Castle Pines North Homeowners Association Number One

Election Review - Page 1-3

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This is the final report from the Election Review Committee (“ERC”) appointed by the Castle Pines North Homeowner’s Association No. 1 to investigate and make findings and recommendations concerning the events surrounding the annual election of board members in September of 1998. The ERC is comprised of Art Suro, Robert Kaser and Robert Cosgrove.

In conducting the investigation the ERC solicited input from all individuals involved with the election and ensuing events, together with Association members at large. After receipt of this information, which was used for purposes of framing the issues for consideration, the ERC conducted interviews with each and every individual whom it deemed possessed information relevant to the issues under consideration. In all instances but three, the interviews were conducted in the presence of all three members of the ERC. In addition to conducting the interviews, the ERC assimilated and reviewed all documents which it believed contained information relevant to the matters under investigation. Lists of the individuals interviewed and the documents reviewed or considered are attached hereto as Exhibits A and B, respectively.

The results of the investigation are set forth in this report, consisting of the ERC’s findings, conclusions and recommendations. The findings, conclusions and recommendations constitute the unanimous consensus of the members of the ERC.

FINDINGS

The annual election of the Board of Directors of the Association was scheduled for September 23, 1998, to fill two positions on the Association’s Board. On August 5, 1998, the Association’s newsletter was mailed to all members announcing the upcoming election. The newsletter announced the existence of a nominating committee formed pursuant to the Association bylaws. The nominating committee consisted of Jim Butler, Harold Sullivan and Sue York. Sullivan was originally designated as chairman of the committee. The newsletter stated that anyone interested in running as a candidate should submit their names to the nominating committee no later than August 14, 1998. The newsletter also stated that, pursuant to the Association bylaws, nominations would also be accepted from the floor during the annual HOA meeting.

The nominating committee received two applications from individuals interested in being considered as a candidate. These were Ron Valiga and Rich Barrow. Both men were incumbent board members, Valiga also being the incumbent president of the Association. These individuals were the only people who indicated a desire to serve on the Board. The nominating committee received no other applications from any other individuals despite the solicitation contained in the newsletter and solicitation by personal contact with other individuals. As a result thereof, these two names were submitted by the nominating committee to Merton Young on August 31, 1998 to be placed on the ballots for the upcoming election. Formal notice of the election with accompanying proxy and ballot containing the names of Valiga and Barrow, together with a space for a write-in candidate, were mailed by Young to all members of the Association by September 8, 1998. Additionally, on September 16, 1998, at the regularly scheduled monthly Board meeting, Valiga and Barrow were formally announced as the only two candidates for the vacant Board positions.

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Yannick LeRolland is a member of the Association, as well as an employee of the Writer Corporation. He was active in the Association as a volunteer involved with the tennis courts and activity pad up keep. LeRolland was unhappy with the workings of and the manner in which the Association was run. Thus, in early 1998 he approached his boss, Dan Nickless, Chief Operating Officer of Writer, and asked if Writer would support him if he decided to run for a Board position. LeRolland did not share his idea about potentially running for the Board with any other member of the Association or anyone other than Nickless at that time. LeRolland took no further action with respect to his thought about running for the Board and instead began painting his house, upon which he focused all his time and energies. LeRolland spent the entire summer of 1998 painting his house. The project was delayed in part by the ACC not responding to his request to change colors.

LeRolland’s dissatisfaction with the way the Association was run continued. However, he decided not to submit his name as a candidate for the September 1998 election. He did not believe that the Board would be open or receptive to new members and also did not believe that the nominating committee would be fair and actually submit his name as a candidate.

LeRolland later received a letter from the ACC chastising him for delays in completing the painting of his house. Receipt of this letter again caused LeRolland to seriously consider running for a position on the Board. Therefore, in late August of 1998 he again approached Nickless to confirm that he could have the Writer votes if he decided to run as a write-in candidate. Nickless, believing that LeRolland did not have any chance at all of winning an election as a write-in candidate but also seeking to support a valued employee, agreed that if LeRolland ran, he could have Writer’s votes. Again, LeRolland did not mention his idea about running to any other member of the Association at this time.

Approximately one week before the election, LeRolland and Valiga had a chance meeting in Writer’s offices. Their discussion involved the letter LeRolland had received from the ACC regarding the painting of his house. Valiga informed him that he was not aware of the fact that LeRolland individually had received a letter, but advised him that he would get him extra time to finish his project if he desired. However, for various reasons, LeRolland was not happy with the manner in which this matter had been handled and this chance encounter, one week before the election, was what finally prompted him to make his decision to run for the Board.

After the encounter with Valiga, LeRolland went home and had a discussion with a neighbor of his, Mark Shively. LeRolland told Shively that he was considering running for the Board and that he had Writer’s votes if he decided to do so. He asked Shively how many votes he thought it would take for him to win as a write-in candidate. Shively told him he thought about 15% of the Association. LeRolland stated that he had to talk it over with his wife and would get back to Shively if he decided to do something. This was the first time, approximately one week before the election, that LeRolland told any other member of the Association that he was thinking of running.

LeRolland then left for Boston, Massachusetts, to attend a training program on the weekend of September 19, 1998. He had no further communications with anyone about the election until late

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Monday morning, September 21, 1998, when he called Shively from Boston. In the phone call, he advised Shively that he had decided to run for the Board. He also advised him that he had just found out that his stepfather had passed away and, instead of being able to return for the election, he had to travel to Paris, France, to tend to the funeral arrangements. He thus requested that Shively try to get people to vote for him and also arrange to have the Writer proxy delivered to the election. Shively agreed to do so. Shively thereupon took a copy of the official ballot and filled LeRolland’s name in as a write-in candidate and had 100 copies of it made. He then contacted Steve Tkach, told him LeRolland was going to run and asked if he would solicit votes on his behalf. Tkach agreed to do so. This was the first notice Tkach received of LeRolland’s candidacy, two days before the election. Later that day, Shively also contacted Charles Schaap and advised him that LeRolland was going to run. He also asked if Schaap would solicit votes for LeRolland. Schaap agreed to vote for LeRolland but declined to solicit votes on his behalf because he did not know him. This was the first point in time that Schaap knew LeRolland was running. Next, Shively sent an E-mail to Dale Mullen, who was in the Philippines, and advised him LeRolland was running and asked if he would vote for him. By return E-mail, Mullen stated that he would but that he had already turned in a ballot. Thereafter, Shively E-mailed or faxed him a new ballot to supersede the first ballot. Mullen signed it in the Philippines and E-mailed it back in time for the election. Monday, the 21st, was the first time Mullen ever knew that LeRolland was going to run for the Board. Finally, Shively also contacted John Jackson and Mike Centola, neighbors of his, and asked if they would solicit votes on LeRolland’s behalf. They agreed to do so.

Between the afternoon of Monday, the 21st, and the night of the election on Wednesday, Tkach, Shively, Centola and Jackson solicited votes for LeRolland. Tkach acknowledges that on Monday he did not approach anyone that was friendly with the Board for fear that the Board would find out they were soliciting votes. Aside from that, there was no formal strategy of solicitation other than to inform people who LeRolland was and their belief that they thought the Board needed new blood, and to ask them to vote. One member of the Association stated that they signed one of the proxies after being told the proxy was needed to establish a quorum at the annual meeting. However, all individuals who actually solicited the proxies denied making any such statement.

On the morning of September 23, 1998, the day of the election, Valiga called Darwin Horan, an employee of Writer, and left him a voice message reminding him to send over Writer’s proxy for that night’s election. Horan was the Writer employee that had previously cast Writer’s votes in the prior Association elections. Valiga also left a voice message with Nickless reminding Nickless to make sure to send over Writer’s votes for the election. Valiga never actually spoke to either of these individuals during the course of that day or night. On the morning of the 23rd, Linda Derback, the administrative assistant for Horan and Nickless, faxed to Young a proxy and ballot that had been filled out by Horan. The Horan ballot cast all of Writer’s votes for the two incumbents running, specifically, Valiga and Barrow. Shortly thereafter, Wendy LeRolland called Nickless and reminded him that she needed Writer’s proxy for her husband. Nickless advised her that he would complete one and leave it at the front desk to be picked up. Nickless then took a proxy and appointed Wendy LeRolland or Shively as Writer’s proxy to cast the votes, Then, being unsure of exactly how many votes Writer had, but intending to cast all of them for LeRolland, he filled in LeRolland’s name in