DECLARATION

This DECLARATION OF COVENANTS, CONDITIONS, RESTRICTIONS, EASEMENTS, CHARGES AND LIENS is made and effective as of the ______________ day of, 2000, by RAYZOR RANCH, L.P., a Texas limited partnership (sometimes referred to herein as the "Declarant"):

PREAMBLE

The Declarant is the owner and developer of certain real property to be hereafter commonly known and described as the Lantana Addition which is a master planned community consisting of an approximately 1,522 acre tract of land (the "Addition").

The Declarant desires to take advantage of the unique features of the Addition, including property located within the Development Tract and Common Properties, as hereinafter defined, and proposes to establish and implement plans for residential living, recreation, aesthetic and quality-of-life considerations. The purposes of this Declaration are to (a) protect the Declarant and the Owners, as hereinafter defined, against the improper development and use of Lots, as hereinafter defined, within the Addition; (b) assure compatibility of design of improvements within the Development Tract and Common Properties and the balance of the Addition; (c) secure and preserve sufficient setbacks and space between buildings so as to create an aesthetically pleasing environment; (d) provide for landscaping and the maintenance thereof and of the Common Properties, as hereinafter defined; and (e) in general to encourage construction of attractive, high quality, permanent improvements that will promote the general welfare of the Declarant and the Owners. In view of the Declarant's long-range plans, the Declarant desires to impose these restrictions on the Development Tract and Common Properties now and yet retain reasonable flexibility to respond to changing or unforeseen circumstances so as to guide, control and maintain the first-class quality and distinction of the Addition. The restrictive covenants hereinbelow are designed to also preserve the best interests of the Declarant and of the Owners of Lots, as hereinafter defined, located within the Addition after completion of all development and construction therein.

The Lantana Community Association, Inc. shall be chartered as a non-profit Texas corporation to assist in the ownership, management, use and care of the various properties located within the Addition, including the Common Properties, and to assist in the administration and enforcement of the covenants, conditions, restrictions, easements, charges and liens set forth with this Declaration.

DECLARATION

The Declarant hereby declares that the Development Tract and Common Properties and such additions thereto as may hereafter be made pursuant to Article II hereof, are and shall be owned, held, mortgaged, transferred, sold, conveyed and occupied subject to the covenants, conditions restrictions, easements, charges and liens hereinafter set forth.

ARTICLE I

CONCEPTS AND DEFINITIONS

The following words, when used in this Declaration or in any amended or supplementary Declaration (unless the context shall otherwise clearly indicate or prohibit), shall have the following respective concepts and meanings:

"Addition" shall mean and refer to the tracts or parcels of real property more particularly described on Exhibit "A" attached hereto and made a part hereof for all purposes, together with all and singular all easements in or upon or benefiting the Addition and all other rights and appurtenances belonging or in anywise pertaining thereto.

"Amended Declaration" shall mean and refer to each and every instrument recorded in the Records which amends, supplements, modifies, clarifies or restates some or all of the terms and provisions of this Declaration.

"Annual Assessment" shall have the meaning specified in Section 5.3 below.

"Articles" shall mean and refer to the Articles of Incorporation of the Association, as the same may be from time to time duly amended or modified.

"ARC" or "ARCS" shall mean one or more of the Architectural Review Committees which may be from time to time appointed or selected pursuant to Article VIII hereof.

"Assessment" or "Assessments" shall mean and refer individually or collectively to the Annual Assessments, the Special Group Assessments and the Individual Assessments, where the context requires.

"Association" shall mean and refer to the LANTANA COMMUNITY ASSOCIATION, INC., a non-profit Texas corporation which shall have the power, duty and responsibility of maintaining and administering certain portions of the Addition and all of the Common Properties, administering and enforcing the Covenants and otherwise maintaining and enhancing the quality of life within the Development Tract, Common Properties and/or the Subdivision.

"Board" shall mean and refer to the Board of Directors of the Association.

"Bylaws" shall mean and refer to the Bylaws of the Association, as shall be adopted and amended from time to time in accordance with the provisions of this Declaration and the Texas Non-Profit Corporation Act or other applicable laws promulgated by the State of Texas.

"Charges" shall mean and refer to charges imposed against an Owner delinquent in the payment of his/her/its Assessments, including, but not limited to the "fines" as described in Section 6.2(d) hereof, together with the charges and fees contemplated by Section 4.7 hereof.

"Class A Member" shall mean each Owner of a Residential Lot and each Resident (other than an Owner) of a Residential Lot.

"Class B Member" shall mean the Declarant.

"Common Properties" shall mean and refer to any and all areas of land within the Addition which are known, described or designated as green areas, common areas, any controlled access areas and monitoring devices, flood gates, street lighting and signs (and all elements thereof), parks, Creek and Greenbelt Easement Areas (hereinafter defined), entryways, monuments, gates and gate houses, recreational easements, lakes, ponds, dams, perimeter fences and column, off-site monuments and directional signs, landscape easements, greenbelt, swimming pool(s), tennis courts(s), open spaces, paths and trails, and the like, including, without limitation, those shown on any Plat, as well as those not shown on a Plat but which are intended for or devoted to the common use and enjoyment of the Members of the Association, together with any and all improvements that are now, or that may hereafter be constructed thereon. The "Common Properties" shall also include any and all public right-of-way lands for which the DCDD has required that the Declarant and/or the Association expend private, non-reimbursable time and monies to care for and maintain, such as, but not limited to, street medians, streetscape, hike and bike trails and park areas. "Covenants" shall mean and refer to all covenants, conditions, restrictions, easements, charges and liens set forth within this Declaration or any Amended Declaration.

"DCDD" shall mean the Denton County Development District No. 4, a political subdivision of the State of Texas.

"Declarant" shall mean and refer to RAYZOR RANCH, L.P., a Texas limited partnership and any or all successor(s) and assign(s) of RAYZOR RANCH, L.P. with respect to the voluntary disposition of all (or substantially all) of the right, title and interest of RAYZOR RANCH, L.P. in and to the Addition; provided however, no Person merely purchasing one or more Lots from RAYZOR RANCH, L.P. or its^-successor or assigns in the ordinary course of business shall be considered a "Declarant".

"Declaration" shall mean and refer to this particular instrument entitled "DECLARATION. OF COVENANTS, CONDITIONS, RESTRICTIONS, EASEMENTS, CHARGES AND LIENS ON AND FOR LANTANA ADDITION, together with any and all amendments or supplements hereto.

"Deed" shall mean and refer to any deed, assignment, testamentary bequest, muniment of title or other instrument, or intestate inheritance and succession, conveying or transferring fee simple tide or a leasehold interest or another legally recognized estate in a Lot.

"Development Period" shall mean a period commencing on the date of the recording of this Declaration in the Records and continuing thereafter until and ending on the earlier of (a) the date of the sale by the Declarant of the last Lot owned by Declarant in the Development Tract, or (b) the date the Declarant voluntarily terminates its Class B Member status by recording a written notice of such termination in the Records.

"Development Tract" shall mean and refer to those portions of the Addition (plus any additional real property added to the scheme of this Declaration pursuant to Section 2.2(a) hereof) which are or hereafter will be (i) platted into Lots and become a part of a Subdivision pursuant to a Plat filed and recorded in the Records, and (ii) assessed by any one or more of the Taxing Authorities, and (c) are not intended to constitute any portion of the Common Properties. As of the date hereof, the Development Tract consists of those portions of the Addition described on Exhibit B attached hereto and made a part hereof for all purposes.

"Director" shall mean and refer to any duly elected member of the Board.

"Dwelling Unit" shall mean and refer to any building or portion of a building situated upon any Residential Lot which is designed and intended for Residential Use.

"Easement Areas" shall mean and refer to those areas which may be covered by an easement specified in Article X below.

"Eligible Insurers" is defined in Article XII below.

"Eligible Mortgagees" is defined in Article XII below.

"Exempt Property" shall mean and refer to the following portions of the Addition: (a) all land and Improvements owned by the United States of America, the State of Texas, DCDD or any instrumentality, political subdivision or agency of any such governmental entity acting in a governmental (rather than a proprietary) capacity; (b) all land and Improvements owned (including legal and beneficial ownership, whether now or in the future) by the Association or constituting a portion of the Common Properties; (c) all land and Improvements which are not only exempt from the payment of ad valorem real property taxes by Taxing Authorities, but also are exempt from the payment of any assessments hereunder as expressly determined by written resolution of the Declarant and/or the Board; (d) such other land(s) and/or Improvement(s) and/or Lot(s) which are specifically exempted from the payment of Annual Assessments in accordance with a special resolution of the Board; and (e) any portion of the Development Tract that is owned by the Declarant, including any portion of the Common Properties.

"Fiscal Year" shall mean each twelve (12) month period commencing on January 1 and ending on the following December 31, unless the Board shall otherwise select an alternative twelve month period.

"Front Yard" shall mean and refer to (a) as to interior Lots, the front yard area of the residence between the street (on the one hand) and the dwelling exterior and fence (on the other hand) and (b) as to corner Lots, the front yard area of the residence between the street (on the one hand) and the dwelling exterior and fence (on the other hand), and that potion of the side yard area exposed to the street, between the street (on the one hand) and the dwelling exterior and fence (on the other hand), but excluding patios, courtyards and fenced areas, unless otherwise defined by the Board.

"Front Yard Maintenance" shall mean and refer to normal and routine maintenance of Front Yards, as determined from time to time by the Board, including but not limited to (a) mowing and edging Front Yards, (b) trimming Front Yards with lawn maintenance equipment, and (c) fertilizing, trimming. shrubbery, turning flower beds and applying insect control chemicals to Front Yards. The term "Front Yard Maintenance" shall not, in any event, include the trimming of trees, planting of shrubbery, grass, trees or other landscaping, installing or maintaining irrigation systems, or any other maintenance or service determined by the Board not to be within normal and routine maintenance of Front Yards.

"Golf Course" shall mean the Lantana Golf Club.

"Improvement" shall mean any physical change to raw land or to an existing Structure which alters the physical appearance, characteristics or properties of the land or Structure, including, but not limited to, the new construction of a Structure or Structures and related amenities, adding or removing square footage area or space to or from a Structure, painting or repainting a Structure, or in any way altering the size, shape or physical appearance of any Structure or any building or other improvement, temporary or permanent, located on any Lot.

"Individual Assessments" shall mean and refer to the assessments that may be from time to time imposed upon an individual Owner in accordance with the provisions of Section 5.1 hereof.

"Institutional Mortgage" shall mean and refer to any bona-fide mortgage, lien or security interest held by a bank, trust company, insurance company, savings and loan association or other recognized lending institution, or by an institutional or governmental purchaser of mortgage loans in the secondary market, such as Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC"), The Federal Housing Administration ("FHA"), The Veterans Administration ("VA"), or their successors, or guaranteed or subsidized by the FHA and/or VA.

"Lot" or "Lots" shall mean and refer to a Residential Lot or any other type of lot reflected on any Plat currently or hereafter filed, or all of the Residential Lots and such other lots.

"Managing Agent" shall mean and refer to any Person who has been designated or engaged by the Board to manage the affairs of the Association, to the extent the Board elects to make such designation.

"Maximum Rate" shall mean and refer to the lesser of (a) the maximum rate of interest permitted to be charged from time to time for the use or forbearance of money by applicable law, or (b) eighteen per cent (18%) per annum.

"Member" shall mean and refer to each Resident who is in good standing with the Association and who has filed a proper statement of residency with the Association and who has complied with all directives and requirements of the Association. Each and every Owner shall and must take such affirmative steps as are necessary to become and remain a Member of, and in good standing in, the Association. Each and every Resident (who is not otherwise an Owner) may, but is not required to, be a Member of the Association. Membership shall consist of two (2) classes, the Class A Members and the Class B Member.

"Owner" shall mean and refer to the holder(s) of record title to the fee simple interest of any Lot whether or not such holder(s) actually reside(s) on any part of the Lot.

"Payment and Performance Lien" shall mean and refer to the lien described within Sections 5.8 and 5.9 below.

"Person" shall mean an individual, partnership, joint venture, corporation, limited liability company, joint stock company, trust (including a business trust), unincorporated association or other entity, or a government or any political subdivision or agency thereof.

"Plat" or "Plats" shall mean and refer to the final subdivision plat or plats of the Subdivisions, which have been approved by Denton County and, if required, DCDD and filed and recorded in the Records.

"Records" shall mean the Public Real Estate Records of Denton County, Texas, including the Map and Plat Records of Denton County, Texas.

"Resident" shall mean and refer to:

(a) each Owner of the fee simple title to any Residential Lot within the Development Tract; and

(b) each Person residing within any part of the Development Tract who is a bona-fide lessee pursuant to a legally cognizable lease agreement with an Owner; and

"Residential Design Guidelines" shall mean and refer to those particular standards, restrictions, guidelines, recommendations and specifications, described herein or from time to time promulgated by the ARC, applicable to most of the aspects of construction, placement, location, alteration, maintenance and design of any improvements to any Residential Lot within a Subdivision, and. all amendments, bulletins, modifications, supplements and interpretations thereof.

"Residential Lot" shall mean and refer to each separately identifiable portion of the Addition which is (a) platted into individual Lots and becomes a part of a Subdivision pursuant to a Plat filed and recorded in the Records, (b) assessed by any one or more of the Taxing Authorities, (c) to be used solely for a Residential Use and (d) not intended to constitute any portion of the Common Properties.

"Residential Use" mean and refer to any use and/or occupancy of any Residential Lot as a residence by a single person, a couple, a family or a permitted family size group of persons.

"Special Group Assessments" shall mean and refer to assessments imposed upon the Owners for capital improvements or unusual or emergency matters, in accordance with the provisions of Section 5.1 hereof.

"Street Reserve Funds" shall mean and refer to a street reserve fund to be established and maintained by the Association with a portion of the Assessments collected by the Association, in respect to the Streets and Alleys to be located within the Common Properties, which reserves shall be created and maintained for the purpose of paying future extraordinary maintenance costs of the Streets and Alleys located within the applicable portion of the Common Properties.

"Streets (and Alleys)" shall mean the right-of-way of all private streets, alleys, sidewalks and other rights-of-way situated within, and shown on the Plats, which have not been dedicated to, and are not owned by, the DCDD, together with all pavement, curbs, street lights, signs and related facilities thereon.

"Structure" shall mean and refer to: (a) any thing or device, other than trees, shrubbery (less than two (2) feet high if in the form of a hedge in respect to a Residential Lot) and landscaping (the placement of which upon any Residential Lot shall not adversely affect the appearance of such Residential Lot), including but not limited, to any building, Improvement, parking facility or area, garage, porch, shed, greenhouse or bathhouse, cabana, coop or cage, covered or uncovered patio, swimming pool, play apparatus, fence, curbing, paving, wall or hedge (more than two (2) feet high if in the form of a hedge in respect to a Residential Lot), signboard or other temporary or permanent living quarters or any temporary or permanent Improvement to any Lot; (b) any excavation, fill, ditch, diversion dam or other thing or device which affects or alters the flow of any waters in any natural or artificial stream, wash or drainage channel from, upon or across any Lot; (c) with respect to Residential Lots, any enclosure or receptacle for the concealment, collection and/or disposition of refuse; and (d) any change in the grade of any Lot which involves a change of more than three (3) inches from the existing grade initially approved by the ARC.

"Subdivision" or "Subdivisions" shall mean and refer to the subdivision or subdivisions of all or a portion of the Addition plus any additional real property added to the scheme of this Declaration pursuant to Section 2.2(a) hereof, in accordance with the Plats now or hereafter filed of record in the Records, as well as any and all revisions, modifications, corrections or clarifications thereto.

"Taxing Authorities" shall mean and refer to Denton County, Denton Independent School District, the DCDD, and the State of Texas and any and all other governmental entities or agencies which have, or may in the future have, the power and authority to impose and collect ad valorem taxes on real property estates, in accordance with the Texas Constitution and applicable statutes and codes.

"Tree Preservation Guidelines" shall mean and refer to those particular standards, restrictions, guidelines, recommendations and specifications, described herein or from time to time promulgated by the Association or the ARC, applicable to the placement, location, trimming, removal, and maintenance of any trees within a Subdivision, and all amendments, bulletins, modifications, supplements and interpretations thereof.

“Trustee" shall mean and refer to Republic Property Group, Ltd., a Texas limited partnership, and its successors and assigns.

ARTICLE II

PROPERTY SUBJECT TO THIS DECLARATION

Section 2.1. Development Tract and Common Properties. The real property which is, and shall be, held, transferred, sold, conveyed and occupied subject to this Declaration shall be the real property located within the Development Tract and the Common Properties.

Section 2.2. Additions. The Development Tract and the Common Properties are within the perimeters of the Addition. Additional land(s) within or outside the Addition may become subject to this Declaration, or the general scheme envisioned by this Declaration, as follows:

(a) During the Development Period, the Declarant may (without the joinder and consent of any Person) add or annex additional real property to the scheme of this Declaration within the term of this Declaration by filing of record an appropriate amendment to this Declaration, or enabling declaration, generally similar to this Declaration, which may extend the scheme of the Covenants to such property; provided further however, such other declaration(s) may contain such complementary additions and modifications of these Covenants as may be necessary to reflect the different character, if any, of the added properties and as are not inconsistent with the concept and purpose of this Declaration.

(b) Any additions made pursuant to this Section 2.2, when made, shall automatically extend the jurisdiction, functions, duties and membership of the Association to the properties added and correspondingly subject the properties added to the covenants of the enabling declaration.

ARTICLE III

MEMBERSHIP; VOTING

RIGHTS IN THE ASSOCIATION

Section 3.1. Membership.

(a) Each and every Owner of each and every Lot within the Development Tract or the Subdivision shall automatically be, and must at all times remain, a Member of the Association in good standing. Each and every Resident (who is not otherwise an Owner) may, but is not required to, be a non-voting Member of the Association. Membership of an Owner in the Association shall be appurtenant to and may not be separated from the interest of such Owner in and to any portion of a Lot. Ownership of any Lot shall be the sole qualification for being a Member; however a Member's privileges to use the Common Properties may be regulated or suspended as provided in this Declaration, the Bylaws or the rules and regulations promulgated by the Board. Any Person who holds an interest in and to all or any part of a Lot merely as security for the performance of an obligation shall not be a Member.

(b) During the Development Period, the Association shall have two (2) classes of Members:

Class A: The Class A Members, shall include:

(i) all Owners (other than the Declarant) of Residential Lots; and

(ii) all Residents (not otherwise Owners) who have properly and timely fulfilled all registration and related requirements prescribed by the Association.

Class B: The Class B Member shall be the Declarant.

(c) Upon conclusion of the Development Period, the Class B membership shall terminate, and thereafter the Association shall have one (1) class of Members, the Class A Members.

Section 3.2. Transfers. The membership of an Owner may not be severed from or in any way transferred, pledged, mortgaged or alienated except upon the sale or assignment of such Owner's interest in all or any part of such Owner's Lot and then only to the purchaser or assignee as the new Owner of the Lot in question. Each Owner shall notify the Association of any transfer or assignment of the fee title to his/her/its Lot. Such transfer shall automatically operate to transfer the membership to the new Owner thereof.

Section 3.3. Voting Rights.

(a) During the Development Period the following classes of Members shall constitute the voting Members of the Association:

Class B: The Class B Member shall be entitled to cast one (1) vote for each Residential Lot located with the Subdivision.

During the Development Period all votes relating to the ownership of a Residential Lot shall be cast by the Declarant to the exclusion of the Class A Members.

(b) Following the expiration of the Development Period the following classes of Members shall constitute the voting Members of the Association:

Class A: The Owner(s) of each Residential Lot in good standing shall be entitled to one (1) vote per Residential Lot. Where more than one (1) Owner owns and holds a record fee interest in a Residential Lot, such Owner(s) may divide and cast portions of the one (1) vote as they decide, but in no event shall any one (1) Lot yield more than one (1) vote.

(c) Any Owner or Member shall not be in "good standing" if such Person is: (i) in violation of any portion of these Covenants, the Residential Design Guidelines applicable to his/her/its Lot, the Tree Preservation Guidelines or any rule or regulation promulgated by the Board; or (ii) delinquent in the full, complete and timely payment of. any Assessments or Charge which is levied, payable or collectible pursuant to the provisions of these Covenants, the Bylaws or any rule or regulation promulgated by the Board. The voting rights of any Member who is not in good standing may be suspended by the Board for any period during which such Member is not in good standing.

(d) The Board may make such rules and regulations, consistent with the terms of this Declaration and the Bylaws, as it deems advisable, for (i) any meeting of Members; (ii) proof of membership in the Association; (iii) the status of good standing; (iv) evidence of right to vote; (v) the appointment and duties of examiners and inspectors of votes; (vi) the procedures for actual voting in person or by proxy; (vii) registration of Members for voting purposes; and (viii) such other matters concerning the conduct of meetings and voting as the Board shall deem fit.

Section 3.4. Notice; Voting Procedures: Meetings. Quorum, notice and voting requirements of and pertaining to the Association may be set forth within the Articles and Bylaws, as either or both may be amended from time to time, and shall be in accordance with permitted Texas law. During the Development Period, from time to time, as and when determined necessary by the Board, the Board may call and schedule a meeting of the Members. From and after the expiration of the Development Period, the Members shall meet annually to deal with and vote on matters relating to the business of the Association, as directed by the Board, including the election of the Directors.

Section 3.5. Matters Generally Subject of the Vote of Members. Members shall, at annual or special meetings called by the Board, deal with and make decisions with respect to (a) from and after the expiration of the Development Period, the election of the Board, (b) the approval of an amendment to this Declaration of a "material nature", as hereinafter defined, as contemplated by Section 13.4 hereof, (c) following the expiration of the Development Period, an increase in the Annual Assessments beyond the thresholds established in Section 5.3 hereof or the imposition of Special Group Assessments, as contemplated by Section 5.4 hereof, and (d) such other matters as may be designated by the Board which are the subject matter of a vote of the Members. Additionally, to the extent that the Board desires to encumber any portion of the Common Properties as security for payment of indebtedness incurred in respect to improvements to the Common Properties, the Board shall obtain the prior approval of the Members in the same manner as approval of a Special Group Assessment as provided in Section 5.4 hereof.

ARTICLE IV

RIGHTS OF ENJOYMENT
IN THE COMMON PROPERTIES

Section 4.1. Easements.

(a) Subject to the provisions of Sections 4.2 through 4.7 below, each and every Owner of a Residential Lot in good standing with the Association shall have a non-exclusive right and easement of enjoyment in and to the Common Properties, and such easement shall be appurtenant to and shall run with every Residential Lot, provided the conveyance and transfer is accomplished in accordance with this Declaration.

(b) All Residents in good standing with the Association shall have a non-transferable, non-exclusive privilege to use and enjoy all Common Properties for so long as they are Members in good standing with the Association.

(c) The Declarant reserves the right to use, during the Development Period, portions of the Common Properties (e.g. a sales information center) for business matters directly and indirectly related to the Addition.

(d) One or more portions of the Common Properties may from time to time be reasonably limited to private functions for use of Members and their guests and invitees (subject to the written consent of the Association), and conversely, one or more portions of otherwise private property (subject to the consent of the Owner thereof) may be utilized for Association functions and activities.

(e) The Declarant shall convey record title to some or all of the Common Properties to the Association if, as and when deemed appropriate by the Declarant or as may be required by governmental officials, and the Declarant shall at all times have and retain the right to effect minor redesigns or minor reconfiguration of the Common Properties and to execute any open space declarations applicable to the Common Properties which may be permitted in order to reduce property taxes, and to take whatever steps may be appropriate to lawfully avoid or minimize the imposition of ad valorem taxes by the Taxing Authorities.

(f) The Common Properties shall be used exclusively by the Members and their guests and invitees and access thereto shall be prohibited to any other Person. Access to the Common Properties may be restricted by gating and fencing to all other Persons. The Owners of the Residential Lots shall be responsible for all Assessments associated with the costs of the maintenance (including landscaping where applicable) of (i) the Streets and Alleys situated within the Development Tract, (ii) manned and unmanned gated areas serving the Development Tract accessible by the Residents only, and (iii) the balance of the Common Properties, including amenities constructed or installed in the Common Properties accessible only by Members in good standing with the Association, such as pools, hike and bike trails, fountains and other amenities located within the Common Properties.

(g) The Board shall have the right (i) to restrict the usage of the Common Properties by the Residents; however any restriction shall be imposed on a uniform basis on the Residents, and (ii) to amend this Declaration for the specific purposes of granting or creating easements between the Association and certain of the Residential Lot Owners to grant the Association an easement within an area (herein called the "Creek and Greenbelt Easement Areas") from the center line of any creek, lake or greenbelt passing through a Residential Lot to a specified distance permitting the Association restricted access to the area covered thereby for the purpose of landscape maintenance and removal of trees and debris to keep water courses clear.

Section 4.2. Extent of Members' Easements. The rights and easements of use, recreation and enjoyment created hereby shall be subject to the following:

(a) The right of the Declarant and/or Association to prescribe reasonable regulations and policies governing, and to charge fees and/or deposits (e.g., key and access card deposits) related to, the use, operation and maintenance of the Common Properties;

(b) Liens or mortgages placed against all or any portion of the Common Properties with respect to monies borrowed by the Association to improve or maintain the Common Properties;

(c) The right of the Declarant and/or the Association to enter into and execute contracts with any party (including, without limitation, the Declarant or its corporate affiliates) for the purpose of providing management, maintenance or such other materials or services consistent with the purposes of the Association and/or this Declaration;

(d) The right of the Declarant and/or the Association to take such steps as are reasonably necessary to protect the Common Properties against foreclosure;

(e) The right of the Declarant and/or the Association to suspend the voting rights of any Member, and to suspend the right of any Member to use or enjoy any of the Common Properties for any period during which any assessment (including without limitation "fines") against a Lot owned and/or occupied by such Member remains unpaid, or during which non-compliance with this Declaration or the Residential Design Guidelines applicable to the Lot in question exists, and otherwise for any period deemed reasonable by the Association for an infraction of the then-existing rules and regulations;

(f) The right of the Declarant and/or the Association to dedicate or transfer all or any part of the Common Properties to the DCDD or any municipal corporation, public agency, governmental authority, or utility for such purposes and upon such conditions as may be agreed to by the Declarant or the Board, including the right of the Declarant or the Association to enter into and execute contracts with the owner-operators of any utility system or other similar operations for the purpose of extending utility service on, over or under the Common Properties to ultimately provide service to one or more of the Lots or to adjacent properties which are not owned by the Declarant; and

(g) The right of the Declarant and/or the Association to grant permits, licenses and easements over the Common Properties for utilities and other purposes necessary for the proper development of the Addition or for any other reason deemed prudent by the Board.

Section 4.3. Restricted Actions by Members. No Member shall permit anything to be done on or in the Common Properties which would violate any applicable public law or which would result in the cancellation of or the increase of premiums for any insurance carried by the Association, or which would be in violation of any law or any rule or regulation promulgated by the Board.

Section 4.4. Damage to the Common Properties. Each Member shall be liable to the Association for any damage to any portion of the Common Properties caused by the negligence or willful misconduct of the Member or his/her family and/or guests and/or invitees and/or employees.

Section 4.5. Rules of the Board. All Members shall abide by any rules and regulations adopted by the Board. The Board shall have the power to enforce compliance with the rules and regulations established from time to time by the Board by all appropriate legal and equitable remedies, and a Member determined to have violated the Board's rules and regulations shall be liable to the Association for all damages and costs incurred by the Association as a result of such violation or in regard to the enforcement thereof, including reasonable attorneys' fees.

Section 4.6. Use of Common Properties. The Board shall have the power and authority to prescribe rules and regulations which extend to and cover matters such as (but not limited to) smoking, the possession and consumption of alcoholic beverages, loud and obnoxious noises and behavior, dress and attire and the supervision by attending adults of children. No Person (excluding the Declarant) shall use any portion of the Common Properties to:

(a) solicit, promote or conduct business, religious, political or propaganda matters; or

(b) distribute handbills, newsletters, flyers, circulars or other printed materials;

without the prior written consent of the Board (which consent may be withheld in its sole and absolute discretion).

Section 4.7. User Fees and Charges. The Board may levy and collect charges, user fees and other fees for the use, operation and maintenance of the Common Properties and services which the Board determines to be necessary for the advancement, benefit and welfare of the Members. In establishing user fees, the Board may formulate reasonable classifications of users. Such fees must be uniform within such classifications but need not be uniform throughout the classifications. If a Member shall fail to pay a Charge when due and payable, the unpaid Charge shall be delinquent and upon written notice to the Member shall become a personal debt of the Member in question. Failure of any Member to pay the Charge when due and payable, in addition, shall be a breach of these Covenants and shall result in suspension of the Member's rights or privileges with respect to the use of the Common Properties.

Section 4.8. Encroachments. If (a) construction, reconstruction or repair activities which have been approved by the ARC, or (b) shifting, settlement or other movements of any portion of Improvements which have been approved by the ARC, results either in the Common Properties encroaching on a Lot or Dwelling Unit or Structure, or in a Lot or Dwelling Unit or Structure encroaching on the Common Properties or on another Lot or Dwelling Unit or Structure, and unless otherwise directed by the ARC, a valid easement shall then and there exist to permit the encroachment and reasonable and necessary maintenance activities related thereto.

ARTICLE V

COVENANTS FOR ASSESSMENTS

Section 5.1. Creation of the Lien and Personal Obligation of Assessments. The Declarant, for each Lot owned by it within the Subdivision hereby covenants and agrees, and each subsequent Owner of any Lot, by acceptance of a Deed therefor, whether or not reference to the Covenants shall be so expressed in any such Deed or other conveyance, shall be deemed to have covenanted and agreed (and such covenant and agreement shall be deemed to constitute a portion of the purchase money and consideration for acquisition of the Lot so as to have affected the purchase price) to pay to the Association (or to an independent entity or agency which may be designated by the Association to receive such monies):

(a) regular Annual Assessments;

(b) Special Group Assessments, to be fixed, established and collected from time to time as hereinafter provided; and

(c) Individual Assessments and fines levied against individual Owners, Members or Residents to reimburse the Association for (i) extra or unusual costs incurred for items such as (but not limited to) (A) maintenance and repairs to portions of the Addition required to be made as a result of the willful or negligent acts of the individual Owner, Member or Resident; or (B) the remedy, cure or minimizing of problems caused by, or as a result of, violations of these Covenants by an Owner, Member or Resident; and (ii) costs incurred relating to or resulting from violations by individual Owners, Members or Residents of rules and regulations pertaining to the Association and/or the Common Properties.

The Annual, Special Group, and Individual Assessments, together with such late charges, interest and costs of collection thereof as are hereinafter provided, shall be a charge running with the land and shall be a continuing lien upon each Lot against which each such Assessment is made and shall also be the continuing personal obligation of the then-existing Owner, Member and Resident of such Lot at the time when the Assessment fell due. Each Owner of each Lot shall be directly liable and responsible to the Association for the acts, conduct and omission of each and every Member and Resident and their respective guests, invitees and employees, associated with the Dwelling Unit(s) or Structures located on such Owner's Lot.

Section 5.2. Purposes of Assessments: Maintenance of the Common Properties.

(a) The Assessments levied by the Association shall be used for the purposes of promoting the comfort, health, recreation, safety, convenience, welfare and quality of life of the Members of the Association and in supplementing some services and facilities normally provided by or associated with governmental or quasi-governmental entities, and otherwise for the improvement and maintenance of the Common Properties, including, walkways, hike and bike trails, landscaping, ponds, lakes, recreational areas, Streets and Alleys and other properties, services and facilities devoted and related to the use and enjoyment of the Common Properties and operation of the Association, including, but not limited to or for, (i) the payment of taxes on the Common Properties and insurance in connection with the Common Properties; (ii) the payment for utilities and the repair, replacement and additions of various items within the Common Properties; (iii) paying the cost of labor, equipment (including the expense of leasing any equipment) and materials required for, and management and supervision of, the Common Properties; (iv) carrying out the duties of the Board as set forth in Article VI of this Declaration, (v) carrying out the other various matters set forth or envisioned herein or in any Amended Declaration related hereto; (vi) services provided to the Addition by CoServ, including, without limitation, cable television, security and intranet services; and (vii) for any matter or thing designated by the DCDD in connection with any zoning, subdivision, platting, building, development or occupancy requirements. The items and areas described above are not intended to be exhaustive but merely illustrative.

(b) Front Yards situated within the Addition shall be maintained by the Association with sums provided by Assessments to be funded by the Owners of Residential Lots and such maintenance shall include and be limited to the items included within the defined term "Front Yard Maintenance." Each Owner of a Residential Lot shall be obligated to immediately advise the Board from time to time in writing of any adverse condition or problem affecting or relating to the Front Yard Maintenance conducted for such Owner as a condition precedent to any obligation of the Association to correct such adverse condition or problem. In the event that the Board shall at any time determine, in its sole discretion, that the correction of any adverse condition or problem relating to any Front Yard Maintenance, then the costs of such maintenance and correction, if requested by such Owner and carried out by the Board, shall be charged to such Owner by the Board and shall be payable by such Owner within fifteen (15) days after receipt of a statement from the Board requesting payment therefor. Under no circumstance shall any Director or any officer or agent of the Association be liable to any Owner for any action or inaction of the Board with respect to any Front Yard Maintenance, and each Owner hereby releases and relinquishes forever any claims, demands or actions which such Owner may at any time have or be deemed to have against the Board, any Director or the Association with regard to Front Yard Maintenance, whether arising out of the alleged negligence, misfeasance, malfeasance (but not gross negligence or willful misconduct) of any agent of the Association, any officer of the Association or any Director.

Section 5.3. Basis and Amount of Annual Assessments.

(a) Regular Annual Assessments and Special Group Assessments in respect to the Common Properties shall be borne one hundred percent (100%) by the Owners of the Residential Lots and, if applicable, the Declarant.

(b) Until December 31, 2000, Annual and Special Group Assessments with respect to the Common Properties shall be borne solely by the Declarant.

(c) Commencing with the year beginning January 1, 2001, and each year thereafter, the regular Annual Assessments for the current Fiscal Year in respect to the Common Properties shall be established and assessed in the following manner:

(i) Sums due in respect to Annual Assessments relating to the Common Properties shall be included in and covered by the regular Annual Assessments to be imposed upon Owners of Residential Lots pursuant to subparagraph (e) below.

(ii) For the period commencing on January 1, 2001, and ending on the expiration of the Development Period, Declarant shall subsidize the Association to the full extent of all net operating losses incurred in respect to costs incurred in respect to the Common Properties. Payments by the Declarant under this subparagraph (ii) shall be made on December 31 of each Fiscal Year. From and after the expiration of the Development Period, to the extent that the Declarant owns one (1) or more Residential Lots, the Declarant shall pay regular Annual Assessments in the same manner as the other Owners of Residential Lots. In the event the Declarant fails to pay any sums contemplated by this subparagraph (ii), there shall exist a self executing and continuing Payment and Performance Lien and equitable charge against each Lot owned by the Declarant. In such event the Association shall be entitled to exercise the remedies contemplated by Sections 5.7 and 5.8 below.

(d) In determining each regular Annual Assessment the Board shall separately assess each Lot in the manner herein provided and each Residential Lot shall be charged with and subjected to a lien for the amount of such separate Assessment which shall be deemed the "Annual Assessment" with respect to such Residential Lot.

(e) The initial regular Annual Assessments in respect to the Common Properties for each Residential Lot for the Fiscal Year beginning January 1, 2001, shall be set by the Declarant. The Declarant shall have the right to establish different classifications of Lots within a Subdivision, which may result in different initial regular Annual Assessments with respect to each classification. In addition, the Declarant shall have the right to set different initial regular Annual Assessments for different Subdivisions within the Addition.

(f) The Board may be permitted at any time during the term of this Declaration to increase the regular Annual Assessment for each Residential Lot without a vote of the Members from Fiscal Year to Fiscal Year, but such an adjustment shall not exceed twenty-five percent (25%) of the previous Fiscal Year's regular Annual Assessment assessed against the Residential Lots in question.

(g) The maximum Annual Assessment may not be otherwise increased beyond the restrictions set forth in subparagraph (f) above without the assent of:

(i) the Declarant during the Development Period, and

(ii) thereafter with the approval of at least fifty-one percent (51%) of the Class A Members in attendance at a meeting or meetings called for that purpose with at least fifty percent (50%) of the Class A Members (or their proxies) after adequate notice. If fifty percent (50%) of the Class A Members (or their proxies) are not attendance, a second meeting may be called with the same notice and the quorum may be reduced to thirty percent (30%) of the Class A Members. The Board shall not take formal action on the Annual Assessment more than once in any Fiscal Year. Each and every meeting of the Board in which final action on an. Annual Assessment or Special Group Assessment is taken shall be open to the Owners.

(h) In addition to regular Annual Assessments, Special Group Assessments and Individual Assessments, each Owner of a Residential Lot shall be obligated, at the time of the purchase of the Lot by such Owner and simultaneously therewith, to pay the Association the sum of One Hundred Dollars ($100.00) as a one-time acquisition and transfer fee to supplement the funds of the Association.

Section 5.4. Special Group Assessments. In addition to the regular Annual Assessments authorized by Section 5.3 hereof, the Association may levy in any Fiscal Year a Special Group Assessment, applicable to that Fiscal Year only, for the purpose of defraying, in whole or in part, the cost of any construction, reconstruction, unexpected repair or replacement of a capital improvement upon the Common Properties, including any necessary fixtures and personal property related thereto or for any unusual or emergency purpose(s) (including without limitation those matters arising out of litigation and/or judgments). Prior to the expiration of the Development Period, any Special Group Assessment must have the affirmative vote of the Declarant. From and after the expiration of the Development Period, any Special Group Assessment must have the affirmative approval of at least fifty-one percent (51%) of the Class A Members in attendance at a duly convened meeting.

Section 5.5. Rate of Assessments. Prior to the expiration of the Development Period, both regular Annual Assessments and Special Group Assessments in respect to Residential Lots within a classification of Lots established by Declarant pursuant to Section 5.3(e) hereof, must be fixed at a uniform rate for all such Residential Lots within such classification, unless otherwise approved by the Declarant. From and after the expiration of the Development Period both regular Annual Assessments and Special Group Assessments in respect to Residential Lots within a classification of Lots must be fixed at a uniform rate for all Residential Lots within such classification, unless otherwise approved by at least three-fourths (3/4ths) of the individuals comprising the Board appointed by the Class A Members.

Section 5.6. Date of Commencement of Assessments; Due Dates. The Annual Assessment shall be paid, at the option of the Declarant, (i) in full on the first day of each Fiscal Year, (ii) in four (4) equal installments on the first day of each quarter during each Fiscal Year, or (iii) in twelve (12) equal installments on the first day of each month during each Fiscal Year, and each such applicable payment shall, if not paid within ten (10) days after the applicable payment date, automatically become delinquent. The Board shall use reasonable efforts to provide each Owner with an invoice statement of the appropriate amount due, but any failure to provide such a notice shall not relieve any Owner of the obligation established by the preceding sentence. The Board may prescribe (a) procedures for collecting advance regular Annual Assessments from new Owners, Members or Residents out of "closing transactions"; and (b) different procedures for collecting Assessments from Owners who have had a recent history of being untimely in the payment of Assessments. Written notice of the applicable Assessment shall be furnished in a timely manner by the Board to every Owner by mail or personal delivery.

Section 5.7. Effect of Non-Payment of Assessment: the Personal Obligation of the Owner: the Lien in Respect to a Residential Lot: and Remedies of Association.

(a) Effective as of, and from and after the filing and recordation of this Declaration, there shall exist a self-executing and continuing contract Payment and Performance Lien and equitable charge on each Residential Lot to secure the full and timely payment of each and all Assessments and all other Charges and monetary amounts and performance obligations due hereunder in respect of the Residential Lots, including the obligations of the Declarant under Section 5.3(c)(ii) hereof. Such lien shall be at all times superior to any claim of homestead by or in any Owner of a Residential Lot. If any Assessment or Charge or other monetary amount or any part thereof is not paid by the Owner of a Residential Lot on the date(s) when due, then the unpaid amount of the Assessment or Charge or other monetary amount shall (after the passage of any stated grace period) be considered delinquent and shall, together with any late charge and interest thereon at the Maximum Rate and costs of collection thereof, become a continuing debt secured by the self-executing Payment and Performance Lien on the Residential Lot of the non-paying Owner/Member/Resident which shall bind such Residential Lot in the hands of the Owner and Owner's heirs, executors, administrators, devisees, personal representatives, successors and assigns. The Association shall have the right to reject partial payments of an unpaid Assessment or other monetary obligation and demand the full payment thereof. The personal obligation of the then-existing Owner to pay such Assessment or other monetary obligation, however, shall remain the Owner's personal obligation and shall not pass to Owner's successors in title unless expressly assumed by them. However, the lien for unpaid Assessments or other monetary obligation shall be unaffected by any sale, conveyance or transfer of a Residential Lot and shall continue in full force and effect.

(b) No Owner may waive or otherwise escape liability for any Assessment or other monetary obligation provided, herein by non-use of the Common Properties or abandonment of his/her/its Lot. No diminution or abatement of Assessments or other monetary obligation shall be claimed or allowed by reason of any alleged failure of the Association to take some action or to perform some function required to be taken or performed by the Association, or for inconvenience or discomfort arising from the making of improvements or repairs which are the responsibility of the Association, or from any action taken by the Association to comply with any law, ordinance, or with any order or directive of any municipal or other governmental authority, the obligation to pay such Assessments or other monetary obligation being a separate and independent covenant on the part of each Owner.

(c) The Association may also give written notification to the holder(s) of any mortgage on the Residential Lot of the non-paying Owner of such Owner's default in paying any Assessment or Charge or other monetary obligation, particularly where the Association has theretofore been furnished in writing with the correct name and address of the holder(s) of such mortgage, and a written request to receive such notification.

(d) If any Assessment or Charge or other monetary obligation or part thereof is not paid when due, the Association shall have the right and option to impose a late charge (but only to the extent permitted by applicable law) to cover the additional administrative costs involved in handling the account and/or to reflect any time-price differential assessment schedule adopted by, the Association. The unpaid amount of any such delinquent Assessment or Charge or other monetary obligation shall bear interest from and after the date when due at the Maximum Rate until fully paid. The Association may, at its election, retain the services of an attorney to review, monitor and/or collect unpaid Assessments or Charges and delinquent accounts, and there shall also be added to the amount of any unpaid Assessment or Charge or any delinquent account any and all reasonable attorneys' fees and other costs of collection incurred by the Association.

(e) In respect to the Residential Lots, the Association may, at its discretion but subject to all applicable debt collection statutes (i) prepare and file a lien affidavit in the Records which specifically identifies the unpaid Assessments or Charges or other monetary obligation; and (ii) publish and post, within one or more locations within the Addition, a list of those individuals or entities who are delinquent and, if applicable, suspend their use and enjoyment of the Common Properties until and unless the delinquency has been cured to the reasonable satisfaction of the Association. Each Owner consents to these procedures and authorizes the Board to undertake such measures for the general benefit of the Association.

(f) All agreements between any Owner and the Association and/or the Declarant, whether now existing or hereafter arising and whether written or oral and whether implied or otherwise, are hereby expressly limited so that in no contingency or event whatsoever shall the amount paid, or agreed to be paid, to the Association and/or the Declarant or for the payment or performance of any covenant or obligation contained herein or in any other document exceed the maximum amount permissible under applicable law. If from any circumstance whatsoever fulfillment of any provision hereof or of such other document at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, then, ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity, and if from any such circumstance the Association and/or the Declarant should ever receive an amount deemed interest by applicable law which shall exceed the Maximum Rate, such amount which would be excessive interest shall be applied to the reduction of the actual base assessment amount or principal amount owing hereunder and other indebtedness of the Owner to the Association and/or the Declarant and not to the payment of interest, and if such excessive interest exceeds the unpaid balance of the actual Annual Assessment due and such other indebtedness, the excess shall be refunded to the Owner in question. All sums paid or agreed to be paid by any Owner for the use, forbearance or detention of any indebtedness to the Association and/or the Declarant shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full so that the interest charged, collected or received on account of such indebtedness is never more than the maximum amount permitted by applicable law. The terms and provisions of this subparagraph (f) shall control and supersede every other provision of all agreements between any Owner and the Association and/or the Declarant.

Section 5.8. Power of Sale in Respect to Residential Lots.

(a) The lien covering the Residential Lots described within Section 5.7 above is and shall be a contract Payment and Performance Lien. Each Owner of a Residential Lot, for the purpose of better securing each and all monetary