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KOHLS TONTO CREEK SUBDIVISION

HOMEOWNERS ASSOCIATION, INC.

ARTICLE I

General

Section 1.1 Organization and Scope. These Bylaws shall constitute the Bylaws of Kohls Tonto Creek Subdivision Homeowners Association, Inc. (the "Association"), an Arizona nonprofit corporation formed for the purpose of serving as the property owners' association at Kohls Tonto Creek Ranch and Saddle Mountain View, subdivisions located in Gila County, Arizona (the "Subdivision").

Section 1.2 Definitions. Except as otherwise provided herein, capitalized terms used in these Bylaws that are defined in the Articles of Incorporation of the Association (the "Articles") shall have the meanings set forth in the Articles.

ARTICLE II

Voting Rights

Section 2.1 Majority Vote. A majority of the votes of Members eligible to vote who are present at any meeting shall decide any question presented to the Members unless these Bylaws, the Articles, or applicable law shall require otherwise, in which latter event the voting percentage required by these Bylaws, the Articles, or such applicable law shall control.

Section 2.2 List of Members Entitled to Vote. Pursuant to Section 10-2325(A), Arizona Revised Statutes, the Secretary of the Association shall maintain, at the office of the statutory agent of the Association or the known place of business of the Association set forth in the Articles, a record of the names and addresses of Members entitled to vote.

ARTICLE III

Meetings of Members

Section 3.1 Annual and Semi Annual Meetings. The first annual meeting of the Members shall be held on the second Saturday in July 1997. Thereafter, the annual meetings of the Members shall be held on or about the second Saturday in July of each succeeding year, with the specific date of the annual meeting to be designated by the President. At each annual meeting the Members shall transact such business as the Articles, these Bylaws, or the Members may authorize. The semi annual meetings shall be held on or about the third Saturday in January each year. Members may transact any such business as the Articles, these Bylaws, or the Members may authorize at semi annual meetings.

Section 3.2 Special Meetings. Special meetings of the Members for any purpose or purposes may be called by the President, by a resolution of the Board, or upon a written petition filed with the Secretary, signed by Members who are entitled to cast one-tenth (1/10) of all of the votes of the Membership, which petition must state the specific purpose of the special meeting. The President shall schedule a special meeting on a date the Board designates in its sole discretion, provided that the meeting must be held within forty-five (45) days from the date the petition is filed with the Secretary. No business shall be transacted at a special meeting except as stated in the notice.

Section 3.3 Place. All meetings of the Members shall be held at such place and time as the Board or the President shall designate as stated in the notice of the meeting.

Section 3.4 Notices. It shall be the duty of the Secretary to mail or deliver a notice of each annual, semi-annual, or special meeting to each Member, stating the time and place of the meeting and the purpose of a special meeting. The notice shall be sent at a reasonable time prior to the meeting.

Section 3.5 Quorum. Except as otherwise provided by statute, the Articles, or these Bylaws, at any meeting of the Members, one-fourth (1/4) of the Members entitled to vote shall constitute a quorum for the transaction of business.

Section 3.6 Election of Directors. Election to the Board of Directors shall be either by secret written ballot or a show of hands at the annual meeting, or by written ballots which are mailed or otherwise delivered within a six month period in advance of the annual meeting.

ARTICLE IV

Board of Directors

Section 4.1 Number and Qualification of Directors. The affairs of the Association shall be governed by the Board in accordance with these Bylaws. The Board shall be composed of not less than five directors nor more than eleven directors, including the current and the next past President of the Association, who shall be ex-officio directors.

Section 4.2 Term and Organization. At each annual meeting the number of directors provided for in the Articles shall be elected for a nominal one year term in accordance with the procedures set forth in these Bylaws. Directors shall take office following the close of the annual meeting at which they are elected and shall hold office until the successor directors have been duly elected and installed. Any director may be elected for additional consecutive terms.

Section 4.3 Vacancies on Board of Directors. All vacancies on the Board may be filled by a vote of the majority of the remaining directors, even if less than a quorum exists.

Section 4.4 Resignation of Directors. Any director may resign at any time by sending written notice of such resignation to the Secretary of the Association. Unless otherwise specified, such resignation shall take effect upon receipt by the Secretary.

Section 4.5 Regular Meetings. The Board may hold regular meetings at such time and place as the President or a majority of the directors shall designate. Notice of regular meetings shall be given to each director at least five (5) days prior to the date designated for such meeting.

Section 4.6 Powers and Duties. The Board shall have all powers necessary and shall be responsible for the administration of the affairs of the Association, and may do all such acts and things as are not by law, by the Articles, or by these Bylaws directed to be exercised solely by the Members. These powers shall include, but not be limited to, the following:

(a) To engage in the management of the business affairs of the Association;

(b) To use, disburse, and expend the funds of the Association in the exercise of its powers and duties;

(d) To establish committees of the Board and delegate to such committees or to the officers of the Association the Board's authority to carry out certain duties of the Board;

(e) To enforce the provisions of the Articles, these Bylaws, and any other documents and laws respecting the Association and the Subdivision;

(f) To pay taxes and assessments which are liens against any part of the Common Areas;

(g) To prepare annual and other budgets;

(h) To obtain such insurance for the Common Areas as the Board may deem appropriate;

(i) To obtain and hold easements and use permits for the benefit of the members and other property owners;

(j) To open bank accounts on behalf of the Association and to designate the signatories therefor;

(k) To invest any excess Association funds; and

(l) To require such audits or reviews of the accounts, finances, receipts and expenditures of the Association as it may deem appropriate from time to time.

Section 4.7 Special Meetings. Special meetings of the Board may be called by the President or Secretary or by two-thirds (2/3) of the directors on three (3) days notice to each director, which notice shall state the time, place, and purpose of the special meeting.

Section 4.8 Waiver of Notice. Before, at, or after any meeting of the Board, any director may, in writing, waive notice of such meeting, and such waiver shall be deemed equivalent to the giving of such notice. Attendance by a director at any meeting of the Board shall be a waiver of notice by the director of the time and place thereof. If all of the directors are present at any meeting of the Board, no notice shall be required, and any business may be transacted at such meeting.

Section 4.9 Board of Directors Quorum. At all meetings of the Board, a majority of the directors shall constitute a quorum for the transaction of business, and the acts of the majority of the directors present at a meeting at which a quorum is present shall be the acts of the Board.

Section 4.10 Compensation. No compensation shall be paid to directors or officers of the Association for their services as directors or officers. Directors and officers of the Association may be reimbursed for any reasonable actual expenses incurred on behalf of the Association in connection with their duties as officers or directors.

ARTICLE V

Officers

Section 5.1 Elected Officers. The principal officers of the Association shall be a President, a Vice President, a Secretary, and a Treasurer. Each officer shall be a Member. A person may hold more than one office, except that the offices of President and Secretary shall not be held by the same person simultaneously.

Section 5.2 Term. The officers of the Association shall be elected annually by the Membership by secret written ballot or a show of hands at the annual meeting, or by written ballots which are mailed or otherwise delivered within a six month period in advance of the annual meeting, and shall hold office at the pleasure of the Membership. Officers shall be installed at the Annual Meeting of the Association. If any office becomes vacant for any reason, the Board shall fill the vacancy at any regular or special meeting of the Board. Any officer may be elected for additional consecutive terms.

Section 5.3 President. The President shall be the chief executive officer of the Association and shall preside at all meetings of the Members and of the Board. The President shall have executive powers and responsibility for general supervision over the affairs of the Association, including but not limited to the power to appoint committees from among the Members to assist in the conduct of the affairs of the Association.

Section 5.4 Vice President. The Vice President shall take the place of the President and perform all of the duties of the President whenever the President is absent or unable to act. The Vice President shall also perform such other duties as may be requested from time to time by the President or the Board.

Section 5.5 Secretary. The Secretary shall: (a) issue notices of all meetings of the Members and the Board; (b) attend and keep the minutes of such meetings; (c) have charge of all of the Association's books, records and papers, including the Member list; and (d) perform such other duties as the President or the Board may request from time to

time.

Section 5.6 Treasurer. The Treasurer shall safeguard and have custody of, and shall keep full and accurate account of, all receipts and disbursements of the Association, in books belonging to the Association, and shall deposit all monies and other valuable effects in the name of and to the credit of the Association in such depositories as the Board may designate. All books of account shall be kept on a consistent basis in accordance with generally accepted accounting practices. The Treasurer shall also perform such other duties as the President or the Board may request from time to time.

Section 5.7 Resignation and Removal of Officers. Upon an affirmative vote of two thirds of the Members eligible to vote, any officer may be removed, either with or without cause. Any officer may resign at any time by giving written notice of such resignation to the Board, the President, or the Secretary. Such resignation shall take effect upon receipt or at any later time specified, and unless otherwise provided, acceptance of such resignation shall not be necessary to make it effective.

ARTICLE VI

Fiscal Management

Section 6.1 Depositories. The funds of the Association shall be deposited in such banks and depositories as the Board may determine from time to time, upon resolutions approved by the Board, and shall be withdrawn only upon checks and demands for money signed by such officer or officers of the Association as the Board may designate.

Section 6.2 Budget. The Board may cause to be prepared an estimated annual budget for each fiscal year of the Association, and such other budgets and financial forecasts as it deems necessary.

Section 6.3 Dues. Each Member shall pay dues as established by the Board from time to time. The initial dues shall be $10.00 per year for each family unit of members.

ARTICLE VII

Amendments

These Bylaws may be amended by a majority vote of the Members then eligible to vote at any duly called regular or special meeting of the Members, provided that the notice of the meeting shall contain a statement of the proposed amendment. Notwithstanding the foregoing, these Bylaws shall not be amended to contain any provision which would be contrary to or inconsistent with the Articles in effect; and any provision of, or purported amendment to, these Bylaws that is contrary to or inconsistent with the Articles shall be void to the extent of such inconsistency.

ARTICLE VIII

Limitation of Liability

The Association shall not be liable for injury or damage caused by a latent or other condition of any of the Common Areas of the Subdivision, or by the acts or omissions of any Member, occupant, or other person.

ARTICLE IX

Construction

Section 9.1 Priorities. Unless otherwise provided, any inconsistencies or conflicts among the provisions of the Arizona Revised Statutes or other applicable law, the Articles, and these Bylaws shall be resolved by giving priority first to the Arizona Revised Statutes or other applicable law, second to the Articles, and third to the Bylaws.

Section 9.2 Disputes. If any dispute or disagreement arises between or among any Members relating to the interpretation, inconsistencies, or application of the provisions of the Articles or these Bylaws, the Board's determination shall be final and binding.

ADOPTED BY the Board of Directors of the Kohls Tonto Creek Subdivision Homeowners Association, Inc. at Phoenix, Arizona, this ___ day of _____________, 1997.

________________________________

CERTIFICATION

The undersigned does hereby certify:

THAT I am the duly elected and acting Secretary of Kohls Tonto Creek Subdivision Homeowners Association, Inc., an Arizona nonprofit corporation; and

THAT the foregoing Bylaws constitute the Bylaws of such corporation, as duly approved and adopted at a Meeting of the Board of the Association held on the _____ day of ________________, 1997.

IN WITNESS WHEREOF, I have hereunto subscribed my name as of this ____ day of ______________, 1997.

______________________________

Secretary