10.1  PRIOR APPROVAL

The prior written approval of holders of at least seventy-five (75%) percent of the first mortgages (based on one (1) vote per lot for each first mortgage owned) of the lots shall be required for any of the following:

(A) The abandonment or termination of the PUD status of the project, except for abandonment of termination, if any, provided by law in the case of substantial destruction by fire or other casualty or in the case of a taking by condemnation or eminent domain.

(B) Any material amendment to this Declaration or to the Articles of Incorporation or Bylaws of the homeowners association, including, but not limited to, any amendments which would change the ownership interest of the owners in this project, change the pro-rata interest or obligation of any individual owner for the purposed of levying assessments or charges or for allocating distributions of hazard insurance proceeds or condemnation awards.

(C) The effectuation of any decision by the owners association to terminate professional management and assume self-management (however this shall not be deemed or construed to require professional management.

(D) Partitioning or subdividing a lot.

(E) Any act or omission seeking to abandon, partition, subdivide, encumber, sell or transfer the Common Area; provided, however, that the granting of easements for public utilities or other public purposes consistent with the intended use of the Common Area shall not be deemed to transfer within the meaning of this clause.

(F) Any act or omission seeking to change, waive or abandon any scheme of regulations or enforcement thereof, pertaining to the architectural design or the exterior appearance of units, the exterior maintenance of units, the maintenance of Common Area walks or common fences and driveways, or to the upkeep of lawns and planting in the properties.

(G) Any act or omission whereby the association fails to maintain fire and extended coverage or insurable Common Area on a current replacement cost basis in an amount not less than 100% of the insurable value (based on current replacement costs).

(H) Use of hazard insurance proceed for losses to the Common Area for other than the repair, replacement or reconstruction of such Common Area.

10.2  WRITTEN NOTICES

The holder or insurer of a first mortgage on a lot (as well as the owners shall be entitled to timely written notice of:

(A) Any significant damage or destruction to the Common Area.

(B) Any condemnation or eminent domain proceeding effecting the Common Area.

(C) Any default under this Declaration or the Articles of Incorporation or Bylaws which gives rise to a cause of action against the owner of a lot subject to the mortgage of such holder or insurer, where the default has not been cured in thirty (30) days.

(D) Any proposed abandonment or termination of the PUD status of this project.

(E) Any material amendment of this Declaration or to the Articles of Incorporation or Bylaws of the Association.

10.3  MORTGAGE PROTECTION

Nothing herein contained shall impair or defeat the lien of an mortgage or deed of trust currently in existence or hereafter recorded covering any lot or lots, but title to any property obtained as a result of foreclosure shall thereafter by held subject to all of the provisions herein.

10.4  RIGHTS

The holder of insurer of a first mortgage on a lot shall be entitled, upon request, to:

(A) Inspect the books and records of the Association during normal business hours.

(B) Require the preparation of and, if preparation is required, receive an annual audited financial statement of the Association for the immediately preceding fiscal year, except that such statement need not be furnished earlier than ninety (90) days following the end of such fiscal year.

(C) Receive written notice of all meetings of the Owners Association and be permitted to designate a representative to attend all such meetings.

10.5  PAYMENTS

First mortgages of any lots may, jointly or separately, pay taxes or other charges which are in default and which may or have become a charge against the Common Area, or may pay overdue premiums on hazard insurance policies, or secure new hazard insurance coverage on the lapse of a policy, for such Common Area, and the first mortgagees making such payment shall be owed immediate reimbursement therefor from the Association.

COVERSE PRK JOINT VENTURE, A JOINT VENTURE
CONSISTING OF TRIMEN DEVELOPMENT, INC.
 

                          BY:  --------/s/-----------------
                          Ken Wolcoski, President
                          Trimen Development, Inc.

                        STATE OF WAHSINGTON  )
                                                                        )
             county of Kitsap                                  )
 On this 19th Day of April, 1988, before me personally appeared KEN WOLCOSKI, to me known to be the President of the corporation that executed the within and foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said corporation for the uses and purposes therein mentioned, and on oath stated that he is authorized to execute said instrument.

 IN WITNESS WHEREOF,  I have hereunto set my hand and affixed my official seal the day and year first above written.

       --------------------/s/---------------------
      NORTARY PUBLIC in and for the
      State of Washington, residing
      in Bremerton.
      My Commission expires:  12-7-89
      -----------------/seal/---------------------