Public Lands Issures

Growth Management

DECLARATION OF COVENANTS
FOR SUSTAINABLE WATER USE
AT CANYON FOREST VILLAGE

TABLE OF CONTENTS

Article One – Scope and Purpose

Article Two – Jurisdictional Statement

Article Three – Joinder and Compliance

Article Four – Concepts and Definitions

Article Five – Benefited Parties

Article Six – Standards and Procedures

Article Seven – Enforcement

Article Eight – Notice, Jurisdiction, and Joinder

Article Nine – Duration and Amendment

Article Ten – Choice of Law

Article Eleven – Annual Report

Article Twelve – Waiver and Indemnity

DECLARATION OF COVENANTS
FOR SUSTAINABLE WATER USE AT
CANYON FOREST VILLAGE

THIS DECLARATION OF COVENANTS FOR SUSTAINABLE WATER USE AT CANYON FOREST VILLAGE ("Covenant") is made this ___ day of _________, 2000, by Grand Canyon Exchange Limited Partnership, an Arizona limited partnership (hereinafter referred to as the "Declarant," including any entity which succeeds to developmental rights for, or community governance of, Canyon Forest Village).

Declarant is the owner of the property described in Exhibit "A" which is incorporated by this reference. Declarant hereby declares that all of the property described in Exhibit "A" shall be used only in strict compliance with the terms of this Covenant.

This Covenant shall run with the title to any and all real property subjected to it and shall be binding on and shall inure to the benefit of all parties having any right, title, or interest in any property subject hereto for the purpose of protecting underground water supplies of the region.

This Covenant is for the benefit of lands which the Benefited Parties (identified in Article Five) own, lease, use, advocate for the protection of, or are responsible for in the Coconino Plateau Region. These benefits, which are appurtenant to lands of the Benefited Parties, specifically are intended to include protection for Havasu Springs and other sacred groundwater resources, including springs and seeps of importance to the Havasupai Tribe. The Benefited Parties have given good and valuable consideration for the protections granted by this Covenant through, among other things, their support and suggestions for improvement of the responsible development of Canyon Forest Village and the sustainable use and conservation of water at Canyon Forest Village.

This Covenant is enforceable in accordance with its terms and, where not inconsistent therewith, Arizona law.

Article One – Scope and Purpose

1.1. Development Intent; Objective and Policy of Covenant. Canyon Forest Village is an unusually sensitive and valuable land area. Declarant intends to develop the community with improvements consistent with the special aspects of its natural setting and environmental limitations. This Covenant establishes a comprehensive plan which is designed to prohibit development and use of Groundwater at Canyon Forest Village.

The intent of this Covenant is to prevent withdrawal of, and long-term reliance on, such Groundwater that might affect the Coconino Plateau Region. Its purpose is to preserve, continue, and maintain the Groundwater resources of the Coconino Plateau Region; to conserve, protect and allocate the use of Groundwater resources; and to provide a framework for the comprehensive management and regulation of the withdrawal, use, and conservation of Groundwater at Canyon Forest Village. All Bound Parties specifically acknowledge and agree that they surrender rights to use Groundwater that they might otherwise have under Arizona law and do so for the reasons set forth in this Covenant.

This Covenant provides procedures for the reasonable and beneficial use of water while upholding policies supporting conservation and sustainable development. It is, therefore, the objective of this Covenant to create a procedure for the accomplishment of these mutually shared goals for the benefit of Declarant, the Benefited Parties, and the lands the Benefited Parties own, lease, use, advocate for the protection of, or are responsible for in the Coconino Plateau Region.

1.2. Benefits and Burdens. All Owners at Canyon Forest Village benefit from this Covenant. Tangible, particularized benefits include the increased desirability of property subject to water use control that provides for resource preservation and protects the fragile environment that comprises much of what makes Canyon Forest Village special and desirable. Each Owner, in the use and enjoyment of such Owner's property, realizes these benefits.

In addition, there are benefits which accrue because the Covenant seeks to preserve and protect scarce water resources which in turn preserves the rare quality of the environment of Canyon Forest Village and the surrounding lands that Canyon Forest Village's development may affect. All parties benefit directly and indirectly from this Covenant and from its plan for orderly, planned, and controlled development.

All Bound Parties benefit not only from the development which will be permitted in accordance with this Covenant's standards and requirements, but they also benefit from that which will not be permitted. Each Bound Party agrees that the restrictions set forth in this Covenant are reasonable and exist to preserve and protect the common good.

Unchecked use of Groundwater, which underlies Canyon Forest Village, may cause irreparable harm to the Benefited Parties, their members, and natural and cultural resources in the Coconino Plateau Region. Accordingly, this Covenant specifically empowers the Benefited Parties (as defined in Section 5.1) that may be injured from overutilization of Groundwater to prevent the Bound Parties from utilizing Groundwater in a manner inconsistent with this Covenant, and to approve and to disapprove water use in the manner set forth in this Covenant in order to achieve the goals of this Covenant and the resulting mutually enjoyed benefits.

1.3. Binding Effect; Superior Application. This Covenant is binding upon all Bound Parties and all of Canyon Forest Village. Its purpose is to preserve, continue, and maintain Groundwater resources. This Covenant is superior to all other covenants or restrictions placed upon all or any part of Canyon Forest Village. All Owners acknowledge and agree that these relationships, and the plenary power in this Covenant, benefit each Owner and all Owners collectively.

Article Two – Jurisdictional Statement

No Person shall record any declaration of covenants, conditions, and restrictions; declaration of condominium; lot split; map of dedication; subplat; or similar instrument affecting any portion of the property comprising Canyon Forest Village, that is in conflict with the terms and conditions of this Covenant or which fails to acknowledge that all decisions relating, directly or indirectly, to Groundwater use are primarily vested in this Covenant. To the extent that any such instrument creates power and authority in any other entity to deal with these issues, such instrument shall explicitly state that the exercise of such power is subordinate to this Covenant.

Any attempted recordation in violation of the preceding paragraph shall result in such instrument being void without the necessity of any action by Declarant or the Benefited Parties.

Article Three – Joinder and Compliance

By taking title to property in Canyon Forest Village, all Owners join in and accept the intent, purpose, and objective of this Covenant and agree to be bound by it in order to protect the unusually valuable Groundwater resources, the rare and unique nature of the Coconino Plateau Region, and the natural environment of which Canyon Forest Village is a part. Each Bound Party acknowledges the benefits received from the existence of this Covenant and the actions of Declarant and the Benefited Parties and accepts these benefits and the burdens that accompany them in order to preserve and to protect the Groundwater and the environment both within and outside Canyon Forest Village.

Owning property subject to this Covenant confers a number of important and significant rights, benefits, and privileges to Owners; however, owning such property also prohibits an Owner's use of Groundwater unless such use is permitted under the terms of this Covenant.

Each Owner acknowledges and agrees that this Covenant empowers Declarant and the Benefited Parties with the ability and the authority to control and regulate use of Groundwater to a degree which in many cases far surpasses the legislative and zoning authority vested in local government. Each Owner, by taking title to property subject to this Covenant, accepts this authority and agrees to comply therewith. Each Owner further agrees to and accepts the procedures and the enforcement measures provided for in this Covenant.

Article Four – Concepts and Definitions

The terms used in this Covenant shall generally be given their commonly accepted definitions unless otherwise specified. Capitalized terms shall be defined as set forth below.

4.1. "Bound Parties": Declarant, any water company or district Declarant creates, all community associations, Owners, occupants of Parcels, Builders, and all Persons who purchase, rent, or conduct a business on the real property known as Canyon Forest Village.

4.2. "Builder": Any Person who purchases one or more Parcels for the purpose of constructing improvements for later sale to consumers, or who purchases one or more Parcels of land within Canyon Forest Village for further subdivision, development, and/or resale in the ordinary course of such Person's business.

4.3. "Canyon Forest Village": The real property described in Exhibit "A."

4.4. "Coconino Plateau Region": A geographic region surrounding Canyon Forest Village; bounded on the east by U.S. Highway 89; on the north by the Colorado River; on the West by the Coconino County line as that line extends south from the Colorado River; and on the south by the Coconino County line until that line intersects Interstate 40, and from there, by Interstate 40 until it intersects U.S. Highway 89.

4.5. "Emergency": Acts of nature, God, or social unrest beyond the control of the Declarant or the Bound Parties that physically interrupt or prevent the diversion, withdrawal, or delivery of Colorado River water or other non-Groundwater sources of water (as such may become available) for or to Canyon Forest Village. An Emergency may consist of any of the following: flood; earthquake; storm; fire; adverse change in water quality sufficient to prevent use of water, after appropriate treatment, for its intended purpose; lightning; epidemic; war; riot or insurrection; sabotage; physical failure of any of the facilities that would serve or transport water from the Point of Diversion to the point of delivery; train derailment; power grid failure; and break, crack, or leak in a pipeline. In addition, an emergency may consist of a strike or labor dispute, labor or material shortage, failure to obtain necessary governmental authorizations or approvals subsequent to the construction and occupancy of Canyon Forest Village, or restraint by court order or public authority (other than an order enforcing the terms of this covenant) if the Bound Parties are unable to overcome such problem by the exercise of due diligence, regardless of the cost of such due diligence. An Emergency does not consist of the following: change in economic or market conditions that causes an increase in the cost of procuring, diverting, withdrawing, or delivering water for or to Canyon Forest Village or any other situation or condition reasonably within the control of the Declarant, the Bound Parties, or the community associations.

4.6. "Groundwater": That part of the subsurface water occurring in the zone of saturation, including underground streams, and all rocks underlying the Coconino Plateau groundwater sub-basin, as identified in Exhibit "B," including but not limited to water withdrawn from the well located in Valle with well registration number 55-543573 and well identifier code (A-26-2) 11ddc.

For the purposes of this Covenant, the term "Groundwater" does not include any water that is stored underground by Declarant and recovered within the area of impact, and from a depth below the surface no greater than 1,500 feet. Any such underground storage and recovery of water shall be conducted in a manner consistent with all applicable Arizona laws, including Chapter 3.1 of Title 45, Arizona Revised Statutes, as it may be amended, and any applicable water quality provisions of Title 49, Arizona Revised Statutes, as it may be amended.

4.7. "Owner": One or more Persons who hold the record title to any Parcel, but excluding in all cases any party holding an interest merely as security for the performance of an obligation. If a Parcel is sold under a recorded contract of sale, and the contract specifically so provides, the purchaser (rather than the fee owner) will be considered the Owner.

4.8. "Parcel": A portion of Canyon Forest Village, whether improved or unimproved, which may be independently owned and conveyed and which is intended for development, use, and occupancy for purposes as indicated on a recorded plat. The term shall refer to the land, if any, which is part of the Parcel as well as any improvements thereon. The boundaries of each Parcel shall be delineated on a recorded plat, and each Parcel shall be identified by the number or address noted on such plat. A Parcel may be intended for commercial, residential, recreational, educational, public, or related use.

In the case of those portions of Canyon Forest Village for which no plat has been recorded, each portion shall be deemed to contain the number of Parcels assigned to it by Declarant. In the absence of such assignment, unplatted land shall be deemed to contain one Parcel.

4.9. "Person": A human being, a corporation, a partnership, or any other legal entity.

4.10. "Point of Diversion": The point(s) at which Colorado River water or other non-Groundwater sources of water is diverted for delivery to Canyon Forest Village. Declarant may add or delete Points of Diversion so long as there is always at least one Point of Diversion.

4.11. "Public Records": The Office of the Recorder of Coconino County, Arizona, or such other place as may be designated as the official location for recording deeds and similar instruments affecting title to real estate in Coconino County, Arizona.

Article Five – Benefited Parties

5.1. "Benefited Parties." This Covenant intends to minimize or eliminate any impact from the development of Canyon Forest Village on the quantity, availability, and sustainability of Groundwater in the region. Because of the possibility of harm in the event any Bound Party violates any provision of this Covenant and in order to prohibit the use of Groundwater at Canyon Forest Village, unless such use is permitted under the terms of this Covenant, the following parties are known as "Benefited Parties" and are specifically given the power to enforce this Covenant to prevent and redress possible future injury:

(a) The Havasupai Tribe, acting through its Tribal Council;

(b) Grand Canyon Trust, acting through its President or Executive Director;

(c) National Parks and Conservation Association, acting through its President or Regional Director;

(d) Natural Resources Defense Council, acting through its President or Executive Director; and

(e) United States of America, acting through the National Park Service. The USDA Forest Service will advise and assist the National Park Service in the determination of impacts of groundwater withdrawal. The designated representative of the National Park Service is the Superintendent of Grand Canyon National Park; the designated representative of the USDA Forest Service is the Supervisor of the Kaibab National Forest.

5.2. Action by Benefited Parties. Except as provided in Section 7.5, four of the five Benefited Parties may act together to enforce this Covenant. Except as provided in Section 7.5, actions taken by less than four of the five Benefited Parties shall not constitute a valid action and shall have no legal force or effect to enforce this Covenant unless otherwise provided for in this Covenant.

5.3. Successor to Grand Canyon Trust, Natural Resources Defense Council, or National Parks and Conservation Association. Should the Grand Canyon Trust, Natural Resources Defense Council, or the National Parks and Conservation Association cease to exist, any entity that exercises the same or similar responsibilities as the defunct organization and is treated as a successor for the purposes of distributing assets to a tax exempt entity in accordance with the Internal Revenue Code shall be considered a successor for the purposes of this Covenant. If no successor can be identified, the number of members of Benefited Parties shall automatically be reduced for each defunct entity.

5.4. Reduction in Number of Benefited Parties. Should any Benefited Party cease to exist and have no successor entity, the number of Benefited Parties shall automatically be reduced for each defunct entity, as shall the numbers, and, where applicable, the ratios of Benefited Parties required in Sections 5.2, 6.3, 6.4, 7.2, 7.3. 7.6, 9.1, and 9.2.

Article Six – Standards and Procedures

6.1. Use of Groundwater. Recognizing the detrimental effect of unchecked use of Groundwater in the Coconino Plateau Region, use of Groundwater in Canyon Forest Village by the Bound Parties is strictly prohibited; however, in the case of an Emergency, the Bound Parties may make limited use of Groundwater as provided in this Article. The use of Groundwater for construction is prohibited. The Emergency provisions do not apply to permit Groundwater use during construction.

6.2. Use of Groundwater in Emergency. In the event of an Emergency, the Bound Parties shall be allowed to use Groundwater for the duration of the Emergency or until other methods of water supply can effectively provide sufficient water for Canyon Forest Village. Declarant shall determine what constitutes sufficient water to fulfill Canyon Forest Village's operational needs while maintaining reasonable water conservation measures in place at Canyon Forest Village as agreed to in the Standards and Guidelines for Sustainability. In determining water needs for Canyon Forest Village, Declarant may rely upon reports from licensed hydrologists, the Benefited Parties, engineers, and from state and federal agencies. Declarant agrees that it will use harvested, underground stored, and other reasonably available sources of water before use of Groundwater in an Emergency.

An Emergency shall be classified as either a low-level Emergency or a high-level Emergency as follows:

(a) Low-level Emergency. A low-level Emergency is short term, lasting 60 days or less and involving the use of no more than 50 acre-feet of Groundwater. In a low-level Emergency, Declarant may obtain an automatic declaration of Emergency, which allows Declarant to use up to 50 acre-feet of Groundwater for a period of 60 days or less. Declarant shall exercise its best efforts to end the low-level Emergency in less than 60 days. To obtain the automatic declaration, Declarant shall file a "Notice of Emergency" with each of the Benefited Parties as early as practicable but no later than 48 hours after pumping begins.

The Notice of Emergency shall state the factual basis of the Emergency in reasonable detail, the anticipated duration of the Emergency, an estimate of how much Groundwater will be needed for the duration of the Emergency, any other alternative sources of and prices for water considered and the methods by which Groundwater will be obtained and delivered to serve Canyon Forest Village during the Emergency. Declarant shall not be required to obtain the consent of any of the Benefited Parties in order to obtain the automatic declaration of Emergency, nor shall an automatic declaration of Emergency under this Section 6.2(a) be subject to an injunction under Section 7.2.

There shall not be more than one automatic declaration of Emergency in any 12-month period. Once an automatic declaration of Emergency has been implemented in any 12-month period, any subsequent low-level Emergencies within such 12-month period shall be addressed through the procedures outlined in Sections 6.3(b) and (c).

(b) High-level Emergency. This type of Emergency is any Emergency not defined as a low-level Emergency. In the case of a high-level Emergency, Declarant may obtain the right to use Groundwater pursuant to the methods outlined in Section 6.3. A high-level Emergency, however declared, may not last more than 180 days unless Declarant obtains a continuation of the right to use Groundwater pursuant to the methods outlined in Sections 6.3(b) and (c).

(c) Declarant may simultaneously pursue any and all methods outlined under Section 6.3 to procure the right to use Groundwater. Declarant shall be specifically entitled to obtain a declaration of Emergency under one or more of the methods outlined under Section 6.3 at the same time that it obtains an automatic declaration of Emergency under Section 6.2(a), and during the time that it is using Groundwater under an automatic declaration of Emergency.

6.3. Declaration of Emergency. An Emergency can be declared in any of the following ways:

(a) By procuring an automatic declaration in the case of a low-level Emergency (see Section 6.2(a));

(b) By execution of a joint declaration among Declarant and any four of the five Benefited Parties (see Section 6.4);

(c) By Declarant obtaining a judicial order from the Coconino County Superior Court determining that an Emergency exists (see Section 6.5).

6.4. Joint Declarations of Emergency. Any joint declaration under Section 6.3(b) must contain a written statement defining the Emergency and setting forth the facts justifying the Declaration of Emergency, the methods by which Groundwater will be obtained to serve Canyon Forest Village during the Emergency, and an estimate of the duration of the Emergency, if such is determinable. The joint declaration shall also contain a provision which defines the end of the Emergency and the end of Groundwater use as a water supply. If a joint declaration is executed, Declarant must provide a copy of the joint declaration to each of the Benefited Parties.

6.5. Judicial Determination of Emergency. Declarant may petition the Coconino County Superior Court or the United States District Court for the District of Arizona to obtain an order determining that an Emergency exists and shall as soon as practicable, but no later than at the time of filing the petition, notify the Benefited Parties of such petition. Declarant may petition the Court to obtain a judicial order while simultaneously pursuing other methods to procure the right to use Groundwater. Such an order shall serve as conclusive proof that an Emergency exists and that Groundwater may be used to serve Canyon Forest Village for the duration of the Emergency. Declarant shall request that the judicial order define the existing Emergency, include any limitations on the use of Groundwater that the Court finds appropriate to prevent unlimited usage, and define what triggers the end of the Emergency period. In the event Declarant obtains a judicial order of Emergency, Declarant shall give notice of such order and its terms to each of the Benefited Parties.

6.6. Duration of Emergency. To the extent not inconsistent with other provisions of this Article, an Emergency shall be deemed to continue so long as the event or events and their direct effects that give rise to the determination of an Emergency are in existence. Use of Groundwater may not continue once the event which gave rise to a determination of an Emergency has passed. In the event of an Emergency, Declarant shall use diligent efforts to employ maximum reasonable water conservation measures, minimize Groundwater use, and locate a non-Groundwater source of water to serve Canyon Forest Village.

Declarant shall realize no economic advantage from the use of Groundwater during an Emergency. Accordingly, if the price of Emergency Groundwater is less than non-Groundwater in non-Emergency operation, Declarant shall pay the difference (for so long as Groundwater use continues) to the Kaibab Institute in furtherance of its mission and purposes.

Article Seven – Enforcement

7.1. Compliance and Enforcement. The Bound Parties shall comply with this Covenant. Any breach of this Covenant as to Groundwater use would cause an irreparable injury to the Benefited Parties and to the environment of the Coconino Plateau Region at large. Therefore, only Declarant or the Benefited Parties (pursuant to Sections 5.2, 7.5, and 7.6) may take the following enforcement actions, in any combination and without limitation, to ensure strict compliance with this Covenant:

(a) file suit in Coconino County Superior Court or in the United States District Court for the District of Arizona to enjoin any use of Groundwater which is inconsistent with this Covenant's provisions;

(b) file suit in Coconino County Superior Court or in the United States District Court for the District of Arizona to receive specific performance of this Covenant's provisions;

(c) pursue alternative dispute resolution methods to create new solutions and settle disputes over this Covenant's provisions; and

(d) void any instrument recorded in violation of this Covenant (notwithstanding the fact that no action on the part of Declarant or the Benefited Parties shall be required to render such instrument void).

All remedies set forth in this Covenant shall be cumulative of any remedies available at law or in equity. The right to enforce this Covenant rests in Declarant and the Benefited Parties, and it is not intended that Owners enforce the Covenant against other Owners.

The Kaibab Institute shall fund enforcement actions pursuant to the Declaration of Covenants for Sustainable Development for Canyon Forest Village, Article Six. If the Benefited Parties prevail in any action to enforce this Covenant, they shall be entitled to recover from the other party or parties all costs, including, without limitation, attorney's fees and court costs, reasonably incurred in such action; provided, should the Kaibab Institute have paid these costs, it shall be entitled to the recovery. It is the intent of this provision to provide recovery either to the Benefited Parties or to the Kaibab Institute whichever has actually incurred the costs and not to provide for double payment to the Benefited Parties.

The Benefited Parties shall not be obligated to take any action if a majority of the Benefited Parties reasonably determines that their position is not strong enough to justify taking such action. Such a decision shall not be construed a waiver of the right of the Benefited Parties to enforce such provision at a later time under other circumstances or estop the Benefited Parties from enforcing any other covenant, restriction, or rule.

7.2. Confession of Judgment. In the event Declarant breaches this Covenant by using Groundwater without complying with this Covenant, four or more of the Benefited Parties may file a sworn affidavit to the Coconino County Superior Court or the United States District Court for the District of Arizona setting forth specific facts detailing how Declarant allegedly breached the Covenant. The sworn affidavit shall not be filed until after Declarant has been provided with (a) written notice of how Declarant has allegedly breached the Covenant, and (b) an opportunity to cure the alleged breach within 48 hours of when Declarant receives such notice. If four of the five Benefited Parties file the sworn affidavit in accordance with the terms of this Section, including providing Declarant with notice and an opportunity to cure as set forth in this Section, Declarant consents to judicial enforcement by injunction and further agrees to remedy the breach through the use of reasonable means to cease Groundwater use.

Declarant agrees to restore the injured parties to the condition existing immediately prior to the breach, if possible, which shall include reimbursement for reasonable attorney's fees expended in the attempt to gain compliance with this Covenant, including, but not limited to, the costs to prepare the affidavit, to mail by certified mail a copy of the affidavit to Declarant, and to prepare the judgment and order. Such sums shall be established in the affidavit completed and filed with the Coconino County Superior Court or the United States District Court for the District of Arizona by the Benefited Parties seeking enforcement. The provisions of this section shall not be used by the Benefited Parties to seek an injunction against a declaration of low-level Emergency under Section 6.2(a).

Declarant may contest the factual basis of the affidavit upon petition to the Court. In such case, a hearing shall be held to adjudicate the affidavit's veracity. Should Declarant contest the affidavit, Declarant shall be entitled to use Groundwater, if necessary, during the period that the validity of the affidavit is being adjudicated.

7.3. Enforcement of Declaration or Judicial Order during Emergency. If an Emergency is declared, either by an automatic declaration of Emergency pursuant to Section 6.2, a joint declaration pursuant to Section 6.3, or judicial order pursuant to Section 6.5, the Bound Parties may use Groundwater without being subject to the enforcement provisions of Sections 7.1 and 7.2. However, in the case of a joint declaration or judicial order, the Bound Parties shall be bound to the terms delineating Groundwater usage as set forth in the joint declaration or judicial order declaring the Emergency which may include, without limitation, provisions setting forth the duration of Emergency usage and/or consumption limits and requirements for procuring or using alternative water sources.

(a) If the Bound Parties do not comply with a joint declaration, the provisions contained therein may be enforced using the processes set forth in Section 7.1.

(b) If the Bound Parties do not comply with a judicial order, the order may be enforced by three of the five Benefited Parties submitting to the Coconino County Superior Court an affidavit stating that the Bound Parties are not in compliance, unless the judicial order contains provisions which otherwise allow for enforcement. Upon submission of the affidavit, the Bound Parties will be enjoined from continuing violation of the order.

7.4. Standing of Benefited Parties. Declarant hereby acknowledges that the Benefited Parties, if acting in accordance with this Covenant, have standing to sue to enforce the provisions contained herein. Declarant agrees that the Benefited Parties may suffer irreparable injury if the Bound Parties make free use of Groundwater in a manner inconsistent with the provisions of this Covenant. This injury is avoided and remedied by limiting the use of Groundwater consistent with this Covenant since the harm to the Benefited Parties is of such a nature that money does not address it.

7.5. Enforcement by the Havasupai Tribe or the United States. For the purposes of this Article, the Havasupai Tribe, having a substantial and legitimate interest in enforcement of this Covenant, acting through its Tribal Council, may independently enforce the terms of this Covenant. After providing Declarant with written notice of a breach of this Covenant as to Groundwater use and an opportunity to cure within 48 hours of when Declarant receives such notice, the Havasupai Tribe, acting through its Tribal Council, may take any of the enforcement actions allowed under Section 7.1. Declarant shall, upon receipt of notice from the Havasupai Tribe, provide reasonably timely notice to the other Benefited Parties of the action taken by the Havasupai Tribe.

For the purposes of this Article, the United States, having a substantial and legitimate interest in enforcement of this Covenant, may independently enforce the terms of this Covenant, subject to the same terms that apply to independent enforcement by the Havasupai Tribe.

The participation of Benefited Parties in this Covenant does not affect the authority of any Benefited Party to initiate actions outside the purview of this Covenant.

7.6. Enforcement by the Benefited Parties. In addition to the independent enforcement actions authorized by Section 7.5, any four of the Benefited Parties, acting together, may enforce the provisions of this Covenant. After providing Declarant with written notice of a breach of this Covenant as to Groundwater use and an opportunity to cure within 48 hours of when Declarant receives such notice, any four of the Benefited Parties, acting together, may take any of the enforcement actions allowed under Section 7.1.

7.7. Enforcement by Declarant. Declarant shall fully enforce this Covenant's provisions. In the event of a breach of Article Six by any Bound Party, Declarant agrees to take any and all actions necessary, as provided for in this Article, swiftly to stop Groundwater usage.

7.8. Ambiguity. This Covenant is to be construed in favor of Declarant and the Benefited Parties seeking to enforce this Covenant. Any ambiguity shall be resolved in favor of promoting this Covenant's intent, purpose, and objective.

7.9. Expectations. Declarant and Benefited Parties intend that enforcement of this Covenant in accordance with its terms will encourage others to use similar servitudes to preserve, continue, and maintain the Groundwater resources of the Coconino Plateau Region, and that such servitudes will promote responsible land use and serve to protect the natural and scenic value of land and the unique and fragile natural and cultural resources in the region.

7.10. Severability. If any provision of this Covenant is declared by a court of competent jurisdiction to be unenforceable, or should a Benefited Party be held not to have standing to enforce this Covenant under the procedures set forth herein, the balance of this Covenant shall remain enforceable.

Article Eight – Notice, Jurisdiction, and Joinder

8.1. Joinder of Parties. In any action arising out of, or relating to, this Covenant, including, without limitation, an action by Declarant seeking an order from the Coconino County Superior Court declaring that an Emergency exists, it shall only be necessary to name one Benefited Party as a defendant in such action. The United States and the Havasupai Tribe agree that they are not necessary and indispensable parties to any action arising out of, or relating to, this Covenant. Declarant agrees, however, that any Benefited Party may apply to intervene in any action arising out of, or relating to, this Covenant and that Declarant will not oppose such application.

8.2. Jurisdiction. The Benefited Parties and Declarant agree that all actions, disputes, and other matters in question between Declarant and one or more of the Benefited Parties arising out of, or relating to, this Covenant, or the breach thereof, shall be decided by the Coconino County Superior Court or in the United States District Court for the District of Arizona.

8.3. Notice. All notices, written statements, or other copies required to be given under this Covenant by Declarant or one or more of the Benefited Parties shall be deemed sufficiently given if delivered in person, transmitted by telecopier or facsimile machine, or dispatched in the United States mail, postage prepaid, for mailing by first class, certified, or registered mail, return receipt requested. Such notices, written statements, or other copies shall be deemed received on the earlier of: (a) actual receipt as evidenced by a time/date stamp, post mark, or other credible evidence; or (b) 48 hours after mailing.

Article Nine – Duration and Amendment

9.1. Duration. The covenants and restrictions set forth in this Covenant shall be of perpetual duration; provided, if Arizona law hereafter limits the duration of covenants running with the land, this Covenant shall automatically be extended at the expiration of such statutory period for successive periods of 20 years each, unless terminated as provided below. Notwithstanding the above, if any of this Covenant's provisions shall be subject to any rule of law limiting non-vested property interests, the interest to which the rule is applicable shall vest or terminate within 90 years of its creation.

Unless otherwise required by Arizona law, this Covenant shall not be terminated except by an instrument recorded in the Public Records and executed by all of the Benefited Parties and Declarant, so long as Declarant owns any portion of the property described in Exhibit "A."

9.2. Amendment. In addition to the rights set forth in Article Two, Declarant may amend this Covenant with the consent of four of the five Benefited Parties for so long as Declarant owns any portion of the property described in Exhibit "A."

After Declarant no longer owns the property described in Exhibit "A," this Covenant may be amended upon the affirmative vote or the written consent, or any combination thereof, of all of the Benefited Parties or by the Kaibab Institute with the consent of four of the five Benefited Parties. No amendment by the Benefited Parties may materially and adversely affect the title to any property unless the Owner thereof consents thereto in writing.

Notwithstanding the above, no amendment shall remove, revoke, or modify any right or privilege of Declarant without the written consent of Declarant or its assignee of such right or privilege.

No amendment materially adversely affecting any expressed or implied right of any Benefited Party shall be made without the written consent of such Benefited Party.

Any amendment shall become effective upon recording in the Public Records, unless a later effective date is specified in the amendment. Any party amending this Covenant shall provide written notice to Declarant, all community associations, and the Benefited Parties within a reasonable time prior to the recordation of the amendment. Any procedural challenge to an amendment must be made within six months of its recordation or such amendment shall be presumed to have been validly adopted. In no event shall a change of conditions or circumstances operate to amend any provisions of this Covenant.

Article Ten – Choice of Law

Declarant and one or more of the Benefited Parties have, in addition to applicable principles of Arizona law, relied upon the Restatement (Third) of Property (Servitudes) (Tentative Draft No. 7, 1998) (hereinafter "the Restatement of Servitudes") in the preparation and adoption of this Covenant. The parties intend that this Covenant run with the land in accordance with the Restatement of Servitudes without regard to technical objections, if any, as might exist under Arizona law from time to time.

Declarant intends by this reference to select the Restatement of Servitudes as its choice of law applicable to the interpretation, enforcement, and validity of this Covenant to the maximum extent Arizona law permits.

Article Eleven – Annual Report

Declarant and any successor that stands in the same relationship as Declarant as the supplier of water to Canyon Forest Village shall provide to the Kaibab Institute and to the Benefited Parties an annual report of water usage. The report shall be submitted within 45 days of the close of each calendar year and shall contain usage data on harvested, reclaimed, stored, and recovered water for the year just ended.

Article Twelve – Waiver and Indemnity

12.1. Waiver. Neither any Benefited Party nor any successor of any Benefited Party shall be liable to Declarant, any other Bound Party, any other Benefited Party, or any other Person for enforcing or for failing to enforce this Covenant or any part thereof. Declarant agrees not to bring any action or suit against any Benefited party or any successor to any Benefited Party to recover damages or to seek equitable relief for enforcing or failing to enforce this Covenant or any part thereof.

12.2. Indemnity. The Kaibab Institute shall indemnify each and every Benefited Party, their successors, their officers, and their agents against all damages and expenses, including attorney's fees, reasonably incurred in connection with any action, suit, or other proceeding brought against them, including any settlement thereof, in connection with this Covenant. The Kaibab Institute shall maintain liability insurance to fund this obligation.

IN WITNESS WHEREOF, the undersigned Declarant has executed this Covenant the date and year first written above.

GRAND CANYON EXCHANGE LIMITED PARTNERSHIP,

an Arizona limited partnership

By: [SEAL]

Its:

Attest: [SEAL]

Its:

STATE OF ARIZONA

COUNTY OF COCONINO

The foregoing instrument was acknowledged before me this _____ day of ___________, 20___, by _____________________ of Grand Canyon Forest Exchange Limited Partnership, an Arizona limited partnership.

Witness my hand and official seal.

______________________________

Notary Public

My Commission expires:_________

5025/WaterUseCovenant/021600

EXHIBIT "A"

Land Submitted

EXHIBIT "B"

Map of Coconino Plateau Groundwater Sub-Basin

Sierra Club, Grand Canyon Chapter, 202 E. McDowell Rd, Suite 277, Phoenix, AZ 85004, (602) 253-8633