CANDLELIGHT HILLSHOMEOWNERS AssocIATIoN

First Restated Bylaws

Bylaws

Summary of Contents

ARTICLE I Name and Location

ARTICLE II Definitions

ARTICLE ifi Meetings of Members

ARTICLE IV Board of Directors

ARTICLE V Board of Directors; Election and Vacancies

ARTICLE VI Board of Directors Meetings

ARTICLE VII Board of Directors Powers and Duties

ARTICLE VIII Officers and their Duties

ARTICLE IX Books and Records

ARTICLE X Amendments

ARTICLE XI Membership Rights and Privileges

ARTICLE XII General Provisions

Table of Contents

ARTICLE ISection 1.1Section 1.2

ARTICLE ISection 1.1Section 2.2Section 2.3Section 2.4Section 2.5Section 2.6Section 2.7Section 2,8Section 2.9Section 2.10Section 2.11Section 2.12Section 2.13Section 2.14Section 2.15Section 2.16Section 2.17Section 2.18Section 2.19Section 2.20Section 2.21Section 2.22Section 2.23Section 2.24

Name and LocationName 1

Location 1

Architectural Improvements

Articles

BylawsCC&RsCommon AreaCommon FacilitiesCommon MaintenanceDevelopmentGuestLotMemberProfessional ManagerQuorumResidents

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ARTICLE IIISection 3.1Section 3.2Section 3.3Section 3.4Section 3.5Section 3.6Section 3.7

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DefinitionsArchitectural Guidelines

Architectural Review Committee or ARC

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AssociationlHOABoard of Directors or the Board

Area

Regular AssessmentReimbursement Assessment .

Rules and Regulations or RulesResidential UseSpecial AssessmentTenant

Meetings of MembersDate of Annual MeetingsNotice of Annual MeetingsSpecial Meetings and Notice ThereofQuorum at Annual MeetingsQuorum at Special MeetingsNotice of Reconvened Annual MeetingsNotice of Reconvened Special Meetings

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Board of DirectorsNumber and QualificationsTerm of Office

ARTICLE VSection 5.1Section 5.2Section 5.3Section 5.4

Board of Directors: ElectionNominationElectionRemovalVacancies

ARTICLE VISection 6.1Section 6.2Section 6.3Section 6.4Section 6.5Section 6.6Section 6.7Section 6.8Section 6.9Section 6.10Section 6.11Section 6.12Section 6.13Section 6.14

Board of Directors MeetingsOrganizational MeetingRegular Board MeetingsNotice of Regular Board Meetings .

Special Board MeetingsNotice of Special Board MeetingsQuorum of DirectorsAdjournmentMinute Entry of NoticeNotice of AdjournmentPlace of Board MeetingsWaiver of Notice of Board MeetingsOpen MeetingsExecutive SessionsAction Without a Meeting

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ARTICLE VII Board of Directors PowersSection 7.1 PowersSection 7.2 DutiesSection 7.3 Restrictions on Powers of the Board

and Duties8

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ARTICLE VIII Officers and Their DutiesSection 8.1 Officers and Their QualificationsSection 8.2 Election of OfficersSection 8,3 Term

Section 3.8Section 3.9Section 3.10Section 3.11Section 3.12

ARTICLE IVSection 4. 1Section 4.2

ProxiesPlace of Meetings of MembersConduct of Meetings of MembersAction Without a MeetingVoting

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and Vacancies5

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Section 8.4Section 8.5Section 8.6

ARTICLE IXSection 9.1Section 9.2

ARTICLE XSection 10.1Section 10.2

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ARTICLE XISection 11.1Section 11.2Section 11.3

Membership Rights and PrivilegesDelegation of AuthoritySuspension of Membership RightsNotice of Disciplinary Action

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ARTICLE XII General ProvisionsSection 12.1 Checks, Drafts, EtcSection 12.2 Contracts, etc., How ExecutedSection 12.3 Liability of Officers and DirectorsSection 12.4 Parliamentary Procedure

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Removal and ResignationMultiple Offices

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11Duties

Books and RecordsInspectionInspection by Directors

AmendmentsAmendmentsRequired Amendments

CANDLELIGHT HILLSHOMEOWNERS AssocL&noN

First RestatedBylaws

ARTICLE I NAME LOCATION

Section Li. Name. The name of the Association is "Candlelight Hills Homeowners Association."

Section 1.2. Location. The principal offices of the HOA must be located in San Diego County,California.

ARTICLE II DEFINITIONS

Section 2.1 Architectural Guidelines. The policies and procedures established by the Board ofDirectors (Board) and/or the Architectural Review Committee (ARC) governing anyproposed changes to the Development.

Section 2,2 Architectural Improvements. Any change to any Lot or structure.

Section 2.3 Architectural Review Committee (ARC). The committee established by the Board inaccordance with these CC&Rs, or the Board if no committee is established, to reviewarchitectural changes to the Development proposed by Members.

Section 2.4 Articles. The Articles of Incorporation of the Candlelight Hills Homeowners Association,a California non-profit, mutual benefit corporation.

Section 2.5 Ass ociationlllOA. The Candlelight Hills Homeowners Association, a California non-profit,mutual benefit corporation; a common interest development.

Section 2.6 Board of Directors or the Board. The governing body of the HOA, as set forth in thegoverning documents.

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Section 2.7

Section 2.8

Section 2.9

Section 2.10

Section 2.11

Section 2.12

Section 2.13

Section 2.14

Section 2.15

Section 2.16

Section 2.17

Section 2.18

Section 2.19

Section 2.20

Section 2.21

Bylaws. The Bylaws of the HOA,

CC&Rs. This First Restated Declaration of Covenants, Conditions and Restrictions. Alsoreferred to as the "Declaration."

Common Area. The entire Development, except for the Lots. Unless stated to thecontrary, reference to the Common Area also refers to all Common Facilities

Common Facilities. All improvements to the Common Area, including but not limited to,the tennis courts, volleyball court, picnic area, hiking trail, landscaping, private streets andelectric gates, basketball court, horseshoe court, playground areas, the barbeques, and thestreetlights.

Common Maintenance Area. Certain easement areas providing access to the CommonArea over adjacent area.

Development. All ofthe property commonly known as Candlelight Hills, including the Lots,the Common Area, and all improvements.

Guest Anyone who is in the Development but who is not a Resident, including Memberswho have rented or leased their Lot.

Lot. The real property and improvements owned by each Owner, including but not limitedto residential dwellings, garages, porches, certain fences and walls, landscaping, etc.

Member. Any owner of a Lot in the Development. All owners are Members of the HOA.

Professional Manager. The property management company and/or its representative.

Quorum. A majority of Members, unless otherwise specifically stated to the contrary.

Residents. The people living in the Development, regardless of whether they are Members.

Regular Assessment. The assessment levied by the HOA with respect to all Lots, used forpaying regular expenses and funding reserves.

Reimbursement Assessment. An assessment levied by the HOA with respect to one ormore Members for reimbursement of costs and expenses of any kind, including attorney fees,incurred by the HOA on behalf of or as a result of the Member(s) subject to the assessment.

Rules and Regulations or Rules. Policies and procedures enacted and implemented by theBoard pursuant to the governing documents.

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Section 2.22 Residential Use. Occupancy and use of a Lot for single family dwelling purposes and notfor business, trade or commercial purposes, as further defined herein.

Section 2.23 Special Assessment. An assessment levied with respect to all Lots for payment ofextraordinary expenses of the HOA.

Section 2.24 Tenant, A Resident of the Development who is renting or leasing a home.

ARTICLE III MEETINGS OF MEMBERS

Section 3.1. Date of Annual Meetings. Annual meetings of Members must be held annually, at a date,time and place determined by the Board, within San Diego County.

Section 3.2. Notice of Annual Meetings. Written notice of annual meeting must be given to eachMember and, upon written request, to all mortgage holders, either personally or by sendinga copy of the notice by regular mail to the address to which Assessment notices are sent, orto the Unit address. Notice must be sent not fewer than 10 days and not more than 90 daysbefore the annual meeting. Notice of the annual meeting must specify:

a. The place, the date and the time of the annual meeting;

b. Those matters which, at the time the notice is given, are intended to be presented foraction by the Members; and

c. If an election is scheduled, the names of nominees for election known at the time thenotice is prepared.

Section 3.3. Special Meetings and Notice Thereof. Special meetings of Members must be promptlycalled by the Board after a vote for such a meeting by a majority of Directors present at ameeting of the Board duly held, or upon receipt of a written request for a special meetingsigned by at least 5% of the Members. Notice of Special Meeting ofMembers must be givenin the same manner provided in these Bylaws for notice of annual meetings of Members.

Section 3.4. Quorum at Annual Meetings. At the annual meeting of Members: the presence, in personor by proxy, of a majority of Members constitutes a quorum; once a quorum is established,business may be conducted until the meeting is adjourned, in spite of the withdrawal ofMembers leaving less than a quorum; if the meeting cannot be held because a quorum is notpresent, the Members present may adjourn the meeting to a time not fewer than two hours,nor more than 30 days from the time of the original meeting. At the reconvened meeting,the quorum requirement will be reduced to 25% of the Members,

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Section 3.5. Quorum at Special At any special meeting of Members: the presence, in personor by proxy, of a majority of the Members constitutes a quorum; once a quorum isestablished, business may be conducted only so long as a quorum remains present; if ameeting cannot be held because a quorum is not present, the Members present may adjournthe meeting to a time not fewer than two days, nor more than 30 days from the time of theoriginal meeting. At the reconvened meeting, the quorum requirement will be a majority ofthe Members.

Section 3.6. Notice of Reconvened Annual Meetings. Notice of an adjournment and the date for areconvened annual meeting may be made by an announcement at the adjourned meeting,provided that no business other than that which appeared on the original meeting notice willbe conducted at the reconvened meeting. If new or different business will be conducted atthe reconvened meeting, notice must be given in the same manner provided in these Bylawsfor notice of annual meetings of Members.

Section 3. 7. Notice of Reconvened Special Meetings. Notice of an adjournment and the date for areconvened special meeting must be given in the same manner provided in these Bylawsfor notice of annual meetings of Members.

Section 3.8. Proxies. At all meetings, Member may vote in person by voice or ballot, or by proxy. Themaximum term of any proxy is three years from the date it is signed. Proxies must be inwriting delivered to the HOA' s Professional Manager or to the Secretary of the HOA. AnOwner's proxy is automatically revoked by conveyance of the Owner's Unit. All proxies andballots distributed to the Members must allow the opportunity to specify a choice betweenapproval and disapproval of each matter or group of matters to be acted upon, and that thevote shall be cast in accordance with that choice, All proxies must also identify the person(s)authorized to exercise the proxy and the length of time it will be valid. Subject to thissection, Proxies must also comply with Section 7613 of the Corporations Code.

Section 3.9. Place of Meetings of Members. Meetings of Members may be held at any time, date andplace, within San Diego County, California, determined by the Board.

Section 3.10. Conduct of Meetings of Members. Meetings of Members shall be chaired by an Officerof the Association, a Director, or a representative chosen by the Board.

Section 3.11. Action Without a Meeting. Any action which may be taken by the vote of Members at ameeting may be taken without a meeting if done in compliance with Section 7513 of theCa4fornia Corporations Code, except the election of Directors where cumulative voting isa requirement.

Section 3.12. Voting. Members may vote by voice or by written ballot; except all elections for Directorsmust be by secret, written ballot.

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ARTICLE IV BoARD OF DIRECTORS

Section 4.]. Number and Qualifications. The Board of Directors will consist of three Directors, eachof whom must be a Member ofthe HOA, or resident spouse ofaMember. Candidates maynot be delinquent in payment of Assessments at the time of election. Only one Member perUnit may serve on the Board at any time.

Section 4.2. Term of Office. The term of office for Directors is one (1) year.

ARTICLE V BOARD OFDIRECTORS: ELECTION AND VACANCIES

Section 5.1. Nomination. The HOA must solicit nominations for Directors prior to the annual meetingof Members. Any Member may nominate himself or herself; or any other Member forelection to the Board. Nominations may be made any time prior to the annual meeting ofMembers, or at the annual meeting of Members when the floor is open for nominations. Allnominations of eligible Members must be accepted by the HOA.

Section 5.2. Election. Elections of Directors must be by secret written ballot. Cumulative voting isrequired for all elections in which more than one (1) Director is being elected.

Section 5.3. Removal. Any and all Directors may be removed by a vote of 75% ofMembers. A Directormay also be removed by the vote of the other Directorsif all of the following conditions aremet:

A. There are three Directors at the time the vote is taken.

B. The vote in favor of removal is unanimous among the two Directors not beingremoved.

C. No other Director has been removed pursuant to this provision within the preceding12 months.

D. The Director to be removed has missed at least three meetings consecutively, or 4meetings in a calender year, is 90 days or more delinquent in payment of Assessmentor is subject to disciplinary action.

E. The Director to be removed has been given 15 days written notice stating thereason(s) for possible removal.

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F. The Director to be removed has been given the opportunity to submit a writtenstatement opposing removal, and the opportunity to discuss removal at a Boardmeeting.

Section 5.4. Vacancies. Vacancies on the Board may be filled by a majority of the remaining Directors,even if less than a quorum. Each Director so appointed may hold office for the remainderof the term assumed, or until a successor is elected at a meeting ofMembers. Vacancies aredeemed to exist in case of the death, resignation or removal of a Director, or if the Membersincrease the number of Directors but do not elect the additional Directors, or any time theMembers fail to elect the total number of Directors authorized. The Members may electDirectors to fill any vacancy not filled by the Directors. A reduction of the number ofDirectors may not have the effect of removing a Director from office prior to expiration athen current term.

ARTICLE VI BoARD OF DIRECTORS MEETINGS

Section 6.1. Organizational Meeting. An organizational meeting of the Board must be held annually,either immediately following adjournment of the annual meeting of Members or at the nextregular Board meeting, for the purpose of election of officers. Notice of the organizationalmeeting is not required.

Section 6.2. Regular Board Meetings. At each organizational meeting, the Board may adopt a schedulesetting forth the time, date and place of the regular meetings of the Board to be held duringthe forthcoming year. The Board must meet at least six (6) times during each calender year.

Section 6.3. Notice of Regular Board Meetings. Notice of the time, date and place of regular Boardmeetings must be communicated to the Directors not fewer than Four (4) days prior to themeeting. If a fixed schedule for regular Board meeting is established and announced at theorganization meeting, no notice to members is required for each subsequent Board meeting,

Section 6.4. Special Board Meetings. Special meetings of the Board may be called at any time by thePresident, by the Vice-President or by any two Directors.

Section 6.5. Notice of Special Board Meetings. Notice of the time, date, place and nature of thebusiness to be discussed at a special Board meeting must be posted in the Common Area notfewer than 4 days prior to the meeting, and sent to all Directors by first-class mail not fewerthan 4 days prior to the meeting, or delivered personally or by telephone to all Directors notfewer than 72 hours prior to the meeting.

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Section 6.6. Quorum of Directors. A majority of the Directors serving on the Board constitutes aquorum, unless there are only two Directors, in which case both Directors must be presentat a Board meeting to constitute a quorum.

Section 6. 7. Adjournment. A quorum of Directors may adjourn any meeting to meet again at a stateddate, time and place, which must then be noticed in accordance with section 6.5, above,unless the meeting is adjourned to the next regular Board meeting, in which case noadditional notice is required. In the absence of a quorum, a majority of Directors present atany Board meeting may adjourn until the next regular meeting of the Board.

Section 6.8. Minute Entry of Notice, If a Director is absent from a special meeting of the Board, anentry in the minutes stating that notice was given constitutes a presumption that propernotice of the special meeting was given to the absent Director.

Section 6.9. Notice of Adjournment. Notice of any adjourned Board meeting must be given prior tothe adjournment, to the Directors present at the time of the adjournment.

Section 6.10. Place of Board Meetings. AliBoard meetings and the organizational meeting maybe heldat any place within San Diego County, California, determined by the Board.

Section 6.11. Waiver of Notice of Board Meetings. Any meeting of the Board, however called andnoticed or wherever held, is valid as though held after regular call and notice if a quorum ispresent and if each of the Directors not present signs a written waiver of notice or a consentto holding the meeting, or an approval of the minutes thereof; or does not object to themeeting in a writing sent to all Directors within 30 days after obtaining knowledge of themeeting. All waivers, consents, approvals and objections must be filed with the corporaterecords or made a part of the minutes of the meeting.

Section 6.12. Open Meetings. All Board meetings must be open to all Members, except during executivesessions. Members who are not Directors may not participate in any deliberations ordiscussion unless expressly so authorized by the vote of a majority of a quorum of the Board.

Section 6.13. Executive Sessions. The Board may, with the approval of a majority of a quorum of theDirectors adjourn a meeting and reconvene in Executive session to discuss and vote uponpersonnel matters, litigation in which the HOA is or may become involved, and contracts.The nature of all business to be considered in executive session must first be announced inopen session. Only Directors are entitled to attend executive sessions, but a quorum of theBoard may vote to include any other person.

Section 6.14. Action Without a Meeting. The Board may take action without a meeting if all Directorsconsent in writing to the actions taken, in which case an explanation of the action to be takenmust be stated in the minutes of the next regular Board meeting.

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ARTICLE VII BOARD OF DIRECTORS POWERS AN) DUTIES

Section 7.]. Powers. The Board has the power to:

A. Exercise all powers, duties and authority vested in or delegated to the HOA and notreserved to the membership by the Governing Documents;

B. Employ a management company, an independent contractor or employees to carryout their duties; and,

C. Contract and borrow money for goods and services for the Common Area.

Section 7.2. Duties. The Board has the duty to:

A. Keep a complete record of all its acts and corporate affairs, including a membershipregister, accounting and minutes of Member and Board meetings;

B. Supervise all officers, agents and employees of the HOA;

C. Determine the amount of all Assessments, and collect delinquent Assessments;

D. Maintain adequate liability and hazard insurance for the Development;

E. Maintain the Common Area;

F. At least 45 days, but not more than 60 days, prior to the beginning of each FiscalYear, prepare and distribute to Members a budget including the following:

(1) Estimated revenue and expenses on an accrual basis.

(2) The amount of the total cash reserves currently available for maintenance ofthe Common Area and contingencies.

(3) An estimate of the current replacement costs of the estimated remaininguseful life of the Common Area, and the methods of funding used to defraythe costs.

(4) A general statement setting forth the procedures used to calculate andestablish reserves to defray the costs of maintaining the Common Area.

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G. Prepare a financial statement, including a balance sheet and income and expensestatement as of the last day of each Fiscal Year reflecting the financial condition ofthe HOA. The financial statement must be prepared in accordance with generallyaccepted accounting principles, by an independent public accountant and mustinclude an external audit by an independent public accountant for each Fiscal Year.A copy of the financial statement must be distributed personally or by mail to eachMember, and upon written request to all first Mortgagees, within 120 days followingthe end of each Fiscal Year. In lieu of the distribution of the financial statement in themanner described above, however, the Board may distribute a summary of thefinancial statement with a written notice that the complete financial statement isavailable, and that copies *111 beprovided upon request and at the expense of theHOA. If a Member requests a copy of the financial statement to be mailed to theMember, the HOA shall send the financial statement by first-class United States mailat the expense of the bA. The written notice regarding the availability of thefinancial statements must be in at least 10-point, bold type, on the front page of thesummary of the statement,

H. Prepare and distribute annually, at least 45 days, but not more than 60 days prior tothe beginning of the Fiscal Year, a statement of the bOA's policies and practices forcollecting delinquent Assessments, including recording and foreclosing of liens, ifapplicable.

At least once every 3 months, review the following:

(1) A current reconciliation of the bOA's operating accounts.

(2) A current reconciliation of the bOA's reserve accounts.

(3) The current year's actual reserve revenues and expenses compared to thecurrent year's budget.

(4) The latest account statements prepared by the financial institution where thebOA has its operating and reserve accounts.

(5) An income and expense statement for the bOA's operating and reserveaccounts.

J. Make available for inspection to any prospective purchaser, Owner, firstmortgagee and the holders, insurers and guarantors of a first mortgage on anyUnit current copies of the Governing Documents and all financial books, recordsand statements of the HOA

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K. Initiate and defend legal action pertinent to the Development, and assess theMembership for fees and costs.

L. Enforce the Governing Documents.

Section 7.3. Restrictions on Powers of the Board0

A. The HOA is prohibited from taking any of the following actions, except with the voteor written consent of a majority of a quorum Members:

B. Entering into a contract on behalf of the Development for a term longer than 1 year,with the following exceptions:

(1) A management contract not to exceed a term of three years;

(2) A contract with a public utility company if the rates charged for the materialsor services are regulated by the Public Utilities Commission; provided,however, that the term of the contract must not exceed the shortest term forwhich the supplier will contract at the regulated rate;

(3) Prepaid casualty and/or liability insurance policies of up to 3 years duration,provided that the policy permits for short rate cancellation by the insured;

(4) A lease agreement for television signal reception services and equipment ofup to 5 years.

(5) Investment of reserve funds.

C. Paying compensation to Directors or officers of the HOA for services performed inthe conduct of the HOAs business, except that Directors and officers may bereimbursed for expenses incurred in carrying on the business of the HOA.

D. Hypothecating any or all of the real or personal property owned by the HOA as realsecurity for money borrowed or debts incurred, but not including pledgingAssessment payments as security for a loan.

E. Selling any real or personal property owned by the HOA.

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ARTICLE VIII OFFICERS AND THEIR DUTIES

Section 8.1. Officers and their Qualifications. The HOA must have a President and Vice Presidentwho are also Directors, and a Secretary and Treasurer who need not be Directors. AnyMember may be an Officer.

Section 8.2. Election of Officers. The election of officers must take place at the organizational meetingof the Board, either immediately following each annual meeting of the Members, or at thenext regular Board meeting. Thereafter, the Board may remove and appoint officers at anytime, including to fill any vacancy.

Section 8.3. Term. The officers serve for one year, at the pleasure of the Board.

Section 8.4. Removal and Resignation. Any officer may be removed with or without cause, by amajority of the Directors. Any officer may resign at any time by giving written notice to theBoard, the President or the Secretary. Resignations take effect upon receipt, or at the timespecified. Acceptance of a resignation is not be necessary to make it effective.

Section 8.5. Multiple Offices. The offices of Secretary and Treasurer may be held by the same person.No person may simultaneously hold more than one of any of the other offices.

Section 8.6. Duties. The duties of the officers, all subject the control of the Board of Directors, are asfollows:

A. PRESIDENT: The President is the chief executive officer, having general supervisorycontrol of the business and officers of the HOA. The President presides at allmeetings of the Members and at all meetings of the Board, is ex-officio a member ofall committees, and has the general powers and duties of management usually vestedin the office of president of a corporation. The President must sign all leases,mortgages, deeds and promissory notes,

B. VICE PRESIDENT: The Vice-President acts in the place and stead of the President,when the President is absent, unable to act or refuses to act. The Vice President mayalso be assigned other duties, by the Board.

C. SEcRETARY: The Secretary records votes and keeps minutes of all proceedings ofthe HOA, keeps the corporate seal, serves notice of meetings and keeps appropriatecurrent records showing the Members of the HOA and their addresses. TheSecretary may delegate these duties to a Professional Manager, however, subject tooversight by the Secretary.

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D. TREASURER: The Treasurer receives and deposits in appropriate bank accounts theHOA's funds, and disburses funds as directed by the Board, signs all checks andpromissory notes of the HOA, keep proper books of account, causes an annual auditof the HOA books to be made by a public accountant at the end of each Fiscal Yearand prepares an annual budget and a statement of income and expenditures to bepresented to the membership at the regular annual meeting, and delivers a copy ofeach to the Members. The Treasurers may delegate these duties to a ProfessionalManager, however, subject to oversight by the Treasurer.

ARTICLE IX BOOKS AND RECORDS

Section 9.1. Inspection. These Bylaws, the membership register, books of account and minutes ofmeetings of the Members, the Board and of committees of the Board must be kept at theoffice of the HOA or within the Development, and must be available for inspection by anyMember of the HOA, orby a duly-appointed representative, and by all first mortgagees forpurposes reasonably related to an interest as a Member or as a first Mortgagee. The rightof inspection includes the right to copy the documents described in this section at theexpense of the requesting party, except that the Board must decide, in its sole discretion,whether to permit any person to copy the membership register. If the Board resolves toprohibit copying the membership register, then the Board must offer a reasonable alternativeto the requesting party. Contracts between the HOA and any third party are not availablefor inspection by Owners, except with the prior written permission of the Board.

Section 9.2. Inspection by Directors. Every Director has the absolute right at any reasonable time toinspect all books, records and documents of the HOA and the physical properties owned orcontrolled by the HOA. The right of inspection by a Director includes the right to makeextracts and copies, at the Director's expense, except that the Board may decide, in its solediscretion, whether to permit Directors to copy the membership register. If the Boardresolves to prohibit copying the membership register, then the Board must offer a reasonablealternative to the requesting Director.

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ARTICLE X AMENDMENTS

Section 10.1. Amendments. These Bylaws may be amended only by the affirmative vote of a majority ofall Members,

Section 10.2. Required Amendments. If any law applicable to the Development exists or is enactedafter the date of adoption of these Bylaws which directly contradicts, restricts, limits oreffectively changes any provision contained herein, these Bylaws will be deemed amendedby operation of law. Any provision herein to the contrary notwithstanding, if anamendment occurs by operation of law the Board may, by unanimous written consent,cause a document describing the amendment by operation of law to be distributed to theMembers as an amendment to these Bylaws.

ARTICLE XI MEMBERSHIP RIGHTS AND PRIVILEGES

Section 11.1. Delegation of Authority. Members may not exercise any of the powers or perform any ofthe acts delegated to the HOA, except with prior written approval from the Board.

Section 11.2. Suspension of Membership Rights. The membership rights and privileges and votingrights of Members may be suspended by the Board for any infraction of the GoverningDocuments, for a period not to exceed 30 days, except that suspension may continue for anyperiod of time during which a Member's Assessment payments are delinquent. Regardlessof the period of suspension, however, no suspension may affect the rights of a Member toaccess his or her Unit, to use any Exclusive Use Area appurtenant to his or her Unit.

Section 11.3. Notice of Disciplinary Action. A decision to impose discipline may not be reached priorto 15 days written notice to the Member, stating the reason for the disciplinary action.Notice must be made personally or sent by first-class mail sent to the address to whichAssessment notices are sent. The Member subject to discipline must be given theopportunity to be heard, orally or in writing, by the Board at least 5 days prior to anydisciplinary action. A majority plus one Director must vote in favor of disciplinary action.

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ARTICLE XII GENERAL PRovIsIoNs

Section 12.1. Checks, Drafts, Etc. All checks, drafts or other orders for payment of money must besigned or endorsed by at least two (2) Directors, except in an emergency, in which case oneBoard Member and a Professional Manager.

Section 12.2. Contracts, etc., How Executed. The Board may authorize any officer or agent to enter intoany contract or execute any instrument in the name and on behalf of the HOA.

Section 12.3. Liability of Officers and Directors. The liability of the volunteer Officers, Directors andcommittee members shall be limited in accordance with California Civil Code 1365.7.Except to the extent prohibited by law, the HOA shall reimburse, indemnify,' and holdharmless each present and past director, officer and employee of this Association from andagainst all loss, cost, liability and expense which may be imposed upon or reasonablyincurred by him, including reasonable settlement payments, in connection with any claim,action, suit or proceeding, or threat made or instituted, in which he may be involvedor be made a party by reason of his being or having been a director, officer or employee ofthis Association, or by reason of any action alleged to have been taken or omitted by him insuch capacity, provided that a disinterested majority of the Board (or, if a majority of theBoard is not disinterested, then independent legal counsel) determines in good faith that suchperson was acting in good faith, (a) within what s/he reasonably believed to be the scope ofauthority or employment, and (b) for a purpose which s/he reasonably believed to be in thebest interests of the HOA.

The right of indemnification provided in this section shall inure to each person referred toin this section, and in the event of death shall extend to legal representatives. The right ofindemnification provided in this section shall not be exclusive of any other rights to whichany such person may be entitled as a matter of law, or under any agreement, vote ofDirectors or Members, or otherwise.

Section 12.4. Parliamentary Procedure. Meetings of the membership of the association shall beconducted in accordance with a recognized system of parliamentary procedure or anyparliamentary procedures the association may adopt.

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Certificate of Amendment ofBylaws

We, the undersigned, do hereby

1. That each of us is an Officer of the Candlelight Hills Homeowners Association, aCalifornia corporation; and

2. That the foregoing Bylaws constitute the Amended Bylaws of said Association, as dulyapproved by a vote of the Association's membership.

WITNESS WhEREoF I sign my name this / day of

CANDLELIGHT HThLS HOMEOWNERS ASSOCIATION

By:Signature

Print Name and Title

IN WITNEss WhEREoF I sign my name this day of j,'

4Print Name and TiUe /

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STATE OF CALIFORNIA ))SS

COUNTY OF SAN DIEGO )

On this of ,2001, before Public, personallyappeared on behalf of CANDLELIGHT HILLSHOMEOWNERS ASSOCIATION personally known to me to be (or proved to me on the basis ofsatisfactory evidence) to be the person(s) whose names h/are subscribed to the within instrument, andacknowledged to me that executed the same in authorized capacity(ies), andthat by signature(s) on the instrument the person(s) or the entity upon behalf of which theperson(s) acted, executed the instrument.

y hand official seal.NOTARY

he m and for said County d State (Seal)