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(a) The Declarant may add by annexation to the scheme of this Declaration, without the consent of otherMembers, all or any part of the real property contained within the Development Area by recording inthe Dallas County Deed Records a Supplementary Declaration of Covenants, Conditions andRestrictions which shall extend the scheme of the covenants, conditions and restrictions of thisDeclaration to such property. The Declarant may annex as Common Areas all or any portion of theproperty proposed as common areas in the master planned development of Mountain Creek by (i)filing a supplementary declaration to such effect, and (ii) conveying to the Association an interest in allor any portion of such property, free and clear of all liens. If the Association acquires a joint interest ina Comn1on Area, such area shall be maintained, improved and otheIWise administered as theAssociation and other joint interest owners agree at the time the Association acquires its joint interestin such Conunon Area. If any other property within the master planned development of MountainCreek is annexed by Declarant, a portion of such property may be conveyed to the Association ascommon Properties. Annexations by the Declarant pursuant to this Paragraph (a) are subject to theFHA and VA determining that the annexation is in accord vtith the general plan heretofore approvedby them.(b) In the event any person or entity (other than the Declarant pursuant to Paragraph (a) of this Section2.02) desires to annex ddit onal residential and/or Common Areas to the scheme of this Declaration,such proposed annexation must have the prior written consent and approval of 213 of the votes of eachclass of Members who are voting in person or by pro .')' at a duly held meeting of the Association.'(c) Any annexations made purstlant to Paragraphs (a) and (b) of this Section 2.02, when made: (i) shallautomatically extend the jurisdiction, functions, duties and n1embership of the Association to theproperties annexed; (ii) may contain in a supplementary declaration such complementary additions andmodifications of the Covenants and Restrictions contained in this Declaration as may be necessary toreflect the different character, if any, of the annexed properties and as are not inconsistent with theconcept of this Declaration; and (iii) shall result in an assessment of the non-Exempt Property withinsuch annexed property which is uniform with all other non-Exempt Property covered by thisDeclaration.(d) The Declarant shall have the right and option upon the joinder, approval or consent of otherassociations to cause the Association to merge or consolidate with any similar association then havingjurisdiction over real property located (in whole or in part) within the master planned development ofMountain Creek. Upon a merger or consolidation of the Association with another association, itsproperties, rights and obligations may, by operation of law or otherwise, be transferred to anothersurviving or consolidated association, or alternatively, the properties, rights and obligations of theAssociation as a surviving corporation pursuant to a merger. The surviving or corisolidated associationmay administer the Covenants and Restrictions established by this Declaration, together with thecovenants, conditions and restrictions administered by the other association upon any other properties,as one scheme.2.03.Title to the Common Properties.The Common Properties (other than properties within the public rightsof-way) shall be owned by the Association. The Association may obtain an easement or a fee or undivided feeinterest in, or a license to use, real property. In the event the Association dissolves and the Common Properties arenot either dedicated to and accepted by the City or other appropriate public agency , authority or utility or conveyedto another association or entity that assumes the Association's maintenance obligations, title to the comn1onProperties shall pass, subject to the city's rights under Section 5.09, as follows:(a) To another homeowners association or sin1ilar entity which shall be established by the Class AMembers and shall (i) conform to the requirements of FHA and VA, (ii) undertake to maintain theCommon Properties, (iii) not convey any of the Common Properties without approval of 2/3 of thevotes of the Class A Members, and (iv) otherwise be structured as agreed by the Class A Members; or(b) If a homeowners association or other entity is not created pursuant to Section 2.03(a) within one yearfrom the date of the dissolution of the Association:3

(i)Easements within the property lines of the Lots shall be distributed to and vest in theOwners of the respective Lots on which such easement is located, each such Owner toreceive only the portion of such easement, and improvements within such easement, asare contained within such individual Owner's Lot;(ii)All other real property comprising the Common Properties shall be distributed to and vestin the Members so that each Lot is attributed an undivided interest in each of theproperties in the proportion that each Lot bears to all Lots covered by this Declaration,and each such undivided interest shall be appurtenant to the respective Lot, and shall beconsidered to be conveyed with the Lot regardless of \.Vhether the interest is referenced inthe instrument of conveyance; provided that the Members can adopt another plan ofdistribution for such real property by a 2/3 vote of each class; and(iii)All personal property shall be distributed as provided in the Association's plan ofdistribution.2.04.Use of Common Properties.The Common Areas are intended for the use and enjoyment of theMembers as provided in Section 2.05 of this Article. All other portions of the Conunon Properties are not intendedfor the use of the Members, but are intended exclusively for landscaping, sprinkler systems, fences, entrymonuments and similar uses, to enhance and protect the value, attractiveness and desirability of the property coveredby this Declaration. Any landscaping or other improveinent placed or constructed by the Association or Declaranton Common Properties within the Lot lines of Lot shall be maintained (but not removed or replaced) by the LotOwner; provided that the Association shall also have the right to provide maintenance for such landscaping or otherimprovements, and shall have the sole right to remove or replace such landscaping or other improvements and toperform all maintenance and repairs on any such landscaping or other improvements unless the Board of Directorsotherwise consents to a lot Owner taking such actions.2.05.Men1bers: Easements ofEniovment in Common Areas.Every Member. shall have a right andeasement of use, recreation and enjoyment in .and to the Common Areas, and such easeinertt shall be appurtenant to:and shall pass with the title of every Lot; provided, however, such easement shall not give a Member the right tomake alterations, additions or improvements to the Common Areas. The rights and easements of use, recreation andenjoyment created hereby shall be subject to the following:(a)(b)(c)( d)( e)(!)the right of the Association to prescribe reasonable regulations goven tlng the use, operation andmaintenance of the Common Areasliens or mortgages placed against all or any portion of the Common Areas by the Association toimprove or maintain the Common Areas;the right of the Association to enter into and execute contracts with any party (including, withoutlin1itation, the Declarant) for the purpose of providing n1aintenance or such other materials orservices consistent with the purposes of the Association;the right of the· Declarant or the Association to take such steps as are reasonably necessary toprotect the Common Properties against foreclosure;the right of the association to suspend the voting rights of any Member to use or enjoy any of theCommon Areas for any period (i) during which any assessn1ent against a Lot of such Memberremains unpaid, (ii) during 'Nhich any violation of these Covenants and Restrictions exists by suchMember, and (iii) not to exceed 60 days, for an infraction by such Member of the then-existingpublished rules and regulations of the Association; andapproval by written consent by the Members having 2/3 of the outstanding votes of each class ofthe Association (which consent shall be recorded in the Dallas County Deed Records), to dedicateor transfer all or any part of the Comn1on Properties to any mllllicipal corporation, public agency,authority or utility company for such ptuposes and upon such conditions as may be agreed uponby such Members.4

2.06.Delegation of Use of Common Areas.Any Owner may delegate, in accordanc.e with the ByLaws and its rights under Section 2.05 of this Article, his right to use the Common Areas and facilities to themembers of his family or his tenants who reside on his Lot.ARTICLE DITHE ASSOCIATION3.01.Association.The purpose of the Association is to enhance and protect the value, attractiveness anddesirability of the Property, and other property annexed hereto. The Association shall have the right, b t not theobligation, to (i) acquire, hold, maintain, improve and convey the Common Properties, including without limitationinstall, protect, preserve, upkeep, n1aintain, repair and replace landscaping and improvements on the CommonProperties, (ii) assess and collect the assessments- as provided in Article V, (iii) administer and enforce theseCovenants and Restrictions, and (iv) perform such other functions as provided or permitted in its Articles ofIncorporation and Bylaws and this Declarations.3.02.Membership.Every Owner of a Lot shall automatically be a Member of the Association. Sincemembership in the Association is appurtenant to and inseparable from ownership of a Lot, a person is obligated toremain in good standing so long as he owns a Lot, and a person's membership shall terminate automaticallywhenever such person ceases to be an Owner; but such termination shall not release or relieve such person from anyliability or obligation incurred while a Member of the Association, nor impair any rights. or remedies which theAssociation or any other Member has with regard to such former Member. The Board of Directors may declare thatan Owner is na.t a Member in good standing because such Member has due but unpaid assessments, charges, interestor legal fees and/or is otherwise in violation of these Covenants and Restrictions. The Board of Directors maytemporarily suspend the voting rights of any Member who is not in good standing until such due but unpaid amountsare paid in full or such violation is cured.3.03.Voting Ri!Zhts.The Association shall have two classes of voting membership:Class A: Class A Members shall include all Members other than Class B Members. Class A Members shall be. entitled to one vote for each Lot owned.Class B: Class B Members shall include (i) the Declarant, and (ii) the Owner of a Lot, other than the Declarant, whois in the process of constructing, or has constructed, pursuant to a sales contract with the Declarant, a residentialdwelling on the lot for sale to consumers, provided such residential dwelling is not and has never been occupied.The Class B Members shall be entitled to ten (1 O) votes for each lot owned. The Class B membership shall cease,and the Class B Members shall become Class A Members, upon .the total outstanding votes in the Class Amembership equaling or exceeding the total outstanding votes in the Class B membership.Any person can be a men1ber of more than one class. When more than ·one person owns a joint interest in the feetitle to a lot, all such joint owners shall be members, and tlie vote for such lot shall be exercised as they, amongthemselves, determine, but in no event shall more than one vote for Class A Members, or three votes for Class BMembers, be cast with respect to any such lot.3.04.Quorum, Voting and Notice Requirements for Member's Meetings.(a)For acts which require a vote from the entire voting membership regardless of class, the presenceat a Member's meeting of 1/10 of the votes entitled to be cast by the entire membership, regardlessof class, represented in person or by legitimate proxy, shall constitute a quorum. Except asotherwise provided in this Declaration or the Articles of Incorporation, for acts which require avote from each voting class of the membership, the presence at a Members' meeting of 1/10 of thevotes entitled to be cast for each voting class of membership, represented in person or bylegitimate proxy, shall constitute a quorum. If a quorum shall not be present or represented at anymeeting, the Members present or represented may adjourn the meeting from time to time, withoutnotice other than announcement at the meeting, until a quorum is present or represented.5(

(b)Unless otherwise expressly required in the Articles of Incorporation or this Declaration, the voteof the majority of the votes entitled to be cast by all Members, regardless of class, present orrepresented by legitimate proxy at a meeting at which a quorum is present shall be the act of theMembers. No portion of. the Common Properties can be mortgaged, dedicated or conveyedwithout the approval of 2/3 of the votes of each class of Members who are voting in person or byproxy at a duly held meeting. As long as there is a Class B membership, annexation of additionalproperties, merger or consolidation, mortgaging of the Common Properties, dedication orconyeyance of Common Properties, dissolution and amendment of this Declaration shall require(c)the prior approval of the FHA or VA.Notice requirements shall be as set forth in this Declaration, the Articles of Incorporation and Bylaws.3.05Board of Directors. The affairs of the Association shall be conducted by its Board of Directors. TheBoard of Directors shall be elected by the Members entitled to vote and shall consist of not less than three nor morethan nine directors. Three of the Board members shall be appointed by the Declarant. The three members appointedby the Declarant shall remain as Board members until the houses have been sold. The Board of Directors shall beselected, serve and have such powers, duties, functions, authority, and responsibility as shall be specified in thisDeclaration, the By-Laws, the Articles of Incorporation, the Texas Non-Profit Corporation Act, and as may bedelegated to it from time to time by the Association not inconsistently with this Declaration.3.06.Powers and Duties of the Board of Directors.(a)The Board, to the extent it deems reasonable and appropriate to accomplish the purposes of theAssociation, shall provide and shall pay for the following:(i)care and preservation of the Common Properties and the furnishing, upkeep andreplacement of any desired improvements or personal property for use on the CommonProperties, including without limitation, grass, vines, ground cover, plants, trees, hedges,shrubs, water sprinkler systems, fountains, waterways, fences, walls, entry monuments,lighting areas, outdoor furniture, complementing structures arid buildings, and othersimilar improvements;(ii)The services of a person or firm to manage the Association or any separate portionthereof; to the extent deemed advisable by the Board, and the services of such otherpersonnel as the Board shall determine to be necessary or proper for the operation of theassociation, whether such personnel are employed directly by the Board or by themanager;(iii)Legal, engineering and accounting services;(iv)A policy or policies of insurance or bonds as provided in Article JV;(v)Workmen's compensation insurance to the extent necessary to comply with anyapplicable laws;(vi)Any other materials, supplies, furniture, labor, services, maintenance, repairs, structuralalterations, taxes or assessments which the board is required to obtain·or pay for pursuantto the terms of this Declaration or by law or which in its opinion "'11all"be necessary orproper for the operation or protection of the Association or for the enforcement of thisDeclaration.(b)The Board additionally shall have the right but not the obligation:(i)to assess the Members, collect assessments, and enforce the maintenance requirements,remedies and liens as provided in Articles V and X, and to execute all declarations ofownership for tax assessment purposes with regard to any of the Common Properties;6

(ii)to enter into agreements or contracts with insurance companies, taxing authorities orother appropriate persons with respect to (i) ta' es on the Common Properties, (ii)insurance coverage (if any) on the Common Properties, and (iii) the assessments,collections and disbursements envisioned by Article V;(iii)to borrow funds to pay operating, maintenance and capital costs of the Association,secured by assignment or pledge of rights against delinquent Owners or of futureassessments or a lien against the Common Properties, if the Board sees fit;(iv)to enter into contracts, maintain one or more bank accountsi and generally, to have all thepowers necessary or incidental to the operation and management of the Association;(v)to protect or defend the Common Properties from Joss or damage by suit or othenvise, tosue or defend in any court of law on behalf of the Association and to provide adequatereserves for repairs and replacements(vi)to make reasonable rules and regulations for the operation of the c6mmon Properties andto amend them from time to time, and to take any action conten1plated by Section 2.05(vii)to make avail ble to each Owner within 45 days after the end of each year an annualreport;(viii)pursuant to Article IV herein, to adjust the amount, collect and use any insuranceproceeds to repair damage or replace lost property; and if proceeds are insufficient torepair damage or replace lost property, to assess the Members in proportionate amountsto cover the deficiency; and(ix)to enforce the provisions of this Declaration and any rules n1ade hereunder and toexercise all other rights and perform all other obligations required or permitted hereunderor under the Articles of Incorporation or By-Laws.(c)The Board shall have the exclusive fight to contract for all goods, services and insurance, and theexclusive right and obligation to perform the functions of the Board, except as otherwise providedherein.( d)The Board, on behalf of the Association, shall have full power and authority to contract with anyOwner (including, without limitation, the Declarant) for the performance by the Association ofservices which the Board is not otherwise required to perfonn pursuant to the terms hereof, suchcontracts to be upon such te1ms and conditions and for such consideration as the Board may deemproper, advisable and in the best interest of the Association.3.07.Indemnification of Directors.The Association shall to the maximum extent permitted by lawindemnify and advance e .-penses to defend all directors of the Association from liability for any act or omission ofany or all directors while acting in such capacity.3.08Master Homeowner 1 s Association. Declarant n1ay, but shall be under no obligation to, hereafter form ahomeowner's association (the "Master Homeo\vner's Association'') for part or all of the Development Area. In theevent Declarant elects to form the Master Homeowner's Association, Declarant reserves the right to incorporate theProperty within the boundary and definition of the property contained in and subject to the restrictions, covenants,and conditions of th declaration establishing the Master Homeowner's Association.7

ARTICLE IVINSURANCE, REPAIR AND RESTORATION4.01.Right to Purchase Insurance. The Association shall have the right and option to purchase and maintain:(a)insurance covering any or all portions of the Common Properties, and any improvements thereonor appurtenant thereto, including without limitation (i) public liability and property damageinsurance on a broad form basis, in such amounts and \.Vi.th such endorsen1ents and coverage asshall be considered reasonable and appropriate by the Board of Directors, and (ii) insuranceagainst loss or damage by fire and hazards covered by a standard extended coverage endorsementin an amount which shall be equal to the n1aximum insurable replacement value, excludingfoundation and excavation costs as determined annually by the insurance carrier;(b)fidelity bond for all officers and employees of the Association having control over the receipt ofdisbursement of funds;(c)(d)officers' and directors 1 liability insurance; andsuch other types of insurance (except hazard or liability insurance on any one or more Lots) as theBoard of Directors deems desirable for the interest of the Association, its Board, agents, officersand employees, and of the Members.4.02.Prooertv Insurance Proceeds.The Association and the Members shall use the net insurance proceedsfrom property damage to repair and replace any damage or destruction of property, real or personal, covered by suchinsurance. Any balance from the proceeds of property insurance paid to the Association, as required in this Article,remaining after satisfactory completion of repair and replacement, shall be retained by the Association as part of ageneral reserve fund for maintenance, repair and replac

Frisco, Texas 75034 (469) 480-8000 (469) 480-8080 ' 7 * [email protected]. DECLARATION . DECLARATION . The declaration of covenants, conditions and restrictions is the document or set of documents that establish the formal regulations for all of the property in the residential community. They