Document

பட்: 0 ENVELOPE ATTACHED 2000-01321) FIRST AMENDED AND RESTATED MASTER DECLARATION COVENANTS, CONDITIONS AND RESTRICTIONS Unofficial STONEBRIDGE RANCH Riddle & Williams, P.C.

1050 Turtle Creek Center 3811 Turtle Creek Boulevard Dallas, Texas 75219 ARTICLE I ) TABLE OF CONTENTS CONCEPTS AND DEFINITIONS.

"Affiliate" 1.1 1.2 1.3 1.4 1.5 "Amended Declaration" "Annual Assessment" "Articles" "Assessable Property" 1.6 "Assessed Valuation" 1.7 "Association" 1.8 "Board" .3 .4 4 Unofficial 1.9 "Builder" 1.10 "Bylaws" 1.11 "Central Appraisal District of Collin County" ("CADCC") 1.12 "Commercial Association" 1.13 "Commercial Declaration" 1.14 "Commercial Use" "Common Properties" "Consumer Price Index (CPI)" "Covenants" "Declaration" "Development Period" 1.22 "Development Plan" "Dwelling Unit" "Basement Area" "Eligible Insurers" 126 Eligible Mortgagees" 1.27 "Exempt Property" "Existing Property" 4.28 1.29 "Fiscal Year" 1.30 "Governing Documents" 1.31 "Greenway Frontage" 1.32 1.33 "Improvement" "Institutional Mortgage".

1.34 "Lot".

1.35 "Master Architectural Review Committee" or "MARC" 1.36 "Master Design Guidelines" 4 4 S S 5 6 6 6 6 6 6 .7 7 7 7 7 7 7 7 8 i ii Board of Directors 1.37 "Member" 1.38 1.39 "Modifications Committee" or "MC" "Owner" 1.40 "Payment and Performance Lien" 1.41 "Person" 1.42 "Phase" 1.43 1.44 "Planning Area" "Private Amenity(ies)" 1.45 "Properties" 1.46 "Resident" 1.47 "Reviewing Body" 1.48 "Structure" 1.49 1.50 "Subdivision Design Guidelines" "Supplementary Declaration" 1.51 "Taxing Authorities" 1.52 "Village".

1.53 "Zoning Ordinance" ARTICLE II PROPERTY SUBJECT TO THIS DECLARATION 2.1 Existing Property 2.2 Additional Property Effect of Merger.

Withdrawal of Property 10 10 10 11 11 ARTICLE III MEMBERSHIP AND VOTING RIGHTS IN THE ASSOCIATION 11 Membership 11

T TO THIS DECLARATION 2.1 Existing Property 2.2 Additional Property Effect of Merger.

Withdrawal of Property 10 10 10 11 11 ARTICLE III MEMBERSHIP AND VOTING RIGHTS IN THE ASSOCIATION 11 Membership 11 Voting Rights 11 Rulemaking Authority Regarding Meetings and Voting 12 33 12 3.5 Notice and Voting Procedures 13 ARTICLE IV RIGHTS OF ENJOYMENT IN THE COMMON PROPERTIES 13 4.1 Common Properties 13 4.2 Residents Bound 15 4.3 Restricted Actions 15 4.4 Damage to the Common Properties 15 4.5 Rules of the Board 15 4.6 User Fees and Charges.

15 4.7 Use of Recreational Facilities 15 4.8 Construction Activities 16 nofficial 9 10 9 9 9 9 9 8 8 ) 4808 3530 5.1 5.2 5.3 5.4 5.5 ARTICLE V COVENANTS FOR ASSESSMENTS Creation of the Lien and Personal Obligation of Assessments Purposes of Assessments Basis and Amount of Annual Assessments Special Group Assessments Date of Commencement of Assessments; Due Dates 5.6 Duties of the Board of Directors with Respect to Assessments 5.7 5.8 Effect of Nonpayment of Assessment, the Personal Obligation of the Owner; the Lien; and Remedies of Association Power of Sale 5.9 Rights of City of McKinney 5.10 19 20 20 23 23 222 222222 Unofficial Subordination of the Irien 5.11 Working Capital Fund 5.12 Exempt Property ARTICLE VI Mortgagees GENERAL POWERS AND DUNES QF THE BOARD 24 6.1 Powers and Duties 24 26 6.3 26 26 26 27 27 ARTICLE VIN 6.2 Board Powers Maintenance Contracts Liability Limitations.

Keserve Funds Patrol Services Communication Systems INSURANCE; REPAIR; RESTORATION Right to Purchase Insurance Insurance and Condemnation Proceeds Insufficient Proceeds Individual Insurance Liability Insurance 7.5 ARTICLE VIII 22222222 222222 27 27 28 28 28 28 8.3 8.4 ARCHITECTURAL REVIEW 8.1 General...

8.2 Master Architectural Review Committee

Insufficient Proceeds Individual Insurance Liability Insurance 7.5 ARTICLE VIII 22222222 222222 27 27 28 28 28 28 8.3 8.4 ARCHITECTURAL REVIEW 8.1 General...

8.2 Master Architectural Review Committee Modifications Committee Review Standards. ....

8.5 Design Guidelines 8.6 No Submission Required iii 22222 29 29 29 30 30 31 . 32 9.20 Single Family Occupancy ARTICLE X 9.5 Garages; Carports.

9.6 Setback Requirements 9.7 9.8 Height Limitations; Elevations ences; Signs 9.9 Easements; Utilities 9.10 Temporary Structures.

9.11 Site Maintenance, Garbage and Trash Collection 9.12 Offensive Activities; Pets 9.13 Landscaping; Maintenance.

9.14 Exterier Surfaces 9.1 9.2 9.3 Alarms 9.4 ARTICLE IX USE OF LOTS; PROTECTIVE COVENANTS..

Residential Use Residential Structures 38 38 .38 .39 .39 39 39 39 40 40 41 41 42 43 44 9.15 Antennae 44 9.16 Solicitation 44 9.17 Subdivision and Time Sharing.

45 9.18 Wetlands, Lakes and Other Water Bodies 45 9:19 Playground and Recreational Equipment 45 45 8.7 8.8 8.9 Fees 8.10 8.11 8.12 8.13 Preliminary and Final Plan Submissions Appeal Process Assistance Construction Deposit Enforcement Notice of Violation 8.14 Notice of Compliance 8.15 8.16 Limitation of Liability Right to Inspect 8.17 Variances 8.18 8.19 No Waiver of Future Approvals . .

Builder Performance official 37 37 38 .36 .37 .37 EASEMENTS ..

45 10.1 Utility Easements 45 10.2 Encroachments 46 10.3 Sign Easement 46 10.4 Ingress, Egress and Maintenance by the Association..

.46 iv : 10.5 Easements for Lakes and Pond Maintenance and Flood Water 10.6 Easements to Serve Additional Property 10.7 Right of Entry 10.8 Public Easement 10.9 ARTICLE XI Retaining Wall/Fence Easements PRIVATE AMENITIES General 4808 3533 ficial ON 50 50 50 51 51 51 52 11.1 11.2 11.3 11.4 Conveyance of Private Amenities

ight of Entry 10.8 Public Easement 10.9 ARTICLE XI Retaining Wall/Fence Easements PRIVATE AMENITIES General 4808 3533 ficial ON 50 50 50 51 51 51 52 11.1 11.2 11.3 11.4 Conveyance of Private Amenities View Impairment..

Easements for Private Amenities 11.5 Assumption of Risk and Indemnification Maintenance of Private Amenity 11.6 ARTICLE XII RIGHTS OF FIRST REFUSAL; REGISTRATION Applicability.

12.1 12.2 Right of First Refusal to Declarant 12.3 Registration with the Association ARTICLE XIII RIGHTS OF CERTAIN MORTGAGEES AND MORTGAGE INSURERS 13.1 13.2 Notices General 13.3 soff Joinder to Action Documents 13.4 Special FHLMC Provision.

13.5 Approval of Amendments 13.6 Inspection of Books 13.7 Financial Statements 13.8 Enforcement ...

13 Attendance at Meeting ARTICLE XIV GENERAL PROVISIONS 14.1 14.2 Further Development Power of Attorney 14.3 Duration ...

14.4 Amendments 14.5 Enforcement.

14.6 Validity..

14.7 Service Mark 14.8 Headings 52 2828 52 52 53 54 54 54 55 56 57 57 57 57 57 55 57 57 58 58 58 59 59 59 59 V 14.9 Notices to Resident/Member/Owner 14.10 Notices to Mortgagees 14.11 Disputes ACKNOWLEDGMENT EXHIBITS: Exhibit "A" Property Subject to Declaration Exhibit "B-1" Appraised Value Lots Exhibit "B-2" - Fixed Rate Lots Exhibit "C" Exhibit "D"Association, Inc.

Unofficial vi 4808 8535 IBI FIRST AMENDED AND RESTATED MASTER DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS FOR STONEBRIDGE RANCH STATE OF TEXAS COUNTY OF COLLIN cas das cas KNOW ALL MEN BY THESE PRESENTS THIS FIRST AMENDED AND RESTATED MASTER DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS FOR STONEBRIDGE RANCH (this "Declaration") is made and effective as of the 30 day of November, 2000, by WESTERRA STONEBRIDGE, L.P., a Texas limited partnership (sometimes referred to herein as the

ONS FOR STONEBRIDGE RANCH (this "Declaration") is made and effective as of the 30 day of November, 2000, by WESTERRA STONEBRIDGE, L.P., a Texas limited partnership (sometimes referred to herein as the "Declarant"), as attorney-in-fact for the Members of the STONEBRIDGE RANCH COMMUNITY ASSOCIATION, INC., a Texas corporation (sometimes referred to herein as the "Association"): WITNESSETH: WHEREAS, Gibraltar Savings Association and Ranch Development Company, as successor to Gibraltar Savings Association, prepared and filed of record a series of substantially similar documents entitled "Master Declaration of Covenants, Conditions, Restrictions, Easements, Charges and Liens", which documents and certain amendments thereto were recorded in the Public Real Estate Records of Collin County, Texas, as follows: Original Amendment Subdivision Volume Page Volume Page Hills Creek Phase I 2775 203 3114 732 Briar Ridge Phase 2775 269 3077 325 Meadow Ridge Phase I 2775 335 3114 665 Wellington Point Phase I 2775 00 3340 855 and 3114 597 Quail Creek Phase I 2779 001 3007 257 Hills Creek Phase II 2987 929 Summer Point Phase I 3092 479 Briar Ridge Phase II 3114 800 Meadow Ridge Phase II 3120 927 Quail Creek Phase II 3121 001 Spring Hill Phase I 3121 068 Quail Creek Phase III 3201 128 Quail Creek Phase IV 3338 20 Quail Creek Phase V 3489 365 Summer Point Phase II 3489 428 FIRST AMENDED AND RESTATED DECLARATION - Page 1 4808 3536 ial (such documents, as amended, are hereinafter collectively referred to as the "Original Declarations"); and WHEREAS, the Original Declarations were amended in certain respects and consolidated into a single instrument entitled the "Consolidated and Amended Master Declaration of Covenants,

eclarations"); and WHEREAS, the Original Declarations were amended in certain respects and consolidated into a single instrument entitled the "Consolidated and Amended Master Declaration of Covenants, Conditions, Restrictions, Easements, Charges and Liens for Stonebridge Ranch", which instrument was recorded on October 29, 1992, as Instrument No. 92-0076613 in the Public Real Estate Records of Collin County, Texas, as amended and supplemented from time to time (hereinafter the "Master Declaration"); and WHEREAS, the Master Declaration was amended and supplemented by an instrument entitled "Supplement to the Consolidated and Amended Master Declaration of Covenants, Conditions, Restrictions, Easements, Charges and Liens for Stonebridge Ranch", which instrument was recorded on September 14, 1995, as Instrument No. 95-0068313 in the Public Real Estate Records of Collin County, Texas (the "First Supplement"); and WHEREAS, the Master Declaration was also amended and supplemented by an instrument entitled "Supplement to the Consolidated and Amended Master Declaration of Covenants, Conditions, Restrictions, Easements, Charges and Liens for Stonebridge Ranch", which instrument was recorded on January 4/1996, as Instrument No. 96-0001219 in the Public Real Estate Records of Collin County, Texas (the "Second Supplement"); and WHEREAS, the Master Declaration was also amended and supplemented by an instrument entitled "Third Supplement to the Consolidated and Amended Master Declaration of Covenants, Conditions, Restrictions, Easements, Charges and Liens for Stonebridge Ranch", which instrument was recorded on September 23, 1997, as Instrument No. 97-0079857 in the Public Real Estate Records of Collin County, Texas (the "Third Supplement"); and

Liens for Stonebridge Ranch", which instrument was recorded on September 23, 1997, as Instrument No. 97-0079857 in the Public Real Estate Records of Collin County, Texas (the "Third Supplement"); and WHEREAS, the Master Declaration was also amended and supplemented by an instrument entitled "Supplement to the Consolidated and Amended Master Declaration of Covenants, Conditions, Restrictions, Easements, Charges and Liens for Stonebridge Ranch", which instrument was recorded on September 27, 1997, as Instrument No. 97-0079857 in the Public Real Estate Records of Collin County, Texas (the "Fourth Supplement"); and WHEREAS, pursuant to the terms of Article XIII, Section 4.B. of the Master Declaration, the Declarant, as attorney-in-fact for and on behalf of each Owner, may amend or change the covenants described therein at any time prior to December 31, 2014, and may impose additional covenants and restrictions on such property, subject to any approval rights of Eligible Mortgagees; and WHEREAS, the Declarant desires to amend and restate the Master Declaration and has received the requisite consent and approval of the Eligible Mortgagees, if any, all in accordance with the provisions of the Master Declaration.

FIRST AMENDED AND RESTATED DECLARATION - Page 2 4808 853 NOW, THEREFORE, the Declarant hereby declares that the Master Declaration, as supplemented and amended by the First Supplement, the Second Supplement, the Third Supplement and the Fourth Supplement (collectively, the "Master Declaration), is hereby replaced and superceded by this Declaration, and from and after the recording of this instrument in the Deed Records of Collin County, Texas, the tracts of land described within Exhibit "A" attached hereto,

ed and superceded by this Declaration, and from and after the recording of this instrument in the Deed Records of Collin County, Texas, the tracts of land described within Exhibit "A" attached hereto, and such phases or additions thereto as may hereafter be made subject to the terms hereof and pursuant to Article II hereof, is and shall be held, sold, used and conveyed subject to the following easements, restrictions, covenants and conditions, which are for the purpose of protecting the value and desirability of and which shall run with the real property subjected to this Declaration. This Declaration shall be binding on all parties having any right, title or interest in the described Properties or any part thereof, their heirs, successors, successors-in title, and assigns, and shall inure to the benefit of each owner thereof.

ARTICLE 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: Section 1.1 "Affiliate shall mean a partner, director, subsidiary, shareholder, officer, employee, agent, co-venturer, executor, personal representative, trustee, attorney or a Person or entity which (either directly or indirectly through one or more intermediaries), controls, is in common control with or is controlled by, another Person or entity and any Person or entity that is a director, trustee, officer, employee, agent, partner, shareholder, subsidiary or attorney of any of the foregoing.

For the purposes of this definition, the term "control" means (a) legal or beneficial ownership of 10%

, officer, employee, agent, partner, shareholder, subsidiary or attorney of any of the foregoing.

For the purposes of this definition, the term "control" means (a) legal or beneficial ownership of 10% or more of the voting interests of an entity, or (b) the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person or entity, whether through the ownership of voting securities, by contract or otherwise.

Section 1.2 "Amended Declaration" shall mean and refer to each and every instrument recorded in the Public Real Estate Records of Collin County, Texas which amends, supplements, modifies, clarifies or restates some or all of the terms and provisions of this Declaration.

Section 1.3 "Annual Assessment" shall have the meaning specified in Section 5.3.

Section 1.4 "Articles" shall mean and refer to the Articles of Incorporation (and all amendments thereto and restatements thereof) of the Association on file in the Office of the Secretary of State of the State of Texas, Austin, Texas.

Section 1.5 "Assessable Property" shall mean and refer to each and every lot, parcel, tract, area, condominium, apartment, unit and space within the entire Properties which: (i) may have been or will be given a separately identifiable tax or parcel number by the Central Appraisal District of Collin County ("CADCC") or a similar governmental agency; and (ii) is not an Exempt Property, as defined herein.

FIRST AMENDED AND RESTATED DECLARATION - Page 3 4808 8538 Section 1.6 "Assessed Valuation" shall mean the most recent valuation placed on a Lot and the permanent improvements thereon (and the easements appurtenant thereto by the CADCC and/or

Page 3 4808 8538 Section 1.6 "Assessed Valuation" shall mean the most recent valuation placed on a Lot and the permanent improvements thereon (and the easements appurtenant thereto by the CADCC and/or the Taxing Authorities as of a cut-off date established by the Board, or the sale price of the Lorupon the first sale thereof after completion of a Dwelling Unit thereon, whichever is higher, but, if the provisions of Section 5.3 are unsatisfactory to the Board, the Board may adopt an alternative method of assessment which will provide a sufficient cash flow to meet the obligations of the Association.

Section 1.7 "Association" shall mean and refer to the STONEBRIDGE RANCH COMMUNITY ASSOCIATION, INC., an existing non-profit Texas corporation which has the power, duty and responsibility of maintaining and administering certain portions of the Properties and all of the Common Properties, administering and enforcing the Covenants and otherwise maintaining and enhancing the quality of life within Stonebridge Ranch.

Section 1.8 "Board" shall mean and refer to the Board of Directors of the Association.

Section 1.9 "Builder" shall mean and refer to any Person who purchases one or more Lots for the purpose of constructing Improvements thereon for later sale to consumers, or who purchases one or more Phases for further subdivision, development, or resale in the ordinary course of such Person's business.

Section 1.10 "Bylaws" shall mean and refer to the Bylaws of the Association, attached hereto as Exhibit "C" and incorporated by references as they may be amended from time to time.

Section 1.11 "Central Appraisal District of Collin County" ("CADCC") shall mean and refer to the governmental and/or quasi-governmental agency established in accordance with Texas

d from time to time.

Section 1.11 "Central Appraisal District of Collin County" ("CADCC") shall mean and refer to the governmental and/or quasi-governmental agency established in accordance with Texas Property Tax Code Section 6.01 et seq. (and its successor and assigns as such law may be amended from time to time) or other similar statute which has, as one of its purposes and functions, the establishment of an assessed valuation and/or fair market value for various lots parcels and tracts of land in Collin County, Texas.

Section 1.12 "Commercial Association" shall mean and refer to Stonebridge Ranch Commercial Association, Inc., a Texas non-profit corporation serving as the mandatory membership owners association having jurisdiction over the commercial properties within the Stonebridge Ranch development.

Section 1.13 "Commercial Declaration" shall mean and refer to that Declaration of Covenants, Conditions and Restrictions for Stonebridge Ranch Commercial Properties which is filed under Instrument No. 95-0030577 of the Deed Records of Collin County, Texas, and is applicable to the commercial properties within the Stonebridge Ranch development and provide for the administration of such commercial properties and enforcement of the terms of such declaration by the Commercial Association.

Section 1.14 "Commercial Use" shall mean and refer to those uses permitted by the Zoning Ordinance for the conduct of a trade, business or enterprise, such as (but not necessarily limited to) office, retail, business, shopping and other commonly understood commercial activities.

FIRST AMENDED AND RESTATED DECLARATION - Page 4 ܕ܂ 4808 3539 Section 1.15 "Common Properties" shall mean and refer to any and all areas of land within

other commonly understood commercial activities.

FIRST AMENDED AND RESTATED DECLARATION - Page 4 ܕ܂ 4808 3539 Section 1.15 "Common Properties" shall mean and refer to any and all areas of land within the Properties and personal property owned, leased or otherwise held by the Association for the common use and enjoyment of the Owners and Residents, including easements and licenses, together with any and all improvements that are now or that may hereafter be constructed thereon. (However, the Common Properties shall not include (i) the two (2) separate and privately owned golf and country clubs geographically situated near the center of Stonebridge Ranch (ii) the daily fee golf course and related facilities proposed to be developed and operated on certain real property located within and adjacent to the Properties as shown on the Development Plan, and (iii) any specifically identified area within any Village which is limited to the use and enjoyment of the Owners, Members and Residents within such Village. 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 development of Stonebridge Ranch. The concept of Common Properties will also include: (i) any and all public right-of-way lands for which the City of McKinney 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, street underpasses, streetscape, hike and bike trails, park areas and quasi-governmental service facilities; and (ii) any and all facilitics provided by the Declarant and/or the Association to or for the benefit of the local

etscape, hike and bike trails, park areas and quasi-governmental service facilities; and (ii) any and all facilitics provided by the Declarant and/or the Association to or for the benefit of the local police, fire and similar governmental departments for which no reimbursement via public funds is requested or anticipated. One or more portions of the Common Properties may from time to time be reasonably limited to private functions and conversely, one or more portions of otherwise private property may be utilized for Association functions and activities. Declarant shall convey record title to some or all of the Common Properties to the Association if, as and when deemed appropriate by Declarant or as may be required by governmental officials, and Declarant shall at all times have and retain the right to effect minor redesigns or minor reconfigurations of the Common Properties (particularly along the golf courses and lake/pond edges) 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 federal and state ad valorem and/or income taxes.

Section .16"Consumer Price Index (CPI)" shall mean and refer to the Consumer Price Index of the Bureau of Labor Statistics of the U.S. Department of Labor for All Urban Consumers (DallasFort Worth Area; Base: 1982-1984 = 100). In the event the compilation and/or publication of the CPI shall be substantially revised, transferred to any other governmental department or bureau or agency or shall be discontinued, then the index (or a substitute procedure which reasonably reflects

e CPI shall be substantially revised, transferred to any other governmental department or bureau or agency or shall be discontinued, then the index (or a substitute procedure which reasonably reflects and monitors fluctuations in consumer prices) most nearly the same as the CPI shall be used to make the calculations envisioned herein, or in the event no such alternative index exists or a dispute arises concerning the selection of such alternative index, the Board shall have the final right and power to select and/or formulate such an alternate index.

Section 1.17 "Covenants" shall mean and refer to all covenants, conditions, restrictions, easements, charges and liens set forth within this Declaration.

FIRST AMENDED AND RESTATED DECLARATION - Page 5 Section 1.18 "Declarant" shall mean and refer to Westerra Stonebridge, L.P., Texas limited partnership, and any successor(s) and assign(s) who take title to all or a portion of the Properties for purposes of development and/or resale in the ordinary course of business and are named the Declarant hereunder in a recorded instrument executed by the immediately preceding Declarant.

However, no Person or entity merely purchasing one or more Lots from the Declarant in the ordinary course of the Declarant's business shall be considered a "Declarant" Section 1.19 "Declaration" shall mean and refer to this particular instrument enticed "First Amended and Restated Master Declaration of Covenants, Conditions and Restrictions for Stonebridge Ranch," together with any and all amendments or supplements thereto.

4808 3540 official Section 1.20 "Deed" shall mean and refer to any deed, assignment, testamentary bequest, muniment of title or other instrument, or intestate inheritance and succession, conveying or

4808 3540 official Section 1.20 "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 title or a leasehold interest or another legally recognized estate in a Lot.

Section 1.21 "Development Period" shall mean a period commencing on the date of the recording of the Master Declaration in the public real estate records of Collin County, Texas and continuing thereafter until and ending the earlier to occur of: (i) substantial completion of all development within the Properties, as determined by the Declarant; or (ii) the twenty-second (22nd) anniversary of the date of recordation of the Master Declaration in the public real estate records of Collin County, Texas.

Section 122 "Development Plan" shall generally mean and refer to the development plan for the Properties as set forth within the Zoning Ordinance and within the "Development Agreement between the City of McKinney, Texas and Gibraltar Savings Association for the Flying "M" Ranch Plan Development", dated January 21, 1986, as such document(s) may from time to time be amended. Inclusion of property on the Development Plan shall not, under any circumstances, obligate Declarant to subject such property to this Declaration, nor shall the omission of property from the Development Plan bar its later annexation as provided in Article II.

Section 1.23 "Dwelling Unit" shall mean and refer to any building or portion of a building situated upon the Properties which is designed and intended for use and occupancy as a residence.

Section 1.24 "Easement Area" shall mean and refer to those areas which may be covered by an easement specified in Sections 9.5 and 9.8 of Article IX and in Article X.

use and occupancy as a residence.

Section 1.24 "Easement Area" shall mean and refer to those areas which may be covered by an easement specified in Sections 9.5 and 9.8 of Article IX and in Article X.

Section 1.25 "Eligible Insurers" is defined in Article XII.

Section 1.26 "Eligible Mortgagees" is defined in Article XI.

Section 1.27 "Exempt Property" shall mean and refer to the following portions of the Properties: (i) all land and Improvements owned by the United States of America, the State of Texas, Collin County or any instrumentality, political subdivision or agency of any such governmental entity acting in a governmental (rather than a proprietary) capacity, (ii) 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; (iii) all land and Improvements which are not only FIRST AMENDED AND RESTATED DECLARATION - Page 6 4808 3541 exempt from the payment of ad valorem real property taxes by Collin County, the McKinney Independent School District, the Frisco Independent School District and the State of Texas, but also are exempt from the payment of any assessments hereunder as expressly determined by written resolution of the Declarant or the Association; and (iii) such other land(s) and/or Improvement(s) and/or Lot(s) which are specifically exempted from the payment of Annual Assessments accordance with a special resolution of the Board.

Section 1.28 "Existing Property" shall mean the residential Lots and Common Properties which are more particularly described on Exhibit "A" attached hereto and incorporated herein by reference for all purposes.

Section 1.29 "Fiscal Year" shall mean each twelve (12) month period commencing on

are more particularly described on Exhibit "A" attached hereto and incorporated herein by reference for all purposes.

Section 1.29 "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 (12) month period.

Section 1.30 "Governing Documents" shall mean this Declaration, the Bylaws, the Articles, any rules and regulations promulgated thereunder, the Master Design Guidelines, all Subdivision Design Guidelines and all architectural bulletins.

Section 1.31 "Greenway Frontage" shall mean and refer to golf courses, parks, schools, community facilities, common green space, recreational facilities (including lakes, hike and bike trails and the like) which are adjacent to rear or side yard Lot lines and/or clearly visible from public streets sidewalks and rights-of-way.

Section 132 "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 adding or removing a structure, adding or removing square footage area space to or from a structure, painting or repainting a structure, or in any way altering the size, shape or physical appearance of any land or structure.

Section 1.33 "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, Federal Home Loan

on 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, Federal Home Loan Mortgage Corporation or their successors, or guaranteed or subsidized by the FHA and/or VA.

Section 1.34 "Lot" shall mean and refer to each separately identifiable portion of the Assessable Property, including any condominium unit, which is platted, filed and recorded in the office of the County Clerk of Collin County, Texas and which is assessed by any one or more of the Taxing Authorities and which is not an Exempt Property. The term shall include the land which is part of the Lot, as well as any improvements thereon.

Section 1.35 "Master Architectural Review Committee" or "MARC" shall mean and refer to that particular committee which is described and explained within Article VIII.

FIRST AMENDED AND RESTATED DECLARATION - Page 7 Section 1.36 "Master Design Guidelines" shall mean and refer to those particular standards, restrictions, guidelines, recommendations and specifications applicable to most of the aspects of construction, placement, location, alteration, maintenance and design of any improvements to or within the Properties, and all amendments, bulletins, modifications, supplements and interpretations thereof.

Section 1.37 "Member" shall mean and refer to each Person subject to membership in the Association pursuant to Article III.

Section 1.38 "Modifications Committee" or "MC shall mean and refer to that particular committee which is described and explained within Article VNI.

IRISINQUI Section 1.39 "Owner" shall mean and refer to the holder(s) of record title to the fee simple

mean and refer to that particular committee which is described and explained within Article VNI.

IRISINQUI Section 1.39 "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, and excluding in all cases any party holding an interest merely as security for the performance of an obligation.

Section 1.40 "Payment and Performance Lien" shall mean and refer to the lien described within Sections 5.8 and 5.9.

Section 1.41 "Person" shall mean and refer to a natural person, a corporation, a partnership, a trustee, a limited liability company, or any other legal entity.

Section 42 "Phase" shall mean and refer to each and every portion of a Village which is the specific subject of a subdivision plat filed of record in the Map and Plat Records of Collin County, Texas, as it may be revised from time to time. As an example, Wellington Point and Meadow Ridge are two separate villages, each of which will be subdivided and platted in two or more phases in accordance with subdivision plats bearing their respective name and phase numbers.

Section 1.43 Planning Area" shall mean and refer to the ten (10) separately numbered and identified land areas appearing within sketches of Stonebridge Ranch which are attached to the Development Plan and the Zoning Ordinance.

Section 1.44 "Private Amenity(ies)" shall mean certain real property and related improvements and facilities thereon located adjacent to, in the vicinity of, or within the Properties, which are privately or publically owned and operated by Persons other than the Association for recreational and related purposes, or a club membership basis or otherwise, and shall include, without limitation, the

vately or publically owned and operated by Persons other than the Association for recreational and related purposes, or a club membership basis or otherwise, and shall include, without limitation, the golf courses, both daily fee and private, and the country clubs and all related facilities.

Section 1.45 "Properties" shall mean and refer to: (i) the land described within Exhibit "A" attached hereto; and (ii) such additional property as is hereafter made subject to this Declaration pursuant to Section 2.2.

Section 1.46 "Resident" shall mean and refer to any Person who inhabits a Dwelling Unit, either permanently or temporarily, and may include, without limitation, an Owner or a lessee and their respective families, guests, invitees, servants or employees.

FIRST AMENDED AND RESTATED DECLARATION - Page 8 4808 3543 Section 1.47 "Reviewing Body" shall mean and refer to either the MARC of the MC, as is appropriate under the circumstances.

Section 1.48 "Structure" shall mean and refer to:(i) any thing or device, other than trees, shrubbery (less than two feet high if in the form of hedge) and landscaping (the placement of which upon any Lot shall not adversely affect the appearance of such Lot) including but not limited to any building, garage, porch, shed, greenhouse or bathhouse, cabana, coop or cage, covered or uncovered patio, swimming pool, play apparatus, clothesline, fence, curbing, paving, want or hedge more than two feet in height, signboard or other temporary or permanent living quarters or any temporary or permanent Improvement to any Lot; (ii) 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

or permanent Improvement to any Lot; (ii) 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; and (in) any enclosure or receptacle for the concealment, collection and/or disposition of refuse; (iv) any change in the grade of any Lot of more than three (3) inches from that existing at the info of initial approval by the Master Architectural Review Committee.

Section 1.49 "Subdivision Design Guidelines" shall mean and refer to those particular standards, restrictions, guidelines, recommendations and specifications applicable to all aspects of construction, placement, location, alteration, maintenance and design of any improvements to or within each Phase. The Subdivision Design Guidelines may vary between Phases and between Villages.

Section 1.50 "Supplementary Declaration" shall mean and refer to an amendment or supplement to this Declaration filed in the Public Real Estate Records of Collin County, Texas, which subjects additional property to this Declaration and/or imposes, expressly or by reference, additional restrictions and obligations on the real property described therein.

Section 151 "Toxing Authorities" shall mean and refer to Collin County, the McKinney Independent School District, the Frisco Independent School District, the City of McKinney 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.

h 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.

Section 1.52 "Village" shall mean and refer to each respective community arising out of the development, construction, use and occupancy of all Phases of plats bearing the same subdivision name. As an example, Summer Point, Briar Ridge, Meadow Ridge, Quail Creek, Wellington Point and Hills Creek are each designed to be a separate and distinct residential Village within the Properties, even though some of the Villages may be composed of two (2) or more Phases. The Declarant reserves the right, power and authority (and such may be assigned or delegated) to create and impose one or more sub-association(s) within one or more Villages (especially those containing townhouse and condominium projects) which may have, as one of their purposes, the responsibility for assuming and discharging one or more of the duties of the Association as to that particular Village.

FIRST AMENDED AND RESTATED DECLARATION - Page 9 4808 3544 Section 1.53 "Zoning Ordinance" shall mean and refer to City of McKinney Ordinance No.

1621 and all amendments thereto.

nofficial ARTICLE II PROPERTY SUBJECT TO THIS DECLARATION Section 2.1. Existing Property. The residential Lots which are, and shall be held transferred, sold, conveyed and occupied subject to this Declaration are more particularly described within Exhibit "A" attached hereto and incorporated herein by reference for all purposes.

Section 2.2 Additional Property. Additional real property may be made subject to this Declaration as follows: A. At any time prior to December 31, 2014, the Declarant may (but shall not be required

s.

Section 2.2 Additional Property. Additional real property may be made subject to this Declaration as follows: A. At any time prior to December 31, 2014, the Declarant may (but shall not be required to) subject to this Declaration all or any portion of the real property within the perimeter boundaries of Stonebridge Ranch, as described in City of McKinney Ordinance No. 1620 and the land use plan for Stonebridge Ranch set forth in City of McKinney Ordmance No. 1621, or any property within a one-mile radius of the perimeter boundaries of such land, by filing one or more Supplementary Declarations describing the real property to be subjected. The addition of such property shall not require the consent of any Person or entity (other than the owner of the subject property, if not the Declarant). The Declarant may transfer or assign this right by a written instrument signed by Declarant and recorded in the public real estate records of Collin County, Texas.

B. Except as set forth in the preceding paragraph, no Person or entity other than the Declarant shall subject additional property to this Declaration, nor shall any property outside the perimeter boundaries of Stonebridge Ranch (as described in City of McKinney Ordinance Nos. 1620 and 1621) be subjected to his Declaration except upon approval of the Board and with the consent of the Declarant (so long as Declarant owns property subject to this Declaration or subject to annexation in accordance with Section 2.2.A of this Article) and at least two-thirds (2/3) of the Owners (excluding the Declarant). Any such annexation shall be effective upon filing for record of a Supplementary Declaration describing the property to be subjected and signed by the President and

e Owners (excluding the Declarant). Any such annexation shall be effective upon filing for record of a Supplementary Declaration describing the property to be subjected and signed by the President and Secretary of the Association and by the owner(s) of such property.

C. 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 this Declaration.

D. Nothing in this Declaration shall be construed to require Declarant or any successor to subject additional property to this Declaration or to develop any of the property located within the Development Plan in any manner whatsoever. The proposals of the Declarant, as set forth in various provisions of this Declaration, to develop additional parcels of property for residential purposes and/or develop the Planning Areas and/or expand the Common Properties (not only geographical, but also in terms of the types of amenities available for use) and items of a related nature are mere proposals and expressions of the existing good faith intentions and plans of the Declarant and shall not be deemed or construed as promises, solicitations, inducements, contractual commitments or material representations by the Declarant upon which any Person or entity can or should rely.

Nothing contained in or inferable from this Declaration shall ever be deemed to impose upon any FIRST AMENDED AND RESTATED DECLARATION - Page 10 4808 3545 other land owned or to be owned by the Declarant, or any related entity, any covenants, restrictions, easements or liens or to create any servitudes, negative reciprocal easements or other interests in any

land owned or to be owned by the Declarant, or any related entity, any covenants, restrictions, easements or liens or to create any servitudes, negative reciprocal easements or other interests in any such land in favor of any Person or entity other than the Declarant.

E. All improvements intended for future Phases will be substantially completed prior to annexation and will be consistent with the initial improvements in terms of quality of construction.

Section 2.3. Effect of Merger. Upon any merger or consolidation of the Association with another association, its properties, rights and obligations may, by operation of law or by lawful articles or agreement of merger, be transferred to another surviving or consolidated association or, alternatively, the properties, rights and obligations of another association may, by operation of law or by lawful articles or agreement of merger, be added to the properties, rights and obligations of the Association as a surviving corporation pursuant to a merger. The surviving or consolidated association may administer the Covenants established by this Declaration, together with the covenants and restrictions established upon any other properties, as one scheme.

Section 2.4. Withdrawal of Property. The Declarant reserves the right to amend this Declaration so long as it has a right to annex additional property pursuant to this Article II, without prior notice and without the consent of any Person or entity other than the owner of the property (if not the Declarant), for the purpose of removing property from the coverage of this Declaration, to the extent originally included in error or as a result of any changes in the Declarant's plans for the

ot the Declarant), for the purpose of removing property from the coverage of this Declaration, to the extent originally included in error or as a result of any changes in the Declarant's plans for the Properties, provided such withdrawal is not unequivocally contrary to the overall, uniform scheme of development for the Properties.

ARTICLE III MEMBERSHIP AND VOTING RIGHTS IN THE ASSOCIATION Section 3.1. Membership. Each and every Owner shall automatically be, and must at all times remain, a Member of the Association. During the Development Period, the Association shall have two (2) classes of Members as follows: Class A Members shall be all Owners, other than the Class B member, if any. The sole Class B Member shall be the Declarant. Upon conclusion of the Development Period, the Class B membership shall terminate and the Class B Member shall thereafter hold Class A membership for each Lot so owned by the Class B Member.

Section 3.2. Voting Rights. Members shall be entitled to vote as follows: Class A: Each Class A Member shall be entitled to one (1) vote for each Lot owned by such Member. Where more than one (1) Owner owns and holds a record fee interest in a Lot, the vote for such Lot shall be exercised as such co-Owners determine among themselves and advise the Secretary of the Association in writing; provided, there shall be no fractional voting and the Board may suspend the voting rights of any Member who is not in good standing. A Member shall not be in "good standing" if such Member is: (a) in violation of any portion of the Governing Documents and/or any portion of the Zoning Ordinance; or (b) delinquent in the full, complete and timely payment of any Annual Assessment, special FIRST AMENDED AND RESTATED DECLARATION - Page 11 4808 3546

ents and/or any portion of the Zoning Ordinance; or (b) delinquent in the full, complete and timely payment of any Annual Assessment, special FIRST AMENDED AND RESTATED DECLARATION - Page 11 4808 3546 assessment, or any other fee, charge or fine which is levied, payable or collectible pursuant to the provisions of the Governing Documents. In no event shall any one (1) Lot yield more than one (1) vote. If more than one Person attempts to exercise the vote for any Lot, neither shall be recognized and the vote for such Lot shall be suspended.

Class B: The Class B Member shall have three (3) votes for each Lop it owns.

Section 3.3 Rulemaking Authority Regarding Meetings and Voting. The Board may make such rules and regulations, consistent with the terms of this Declaration and the Bylaws, as it deems advisable with regard to membership meetings and voting, including, without limitation, rules regarding: (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 necessary or advisable.

Section 3.4 Board of Directors. The affans of the Association are managed by a board of five individuals, three of whom are elected by the Class B Member and two of whom are elected by the Class A Members. However, at the 2003 annual meeting of the Members of the Association through the 2014 annual meeting, the number of Board members shall be increased to seven

whom are elected by the Class A Members. However, at the 2003 annual meeting of the Members of the Association through the 2014 annual meeting, the number of Board members shall be increased to seven individual Directors, four of whom shall be elected by the Class B Member and three of whom shall be elected by the Class A Members. Thereafter, Class A Members shall elect all seven of the Directors.

The Directors need not be Members of the Association. Directors elected by the Class A Members shall be elected for two year terms of office and shall serve until their respective successors are elected and qualified. No more than one Member and/or Resident from each Village may serve on the Board at any given time, except with respect to Directors appointed by the Class B Member.

In the event two or more Members and/or Residents from the same Village are nominated for election to the Board, only the candidate receiving the highest number of votes from among those candidates shall be eligible to serve on the Board. Any vacancy which occurs in the Board by reason of death, resignation, removal, or otherwise, may be filled at any meeting of the Board by the affirmative vote of a majority of the remaining Directors representing the same class of Members who elected the Director whose position has become vacant. Any Director elected to fill a vacancy Shall serve as such until the expiration of the term of the Director whose position he or she was elected to fill. Notwithstanding the above, Directors elected by the Class B Member shall serve, and may be removed and replaced, only at the discretion of the Class B Member acting in its sole discretion.

Unless otherwise prohibited by the Bylaws, the Board shall be entitled to have one or more

and may be removed and replaced, only at the discretion of the Class B Member acting in its sole discretion.

Unless otherwise prohibited by the Bylaws, the Board shall be entitled to have one or more private workshop meetings and to have one or more public meetings per Fiscal Year. The actual election of the directors shall take place in accordance with the Bylaws or, to the extent not inconsistent with the Bylaws, the directives of the then-existing Board.

FIRST AMENDED AND RESTATED DECLARATION - Page 12 AZX3 -----4808 3547 Section 3.5. Notice and Voting Procedures, 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 Texas law.

ARTICLE IV RIGHTS OF ENJOYMENT IN THE COMMON PROPERTIES Section 4.1 Common Properties. Subject to the provisions of Sections 4.1 through 4.8, inclusive, of this Article, each and every Owner and Resident and their respective family, guests, and invitees, shall have a non-exclusive right and easement of enjoyment in and to all Common Properties, and such easement shall be appurtenant to and shall pass with the title to every Lot.

18 nonicia A. The right of the Declarant on 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, including rules limiting the number of guests who may use the Common Properties and imposing fines for infractions of such regulations.

B. Liens or mortgages placed against all or any portion of the Common Properties with respect to monies borrowed by the Declarant to develop and improve the Properties or

ractions of such regulations.

B. Liens or mortgages placed against all or any portion of the Common Properties with respect to monies borrowed by the Declarant to develop and improve the Properties or Common Properties or by the Association to improve or maintain the Common Properties.

C. The right of 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 or the Association to take such steps as are reasonably necessary to protect the Common Properties against foreclosure.

E. The right of the Declarant or the Association to enter into and execute contracts with the owner-operators of any community antenna television system ("CATV") or other similar operations for the purpose of extending cable or utility or other service on, over or under the Common Properties to ultimately provide service to one or more of the Lots.

F. The right of the Declarant or the Association to suspend the voting rights of any Member (as set forth in Section 3.2) and to suspend the right of any Owner or Resident to use or enjoy any of the Common Properties for any period during which any assessment (including, without limitation, "fines") against such Owner's or Resident's Lot remains unpaid, or during which non-compliance with the Governing Documents exists, and otherwise for any period deemed reasonable by the Association for an infraction of the Governing Documents.

G. The right of the Declarant or the Association to delegate one or more of the duties and

d otherwise for any period deemed reasonable by the Association for an infraction of the Governing Documents.

G. The right of the Declarant or the Association to delegate one or more of the duties and responsibilities of the Association to any Village sub-association which in turn shall assume and discharge such duties and responsibilities as to that particular Village.

FIRST AMENDED AND RESTATED DECLARATION - Page 13 4808 3548 H. The right of the Declarant and/or the Association to hold and sponsor, whether alone or in conjunction with municipal departments or other non-profit groups and entities, events and activities within the Common Properties which are not necessarily limited only to Owners or Residents, but which may also include selected invitees and/or the general public (for which the Board may, in its discretion, charge a user fee equal to or greater than any fee charged to Owners or Residents), such as (but not necessarily limited to) children summer recreational events, sports festivals and tournaments, summer camps, day care centers, concerts-in-the-park, wedding receptions, reunions, conferences, picnics, national and/or state holiday commemorations, educational and cultural presentations and other similar events which the Board reasonably believes will be of direct or indirect benefit to the Association and/or an appreciable number of its Members.

Noticia I. The right of the Declarant and/or the Association to dedicate or transfer all or any part of the Common Properties to any municipal corporation, public agency, governmental authority or utility for such purposes and upon such conditions as may be agreed to by the Declarant and the Board.

J. The right of the Declarant and/or the Association to grant permits, licenses and easements

or utility for such purposes and upon such conditions as may be agreed to by the Declarant and the Board.

J. The right of the Declarant and/or the Association to grant permits, licenses and easements over the Common Properties for utilities, roads and other purposes necessary for the proper operation of the Development Plan.

K. The Governing Documents.

L. The night of the Declarant and/or the Association to impose reasonable membership requirements and charge reasonable membership admission or other fees for the use of any recreational facility situated upon the Common Properties.

M. The sight of the Declarant and/or the Association to permit use of any recreational facilities situated upon the Common Properties by Persons other than Owners, their families, lessees and guests upon payment of use fees established by the Board.

N. The right of the Declarant or the Association to enter into agreements with neighboring landowners, including the Commercial Association, for the sharing of the costs to maintain, insure or improve land or improvements which benefits the Association.

O. The right of the Declarant and/or the Association to deny or prohibit the use of any recreational facilities situated upon the Common Properties by Persons other than the Owners, their families, lessees and guests, upon such terms and conditions as may be established by the Board from time to time.

An Owner who leases his or her Lot shall be deemed to have assigned all such rights and easements to the lessee of such Lot for the period of the lease.

FIRST AMENDED AND RESTATED DECLARATION - Page 14 Section 4.2 Residents Bound. Each Owner of each Lot shall be deemed and held directly responsible and liable for the acts, conduct and omission of each and every Resident, guest and

LARATION - Page 14 Section 4.2 Residents Bound. Each Owner of each Lot shall be deemed and held directly responsible and liable for the acts, conduct and omission of each and every Resident, guest and invitee affiliated with such Lot, and such liability and responsibility of each Owner shall be joint and several with their Resident(s), guests and invitees. The Payment and Performance Dien shall extend to, cover and secure the proper payment and performance by each and every Resident, guest and invitee affiliated with each Owner.

Section 4.3. Restricted Actions, No Owner or Resident shall permit any thing to be done on or in the Common Properties which would violate any applicable public law or Zoning Ordinance 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.

nofficial 4808 3549 Section 4.4 Damage to the Common Properties. Each Owner and Resident 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 Owner or Resident or their family guests or invitees.

Section 4.5. Rules of the Board The Board may make and enforce reasonable rules and regulations governing the use of the Properties 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, which rules and regulations shall be consistent with the rights and duties established by this Declaration. The Board shall have the power to enforce compliance with said rules and regulations by all appropriate

and regulations shall be consistent with the rights and duties established by this Declaration. The Board shall have the power to enforce compliance with said rules and regulations by all appropriate legal and equitable remedies, and an Owner or Resident determined to have violated said rules and regulations shall be liable to the Association for all damages and costs, including reasonable attorneys' fees.

Section 4.6. User Fees and Charges. The Board may levy and collect charges and fees for the operation and maintenance of the Common Properties and services which the Board determines to be necessary for the advancement, benefit and welfare of the Owners and Residents. In establishing user fees, the Board may formulate reasonable classifications of users. Such fees must be uniform within each class but need not be uniform from class to class. If an Owner shall fail to pay a charge of fee when due and payable, said unpaid charge or fee shall be delinquent and upon written notice to said Owner shall become a personal debt of said Owner. Failure of any Owner to pay said fee and charge when due and payable, in addition, shall be a breach of these Covenants and shall result in suspension of said Owner's and such Owner's Resident's rights or privileges.

Section 4.7 Use of Recreational Facilities. Each Owner acknowledges that certain recreational facilities including, but not limited to, swimming pools, beach club and related facilities, playgrounds, sports fields and courts, bike and hike trails, tennis facilities, skate parks, BMX bike tracks, are or may be provided within the Common Properties for the use and enjoyment of the Owners and Residents, and their respective families, tenants, and invitees. Inclusion of a recreational

ike tracks, are or may be provided within the Common Properties for the use and enjoyment of the Owners and Residents, and their respective families, tenants, and invitees. Inclusion of a recreational facility in this Section 4.7 shall not, under any circumstances, obligate the Declarant or the Association to provide such facility, nor shall the omission of any type of recreational facility from this Section 4.7 prevent the Declarant or the Association from providing such facility at a later time.

Each Owner hereby acknowledges that there are risks associated with the use of any such FIRST AMENDED AND RESTATED DECLARATION - Page 15 4808 3550 recreational facilities and that ALL USERS OF SUCH FACILITIES ARE SOLELY RESPONSIBLE FOR SUCH RISK. Each Owner, by accepting a deed to a Lot, acknowledges that he or she has not relied upon the representations of Declarant or the Association with respect to the safety of any recreational facilities or other Common Properties within the Properties.

The Association may, but shall not be obligated to, contract with, employ or otherwise provide, from time to time, a lifeguard or other monitoring personnel to be present at any recreational facility within the Properties. Each Owner acknowledges that the presence of such personnel shall not create a duty on the part of Declarant or the Association to provide for, insure or guarantee the safety of any user of the facility. Each Owner acknowledges that the presence of such monitoring personnel shall not in any way after the risks assumed by each Owner, his or her family members, tenants, other occupants of Owner's Lot and guests of any such Persons, which risks shall continue to be assumed by the user of the recreational facility.

med by each Owner, his or her family members, tenants, other occupants of Owner's Lot and guests of any such Persons, which risks shall continue to be assumed by the user of the recreational facility.

Section 4.8 Construction Activities. All Owners are hereby placed on notice that Declarant, any Affiliate of Declarant and/or its agents, contractors, subcontractors, licensees and other designees, successors or assignees, may be, from time to time conducting excavation, construction and other activities within or in proximity to the Properties. By the acceptance of a deed or other conveyance or Mortgage, leasehold, license, easement or other interest, and by using any portion of the Properties, each Owner automatically acknowledges, stipulates and agrees (a) that none of the aforesaid activities shall be deemed nuisances or noxious or offensive activities, under any applicable covenants or at law generally, (b) not to enter upon, or allow their children or other Persons under their control or direction to enter upon (regardless of whether such entry is trespass or otherwise) any property within or in proximity to any portion of the Properties where such activities are being conducted (even if not being actively conducted at the time of entry, such as at night or otherwise during non-working hours), (c) Declarant, any Affiliate of Declarant and all of their agents, contractors, subcontractors, licensees and other designees, successors and assignees, shall not be liable but rather, shall be held harmless, for any and all losses and damages (compensatory, consequential, punitive or otherwise), injuries or deaths arising from or relating to the aforesaid activities, and (d) any purchase or use of any portion of the Properties has been and will be made

, consequential, punitive or otherwise), injuries or deaths arising from or relating to the aforesaid activities, and (d) any purchase or use of any portion of the Properties has been and will be made with full knowledge of the foregoing.

ARTICLE V COVENANTS FOR ASSESSMENTS Section 5.1. Creation of the Lien and Personal Obligation of Assessments. Declarant, for each Lot owned by it, hereby covenants and agrees, and each Owner of any Lot, by acceptance of a Deed therefor, whether or not it shall be so expressed in any such Deed or other conveyance, shall be deemed to covenant and agree (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; FIRST AMENDED AND RESTATED DECLARATION - Page 16 L ( 4808 355J B. special group assessments for capital improvements or unusual or emergency matters, such assessments to be fixed, established and collected from time to time as hereinafter provided; C. special individual assessments levied against individual Owners to reimburse the Association for extra or unusual costs incurred for items such as (but not limited to): maintenance and repairs to portions of the Properties caused by the willful or negligent acts of the individual Owner or a Resident of his Lat; the remedy, cure or minimizing of problems caused by, or as a result of, violations of these Covenants by an Owner of Resident of his Lot; and D. individual assessments and fines levied against an individual Owner for violations of

of problems caused by, or as a result of, violations of these Covenants by an Owner of Resident of his Lot; and D. individual assessments and fines levied against an individual Owner for violations of rules and regulations by the Owner or a Resident of his Lot pertaining to the Association and/or the Common Properties.

nofficia The regular, special group, special individual and individual assessments, together with such late charges, interest and costs of collection thereof as are hereinafter provided, shall be a charge on the land and shall be a continuing Hen upon each Lot against which each such assessment is made and shall also be the continuing personal obligation of the then-existing Owner of such Lot at the time when the assessment fell due.

Section 5.2. Purposes of Assessments The assessments levied by the Association shall be used for the purposes of promoting the comfort, recreation, convenience, welfare and quality of life of the Owners and Residents of the Properties 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 greenbelt easements, walkways, common green, hike and bike trails, ponds, lakes, recreational areas 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: the payment of taxes on the Common Properties and insurance in connection with the Common Properties; the payment for utilities and the repair, replacement and additions of various items within the Common Properties; paying the cost of labor, equipment

surance in connection with the Common Properties; the payment for utilities and the repair, replacement and additions of various items within the Common Properties; 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; carrying out the duties of the Board of Directors of the Association as set forth in Articles IV and VI hereof; carrying out the other various matters set forth osenvisioned herein or in any Supplementary Declaration related hereto; and for any matter or thing designated by the City of McKinney 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.

Section 5.3. Basis and Amount of Annual Assessments.

A. Appraised Value Lots. The basis and concept of determining, revising (when appropriate from time to time) and collecting the Annual Assessment on Lots within the Assessable Properties and described on Exhibit "B-1" (the "Appraised Value Lots") parallels the system of ad valorem FIRST AMENDED AND RESTATED DECLARATION - Page 17 4808 3552 taxation imposed and administered by the Taxing Authorities and the CADCC. Each Owner of an Appraised Value Lot, including the Class B Member, therefore, shall be deemed to covenant and agree with the Association that, as to each Lot so owned by such Owner (1) any and all renderings, renditions, valuations, comparables, sales price(s) and other information, calculations and data submitted to or for the benefit of the Taxing Authorities and/or the CADCC shall similarly and contemporaneously be submitted to the Association; nofficial

and other information, calculations and data submitted to or for the benefit of the Taxing Authorities and/or the CADCC shall similarly and contemporaneously be submitted to the Association; nofficial (2) the Association is made, constituted and appointed as such Owner's true and lawful attorney-in-fact, coupled with an irrevocable interest, to apply for seek and obtain ad valorem tax data, market valuations, assessed valuations and like data kept and maintained by the Taxing Authorities and/or the CADCC and/oNmultiple listing service records kept and maintained by realtors or appraisers on a systematized basis, so that the Assessed Valuation can be properly determined. In the event any Owner fails, neglects or refuses to so cooperate with and assist the Association in discharging its responsibility to so determine the Assessed Valuation, then: (i) the Board may levy an individual special assessment against the Owner and the Owner's Lot equal to the reasonable cost and expense incurred by the Association in otherwise gathering the data; and/or (ii) the Board may estimate and prescribe an Assessed Valuation which shall be binding upon the Owner and his Lot.

To provide funds for the purposes illustrated in Section 5.2 above, the Board shall assess against each Appraised Value Lot a charge which shall be uniform with respect to all such Lots and which shall be equal to a specified number of dollars and/or cents, as determined by the Board, for each One Hundred Dollars ($100.00) of the Assessed Valuation of the Lot (the "Assessment Rate").

The Assessment Rate for the 2000 Fiscal Year shall be ($0.1861) per One Hundred Dollars $100.00) of Assessed Valuation, and such Assessment Rate may be increased, in the sole discretion

ssment Rate").

The Assessment Rate for the 2000 Fiscal Year shall be ($0.1861) per One Hundred Dollars $100.00) of Assessed Valuation, and such Assessment Rate may be increased, in the sole discretion of the Board, in any subsequent Fiscal Years so long as the cumulative increases in the Assessment Rate after 2000 do not exceed five percent (5%) per year or the cumulative increases in the Consumer Price Index since January 1, 2000, whichever is greater. In making each such assessment, the Board shall separately assess each Lot and each such 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 Lot.

B. Fixed Rate Lots. The Annual Assessment to be levied on each Lot within the Assessable Properties described on Exhibit "B-2" or subjected to this Declaration after the date of recording of this Declaration (the "Fixed Rate Lots") shall not be based upon the Assessed Valuation but shall be equal for all such Lots. The amount of such Annual Assessment for the 2000 Fiscal Year shall be Five Hundred Six and 56/100 Dollars ($506.56) per Fixed Rate Lot. Such Annual Assessment may be increased, in the discretion of the Board, in any subsequent Fiscal Years, provided it does not exceed the Maximum Annual Assessment determined as set forth in Section 5.3C. Each Owner of a Fixed Rate Lot, including the Class B Member, by acceptance of a deed to any such Lot Property, acknowledges that such method of determining assessments is reasonable in light of the membership privileges and benefits received from the Association and is the least burdensome means of determining Annual Assessments on the Fixed Rate Lots, and agrees to pay such

able in light of the membership privileges and benefits received from the Association and is the least burdensome means of determining Annual Assessments on the Fixed Rate Lots, and agrees to pay such assessments notwithstanding that they may exceed the Annual Assessment payable by Owners of Appraised Value Lots.

FIRST AMENDED AND RESTATED DECLARATION - Page 18 4808 3553 C. Maximum Annual Assessment. The maximum Annual Assessment to be levied on any Lot within the Properties shall be $506.56 for the 2000 Fiscal Year and shall automatically increase for each subsequent Fiscal Year by five percent (5%) or the percentage increase in the Consumer Price Index during the previous Fiscal Year, whichever is greater. The maximum Annual Assessment may not be otherwise increased without the assent of at least two-thirds of each class of Members at a meeting called for that purpose with at least sixty percent (60%) of the Lot Owners (or their proxies) present after adequate notice. If sixty percent (60%) do not attend, a second meeting may be called with the same notice and the quorum may be reduced to thirty percent (30%). In the event that the Annual Assessment against any Lot within the Existing Property, computed as described in Paragraph A of this Section, would otherwise exceed the maximum Annual Assessment allowed hereunder, then the Annual Assessment against such Lot shall be reduced to equal the maximum Annual Assessment permitted hereunder The Board shall not increase the Annual Assessment except pursuant to this Section and shall not take formal action on or impose a cost of living increase in the Annual Assessment more than once in any Fiscal Year. Any such cost of living increase in the Annual Assessment shall thereafter

all not take formal action on or impose a cost of living increase in the Annual Assessment more than once in any Fiscal Year. Any such cost of living increase in the Annual Assessment shall thereafter remain in effect indefinitely; and any increase shall not be deemed to limit the Board's authority to increase the annual assessment in succeeding Fiscal Years provided, however, that any further increases are made in accordance with this Section. 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.

Section 54 Special Group Assessments. In addition to the regular Annual Assessment authorized by Section 5.3, the Association may levy in any Fiscal Year a special assessment, applicable to that 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). Special Group Assessments shall be levied equally on all residential Lots within the Assessable Property.

Section 5.5. Date of Commencement of Assessments: Due Dates. The Annual Assessment shall be due and payable in full in advance on the first day of each Fiscal Year and shall, if not automatically paid within thirty (30) consecutive calendar days thereafter, 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 notice shall not relieve any Owner of

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 notice shall not relieve any Owner of the obligation established by the preceding sentence. The Board may (but is not required to), however, prescribe time-price differential payment schedules which would permit the collection of an amount greater than the Annual Assessment on a semi-annual, quarterly or monthly basis provided that the creditworthiness of the Owner was acceptable to the Board and the inconvenience to the staff of the Association for additional invoicing and collection efforts was minimized or eliminated. The Board may further prescribe: (a) procedures for collecting advance regular Annual Assessments from new Owners 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(s) of assessments.

FIRST AMENDED AND RESTATED DECLARATION - Page 19 4808 3554 Section 5.6. Duties of the Board of Directors with Respect to Assessments.

A. In the event of a revision to the amount or rate of the Annual Assessment, or establish ment of a special group assessment, the Board shall fix the amount of the assessment against each Lot, and the applicable due date(s) for each assessment, at least sixty (60) days in advance of such date or period and shall, at that time, prepare a roster of the Lots and assessments applicable thereto which shall be kept in the office of the Association B. Written notice of the applicable assessment shall be actually or constructively furnished to every Owner subject thereto in accordance with the procedures then determined by the Board as being reasonable and economical; and

pplicable assessment shall be actually or constructively furnished to every Owner subject thereto in accordance with the procedures then determined by the Board as being reasonable and economical; and C. The Board shall, upon reasonable demand, furnish to any Owner originally liable for said assessment, a certificate in writing signed by an officer of the Association, setting forth whether said assessment has been paid. Such certificate shall be conclusive evidence of payment of any assessment therein stated to have been paid. A reasonable charge may be made by the Board for the issuance of such certificate.

Section 5.7. Effect of Nonpayment of Assessment; the Personal Obligation of the Owner: the Lien; and Remedies of Association A. Effective as of and from and after the filing and recordation of each of the Master Declarations and any Supplementary Declarations hereafter filed, there has existed and shall continue to exist a self-executing and continuing contract Payment and Performance Lien and equitable charge on each Lotto secure the full and timely payment of each and all assessments and all other charges and monetary amounts and performance obligations due hereunder. Such lien shall be at all times superior to any claim of homestead by or in any Owner. If any assessment, charge or fine or any part thereof levied by the Association against any Lot or the Owner or a Resident thereof is not paid on the date(s) when due, then the unpaid amount of such assessment, charge or fine shall (after the passage of any stated grace period) be considered delinquent and shall, together with any late charge and interest thereon at the highest lawful rate of interest per annum and costs of collection thereof,

age of any stated grace period) be considered delinquent and shall, together with any late charge and interest thereon at the highest lawful rate of interest per annum and costs of collection thereof, become a continuing debt secured by the self-executing Payment and Performance Lien on the Lot ofthe non-paying Owner/Member/Resident which shall bind such 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 an owner to pay such assessment or other monetary obligations, however, shall remain such Owner's personal obligation and shall not pass to the Owner's successors in title unless expressly assumed by them.

However, the lien for unpaid assessments shall be unaffected by any sale or assignment of a Lot and shall continue in full force and effect. No Owner may waive or otherwise escape liability for any assessment provided for herein by non-use of the Common Properties or abandonment of the Lot.

No diminution or abatement of assessments 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 FIRST AMENDED AND RESTATED DECLARATION - Page 20 4808 3555 by the Association to comply with any law, ordinance or with any order or directive of any municipal

he Association, or from any action taken FIRST AMENDED AND RESTATED DECLARATION - Page 20 4808 3555 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 being a separate and independent covenant on the part of each Owner.

B. The Association may give written notification to the holder(s) of any mortgage on the Lot of a non-paying Owner of such Owner's default in paying any assessment, charge or fine and shall be obligated to do, so if the Association has theretofore been furnished in writing with the correct name and address of the holder(s) of such mortgage a reasonable supply of self-addressed postage prepaid envelopes, and a written request to receive such notification ficia C. If any assessment, charge or fine or part thereof is not paid when due, the Association shall have the right and option to impose a late charge (out 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, charge or fine may bear interest, in the Board's discretion, from and after the date when due until fully paid at a rate determined by the Board, but not to exceed the highest lawful rate of interest per annum. If applicable state law provides or requires an alternate ceiling under Vernon's Annotated Texas Civil Statutes Article 5069-1.04, then that ceiling shall be the indicated rate ceiling. The Association may, at its election, retain the services of an attorney to

ling under Vernon's Annotated Texas Civil Statutes Article 5069-1.04, then that ceiling shall be the indicated rate ceiling. The Association may, at its election, retain the services of an attorney to review, monitor and/or collect unpaid assessments, charges, fines and delinquent accounts, and there shall also be added to the amount of any unpaid assessment, charge, fine or any delinquent account any and all attorneys' fees and other costs of collection incurred by the Association.

D. The Association may, at its discretion but subject to all applicable debt collection statutes prepare and tile a document in the public records of Collin County, Texas which specifically identifies the unpaid assessments, charges or fines and that the fact that a lien exists to secure the repayment thereof. However failure to execute and record any such document shall not, to any extent, affect the validity, enforceability or priority of the lien. Each Owner consents to these procedures and authorizes the Board to undertake such measures for the general benefit of the Association.

E All agreements between any Owner and the Association and/or 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 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

ermissible 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 Declarant should ever receive an amount deemed interest by applicable law which shall exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the actual assessment amount or principal amount owing hereunder and other indebtedness of the Owner to the Association and/or Declarant and not to the payment of interest or if such excessive interest exceeds the unpaid balance of the actual Annual Assessment hereof and such other indebtedness, the excess shall be refunded to Owner. 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 FIRST AMENDED AND RESTATED DECLARATION - Page 21 1 4808 3556 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 paragraph shall control and supersede every other provision of all agreements between any Owner and the Association and/or Declarant.

Section 5.8. Power of Sale. The lien described within the preceding Section is and shall be

nd supersede every other provision of all agreements between any Owner and the Association and/or Declarant.

Section 5.8. Power of Sale. The lien described within the preceding Section is and shall be a contract Payment and Performance Lien and may be foreclosed through judicial or, to the extent allowed by law, non-judicial foreclosure proceedings in accordance with Tex. Prop. Code Ann.

Section 51.002 (Vernon 1984), as it may be amended, in like manner of any deed of trust on real property. Each Owner hereby grants to the Association, whether or not it is expressed in the deed or other instrument conveying such Lot to the Owner, a power of sale to be exercised in accordance with Tex. Prop.Code Ann. Section 51002 (Vernon 1984), as it may be amended.

Section 5.9. Rights of City of McKinney In the event that the Association, its successors or assigns, shall fail or refuse to adequately maintain the appearance and condition of the Common Properties which it is obligated to maintain hereunder, the City of McKinney, Texas shall have the right and may assume the duty of performing all such maintenance obligations of the Association at any time, upon giving written notice to the Owners or at any time after the expiration of ten (10) days after receipt by the Association, its successors or assigns, of written notice specifying in detail the nature and extent of the failure to maintain without such failure being remedied, whichever notice shall be deemed appropriate by the City of McKinney. Upon assuming such maintenance obligations, the City of McKinney may levy an assessment upon each Lot on a pro rata basis for the cost of such maintenance, notwithstanding any other provisions contained in this Declaration, which

e obligations, the City of McKinney may levy an assessment upon each Lot on a pro rata basis for the cost of such maintenance, notwithstanding any other provisions contained in this Declaration, which assessment shall constitute a lien upon the Lot against which each assessment is made. During the period the City of McKinney has a right and assumes the obligation to maintain and care for the Common Properties, the Association shall have no obligation or authority with respect to such maintenance. The right and authority of the City of McKinney to maintain the Common Properties shall cease and terminate when the Association, its successors or assigns, shall present to the City of McKinney reasonable evidence of its willingness and ability to resume maintenance of the Common Properties. In the event the City of McKinney assumes the duty of performing the maintenance obligations of the Association as provided herein, then the City of McKinney, its agents, representatives and employees shall have right of access to and over the Common Properties for the purpose of maintaining, improving and preserving the same; and in no event, and under no circumstances, shall the City of McKinney be liable to the Association or any Owner, Resident or Member, or their respective heirs, executors, administrators, devisees, personal representatives, successors and assigns for negligent acts or construction relating in any manner to maintaining, improving and preserving the Common Properties, or to any Owner, Resident, Member, the Association or any other Person for failure to perform such maintenance.

Section 5.10. Subordination of the Lien to Mortgagees. The lien securing the payment of the assessments and other obligations provided for herein shall be superior to any and all other

ch maintenance.

Section 5.10. Subordination of the Lien to Mortgagees. The lien securing the payment of the assessments and other obligations provided for herein shall be superior to any and all other charges, liens or encumbrances which may hereafter in any manner arise or be imposed upon any Lot whether arising from or imposed by judgment or decree or by any agreement, contract, mortgage or other instrument, except for: FIRST AMENDED AND RESTATED DECLARATION - Page 22 A.

4808 3557 bona-fide first mortgage or deed of trust liens for purchase money and/or home improvement purposes placed upon a Lot, including without limitation Institutional Mortgages and Eligible Mortgages, in which event the Association's Henshall automatically become subordinate and inferior to such first lien; icial B. liens for taxes or other public charges as are by applicable law made superior to the Association's lien; and C. such other liens about which the Board may, in the exercise of its reasonable discretion, elect to voluntarily subordinate the Association's lien; provided, however, such subordination shall apply only to (i) the assessments which have been due and payable prior to the foreclosure sale (whether public or private) of such Lot pursuant to the terms and conditions of any such first mortgage or deed of trust or tax lien, (ii) the permitted lien on the Lot alone and not on or to any easement appurtenant for use and enjoyment of the Common Properties. Such sale shall not relieve such Let from liability for the amount of any assessment thereafter becoming due nor from the Hen any such subsequent assessment. Such subordination shall not apply where the first mortgage or deed of trust or tax lien is used as a device, scheme or

essment thereafter becoming due nor from the Hen any such subsequent assessment. Such subordination shall not apply where the first mortgage or deed of trust or tax lien is used as a device, scheme or artifice to evade the obligation to pay assessments and/or to hinder the Association in performing its functions hereunder.

Section 5.11. Working Capital Fund. To satisfy existing requirements of Eligible Mortgagees and Eligible Insurers and better insure that the Association will have the funds to meet unforeseen expenditures or to purchase additional equipment or services, a contribution shall be made by or on behalf of the first Owner of a Lot (other than the Declarant or a Builder) to the working capital of the Association in an amount equal to one-sixth (1/6) of the Annual Assessment per Lot for that year as determined by the Board. This amount shall be in addition to, not in lieu of, the Annual Assessment levied on the Lot and shall not be considered an advance payment of any portion thereof.

This amount may be used in covering operating expenses and other expenses incurred by the Association pursuant to the terms of this Declaration and the By-Laws. Within sixty (60) days after termination of the Class B Membership, and in accordance with the requirements of the Federal National Mortgage Association, Declarant shall pay the share of the working capital fund applicable to each unsold Lot to the Association. Declarant should then reimburse itself for this payment from the funds collected at closing when the unsold Lots are sold.

Exempt Property. The following property otherwise subject to this Declaration shall be exempted from any assessments, charge and lien created herein: Section 5.12.

osing when the unsold Lots are sold.

Exempt Property. The following property otherwise subject to this Declaration shall be exempted from any assessments, charge and lien created herein: Section 5.12.

A. All properties dedicated to and accepted by a local public or governmental official; B. Common Properties; and C. Exempt Property.

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