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11.3 Payment of Insurance Proceeds. With respect to any loss to any Area of Association Responsibility covered by property insurance obtained by the Association in accordance with this Article 11, the loss shall be adjusted with the Association, and the insurance proceeds shall be payable to the Association and not to any mortgagee or beneficiary under a deed of trust. Subject to the provisions of Section 10.1, the proceeds shall be disbursed for the repair or restoration of the damage to the Area of Association Responsibility. 11.4 Repair and Replacement of Damaged or Destroyed Property. Any portion of the Areas of Association Responsibility that is damaged or destroyed shall be repaired or replaced promptly by the Association unless repair or replacement would be illegal under any state or local health or safety statute or ordinance, or Owners representing at least eighty percent (80 %) of the total authorized votes in the Association vote not to repair or replace the damaged or destroyed Improvements. The cost of repair or replacement in excess of insurance proceeds and reserves shall be paid by the Association. If all of the damaged Areas of Association Responsibility are not completely repaired or replaced, insurance proceeds attributable to the damaged Areas of Association Responsibility shall be used to restore the damaged area to a condition that is not in violation of any state or local health or safety statute or ordinance and the remainder of the proceeds shall be retained by the Association as an additional capital reserve. ARTICLE 12 DISPUTE RESOLUTION 12.1 Agreement to Resolve Certain Disputes Without Litigation. 201503252 As used in this Article 12, the term "Claim" shall mean: (a) any claim or cause of action arising out of or related in any way to the planning, design, engineering, grading, construction, or development of the Common Area or any Lot, including without limitation any claim or cause of action that the Common Areas are defective or that the Declarant or a Designated Builder or their agents, contractors, employees, subcontractors, architects, engineers, or consultants were negligent in the planning, design, engineering, grading, construction, or development thereof; or (b) any claim or cause of action against the Declarant or a Designated Builder or any employee, agent, director, member, or officer of Declarant or a Designated Builder arising out of or in any way related to the development of the Project or the management or operation of the Association, including without limitation any claim for negligence, fraud, intentional misconduct, or breach of fiduciary duty. The Association, Declarant, and Designated Builders; all Owners, Residents, and other Persons bound by this Declaration; and any Person not otherwise bound by this Declaration who agrees to submit to this Article 12 (collectively, the "Bound Parties ") agree that the dispute resolution procedures set forth in this Article 12 shall apply to all claims. Page 52 of 69