5/4/94

CODE OF REGULATIONS OF BAYCLIFFS HOMEOWNERS’ ASSOCIATION, INC.PREAMBLE

This Code of Regulations is adopted by Baycliffs Corporation, an Ohio corporation (“Declarant”) the sole member of Baycliffs Homeowners’ Association, Inc., to establish an association for the administration of Baycliffs Subdivision, a development of 85 residential lots and available dockage and related common areas, subject to a certain Declaration Of Restrictions,Covenants and Easements filed for record by Declarant and recorded in Volume Page  of Ottawa County Records (the “Declaration”).

ARTICLE 1

THE ASSOCIATION

1.1  Name and Nature of Association

The Association shall be formed under the laws of the State of Ohio as a corporation not-for-profit and shall be called “BAYCLIFFS HOMEOWNERS’ ASSOCIATION, INC.”

1.2 Purposes

The purpose or purposes for which the Association is formed are to administer theCommon Properties of Baycliffs Subdivision, a residential and non-residential development on Johnson’s Island in Danbury Township, Ottawa County, Ohio in accordance with and subject to the provisions of the Revised Code of Ohio, the Declaration of Restrictions, Covenants and Easements for Baycliffs Subdivision, this Code of Regulations and the rules and regulations adopted pursuant hereto, as any of the same may be lawfully amended from time to time; to provide for the acquisition, construction, management, maintenance and care of “association property”, as said term is defined in present Sec. 528 of the United States Internal Revenue Code or may be hereafter defined in any amendment or replacement of said section; and, in carrying out the foregoing purposes, to purchase, lease, exchange, acquire, own, hold, mortgage, pledge, hypothecate, borrow money upon, sell and otherwise deal in and with real and personal property of every kind, character and description whatsoever and any and all estates and interests therein and otherwise to do all things permitted by law.All of the foregoing purposes shall be accomplished on a non-profit basis, and no part of the net earnings of this Association shall inure (other than by acquiring, constructing or providing management; maintenance and care of Baycliffs and other than by a rebate of excess membership dues, fees or assessments) to the benefit of any private shareholder, any member of the Association or any other individual.

1.3 Definitions

Certain of the terms used in this Code of Regulations have been defined in the Declaration and, when used herein, shall have the same meaning as set forth in the Declaration, unless the context clearly indicates a different meaning.

1.4 Membership

Each Owner in Baycliffs Subdivision shall automatically become a member of the Association. Membership may be held in the names of more than one individual or entity but collectively they shall constitute a single Owner. Such membership shall terminate upon the recording of a deed or other documentation with the Ottawa County Recorder’s Office evidencing sale, transfer or other disposition by a Owner of his Residential Lot, upon which recording the new Owner of said Residential Lot shall automatically become a member of the Association. Declarant shall be a member of the Association with respect to all Residential Lots owned by Declarant.

ARTICLE 2

VOTING

2.1 Voting Members

Each Owner shall be entitled to exercise one (1) vote for each Residential Lot owned by such Owner on any question for which the vote of Owners is permitted or required,  except that, for voting purposes, so long as Declarant owners any Residential Lot Declarant shall be entitled to one (1) vote for each so held. In the case of a Residential Lot owned or held in the name of a corporation or a partnership, a certificate signed by such Owner shall be filed with the Secretary of the Association naming the person authorized to cast Votes for such Residential Lot, which certificate shall be conclusive until a subsequent substitute certificate is filed with the Secretary of the Association. If such certificate is not on file, the vote of such corporation or partnership shall not be considered nor shall the presence of such Owner at a meeting be considered in determining whether the quorum requirement for such meeting has been met. Fiduciaries and minors who are owners of record may vote their respective interests. If two or more persons, whether fiduciaries, tenants-in-common or otherwise, own undivided interests in a Residential Lot, each may exercise that proportion of the voting power of all the Owners of said Residential Lot that is equivalent to their respective proportionate interests in said Residential Lot. When any fiduciary or other legal representative of a Owner has furnished to the Association proof, satisfactory to it, of his authority, he may vote as though he were the Owner. Declarant or its nominee shall be the voting member with respect to any Residential Lot owned by Declarant. The vote of the Association with respect to any Residential Lots owned by the Association shall be determined by the Board.

2.2 Majority

Except as may be otherwise provided in the Declaration or herein, all actions taken by the Association shall require the affirmative vote of a majority of the voting power of the Association present at a meeting at which a quorum is present.

2.3 Quorum

Except as may be otherwise provided by the Declaration or herein, the presence in person or by proxy of Owners representing sixty-seven percent (67%) of the total voting power of the Association shall constitute a quorum. No action may be authorized or taken by a lesser percentage than required by the Declaration or this Code of Regulations. A majority of the voting power of the Association present at a meeting, whether or not a quorum is present, may adjourn such meeting from time to time.

2.4 Proxies

Owners may vote or act in person or by proxy. The person appointed as proxy need not be a member of the Association. Designation by a Owner of a proxy to vote or act on his behalf shall be made in writing to the Board, shall be filed with the Secretary, and shall be revocable at any time by actual notice to the Board given by such Ovvner. Notice to the Board in writing or in open meeting of the revocation of the designation of a proxy shall not affect any vote or act previously taken or authorized.

ARTICLE 3

MEETINGS

3.1 Place of Meetings

Meetings of the Association shall be held, if possible, at a suitable place located in Ottawa County, Ohio selected by the Board.

3.2 Establishment of the Association

The Association shall be established upon the date of filing of the Declaration but Declarant shall retain legal title to the Common Properties and shall be responsible for the maintenance thereof until such time as it has completed the site improvements thereto or thereon and, in the opinion of Declarant, the Association is able to maintain the same.

3.3 Annual Meeting

The First Annual Meeting (hereinafter defined) of the Association shall be held in accordance with the provisions of Section 4.4 herein. Subsequent annual meetings shall be held at such places and times as the Board selects (but not later than thirty (30) days before or after the anniversary of the First Annual Meeting) by so notifying the Owners pursuant to Section 3.5 hereof of the date fixed for said annual meeting. Any business which may be properly brought before any meeting of the Association, including the election and/or designation of members of the Board (hereinafter sometimes called “Board Members”), may be considered and transacted at the annual meetings.

3.4 Special Meetings

Special Meetings of the Association may be held on any business day when called by the President of the Association, by the Board or by the Chmers entitled to exercise at least twenty-five percent (25%) of the total voting power of the Association. Upon request in writing delivered either in person or by certified mail to the President or the Secretary of the Association by any persons entitled to call a meeting of the Owners, such officer shall forthwith notify the Owners of such Special Meeting pursuant to Section 3.5 hereof. If such notice is not given within ten (10) days after the delivery or mailing of such request, the persons calling the meeting may fix the time of the meeting and give notice thereof. Each Special Meeting shall be called to convene at such time and shall be held at such place within Ottawa County, Ohio, as shall be specified in the notice of meeting. Calls for such meetings shall specify the purposes for which such meeting is requested. No business other than that specified in the call and set forth in the notice shall be considered at any Special Meeting.

3.5 Notice of Meetings

Not less than seven (7) nor more than thirty (30) days before the day fixed for a meeting of the Association, written notice stating the time, place and purpose of such meeting shall be given by or at the direction of the Secretary of the Association or any other person or persons required or permitted herein to give such notice. Such notice shall be given by personal delivery or by regular U.S. mail to a Owner. If mailed, such notice shall be addressed to the Owners and others such as mortgagees (if entitled to such notice) at their respective addresses as they appear on the records of the Association or to the Owner’s Dwelling Unit if no address has been given to the Association. Notice of the time, place and purpose of any meeting of the Association may be waived in writing by any Owner, either before or after the holding of such meeting, which writing shall be filed with or entered upon the records of the meeting. The attendance of any Owner at any such meeting, without protesting the lack of proper notice, prior to or at the commencement of the meeting, shall be a waiver by said Owner of notice of such meeting.

3.6 Adjourned Meetings

If any meeting of the Association cannot be organized due to the failure to obtain a quorum, the Owners who are present, either in person or by proxy, may adjourn the meeting to a time not less than forty-eight (48) hours from the time the original meeting was called. If any meeting is adjourned, the notice of such adjournment need not be given if the time and place to which such meeting is adjourned are fixed and announced at such meeting.

3.7 Order of Business at Meetings

The order of business at all regular meetings of the Association shall be as follows:

(1) Calling of meeting to order

(2) Proof of notice of meeting or waiver of notice

(3) Reading of minutes of preceding meeting

(4) Reports of officers

(5) Reports of committees

(6) Election of inspectors of election (at annual meetings when appropriate)

(7) Election of members of the Board (at annual meetings when appropriate)

(8) Unfinished and/or old business

(9) New business

(10) Adjournment

3.8 Order of Business at Special Meetings

The business at each Special Meeting shall be that business specified in the notice therefor.

3.9 Actions Without a Meeting 

All actions, except removal of a Board Member, which may be taken at a meeting of the Association may be taken without a meeting with the approval of and in a writing or writings signed by having the percentage of voting power required to take such action if the same were taken at a meeting. Such writings shall be filed with the Secretary of the Association.

ARTICLE 4

BOARD OF MANAGERS

4.I Qualifications

All Board Members shall be (a) Owners (including the partners, agents or employees of a partnership owning a Residential Lot, the officers, directors, agents or employees of a corporation or an association owning a Residential Lot or the officers, agents or employees of fiduciaries owning a Residential Lot); (b) spouses of Owners; or (c) the mortgagee of a Residential Lot or such mortgagee’s individual designee. Members of the Board designated by Declarant, however, may be any individuals Declarant selects whether or not such individuals are Owners, or partners, officers, agents or employees of Declarant. Until the time of the First Annual Meeting the Board shall consist of three (3) persons designated by Declarant. Board Members designated by Declarant may be removed only by Declarant or by election as provided in Sections 4.3 and 4.4 hereof.

4.2 Number Of Board Members
The Board shall consist of three (3) persons.

4.3 Election of Board Members by Declarant and Owners Prior to the First Annual Meeting

Not later than the earlier of the date that thirty-five percent (35%) of the Residential Lots shown on the plat of Baycliffs have been sold and conveyed by Declarant or January I, 1998, the Association shall meet and the Owners, other than Declarant, shall elect one (1) Board Member who shall replace one (1) of the Board Members previously designated by Declarant and shall serve until the First Annual Meeting. Declarant shall have the sole right to designate the one (1) Board Member who shall be replaced. Not later than the time that one hundred percent (100%) of the total number of Residential Lots have been sold and conveyed by Declarant, the Association shall meet and the Owners, other than Declarant, shall elect one (I) additional Board Member who shall replace one (1) of the Board Members previously designated by Declarant and shall serve until the First Annual Meeting. Declarant shall have the sole right to designate the one (I) Board Member who shall be replaced.

4.4 First Annual Meeting

Not earlier than one year after the date on which one hundred percent (100%) of the total number of Residential Lots have been sold and conveyed by Declarant, or such earlier date as shall be determined by Declarant, in its sole discretion, the Association shall meet (the “First Annual Meeting”) and elect three (3) new Board Members and all officers of the Association and all persons previously elected by Owners or designated by Declarant shall immediately resign; provided, however, that such resigning persons shall be eligible for re-election to the Board. The persons so elected at the First Annual Meeting shall take office upon such election and shall serve for the respective terms specified in Section 4.5.

4.5 Election of Board Members from and after the First Annual Meeting

Except as otherwise provided in Section 4.3 hereof, Board Members shall be elected at the annual meeting of the Association, but if the annual meeting is not held or Board Members are not elected thereat, they may be elected at a Special Meeting called and held for that purpose. Such election shall be by written secret ballot whenever requested by any Owner; but, unless such request is made, the election may be conducted in any manner determined by the Board.The terms of Board Members elected at the First Annual Meeting of the Association shall be fixed such that the term of one such Board Member shall expire on the respective dates of the next three successive annual meetings. At meetings of the Association subsequent to the First Annual Meeting which are called for the purpose of electing Board Members, Board Members shall be elected for terms of three (3) years or to complete unfinished terrns.Except as otherwise provided herein, each Board Member shall hold office until the expiration of his term and until his successor is elected, or until his earlier resignation,  removal from office or death. Any Board Member may resign at any time by oral statement to that effect made at a meeting of the Board or by a writing to that effect delivered to the Secretary of the Association; such resignation shall take effect immediately or at such other time as the Board Member may specify.The candidates receiving the votes of the greatest percentages of the voting power of the Association shall be elected and those receiving the highest percentages of the total vote cast shall serve for the longest terms. Tie votes shall be decided by drawing of lots.

4.6 Removal of Board Members

Except as otherwise provided herein, the Board may remove any Board Member and thereby create a vacancy in the Board if by order of court he has been found to be of unsound mind, or if he is physically incapacitated, adjudicated a bankrupt, or fails to attend at least one of any three (3) consecutive meetings of the Board. At any regular or Special Meeting of the Association duly called at which a quorum shall be present, any one or more of the Board Members elected by the Owners may be removed, with or cause, by the vote of the Owners entitled to exercise a majority of the voting power of the Association, and a successor or successors to such Board Member so removed may be elected at the same meeting for the unexpired term for such removed Board Member. Any Board Member whose removal has been proposed by the Owners shall be given an opportunity to be heard at such meeting prior to the vote on his removal.

4.7 Vacancies

Vacancies in the Board may be filled by a majority vote of the remaining Board Members for the unexpired portion of the term of the Board Member whose place shall be vacant and until the election of a duly qualified successor.

4.8 Powers and Duties

Except as otherwise provided by law, the Declaration or this Code of Regulations all power and authority of the Association shall be exercised by the Board. In carrying out the purposes of the Association and subject to the limitations prescribed by law, the Declaration or this Code of Regulations, the Board, for and on behalf of the Association shall have the  duties and authority (i) generally conferred by law upon an Ohio corporation not-for-profit; (ii) specifically conferred by the Declaration and this Code of Regulations, and (iii) necessary for the administration of the affairs of the Association including the adoption from time to time of Rules as provided in Section 10.3 hereof, and may do all such acts and things as are not by the Declaration or by this Code of Regulations directed to be exercised and done by the Owners or by Declarant. Board Members shall serve without compensation for their services, as such; provided, however, that nothing contained herein shall be construed to preclude any Board Member from having dealings with the Association in any other capacity and receiving compensation therefor.

4.9 Other Duties

In addition to the duties imposed by law, by the Declaration, this Code of Regulations or by resolutions of the Association, the Board shall:(a) Maintain the Common Properties in good order, condition, replacement arm repair;(b) Maintain and repair any other portions of the subdivision or any portion of the Common Properties required by the provisions of the Declaration to be maintained and repaired by an Owner, if, in the judgment of the Board, such repair or maintenance is necessary to protect any other part of the Common Properties, or to preserve the overall appearance of Baycliffs Subdivision, and the Owner shall have failed after reasonable notice to make such repairs or perform such maintenance; provided, however, that such Owner shall be liable to the Association for any such costs paid or incurred by the Association, and the Association shall impose a Special Charge for such costs against such Owner;(c) Dispose of all rubbish and garbage attributable to the Dwelling Units and to the Common Properties;(d) Levy and collect Assessments and Special Charges;(e) Employ and discharge all services and personnel necessary in the judgment of the Board to carry out its duties hereunder including a managing agent as provided for in Section 4.10;(f) Designate members of the Architectural Control Committee pursuant and subject to Article 7 of the Declaration.

4.10 Managing Agent

Subject to the provisions of the Declaration, the Board may employ for the Association a Managing Agent at a compensation established by the Board and may delegate thereto such duties and responsibilities as the Board shall from time to time specify.

4.11 Organizational Meeting

Immediately after each annual meeting of the Owners or Special Meeting held in lieu thereof, the newly elected Board Members and those Board Members whose terms have not expired shall hold an organizational meeting for the purpose of electing officers and transacting any other business. Notice of such meeting of the Board need not be given.

4.12 Regular Meetings

Regular meetings of the Board may be held at such -time and place as shall be determined, from time to time, by a majority of the Board, but at least two (2) such meetings shall be held in Ottawa County, Ohio during each calendar year. Notice of regular meetings of the Board shall be given to each Board Member, personally or by mail, telephone or telegraph, at least seven (7) days prior to the day named for such meetings. At such meetings, any and all business within the power of the Board may be transacted.

4.13 Special Meetings

Special meetings of the Board may be held at any time upon call by the President or any two (2) Board Members. Notice of the time, place and purposes of each special meeting of the Board shall be given to each Board Member by the Secretary or by the person or persons calling such meeting. Such notice shall state the purpose or purposes of the meeting and may be given in any manner or method and at such time so that the Board Member receiving it may have reasonable opportunity to attend the meeting. Such notice shall, in all events, be deemed to have been properly and duly given if delivered or mailed at least forty-eight (48) hours prior to the meeting and directed to the residence of the Board Members shown upon the Secretary’s records. Unless otherwise indicated in the notice thereof, any business may be transacted at any special meeting of the Board.

4.14 Waiver of Notice

Before or at any meeting of the Board, any Board Member may, in writing, waive notice of such meeting and such waiver shall be deemed equivalent to the giving of such notice. Attendance by a Board Member at any meeting of the Board shall be a waiver of notice by him of the time and place thereof. If all the Board Members are present at any meeting of the Board, no notice shall be required and any business may be transacted at such meeting.

4.15 Quorum

At all meetings of the Board, a majority of the Board shall constitute a quorum for the transaction of business, and the acts of the majority of the Board Members present at a meeting at which a quorum is present shall be the acts of the Board. If, at any meeting of the Board, there be less than a quorum present, the majority of those present may adjourn the meeting from time to time. At any such adjourned meeting, any business which might have been transacted at the meeting as originally called may be transacted without further notice.

4.16 Open Meetings

All meetings of the Board shall be open to all Owners.

4.17 Action Without a Meeting

Any action required to be taken, or any action which may be taken, at a meeting of the Board, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the Board Members.

4.18 Committees  

The Board shall appoint the members of the Architectural Control Committee of Baycliffs from time to time, including the filling of any vacancies, as required by the Declarationo The Architectural Control Committee may be comprised of Board Members, other Owners or non-Owners, in the Board’s discretion.Additionally, the Board may by resolution provide for such standing or special committees as it deems desirable, and discontinue the same at its discretion. Each such committee shall consist of not less than one (1) Board Member and shall have such powers and perform such duties, not inconsistent with the Declaration or this Code of Regulations, as may be delegated to it by the Board. Each such committee shall keep full records and accounts of its proceedings and transactions. All action by any such committee shall be reported to the Board at its meeting next succeeding such action and shall be subject to control, revision and alteration by the Board, provided that no rights of third persons shall be prejudicially affected thereby. Each such committee shall fix its own rules of procedure and shall meet as provided by such rules or by resolutions of the Board, and it shall also meet at the call of the President of the Association or of any two members of the committee. Unless otherwise provided by such rules or by such resolutions, the provisions of Section 4.13 relating to the notice required to be given of special meetings of the Board shall also apply to meetings of each such committee. A majority of the members of a committee shall constitute a quorum, and the acts of the majority present at a meeting at which a quorum is present shall be the acts of the committee. Each such committee may act in writing or by telegram or by telephone with written confirmation, without a meeting, but no such action shall be effective unless concurred in by all members of such committee. Vacancies in any committee shall be filled by the Board or as it may provide.

4.19 Fidelity ponds

The Board may require that all officers, employees, volunteers and agents of the Association handling or responsible for Association funds shall furnish adequate fidelity bonds or insurance. The premiums on such bonds or insurance shall be paid by the Association, and shall be a Common Expense.

ARTICLE 5

OFFICERS
5.I Designation

The principal officers of the Association shall be a President, a Secretary and a Treasurer, all of whom shall be elected by and from the Board, except that officers appointed by Declarant pursuant to Section 10.4 hereof shall not be required to be Board Members. The Board may appoint an Assistant Treasurer and an Assistant Secretary, and such other officers as in their judgment may be necessary, who are not Board Members, but are Owners. Each such officer shall perform such duties as the Board may prescribe.

5.2 Election of Officers

All officers of the Association shall hold office at the pleasure of the Board, and}unless sooner removed by the Board, shall hold office until their successors are duly elected.

5.3 Removal of Officers

Upon an affirmative vote of a majority of the Board Members, any officer may be removed, either with or without cause, and his successor may be elected at any regulæc meeting of the Board, or at any special meeting of the Board called for such purpose. A vacancy in any office, however created, shall be filled by the Board. The provisions of this Section shall be subject to the rights of Declarant to appoint and remove officers set forth in Section 10.4 of this Code of Regulations.

5.4 President

The President shall be the chief executive officer of the Association. He shall have all of the general powers and duties which are usually vested in the office of President of an Ohio corporation not-for-profit, and such further powers and duties as the Board may from time to time assign to him.

5.5 Secretary

The Secretary shall keep the minutes of all meetings of the Board and the minutes of all meetings of the Association; he shall have charge of such books and papers as the Board may direct, and he shall, in general, perform all the duties incident to the office of Secretary and such duties as the Board may prescribe. A copy of such minutes shall be posted in a place designated by the Board or otherwise made available to all Site Owners.

5.6 Treasurer

The Treasurer shall have the responsibility for Association funds and securities and shall be responsible for keeping full and accurate accounts of all receipts and disbursements in books belonging to the Association. He shall be responsible for the deposit of all monies and other valuable effects in the name, and to the credit of, the Association in such depositories as may from time to time be designated by the Board, and he shall perform such other duties as from time to time may be assigned to him by the Board.

5.7 Duties of Officers May Be Delegated

In the absence of any officer of the Association, the Board may delegate any of the powers or duties of such officer to any other officer or to any Board Member or to the Managing Agent, if any.

ARTICLE 6

COMMON EXPENSES AND PROFITS

6.1 Association Expenses

The costs and expenses specifically enumerated in Article I, Subparagraph (d) of the Declaration and all costs considered necessary or appropriate by the Board to the proper administration of Baycliffs Subdivision shall be Association Expenses. The cost of such Association Expenses shall be defrayed by Assessments, Special Assessments and Special Charges levied against the Residential Lots as provided in the Declaration.

6.2 Obligations of Declarant

Declarant shall be obligated to pay its share of Common Expenses with respect to any Residential Lot owned by Declarant on which is located a completely constructed Dwelling Unit. The phrase “completely constructed” shall mean that a certificate of occupancy with respect thereto shall have been issued by the appropriate governmental authority.

6.3 Limitation on Expenditures and Borrowing

Except for expenditures made for discharging the maintenance, repair or replacement obligations of the Association and expenditures identified in the annual budget, the Association shall not (i) make expenditures for any single item in excess of Five Thousand Dollars ($5,000) nor aggregate expenditures in any one (I) year in excess Of Twenty Thousand Dollars ($20,000); or (ii) borrow any amounts which in the aggregate exceed at any one time the sum of Ten Thousand Dollars ($10,000), without in each case having the prior approval of the Owners entitled to exercise a majority of the voting power of all the Owners present in person or by proxy at an annual or a Special Meeting duly held for such purpose.

6.4 Dispute as to Common Expenses and Special Charges

Any Owner who believes that all or any part of the Assessments or special Charges for which a certificate of lien has been filed by the Association has been improperly charged against him may bring an action in the Common Pleas Court of Ottawa County, Ohio, for the discharge of such lien. In any such action, if it is finally determined that any portion of  Assessments or Special Charges has been improperly charged to such Owner, the court shall make such order as is just, which may provide for a discharge of record of all or a portion of such lien.

6.5 Association Revenues in Excess of Expenses

Any revenues of the Association in excess of Common-Expenses shall be divided pro rata among the owners of Residential Lots, added to a reserve fund, or credited to reduce Assessments, as the Board may determine.

ARTICLE 7

ASSESSMENTS, SPECIAL ASSESSMENTS AND SPECIAL CHARGES

7.1 Obligation of Owners

Subject to the limitations of Section 6.2 hereof respecting the obligations of the Declarant, every Owner shall pay Assessments for his proportionate share of Association Expenses. Each Owner’s “proportionate share” shall be a fraction, the numerator of which is the number one (1), and the denominator of which is the lesser of (a) the number of platted Residential Lots which have been sold to Owners, or (b) thirty (3()). For this purpose, no distinction shall be drawn among the Sites due to floor plans of Dwelling Units, basements, usable square footage, Site value or for any other reason, except that for this purpose a Residential Lot shall be considered as one Dwelling Unit. Payment of Assessments shall be in such amounts and at such times as may be determined by the Board in accordance with this Code of Regulations. In addition, each Owner shall promptly pay to the Association any Special Charges imposed by the Association in respect of his Residential Lot.

7.2 Preparation of Estimated Budget and Assessment of Common Expenses

On or before the 1st day of December of each year, the Board shall estimate the total amount necessary to pay the Common Expenses and, to the extent possible, Special Charges for the next calendar year, together with reasonable amounts for reserves if so determined by the Board, and other amounts necessary or required for the administration of Baycliffs Subdivision as authorized by the Declaration and this Code of Regulations. On or before December 15 following the First Annual Meeting and on or before December 15 of each year thereafter, the Board shall notify each Owner in writing of the amount of such estimate (the “estimated cash requirement”), with reasonable itemization thereof. Said “estimated cash requirement” shall be assessed to the Owners in accordance with the provisions of the Declaration and this Code of Regulations. On or before February I of the ensuing year, and (unless otherwise specified by the Board), each Owner shall be obligated to pay to the Association the Assessments in full made pursuant to this Section. If the “estimated cash requirement” is insufficient for any reason including the nonpayment by any Ow•ner of his share of the Assessments, the Association may at any time prepare an adjusted estimate and levy additional Assessments, which shall be assessed to Site Owners. The Association shall give written notice of any such additional Assessments to all Owners stating the amount thereof, the reasons therefor and time when the same shall be payable, which shall not be less than ten (10) days after the mailing of such notice, or, if the same is not mailed, the delivery thereof. All Owners shall be obligated to pay the amount, as so adjusted. Any amount collected by the Association in excess of the amount required for the actual expenses and reserves in any year shall be credited promptly to the Assessments next due from Owners pursuant to the current year’s estimate. Any deficiency shall be added to the Assessment due in the succeeding fiscal year after rendering of the accounting.

7.3 Fiscal Year

The fiscal year of the Association shall end on the thirty-first (31st) day of December in each year, or on such other day as may be fixed from time to time by the Board.

7.4 Failure to Prepare Annual Budget

The failure or delay of the Board to prepare or to serve a copy of the annual or adjusted budget on any Owner shall not constitute a waiver or release in any manner of such Owner’s obligation to pay his share of the Common Expenses whenever the same shall be determined, and in the absence of any annual budget or adjusted budget, each Owner shall continue his payment of Assessments at the then-existing rate established for the previous period until the amount of the Assessments is changed as herein provided.

7.5 Reserve Fund

The Board shall establish and maintain for the Association a reasonable reserve fund for contingencies and replacements in such amount as the Board may deem necessary. The Board, in its discretion, may require the Owners to make reserve fund contributions. Upon the sale of a Residential Lot by any Owner, such Owner shall have no right to any portion of the funds in the reserve account; nor shall such Owner have any claim against the Association with respect thereto. Extraordinary expenditures incurred in any year which were not originally included in the estimated cash requirement for such year may be charged first against such reserve fund. The amount of the reserve fund shall be reviewed annually by the Board.

7.6 Estimated Assessments

Following the establishment of the Association and prior to the preparation of the estimated budget in accordance with Section 7.2, payments of assessments shall be made by Owners in an amount estimated by the Board as being sufficient to cover the initial working capital requirements for the Association.

7.7 Initial Capital Contribution

In addition to the regular payments of Assessments, each purchaser of a Residential Lot from Declarant will be required to make, at the time such purchaser acquires title thereto, an initial capital contribution to the Association in the amount of Five Hundred Dollars ($500). The general purpose of this contribution is to provide the Association with a portion of the necessary initial working capital and a contingency reserve. Such funds may be used for certain prepaid items (e.g., insurance premiums, utility deposits, organizational expenses, equipment and supply costs) and for such additional purposes as the Board may determine. The initial capital contribution is not an escrow or advance and is not refundable.

7.8 Status of Funds Collected by Association

All funds collected by the Association shall be held and expended solely for the purposes designated in the Declaration and this Code of Regulations. Except for Special Charges as may be levied against less than all of the Owners and except, further, for such adjustments as may be required to reflect delinquent or prepaid Assessments, funds collected by the Association shall be held for the use, benefit and account of all Owners, in proportion to their voting percentage. All sums collected by the Association may be commingled in a single fund or divided into more than one fund, as determined by the Board.All funds collected by the Association shall be deposited when received by the Association in one or more accounts established in the name of the Association at one or more banks or savings and loan associations in Ottawa County, Ohio, or shall be deposited in such other manner as shall be provided for pursuant to the provisions of any management agreement with any Managing Agent.

7.9 Lien of Unpaid Assessments

Assessments and Special Charges shall be a lien upon the respective Residential Lots in the manner specified in the Declaration. The Board may charge interest on same and impose late charges as provided in the Declaration.

7.10 Remedies for Failure to Pay Assessments and Special Charges

If a Owner is in default in the payment of any Assessments or Special Charges for sixty (60) days after the due date for payment thereof, the Association, upon authorization of the Board, may bring suit to enforce collection thereof or to foreclose the lien thereof as provided in the Declaration, together with interest and late charges, if any, as provided in the Declaration, and reasonable attorneys’ fees as permitted by law.

7.11 Books and Records of Association

The Association shall keep full and correct books of account, and the same shall be open for inspection by any Owner, his mortgagee and by any representative of a Owner duly authorized in writing, at reasonable times and upon request by a Owner. Upon fifteen (15) days written notice to the Board and upon payment of a reasonable fee, any Owner shall be furnished a statement of his account setting forth the amount of any unpaid Assessments or Special Charges due and owing from such Owner.

7.12 Annual Statements

Within one hundred twenty (120) days after the end of each fiscal year of the Association, the Board shall furnish to each Owner a financial statement consisting of (a) a balance sheet containing a summary of the assets and liabilities of the Association as of the date of such balance sheet, and (b) a statement of the income and expenses for the period commencing with the date marking the end of the period for which the last preceding statement of income and expenses required hereunder was made and ending with the date of said statement, or in the case of the first such statement, from the formation of the Association to the date of said statement.

7.13 Annual Audit

The books of the Association shall be reviewed once a year by the Board, and such review shall be completed prior to each annual meeting. At any time upon the request of the Owners holding more than fifty percent (50%) of the voting power of the Association, or upon request of two (2) Board Members, the Board shall cause a review of the books of the Association to be made by an independent certified public accountant, the cost therefor to be included as part of the Common Expenses.

7.14 Special Services

The Association may arrange for special services and/or facilities for the benefit of such Owners as may desire to pay for same. The cost of any such special services or facilities shall be determined by the Association and may be charged directly to participating Owners and collected through Special Charges levied against such participating Owners. 7.15 Collection of AssessmentsThe holder of a first mortgage encumbering a Residential Lot shall be permitted to collect Assessments from its mortgagor and upon such collections shall promptly remit the amount so collected to the Association.

ARTICLE 8

MORTGAGEES

8.1 Notices to Mortgagees

All owner who mortgages his Residential Lot shall notify the Association through the managing agent, if any, or the President of the Board in the event there is no managing agent, of the name and address of his mortgagee and thereafter shall notify-the Association of the full payment, cancellation or other alteration in the status of such mortgage. The Association shall maintain such information in a book entitled “Mortgagees of Sites.” 8.2 Rights of Mortgagees A mortgagee shall be entitled to written notice from the Association of any default by its mortgagor Owner which is not cured within sixty (60) days. Any mortgagee may from time to time request, in writing, a written statement from the Board setting forth any and all unpaid Assessments and Special Charges due and owing to the Association with respect to the property subject to the lien of its mortgage and such request shall be complied with within twenty (20) days from receipt thereof. Any mortgagee may pay unpaid Common Expenses or Special Charges, imposed upon its security and upon such payment, such mortgagee shall have a lien on such security for the amounts so paid at the same rank as the lien of its mortgage, to the extent provided for and consistent with its mortgage loan documents.

ARTICLE 9

INDEMNIFICATION

9.1 General

The Association shall indemnify any present or former Board Member, officer or committee member of the Association and their respective heirs, executors and administrators, and, in its discretion, the Association may indemnify any present or former agent or employee of the Association, and his respective heirs, executors, administrators or successors, from and against reasonable expenses, including attorneys’ fees, judgments, decrees, fines, penalties or amounts paid in settlement actually and necessarily incurred in connection with the defense of any pending or threatened action, suit, or proceeding, criminal or civil, to which any of the foregoing is or may be made a party by reason of being or having been a Board Member, officer, committee member, employee or agent of the Association, provided it is determined in the manner hereinafter set forth (a) that such Board Member, officer, committee member, employee or agent of the Association was not, and is not adjudicated to have been, negligent or guilty of misconduct in the performance of his duty to the Association, (b) that he acted in good faith in what he reasonably believed to be in the best interest of the Association, (c) that, in any matter the subject of a criminal action, suit or proceeding, he had no reasonable cause to believe that his conduct was unlawful, and (d) in case of settlement, that the amount paid in the settlement was reasonable. Such determination shall be made by the Board Members.

9.2 Advance of Expenses

Funds to cover expenses, including attorneys’ fees, with respect to any pending or threatened action, suit or proceeding, may be advanced by the Association prior to the final disposition thereof upon receipt of a written agreement executed by or on behalf of the recipient to repay such amounts unless it shall ultimately be determined that he is entitled to indemnification hereunder.

9.3 Indemnification Not Exclusive; Insurance

The indemnification provided for in this Article 9 shall not be exclusive, but shall be in addition to (a) any other rights to which any person may be entitled under this Code of Regulations, vote of the Owners or disinterested Board Members, any agreement, any insurance provided by the Association, or otherwise. The Association may purchase and maintain insurance on behalf of any person who is or was a Board Member, officer, committee member, agent or employee of the Association against any liability asserted against him or incurred by him in any such capacity or arising out of his status, as such, whether or not the Association would have the power to indemnify him against such liability under the provisions of this Article 9.

9.4 Exoneration from Liability

Neither any Board Member nor any officer of the Association shall be liable to the Owners for any mistake of judgment, negligence, or otherwise, except for his own individual willful misconduct or bad faith. The Association shall indemnify and hold harmless each of the Board Members and officers of the Association against all contractual liability to other parties arising out of contracts made on behalf of the Association except with respect to any such contracts made in bad faith or contrary to the provisions of the Declaration or this Code of Regulations. It is intended that neither the Board Members, officers of the Association nor the Owners shall be personally liable with respect to contracts entered into on behalf of the Association. 9.5 Cost of IndemnificationAny sum paid or advanced by the Association under this Article 9 shall constitute an Association Expense, and the Association and the Board shall have the power to raise and the responsibility for collecting, by way of Assessments, any sums required to discharge the obligations of the Association under this Article 9.

ARTICLE 10

GENERAL PROVISIONS

10.1 Employees and Independent Contractors

The Board or the Managing Agent, if any, shall have authority to hire employees, to engage independent contractors, to purchase equipment and supplies, and to take any and all actions on behalf of the Association which may be necessary or appropriate to the proper administration of Baycliffs Subdivision. The execution of a management agreement with a Managing Agent or management company which authorizes or requires the Managing Agent or management company to perform certain duties shall be deemed to be a delegation and authorization to such Managing Agent or management company of such duties and of such power and authority necessary to carry out such duties.

10.2 Acquisition Lease Sale or Exchange of Property

Notwithstanding any contrary provision herein, whenever the Board determines to acquire, lease, sell or exchange real property or any interest therein, the Board shall submit such acquisition, lease or exchange to the vote of the Owners, and, upon the affirmative vote of the  entitled to exercise not less than sixty-seven percent (67%) of total voting power of the Association present in person or by proxy at an annual meeting or a special meeting duly held for such purpose, the Board may proceed with such acquisition, lease, sale or exchange, in the name of the Association and on behalf of all Owners, and the costs and expenses incident thereto shall constitute part of the Common Expenses. This provision shall not apply to the addition of property to Baycliffs Subdivision by Declaration in accordance with Section 2.2 of the Declaration.

10.3 Rules and Regulations

The Association, by the affirmative vote of a majority of the Board Members, may adopt such reasonable Rules from time to time (or amend or supplement the same) as may be advisable for the operation, use, maintenance, conservation and enhancement of the Common Properties or any portion thereof, or for the health, comfort, safety and general welfare of the Owners and occupants of Baycliffs Subdivision. Written notice of such Rules shall be given to all Owners, and the Common Properties shall at all times be used and maintained subject to the Rules.

10.4 Severability

The invalidity of any covenant, restriction, condition, limitation or any other provision of this Code of Regulations, or any part of the same, shall not impair or affect in any manner the validity, enforceability or effect of any other provision contained in this Code of Regulations or in the Declaration.

10.5 Ratification

All present and future Owners and occupants shall be subject to the provisions set forth in the Declaration and in this Code of Regulations and the Rules. The acquisition, rental or occupancy of any of the Residential Lots thereon, shall constitute acceptance and ratification of the Declaration, this Code of Regulations and the Rules.

10.6 Conflict Between Declaration. Code Of Regulations and Rules

In the event of conflict or inconsistency between any of the provisions of the Declaration or this Code of Regulations or the Rules, as the case may be, it is hereby agreed that the provisions of the Declaration shall be paramount, and the Owners and all persons claiming under them covenant and agree to vote in favor of such amendments to this Code of Regulations or the Rules, as the case may be, as will remove such conflicts or inconsistencies.

10.7 Agreements Binding

All agreements and determinations lawfully made by the Association in accordance with the procedures established in the Declaration and this Code of Regulations shall be deemed to be binding upon all Owners, and their respective heirs, executors, administrators, successors and assigns.

10.8 Gender

The use of the masculine gender herein shall be deemed to include the feminine and the neuter genders, as the case may be, and the use of the singular shall be deemed to include the plural, wherever the context so requires.

10.9 Marginal References

The heading of each Article herein is inserted for convenience and reference only and in no way shall be held to explain, modify, amplify or limit the meaning of any such Article.

10.10 Amendment

This Code of Regulations may be amended in any respect not inconsistent with the Declaration by the affirmative vote of sixty-seven percent (67%) of the voting power of the Association.

10.11 Dissolution of Association.

The Association may be dissolved with the written and signed assent of members having not less than seventy-five percent (75%) of the voting power of all members of the Association. Upon dissolution of the Association, other than incident to a merger or consolidation, the Common Properties owned in fee by the Association and all facilities and improvements thereon and all other assets owned by the Association shall be dedicated to the local political subdivision or to an appropriate public agency to be used for purposes similar to those for which the Association was created and as contemplated by this Declaration. In the event that such dedication is refused acceptance, such assets shall be granted, conveyed and assigned to any nonprofit corporation, association, trust or other organization to be devoted to such purposes.

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Rules and Regulations for Baycliffs Subdivision(the “Development”) 

1. Reference should be made to the Declaration of Restrictions, Covenants and Easements relating to the Development (the “Declaration”) and especially to Article 5 (“Use Restrictions”), Article 6 (“Building Restrictions”) and Article 7 (“Architectural Control”) thereof for detailed covenants and restrictions pertaining to the use and occupancy of the Development. The rules that follow herein have been adopted initially by Baycliffs Corporation (the “Declarant”) and upon formation of the homeowners association for the Development (the “Association”), may be adopted, amended or repealed by or on behalf of its board.

2. Garage doors are to be kept closed except when in use for ingress and egress.

3. Except in case of emergency, no repairs are to be made to vehicles in any part of the Development other than within a garage..

4. No more than two customary domestic household pets shall be permitted to be kept in any Dwelling Unit except upon special permit issued by the Declarant or the Association which such permit may contain such limitations with respect to such permission,including limitations on duration of stay or of non-replacement, as shall in the judgment of the issuing authority, protect the interests of residents of the Development.

5. All window fittings visible from the exterior of the dwelling shall be white or off-white.

6. Unless otherwise approved in writing by the Architectural Control Committee, all furniture for exterior use, including all terrace, patio and balcony -furniture (cushions, exposed frames and umbrellas) shall be white, off-white, tan, beige, black or earth tones.

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