1 The Project is benefited by the fact that it is located near or adjacent to the Aspen Ski Area (the "Ski Area"). The Ski Area represents a unique and desirable amenity that includes many year-round activities. As such, the Ski Area may generate an unpredictable amount of visible, audible and odorous impacts and disturbances from activities relating to the construction, operation, use and maintenance thereof. The activities associated with the Ski Area include, without limitation: (i) vehicular and non- vehicular traffic, including, without limitation, (a) buses, vans, snowcats, snowmobiles and other vehicles which transport residents and guests of the Town of Aspen over, around and through the Ski Area and the Town of Aspen, and (b) construction vehicles and equipment; (ii) activities relating to the construction, operation and maintenance of ski trails, skiways and skier bridges and tunnels relating to the Ski Area, including, without limitation, (a) construction, operation and maintenance of Ski Area access roads, snow-making equipment and chair lifts, gondolas and other skier transportation systems, and (b) operation of snow- grooming vehicles and equipment and safety and supervision vehicles; and (iii) activities relating to the use of the Ski Area, including, without limitation, skiing, snow boarding, hiking, horseback riding, bicycling and other recreational activities. 20.5.2 In addition to the general provisions of subsection 20.5.1, certain areas in other buildings in the Town of Aspen, may be used in connection with the operation of the Ski Area, including, without limitation, the use of such areas for purposes of snowcat storage, maintenance and repair and ski patrol purposes. An unpredictable amount of visible, audible and odorous impacts and disturbances may occur from activities relating to the use of areas in connection with operation of the Ski Area. Owners acknowledge that substantial operations relating to the Ski Area occur at night, and the impacts and disturbances referenced in this subsection and in subsection 20.5.1 may occur at any time. 20.5.3 Substantial construction-related activities relating to the development within or near the Town of Aspen may cause considerable noise, dust and other inconveniences to the Owners. 20.5.4 No interest in or right to use any amenity located near the Project, such as swimming pools, spas, golf facilities, ski facilities or the like, shall be conveyed to any Owner pursuant to this Declaration. The owners of any facilities that are not part of the Project shall have the right, in their sole discretion, to remove, relocate, discontinue operation of, restrict access to, charge fees for the use of, sell interests in or otherwise deal with such assets in their sole discretion without regard to any prior use of or benefit to any Owners. Declarant reserves the right to negotiate and enter contracts in the future with {00053419 / 1} -44- .. third parties to provide such amenities and other benefits of ownership on behalf of the Association and the Owners. 20.5.5 Declarant is not the operator of the Ski Area, and accordingly, Declarant cannot make any representations relating thereto. Declarant does not make nor any of its employees or agents have the authority to make any representations regarding the opening or closing dates of the Ski Area in any given year. The operator of the Ski Area may decide, in its sole discretion, whether and when any or all of the chairlifts within the Ski Area should be operated. 20.5.6 Ownership of real property in mountain areas involves certain inherent inconveniences. These include, but are not limited to: (a) dripping water onto decks and porches from snow melt, (b) snow and ice build-up on decks, roofs, gutters and porches during winter months, (c) the need to open windows to cool a Unit during certain summer periods, in that due to the temperate summer climate air conditioning may not be provided in all parts of the Building, and (d) other inconveniences arising from the variable weather conditions in the Rocky Mountains. 20.5.7 Use of wood burning fireplaces, stoves and other devices is restricted within Town of Aspen by governmental regulation. 20.5.8 Declarant reserves the right to negotiate and enter contracts with third parties to provide services and benefits on behalf of the Association and the Owners. ARTICLE 21 - DECLARANT'S RIGHTS REGARDING TRANSFER Any right or any interest reserved or contained in this Declaration for the benefit of Declarant may be transferred or assigned by Declarant, either separately or with one or more other such rights or interests, to any person, corporation, partnership, association or other entity, by written instrument executed by both Declarant and the transferee or assignee and recorded in the Records. Upon such recording, Declarant's rights and obligations under this Declaration shall cease and terminate to the extent provided in such instrument. ARTICLE 22 - MISCELLANEOUS Section 22.1 Restriction on Declarant Powers. Notwithstanding anything to the contrary herein, no rights or powers reserved to Declarant hereunder shall exceed the time limitations or permissible extent of such rights or powers as restricted under the Act. Any provision in this Declaration in conflict with the requirements of the Act shall not be deemed to invalidate such provision as a whole but shall be adjusted as is necessary to comply with the Act. No rights of Declarant under the Association Documents may be abridged without the consent of Declarant. {00053419 / 1} - 45 - .. Section 22.2 Term. The covenants and restrictions of this Declaration shall run with and bind the land in perpetuity, subject to the termination provisions of the Act. Section 22.3 Amendment. The provisions of this Declaration may be amended or terminated, in whole or in part, from time to time, upon the written consent of Members of the Association representing a majority of the total number of votes entitled to be cast on Association matters or by the Members of the Association representing a majority of the total number of votes entitled to be cast on Association matters at a meeting of the Owners called for that purpose; provided, however, matters not requiring Owner approval as described in Section 38-33.3-217(1) of the Act may be handled by the Executive Board. Any provision of this Declaration requiring a vote of more than 50% of the total voting interest in the Association and/or of a group thereof to be effective may only be amended by a vote of the applicable aggregate voting interest stated in such provision. In addition: (a) a majority of the voting Directors of the Executive Board may make, without the approval of the Members of the Association, changes to the Map or any other Association Documents to the extent necessary to correct a factual error, and (b) any proposed amendment to this Declaration which affects any right of Declarant shall require the prior written approval of Declarant, in addition to the approval requirements otherwise set forth herein. Provided, however, with respect to the foregoing, that the percentage of the voting power of the Association necessary to amend a specific clause or provision of this Declaration shall not be less than the percentage of affirmative votes prescribed for action to be taken under that clause or provision. Section 22.4 Unilateral Amendment Rights Reserved by Declarant. Notwithstanding any provision in this Declaration to the contrary, Declarant, acting alone, reserves to itself the right and power to modify and amend this Declaration to the fullest extent permitted under the Act including, without limitation, to correct clerical, typographical or technical errors, or to comply with the requirements, standards, or guidelines of recognized secondary mortgage markets, the Department of Housing and Urban Development, the Federal Housing Administration, the Veterans Administration, the Federal Home Loan Mortgage Corporation, the Government National Mortgage Association, or the Federal National Mortgage Association, or any governmental authority having jurisdiction over the Project. I)eclarant reserves the right to amend this Declaration to delete the phrase "or any other governmental authority having jurisdiction over the Project" in the prior sentence. Section 22.5 Recording of Amendments. Except as provided in Section 22.4 hereof, any amendment to this Declaration must be executed by the President of the Association and shall be immediately effective upon recording in the Records, and approval, if required, of such amendment may be shown by attaching a certificate of the Secretary of the Association to the recorded instrument certifying the approval of a sufficient number of Members of the Association for the amendment. Section 22.6 Enforcement. Enforcement of the covenants, conditions, restrictions, easements, reservations, rights-of-way, liens, charges and other provisions contained in this Declaration, the articles, the Bylaws and the rules and regulations of the Association, all as amended, shall be by any proceeding at law or in equity against any person or persons, {00053419 / 1} -46- .. including the Association, violating or attempting to violate any such provision. The Association and any aggrieved Owner shall have the right to institute, maintain and/or prosecute any such proceedings, and the Association shall further have the right (after notice and an opportunity to be heard) to levy and collect fines for the violation of any provision of the aforesaid documents. Any legal action initiated by the Association other than as described in this Declaration shall require the approval of the Executive Board. In any action instituted or maintained under this Section, the prevailing party shall be entitled to recover its costs and reasonable attorneys' fees incurred pursuant thereto, as well as any and all other sums awarded by the Court. Failure by the Association or any Owner to enforce any covenant or restriction herein contained shall in no event be deemed a waiver of the right to do so thereafter. Section 22.7 Severability. Invalidation of any of the covenants, restrictions or other provisions contained in this Declaration by judgment or court order shall in no way affect or limit any other provisions which shall remain in full force and effect. Section 22.8 Conflict of Provisions. In case of any conflict between this Declaration and the articles of incorporation or the Bylaws, this Declaration shall control. In case of any conflict between the articles of incorporation and the Bylaws, the articles of incorporation shall control. Section 22.9 Nonwaiver. Failure by Declarant, the Association or any Owner or First Mortgagee to enforce any covenant, condition, restriction, easement, reservation, right-of- way or other provision contained in this Declaration shall in no way or event be deemed to be a waiver of the right to do so thereafter. Section 22.10 Number and Gender. Unless the context provides or requires to the contrary, the use of the singular herein shall include the plural, the use of the plural shall include the singular and the use of any gender shall include all genders. Section 22.11 Captions. The captions to the Articles and Sections of this Declaration are inserted only as a matter of convenience and for reference, and are in no way to be construed to define, limit or otherwise describe the scope of this Declaration or the intent of any provision of this Declaration. Section 22.12 Exhibits. All the Exhibits attached to and described in this Declaration are incorporated in this Declaration by this reference. ARTICLE 23 - PLAN OF FRACTIONAL OWNERSHIP Section 23.1 Right to Submit Units to a Plan of Fractional Ownership. Declarant hereby submits all Units in the Project to a Plan of Fractional Ownership as set forth in this Article. The provisions of this Article relate only to those Units submitted to the Plan of Fractional Ownership and shall govern the ownership of Fractional Ownership Interests in Units and the rights, duties and obligations of Members. The provisions of the Declaration shall apply to all {00053419/ 1} -47- .. Units and Fractional Ownership Interests created hereunder; provided, however, in the event of an inconsistency between this Article and the remaining provisions of the Declaration with respect to the ownership of a Unit or Fractional Ownership Interest and the rights, duties, and obligations of Members, then the provisions of this Article shall control. Section 23.2 Convevance by Purchaser. Each Fractional Ownership Interest shall constitute an estate in real property separate and distinct from all other Fractional Ownership Interests in the Unit and other Units, which estate may be separately conveyed. A purchaser may acquire more than one Fractional Ownership Interest and thereafter convey each Fractional Ownership Interest so acquired separately. In no event, however, shall a Member convey less than one Fractional Ownership Interest as defined herein or as defined in a deed conveying a Fractional Ownership Interest, or attempt to subdivide a Fractional Ownership Interest into lesser interests. The specific rights conveyed to each purchaser of a Fractional Ownership Interest, including, without limitation, the fractional interest in the Unit owned by and the minimum usage rights granted to such purchaser, shall be established pursuant to the deed of the Fractional Ownership Interest from Declarant to each purchaser. No Purchaser or Owner (other than Declarant) shall encumber in any manner a Fractional Ownership Interest. It is the intention of the Declarant to convey undivided one-seventeenth (1/17th) fee ownership interests in each Unit. The total of all Fractional Ownership Interests in a single Unit, expressed as fractions, shall equal one (or seventeen [17] one-seventeenth [1/17*-1 Fractional Ownership Interests) and expressed as percentages, shall equal 100. Each one-seventeenth (1/17th) Fractional Ownership Interest will have ascribed to it a specified number of Club Points quantifying the rights of such Owner to the use and occupancy of the Unit, as reserved in accordance with the Association Documents. The statement of intent set forth herein shall not limit the rights of the Declarant, as reserved herein, to create undivided fee ownership interests (i.e. Fractional Ownership Interests) of differing fractions and percentages in the Units, subject to the prior written consent of any first Mortgagee having an interest in the subject Units. Should the Declarant decide to do so, it shall file a supplement to this Declaration setting forth the use rights of such differing fractions and percentages. In such case, the rights with respect to such Fractional Ownership Interests will be different from those stated in this Section for one-seventeenth (1/17th) Fractional Ownership Interests. However, notwithstanding anything herein to the contrary: (a) all Fractional Ownership Interests of equal fractions shall have the same number of Club Points ascribed to such Fractional Ownership Interests, subject to the Association Documents; and (b) Owners, excluding the Declarant, are expressly prohibited from combining or further dividing Fractional Ownership Interests. Section 23.4 Legal Description of a Fractional Ownership Interest. Every contract for sale, deed, lease, mortgage, trust deed, or other instrument relating to a Fractional Ownership Interest will legally describe the Fractional Ownership Interest by reference to the Unit number, the purchaser's fractional interest in the Unit and the purchaser's right to use and occupy the Unit during periods reserved pursuant to the reservation procedures, or by completing the following legal description: {00053419 / 1} -48- .. Fractional Ownership Interest No. _ consisting of an undivided interest in Unit of LITTLE RED RESIDENCE, according to the Declaration of Condominium for LITTLE RED RESIDENCE, recorded , 200_, at Reception No. as amended and supplemented from time to time and according to the Map for LITTLE RED RESIDENCE recorded , 200_, in Plat Book at Page , Reception No. as amended and supplemented from time to time, all in the Office of the Clerk and Recorder of Pitkin County, Colorado, together with the perpetual use of 7 seven days per year for each 1/52nd interest owned in accordance with the Association Documents for LITTLE RED RESIDENCE. Any legal description substantially in the form provided above or which is otherwise sufficient to identify the Fractional Ownership Interest shall be good and sufficient for all purposes to sell, convey and transfer or otherwise affect a Fractional Ownership Interest and all Common Elements and easements appurtenant thereto. A contract or other agreement for the sale of a Fractional Ownership Interest entered into prior to the filing of this Declaration and Condominium Map in the Records, may legally describe such Fractional Ownership Interest in substantially the manner set forth above and may indicate that the Condominium Map and this Declaration are to be recorded. Section 23.5 Administration and Management. The Executive Board shall perform the administration and management of the Plan of Fractional Ownership. It is contemplated that the Executive Board will delegate the responsibility for administration and management of the Plan of Fractional Ownership, including the powers and duties described in Section 23.7 below, to a Managing Agent pursuant to a Management Agreement. The Executive Board shall have all powers necessary or desirable to effectuate any of the purposes provided for herein. A Member, upon becoming the Owner of a Fractional Ownership Interest, shall be a Member of the Association and shall remain a member for the period ofhis ownership. Section 23.6 Acceptance; Enforcement; Indemnification. By acceptance of a deed to a Fractional Membership Interest, a Member agrees to be bound by the terms and conditions of the Declaration, specifically including, but not limited to, the specific provisions relating to the Plan of Fractional Membership set forth in this Article. In addition to all remedies provided to the Association in the Declaration, the Executive Board shall also have the following special remedies with respect to any Member who fails to pay the Assessments, fails to vacate a Unit or is otherwise in default of any provision ofthe Plan of Fractional Membership: 23.6.1 In the event any Member fails to vacate a Unit after termination of a reserved Allocated Use Period or otherwise uses or occupies or prevents another Member from using or occupying an Allocated Use Period, that Member shall be in default hereunder and shall be subject to immediate removal, eviction or ejection from the Unit wrongfully occupied; shall be deemed to have waived any notices required by law with respect to any legal proceedings regarding the {00053419 / 1} -49- .. removal, eviction or ejection; and shall pay to the Member entitled to use the Unit during such wrongful occupancy, as liquidated damages for the wrongful use of the Unit, a sum equal to two hundred percent (200%) of the fair rental value per day for the Unit wrongfully occupied as determined by the Executive Board in their sole discretion for each day, or portion thereof, including the day of surrender, during which the Member wrongfully occupies a Unit, plus all costs and expenses of enforcement, including attorneys' fees, which amounts may be collected by the Executive Board in the manner provided herein for the collection of Assessments, including lien and foreclosure rights. 23.6.2 Withhold use or possession of the Member's Fractional Ownership Interest during the Allocated Use Period, prohibit the Member from making any reservation pursuant to the reservation procedures and, upon notice, cancel any reservation previously made by the Member and rent any Allocated Use Period to which a Member is entitled. Written notice shall be given to the Member of the suspension of the Member's rights and privileges. However, no such suspension of the Member's rights and privileges, except a suspension of privileges for the failure of such Member to pay any Assessments, any portion thereof or any other amount(s) due hereunder on or before the due date thereof, or imposition of monetary penalties shall be made except after a meeting of the Executive Board at which a quorum of the Directors are present, duly called and held for such purpose in the same manner as provided in the Bylaws for the noticing, calling and holding of a meeting of the Executive Board for purposes of transacting business on behalf of the Members. Written notice of such meeting, the purpose thereof, including the reasons for the suspension sought or the monetary penalties sought to be imposed, and whether the Member's defense shall be oral or written, shall be given to the Member against whom such activity is to be taken at least fifteen (15) days prior to the holding of such meeting. Such notice shall be given as provided at Section 7.10 ofthis Declaration. 23.6.4 Except as to a transfer to a Mortgagee by foreclosure or deed in lieu of foreclosure, no transfer of a Fractional Ownership Interest shall be permitted unless and until the proposed transferor is current as to all Assessments due to the Association and is otherwise not in default under any other provision of the Declaration. Any purported transfer of a Fractional Ownership Interest while a Member is delinquent or is in default on any other obligation shall he null and void. All of the remedies granted by the Association Documents, specifically including the specific remedies provided for in this Article are cumulative, and the exercise of one right or remedy by the Association or the Executive Board shall not impair the right of the Association or the Executive Board to exercise any other remedy. The Executive Board shall not be limited to the remedies set forth herein and may invoke any other or additional remedies provided for or allowed by the Act, in law or in equity. The Executive Board may pursue any of the remedies provided for in whatever order is determined by the Executive Board. The failure by the Executive Board to insist in any one or more instances upon the strict compliance with any provision of the Association Documents, to exercise any right or option contained therein, to serve any notice or to institute any action or proceeding, shall not be construed as a waiver or relinquishment ofany such provision, option or right. Section 23.7 Right of First Refusal to Purchase Fractional Ownership Interests. If an Owner desires to sell, convey or transfer a Fractional Ownership Interest, and for so long as the Declarant owns one or more Fractional Ownership Interests, the Declarant shall have the right of {00053419 / 1} -50- .. first refusal to purchase the Fractional Ownership Interest under the same terms and conditions as are offered to or by a bona fide third party, including financing. Accordingly, each Owner desiring to sell the Owner's Fractional Ownership Interest must notify the Declarant in writing not less than thirty (30) days prior to the proposed closing date and must include a complete, written copy of the proposed sales contract. Within fifteen (15) days after receipt of such notice and a copy of the proposed sales contract, the Declarant shall determine whether the Declarant desires to exercise its right of first refusal as set forth herein. If the Declarant elects to exercise its right of first refusal, the Declarant shall notify the Owner in writing of such election within fifteen (15) days after receipt of Owner's written notice and sales contract, and the purchase by the Declarant shall be closed on the closing date as outlined in the written notice and proposed sales contract. If the Declarant fails to notify the Owner of its intent to exercise its right of first refusal within such fifteen (15) day period, the Owner may proceed to close on the Owner's transaction with such bona fide third party. In addition, any permitted sale between an Owner and a bona fide third party shall be deemed to contain a provision requiring that any sums due to the Association as Assessments must be paid in full as a condition of closing of the sale. In any and all events, the Declarant's right of first refusal as set forth above shall be a requirement of any successor in title to an Owner, the same being a covenant running with the land. Section 23.8 Limitation on Transfers bv Owners. No Owner, other than the Declarant, may sell, transfer, exchange, assign, convey, or othenvise dispose of a Fractional Ownership Interest for a period of one year following the date of acquisition of such Fractional Ownership Interest without the express written consent of the Declarant. Section 23.9 Declarant's Right to Repurchase Fractional Ownership Interest upon Abandonment of Plan of Fractional Ownership by Declarant. For a period of twenty-four months after the close of escrow of the first conveyance of a Fractional Ownership Interest, Declarant may abandon the Plan of Fractional Ownership Interest upon written notice to each Owner and Eligible Mortgagee. If Declarant abandons the Plan of Fractional Ownership, Declarant shall purchase, and each Owner shall sell to Declarant, each Fractional Ownership Interest owned by such Owner. The purchase price Declarant shall pay for each Fractional Ownership Interest shall be the original purchase price paid by such Owner for the Fractional Ownership Interest. In any and all events, the Declarant's right to repurchase as set forth above and the Owners obligation to sell and relinquish its Fractional Ownership Interest shall be enforceable against and binding upon any successor in title to an Owner, and shall be deemed a covenant running with the land. Section 23.10 Lodging Rules and Regulations. All Owners shall be entitled to make reservations for the use and occupancy of Fractional Ownership Interests pursuant to the Lodging Rules and Regulations established from time to time by the reservation services {00053419/ 1} -51- .. provider. The Lodging Rules and Regulations shall specify the manner in which reservations for the use and occupancy of Fractional Ownership Interests are to be requested and confirmed. The Lodging Rules and Regulations shall contain schedules, conditions, restrictions and limitations as are deemed necessary or desirable by the reservation services provider. The Lodging Rules and Regulations may be amended from time to time by the reservation service provider. The Lodging Rules and Regulations may establish nightly usage fees, which may distinguish among Owners, their guests, renters and Exchange Users. Section 23.11 Reservation Services and Exchange Program. The Declarant, through an agreement with Boutique Club International, Inc. (the "Club Affiliation Agreement"), has affiliated the Plan of Fractional Ownership with a reservation services and exchange program operated and administered by Boutique Club International (the "Boutique Club"), providing Owners (i) reservation services for the use and occupancy of the Fractional Ownership Interests, and (ii) the opportunity to use and occupy accommodations at other resorts affiliated with the Boutique Club ("Club Resorts"), and Exchange Users to use and occupy the Fractional Ownership Interests, pursuant to the terms and conditions of the documents governing the Boutique Club (the "Boutique Club Documents"). Section 23.12 Appurtenant to Fractional Ownership Interests. Membership in the Boutique Club is appurtenant to each Fractional Interest. Owners are automatically enrolled in the Exchange Program upon purchase of a Fractional Ownership Interest. Section 23.13 Master Reservation System. As a part of the services provided to Owners through the Boutique Club, Boutique Club International, Inc., administers the master reservation system through which Owners reserve the use and occupancy of the Fractional Ownership Interests, and which owners of interests at other Club Resorts reserve the use and occupancy of accommodations at their respective Club Resorts. In the event that the Club Affiliation Agreement is terminated in accordance with its terms, the Owners hereby designate the Declarant as their agent to establish reservation procedures for the Owners to reserve the use and occupancy of the Fractional Ownership Interests to replace the reservation procedures set forth in the Lodging Rules and Regulations as necessary. Furthermore, as set forth in the Club Affiliation Agreement, upon the termination of the Plan of Fractional Ownership's affiliation with the Boutique Club, the Plan of Fractional Ownership will cease to be a Club Resort and the Owners shall no longer have access to the other Club Resorts through the Boutique Club's master reservation system, and owners at other Club resorts will no longer have access to the Little Red Residence. Section 23.14 Boutique Club Documents. The Declarant may arrange for the assignment of the use and occupancy of the Units by Exchange Users and the use and occupancy of accommodations at other Club Resorts by Owners pursuant to the terms and conditions of the Club Affiliation Agreement. Boutique Club International, Inc., shall have the right to amend the terms and conditions of the Club Affiliation Agreement, the Lodging Rules and Regulations and other Boutique Club Documents from time to time as set forth therein; provided, however, that any such amendment shall be consistent with the terms and {00053419 / 1} - 52 - .. provisions of the Association Documents and shall not adversely affect the rights of the Owners thereunder. Section 23.15 Home Resort Preference Period. During the term of the Club Affiliation Agreement, all Units shall be available for use by Owners, subject to the home resort preference period priority right and other provisions set forth in the Lodging Rules and Regulations. Section 23.16 Use of Units. The Owners shall reserve, use and occupy Units in accordance with the Lodging Rules and Regulations. No Owner of a Fractional Ownership Interest may occupy a Unit dedicated to the Plan of Fractional Ownership except during such period as the Owner has received written notice of a confirmed reservation for a Unit in accordance with the Lodging Rules and Regulations. Reservation and occupancy is not specific to a particular Unit. Subject to all of the terms and conditions contained in the Lodging Rules and Regulations or other provisions of the Association Documents which pertain solely to the Plan of Fractional Ownership, the Owner of a Fractional Ownership Interest shall be entitled to apply the Club Points allocated to such Owner each Use Year toward the use and occupy of a Unit, which includes the exclusive right to use and enjoy the appurtenances thereto. Section 23.17 Service Periods. The Association Documents may provide that the Declarant shall have the right to reserve for each Unit as a service period a maximum of seven (7) days per Use Year on a super-priority basis. Section 23.18 Declarant's Right to Rent Units. Notwithstanding any other provision of this Declaration, the Declarant may rent or lease, as a hotel, lodge, or other accommodation facility, as part of its sales and marketing program, or otherwise, any of the Units or Fractional Ownership Interests that it owns or that are unreserved or otherwise not in use, without the approval of the Association or the Owners. Any revenues received by Declarant pursuant to this right shall be the sole property of Declarant. 23.18.1 Declarant, its successors, assigns or designees shall have the exclusive right to, and may operate an on-site rental agency program on the premises of Little Red Residence, including (i) the exclusive right to advertise Little Red Residence for commercial purposes related to the Restaurant and/or Units, including Fractional Ownership Interests, and, (ii) the exclusive right of Declarant, its successors, assigns or designees, to operate within Little Red Residence, a rental operation which may include, but is not limited to: a reception desk, lobby area, management offices and similar such facilities and activities. No other Owner, nor any other party, shall operate such facilities or similar facilities within the Condominium. 23.18.2 Fractional Ownership Interests and Units shall be made available for short- term rental when not in use by the Owner, the Owner' s invitees, or Exchange Users. Units that are available for rental shall be listed at competitive rates in a central reservation system. The Association shall permit walk-in rental of Units, and shall not limit rental {00053419 / 1} - 53 - .. arrangements as only weekly rentals; instead the Association shall permit shorter stays, split-week rentals, and similar flexible arrangements. 23.18.3 Owners shall receive a five-year schedule, at closing, that is updated on a periodic rolling basis, and Owners must provide thirty days' notice of their intent not to use a Fractional Ownership Interest unless provided otherwise under an Exchange Program. No Owner may utilize a Fractional Ownership Interest for any period in excess of thirty consecutive calendar days. No Owner may store a vehicle in a parking space on-site when that Owner is not utilizing a Fractional Ownership Interest. {00053419 / 1} - 54 - .. DECLARANT: LITTLE RED SKI HAUS, LLC, a Colorado Limited Liability Company By: Its: I)ate: STATE OF ) ) SS. COUNTY OF ) The foregoing instrument was acknowledged before me this day of 2006, by , as of Little Red Ski Haus, LLC, a Colorado Limited Liability Company, the Declarant. WITNESS my hand and official seal. Notary Public My commission expires: [SEAL] {00053419 / 1} - 55 - .. EXHIBIT A Legal Description LOT O AND THE WEST ONE-HALF OF LOT P, BLOCK 69, CITY AND TOWNSITE OF ASPEN, COUNTY OF PITKIN, STATE OF COLORADO including any appurtenant easements or licenses, subject to any lot line adjustments made subsequent to the recording of these Declarations. {00053419 / 1} - 56 - .. EXHIBIT B Allocated Interest An Allocated Interest of a Unit shall equal 1/12th. With respect to a Unit divided into Fractional Ownership Interests constituting a 1 /52 share of such Unit, each Fractional Ownership Interest shall have an Allocated Interest of 1/52. {00053419 / 1} -57- .. EXHIBIT C Permitted Exceptions To be provided by Title Company. (SEE §15.3) {00053419 / 1} -58- .. ATTACHMENT 2-LAND USE APPLICATION APPLICANr: Name: t; #le- Rul ski #-aus. it.c q.4 We,aterM Peak Lu:koue. club LLC Location: .»4 Nor~s ko€_ Dr:06 8464.ji. ro »Sf 5u*aSSe>r- 0 W vjir-- (Indicate street address, lot & block number. legal des6ription where appropriate) ParceUD11(BEQUBED) t•+ O 4,14 W '4 a#F Let P, 8/K 69 A-jecti 'CO 720-244-/0404 4594 #C>wa , 4 .rvt€. REPRESENTATfVE: &1111 Fra47*iff ,_4hr•le, r LIHE Rel- 51¢Z 8·«4, UC_, Name: have- Aort. PvuUe-•cr Weskra ?eAk as /Ha.•1273 '*-"*Aer- Address: 3 4 4 #ar:,13 6.-f) rive-. 8£, 64 lt, Co 7/6,21 Phone #: (974 927- 0811 PROJECT: Name: t;tlk RJ ·* Res:Jexce_ Address: IM E. C.per Aue- 9 6 peA, 60 9/6 Il Phone #: (11 4 tal L c>Tl S TYPE OF APPLICATION: (please check all that apply): £ Conditional Use U Conceptual PUD U Conceptual Historic Devt E Special Review O Final PUD (& PUD Amendment) E Final Historic Development C] Design Review Appeal El Conceptual SPA 0 Minor Historic Devt. C GMQS Allobnent ~ Final SPA (& SPA Amendment) O IIistoric Demolition E GMQS Exemption E Subdivision E Historic Designation E ESA - 8040 Greenline, Stream O Subdivision Exemption (includes O Small Lodge Conversion/ Margin, Hallam Lake Bluff, condominiumization) Expansion Mountain View Plane E Lot Split U Temporary Use 21 Othwr F'.04/ A.U/ew ef , 6.uU••11*14*4 de,9«4•E~ [3 Lot Line Adjustment E Text/Map Amendment ~urettic Al- .te Qull¢or,<Arvvt ; EXISTING CONDITIONS: (description of existing buildings, uses, previous approvals, etc.) r /1./ 4 < Le ·'le' tnu lerti Ce '41'£~T1- 6(4 7•C~) r£>Fu:*0*vt, AUMA ct.M,G~. 1*le.5*'Vt 14€s . crd.». 4(460©4; pt:lb AF'-*'516 Ord, 1).. faoo© PROPOSAL: (description of proposed buildings. uses, modifications, etc.) L * D . (DID,•r A<s apgreva] 45 54{ €ra.cke,lA.l ;.14aou ,~ 7/~ed-upa,~ 69~ fi«l r«.Viek) of< C.sdpAJQH*% leaune@t aw~ bw#£7049 Pia 13 6-00{ l~ €MY-,>€ *rdle=f fe Wes·fer,C Feat Bow.14%1£-- 064 . C.Ld- Have you attached the following? ' FEES DUE: $-5-¥G 42% E Pre-Application Conference Summary E Attachment #1, Signed Fee Agreement G Response to Attachment #3, Dimensional Requirements Form U Response to Attachment #4, Submittal Requirements- Including Written Responses to Review Standards All plans that are larger than 8.5" x 11" must be folded and a floppy disk with an electronic copy of all written text (Microsoft Word Format) must be submitted as part of the application. RETAIN FOR PERMAn/7 RTI-r .. David R. Fiore President WESTERN PEAK Rud,at Dec.-0 16 , 1,006 PROFFSSIONAI SFRVIC.F, INVESTMENTF & RFAI F.STATF DFVFIOPMENT December 15,2006 HAND DELIVERED Joyce Allgaier Deputy Planning Director City of Aspen 130 South Galina Street Aspen, CO 81611 RE: Little Red Ski Haus, LLC Condominium Time Share Project 118 East Cooper Avenue, Aspen CO 81611 Dear Ms. Allgaier: I am the President of Western Peak, LLC and Principal Managing Partner for the Little Red Ski Haus, LLC. In my capacity I am the authorized agent to file the land use application and pertinent documents mentioned below in accordance with our PUD approvals from the City. I have been in this capacity since we acquired the property in 2001. Please find enclosed the following: (1) Land Use Application; (2) A check #1070 in the amount of $546.00; (3) Condominium Declarations; (4) Condominium Map; and (5) The timeshare exchange program rule and regulations. You will find that the condominium declarations reviewed by the City in 2004 are substantially the same. Ultimately, we plan to sell our interest to Western Peak Boutique Club, LLC in which I will remain a managing member. Our exchange program will be through Boutique Club International and their master affiliation with Interval International. We are pleased to bring this added value to the community. Joyce, I hope to see you today when I deliver this package but if not 1 look forward to speaking with you to answer any questions that you may have. -_.Opatrav-v~m~./k A r f all -90</ ~ David R. ~6re DRF:wp Enclosures (5) ec: Jason T. Howard, Attorney, Gouger Franzmann and Hooke Mike Murphy, Boutique Club International IL (630) 768-4782 CO (970) 927-0815 FAX (970) 927-0816 PO Box 4320, Basalt CO 81621 www.WesternPeak.com - Email: David@WesternPeak.com . 0 Boutique Club International Rules and Regulations Each member of Boutique Club International shall be governed by and comply with the terms and conditions of these Boutique Club International Rules and Regulations, which may be amended from time to time. I. Definitions Bank or Banking -shall mean the act of a Club Member in deferring all or a portion of their Club Points from a given Use Year to the next successive Use Year. BCI - shall mean Boutique Club, 1.I.C, a I)elaware lin+ed liability company, or any of its affiliates. For purposes of these Boutique Club International Rules and Regulations shall also refer to Boutique Club International Exchange, an entitjz created for the purpose of offering Members of BCI management, exchange, reservations services, and related vacatio n and travel benefits. The services to be provided include the operation of the reservation system through which Club Members reserve the use of accommodations al one or inore Club Resorts, pursuant to the priorities, restrictions and limitations set forth in the Club Documents. Borrow or Borrowing - shall mean the act of a Club Member in accelerating the use of a portion of their Club Points from the next successive Use Year into the then current Use Year. Cancellation - shall mean the act of a Club Member of canceling a previously confirmed reservation, whereby such act(s) shall be subject to the terms and conditions described herein in Section V, Reservation Priorities. For purposes of these Rules and Regulations, a modification on a previously confirmed reservation shall be treated in the same manner asa cancellation. Club Benefits Program - shall mean the additional vacation, travel, activities, events, and other benefits created by BCI and made available to Club Members from time to time. Club Documents - shall mean those instruments governing the use and operation of BCI, including, but not limited to, these Rules and Regulations, which are promulgated, executed or amended by BCI from time to time. Club Dues- shall include the costs and expenses associated with the operation of BCI that are chargeable to each Club Member and/or Club Resort each calendar year. Club Member - shall mean the owner of record of a Fractional Interest at any Club Resort or an owner of record o f a Fractional Interest at a Club Resort, who has complied with all of the terms and conditions of BCI membership for that Club Resort. Club Point(s) - shall mean the symbolic unit of measure assigned to a Club Member's Fractional Interest by BCI that enables the Club Member to access BCI's accommodations, {00053127 / 2} -1- Boutique Club International Rules and Regulations .. services and benefits. Each Club Member shall annually be assigned an allocation of Club Points to represent the use rights associated with that Club Member's Fractional Interest. Club Points are used to establish a relative value for Fractional Interests based on, among other things, seasons, unit sizes, and resort locations. Club Point Account - shall mean the record of the number of Club Points available for use by a Club Member during each Use Year. Club Point Chart - shall mean the schedule detailing the amount of Club Points that Club Members are required to relinquish to reserve accommodations at Club Resorts for specific Units or tJypes of Units, during various time periods throughout each calendar year, and/or to access BCI services and benefits. The Club Point Chart maybe revised from time to time as determined by BCI from time to time in its sole discretion. Club Priority Period - shall mean the period beginning on the day after the expiration of the th Home Resort Preference Period and ending on the fifteenth (15 ) day prior to the first day of occupancy of a Floating Week or a Week containing a Floating Split Week. During the Club Priority Period, Club Members compete on a first-come, first-served basis to reserve the use of any available Week within BCI. Club Resort - shall mean those resorts, improvements, facilities and amenities whose assets are available from time to time to BCI for the purpose of providing accommodations and the related vacation and travel benefits to Club Members. The initial Club Resorts are '1'he Vanderbilt Residence Club, located in Newport, Rhode Island, USA and The Little Red Residence located in Aspen, Colorado, USA. Other resorts under consideration for inclusion in BCI are located in Costa Rica; however, BCI is not obligated to include any such resort in BCI nor does BCI make any guarantee that resorts in such locations or any other location shall be included in BCI. Club Resort Operating Budget - shall mean the budget that accounts for the estimated annual common expenses, ad valorem real estate taxes and replacement reserves attributable to a given Club Resort, including those Club Dues allocable to that Club Resort. Daily Use Periods - shall mean a Week, the use of which is divided into periods of one day allowing use during any night of such Week. BCI reserves the right to limit or prohibit the reservation of Daily Use Periods in the best interests of the Club Members as a whole. I)aily Use Period reservations may only be inade by Club Members within the Club Priority Period. External Exchange Company - shall mean a company that provides services to BCI and/or to Club Members pursuant to an External Exchange Program. The initial External Exchange Company is Interval International, Inc. External Exchange Program - shall mean the contractual agreement between BCI or an affiliate of BCI, on behalf of BCI and an External Exchange Company under which Club Members may reserve, subject to certain terms and conditions, the use of accommodations iii resorts other than Club Resorts, affiliated with the External Exchange Company. {00053127 / 2} -2- Boutique Club International Rules and Regulations .. Fixed Club Points - shall mean those Club Points that are used to reserve the use of a specifically deeded Week during the Home Resort Preference Period. Unused Fixed Club Points expire at the end of the Home Resort Preference Period. Fixed Week - shall mean a Week within a specific unit type, the exclusive use and occupancy o f which is resenred to a particular Club Member during the Home Resort Preference Period, subject to these Rules and Regulations. A Fixed Week must be deeded directly to a Club Member. No more than forty percent (40°/o) of the inventory from any week at The Little Red Residence shall be designated as a Fixed Week. Accordingly, this may limit a Club Member's ability to reserve certain weeks in the Use Year at certain Club Resorts, including the Home Resort. Floating Club Points - shall mean those Club Points that are used to reserve the use of an available Week by a Club Member whose Fractional Interest does not include a specifically deeded Fixed Week during the Home Resort Preference Period and by all Club Members during any Club Priority Period or limited Club Priority Period. Floating Week - shall mean a Week at a Club Resort within an established season that allows a Club Member to select their Week(s) from varying weeks each year. Floating Week reservations are made by Club Members on a first-come, first-served basis subject to the reservation policies set forth in these Rules and Regulations. Fractional Interest - shall mean the fractional ownership estate or other real or personal ownership interest in a Club Resort as evidenced by an ownership interest in a participating Club Resort. Guest Certificate - shall mean the certificate issued by BCI confirming that a Club Member has relinquished Club Points and reserved a Unit at a Club Resort in the name of a guest, friend or family member. Home Resort - shall mean the Club Resort in which a Club Member's Fractional Interest is located. This may or may not be the resort location where the original purchase agreement was executed. Home Resort Preference Period - shall mean the period during which a Club Member who is assigned the right to reserve the use and occupancy of an available Floating Week on a first-come, first-served basis as part of the Member's Fractional Interest is permitted to make such reservation. As it relates to the reservation of a Floating Week, the Home Resort Preference Period begins approximately twelve (12) months prior to the first day of use of a Floating Week and lasts for three (3) months. Limited Club Use Period - shall mean that period beginning on the day after the expiration of the Club Priority Period, during which Club Members have only limited rights to use Club Points to make a reservation through BCI within fourteen (14) days prior to the first day of use of a Floating Week, a Week containing a Floating Split Week, or a Week containing a Daily Use Period, {00053127 / 2} -3- Boutique Club International Rules and Regulations .. Little Red Residence - shall mean that certain Club Resort located in Aspen, Colorado. The Little Red Residence is a Club Resort of BCI. Managing Entity - shall mean BCI or, if not BCI, the management company or other entity responsible for operating and maintaining each Club Resort. Membership Certificate - shall mean that document issued by BCI to individual Club Members which conveys usage rights at Club Resorts to each individual Club Member. A Membership Certificate will set forth a Club Member's annual allotment of Club Points. Operating Budget - shall mean the operating budget for each Club Resort. Reservation Policies - shall mean those policies and procedures set forth herein which govern the process by which a Club Member may reserve the use and occupancy of accommodations included within BCI. In the event the Resort Agreement between The Little Red Residence and BC1 is terminated, those certain Reservation Policies as indicated herein will continue to govern the process by which owners of Fractional Interests at The Little Red Residence may reserve the use and occupancy ofaccommodations at The Little Red Residence. Reservation Services - shall mean the division of BCI that accepts and processes reservation requests and provides other Club Member services from time to time. Resort Agreement - shall mean a BCI Club Resort Agreement. A Resort Agreement is the contract among BCI and the owner, developer and/or managing entity of a resort under which the accommodations and facilities of that resort are included as a part of BCI. Resort Documents - shall mean all of the documents and any amendments thereto, which create and govern the rights and relationships between Club Members who own Fractional Interests in a Club Resort and such Club Resort, and which govern the use and operation of such Club Resort. Rules and Regulations - shall mean these BCI Rules and Regulations governing the reservation and use of BCI accommodations and facilities, which rules have been promulgated, adopted and/or amended from time to time by BCI in its sole discretion. Split Week - shall mean, unless specifically provided otherwise, a Week, the use of which is divided into periods of three (3) consecutive nights or four (4) consecutive nights. BCI reserves the right to liinit or prohibit the reservation of Split Weeks in the best interests of the Club Members as a whole. Split Week reservations may only be made by Club Members within the applicable Club Priority Period. Unit Type - has the meaning assigned to such term in Section III.1. Use Year - shall mean the twelve (12) month period during which a Club Member may redeem his or her annually allotted Club Points to reserve accommodations at a Club Resort or for other BCI services or benefits that may be made available by BCI from time to time. Except for a Club Member's initial individual Use Year, which may be pro-rated based upon {00053127 / 2} -4- Boutique Club International Rules and Regulations .. the time of purchase, all Use Years shall commence on January 1 and end on December 31 of each calendar year and remain the same throughout the life of the individual membership. Use Year Begin Date - shall mean the first day that a Club Member's annual allotment of Club Points becomes available for use within BCI. Use Year End Date - shall mean the last day that a Club Member's annual allotment of Club Points is available for use within BCI. Week - shall mean a period of seven (7) consecutive nights during which an accommodation unit, or combination of accommodation units within a single Club Resort, may be used pursuant to the Resort Documents for a Club Resort. II. Club Operation II.1 Membership - To participate in BCI, each Club Member must purchase a qualifying Fractional Interest at a Club Resort. Membership in BCI is an appurtenance to each Fractional Interest at a Club Resort as set forth in the Resort Documents for each such Club Resort. Membership in BCI is not an appurtenance to ownership interests at a Club Resort. In order to enjoy the benefits of membership in BCI, a purchaser of an ownership interest at a Club Resort must be enrolled as a Club Member and comply with all terms and conditions for membership as determined by BCI for that Club Resort. The usage rights conveyed to individual Club Members are represented by an associated Club Points value assigned or conveyed to such Club Member. Club Points can be redeemed through BCI for accommodations at any of BCI's Club Resorts, or for other Club services or benefits as may be available from time to time, throughout the life of the Club Member's BCI membership, subject to the provisions and conditions described herein. Membership in BCI with respect to a specific Fractional Interest automatically terminates for a given Club Member in the event the Club Member voluntarily or involuntarily transfers that Fractional Interest, or in the event the Member's Home Resort ceases to be a Club Resort. II.2 Management - BCI is expressly authorized to take such actions as it deems necessary or appropriate for its operation, including, but not limited to, the implementation of the reservation system duties as outlined in these Rules and Regulations. II.3 Club Dues - Costs and expenses incurred by BCI for the operation and management of the reservation system and the delivery of other BCI services and benefits shall constitute common expenses of BCI and shall be charged on an annual basis as Club Dues to the individual Club Members based upon a reasonably determined pro- ration formula. Club Dues charged against Club Members shall be billed annually, one hundred percent (100°/0) of which is to be paid no later than January 31 St. of each Use Year, except for a Club Member's initial Use Year. Failure on the part of any individual Club Member to pay their assessed Club Dues by the prescribed date will result in immediate suspension of BCI privileges including any and all usage rights associated with Club Resorts and/or BCI services and benefits, Further, no reservation for Club Resort accommodations or any other BCI service will be {00053127 / 2} -3- Boutique Club International Rules and Regulations .. confirmed unless the Club Member has paid in full the annual Club Dues. Use of Club Points may be restricted or denied by BCI if the Club Member is not current in the payment of the Member's Home Resort assessments and charges or is in default under the Member's Home Resort project documents, or any mortgage or deed of trust encumbering the Member's Fractional Interest. Continued failure on the part of the Club Member to rectify any delinquent payment may ultimately result in termination of the Club Member's BCI membership. Except as otherwise provided iii the Resort Documents, a Club Member who uses BC.1 to make a reservation - other than a reservation for a Week during the applicable Home Resort Preference Period - shall be liable for anv transaction fees charged by BCI from time to time. Unless provided otherwise in the Resort Documents, a Club Member who reserv-es accommodations through BCI in the name of a friend or guest shall also be liable for any Guest Certificate processing fee charged by BCI from time to time. All Club Dues owed to BC from the owners of Fractional Interests at a Club Resort shall be assessed by the Managing Entity of such Club Resort to the owners of Fractional Interests within such Club Resort together with other common expenses of such Club Resort; shall be remitted to BC by the Managing Entity as collected; and shall be paid according to the terms and conditions of these Rules and Regulations and the Resort Agreement for such Club Resort. Pursuant to the Resort Documents for such Club Resort, the homeowners association for such (Club Resort is obligated to collect and remit to BCI the total amount of Club Dues which are charged to the owners, as Club Members, of such Club Resort. Notwithstanding the foregoing, the Managing Entity of a Club Resort may collect Club Dues from individual owners, and not as a common expense of the Club Resort, provided that the Resort Documents for such Club Resort provide for Club Dues to be charged directly to the individual owners. For any Club Resort, a Club Member's failure to pay the Club Member's share of the Club Dues shall not relieve the Managing Entity of that Club Resort from its obligation to pay the entire amount of Club Dues due and owing BCL Club Members who own Fractional Interests or other ownership interest at Club Resorts are charged Club Dues directly by BCI or through the Managing Entity of the Club Resort, depending upon the terms and conditions pursuant to which the Club Resort became affiliated with BCI. Club Dues charged against Club Members who own Fractional Interests or other ownership interests at Club Resorts shall also be paid under the terms and conditions of these Rules and Regulations. III. Club Points III.1 Creation of Club Points - The total number of Club Points in BCI is the sum of all of the Club Point values represented by each unit week or other use period and/or all occupancy and other rights associated therewith conveyed or assigned to BCI. This inventory has an associated Club Point value for every night of the year and this value is based upon factors such as the cost of the resort product, relative supply and demand for the accommodation size and type (collectively, "Unit Types"), historical market average occupancy rates, resort seasonality, holidays and special events, and other applicable factors such as day o f week. Furthermore, the total number of Club {00053127 / 2} -6- Boutique Club International Rules and Regulations .. Points within BCI may vary slightly from year to year if there is a point differential between weekend and weekday values, since each weekend/weekday distribution will vary slightly across calendar years. In addition, Club Points may be increased upon the addition of future phases of existing Club Resorts or other resort locations within BCI. III.2 Reallocation of Club Points - BCI may elect to reallocate Club Points across seasons, resort locations, and/or Unit Types. Any such reallocation shall be based upon apparent supply and demand of BCI's accommodations, or in the absence of such information upon other accessible market data specific to BCI's resort locations, as experienced over a period of at least three (3) consecutive calendar years. The maximum annual reallocation shall not exceed fifteen percent (15°/0) of the total Club Points involved in the categories containing the redistribution. Additionally, if the reallocation includes adjustments to multiple Unit Types or locations, BCI may only change one aspect of the relationship per year. Notwithstanding the foregoing, Club Members will be notified of ally planned reallocation of Club Points, other than a reallocation resulting from the addition or deletion of Club Resorts or locations, at least twelve (12) months prior to any such reallocation becoming effective. III.3 Club Point Charts - Club Point Charts are issued by BCI and describe the associated Club Point value required for Club Members to reserve accommodations at each Club Resort location within a given unit size, Unit Type, season and day of week, as well as to access other services and benefits provided by BCI from time to time. BCI reserves the right to periodically modify, change, and/or amend the Club Point Charts based on changes in demand patterns, resort substitutions, resort additions, new products and services, or use patterns created by additional resort participation in BCI. BCI reserves the right to revise the number of Club Points required to reserve the use of various Weeks, Split Weeks, and/or I)aily Use Periods at each location within BCI from time to time, without Club Member consent. Pursuant to this reserved right, BCCI has the right to change the composition o f its existing seasons set forth in the Club Point Chart or to create additional seasonal bands to be set forth in a revised Club Point Chart in response to anticipated Club Member demand for a particular Club Resort, Unit Type or Week. III.4 Annual Club Point Allocations to Members - On an annual basis, Club Members shall be allocated the number of Club Points set forth ill such Club Member's Membership Certificate. The date that this annual allocation is performed may vary across Club Members. The first day that an annual allotment of Club Points is available for use is called the Use Year Begin Date, and the date that Club Points are scheduled to expire is called the Use Year End Date. Club Members have a twelve (12) month period during which they may use their Club Points to make Home Resort and/or Club Resort reservations, access BCI products or services, or to utilize BCI's flexible features, such as Banking or Borrowing. Club Points that remain unused at the end of the applicable twelve (12) month period (i.e., upon arrival of the Use Year End Date) {00053127 / 2} -7- Boutique Club International Rules and Regulations .. will expire and all usage rights associated with the expired Club Points will be deemed to be forfeited by the Club Member for that Use Year. Club Members whose Fractional Interest includes a specifically deeded Fixed Week(s) will receive an assigned number of Fixed Club Points for use during the Home Resort Preference Period; provided, however, that in the event that such Club Members fail to timely exercise their priority reservation rights during the Home Resort Preference Period or the Club Member voluntarily elects to access the BCI reservation system during the Home Resort Preference Period to reserve another Week at the same or another Club Resort, to make an exchange through the External Exchange Program or to access other Club Benefits, such Fixed Club Points shall be automatically converted to an equivalent number of Floating Club Points, for use subject to these Rules and Regulations. Club Members whose Fractional Interest does not include a specifically deeded Fixed Week(s) will receive an assigned number of Floating Club Points for use within BCI, subject to these Rules and Regulations. III.5 Additional Club Points - If a Club Member does not have sufficient Club Points to complete a desired transaction during a given Use Year, the Club Member may borrow Club Points from the next successive Use Year or rent Club Points as set forth below, or, if available, purchase an additional Fractional Interest or undivided interests in increments of no fewer than seven (7) days to supplement the Club Member's total Club Points. In such instances where a Club Member has acquired an additional Fractional Interest to supplement that Club Member's total Club Points, the Club and/or BCI reserves the right but not the obligation to require the Club Member to consolidate all allocable Club Points into a single Use Year. III.6 Borrowing Club Points - As described below, a Club Member may, during the applicable Club Priority Period, Borrow a portion of his or her next successive Use Year's Club Points for use in his or her current Use Year, subject to the following restrictions: III.6.1 In conjunction with making a BCI reservation, Club Members may Borrow up to fifty percent (50°/0) of their next successive Use Year's Club Points to reserve multiple nights accommodations, or to access BCI services and benefits, provided that they have available at least one (1) Club Point in their Club Point Account to be applied towards the borrowed reservation transaction III.6.2 If a Club Member intends to Borrow a portion of their Club Points from their next successive Use Year, the Club Member must first pay at least fifty percent (50°/0) of the total estimated Club Dues for the following Use Year. III.6.3 BCI reserves the right to prohibit a Club Member from Borrowing Club Points if the Club Member is delinquent in the payment of his or her {00053127 / 2} -8- Boutique Club International Rules and Regulations .. Club Dues, Home Resort assessments and charges, or any purchase- money note obligation. III.6.4 BCI reserves the right to prohibit Club Members from Borrowing Club Points during the first Use Year following the Club Member's BCI membership purchase date. III.6.5 BCI reserves the right, in its sole discretion, to suspend Borrowing activity at any time if BCI determines that such suspension will result in an improvement in the quality and operation of BCI. III.6.6 Club Points which have been deferred to a subsequent Use Year shall, in no circumstance, be available for Borrowing pursuant to this section. III.6.7 In the event that a previously confirmed reservation was made using Borrowed Club Points and is subsequently canceled, the unused Borrowed Club Points will carry over for use in the Use Year from which they were originally Borrowed. III.6.8 A Club Member may not utilize Borrowed Club Points to make a reservation through the External Exchange Program. III.7 Banking Club Points - A Club Member may Bank a portion of their current Use Year's Club Points for use in the next successive Use Year, subject to the following restrictions: III.7.1 Club Members may Bank up to fifty percent (50°/0) of their current Use Year's Club Points for use in the next successive Use Year, to reserve multiple nights accommodations, or to access BCI services and benefits. Banked Club Points may be used to reserve BCI accommodations up to twelve (12) months in advance of the Club Member's requested occupancy dates, subject to the appropriate reservation window then in effect (e.g., Home Resort Preference Period, Club Priority Period, or Limited Club Priority Period) to access BCI services and benefits, anytime during the Club Member's next successive Use Year. III.7.2 Once a Club Member's Club Points have been designated by BCI as Banked, use of those Club Points may not be returned to their originally allotted Use Year, nor may use of such Club Points be Banked or otherwise deferred to another subsequent Use Year. III.7.3 A Club Member must notify Reservation Services of their intent to Bank Club Points for use in the Club Member's next successive Use Year at least three (3) months prior to the Club Member's Use Year End Date. Upon receiving such notification, BCI will mail a written statement of confirmation of the Banking of such Club Points to the address o f record as set forth in the Club Member's Club Point Account. {00053127 / 2} -9- Boutique Club International Rules and Regulations III.7.4 BCI reserves the right to prohibit Club Members from Banking Club Points during the first Use Year following the Club Member's BCI membership purchase date. III.7.5 BCI reserves the right to prohibit a Club Member from Banking Club Points if the Club Member is delinquent in the payment of his or her Club Dues, Home Resort assessments and charges, or any purchase- money note obligation. III.7.6 BCI reserves the right, in its sole discretion, to suspend Banking activity at any time if BCI determines that such suspension will result in an improvement in the quality and operation of BCI. III.7.7 Club Points which have been Borrowed from a subsequent Use Year shall, in no circumstance, be available for Banking pursuant to this section. III.8 Renting Club Points - BCI reserves the right, in its sole discretion, to permit Club Members to rent additional Club Points, in order to complete a reservation within the Home Resort Preference Period, or to make reservations within the Club Priority Period, subject to terms and conditions in effect at that time. '110 the extent a (:lub Member elects to rent Club Points to complete a reservation, or to make a reservation within the Club Priority Period, any Club Point rental fees charged shall be due and payable upon the issuance of a reservation confirmation. IV. Reservation Procedures IV.1 Making a Reservation - To reserve accommodations at a Club Resort, or to access BCI services and benefits made available from time to time, a Club Member must first determine whether sufficient Club Points are available in their Club Point Account to complete the reservation transaction. To make this determination, a Club Member may either call BCI for reservation assistance or utilize the annual Club Point Chart provided by BCI to each Club Member. Once a determination has been made that the Club Member has sufficient Club Points available, the Club Member must submit a reservation request in writing via regular mail, email, or facsimile, or by telephone, which reservation contact information shall be provided to Club Members at the time of purchase of their Fractional Interests. A reservation request will only be accepted by BCI if the Club Member has paid all applicable Club Dues, Home Resort assessments and charges, and is in good standing with regard to any outstanding purchase-money note obligation. There may be a limited number of particular weeks available at The Little Red Residence for reservation through BCI due to the fact the developer of The Little Red Residence intends to dedicate, as specifically deeded Fixed Weeks, up to forty percent (40°/0) of the inventory of Fractional Interests from any particular Week. V. Reservation Priorities {00053127 / 2} -10- Boutique Club International Rules and Regulations V.1 Use of Club Points - With the exception of the priority rights a Club Member may have with respect to reserving the use of a specifically deeded Fixed Week(s) using Fixed Club Points during the Home Resort Preference Period, Club Member requests for accommodations at Club Resorts, or for BCI services and benefits, are fulfilled on a first-requested, first-served, space available basis, and BCI cannot ensure that confirmation of a reservation request for any specific Club Resort, season, Unit Type, or time period will occur since availability will vary. The earlier a request is submitted, the better the chance that a reservation confirmation can be secured. Therefore, Club Members are encouraged to submit requests as far in advance as possible in order to obtain the best choice of accommodations. V.2 -Reservation Windows - Club Member reservation requests may be submitted to BCI up to twelve (12) months in advance of the requested occupancy dates, when making a full-week reservation at the Club Member's Home Resort. Furthermore, to provide optimum utilization of accommodations available within BCI, BCI has established various reservation windows that provide a priority to reservation requests submitted for longer periods of time, such as seven (7) nights, over reservation requests for accommodations of shorter duration, such as three (3) nights. When making reservation requests, Club Members should be aware of the following reservation windows that govern how far in advance reservations of varying lengths can be requested: V.2.1 Home Resort Preference Period - The following reservation window is deemed by 13CI to be part of the Home Resort Preference Period. During the Home Resort Preference Period, a Club Member may exercise a priority right to reserve the use of a full Week at the Member's Home Resort without competing with other Club Members for such accommodations, except those Club Members who also own Fractional Interests at the Club Member's Home Resort. BCI reserves the right to affiliate Club Resorts that may have Home Resort Preference Periods o f varying lengths Full-Week Reservation Window - Club Members who have been specifically deeded a Fixed Week(s) do not need to reserve the use of such Fixed Week(s) within the Home Resort Preference Period, as such Fixed Weeks shall be deemed pre-reserved for them. All other Club Members may request reservations of accommodations in increments of seven (7) consecutive nights at their Home Resort beginning twelve (12) months prior to the first day of use of the full Week being sought, or the earliest permissible time a Club Member may request reservations or accommodations in increments of seven (7) consecutive nights at their Home Resort pursuant to such Club Resort's Resort Documents, up to that date which is nine (9) months prior to the first day of the Week of requested occupancy. A Club Member who has been specifically deeded a Fixed Week(s) relinquishes their pre-reserved Fixed Week(s) whenever the Club Member voluntarily elects to convert his/her Fixed Club Points to Floating Club Points to access the BCI reservation system during the Home Resort Preference Period to reserve a Week at the same or another Club Resort, to make an exchange through the External Exchange Program or to access other Club Benefits. {00033127 / 2} -11- Boutique Club International Rules and Regulations V.2.2 Club Priority Period - Each of the following reserv-ation windows are deemed by BCI to be part of the Club Priority Period. During the Club Priority Period, a Club Member must compete with other Club Members on a first-requested, first-served, space available basis for a reservation of any available Club Resort accommodations. Club Members will have only limited rights to reserve full- Weeks, Split-Weeks or Daily Use Periods within BCI during the Club Priority Period, as described below: V.2.2.1 Full-Week Reservation Window - Club Members may request reservations of accommodations in increments of seven (7) consecutive nights beginning nine (9) months prior to the first day of use of the full Week being sought up to that date which is fifteen (15) days prior to the first day of that Week. V.2.2.2 Split Week Reservation Window - Club Members may request reservations of accommodation in increments of either four (4) consecutive nights or three (3) consecutive nights beginning ninety (90) days prior to the first day of requested occupancy up to that date which is fifteen (15) days prior to the first day of that Week. V.2.2.3 Daily Use Period Reservation Window - Club Members may request reservations of accommodations in daily increments comprising a minimum two (2) nights stay beginning forty-five (45) days in advance of the first date of occupancy up to that date which is fifteen (15) days prior to the first day of that Week. Some Club Resorts may allow single night stays during this period in the sole discretion of such Club Resort up to that date which is fifteen (15) days prior to the first day of that Week. V.2.2.4 Limited Club Priority Period - Club Members should be aware that BCI's ability to confirm reservation requests not received by the beginning of the Limited Club Priority Period (the fourteen (14) day period immediately preceding the first day of the period being sought) will be limited by and subject to the following: 1. Any accommodations removed from availability by a Club Resort for maintenance purposes; and 2. Any reservation requests made by a Club Resort for its own purposes including for exchange, promotion use, rental or any other purpose as determined by such Club Resort in its sole discretion; and 3. BCI reserves the right to provide to Club Members discounted inventory for short-notice reservations, from time to time, if it determines, in its sole discretion, that doing so is in the best interests of BCI. {00053127 / 2} -12- Boutique Club International Rules and Regulations 0 0 V.3 Confirmations - A written reservation confirmation will be mailed to each Club Member's address of record, oil file with BCI, to document each confirmed reservation or transaction. In the event that a particular unit, or combination of units, is denoted oIl the written confirmation as being reserved for the Club Member, BCI reserves the right to assign the Club Member to an alternate unit at the time of check-in, provided that such alternate unit is deemed by BCI, in its sole discretion, to be at least of the same Unit Type(s) and comparable in terms of location, size and quality. V.4 (Cancellation and No-Shows - Cancellations on confirmed reservations may be made at any time up to the day of check-in, and may be subject to a cancellation fee as determined by BCI from time to time. Notwithstanding the foregoing, a Club Member who cancels a reservation within twenty-four (24) hours following confirmation will receive a full refund of the Club Points relinquished and will not be subject to any cancellation fee. Cancellations made forty-five (45) days or more prior to check-in, but not within the twenty-four (24) hour period following confirmation will result in restoration of the related Club Points to the Club Member's Club Point Account for further use during that Use Year and may be subject to a cancellation fec. Cancellations less than forty-five (45) days but at least fifteen (15) days or more prior to check-in will result in the forfeiture of a portion of the Club Points relinquished, such forfeiture amount to be determined by BCI in its sole discretion and may be subject to a cancellation fee. Cancellations made less than fifteen (15) days prior to check-in will result in the forfeiture of all Club Points related to the canceled occupancy dates and may be subject to a cancellation fee. Borrowed Club Points that were used to secure a canceled reservation will be returned, based upon the aforementioned schedule, to the original Use Year; however, no refund of advance payment of estimated Club Dues will be made. A Club Member who fails to check-in on the first day of the reserved Week, Split-Week or Daily Use Period must notifr BCI of the late arrival or risk cancellation of the reservation without restoration of Club Points. V.5 Split-Week and Daily Use Period Options - Club Members will be permitted to make reservations for two-day, three-day, and four-day Split Weeks at certain Club Resorts, as permitted by the resort and BCI from time to time. Split-Weeks and/or Daily Use Periods may not be available at all Club Resorts. A Split-Week or Daily Use Period may only be reserved during the Club Priority Period reservation window for the Week containing the Split-Week or Daily Use Period desired. All reservations for Split-Weeks and Daily Use Periods shall be subject to the reservation request priorities for the Week containing the Split-Week or Daily Use Periods in question. BCI reserves the right in its sole discretion to designate those Weeks in which Split-Weeks and/or Daily Use Periods will be permitted to be reserved from tirne to time. Club Points required to reserve a Split-Week or Daily Use Period are subject to reasonable change by BCI from time to time without Club Member consent in the best interests of the Club Members as a whole. A Club Member who uses Club Points to reserve a Split-Week or Daily Use Period may use any remaining Club {00053127 / 2} -13- Boutique Club International Rules and Regulations .. Points to reserve another available Week, Split-Week or Daily Use Period. As a condition of receiving a Split-Week or Daily Use Period reservation confirmation, a Club Member may be required to pay an additional housekeeping fee to BCI. VI. Other Club Options VI.1 External Exchange Program - In order to expand the range of options available to V L Club Members, BCI has arranged for an "External Exchange Program". This program currently consists of exchange agreements between and among BCI, individual Club Resorts, and Interval International, Inc., as the External Exchange Company. An exchange agreement between the External Exchange Company and an individual Club Resort allows Club Members whose Fractional Interest is in such Club Resort to exchange weeks with other resort locations that participate in the External Exchange Company's exchange network. Club Members associated with Club Resorts not independently affiliated with the External Exchange Company may not be able utilize the External Exchange Program. Neither the External Exchange Company nor the individual Club Resorts are obligated to renew any exchange agreement upon the expiration such exchange agreement. The External Exchange Company, BCI, the individual Club Resorts and their respective subsidiaries and affiliates are separate and distinct entities. The External Exchange Company is managed and operated entirely independent from BCI and the individual Club Resorts and the External Exchange Company's terms and conditions for exchange are consistently applied to all resorts that participate in the External Exchange Program. Neither the External Exchange Company, BCI, nor the Club Resorts, nor any subsidiary or affiliate of the External Exchange Company or BCI has agreed or will agree to assume, guarantee or otherwise be responsible for any of the obligations, acts, or omissions of the other party in connection with this offering. Neither BCI nor the Club Resorts are agents for the External Exchange Company and no representations or promises made by BCI, the Club Resorts, or their agents, are binding on the External Exchange Company. The External Exchange Company's responsibility for representations regarding the External Exchange Program, as well as its current or future services, are limited to those made in written materials furnished by the External Exchange Company. VI.1.1. - External Exchange Requests - All external exchange requests will be processed through BCI. A Club Member who is interested in an external exchange will contact BCI and indicate their preference for an external exchange. Following verification of the identity of the Club Member and that the Club Member is in good standing with BCI and is entitled to utilize the External Exchange Program, a BCI representative and the Club Member will discuss the Club Member's desired time, destination and unit type requests. BCI will forward all requested reservations to the External Exchange Company for processing. Club Member participation in the External Exchange Program will be governed by the terms and conditions of the External Exchange Program and those restrictions contained in these Rules and Regulations. VI.2 Club Benefits Program - BCI may offer special services and benefits to Club Meinbers, from tillie to time, through its Club Benefits Program. BCI reserves the {00053127 / 2} -14- Boutique Club International Rules and Regulations .. right to establish such rules and regulations as it deems necessary to adequately govern Club Member access to the Club Benefits Program. VII Miscellaneous Provisions VII.1 Personal Use; Commercial Purposes - Use of the accommodations and facilities associated with BCI is limited solely to personal use, during period(s) of occupancy, by Club Members, their guests, invitees, exchangers and lessees, and to the number of authorized users permitted to occupy BCI accommodations as may be posted in the unit or set forth in the Club Resort rules and regulations. Purchase of a Fractional Interest at a Club Resort or use of accommodations and facilities associated with BCI for commercial purposes, for contribution to or use in a different timeshare, fractional, shared ownership plan or vacation club, or for any purpose other than the personal use described above is expressly prohibited. VII.2 Club Member Rentals - A Club Member may reserve a Week at his or her Home Resort during a Home Resort Preference Period, the Club Priority Period, or any reservation period and rent it for the Club Member's own personal account. A Club Member may only rent a week at their Home Resort and only a complete seven (7) day week can be rented. Split Week and Daily Use Period rental is prohibited. All renters must comply with the rules and regulations of the Resort Documents affecting occupancy, and the renting Club Member will be responsible for the acts or omissions of renters or any other person or persons permitted by the Club Member or the renter to use the accommodations. VII.3 Amendment of Rules and Regulations - These Rules and Regulations may be amended by BCI in its sole discretion from time to time without the consent of Club Members. Notice of any amendment shall be delivered by BCI to each Club Member at the Club Member's mailing address of record, and such notice shall include an effective date for such amendments. Notice of amendments may be delivered by newsletter, annual mailings, or electronically via a dedicated BCI website or email distribution. VII.4 Termination - In the event that the Resort Agreement or other instrument which affiliates a Club Resort with BCI is terminated or expires in accordance with its own terms, the terminated Club Resort will no longer be affiliated as a part of BCI. However, upon termination of such instrument, all confirmed reservations of Club Members (from the terminating Club Resort and from the non-terminating Club Resorts) will be honored at both the terminating Club Resort and at non-terminating Club Resorts. VII.4.1 Reservation Policies in the Event of'l'ermination. In the event the Resort Agreement between The Little Red Residence and BCI is terminated, the Managing Entity o f the I ittle Red Residence or an affiliate will provide Reservation Services (referred to in this Section as the "Reservation Services Provider") for the owners Fractional Interests at The Little Red Residence and the following Reservation Policies will continue to govern the process by which such owners may reserve the use and occupancy of accommodations at The Little Red Residence: {00053127 / 2} -15- Boutique Club International Rules and Regulations I & .. Section III. Club Points - The Reservation Services Provider shall issue and have the rights and obligations with respect to the Club Points and the Club Point Chart for The Little Red Residence as set forth in Section III. Section IV. Reservation Procedures. Section IV will continue to set forth the procedures and reservation windows by which owners of Fractional Interests at The Little Red Residence will reserve accommodations at The Little Red Residence; provided, however, such owners will only be competing with other owners of Fractional Interests at The Little Red Residence solely for accommodations at The Little Red Residence during all reservation periods and all reservations will be on a first-requested, first- served basis. Further, in the event of termination of the Resort Agreement between The Little Red Residence and BCI, the Reservations Services l~rovider shall have the right to revise, amend or supplement any of the Reservation Policies set forth in Sections III and IV herein to accommodate or change the reservation process for '1'he Little Red Residence. VII.5 E ffect o f Transfer of Club Member's Fractional Interest - If a Club Member ¢'Selling Member") sells, assigns, or transfers the Selling Member's Fractional Interest to another party ("New Member"), the Selling Member will forfeit any and all rights to utilize Club Points associated with such Fractional Interest to reserve the use of BCI accommodations, facilities or services, or to use any previously-reserved Weeks, Split-Weeks or Daily Use Periods. BCI will, within ten (10) business days of receipt of a certified copy of the recorded instrument transferring a Fractional Interest from a Selling Member to a New Member change BCI's official records to reflect such transfer of a Fractional Interest. Upon BCI's change in its records, the New Member will assume any existing reservations previously made by the Selling Member, unless the Club Points associated with the Fractional Interest would not be sufficient to make such reservations. BCI will notify the New Member of those existing reservations that are being assumed. The New Member will also assume the Selling Member's Club Points remaining as of the date of BCI's recognition of such transfer. # 4095044_v3 {00053127 / 2} -16- Boutique Club International Rules and Regulations I)avid R. Fiore Principal Managing Partner · ttle Red Ski # 4'4 A Established 1888 04,· t90 han Bed & Bre* P.O. Box 8288• ] 18 East Cooper Avenue •Aspen. CO 81612 Phone: (970) 925-3333 • Fax (970) 925-7123 • Cell: (630) 768-4782 www.littleredskihaus.com •Email: david@littleredskihaus.com ~ Our logo depicts Aspen's historic - silver mining days followed by the birth of world-renowned skiing A WesternPeak Project