The Association will meet annually at which meeting members will elect directors to the Board of Directors to fill the vacancies resulting from expiration of prior terms of office on such Board. At each meeting, the officers of the Association will present a financial report and other business will be conducted according to the agenda for such annual meetings. Special meetings of the Association may be called at any time by the President, the Board of Directors, or upon written request by the members entitled to vote one-fourth of the votes of the non-developer class membership

The Board of Directors elects the officers of the Association who direct the day-to-day business of the Association. The Association is responsible for the maintenance, upkeep and landscaping of the recreational property, bookkeeping and accounting functions, maintenance of sidewalks, private streets and drives, parking lots and parking areas located on the recreational property, collection of the assessment fees from the members, preparation of an annual budget, providing for an annual compilation report or financial statement of the Association, insuring the recreational property and related duties.

The Association has the right to charge reasonable fees for the use of any recreational facilities located on the recreational property and to establish and enforce reasonable rules and regulations governing the use of the recreational property. Further, all facilities located upon the recreational property shall be available for use of all owners of single family non-cluster lots located within Piney Creek and shall not be restricted to the use of owners of lots located in a specific subdivision.

The Association shall also establish a committee for architectural control, which will approve and review all additions, changes, or improvements which are made to the recreational property.

The maximum annual assessment fee is determined each year by the Board of Directors of the Association. The owners of each lot will be assessed the same actual assessment fees except that the actual assessment fees on the lots which are owned by the developer and/or Participating Builder and which are neither leased, nor rented nor otherwise occupied as a residence will be fixed at twenty-five percent (25%) of the actual assessment rate for the other lots. However, if the Association income is inadequate to meet its expenses during a particular annual assessment period, and if the steps required by the Declaration are taken by the Association, then the developer and Participating Builders will be made responsible for the payment of a subsidy equal to that amount necessary to meet such shortfall, up to full parity on the developer's and Participating Builders' assessments. The amount of the annual increase in the maximum annual assessment fee for the Association over the preceding assessment year will be equal to yearly increases, if any, in the Consumer Price Index. Only by vote of two-thirds of each class of members who are voting in person or by proxy at a meeting duly called for that purpose may the maximum annual assessment for the Association be increased above that established by the Consumer Price Index formula. At any time, upon notice to the owners, the Board of Directors of the Association, may fix the actual assessment at any amount not in excess of the maximum. Presently the maximum annual assessment which may be assessed by the Association is Six Hundred Dollars ($600.00) per assessable lot. The annual assessment of the Association is presently collected on a monthly basis as provided in the Declaration, although the Board of Directors of the Association may collect assessments less frequently.

In addition to the annual assessments, the Association may levy, in any assessment year, a special assessment, for that year only, for construction, repair, or replacement of capital improvements on the recreational property or for funding any operating deficit of the Association. Any such special assessment requires the assent of two-thirds of each class of members voting in person or by proxy at a meeting duly called for considering such special assessment. Any special assessment levied by the Association will be assessed equally against each lot, except that special assessments against lots owned by the developer and/or any Participating Builder will be twenty-five percent (25%) of the rate of special assessments levied against other lots.

In addition to the annual and special assessments, a contribution to the working fund in an amount equal to 2 times the monthly installment of the maximum annual assessment assessed by the Association will be paid at closing by the purchasers of each lot who purchase their lot from the developer or Participating Builder. Such working fund is to be maintained by the Association in a segregated account for the use and benefit of the Associations.

Since it is important that each owner pay his assessments when due, procedures for the enforcement and collection of assessments have been established. The assessment is the personal obligation of the owner concerned, and also a lien will be created against an owner's lot for the amount of any delinquent assessment. After an assessment is delinquent over ten (10) days, it bears interest from the due date at the rate of eighteen percent (18%) per annum, and the Association may assess a monthly late charge thereon. Such lien is for the benefit of the Association and can be foreclosed. In addition, the Association can file an action in court to collect the amount of the assessment plus interest, late charges, costs and attorneys' fees, without foreclosing its lien.

Additional residential and recreational property may be annexed to Piney Creek to be owned and maintained by the Association with the consent of two-thirds of each class of members. In addition, subject to approval by the Federal Housing Administration of the U.S. Department of Housing and Urban Development or the Veterans Administration while there is a Class B membership, the developer may annex additional residential and recreational property within the lands, described as Piney Creek, Arapahoe County, Colorado, to be owned and maintained by the Association until ten (10) years from the recording date of the Declaration, without the consent of the individual homeowners or the Association. Any such annexed recreational property will be owned and maintained by the Association. Further, any such annexation, as well as any merger or consolidation, will increase the number of members of the Association.

I/we acknowledge receipt of a copy of this Information Brochure for Piney Creek Recreational Association, Inc. this________________day of__________________, 19_______.

______________________________

Purchaser

______________________________

Purchaser

DECLARATION

OF

COVENANTS, CONDITIONS AND RESTRICTIONS

OF

PINEY CREEK RECREATIONAL ASSOCIATION, INC.

TABLE OF CONTENTS

Section 3. Delegation of Use. Any Owner may delegate, in accordance with the Bylaws, his right of enjoyment to the Recreational Property and facilities to the members of his family, his tenants, or contract purchasers who reside on his Lot.

Section 4. Payment of Taxes or Insurance by Mortgagees. First Mortgagees of Lots shall have the right, jointly or singly, to pay taxes or other charges or assessments which are in default and which may or have become a lien against the Recreational Property and may pay overdue premiums on hazard insurance policies or secure new hazard insurance coverage on the lapse of a policy for the Recreational Property, and any First Mortgagee making any such payment shall be owed immediate reimbursement therefor from the Association.

Section 5. Improvements to be Constructed by Declarant. Declarant shall construct the following facilities only upon the Recreational Property, to wit: (a) 1 swimming pool; (b) 1 wading pool; (c) 4 tennis courts; (d) 1 clubhouse; (e) 1 children play area; (f) 1 pond system; (g) a park area; and (h) a private street and parking lot. Any additional facilities shall be constructed by the Association at its sole cost and expense.

ARTICLE III

MEMBERSHIP AND VOTING RIGHTS

Section 1. Membership. Every Owner of a Lot, which is subject to assessment hereunder, shall be a Member of the Association. Membership shall be appurtenant to and may not be separated from ownership of any Lot.

Section 2. Classes of Membership. The Association shall have two classes of voting membership:

Class A. Class A Members shall be all Owners of Lots, with the exception of Declarant. Each Class A Member shall be entitled to one vote for each Lot owned. When more than one person holds an interest in any Lot, all such persons shall be Members, and the vote for such Lot shall be exercised as they determine, but in no event shall more than one vote be cast with respect to any such Lot.

Class B. The Class B Member shall be Declarant and shall be entitled to three (3) votes for each Lot which it owns, which are neither leased, nor rented, nor otherwise residentially occupied. Leasing, renting, or allowing entry for residential occupancy shall terminate Declarant's weighted voting advantage in relation to any Lot so leased, rented, or residentially occupied, and shall limit Declarant in relation to any such Lots to the same voting rights as a Class A Member. The Class B membership shall cease and be convened to Class A membership, whichever is appropriate, on the happening of the first of the following events:

(a) When the total Class A votes equal the total Class B votes applicable to Lots; or

(b) ten (10) years from the date upon which this Declaration is recorded in the office of the Clerk and Recorder of Arapahoe County, Colorado.

(c) on a date certain set forth in written notice from the Declarant to the Secretary of the Association of its intent to terminate its Class B voting rights as of such date; provided, however, that in the event there is more than one Declarant, such notice must be signed by all such Declarants.

ARTICLE IV

COVENANT FOR ASSESSMENTS

Section 1. Creation of the Lien and Personal Obligation of Assessments . Each Owner of a Lot, including Declarant and Participating Builders, by acceptance of a deed therefor, whether or not it shall be so expressed in such deed, is deemed to covenant and agree to pay to the Association: (1) annual assessments or charges and (2) special assessments, such assessments to be established and collected as hereinafter provided. The annual and special assessments, together with interest, late charges, costs, and reasonable attorney's fees, shall be a charge on the land and shall be a continuing lien upon the Lot and Residence located thereon against which each such assessment is made. The lien may be enforced by foreclosure of the defaulting Owner's Lot and Residence located thereon by the Association in like manner as a mortgage on real property. In any such foreclosure the Owner shall be required to pay the costs and expenses of such proceedings, including reasonable attorney's fees. The Board of Directors or managing agent of the Association may prepare a written notice setting forth the amount of such unpaid indebtedness, the name of the Owner of the Lot and a description of the Lot. Such a notice shall be signed by one of the Board of Directors or by the managing agent of the Association and may be recorded in the office of the Clerk and Recorder of the County of Arapahoe, Colorado. The lien for each unpaid assessment shall attach to each Lot at the beginning of each assessment period and shall continue to be a lien against such Lot until paid. The costs and expenses for filing any notice of lien shall be added to the assessment for the Lot against which it is filed and collected as part and parcel thereof. Each assessment, together with interest, late charges, costs, and reasonable attorney's fees, shall also be the personal obligation of each person who was the Owner of such Lot at the time when the assessment became due. The personal obligation for delinquent assessments shall not pass to such Owner's successors in title unless expressly assumed by them. The Association's lien on each Lot for assessments shall be superior to any homestead exemption now or hereafter provided by the laws of the State of Colorado or any exemption now or hereafter provided by the laws of the United States. The acceptance of a deed subject to this Declaration shall constitute a waiver of the homestead and any other exemption as against said assessment lien.

Section 2. Purpose of Assessments . The assessments levied by the Association shall be used exclusively to promote the recreation of the residents of the Properties, for the improvement, repair, replacement, and maintenance of the Recreational Property and the appurtenances and improvements thereto and thereon, including without limitation, maintenance of landscaping located on the Recreational Property, maintaining, repairing and replacing all improvements and recreational facilities located thereon, and paying all taxes, insurance premiums, professional management tees and utilities costs in connection with the Recreational Property.

Section 3. Maximum Annual Assessment. Until commencement of the second annual assessment period, the maximum annual assessment shall be Six Hundred Dollars ($600.00) per Lot.

(a) Effective with commencement of the second and each subsequent annual assessment period, the maximum annual assessment shall be increased effective each annual assessment year in conformance with the rise, if any, of the Consumer Price Index published by the U.S. Department of Labor, Washington, D.C., for All Items and Major Group Figures for All Urban Consumers (1967=100), for the one-year period ending with the preceding month of November. This annual increase in the maximum annual assessment shall occur automatically upon the commencement of each annual assessment year without the necessity of any action being taken with respect thereto by the Association. In the event the aforesaid Consumer Price Index is not published, for whatever reason, then the increase in the maximum annual assessment, as provided herein, shall be calculated by using a substantially comparable index designated by the Board of Directors of the Association.

(b) Effective with commencement of the second and each subsequent annual assessment period, the maximum annual assessment may be increased above that established by the Consumer Price Index formula, for the next succeeding annual assessment year and at the end of each such annual assessment period, for each succeeding annual assessment year, provided that any such increase shall have the assent of two-thirds (2/3) of each class of Members who are voting in person or by proxy at a meeting duly called for this purpose, written notice of which shall be sent to all Members not less than 30 days nor more than 60 days in advance of such meeting setting forth the purpose therefor.

(c) Subject to the provisions of Section 6 of this Article IV relating to Declarant's and Participating Builders' obligations to subsidize the Association for shortfalls in assessments, the Board of Directors of the Association may, at any time and from time to time, after consideration of the projected maintenance costs and other financial needs of the Association, and upon written notification to each Owner of the amount of the actual assessment to be levied, fix the actual assessment against each Lot at an amount less than the maximum. In the event the Board of Directors of the Association determines, at any time and from time to time, during any annual assessment period in which the Association shall have levied an assessment in an amount less than the maximum, that the rate of assessment then in effect is less than may be necessary to adequately fund all maintenance costs and other financial needs of the Association, then the Board of Directors of the Association may increase the actual assessment against each Lot upon written notification thereof to each Owner, provided that the amount of the actual assessment against each Lot shall not be increased to an amount in excess of the maximum annual assessment for that annual assessment period.

(d) The limitations hereof shall not apply to any change in the maximum and basis of the assessments undertaken as an incident to a merger or consolidation in which the Association is authorized to participate under its Articles of Incorporation.

(e) The Association shall maintain an adequate reserve fund out of the annual assessments for the maintenance, repair and replacement of those elements of the Recreational Property that must be maintained, repaired or replaced on a periodic basis.

Section 4. Special Assessments for Capital Improvements. In addition to the annual assessments authorized in this Article IV, the Association may levy, in any assessment 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, repair, or replacement of a capital improvement upon the Recreation Property, including fixtures and personal property related thereto, or for the funding of any operating deficit incurred by the Association. Any such assessment shall have the assent of two-thirds (2/3) of the votes of each class of Members who are voting in person or by proxy at a meeting duly called for this purpose.

Section 5. Notice and Quorum for Any Action Authorized Under Sections 3 and 4. Written notice of any meeting called for the purpose of taking any action authorized under Sections 3 or 4 of this Article shall be sent to all Members not less than 30 days nor more than 60 days in advance of the meeting. The first such meeting called for such purpose shall require the presence of Members or of proxies entitled to cast sixty percent (60%) of all the votes of each class of membership shall constitute a quorum. If the required quorum is not present, other meetings may be called subject to the same notice requirement, and the required quorum at each such subsequent meeting shall be one-half (½) of the required quorum at the preceding meeting. No such subsequent meeting shall be held more than 60 days following the preceding meeting.

Section 6. Uniform Rate of Assessment . Annual and special assessments must be fixed at a uniform rate for all Lots sufficient to meet the expected needs of the Association; provided, however, that notwithstanding anything to the contrary contained in this Declaration, the rate of annual and special assessments set for the Lots owned by Declarant and/or Participating Builders which are neither leased, nor rented, nor otherwise occupied as a Residence shall be fixed at one-quarter (¼) of the assessment rate for the other Lots. In the event that, prior to the termination of the Class B membership, assessments for annual common expenses, exclusive of those amounts held by the Association for an adequate reserve fund and for working capital, fail to equal or exceed the actual expenses incurred by the Association during any particular annual assessment period because of such partial Declarant and/or Participating Builder assessment, then Declarant and all Participating Builders shall pay a sufficient amount, up to the amount of full parity on such assessment, to she Association to meet any such shortfall so long as (a) written notice must be given by the Association within sixty (60) days following the termination of the then current fiscal year of the Association at the time of the termination of the Class B membership, but in no event more than one (1) year following the termination of such Class B membership, and (b) Declarant and Participating Builders shall have no obligation for any such shortfall caused by expenditures for capital improvements, or by any decrease in assessments, including without limitation, the levying of any assessment in an amount less than the maximum for any common expense assessment period, which amount is established subsequent to the termination of the Class B membership, unless the same has previously been approved in writing by Declarant; provided, however, that at the time any Lot owned by Declarant and/or a Participating Builder and is leased, rented or residentially occupied, that Lot shall be assessed at the uniform rate of assessment for privately owned Lots. In the event there are any Participating Builders or there is more than one "Declarant' then, subject to the conditions hereinabove stated, each such Declarant and/or Participating Builder shall pay a pro rata share of the amount necessary to meet each such shortfall in Association assessment, up to the amount of full parity on such assessments; such pro rata share to be based on the number of Lots not subject to the full assessment rate described above which are owned by each Declarant and Participating Builder and the duration of such payment of assessment at less than the full rate during the applicable annual assessment period.

Section 7. Date of Commencement of Annual Assessments. The initial annual assessment shall commence on the first day of the month following the first residential occupancy of a Lot and the second and each subsequent annual assessment period shall correspond with the fiscal year of the Association, The annual assessments may be made due and payable in twelve monthly installments or with such other frequency per annum, on such dates as determined by the Board of Directors of the Association, provided that the first annual assessment shall be adjusted according to the number of months in the first annual assessment year. Any Owner purchasing a Lot between installment due dates shall pay a pro rata share of the last installment due.

Section 8. Effect of Nonpayment of Assessments; Remedies of the Association. Any assessment or portion thereof which is not paid when due shall be delinquent. Any assessment or portion thereof which is not paid within ten (10) days after the due date shall bear interest from the due date at the rate of eighteen percent (18%) per annum and the Association may assess a monthly late charge thereon in such reasonable amounts as determined from time to time by the Association. The Association may bring an action at law against the Owner personally obligated to pay the same, or foreclose the lien against such Owner's lot, and in the event a judgment is obtained, such judgment shall include interest and late charges on the assessment, as above provided, and a reasonable attorney's fee to be fixed by the court, together with the costs of the action. No Owner may waive or otherwise escape liability for the assessments provided for herein by non-use of the Recreational Property or abandonment of his Lot.

Section 9. Working Capital. The Association or Declarant shall require the first Owner of each Lot, who purchases that Lot from Declarant or a Participating Builder, to make a nonrefundable contribution to capital to the Association in an amount equal to two (2) times the monthly installment of the annual common expense assessment effective at the time of conveyance of the Lot, which sum shall be held in a segregated account by the Association as and for working capital. Said payment shall be held for the use and benefit of the Association as it deems desirable, including but not limited to the use to insure that the Board of Directors of the Association will have cash available to meet unforeseen expenditures, or to acquire additional equipment or services deemed necessary or desirable by the Board. Such deposit shall not relieve an Owner from making the regular payment of assessments as the same become due. Upon the transfer of his Lot, an Owner shall be entitled to a credit from his transferee in an amount equal to that portion of the first private Owner's payment into the working capital fund which remains in the account, which amount shall be calculated by multiplying such first private Owner's payment to the working capital fund by a fraction, the numerator of which is equal to the amount in the fund as of the date of the Association's last financial statement (or, if readily available, such amount as of a more current date) and the denominator of which is equal to the total amount which would have been in such account had there been no expenditures as of such date.

Section 10. Subordination of the Lien to Mortgages. The lien of the assessments provided for herein, including without limitation any fees, costs, late charges or interest which maybe levied by the Association in connection with unpaid assessments, shall be subordinate to the lien of any First Mortgage, including without limitation any executory land sales contract wherein the Administrator of Veterans Affairs (Veterans Administration) is seller, whether such contract is owned by the Veterans Administration or its assigns, and whether such contract is recorded or not. Sale or transfer of any Lot shall not affect the liens for said assessment charges except that sale or transfer of any Lot pursuant to foreclosure of any such First Mortgage or any such executory land sales contract, or any proceeding in lieu thereof, including deed in lieu of foreclosure, or cancellation or forfeiture of any such executory land sales contract, shall extinguish the lien of assessments charges which became due prior to any such sale or transfer, or foreclosure, or any proceeding in lieu thereof, including deed in lieu of foreclosure, or cancellation or forfeiture of any such executory land sales contract; provided however, that any such delinquent assessment charges, including interest, late charges, costs and reasonable attorney's fees, which are extinguished as provided herein may be reallocated and assessed to all Lots as a common expense. No such sale, transfer, foreclosure, or any proceeding in lieu thereof, including deed in lieu of foreclosure, nor cancellation or forfeiture of such executory land sales contract shall relieve any Lot from liability for any assessment charges thereafter becoming due, nor from the lien thereof; provided, however, that in the event of foreclosure of a First Mortgage or the taking of a deed in lieu thereof, such First Mortgagee shall not be liable for unpaid assessments or other charges which accrue prior to the acquisition of title to the Lot in question by such First Mortgagee.

ARTICLE V

ARCHITECTURAL CONTROL COMMITTEE

Section 1. Composition of Committee. The Architectural Control Committee shall consist of three (3) or more persons appointed by the Board of Directors of the Association; provided, however, that until all Lots have been conveyed to the first Owner thereof (other than Declarant), Declarant shall appoint the Architectural Control Committee; and further provided, however, that in the event there is more than one "Declarant," as defined in this Declaration, Piney Creek Development, Co. shall appoint the Architectural Control Committee so long as Piney Creek Development, Co. owns at least one Lot. A majority of the Committee may designate a representative to act for it.

Section 2. Review by Committee. No structure or any attachment to an existing structure, any building, tennis court, swimming pool, fences, walls, canopies, awnings, roofs, exterior lighting facilities, athletic facility, or other similar improvements or attachments, shall be constructed upon the Recreational Property, no alteration of the exterior or structure of any improvement located on the Recreational Property shall be made, and no change in the final grade, nor the installation of or any change in any landscaping, shall be performed, unless complete plans and specifications therefor (said plans and specifications to show exterior design, height, materials, color, location of the structure or addition to the structure, plotted horizontally and vertically, location and size of private streets, general plan of landscaping, fencing, walls, windbreaks and grading plan) shall have been first submitted to and approved in writing by the Architectural Control Committee. The Architectural Control Committee shall exercise its best judgment to the end that all attachments, improvements, construction, landscaping and alterations to improvements and property, within the Recreational Property conform to and harmonize with the existing surroundings, Residences, landscaping and structures of the Properties.

Section 3. Procedures. The Architectural Control Committee shall approve or disapprove all plans within thirty (30) days after complete submission thereof. In the event that the Architectural Control Committee fails to approve or disapprove said plans and specifications within thirty (30) days after the complete submission thereof, approval shall not be required and this Article shall be deemed to have been fully complied with.

Section 4. Vote. A majority vote of the Architectural Control Committee is required to approve a proposed change or improvement, unless the Committee has designated a representative to act for it, in which case the decision of the representative shall control.

Section 5. Records. The Architectural Control Committee shall maintain written records of all applications submitted to it and all actions taken by it thereon, and such records shall be available to Members for inspection at reasonable hours of the business day.

Section 6. Liability. The Architectural Control Committee and the members thereof shall not be liable in damages to any person submitting requests for approval or to any Owner, by reason of any action, failure to act, approval, disapproval, or failure to approve or disapprove in regard to any matter within its jurisdiction hereunder.

Section 7. Variance. The Architectural Control Committee may grant reasonable variances or adjustments from any conditions and restrictions imposed by this Article or Article VII hereof, in order to overcome practical difficulties and prevent unnecessary hardships arising by reason of the application of the conditions and restrictions contained in this Article, Article VII hereof. Such variances or adjustments shall be granted only in case the granting thereof shall not be materially detrimental or injurious to the other property or improvements in the neighborhood and shall not militate against the general intent and purpose hereof.

ARTICLE VI

INSURANCE

Section 1. Insurance on Recreational Property. The Association shall maintain insurance covering all insurable improvements located or constructed upon the Recreational Property. The Association shall maintain the following types of insurance, to the extent that such insurance is reasonably available, considering the availability, cost and risk coverage provided by such insurance:

(a) A policy of property insurance covering all insurable improvements located on the Recreational Property, with a "Replacement Cost Endorsement" providing that any claim shall be settled on a full replacement cost basis without deduction for depreciation, and including an "Inflation Guard Endorsement" and an "Agreed Amount Endorsement." The Association may also purchase a "Demolition Endorsement," and "Increased Cost of Construction Endorsement," a "Contingent Liability from Operation of Building Laws Endorsement" or the equivalent, and/or coverage on personal property owned by the Association. Such insurance as maintained by the Association pursuant to this subsection shall afford protection against at least the following:

(1) loss or damage by fire and other perils normally covered by the standard extended coverage endorsement; and

(2) such other risks as shall customarily be covered with respect to projects similar in construction, location and use, including all perils normally covered by the standard all risk endorsement, where such is available.

(b) A comprehensive policy of public liability insurance covering all of the Recreational Property, insuring the Association in an amount not less than $1,000,000 covering bodily injury, including death of persons, personal injury and property damage liability arising out of a single occurrence. Such coverage shall include, without limitation, legal liability of the insureds for property damage, bodily injuries and deaths of persons in connection with the operation, maintenance or use of the Recreational Property, legal liability arising out of law suits related to employment contracts of the Association, and protection against liability for non-owned and hired automobile; such coverage may also include, if applicable, garagekeeper's liability, liability for property of others, host liquor liability, water damage liability, contractual liability, workmen's compensation insurance for employees of the Association, and such other risks as shall customarily be covered with respect to projects similar in construction, location, and use.

(c) A policy providing adequate fidelity coverage or fidelity bonds to protect against dishonest acts on the part of officers, directors, trustees and employees of the Association and all others who handle or are responsible for handling funds of the Association. Such fidelity coverage or bonds shall meet the following requirements:

(1) all such fidelity coverage or bonds shall name the Association as an obligee;

(2) such fidelity coverage or bonds shall contain waivers of any defense based upon the exclusion of person who serve without compensation from any definition of "employee" or similar expression.

(d) If the Recreational Property or any portion thereof, is located within an area identified by the Federal Emergency Management Agency as having special flood hazards, and flood insurance coverage on the Recreational Property has been made available under the National Flood Insurance Program, then such a policy of flood insurance on the Recreational Property in an amount at least equal to the lesser of:

(1) the maximum coverage available under the National Flood Insurance Program for all buildings and other insurable property located within a designated flood hazard area; or

(2) one hundred percent (100%) of current replacement cost of all buildings and other insurable property located within a designated flood hazard area.

(e) A policy providing errors and omissions insurance of officers and directors of the Association, in such amounts and containing such provisions as may from time to time be deemed necessary or desirable by the Board of Directors of the Association.

All such policies of insurance shall contain waivers of subrogation and waivers of any defense based on invalidity arising from any acts of a Member of the Association and shall provide that the policies may not be canceled or substantially modified without at least thirty (30) days prior written notice to the insured, as well as to the First Mortgagees of each Lot. Duplicate originals of all policies and renewals thereof, together with proof of payment of premiums, shall be delivered to any First Mortgagee of a Lot, upon written request. The insurance shall be carried in blanket forms naming the Association, as the insured, as trustee and attorney in fact for all Owners, and each Owner shall be an insured person under such policies with respect to liability arising out of any such Owner's membership in the Association.

Section 2. Damage to Recreational Property. In the event of damage to or destruction of all or a portion of the Recreational Property due to fire or other adversity or disaster, the insurance proceeds, if sufficient to reconstruct or repair the damage, shall be applied by the Association to such reconstruction and repair. If the insurance proceeds with respect to such Recreational Property damage or destruction are insufficient to repair and reconstruct the damage or destruction, the Association shall cause such Recreational Property to be promptly repaired and reconstructed, using the insurance proceeds and the proceeds of a special assessment which notwithstanding the provisions of Article IV, Section 4 to the contrary, may be levied without a vote of the Members. The amount of such assessment shall be equal to the amount by which the cost of repair or reconstruction exceeds the sum of the insurance proceeds available and shall be assessed equally against each Lot. The assessment provided for herein shall be a debt of each Owner and a lien on such Owner's Lot and the improvements thereon, and shall be enforced and collected as provided in Article IV hereof.

Section 3. Association Insurance as Primary Coverage. If at the time of any loss under any policy which is in the name of the Association, there is other insurance in the name of any Owner and such Owner's policy covers the same property or loss, or any portion thereof, which is covered by such Association policy, such Association policy shall be primary insurance not contributing with any of such other insurance.

Section 4. Other Insurance to be Maintained by Owners. Insurance coverage on the furnishings and other items of personal property belonging to an Owner, public liability insurance coverage upon each Lot and hazard insurance coverage on the improvements constructed on Lots, shall be the responsibility of the Owner thereof.

Section 5. Annual Review of Insurance Policies. All insurance policies carried by the Association shall be reviewed at least annually by the Board of Directors of the Association to ascertain that the coverage provided by such policies adequately covers those risks insured by the Association.

ARTICLE VII

RESTRICTIONS

Section 1. General Plan. It is the intention of the Declarant to establish and impose a general plan for the improvement, development, and use of the Recreational Property, in order to enhance the value, desirability, and attractiveness of the Properties.

Section 2. Restrictions Imposed. The Declarant hereby declares that the Recreational Property shall be held and shall henceforth be sold, conveyed, used, improved, owned, and hypothecated upon, subject to the following provisions, conditions, limitations, restrictions, agreements, and covenants.

Section 3. Use of Recreational Property.

(a) No use shall be made of the Recreational Property which will in any manner violate the statutes, rules or regulations of any governmental authority having jurisdiction over the Recreational Property.

(b) No Owner shall place any structure whatsoever upon the Recreational Property, except as provided herein, nor shall any Owner engage in any activity which will temporarily or permanently deny free access to any part of the Recreational Property to all Members.

(c) The use of the Recreational Property shall be subject to such rules and regulations as may be adopted from time to time by the Board of Directors of the Association.

(d) No use shall ever be made of the Recreational Property which will deny ingress and egress to those Owners having access to a public street or to their Lots only over Recreational Property, and said rights of ingress and egress to all Lots are hereby expressly granted.

Section 4. Declarant's Use. Notwithstanding anything to the contrary contained in this Declaration, it shall be expressly permissible and proper for Declarant, its employees, agents, and contractors, to perform such reasonable activities, and to maintain upon portions of the Recreational Property, such facilities as Declarant deems reasonably necessary or incidental to the construction and sale of Lots and development of the Properties, specifically including without limiting the generality of the foregoing, maintaining business offices, storage areas, construction yards and equipment, signs, model units, sales offices, parking areas and lighting facilities. Notwithstanding the foregoing, Declarant shall not perform any activity or maintain any facility on any portion of the Recreational Property in such a way as to unreasonably interfere with or disturb any Owner, or to unreasonably interfere with the use, enjoyment or access of such Owner, his family members, guests or invitees of and to his Lot, parking areas, any recreational facilities existing upon the Recreational Property, and to a public right of way. In accordance with the foregoing, Declarant is hereby authorized to rent, at a reasonable rate, to be determined by the Board of Directors of the Association, and to use, the Clubhouse to be constructed on the Recreational Property as a sales office.

Section 5. Household Pets. No animals, livestock, poultry or bees, of any kind, shall be raised, bred, kept or boarded in or on the Recreational Property; provided, however, that the Owners of Lots may take such household pets as are allowed by the Association upon the Recreational Property if such animals are controlled on a leash or similar device, subject to the obligation of each such Owner to immediately remove and dispose of all of such animals solid bodily wastes and to the rules and regulations of the Association.

Section 6. Temporary Structures. Except as hereinafter provided, no structure of a temporary character, including but not limited to a house trailer, tent, shack, garage, or outbuilding shall be placed or erected upon the Recreational Property at any time prior to its being fully completed in accordance with approved plans, nor shall any improvements located on the Recreational Property, when completed, be in any manner used until made to comply with all requirements, conditions, and restrictions herein set forth; provided, however, that during the actual construction or alteration of improvements, necessary temporary structures for storage of materials may be erected and maintained by the person doing such work. The work of constructing, altering, or remodeling any improvement on the Recreational Property shall be prosecuted diligently from the commencement thereof until the completion thereof.

Section 7. Signs and Advertising. No signs, advertisings, billboards, unsightly objects or nuisances of any kind shall be placed, erected or permitted to remain in or on the Recreational Property, without the prior written approval of the Association. Notwithstanding the foregoing, reasonable signs, advertisings, or billboards used by the Declarant in connection with its sale or rental of Lots, or otherwise in connection with its development of the Properties, shall be permissible, provided that such use by the Declarant shall not interfere with the Owners' use and enjoyment of the Recreational Property, with their Lot, or with their ingress and egress from a public way to the Recreational Property, or their Lot.

Section 8. Miscellaneous Structures. No tanks of any kind, either elevated or buried, shall be erected, placed or permitted upon the Recreational Property.

Section 9. Vehicular Parking, Storage and Repairs.

(a) No portion of the Recreational Property, including but not limited to streets, drives, or parking areas, unless specifically designated by the Association therefor, shall be used as a parking, storage, display, or accommodation area for any type of house trailer, camping trailer, boat trailer, hauling trailer, running gear, boat, or accessories thereto, truck larger than 3/4 ton, or self-contained motorized recreational vehicle, except as a temporary expedience for loading, delivery, or emergency. This restriction, however, shall not restrict trucks or other commercial vehicles upon the Recreational Property which are necessary for the construction of Residences or the maintenance of the Recreational Property, Lots, or any improvements located on the Properties.

(b) No abandoned or inoperable automobiles or vehicles of any kind shall be stored or parked on the Recreational Property. An "abandoned or inoperable vehicle" shall be defined as any automobile, truck, motorcycle, boat, trailer, camper, housetrailer, self-contained motorized recreational vehicle, or other similar vehicle, which has not been driven under its own propulsion for a period of two (2) weeks or longer, or which does not have an operable propulsion system installed therein; provided, however, that otherwise permitted vehicles parked by Owners while on vacation or during a period of illness shall not constitute abandoned or inoperable vehicles. In the event the Association shall determine that a vehicle is an abandoned or inoperable vehicle, then a written notice describing said vehicle shall be personally delivered to the owner thereof (if such owner can be reasonably ascertained) or shall be conspicuously placed upon the vehicle (if the owner thereof cannot be reasonably ascertained), and if the abandoned or inoperable vehicle is not removed within 72 hours thereafter, the Association shall have the right to remove the vehicle at the sole expense of the owner thereof.

(c) No activity such as, but not limited to, maintenance, repair, rebuilding, dismantling, repainting, or servicing of any kind of vehicles, trailers or boats, may be performed on the Recreational Property.

Section 10. Nuisances. No nuisance shall be permitted on the Recreational Property, nor any use or practice which is the source of annoyance to residents or which interferes with the peaceful enjoyment or possession and proper use of the Recreational Property, or any portion thereof. As used herein, the term "nuisance" shall not include any activities of Declarant which are reasonably necessary to the development of and construction on the Properties, Such activities of the Declarant shall not reasonably interfere with any Owner's use and enjoyment of his Lot, or with any Owner's ingress or egress to or from his lot and a public way. The Recreational Property and all portions thereof shall be kept in a clean and sanitary condition, and no rubbish, refuse, litter, junk or garbage shall be allowed to accumulate, nor any fire hazard to exist. Further, no immoral, improper, offensive or unlawful use shall be permitted or made of the Recreational Property or any portion thereof. All valid laws, ordinances and regulations of all governmental bodies having jurisdiction over the Recreational Property, or any portion thereof, shall be observed.

Section 11. Underground Utility Lines. All electric, television, radio, and telephone line installations and connections on the Recreational Property shall be placed underground, except that during the construction of a Residence the contractor or builder may install a temporary overhead utility line which shall be promptly removed upon completion of construction.

Section 12. No Hazardous Activities. No activities shall be conducted on the Recreational Property or within improvements constructed on the Recreational Property which are or might be unsafe or hazardous to any person or property. Without limiting the generality of the foregoing, no firearms shall be discharged upon any of the Recreational Property and no open fires shall be lighted or permitted on the Recreational Property except in a contained barbecue unit while attended and in use for cooking purposes or within a safe and well-designed interior fireplace, or except such campfires or picnic fires on property designated for such use by the Association.

Section 13. No Annoying Light, Sounds, or Odors. No light shall be emitted from the Recreational Property which is unreasonably bright or causes unreasonable glare; no sound shall be emitted from the Recreational Property which is unreasonably loud or annoying; and no odor shall be emitted from the Recreational Property which is noxious or offensive to others. Notwithstanding the foregoing, all owners agree that tennis court lights and parking lot lights shall be permitted on the Recreational Property.

Section 14. Garbage and Refuse Disposal. No garbage, refuse, rubbish, or cuttings shall be deposited on any street, the Recreational Property, unless placed in a suitable container suitably located, solely for the purpose of garbage pickup, as provided by the Association. All equipment for the storage or disposal of such materials shall be kept in clean and sanitary condition. No garbage or trash cans or receptacles shall be maintained in an exposed or unsightly manner.

Section 15. Rules and Regulations. Rules and regulations concerning and governing use of the Recreational Property, may be adopted, amended and repealed, from time to time by the Board of Directors of the Association, and the Board of Directors may establish and enforce penalties for the infraction thereof, including without limitation the levying and collecting of fines for the violation of any of such rules and regulations or for the violation of any provision of this Declaration; provided, however, that copies of such rules and regulations shall be furnished to Owners and shall be uniform and non-discriminatory except to the extent that such rules and regulations concern discretionary rights given to the Association or its Board of Directors in this Declaration, the Articles of Incorporation or Bylaws of the Association.

ARTICLE VIII

EASEMENTS

Section 1. Easement for Encroachments. If any portion of a Residence encroaches upon the Recreational Property, including any future encroachments arising or resulting from the repair or reconstruction of a Residence subsequent to its damage, destruction or condemnation, a valid easement on the surface and for subsurface support below such surface and for the maintenance of same, so long as it stands, shall and does exist for such encroachment.

Section 2. Maintenance Easement. An easement is hereby granted to the Association, its officers, agents, employees and assigns upon, across, over, in and under the Recreational Property and a right to make such use of the Recreational Property, as may be necessary or appropriate to perform the duties and functions which it is obligated or permitted to perform pursuant to this Declaration.

Section 3. Utilities. There is hereby created a blanket easement upon, across, over and under the Recreational Property, for utilities and the installation, replacement, repair and maintenance of utilities, including but not limited to water, sewer, gas, telephone, electricity and master, cable and satellite television systems, if any. By virtue of this blanket easement, it shall be expressly permissible to erect and maintain the necessary facilities, equipment and appurtenances on the Recreational Property and to affix, repair, and maintain water and sewer pipes, gas, electric, telephone and television wires, circuits, cable, conduits, satellite reception dishes and meters. In the event any utility or quasi-utility company furnishing a service covered by the general easement created herein requests a specific easement by separate recordable document, Declarant reserves and is hereby given the right and authority to grant such easement upon, across, over or under any part or all of the Recreational Property, without conflicting with the terms hereof; provided, however, that such right and authority shall cease and terminate upon conveyance by Declarant of the last Lot to the first Owner thereof (other than Declarant). The easement provided for in this Section 3 shall in no way affect, avoid, extinguish or modify any other recorded easement(s) on the Recreational Property.

Section 4. Rights of Declarant Incident to Construction. An easement is hereby retained by and granted to Declarant, its successors and assigns, for access, ingress, and egress over, in, upon, under, and across the Recreational Property, including but not limited to the right to store materials thereon and to make such other use thereof as may be reasonably necessary or incidental to Declarant's construction on the Properties; provided, however, that no such rights or easements shall be exercised by Declarant in such a manner as to unreasonably interfere with the occupancy, use, enjoyment, or access by any Owner, his family members, guests, or invitees, to or of that Owner's Lot or any recreational facility completed upon the Recreational Property.

Section 5. Easements Deemed Created. All conveyances of Lots hereafter made, whether by the Declarant or otherwise, shall be construed to grant and reserve the easements contained in this Article VIII, even though no specific reference to such easements or to this Article VIII appears in the instrument of such conveyance.

ARTICLE IX

RECREATIONAL LICENSE

Declarant hereby grants to Centex Homes Corporation ("Centex"), a Nevada corporation, as the owner of that certain parcel of real property described on Exhibit C attached hereto and incorporated herein by this reference, and to the successors and assigns of Centex which own and/or occupy any residence presently existing or hereafter constructed on such property, a nonexclusive license to utilize as much of the Properties as is necessary to provide vehicular and/or pedestrian access to and from any recreational facilities located on the Recreational Property and a nonexclusive license to use any such facilities, all subject to the provisions of a license agreement to be executed by the Association and Centex and/or its successors or assigns containing such terms and provisions as are mutually agreeable to the Association and Centex and/or its successors or assigns; provided, however, that such agreement shall provide that the right to benefit from these licenses and to utilize the recreational facilities shall be voluntary with the owners of any lot or residence upon the real property described on the attached Exhibit C and any such owners desiring to benefit from this license shall not be able to do so unless they pay to the Association fees equal to the amount of assessments paid by Residence Owners within the Properties. The Association is hereby authorized, subject to the foregoing restrictions, to enter into similar license agreements with Centex or other persons or entities pertaining to parcels of real property other than that described on the attached Exhibit C. This license and any other license granted in accordance herewith shall remain in full force and effect until five (5) years from the recording date of this Declaration unless sooner terminated pursuant to the terms of the license agreement or unless extended pursuant to the terms and provisions of such license agreement or any subsequent license agreement.

ARTICLE X

FIRST MORTGAGEES

Section 1. Member and First Mortgagee Approval. Subject to the provisions of Article XI, Sections 6(b) and 6(c) hereof, but notwithstanding anything to the contrary set forth elsewhere in this Declaration, the Association shall not unless it has obtained the prior written consent of at least sixty-seven percent (67%) of each class of Members, and sixty-seven percent (67%) of the First Mortgagees of Lots (based upon one vote for each First Mortgage owned):

(1) by act or omission, change, waive, or abandon any scheme of architectural control, or enforcement thereof, as set forth in this Declaration, regarding the design or maintenance of the Recreational Property,

(2) fail to maintain full current replacement cost, fire and extended insurance coverage on the Recreational Property,

(3) use hazard insurance proceeds for Recreational Property property losses for purposes other than to repair, replace, or reconstruct such property,

(4) by act or omission, seek to abandon, partition, subdivide, encumber, sell, or transfer any property owned, directly or indirectly, by the Association for the benefit of the Owners (excluding the granting of permits, licenses and easements for public utilities, roads or other purposes consistent with the intended use of such property and reasonably necessary or useful for the proper maintenance or operation of the Properties or the Association),

(5) change the method of determining the obligations, assessments, dues, or other charges which may be levied against an Owner;

(6) add or amend any material provisions of this Declaration, the Articles of Incorporation or Bylaws of the Association, which establish, provide for, govern or regulate any of the following, provided that any First Mortgagee who receives a written request to approve any additions or amendments to any of such documents and who does not deliver or post to the requesting party a negative response within thirty (30) days of its receipt of such request, shall be deemed to have approved such request, and further provided that such additions or amendments shall not be considered material if they are for the purpose of correcting technical errors or for clarification only, and finally provided that this subsection (6) shall not apply to amendments to this Declaration, the Articles of Incorporation or Bylaws of the Association made as a result of destruction, damage or condemnation of the Properties or the improvements thereon;

(A) voting rights;

(B) assessments, assessment liens or subordination of such liens;