April 14, 2012

Dear Knolls Estates Owner,

The Board has been working on redrafting the Bylaws and CC&Rs into a single, readable document. Our current CC&Rs are confusing, difficult to understand and sometimes in conflict with State Laws regarding homeowner associations. Our CC&Rs have consequently been interpreted and enforced inconsistently, and this has negatively impacted our reputation as a Homeowner Association and a subdivision. The Board of Directors believes that it is in the best interest of Owners and Association Members to update and revise our current CC&Rs.

Our attorney has advised us to divide the vote on the revised CC&Rs into two parts. The first vote, which we are doing now, will be on whether to amend Section 12.01 of the CC&Rs. Currently, Section 12.01 stops us from altering Sections 3 and 10 of our CC&Rs forever. The second vote, which we expect to occur this fall, will be to accept or reject a revised version of the CC&Rs in total.

WE NEED EACH OWNER TO VOTE BY COMPLETING AND RETURNING THE ENCLOSED WRITTEN BALLOT. It is important that all Owners vote. At least 75% of the Owners must vote “Yes” to alter Section 12.01. If a 75% threshold is not reached, the plan to redraft the CC&Rs will be drastically altered and possibly abandoned. If 75% of the Owners vote “Yes” to revise Section 12.01, the redrafting will continue, and all sections of our governing documents can be altered as future needs arise, with a 75% vote by the Owners.

WE WANT YOU TO UNDERSTAND WHAT THIS VOTE IS ABOUT. We have attached an Explanation Page for you to review. If you have concerns or questions that we have not addressed, please contact any of the following Board Members:

Stan King – 541-315-2351Dave Weldon-541-643-9558

Tom Moulton – 541-459-1185Ken Quiner – 541-391-1476

Greg Henderson – 541-315-2166Harold Sheeran- 541-459-4007

Sharon Anderson – 541-459-4799

We are currently on our second draft of the revised CC&Rs. Both the first and second drafts are available to you at our website, We encourage you to take a look at these drafts, and give us your feedback.

The Board encourages you to check the “Yes” box on your ballot. Then, sign your ballot and mail it in the postage paid enclosed envelope by May 19, 2012. The Association’s Election Committee will open and tabulate the returned ballots. Results will be published in the newsletter and minutes of our meetings. Thank you for voting!

Sincerely,

The Knolls Estates Board of Directors

EXPLANATION PAGE FOR PROPOSED REVISION OF SECTION 12.01, CC&RS

Our current CC&Rs (Declaration and Bylaws) were written by the original developer of The Knolls Estates and were approved in 1994, before any structures were built or lots were sold. The exact wording of Section 12.01 of our current version of the CC&Rs is as follows:

Section 12. Miscellaneous Provisions.

12.01 Amendments: Except as provided herein, the provisions hereof may be amended by an instrument in writing, signed and acknowledged by a majority of the members of the Board of Directors of the Owners Association, certifying under penalty of perjury that the amendment set forth therein was duly adopted with written permission and consent of not less than sixty percent (60%) of the votes cast by written ballot directed to all owners. Any amendment or revision of the Consolidated Plan or additional provision shall become effective only upon the filing in the Deed Records of Douglas County, Oregon, of such certificate, setting forth in full the amendment, amendments, additional provision, or repeals approved as provided in this Section. There shall be no amendments of the Consolidated Plan which would change Sections 3 and 10.

Section 3 of the CC&Rs is “Land Classification and Uses of The Knolls Estates” and Section 10 is “The Knolls Estates Association”. Subsection 3.05, “Use Restrictions”, has been a topic of discussion and the source of considerable conflict since the inception of our Association. Owners have expressed concerns about restrictions that are confusing, not relevant, or not meaningful. Subsection 3.05 covers issues like home size and height, landscaping, fencing, parking, and home business restrictions.Section 12.01 stops us, as Owners, fromever making our own decisions about what use restrictions we want as a community and what structures we should build or should not build in order to protect and enhance the values of everyone’s properties.

The Board recommends that Section 12.01 be replaced with the following:

12.01 Amendment by Members and Recordation of Amendments: These CC&Rs may be amended only by affirmative vote or agreement of the Owners representing seventy-five percent (75%) or more of the total votes in the Association. Amendments to these CC&Rs must be executed and certified by an officer of the Association designated for that purpose, as applicable. In the absence of designation, the president of the Association may sign on behalf of the Association. Any amendment must be recorded in the deed records of Douglas County.

Note that the proposed revision increases the required vote to amend from 60% of the Owners to 75% of the Owners. The increased percentage is driven by a state law requiring a 75% vote to amend a Declaration. In addition, this revision would allow any and all sections of the CC&Rs to be revised in the future if approved by a vote of 75% of the Owners. No section would be considered to be permanent and unchangeable for all of time.

The Board believes that the current Owners, have a more complete understanding than the original Developer of Knolls Estates as to what constitutes an aesthetically pleasing community and should have the power to make necessary revisions in any section of their governing documents. The Board recommends that you vote “Yes” on this proposed revision of Section 12.01.

BALLOT REGARDING PROPOSED REVISION OF SECTION 12.01, CC&RS

Lot(s) #:______Total # of Votes: ______

Owner(s): ______

STEP 1 - VOTE: Please indicate your vote by placing a checkmark or “X” in one of the following two boxes. If you own multiple lots, your vote will be used as your choice for all of the lots you own, unless you indicate on this ballot that you are voting both “Yes” and “No” and providing us with directions as to how to allocate your votes per the total number of lots you own.

YES: I vote to revise Section 12.01 of the document entitled Bylaws and Declaration of Covenants and Restrictions, A Consolidated Plan of The Knolls Estates Planned Unit Development, Owners’ Association, Inc., recorded in the State of Oregon, County of Douglas, by deleting Section 12.01 as it currently exists and replacing it with the following:

12.01 Amendment by Members and Recordation of Amendments: These CC&Rs

may be amended only by affirmative vote or agreement of the Owners representing seventy-five percent (75%) or more of the total votes in the Association. Amendments to these CC&Rs must be executed and certified by an officer of the Association designated for that purpose, as applicable. In the absence of designation, the president of the Association may sign on behalf of the Association. Any amendment must be recorded in the deed records of Douglas County.

NO. I vote to retain Section 12.01 of the document entitled Bylaws and Declaration of Covenants and Restrictions, A Consolidated Plan of The Knolls Estates Planned Unit Development, Owners’ Association, Inc., recorded in the State of Oregon, County of Douglas.

STEP 2 - SIGN AND DATE YOUR BALLOT: Only one Owner is required to sign the ballot.

Owner(s) Signature:______

Date Signed:______

STEP 3 - RETURN YOUR BALLOT: Place your completed ballot in the enclosed, postage paid envelope and drop it in the mail. We want all votes returned by May 19, 2012.

Thank you for voting!