SECTION 1 GUIDELINES FOR ARCHITECTURAL APPROVAL AND CONSTRUCTION SECTION 2 DECLARATION OF COVENANTS AND RESTRICTIONS OF KERRINGTON PROPER "COMMUNITY"

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1 SECTON 1 GUELNES FOR ARCHTECTURAL APPROVAL AN CONSTRUCTON SECTON 2 ECLARATON OF COVENANTS AN RESTRCTONS OF KERRNGTON PROPER "COMMUNTY" 6375 EERVVOO COURT GREENWOO, NANA PHONE/FAX:

2 errngton roper SECTON GUELNES FOR ARCHTECTURAL APPROVAL AN CONSTRUCTON P

3 tt - - f Kerrngton Proper * The Reserve at Kerrngton Proper E _ ^ p & Gudelnes for Archtectural Approval And Constructon ntroducton Pursuant to the eclaraton of Covenants and Restrctons of Kerrngton Proper as aended and suppleented (heren referred to as the "eclaraton"), the Kerrngton Proper Archtectural Control Cottee (heren referred to as the "Cottee") s charged wth the responsblty of preservng and enhancng the values of propertes subject to the eclaraton, antanng a haronous relatonshp aong structures and the natural vegetaton and topography of sad propertes, and provdng for the proper functonng of stor dranage syste for sad propertes. For these purposes, the Cottee has the rght to proulgate and enforce rules, regulatons and gudelnes to regulate the exteror desgn, appearance, use, locaton and antenance of land, and proveents thereon, * subject to the eclaraton. n order to satsfy ths responsblty, the Cottee 9 has the rght to take the followng actons: ~ (a) Approve or dsapprove plans and specfcatons for all proposed constructon on land subject to the eclaraton, and * (b) Approve or dsapprove plans and specfcatons for all proveents of property on land subject to the eclaraton. & The followng gudelnes for all constructon on and proveent of the land _ subject to the eclaraton are hereby adopted by the Cottee for gudance to property owners n preparng and subttng plans and specfcatons to the Cottee for ts consderaton. These gudelnes ay be changed, odfed and aended by the Cottee at any te, n accordance wth the procedure p therefore set forth n the eclaraton. Note: No new constructon or proveent to an exstng structure ay be * ntated wthout the pror wrtten approval fro the cottee. 0 Whle the Cottee shall have up to fourteen (14)daysforthe approval or rejecton of subtted plans, every effort wll be ake to coplete the revew process n a shorter perod when necessary to accoodate the needs of * property owners, ^. Constructon Approval» n order to create and antan a hgh qualty resdental developent on the subject property, certan crtera for all constructon has been establshed by the * Cottee.

4 2 p The owner or owners of a lot shall be responsble for the perforance of all - requreents of these gudelnes by bulders and contractors eployed by or through such owners. n the case of a bulder constructng a speculatve hoe the bulder wll be held responsble for eetng the requreents, A 1. Method of Approval The Cottee shall revew plans wthn fourteen (14) days of coplete subttal. A "Checklst of Coplance", attached to these * Gudelnes, shall be returned wth one (1) set of plans staped "Approved", sgned and dated by the Cottee. The Cottee p shall retan one (1) set of plans wth the Checklst for ts fles. f the Cottee dsapproves the plans, wrtten notce of such shall be - gven to the lot owner and shall specfy the reason or reasons for such dsapproval. Constructon ay not start untl all plans have ^ receved "approval" fro the Cottee. ^ 2. Resubttal. f the Cottee has dsapproved any of the subtted plans, t s the responsblty of the owner to see that correctons or odfcatons are ake n coplance wth the Cottee coents. One set of corrected plans shall then be resubtted g wth changes "noted". The Cottee wll ake every effort to - revew and approve the plans as quckly as possble. " 3. General Requreents for Constructon Whle detaled constructons requreents ay vary by specfc areas ^ or sectons of the property, the general requreents are set forth _ below. (a) Securty epost. For any and every proveent proposed on each lot, the owner of or bulder on sad lot shall be requred to p depost a $2,500 securty depost wth the eveloper or _ Kerrngton Proper Hoe Owners Assocaton ("HOA") for the fathful coplance wth the eclaraton and the archtectural * gudelnes contaned heren. The securty depost shall be held n escrow and proptly returned upon copleton of the requreents by the owner or bulder. n the event owner or» bulder fals to coply wth the ters contaned heren and the eclaraton, the securty depost shall be appled to any cost that ay be ncurred by the eveloper or HOA for correctve work; provded however the eveloper or HOA shall not be oblgated to perfor any correctve work ake necessary by owner or bulder.

5 3 p (b) Tree Preservaton. No exstng tree 15' outsde of the buldng, and 10' outsde the drveway and parkng areas of a lot shall be reoved wthout the pror wrtten approval of the Cottee and * such approval shall only be granted upon proof of unusual hardshp n the practcal utlzaton of the lot. Accordngly, all plot plans subtted to the Cottee for approval shall desgnate g thereon all trees outsde of the buldng, drveway and parkng areas. The reoval or destructon of any such trees wthout the * consent of the Cottee shall result n lablty of the owner of such lotto replace sad trees wth trees of the lke knd, qualty and sze. ^ (c) Constructon Trash. All bulders wll be requred to utlze thrty (30) cubc yard trash receptacles for each hoe durng perods of constructon n order to properly dspose of debrs and to preserve the overall appearance of the county whle under constructon. (d) Teporary rveway. To further preserve the overall appearance of the county durng constructon, each bulder s requred to nstall and antan a teporary stone drve on each lot. Such teporary drve shall consst of #2 and/or #53 stone and shall provde for constructon access fro the publc street to the buldng area. Street shall be kept clean of debrs n front of ste and leadng fro ste at all tes. (e) aage Control. Each bulder shall be responsble for daage to adjacent lots caused by ts supplers, agents, delvery en, _ subcontractors, etc. The undersgned has nspected curbs and street sdewalks n front of sad lot and found the defect-free and accepts the as s, and s responsble for any daage caused to the whle sad hoe s under constructon and or g any future constructon actvty. (f) Colors and Materals of Hoe. Materals used on exteror of hoes and proveents are subject to the approval of the Cottee, and all exteror colors are, generally, to the subdued, earthen tones or whte and copatble wth other structures n or planned for the edate area. (g) Yards. y applcable zonng ordnances, the "front yard" of a lot s consdered to be that area between the publc street frontage and the house regardless of how the house s faced and g nu front yard and rear yard setbacks ust nally coply wth the requreents therefore referred to n the Plat * Restrctons. The sde yard setbacks for each county, as deterned by the Cottee, are as follow:

6 4 County Mnu Aggregate Kerrngton Proper 10' 251 The Reserve at Kerrngton Proper 10' 25' w All setbacks are subject to approval by the Johnson County Plannng and Zonng epartent. ^ h) Eroson Control and Tree Protecton Measures. The owner or owners _ of a lot shall be responsble for the perforance of all requreents of these gudelnes by bulders and contractors eployed or engaged by or through such owner or owners. urng perods of constructon of a hoe or proveents on a lot, the bulder shall provde adequate p physcal barrers such as straw bales or snow fencng n order to protect trees fro daage by constructon equpent and related actvtes. n addton, bulders shall be requred to exercse eroson * control easures to prevent slt transportaton to the an dranage ways. ulders shall provde approprate teporary seedng of 0 dsturbed earth areas and teporary wood or straw bale das to restrct slt-sedent transportaton. ) Stor Water ranage. To ad n the effcent operaton of the stor water dranage syste of the entre property subject to the eclaraton, all water dscharged fro proveents on such lot ncludng, but not & lted to, water dscharged fro or through roofs, down spouts, sup pups, gravty drans, water treatent and geotheral devces, patos, pool decks and tenns courts, shall be drected nto exstng stor dranage facltes. The ste plan or plot plan for a lot subtted to the Cottee for ts approval shall reflect coplance wth the foregong provsons. The bulder s responsble for antanng proper lot - dranage between hoes as they are constructed per dranage plan. j) Utltes. All utltes shall be nstalled underground Plans and specfcatons n order to properly revew proposed constructon, the Cottee has * establshed the followng drawngs as a nu for subttal to the fr Cottee. Subttal for approval shall nclude all tes below. Clarfcaton drawngs and detals ay be requested by the Cottee g pror to approval f adequate detals are not ncluded n the plans.

7 -5 (a) Plot Plan. The plot plan shall nclude locatons of all exstng trees, & proposed structures, drveways, walks, terraces, decks, pools, fences, etc. The plan shall also nclude all exstng and proposed "* elevatons, contours, fnshed floor elevatons, proposed and exstng utltes. 0 (b) Foundaton Plan. (c) Floor Plans (d) Elevatons. Front, Rear and sdes - (e) etals. Exteror * (f) Specfcatons. For all exteror buldng colors, fnshes and aterals. All ste related plans shall be drawn at a scale of not less then 1"=305. All archtectural plans are to be drawn at a scale of not less * then 14"=1'. All plans shall be full densoned and presented n duplcate(two sets).. Archtectural Gudelnes As noted prevously, any new buldng or proveent or any addton to an exstng buldng or an exteror alteraton or change to an exstng buldng ust have the pror wrtten approval of the Cottee before any work s undertaken. The Cottee has establshed the followng addtonal - gudelnes, coupled wth the eclaraton, for specfc types of constructon and proveents on land subject to the eclaraton. Any addton, exteror alteraton or change to an exstng buldng shall be copatble wth the desgn character of the orgnal buldng. Any new detached structure (f pertted) shall be copatble wth the exstng structure. _ 1. Fences, walls and screenng Fencng, wall and screenng wll be desgned and nstalled to be as haronous as possble wth the archtectural character of the» county. No fence or screen wll be approved f ts nstallaton wll obstruct necessary ste lnes for vehcular traffc. Undue obstructons of * vew or other aentes fro adjonng propertes wll be taken nto consderaton by the Cottee when revewng for approval. Fences n general shall not be located any closer to the front of the hoe than the rear foundaton lne of the hoe. The Cottee dscourages _ fencng of the entre back yard due to the effect ths fencng ay have on the feelng of spacousness desgned by other property owners. The Cottee shall have the rght to requre addtonal landscapng on the

8 g exteror of all sold fencng on a lot (.e. on the sdes of such fencng» facng away fro the house on such lot). Fences ay be prvately nstalled but ust be constructed to professonal levels of qualty. (a) Heght Restrctons. The Cottee s of the opnon that the envronental ntegrty of the county wll be aterally p lessened f the open nature of the county s daaged by a _ prolferaton of fences of excess heght. The Cottee, therefore, wll approve fences up to four (4) feet n heght whch otherwse eet these gudelnes. The Cottee wll gve consderaton, however, to a varance n ths heght lt where clearly unque crcustances exst. ^ (b) Materals and Fnsh.». 2. Landscape Materals (1) Wrought ron Fencng wll be approved f, n the sole dscreton of the Cottee, the desgn s n conforty wth the archtectural desgn of the county, subject to the Cottee's rght to requre landscapng on the exteror sdes thereof and s located n an area where the envronental ntegrty of the county or neghborng lots s not lessened or coprosed. (2) Chan-lnk fencng s not pertted. (3) Wood fencng s not pertted. (4) Walls above grade should be constructed of natural stone, asonry or attractve tber. (Ralroad tes wll not allowed) Each hoe s requred to have a nu plantng requreent of: Front and Sde Yard: g 2 ecduous shade trees 2-21/2" calper 1 Flowerng tree 1-11/2" calper 3 Confer trees 6-8'heght 6 Shrubs 3-4' heght p 10 shrubs 18-24" spread - 3. Lawns All yards are to be seeded as the nu requreent. All establshed lawns are requred to be fertlzed and weeded as necessary to nsure a qualty lawn.

9 -7- M 4. Retanng Walls 5. Roofs Retanng walls ust be archtecturally copatble wth the exteror of the hoe (.e. stone, brck or lled luber). Ralroad te retanng walls wth no be approved. All roofng aterals ust be ether wood shngle or a "densonal" shngle as approved by the Cottee. 6. Malboxes n order to preserve the overall aesthetc appearance of the subdvson propertes subject to the declaraton, all alboxes wll be of lke desgn, type and color as requred by the eveloper and/or HOA. Each albox wll be purchased fro eveloper at the ntal closng of each!ot for $650 and sad albox wll be held n nventory untl ts nstallaton. Each albox wll be nstalled at the eveloper's and/or HOA's drecton upon the successful copleton of the hoe located on each lot. 7. Accessory uldngs Up to one addtonal accessory buldng shall be allowed on each lot wth the approval of the Cottee. Ths buldng ust be bult wth exteror fnshed and features that are consstent wth and the sae ^ as the hoe on the sad lot. Structure ust contan a nu of» 400 sq. enclosed space. 8. Mscellaneous (a) Al constructon trades perforng work on any structure or other - proveents on any lot n the property subject to the eclaraton wll be expected to do ther work n a professonal anner, and n * accordance wth all standards publshed by the recognzed trade councls of ther respectve ndustres, and t shall be understood 0 that all work perfored n such property shall be of hgh qualty. t s g not the duty or the responsblty of the Cottee to supervse or nspect the qualty of constructon perfored by the constructons trades, but should the Cottee dscover what t consders "low 1 qualty work" or work beng perfored whch s not n accordance wth the plans approved by the Cottee, the owner of the lot and p the holder of the buldng pert for the work n queston (f known) ay be notfed and the work shall be corrected to a professonal standard and ade to confor to the approved plans.

10 (b) Should the deternaton of the Cottee n ths regard be challenged by the owner of the lot or the holder of the buldng pert, such challenge shall be n wrtng and served upon the Cottee accopaned by a certfed letter fro an archtect 0 regstered to practce n the State of ndana and bearng hs sgned g seal statng that, n hs professonal opnon, the work n queston s n accordance wth the plans approved by the Cottee and eets the qualty standards heren requred. (c) Should the Cottee stll dsagree and feel the work s substandard or not n accordance wth the approved plans, a panel of three archtects wll be chosen to revew the work and ther ajorty vote shall consttute the fnal deternaton as to what, n * any, acton s requred. Should such panel of archtects rule the work substandard or not n accordance wth the approved plans, 0 then the work shall be re-executed to professonal standards and n e& accordance wth the approved plans wthn thrty (30) days. n any case n whch such a panel of archtects s to ake a deternaton hereunder, one such archtect shall be selected by the Cottee, one by the owner of the lot (or hs bulder), and the thrd by the two so selected. f ether party fals to select ts archtect and advse the ^ other of such selecton wthn fve (5) days aer the date upon whch the Cottee notfes the owner of the lot or the holder of the buldng pert that the Cottee stll feels the work s * substandard or not n accordance wth the approved plans, then the sngle archtect selected by one of the partes shall serve alone as 9 the panel of archtects to ake such fnal deternaton. The costs ^ and expenses of the archtectural revew panel selected to deterne any such dspute shall be borne and pad n equal * shares, one-half (1/2) by the Assocaton and one-half (1/2) by the owner of the affected lot. f (d) Nether the developer of the property subject to the eclaraton nor _ the HOA nor any eber of the Cottee shall at any te have any lablty whatsoever to the owner of any lot n such property or ^ to any holder of a buldng pert for any proveents to be 9 located thereon nor to any other person for any deternaton or decson ake by the Cottee n the exercse of ts dutes and * responsbltes or for any actons taken or attepts ade by the eveloper or the HOA or the Cottee to enforce qualty * constructon practces n the subject property.

11 -9 The anufacturer's prnted nstructon and drecton for the applcaton or nstallaton of ther products shall always consttute the nu standard for the applcaton or nstallaton of that product. f ths nstruent s beng executed by ulder, ulder agrees to obtan wrtten acceptance and approval of ths nstruent fro ts purchaser pror to re-sale of the Lot or copleton of proveents on the Lot by ulder. y y sgnature below certfy that have read the entre contents of ths docuent and agree to coply wth the requreents contaned heren. Lot# ulder Lot Owner ate ate

12 -1- Kerrngton Proper Checklst of Coplance nstructons: The applcaton for approval of any constructon upon or proveent to any and all lots n the Kerrngton Proper subdvson, ust be perfored by the owner or owners of sad lot by copletng ths Checklst by supplyng all nforaton requred n Sectons 1, 2 and 3 as follows. Together wth ths Checklst, each applcaton ust provde two (2) copes of all plans and drawngs pertanng to requested constructon and/or proveent to the Kerrngton Proper Archtectural Control Cottee ("Cottee"). Each applcant ust also subt to the Cottee a Securty epost n the aount of $2,500 as detaled n the Kerrngton Proper Gudelnes for Archtectural Approval and Constructon ("Gudelnes"). 1. Constructon/proveent nforaton a) Lot Nuber: b) Owner(s) of Lot: c) Type of constructon/proveent (new hoe, pool, basketball goal, etc):. d) f new hoe coplete the followng: Nuber of levels above grade: 1 ^ Floor square footage: 2nd Floor square footage: Other floor square footage (specfy): Total square footage: Exteror pant color: rck color: Shngles: Exteror tr aterals: Wndow brand & type: Front door:

13 -2-2. Request for Approval: Ḅ The undersgned, owner(s) of the lot n Kerrngton Proper dentfed * above, hereby states and certfes that a) he/she/they s the sole owner of sad lot, b) the nforaton set forth heren s true and correct, and c) the plans and drawngs dentfed above and p subtted herewth are the only and coplete plans and drawngs beng subtted for approval by the Cottee. The undersgned represents, warrants, and agrees that all constructon upon and proveent to sad lot wll be prefored n accordance wth subtted plans and drawngs as fnally approved by the ^ Cottee. The undersgned acknowledges and understands that any changes n plans and drawngs, aer the approval of those subtted to the Cottee, ust be resubtted to the Cottee for ts consderaton and approval. The undersgned further agrees to abde by all of the Covenants and Restrctons of Kerrngton Proper, and the plat restrctons. The undersgned has nspected «the curbs n front of sad lot and found the defect-free and accepts the as s, and s responsble for any daage caused to the * whle sad hoe s under constructon. Ths undersgned hereby requests approval of the Cottee of the plans and drawngs dentfed above and subtted herewth to the Cottee: Owner(s) ate: ^ All owner of record ust sgn ths applcaton of approval. 3. Plans» Subtted Approved sapproved Ste Plan Foundaton Plan Floor(s) Plan Elevatons etals p Specfcatons _ Securty epost f Sgned Gudelnes for Archtectural And Constructon Coent:

14 4, Acton by Cottee: a) ate ths checklst and all plans and drawngs referred to heren were receved by the Cottee: _. _. g b) Plans and drawngs are: _ Approved as subtted and the Cottee hereby authorze, f applcable, the ssuance by the buldng Cossoner, n hs dscreton, of an proveent locaton pert and a buldng pert for the constructon reflected on the plans and drawngs approved by the Cottee, whch bear the "Approved" stap of the Cottee. _ sapprove due to beng ncoplete for the followng reasons: sapproved for the followng reasons: c) ate of acton by the Cottee: d) The foregong acton by the Cottee s vald only when ths Checklst s executed by the Cottee and all plans and drawngs lsted heren have been staped "Approved" by the Cottee. Kerrngton Proper Archtectural Control Cottee y:

15 errngton roper SECTON 2 ECLARATON OF COVENANTS AN RESTRCTONS OF KERRNGTON PROPER "COMMUNTY"

16 ECLARATON OF COVENANTS AN RESTRCTONS OF KERRNGTON PROPER "COMMUNTY" _2... T H&orded.jhRot County; ndan Sue &» Hslnst Recorder fete 06/09/2003 Tns 15 s of 51 P3= nst S OFF Fss Hst* lllsoo Ths eclaraton of Covenants and Restrctons of Kerrngton Proper "County" ("eclaraton") s ade ths ch*~ day of J^»/C 2003, by Kerrngton Proper evelopent, LLC (the "eclarant"). WTNESSETH: WHEREAS, eclarant s the Owner of real estate n Johnson County, State of ndana. whch s ore partcularly descrbed n Exhbt "A" attached hereto and hereby ncorporated heren by reference (herenaer referred to as the "Real Estate" or Kerrngton Proper Secton 1), and WHEREAS. eclarant desres and. ntends to create on the Real Estate a resdental county (nvolvng a x of affordable housng) wth publc streets, an earth da created lake, landscaped areas, dentfcaton and drectonal sgnage, fences and other coon areas for the bene of such resdental county., to be known as "Kerrngton Proper Subdvson"; and WHEREAS. eclarant desres to provde for the preservaton and enhanceent of the values h such county and the coon areas theren contaned, and, to ths end, eclarant desres to subject the Real Estate and any Addtonal Property whch s hereaer ade subject to ths eclaraton to certan rghts, prvleges, covenants, restrctons, easeents accordng to the procedure set out n Artcle XV. Assessents, charges and Hens, each and all to the extent heren provded, for the bene of the Real Estate and each Owner of all or part thereof; and WHEREAS, eclarant dees t desrable, for the effcent preservaton of the values n sad county, to create an agency to whch shall be delegated and assgned the powers of supervsng, antanng and adnsterng any coon areas located on the Real Estate, adnsterng and enforcng the covenants and restrctons contaned n ths eclaraton, collectng and dsbursng the assessents and charges posed and created hereby and

17 » hereunder, and prootng the health, safety and welfare of the Owners of the Real Estate, and all parts thereof: and 0 WHEREAS. eclarant has caused, or wll cause, to be ncorporated under the ndana Code , et seq., under the nae "Kerrngton Proper Hoeowners Assocaton, nc.", or a M slar nae, as such agency for the purpose of exercsng such functons: NOW, THEREFORE, eclarant, as owner of the Real Estate and any Addtonal Property whch s hereaer ade subject to ths eclaraton hereby declares that the Real Estate s and shall be held, transferred, sold, conveyed, hypothecated, encubered, leased, rented, used, n proved and occuped subject to the provsons, agreeents, condtons, covenants, restrctons, easeents, assessents, charges and lens herenaer set forth, all of whch are declared to be n * furtherance of a plan for preservaton and enhanceent of the Real Estate, and are establshed and agreed upon for the purpose of enhancng and protectng the value, desrablty and attractveness of the Real Estate as a whole and of each of the Lots stuated theren. _ RECTALS 6 - n _ The Rectals are ncorporated heren as f set out n full. ARTCLE efntons Secton 1. The followng words and ters, when used heren or n any suppleent or aendent hereto, unless the context clearly requres otherwse, shall have the followng eanngs: (a) "Act" shall ean and refer to the ndana Nonpro Corporaton Act of 1991, as aended; nd. Code , et seq. _ (b) "Addtonal Property" refers to the real estate, or any part thereof, descrbed n Artcle XV of ths eclaraton and legally descrbed n ts entrety as Exhbt attached hereto and ade a part hereof less the Exhbt A Realty. g (c) "Applcable ate" shall ean and refer to the date deterned pursuant to Artcle V, Secton 2(b) of ths eclaraton; 9 (d) 'Assocaton" shall ean and refer to Kerrngton Proper Hoeowners Assocaton, nc., an ndana corporaton organzed under ndana Code , et seq., whch g eclarant has caused, or wll cause, to be ncorporated under sad nae or a slar nae, ts» successors and assgns; (e) "Artcles" shall ean and refer to the Artcles of ncorporaton of the Assocaton, as the sae ay be aended fro te to te;

18 ^ (f) "oard" or "oard of rectors" shall ean and refer to the governng body of the Assocaton elected, selected or apponted as provded for n the Artcles, ylaws and ths * eclaraton; (g) "ylaws" shall ean and refer to the Code of ylaws of the Assocaton, as the ~ sae ay be aended fro te to te: * (h) "Cottee" shall ean and refer to the "Kerrngton Proper Archtectural Control Cottee", the sae beng the cottee or entty establshed pursuant to Artcle V, Secton 1, of ths eclaraton for the purposes heren stated; () "Coon Areas" - reference s ade to a Conceptual Plan for the Kerrngton * Proper project attached hereto as Exhbt C and ade a part hereof wth the Exhbt A "Real Estate" referenced as Secton 1 and wth the "Addtonal Property" (Exhbt ), f the latter s added by Recorded Plat or Plats as to ts entrety (as dstngushed fro n part) havng referenced as Secton 2. The Coon Areas n Secton 1 refer to what reans aer platted Lots are l» reoved fro the Exhbt A descrpton and s further reduced by excludng dedcated rghts of way for publc streets. f Secton 2 s ade subject to ths eclaraton, the sae standard wll appty as n Secton 1, but does not nclude the Lake, whch Lake wll be ttled n the Lots _ surroundng the Lake as depcted on Exhbt C. The Coon Areas nclude all General Coon Areas and Lted Coon Areas as herenaer defned, SPECAL NOTE RE PROPOSE LOT 24 AS EPCTE ON EXHT C MPROVEMENTS, WHCH NCLUE UT ARE NOT LMTE TO A» RESENCE, ACCESSORY STRUCTURES AN A OCK AT THE LAKE, PRESENTLY EXST ON A METES AN OUNS PARCEL OF REAL ESTATE THAT WLL MATCH WHAT S EPCTE ON EXHT C F AN WHEN PLATTE AT WHCH TME SA * PARCEL WLL ECOME LOT 24 N THE KERRNGTON PROPER SUVSON, HOWEVER SA PARCEL AN TS OWNERS, SUCCESSORS AN ASSGNS SHALL NOT, Y VRTUE OF ENG PART OF RECORE PLAT, E SUJECT TO THS ECLARATON. THE ECLARANT, AN THE ASSOCATON AFTER THE _ APPLCALE ATE, RESERVES THE RGHT Y THE FLNGS OF APPROPRATE WRTTEN OCUMENT(S) EXECUTE Y THE TTLEOWNER OF LOT 24 TO MAKE SUCH REAL ESTATE AN TS SUCCESSOR AN ASSGN SUJECT TO ALL OR 0 PARTS OF THE ECLARATON AS STATE N SUCH WRTTEN OCUMENTS.» (j) "Coon Expenses" shall ean and refer to expenses of adnstraton of the Assocaton, and expenses for the upkeep, antenance, repar and replaceent of the Coon * Areas, and all sus lawfully assessed aganst the Owners by the Assocaton, and all sus, costs and expenses declared by ths eclaraton to be Coon Expenses. The Coon Expenses arse out of and concern, but are not lted to, the followng:

19 554054_1 Lake. The exstng Lake of approxately 4 acres shown on Exhbt "C", * notwthstandng that the Lake s proposed to be ttled n platted Lots surroundng the Lake, shall be for the exclusve use of the owners, guest and nvtees of Lot owners as shown on Exhbt "C", subject to sad Lake also servng as a collecton source of ~ surface water dranage of the county and further subject to Assocaton Rules and Regulatons (EXCLUNG Lot 24 unless countered by subsequent flngs executed by * such ttleowners) and lkewse subject to access by the eclarant, the Assocaton (and solely for vewng by governental agences) for ther upkeep, antenance and repar oblgatons. Ths antenance, to assure the ntegrty of the Lake, shall be a coon ^ expense atter under subsecton (J) hereof. The eclarant and the Assocaton, aer the Applcable ate, reserve the rght, but not the oblgaton, to nstall fountans and utlty servce thereto for the Lake. NETHER THE ECLARANT OR THE ASSOCATON MAKE ANY * REPRESENTATON THAT ANY CERTAN LEVEL OF WATER WLL E MANTANE N ANY LAKE. Sgnage. ecoratve Wall and Landscapng. dentfcaton sgnage at one of the two ponts of entry to Kerrngton Proper fro Whteland Road (CR 500 North) wth a decoratve all (wthout dentfcaton sgnage) at the second entry pont and ^ accopanyng landscapng, plus fencng at both of the entry locatons, plus drectonal nteror sgnage to dentfy the separate housng arket areas of Kerrngton Proper whch shall be nstalled and located wthn "Utlty, ranage and Landscape Easeents" as defned n the plats of such arket areas useable by the eclarant, the Assocaton or ther representatves. These desgnated partes reserve the rght to nstall, wthout the oblgaton to nstall, utltes to servce these areas wth any user charges arsng therefro to be a Coon Expense. A nteror Sgnage fas Noted). eclarant s presently negotatng wth approprate _ governent authortes for approval of stylzed traffc control sgns for the nteror of the county n addton to the referenced drectonal sgns and f approval s secured the * antenance and replaceent of all such sgnage wll be a "coon expense te" Addtonal Sgnage, ecoratve Walls and Landscapng. eclarant has reserved the rght renforced by easeents of record to nstall cobnatons of sgnage, decoratve walls and coplentary landscapng on Lots 16 and 17 at the entry corners tot he W county at Alar Court and also at ponts vsually opposte Kerrngton oulevard on 0 Lots 26 and 27 as sad Lots are depcted on Exhbt "C". _ Santary Sewer Easeent. A santary sewer easeent wll be ade of record to the Cty of argersvlle to thereof locate a l staton as part of ts santary syste wth * the rght of ngress-egress thereto. Whle the eclarant nor the Assocaton have any antenance oblgatons wth regard to sad syste and wth the Lot owner beng 4

20 554054_1 tt responsble to ancure the law surface wthn sad easeent any expense necessary to oversee these oblgatons shall also be a coon expense. Earthen a and Assocated Coponents. The Earthen da and assocated coponents, ncludng but not lted to the sphon dran, possble fountan wthn the Lake and overflow coponents located n easeent of record on Lots 21, 31 and Lot 32 as shown on Exhbt "C" are part of the ntegrty of the Lake and are part of the oblgaton of coon expenses to be addressed. ^ Lake Tree Preservaton Area. An area of 50 feet easured away fro the Lake shore lne shall be deeed a Lake Tree Preservaton Area fro whch trees at least 2 nches n daeter easured 6 nches above ground level ay not be reoved wthout * the approval of the Archtectural Control Cottee. Any overseeng and approval 9 procedure expense ncludng the hrng of professonals regardng trees shall be deeed a p coon expense. The Center of the Round-About n Secton 2. The Center of the round-about at the ntersecton of Coventry and Chancery as shown on Exhbt "C" shall be landscaped to soe extent wth possble utlty servce the user utlty expense of whch wll be a Coon Expense. Utlty Fees. All utlty user fees to serve the Coon Areas and whch ay be * nvolved n coon expense tes durng eclarant's control pror to the Applcaton ate and thereaer all nstallaton and user fees authorzed by the Assocaton. Fees, f any., for the electrc lght syste n the county shall also be a coon expense te. Fy percent (50%) of the cost of counsel expenses to create ths eclaraton and Kerrngton Proper Hoeowners Assocaton, ncludng, but not lted to, Artcles of 9 ncorporaton, y-laws, Secretary of State fle fees and ntal nutes.» ~ (k) "eclarant"/"eveloper" shall ean and refer to Kengton Proper evelopent, LLC, an ndana lted lablty copany, and any successors and assgns of Kerrngton Proper evelopent, LLC who t desgnates n one or ore wrtten recorded nstrurnents to have the rghts of eclarant hereunder, ncludng, but not lted to, any ortgagee acqurng ttle, to any 0 porton of the Real Estate pursuant to the exercse of rghts under, or foreclosure of, a ortgage _ executed by eclarant; " (1) "wellng Unt" shall ean and refer to any buldng, structure or porton thereof stuated on the Real Estate desgned and ntended for use and occupancy as a resdence by one (1) sngle faly; () "Lake" shall ean and refer to the Lake located on the Real Estate; (n) "Lot" shall ean and refer to any and each porton of the Real Estate (excludng 0 any part of the Coon Areas) desgned and ntended for use as a buldng ste for, or developed and unproved for use as, a wellng Unt (whch shall be deeed to nclude any other buldngs

21 " _1 * or proveents appurtenant to such wellng Unt), as desgnated by eclarant by ts deed of the sae to another Person. A Lot wll not necessarly be the sae as any sngle nubered parcel of land shown upon, and dentfed as a Lot on, any recorded subdvson plat of the Real Estate 0 or any part thereof. For purposes of ths eclaraton, a "Lot" ay be () any sngle nubered parcel of land dentfed as a Lot on such subdvson plat, () part of such a nubered parcel of M land, () such a nubered parcel of land cobned wth part or all of another such nubered parcel of land, or (v) parts or all of two (2) or ore of such nubered parcels of land cobned. The deternaton of what porton of the Real Estate consttutes a "Lot" for purposes of ths eclaraton shall be ade by reference to, and shall ean, each tract of land conveyed by 0 eclarant to another Person for use as a buldng ste for, or developed and proved for use as, ^ a wellng Unt (whch shall be deeed to nclude any other buldngs or proveents appurtenant to such wellng Unt). Notwthstandng the foregong, f aer the ntal conveyance of a porton of the Real Estate by eclarant to another Person t s agreed between eclarant and such Person to enlarge or reduce or otherwse change the porton of the Real P Estate so orgnally conveyed to such Person as a "Lot", then the deternaton of what porton of the Real Estate consttutes such "Lot" for purposes of ths eclaraton shall be ade by reference to, and shall ean, such "Lot" ntally so conveyed by eclarant, as the sae has been * adjusted or changed at any te by conveyances by and between eclarant and such Person. Any deed or other nstruent of conveyance so adjustng or changng the descrpton of a "Lot" shall state on ts face that t s ade for such purpose. Any part of a "Lot" reconveyed to eclarant shall, upon such reconveyance, lose ts character as part of a "Lot" and ay thereaer be conveyed by eclarant as part of another "Lot". The foregong procedures ay be used to ^ correct errors n descrptons, to adjust boundary lnes of "Lots" or for any other reason; THE LOT LNES OF LOTS NCLUSVE AS SHOWN ON EXHT C (CONCEPTUAL PLAN) SHALL E EXTENE NTO THE LAKE SO THAT ALL THE LAKE, N THE AGGREGATE, S OWNE Y SA TTLEOWNERS. GS (o) "Meber" eans a eber of the Assocaton. (p) "Applcable ate or eclarant Turnover ate" refers to the te at whch the n eclarant relnqushes control of the governance of the Assocaton as detaled on Artcle V. ^ (q) "Mortgages" shall ean and refer to the holder of a recorded frst ortgage len on a Lot or wellng Unt; (r) "Owner" shall ean and refer to the record Owner, whether one or ore Persons, of the fee sple ttle to any Lot, but n any event shall not nclude or ean or refer to a ortgagee or tenant unless and untl such ortgagee or tenant has acqured ttle to any Lot, but upon so acqurng ttle to any Lot a ortgagee or tenant shall be an Owner; g (s) "Person" shall ean and refer to an ndvdual, fr, corporaton, partnershp, _ assocaton, trust, or other legal entty, or any cobnaton thereof; (t) "Propertes" shall ean and refer to the real property descrbed n Exhbt "A" attached hereto, together wth such "Addtonal Property" as s hereaer ade subject to ths e& eclaraton by recorded plats for the Addtonal Property;

22 554054_1 (u) "The Real Estate" shall ean and refer to the parcel of real estate n Johnson County, ndana, descrbed h Exhbt "A" attached to ths eclaraton, as referred to h the frst rectal clause of ths eclaraton, and defned theren as the Real Estate; (v) "Restrctons" shall ean and refer to the agreeents, condtons, covenants, restrctons, easeents, assessents, charges, lens and all other provsons set forth h ths eclaraton, as the sae ay be aended fro te to te; (w) "Rules and Regulatons" rules and regulatons relatve to the use, occupancy, operaton and enjoyent of the Real Estate and the Coon Areas as authorzed under Artcle V, Secton 7(g). (x) "Cottee" shall refer to the Archtectural Control Cottee all as fully detaled n Artcle C hereof. (y) "County or Project" refers to the Kerrngton Proper project as t s developed and as t contnues to exst aer the Applcable ate and f copleted n full wll be as shown on Exhbt C wth Lots 1-6 and nclusve to be called Kerrngton Proper and Lots nclusve to be called The Reserve at Kerrngton Proper. Secton 2. Other ters and words defned elsewhere h ths eclaraton shall have the eanngs heren attrbuted to the. ARTCLE eclaraton: Coon Areas and Rghts Theren Secton 1. eclaraton. eclarant hereby expressly declares that the Propertes shall be held, transferred and occuped subject to the Restrctons as Covenants runnng wth the Real Estate. The Owners of any Lot subject to these Restrctons, and all other Persons, by () acceptance of a deed conveyng ttle thereto, or the executon of a contract for the purchase thereof, whether fro eclarant or a subsequent Owner of such Lot, or () by the act of occupancy of any Lot, shall conclusvely be deeed to have accepted such deed, executed such contract and undertaken such occupancy subject to each Restrcton and agreeent heren contaned. y acceptance of such deed, or executon of such contract, or undertakng such occupancy, each Owner and all other Persons acknowledge the rghts and powers of eclarant, the Cottee and of the Assocaton wth respect to these Restrctons, and also for tself, ts hers, personal representatves, successors and assgns, covenant, agree and consent to and wth eclarant, the Cottee, the Assocaton, and the Owners and subsequent Owners of each of the Lots affected by these Restrctons to keep, observe, coply wth and perfor such Restrctons and agreeent. Secton 2. Easeent to Owner. eclarant hereby grants a non-exclusve easeent n favor of each Owner for the use, enjoyent and bene of the Coon Areas (except for the Lted Coon Area, as to whch, h accordance wth, other provsons hereof, the use, enjoyent and bene s lted to the Owners of certan desgnated Lots to the excluson of

23 other Lots) subject to all of the Restrctons of ths eclaraton, and such easeent shall be an easeent runnng wth and appurtenant to each Lot. ARTCLE H 0 Oblgatons of eclarant as to Coon Areas Secton 1. Agreeent to Construct and Convey Other Coon Areas. eclarant * has constructed or provded for, or wll pror to the Applcable ate construct or provde for, Coon Areas consstng of the followng tes: (a) a stor dranage syste for the Real Estate (Secton 1), whch ay nclude a lake, nlet ppes, open dtches, swales, ppes and other structures and dranage courses; (b) the nstallaton, n coon areas or landscape easeents of landscapng walls,, fencng and/or sgnage as descrbed under "coon expenses" n Secton 1(J) hereof; (c) the nstallaton of entrance walls n landscape easeents and drectonal "* dentfcaton sgnage as descrbed under "coon expense" n Secton 1(J) hereof; (d) the nstallaton, wthn the street rghts-of-way areas or n landscape easeent of landscapng for the center area of the turnaround of Secton 2 s developed all as descrbed under "coon expense" n Secton 1(J) hereof. (e) the nstallaton of such utltes as eclarant, n ts dscreton, chooses to nstall to serve (a),(b),(c) or (d) above. _ ^^3 ^ A a A Upon substantal copleton of portons of the Coon Areas descrbed n ths Secton 1 or earler f the Assocaton and the eclarant are wllng to convey and accept sae subject to agreed condtons. When Owner oard Mebers (excludng eclarant) are at least equal to eclarant oard Mebers (non-owners, ncludng eclarant), but n no event wll all the Coon Areas be conveyed len free and copletely constructed later than the Applcable ate. eclarant covenants to convey by qutcla deed all of ts rght, ttle and nterest n and to sad Coon Areas to the Assocaton and all such rght, ttle and nterest n and to sad tes (whether owned n fee or by easeents) shall then be the property of the Assocaton, whether or not the sae ay be located entrely or partally on any one or ore of the Lots. As to any of such tes of and consttutng the Coon Expense Areas located entrely or partally on any one or ore of the Lots, the Owners of such Lots shall have only non-exclusve easeent rghts theren as descrbed n Artcle, Secton 2. of ths eclaraton. ARTCLE V Assocaton; Mebershp; Votng; Functons Secton 1. Mebershp n Assocaton. eclarant and each Owner of a Lot shall, autoatcally upon becong an Owner, be and becoe a eber of the Assocaton and shall rean a eber untl such te as hs ownershp of a Lot ceases, but ebershp shall» ternate when such Owner ceases to be an Owner, and ebershp wll be transferred to the

24 554054J new Owner of hs Lot; provded, however, that any Person who holds the nterest of an Owner n a Lot erely as securty for the perforance of an oblgaton shall not be a eber untl and unless he realzes upon hs securty, at whch te he shall autoatcally be and becoe an Owner and a eber of the Assocaton. _ Secton 2. Votng Rghts. The Assocaton shall have the followng classes of ebershp, wth the followng votng rghts: (a) Class A. Class A ebers shall be all Owners except Class ebers. Each ^ Class A eber shall be enttled to one (1) vote for each Lot of whch such eber s the Owner wth respect to each atter subtted to a vote of ebers upon whch the Class A ebers are enttled to vote. When ore than one (1) ^ Person consttutes the Owner of a J partcular Lot, all such Persons shall be ebers of the Assocaton, but all of such Persons shall have only one (1) vote for such Lot, whch vote shall be exercsed as they aong theselves gj deterne, but n no event shall ore than one (1) vote be cast wth respect to any such Lot. (b) Class. Class ebers shall be eclarant and all successors and assgns of * eclarant desgnated by eclarant as Class ebers n a wrtten notce aled or delvered to the resdent agent of the Assocaton. Each Class eber shall be enttled to four (4) votes for g} each Lot of whch t s the Owner on the recorded subdvson plat of the Real Estate and ten (10) _ votes per "denonated Lot" on the property adjacent to the Propertes (Addtonal Property) whch whle not a platted Lot s denonated as a Lot on Exhbt C (conceptual plan) as defned * n ths eclaraton, on all atters requrng a vote of the ebers of the Assocaton, THE CLASS MEMERSHP SHALL CEASE AN TERMNATE UPON THE FRST TO OCCUR OF () THRTY (30) AYS AFTER THE ATE UPON WHCH THE WRTTEN RESGNATON OF THE CLASS MEMERS S ELVERE TO THE RESENT AGENT OF THE ASSOCATON, OR () THE ATE WHEN EGHTY PERCENT (80%) OF LOTS AN THE * ENOMNATE LOTS N THE "ATONAL PROPERTY: HAVE EEN CONVEYE * Y EE FROM ECLARANT TO ULERS OR OTHER LOT PURCHASERS. () TEN (10) YEARS AFTER THE ATE OF RECORATON OF THS ECLARATON. The ate applcable to the above s herenaer referred to as the Applcable ate. 0 Aer the Applcable ate, Class ebershps shall be converted to Class A» ebershps, and each forer Class eber shall be enttled to one, (1) Class A ebershp for each Lot owned and for each denonated Lot dentfed as a Lot on Exhbt C (conceptual * plan). Secton 3. Functons, The Assocaton has been (or wll be) fored for the purpose of provdng for the antenance, repar, replaceent, adnstraton, operaton and ownershp of

25 the Coon Areas as and to the extent provded heren to pay the coon expenses, to pay taxes assessed aganst and payable wth respect to the Coon Areas, to pay any other necessary expenses and costs n connecton wth the Coon Areas, and to perfor such other functons as ay be desgnated for t to perfor under ths eclaraton. ARTCLE V oard of rectors Secton 1. Manageent. The busness and affars of the Assocaton shall be governed and anaged by the oard of rectors, No person shall be elgble to serve as a eber of the oard of rectors unless he s, or s deeed n accordance wth ths eclaraton to be, an Owner, or a person apponted by eclarant as provded n Secton 2 of ths Artcle V. Secton 2. ntal oard of rectors. The ntal oard of rectors shall be coposed of the persons desgnated or to be desgnated, n the Artcles., to-wt: Gregory V. Costelow, Gary L. McNel and Manager of T&C Enterprses LLC (heren referred to as the "ntal oard"), who has been or shall be apponted by eclarant Notwthstandng anythng to the contrary contaned n, or any other provson of, ths eclaraton, the Artcles, the ylaws or the Act (a) the ntal oard shall hold offce untl the frst annual eetng of the ebers of the Assocaton occurrng on or aer the Applcable ate., and (b) n the event of any vacancy or vacances occurrng n the ntal oard for any reason or cause whatsoever pror to such frst annual eetng occurrng on or aer the Applcable ate deterned as provded above, every such vacancy shall be flled by a person apponted by eclarant, who shall thereaer be deeed a eber of the ntal oard. Each Owner, by acceptance of a deed to a Lot, or by acquston of any nterest n a wellng Unt by any type of jurdc acts nter vvos or causa orts, or otherwse, shall be deeed to have apponted eclarant as such Owner's agent, attoey-n-fact and proxy, whch shall be deeed coupled wth an nterest and rrevocable untl the Applcable ate deterned as provded above, to exercse all of sad Owner's rght to vote, and to vote as eclarant deternes, on all atters as to whch ebers of the Assocaton are enttled to vote under the eclaraton, the Artcles, the ylaws, the Act or otherwse. Ths appontent of eclarant as such Owner's agent, attorney-n-fact and proxy shall not be affected by ncopetence of the Owner grantng the sae. Each Person servng on the ntal oard, whether as an orgnal eber thereof or as a eber thereof apponted by eclarant to fll a vacancy, shall be deeed a Specal eber of the Assocaton and an Owner solely for the purpose of qualfyng to act as a eber of the oard of rectors and for no other purpose. No such person servng on the ntal oard shall be deeed or consdered a eber of the Assocaton nor an Owner of a Lot for any other purpose (unless he s actually the Owner of a Lot and thereby a eber of the Assocaton). Secton 3. Addtonal ualfcatons. Where an Owner conssts of ore than one Person or s a partnershp, corporaton, trust or other legal entty, then one of the Persons consttutng the ultple Owner, or a partner or an offcer or trustee shall be elgble to serve on the oard of rectors, except that no sngle Lot or wellng Unt ay be represented on the oard of rectors by ore than one Person at a te. 10

26 Secton 4. Ter of Offce, Vacancy and Nuber of rectors Aer the Applcable (a) Ter. Subject to the provsons of Secton 2 of ths Artcle V, the entre ebershp of the oard of rectors shall be elected at each annual eetng of the Assocaton. K The ntal oard shall be deeed to be elected and re-elected as the oard of rectors at each tt annual eetng untl the frst annual eetng of the ebers occurrng on or aer the Applcable ate provded heren. Aer the Applcable ate, each eber of the oard of rectors shall be elected for a ter of one (1) year. Each rector shall hold offce throughout the ter of hs electon and untl hs successor s elected and qualfed. (b) Nuber of rectors Aer Applcable ate. The nuber of rectors to serve on the oard aer the Applcable ate shall be fve (5) wth representaton thereon assured to each of the separately naed areas of Kerrngton Proper as follows: A Kerrngton Proper 2 rectors _ The Reserve at Kerrngton Proper 2 rectors and 1 rector elected At Large g The votng for rectors fro each of these separately naed areas wll solely be deterned by the Owners fro wthn the separately naed area. (c) Vacances. Subject to the provsons of Secton 2 of ths Artcle V as to the ntal oard, any vacancy or vacances occurrng n the oard shall be flled by a vote of a ajorty of the reanng ebers of the oard or by vote of the Owners f a rector s reoved n accordance wth Secton 5 of ths Artcle V wth any such replaceent to be consstent wth the _ representaton n Secton 4(b) hereof. The rector so fllng a vacancy shall serve untl the next annual eetng of the ebers and untl hs successor s elected and qualfed. At the frst annual eetng followng any such vacancy, a rector shall be elected for the balance of the ter of the rector so reoved or n respect to who there has otherwse been a vacancy. Secton 5. Reoval of rectors. A rector or rectors., except the ebers of the ntal oard., ay be reoved wth or wthout cause by vote of a ajorty of the votes enttled to " be cast at a specal eetng of the Owners duly called and consttuted for such purpose. n such case, hs successor shall be elected at the sae eetng fro elgble Owners nonated at the g} eetng. A rector so elected shall serve untl the next annual eetng of the Owners or untl hs successor s duly elected and qualfed. ^ Secton 6. utes of the oard of rectors. The oard of rectors shall be the governng body of the Assocaton representng all of the Owners and beng responsble for the functons and dutes of the Assocaton, rncludng but not lted to provdng for the adnstraton of the Real Estate, the anageent, antenance, repar, upkeep and replaceent of the Coon Areas (unless the sae are otherwse the responsblty or duty of Owners), and the collecton and dsburseent of the Coon Expenses. Aer the Applcable ate, the oard ay eploy a Managng Agent upon such ters as the oard shall fnd, n ts dscreton, 11

27 _ _1 reasonable and custoary. The Managng Agent, f one s eployed, shall assst the oard n carryng out ts dutes, whch nclude, but are not lted to: * (a) protecton, survellance and replaceent of the Coon Areas, unless the sae are otherwse the responsblty or duty of Owners of Lots; provded, however, that ths duty ca shall not nclude or be deeed or nterpreted as a requreent that the Assocaton, the oard or a any Managng Agent ust provde any on-ste or rovng guards, securty servce or securty syste for protecton or survellance., and the sae need not be furnshed; (b) procurng of utltes used n connecton wth the Lots, wellng Unts and Coon Areas (to the extent the sae are not provded and blled drectly to Owners of Lots and wellng Unts by utlty copanes); * (c) landscapng, pantng, decoratng, furnshng, and antenance and upkeep of, the Coon Areas; _ (d) assessent and collecton fro the Owners of the Owners' respectve shares of the Coon Expenses; s (e) preparaton of the proposed annual budget, a copy of whch wll be aled or delvered to each Owner at the sae te as the notce of the annual or specal eetng at whch _ the sae s to be acted upon s aled or delvered; " (f) preparng and delverng annually to the Owners a full accountng of all recepts and expenses ncurred n the pror year; f possble, such accountng shall be delvered to each Owner sultaneously wth delvery of the proposed annual budget for the current year; (g) keepng a current, accurate and detaled record of recepts and expendtures * affectng the Coon Areas and the busness and affars of the Assocaton, specfyng and tezng the Coon Expenses; all records and vouchers shall be avalable for exanaton by an Owner at any te durng noral busness hours by reasonable pre-arrangeent; (h) procurng and antanng for the bene of the Assocaton, the Owners, any ** Managng Agent and the oard the nsurance coverages requred under ths eclaraton and such other nsurance coverages as the oard, n ts sole dscreton, ay dee necessary or advsable; A () payng taxes and assessents assessed aganst and payable wth respect to the Coon Areas and payng any other necessary expenses and costs n connecton wth the Coon Areas; and 0) all dutes and oblgatons posed upon the Assocaton or the oard under ths A eclaraton, the Artcles, the ylaws or the Act. Secton 7. Powers of the oard of rectors. The oard of rectors shall have such powers as are reasonable and necessary to accoplsh the perforance of ther dutes. These power nclude, but are not lted to, the power: 12

28 & (a) to eploy a Managng Agent to assst the oard n perforng ts dutes; (b) to purchase, lease or otherwse obtan for the Assocaton, to enable t to perfor ts functons and dutes, such equpent, aterals, labor and servces as ay be necessary n the judgent of the oard of rectors. (c) to eploy legal counsel, archtects, Contractors, accountants and others as n the judgent of the oard of rectors ay be necessary or desrable n connecton wth the busness and affars of the Assocaton; (d) to eploy, desgnate, dscharge and reove such personnel as n the judgent of the oard of rectors ay be necessary for the antenance, upkeep, repar and replaceent of the Coon Areas, and to perfor all other antenance, upkeep, repar and replaceent dutes of the Assocaton and the oard; (e) to nclude the costs of perforng all of ts functons, dutes and oblgatons as Coon Expenses and to pay all of such costs therefro; (f) to open and antan a bank account or accounts n the nae of the Assocaton; (g) to proulgate, adopt, revse, aend and alter fro te to te such addtonal Rules and Regulatons wth respect to use, occupancy, operaton and enjoyent of the Real Estate and the Coon Areas (n addton to those set forth n ths eclaraton) as the oard, n ts dscreton, dees necessary or advsable; provded, however, that copes of any such addtonal rules and regulatons so adopted by the oard shall be proptly delvered to all Owners; and (h) to grant to such publc or prvate copanes, enttes or bodes as the oard ay approve, such easeents as ay be necessary to provde the Los, wellng Unts and Coon Areas wth facltes for utlty and slar servces, ncludng but not lted to cable televson facltes and servce, provded that such easeents are located wthn or are coextensve wth any one or ore utlty easeents, antenance and access easeent, landscape and antenance easeents, or Coon Areas shown upon, and dentfed as such on, or provded for n, any subdvson plat of the Real Estate, whether such plat s heretofore or hereaer recorded. () to borrow funds to perfor ts dutes for the bene of the Assocaton and Owners and use the assessents as collateral, f collateral s requred, to secure such fnancng. Secton 8. Ltaton on oard Acton. Aer the Applcable ate, the authorty of the oard to enter nto contracts shall be lted to contracts nvolvng a total expendture of less than $10, per year wthout obtanng the pror approval of a ajorty of the cuulatve vote of the Owners, except that n the followng cases such approval shall not be necessary; 13

29 554054_1 (a) contracts for replacng or restorng portons of the Coon Areas daaged or destroyed by fre or other casualty where the cost thereof s payable out of nsurance proceeds * actually receved or for whch the nsurance carrer has acknowledged coverage; S O3) proposed contracts and proposed expendtures expressly set forth n the proposed «annual budget as approved by the Owners at the annual eetng; and (c) expendtures necessary to deal wth eergency condtons n whch the oard of rectors reasonably beleves there s nsuffcent te to call a eetng of the Owners. e Secton 9- Copensaton. No rector shall receve any copensaton for hs servces as such except to such extent as ay be expressly authorzed by a ajorty vote of the Owners. ^ The Managng Agent, f any s eployed, shall be enttled to reasonable copensaton for ts O O o servces, the cost of whch shall be a Coon Expense. Secton 10. Non-Lablty of rectors. The rectors shall not be lable to the Owners or any other Persons for any error or stake of judgent exercsed n carryng out ther dutes and responsbltes as rectors, except for ther own ndvdual wllful sconduct, bad fath or gross neglgence. The Assocaton shall ndenfy and hold harless and defend each of the rectors aganst any and all lablty to any person, fr or corporaton arsng of contracts ade by the oard on behalf of the Assocaton, unless any such contract shall have been ade n bad fath. t s ntended that the rectors shall have no personal lablty wth respect to any contract - ade by the on behalf of the Assocaton. O Secton 11. Addtonal ndenty of rectors- The Assocaton shall ndenfy, hold» harless and defend any Person, hs hers, assgns and legal representatves, ade a party to any ^ acton, sut or proceedng by reason of the fact that he s or was a rector of the Assocaton, aganst the reasonable expenses, ncludng attorneys' fees, actually and necessarly ncurred by * h n connecton wth the defense of such acton, sut or proceedng, or n connecton wth any 0 appeal theren, except as otherwse specfcally provded heren n relaton to atters as to whch a t shall be adjudged n such acton, sut or proceedng that such rector s lable for gross neglgence or sconduct n the perforance of hs dutes. The Assocaton shall also reburse to any such rector the reasonable costs of settleent of or judgent rendered n any acton, * sut or proceedng, f t shall be found by a ajorty vote of the Owners that such rector was O not gulty of gross neglgence or sconduct. n akng such fndngs and notwthstandng the adjudcaton n any acton, sut or proceedng aganst a rector, no rector shall be consdered or deeed to be gulty of or lable for neglgence or sconduct n the perforance of hs dutes where, actng n good fath, such rector reled on the books and records of the Assocaton or stateents or advce ade by or prepared by the Managng Agent (f any) or any offcer or O eployee thereof, or any accountant, attorney or other person, fr or corporaton eployed by ^ the Assocaton to render advce or servce unless such rector had actual knowledge of the falsty or ncorrectness thereof; nor shall a rector be deeed gulty of or lable for neglgence or sconduct by vrtue of the fact that he faled or neglected to attend a eetng or eetngs of the oard of rectors. 14

30 Secton 12. ond. The oard of rectors ay provde surety bonds and ay requre the Managng Agent (f any), the treasurer of the Assocaton, and such other offcers as the oard dees necessary, to provde surety bonds, ndenfyng the Assocaton aganst larceny, the, ebezzleent, forgery, sappropraton, wrongful, abstracton, wllful sapplcaton and other acts of fraud or dshonesty, n such sus and wth such suretes as ay be approved by the oard of rectors and any such bond shall specfcally nclude protecton for any nsurance proceeds receved for any reason by the oard, The expense of any such bonds shall be a Coon Expense. Secton 13. ntal Manageent. Notwthstandng anythng to the contrary contaned n ths eclaraton, eclarant shall have, and eclarant hereby reserves to tself, the exclusve rght to anage or desgnate a Managng Agent for the Real Estate and Coon Areas, and to perfor all the functons of the Assocaton, untl the Applcable ate. eclarant ay, at ts opton, engage a Managng Agent afflated wth t to perfor such functons and, n ether case, eclarant or such Managng Agent shall be enttled to reasonable copensaton for ts servces. ARTCLE V Real Estate Taxes; Utltes Secton 1. Real Estate Taxes. Real estate taxes on each Lot, and on any wellng Unt or other proveents on each Lot, are to be separately assessed and taxed to each Lot and shall be pad by the Owner of such Lot. Any real estate taxes or other assessents aganst the Coon Areas, f any, shall be pad by the Assocaton and treated as a Coon Expense. Secton 2. Utltes. Each Owner shall pay for hs own utltes whch, to the extent possble, shall be separately etered to each Lot and wellng Unt Utltes whch are not separately etered to an Owner's Lot or wellng Unt shall be treated as and pad as part of the Coon Expense, unless otherwse deterned by the Assocaton. ARTCLE VH Mantenance, Repar and Replaceent Secton 1. y the Owner. Each Owner shall be responsble for, f the need therefor arses, all antenance, repars, decoraton and replaceent of hs own wellng Unt, both nteror and exteror. n addton, each Owner shall furnsh and be responsble for the antenance of all portons of hs Lot, except for such portons thereof as ay, n accordance wth the ters of ths eclaraton, be desgnated as a part of the Coon Areas for purposes of antenance only. All fxtures and equpent nstalled wthn or as part of a wellng Unt, coencng at the ponts where the utlty lnes, ppes, wres, conduts or systes enter the Lot upon whch sad wellng Unt s located, shall be antaned and kept n repar by the Owner thereof. Each Owner shall proptly perfor all antenance and repar of hs Lot and wellng Unt whch, f neglected, ght adversely affect any other Lot or wellng or any part of the Coon Areas or n the judgent of the oard negatvely pact on the preservaton and enhanceent of values n the Kerrngton Proper "County" project. Such antenance and repars nclude but are not lted nternal water lnes, plubng, electrc lnes, gas lnes, 15

31 applances and other fxtures, equpent and accessores belongng to the Owner and a part of or appurtenant to hs wellng Unt or Lot. Secton 1. y the Assocaton. Mantenance, repars, replaceents and upkeep of the Coon Areas shall (except to the extent provded heren as the oblgaton of Owners) and such responsbltes wthn easeents as detaled under "coon expenses" n Secton 1(J) hereof be furnshed by the Assocaton, as a part of ts dutes, and the cost thereof shall consttute a part of the Coon Expenses as detaled n Artcle (k). The oard of rectors ay adopt such other rules and regulatons concernng antenance, repar, use and enjoyent of the Coon Areas as t dees necessary, provded that the sae are not nconsstent wth the express provsons of ths eclaraton. Notwthstandng any oblgaton or duty of the Assocaton to repar or antan any of the Coon Areas (or tes deeed Coon Expense Areas for purposes of antenance), f, due to the wllful, ntentonal or neglgent acts or ossons of an Owner or of a eber of hs faly or of a guest, tenant, nvtee, or other occupant or vstor of such Owner., daage shall be caused to the Coon Areas (or tes deeed as such for purposes of antenance), or f antenance, repars or replaceents shall be requred thereby whch would otherwse be at the Coon Expense, then such Owner shall pay for such daage and such antenance, repars and replaceents, as ay be deterned by the Assocaton, unless such loss s covered by the Assocaton's nsurance wth such polcy havng a waver of subrogaton clause. f not pad by such Owner upon deand by the Assocaton, the cost of reparng such daage shall be added to and becoe a part of the assessent to whch such Owner's Lot s subject. The authorzed representatves of the Assocaton, the oard and the Managng Agent for the Assocaton (f any) shall be enttled to reasonable access to any Lot as ay be requred n connecton wth antenance, repars or replaceents of or to the Coon Areas and tes deeed as Coon Expense Areas for purposes of antenance, ncludng, but not lted to, access to any easeents reserved, granted or created by any Kengton Proper subdvson plat of any porton of the Real Estate for such purposes. ARTCLE Lake Covenants Secton 1. Ownershp of Lake. The Lake area as shown on Exhbt C when platted s a lted use area but s not a coon area snce t s proposed to be ttled n Lot 21 Lot 32 ttleowners, however, ts antenance s a coon expense as detaled n Secton 1(J) hereof and ts use s subject to Rules and Regulatons adopted. Secton 2- Rghts To Use Lake. Subject to the easeent rghts wth respect to the Lake descrbed n the recorded plats applcable to the Real Estate and as detaled n Secton 1(J), all Owners of Lots surroundng the Lake together wth guests n ther presence, shall have the rghts to use and enjoyent of such Lake (except the Lted Lake) provded they access such Lake only va coon areas and not through Lots owned by others and provded further that they not 16

32 ~ _1 nterfere wth the dranage syste of the subdvson of whch the Lake s a part and coply wth ltatons on the use thereof and Rules and Regulatons adopted relatve thereto. Secton 3. Ltatons on Use of Lake. No person shall do or pert to be done any acton or actvty whch could result h polluton of the Lake, dverson of water, elevaton of Lake levels, earth dsturbance resultng n sltng or any conduct whch could result n an adverse affect upon water qualty, dranage of the subdvson or proper Lake anageent. The Lake s and wll be an ntegral part of the stor water dranage syste servng the Real Estate and s ntended to be used for such purpose and prarly as a vsual and aesthetc n aenty and not as a recreatonal aenty. Accordngly, no use shall be ade of any of the Lake whch n any way nterferes wth ts proper functonng as part of such stor water dranage * syste. The Lake shall be kept free and clean of rubbsh, debrs and other unsghtly aterals. No n structure of any knd shall be placed n the Lake or on the Lake property wthout the pror wrtten _ approval of the Cottee, ncludng but not lted to docks, wharves, etc. R No boatng, swng, dvng, skng, ce skatng or robot controlled vehcles shall be 0 pertted n or on sad Lake except as pertted by the oard of rectors under wrtten and proulgated Rules and Regulatons. Fshng fro the Lake's shorelne or fro approved docks _ and wharves s perssble wthn lts as stated n such Rules and Regulatons. J» a No sewage, garbage, refuse or other sold, lqud, gaseous or other aterals or tes (other than stor and surface water dranage) shall be put nto sad lake, except the oard of rectors ay take steps to clear and purfy the waters thereof by the addton of checals or other substances coonly used for such purposes or by provdng theren structures and equpent to aerate the sae. Fshng fro the shores of such lake shall be pertted subject to obeyance and coplance wth all applcable fshng and gae laws, ordnances, Rules and Regulatons.... Secton 5. Costs of Mantenance. Estated costs of antenance and repar of the Lake ^ property related to the stor water dranage syste shall be ncluded n the Coon Expenses subject to the assessent for Lots n the Kerrngton Proper Project as herenaer detaled and dstngushed for the Kerrngton Proper and The Reserve at Kerrngton Proper coponents of _ ths project. ARTCLE X Archtectural Standards * Nothng, ncludng any fence, deck, dock, recreatonal equpent (ncludng basketball goals), or any structure, storage shed, doghouse or other proveents, shall be erected on any * Lot, and no constructon, whch ter shall nclude wthn ts defnton stakng, clearng, excavaton, gradng, and other ste work, no exteror alteraton or odfcaton of exstng a proveents, and no plantngs or reoval of plants, trees, or shrubs shall take place except n 17

33 strct coplance wth ths Artcle, untl the requreents below have been fully et, and untl the approval of the Cottee has been obtaned pursuant to Secton 1 below. THS ARTCLE SHALL NOT APPLY TO THE ACTVTES OF THE ECLARANT, NOR TO CONSTRUCTON OR MPROVEMENTS OR MOFCATONS TO THE COMMON AREA Y OR ON EHALF OF THE ASSOCATON. THS ARTCLE MAY NOT E AMENE WTHOUT THE ECLARANT'S WRTTEN CONSENT SO LONG AS THE ECLARANT OWNS ANY LAN SUJECT TO THS ECLARATON. Secton 1. Archtectural Control Cottee. There shall be, and hereby s, created and establshed the "Kerrngton Proper Archtectural Control Cottee" ("Cottee") whch shall have exclusve jursdcton over all constructon on any porton of the Propertes. UNTL 100% OF THE PROPERTES HAVE EEN EVELOPE AN CONVEYE TO PURCHASERS n the noral course of developent and sale, the ECLARANT, or not ore than fve, nor less than three, persons desgnated by t, SHALL CONSTTUTE THE COMMTTEE AN SHALL SERVE AT THE SCRETON OF THE ECLARANT. THERE SHALL E NO SURRENER OF THS RGHT PROR TO THAT TME EXCEPT N A WRTTEN NSTRUMENT N RECORALE FORM EXECUTE Y THE ECLARANT. Aer the sale of 100% of the Propertes, the Cottee shall be a standng cottee of the Assocaton, consstng of not ore than fve, nor less than three, persons as ay, fro te to te, be provded n the ylaws. f the ylaws do not at any te provde for the Cottee, then the oard shall be and consttute the Cottee. Secton 2. Approval Process. The Cottee has prepared and proulgated, on behalf of the oard of rectors, desgn and developent gudelnes and applcaton and revew procedures. Copes are on fle n the offce of the eclarant (or the Assocaton, as the case ay be) whch are ncorporated nto ths eclaraton by reference. The gudelnes and procedures shall be those of the Assocaton, and the Cottee shall have sole and full authorty to prepare and to aend the. t shall ake the gudelnes and procedures avalable to Owners, bulders, and developers who seek to engage n developent of or constructon, odfcaton, addton or alteraton ade on or to any exstng structure, upon all or any porton of the Propertes and such Owners and bulders shall conduct ther operatons strctly n accordance therewth. The Cottee, or ts desgnee, ust gve wrtten approval for any buldng contractor selected by the Lot Owner for constructon. Pror to any constructon on any Lot, the approval of the Cottee ust be obtaned aer wrtten applcaton has been ade to the Cottee by the Owner of the Lot requestng authorzaton fro the Cottee. Such wrtten applcaton shall be ade n the anner and for prescrbed fro te to te by the Cottee n ts gudelnes and procedures whch wll contan requreents to proote the standard of qualty of workanshp and desgn and harony of external desgn wth exstng structures, locaton n relaton to surroundng structures, topography and fnsh grade elevaton as deterned by the Cottee. 18

34 Secton 3. Power of sapproval. The Cottee ay refuse to grant persson to construct, place or ake the requested proveent, when: (a) the plans, specfcatons, drawngs or other ateral subtted are, ^ theselves, nadequate or ncoplete, or show the proposed proveent to be n volaton of _ these eclaratons, the plat restrctons or any rules, regulatons or gudelnes adopted by tle Cottee: (b) the desgn or color schee of a proposed proveent or the aterals 0 proposed to be used are not n harony wth the general surroundngs of the Lot or wth adjacent buldngs or structures n the sole opnon of the Cottee; or * (c) the proposed proveent, or any part thereof, would, n the sole opnon of the Cottee, be contrary to the nterest, welfare or rghts of all or part of other Owners. _ Secton 4. utes of Cottee. The Cottee shall approve or dsapprove proposed proveents wthn fourteen (14) calendar days aer all requred nforaton shall have been subtted to t. One copy of subtted ateral shall be retaned by the Cottee for ts peranent fles. All notfcatons to applcants shall be n wrtng, and the event that such M notfcaton s one of dsapproval, t shall specfy the reason or reasons therefor. n the event that the Cottee fals to approve or dsapprove such plans or to request addtonal nforaton reasonably requred wthn 45 days aer subsson of all requred or requested * nforaton, the plans shall be deeed approved. Secton 5. No Waver of Future Approvals. The approval of the Cottee of any proposals or plans and specfcatons or drawngs for any work done or proposed, or h connecton wth any other atter requrng the approval and consent of such Cottee, shall * not be deeed to consttute a waver of any rght to wthhold approval or consent as to any p slar proposals, plans and specfcatons, drawngs, or atters whatever subsequently or addtonally subtted for approval or consent. Secton 6. Varance. The Cottee ay authorze varances fro coplance wth any of ts gudelnes and procedures when crcustances such as topography, natural obstructons, hardshp, or aesthetc or envronental consderatons requre, but only n accordance wth duly adopted rules and applcable zonng laws, ordnances and regulatons. Such varances ay only be granted, however, when unque crcustances dctate and no varance shall (a) be effectve unless n wrtng, (b) be contrary to the restrctons set forth n the body of ths eclaraton, or (c) * estop the Cottee fro denyng a varance n other crcustances. For purposes of ths Secton, the nablty to obtan approval of any governental agency, the ssuance of any pert^ the ters of any fnancng, or the ntaton of work wthout the requred approval of the ~ Cottee shall not be consdered hardshps warrantng a varance. " Secton 7. Coplance wth Gudelnes. Any contractor, subcontractor, agent, eployee, or other nvtee of an Owner who fals to coply wth the ters and provsons of the gudelnes and procedures proulgated by the Cottee ay be excluded by the oard fro the Propertes wthout lablty to any person, subject to the notce and hearng procedures 19

35 ^ J»» contaned n the ylaws. Further, f any approval requred by ths eclaraton s not granted n wrtng wth respect to any te pror to ts nstallaton, the respectve Owner thereof shall reove proptly the unapproved te or structure, upon request by eclarant or the 9 Assocaton. Secton 8. Non-Lablty of eclarant, Cottee. Nether the eclarant nor the Cottee shall be responsble n any way for any defect n any plans, specfcatons or other aterals subtted to t, nor for any defects n any work done accordng thereto. Further, the Cottee or the eclarant does not ake, and shall not be deeed by vrtue of any acton of p approval or dsapproval taken by t to have ade, any representaton or warranty as to the sutablty or advsablty of the desgn, the engneerng, the ethod of constructon nvolved, or the aterals to be used or as to the coplance of any plans subtted for approval wth these * Restrctons, any recorded plat governng the Real Estate or any applcable code, regulaton or law. Secton 9. nspecton. The Cottee and the eclarant ay nspect work beng perfored to assure coplance wth these Restrctons, the plat restrctons and applcable * regulatons. However, nether the Cottee, nor any eber thereof, nor the eclarant, nor M any agent or contractor eployed or engaged by the Cottee or the eclarant, shall be lable or responsble for defects, nonconforty or defcences n any work nspected or approved by t or the, or on ts or ther behalf. Further, no such nspecton or approval gven by or on behalf of the Cottee or the eclarant shall be taken or deeed to be or consttute a warranty or * guaranty of the work so nspected or approved, p Secton 10. No Copensaton. Nether the Cottee nor any of ts ebers shall be enttled to any copensaton for perforng ts dutes or oblgatons set forth n ths eclaraton. Secton 11. Rules Governng uldng on Several Contguous Lots Havng One 9 Owner. Whenever two or ore contguous Lots shall be owned by the sae Person, and such p Owner shall desre to use two or ore of sad Lots as a ste for a sngle wellng Unt, he shall A apply n wrtng to the Cottee for persson to so use sad Lots. f persson for such a use shall be granted, the Lots consttutng the ste for such sngle wellng Unt shall be treated as a ~ sngle Lot for the purpose of applyng these Restrctons to sad Lots, so long as, and only so ^ long as, the Lots rean proved wth one sngle wellng Unt; provded, however, that any dues, fees or other charges shall be assessed aganst each Lot ndvdually. _ ARTCLE X ^ Use Restrctons/Covenants and Regulatons 0 The followng covenants and restrctons contaned n Exhbt attached and ade a part» hereof concernng the use and enjoyent of the Lots, wellng Unts, Coon Areas and Coon Expense Areas (Artcle (k)) are n addton to any other covenants or restrctons contaned heren and n the Fnal Plat(s) of Kerrngton Proper. All such covenants and ^ restrctons are for the utual bene and protecton of the present and future Owners and shall run wth the land and nure to the bene of and are enforceable by an Owner, or by the Assocaton. Present or future Owners or the Assocaton shall be enttled to njunctve relef 20

36 ~ _1. aganst any volaton or attepted volaton of any such covenants and restrctons;, and shall, n addton, be enttled to daages for any njures or losses resultng fro any volatons thereof ncludng reasonable attorney fees, but there shall be no rght or reverson or forfeture resultng fro such volaton. Notwthstandng anythng to the contrary contaned heren or n the Artcles or ylaws, ncludng, but not lted to, any covenants and restrctons set forth heren or otherwse, * eclarant shall have the rght to use and antan any Lots and wellng Unts owned by eclarant n and on the Real Estate and the Addtonal Property (other than ndvdual wellng Unts and Lots owned by persons other than eclarant), all of such nuber and sze and at such & locatons as eclarant n ts sole dscreton ay deterne, as eclarant ay dee advsable or necessary n ts sole dscreton to ad n the constructon of wellng Unts and the sale of Lots and wellng Unts or for the conductng of any busness or actvty attendant thereto, ncludng, but not lted to odel wellng Unts, storage areas, constructon yards, sgns, constructon 0 offces, sales offces, anageent offces and busness offces. eclarant shall have the rght to relocate any or all of the sae fro te to te as t desres. eclarant shall have the rght to reove the sae fro the Real Estate and Addtonal Property at any te. ARTCLE X 0 Assessents M A _ Secton 1. Annual Accountng. Annually, aer the close of each fscal year of the Assocaton and pror to the date of the annual eetng of the Assocaton next followng the end of such fscal year, the oard shall cause to be prepared and furnsh the Owners wth a fnancal stateent of operatons by the Assocaton, whch stateent shall show all recepts and expenses receved, ncurred and pad durng the precedng fscal year. Secton 2, Proposed Annual udget. Annually, on or before the date of the annual or specal eetng of the Assocaton at whch the budget s to be acted upon, the oard of rectors shall cause to be prepared a proposed annual budget for the next ensung fscal year estatng the total aount of the Coon Expenses for such next ensung fscal year and shall furnsh a copy of such proposed budget to each Owner at or pror to the te the notce of such annual or specal eetng s aled or delvered to such Owners. The anal budget shall be subtted to the Owners at the annual or specal eetng of the Assocaton for adopton and, f so adopted, shall be the bass for the Regular Assessents (herenaer defned) for the next ensung fscal year. At such annual or specal eetng of the Owners, the budget ay be approved n whole or n part or ay be aended n whole or n part by a ajorty vote of the Owners attendng such eetng (.e. ajorty of a quoru as defned n the y-laws of naely 50% plus the total Owners vote); provded, however, that n no event shall such annual or specal eetng of the Owners be adjourned untl an annual budget s approved and adopted at such eetng, ether the proposed annual budget or the proposed annual budget as aended. The annual budget, the Regular Assessents and all sus assessed by the Assocaton shall be establshed by usng generally accepted accountng prncples appled on a consstent bass. The annual budget and the Regular Assessents shall, n addton, be establshed to nclude the establshent and antenance of a replaceent reserve fund for captal expendtures and replaceent and repar of the Coon Areas, whch replaceent reserve fund shall be used for 21

37 those purposes and not for usual and ordnary repar expenses of the Coon Areas. Such replaceent reserve fund for captal expendtures and replaceent repar of the Coon Areas shall be antaned by the Assocaton n a separate nterest bearng^account or accounts wth one or ore banks: or savngs_and loan assocatons authorzed to conduct busness n Johnson County or Maron County, ndana selected fro te to te by the oard. The falure or delay of the oard of rectors to prepare a proposed annual budget and to furnsh a copy thereof to the Owners shall not consttute a waver or release n any anner of the oblgatons of the Owners to pay the Coon Expenses as heren provded, whenever deterned. Whenever, whether before or aer the annual or specal eetng of the Assocaton at whch the budget s to be acted upon, there s no annual budget approved by the Owners as heren provded for the current fscal year, the Owners shall contnue to pay Regular Assessents based upon the last approved budget or, at the opton of the oard, based upon one hundred and ten percent (10 %) of such last approved budget, as a teporary budget. Secton 3. Regular Assessents. The annual budget as adopted by the Owners shall, based on the estated cash requreent for the Coon Expenses n the fscal year covered thereby as set forth n sad budget, contan a proposed assessent aganst each Lot, whch shall be the sae aount for each Lot, provded, edately followng the adopton of the annual budget, each Owner shall be gven wrtten notce of the assessent aganst hs respectve Lot (heren called the "Regular Assessent"). n the event the Regular Assessent for a partcular fscal year s ntally based upon a teporary budget, each Regular Assessent shall be revsed, wthn feen (15) days followng adopton of the fnal annual budget by the Owners, to reflect the assessent aganst each Lot based upon such annual budget as fnally adopted by the Owners. The aggregate aount of the Regular Assessents shall be equal to the total aount of expenses provded and ncluded n the fnal annual budget, ncludng reserve funds as herenabove provded. The Regular Assessent aganst each Lot shall be pad, n full n advance by a date specfed by the oard whch date shall not be earler than feen (15) days aer the wrtten notce of such Regular Assessent s gven to the Owners. However, at the opton of the oard, the Regular Assessent aganst each Lot ay be pad n advance n equal quarterly nstallents coencng on the frst day of the frst onth of each fscal year and quarterly thereaer through and ncludng the frst day of the last quarter of such fscal year. Payent of the Regular Assessent, whether n one payent or n quarterly nstallents, shall be ade to the oard of rectors or the Managng Agent, as drected by the oard of rectors. n the event the Regular Assessent for a partcular fscal year of the Assocaton was ntally based upon a teporary budget, (a) f the Regular Assessent based upon the fnal annual budget adopted by the Owners exceeds the aount of the Regular Assessent based upon the teporary budget, that porton of such excess applcable to the perod fro the frst day of the current fscal year to the date of the next payent of the Regular Assessent whch s due shall be pad wth such next payent and such next payent, and all payents thereaer durng such fscal year, whether annual or quarterly, shall be ncreased so that the Regular Assessent as fnally deterned shall be pad n full by the reanng payents due n such fscal year, or 22

38 (b) f the Regular Assessent based upon the teporary budget exceeds the Regular Assessent based upon the fnal annual budget adopted by the Owners, such excess shall be credted aganst the next payent or payents of the Regular Assessent cong due, whether annual or quarterly, untl the entre aount of such excess has been so credted: provded, however, that f an Owner had pad hs Regular Assessent n full n advance, then the adjustents set forth under (a) above or (b) shall be ade by a cash payent by, or refund to, the Owner or the frst day of the second onth followng the deternaton of the Regular Assessent based upon the annual budget fnally adopted by the Owners. The Regular Assessent for each fscal year of the Assocaton shall becoe a len on each separate Lot as of the frst day of each fscal year of the Assocaton, even though the fnal deternaton of the aount of such Regular Assessent ay not have been ade by that date. The fact that an Owner has pad hs Regular Assessent for the current fscal year n whole or n part based upon a teporary budget and thereaer, before the annual budget and Regular Assessent are fnally deterned, approved and adjusted as heren provded, sells, conveys or transfer hs Lot or any nterest theren, shall not releve or release such Owner or hs successor as Owner of such Lot fro payent of the Regular Assessent for the Lot as fnally deterned, and such Owner and hs successor as Owner of such Lot shall be jontly and severally lable for the Regular Assessent as fnally deterned. Any stateent of unpad assessents furnshed by the Assocaton pursuant to Secton 2 of Artcle X hereof pror to the fnal deternaton and adopton of the annual budget and Regular Assessent for the year wth respect to whch such stateent s ade shall state that the atters set forth theren are subject to adjustent upon deternaton and adopton of the fnal budget and Regular Assessent for such year, and all partes to who any such stateent ay be delvered or who ay rely thereon shall be bound by such fnal deternatons. Annual or quarterly (f so deterned by the oard) nstallents of Regular Assessents shall be due and payable autoatcally on ther respectve due dates wthout any notce fro the oard or the Assocaton, and nether the oard nor the Assocaton shall be responsble for provdng any notce or stateents to Owners for the sae. The Regular Assessent (not ncludng the start up fund n Subsecton 7 hereof) for Lots n each porton s as follows: Kerrngton Proper - $ per Lot annually; The Reserve at Kerrngton Proper - $ per Lot annually. Ths assessent s payable h advance as of the date the deed to a Lot s transferred fro the eclarant to the Lot owner as an annual assessent based on a calendar year consequently proratable based on the unexpred days le n the calendar year easured fro the date of sad deed. (c) Notwthstandng anythng to the contrary above concernng eclarant not beng oblgated for Regular Assessent, the eclarant aer the Applcable ate wll contrbute twenty-fve percent (25%) of the Regular Assessent for unproved Lots n eclarant's nae, but only f the Applcable ate s not earler than when eclarant has conveyed eghty percent (80%) of the Lots on Exhbt C to others or ten (10) years aer the date ths eclaraton has been recorded, whchever frst occurs. 23

39 554054_1 Secton 4. Specal Assessents. Fro te to te Coon Expenses of an unusual or extraordnary nature or not otherwse antcpated ay arse. At such te and wthout the approval of the Owners, unless otherwse provded n ths eclaraton, the Artcles, the ylaws or the Act, the oard of rectors shall have the full rght, power and authorty to ake specal assessents whch, upon resoluton of the oard, shall becoe a len on each Lot, ncludng Lots n The Estates, but not on Lots owned by eclarant, prorated n equal shares (heren called "Specal Assessent"). Wthout ltng the generalty of the foregong provsons, Specal Assessents ay be ade by the oard of rectors fro te to te to pay for captal expendtures and to pay for the cost of any repar or reconstructon of daage caused by fre or other casualty or dsaster to the extent nsurance proceeds are nsuffcent therefor under the crcustances descrbed n ths eclaraton. THE ECLARANT SHALL ONLY E RESPONSLE FOR SPECAL ASSESSMENTS AFTER THE "APPLCALE ATE" OCCASONE Y EXTRAORNARY REPARS TO ORGNALLY NSTALLE NFRASTRUCTURE, UT SHALL NOT E RESPONSLE FOR NEW NFRASTRUCTURE OR AMENTES ESRE Y OTHER OWNERS UNLESS ECLARANT SPECFCALLY AGREES OTHERWSE N WRTNG. Secton 5. Falure of Owner to Pay Assessents. (a) No Owner ay exept hself fro payng Regular Assessents and Specal Assessents, or fro contrbutng toward the expenses of adnstraton and of antenance and repar of the Coon Areas and tes deeed Coon Areas for purposes of antenance, and toward any other expense lawfully agreed upon, by waver of the use or enjoyent of the Coon Areas or by abandonent of the Lot belongng to h. Each Owner shall be personally lable for the payent of all Regular and Specal Assessents aganst hs Lot. Where the Owner consttutes or conssts of ore than one Person, the lablty of such Persons shall be jont and several. Regular and specal assessents should consttute a len aganst the Lots and wellng Unts thereon. f any Owner shall fal, refuse or neglect to ake any payent of any Regular Assessents or Specal Assessents aganst hs Lot when due, the len for such Assessent on the Owner's Lot and wellng Unt ay be fled and foreclosed by the oard for and on behalf of the Assocaton as a echanc's len on real property or as otherwse provded or pertted by law. Upon the falure of an Owner to ake tely payents of any such Regular Assessents or Specal Assessents, when due, the oard ay, n ts dscreton, accelerate the entre balance of the unpad Assessents and declare the sae edately due and payable, notwthstandng any other provsons hereof to the contrary. The oard ay, at ts opton, brng a sut to recover a oney judgent for any unpad Regular Assessent or Specal Assessent wthout foreclosng (and wthout thereby wavng) the len securng the sae. n any acton to recover a Regular Assessent or Specal Assessent, or any other charges due the Assocaton, whether by foreclosure or otherwse, the oard, for and on behalf of the Assocaton, shall be enttled to recover fro the Owner of the respectve Lot and wellng Unt all of the costs and expenses of such acton ncurred (ncludng but not lted to reasonable attorneys' fees) and nterest fro the date such Assessents or charges were due, untl pad, at a rate equal to the "pre nterest rate" then n effect as publcly announced or publshed by ank One or ts successors (or f sad ank s no longer n exstence, then such rate charged by another natonal bank n Maron County, ndana selected by the oard) plus 4% but n no event ore than the axu rate allowable under applcable usury laws. 24

40 554054_1» (b) Notwthstandng anythng contaned n ths Secton or elsewhere n ths eclaraton, W the Artcles or the ylaws, any sale or transfer of a Lot and wellng Unt to a Mortgagee ^ pursuant to a foreclosure on ts ortgage or conveyance h leu thereof, or a conveyance to any A person at a publc sale n the anner provded by law wth respect to ortgage foreclosures, _ shall extngush the len of any unpad nstallent of any Regular Assessent or Specal Assessent or other changes as to such nstallents whch becae due pror to such sale, ^ transfer or conveyance; provded, however, that the extngushent of such hen shall not releve 0 the pror Owner fro personal lablty therefor. No such sale, transfer or conveyance shall A releve the Lot and wellng Unt or the purchaser at such foreclosure sale, or grantee n the _ event of conveyance n leu thereof, fro lablty for any nstallents of Regular Assessents or Specal Assessents or other charges thereaer becong due or fro the len therefor. Such ^ unpad share of any Regular Assessents or Specal Assessents or other charges, the len for 0 whch has been dvested as aforesad, shall, f not collected fro the party personally lable e therefor, be deeed to be a Coon Expense, collectble fro all Owners (ncludng the party _ acqurng the subject Lot and wellng Unt fro whch t arose). (c) Jn addton to the reedes above stated for falure to pay assessents, the 0 Assocaton ay dsqualfy a delnquent Owner fro hs rght to vote and to hold offce or» cottee ebershp n the Assocaton whle Assessent are delnquent n addton to chargng a late fee of $25.00 per day of delnquency to aong other thngs, cover the adnstratve expense of addressng the delnquency. Secton 6. ntal udgets and Assessents. Notwthstandng anythng to the contrary & contaned heren, n the Artcles, n the ylaws, n the Act or otherwse, untl the Applcable ate the annual budget and all Regular Assessents and Specal Assessents shall be establshed by the ntal oard wthout eetngs of or concurrence of the Owners. The agency, * power of attorney and proxy granted to the eclarant by each Owner pursuant to Secton 2 of Artcle V hereof shall be deeed to cover and nclude each Owner's rght to vote on and ^ approve the annual budget and any Regular Assessents and Specal Assessents untl the ^ Applcable ate. * Further, untl the Applcable ate and notwthstandng the foregong or anythng else contaned heren, no Regular Assessents. Specal Assessents or other charges shall be owed or payable by eclarant wth respect to any Lot or other porton of the Real Estate owned by eclarant whle the sae s owned by eclarant, nor shall any such Assessents or Charges becoe a len on any such Lot or other porton of the Real Estate owned by eclarant, nor shall * any such Assessents or charges becoe a len on any such Lot or other porton of the Real Estate owned by eclarant, except as specfcally detaled n the last paragraph of subsecton 3 ^ heren. Assessents aganst a Lot shall coence to accrue fro the date each Lot s conveyed by eclarant to another Person, and a prorated porton of the Regular Assessent for the balance of the fscal year of the Assocaton aganst each Lot so conveyed by eclarant shall be pad by each purchaser upon such conveyance. ^ Secton 7. ntal Workng Captal and Start-Up Fund. Upon the closng of the ntal conveyance of each Lot by eclarant to another Person, the purchaser of such Lot shall pay to 25

41 the Assocaton, h addton to any other aount then owed or due to the Assocaton, as a contrbuton to ts workng, captal and start-up fund, an aount equal to one-sxth (l/6th) of the then current annual Regular Assessent aganst such Lot, whch payent shall be nonrefundable and shall not be consdered as an advance payent of any Assessent or other charge owed the Assocaton wth respect to such Lot. Such workng captal and start-up fund shall be held and used by the Assocaton for payent of, or reburseent to eclarant for advances ade to pay expenses of the Assocaton for ts early perod of operaton of the Real Estate, to enable the Assocaton to have cash avalable to eet unforeseen expendtures, or to acqure addtonal equpent or servces deeed necessary by the oard. ARTCLE Xn Mortgages Secton 1. Notce to Assocaton. Any Owner who places a frst ortgage len upon hs Lot, or the Mortgagee, ay notfy the Secretary of the Assocaton thereof and provde the nae and address of the Mortgagee. A record of each such frst "ortgage, and nae and address of the Mortgagee, shall be antaned by the Secretary ard any notce requred to be gven to the Mortgagee pursuant to the ters of ths eclaraton, the ylaws or otherwse shall be deeed effectvely gven f aled to such Mortgagee at the address shown n such record or n the te provded. Unless notfcaton of any such ortgage and the nae and address of Mortgagee are furnshed to the Secretary, ether by the Owner or the Mortgagee, no notce to any Mortgagee as ay be otherwse requred by ths eclaraton, the ylaws or otherwse shall be requred and no Mortgagee shall be enttled to vote on any atter to whch he otherwse ay be enttled by vrtue of ths eclaraton, the ylaws, a proxy granted to such Mortgage n connecton wth the ortgage, or otherwse. The Assocaton shall, upon wrtten request of a Mortgagee who has furnshed the Assocaton wth ts nae and address as herenabove provded, furnsh such Mortgagee wth wrtten notce of any default n the perforance by ts borrower of any oblgatons of such borrower under ths eclaraton or the ylaws whch s not cured wthn sxty (60) days. Secton 2. Notce of Unpad Assessents. The Assocaton shall, upon request of a Mortgagee, a proposed ortgagee, or a proposed purchaser who has a contractual rght to purchase a Lot, furnsh to such Mortgagee or purchaser a stateent settng forth the aount of the unpad Regular Assessents or Specal Assessents or other charges aganst the Lot, whch stateent shall be bndng upon the Assocaton and the Owners, and any Mortgagee or grantee of the Lot shall not be lable for nor shall the Lot conveyed be subject to a hen for any unpad assessents or charges n excess of the aounts set forth n such stateent except as such assessents ay be adjusted upon adopton of the fnal annual budget, as referred to n Secton 3 of Artcle V hereof. ARTCLE Xffl nsurance Preface 26

42 NOTWTHSTANNG ANYTHNG TO THE CONTRARY N THS ARTCLE (NSURANCE), THE ASSOCATON WLL SEEK TO OTAN THE COVERAGES NCATE SUJECT HOWEVER TO THE LMTATON OF WHAT'S AVALALE FROM NSURANCE CARRERS FOR THE KERRNGTON PROPER COMMUNTY COUPLE WTH CONSERATON AS TO EXCEPTONS AN EXCLUSONS OF COVERAGE, AN EUCTALES TO MANTAN CONTROL OF THS TEM OF COMMON EXPENSE. THE ASSOCATON WELCOMES THE OWNERS' NPUT REGARNG THE EST COVERAGE FOR THE EST PRCE AN WLL SUPPLY OWNERS WTH A SUMMARY FROM THE ASSOCATON'S NSURANCE PROFESSONAL WHCH WE URGE OWNERS TO SHARE AN CHALLENGE THER OWN NSURANCE PROFESSONAL FOR RECOMMENATONS AS TO THER REURE NSURANCE AN ANY AVSALE ATONAL COVERAGE (GAP OR OTHERWSE) FOR RECT PURCHASE Y OWNERS. Secton 1. Casualty nsurance. The Assocaton shall purchase a aster casualty nsurance polcy affordng fre and extended coverage nsurance nsurng the Coon Areas n an aount consonant "wth the full replaceent value of the proveents, f any, whch, n whole or n part, coprse the Coon Areas. f the oard of rectors can obtan such coverage for reasonable aounts they shall also obtan "all rsk" coverage. The oard of rectors shall be responsble for revewng at least annually the aount and type of such nsurance and shall purchase such addtonal nsurance as s necessary to provde the nsurance requred above. f deeed advsable by the oard, the oard ay cause such full replaceent value to be deterned by a qualfed appraser. The cost of any such apprasal shall be a Coon Expense. Such nsurance coverage shall nae the Assocaton as the nsured, for the bene of each Owner (to the extent, f any, that ndvdual Owners have an ndependent nterest n the property covered thereby). All proceeds payable as a result of casualty losses sustaned whch are covered by nsurance purchased by the Assocaton as herenabove set forth shall be pad to t or to the oard of rectors. n the event that the oard of rectors has not posted surety bonds for the fathful perforance of ther dutes as such rectors or f such bonds do not exceed the funds whch wll coe nto ts hands, and there s daage to a part or all of the Coon Areas resultng n a loss, the oard of rectors shall obtan and post a bond for the fathful perforance of ts dutes n an aount to be deterned by the oard, but not less than 150% of the loss, before the oard shall be enttled to receve the proceeds of the nsurance payable as a result of such loss. The sole duty on the oard n connecton wth any such nsurance proceeds shall be to receve such proceeds as are pad and to hold the sae for the purposes elsewhere stated heren, and for the bene of the Owners. The proceeds shall be used or dstrbuted by the Assocaton or the oard, as approprate, only n accordance wth the provsons of ths eclaraton. 27

43 Such aster casualty nsurance polcy, and "all rsk" coverage f obtaned, shall (to the extent the sae are obtanable) contan provsons that the nsurer (a) waves ts rght to subrogaton as to any cla aganst the Assocaton, the oard of rectors., ts agents and eployees. Owners, ther respectve agents and guests, and (b) waves any defense based on the nvaldty arsng fro the acts of the nsured, and provdng further, f the oard of rectors s able to obtan such nsurance upon reasonable ters () that the nsurer shall not be enttled to contrbuton aganst casualty nsurance whch ay be purchased by ndvdual Owners, and () that notwthstandng any provson thereof gvng the nsurer an electon to restore daage n leu of a cash settleent, such opton shall not be exercsable n the event the Assocaton does not elect to restore. Secton 2. Publc Lablty nsurance. The Assocaton shall also purchase a aster coprehensve publc lablty nsurance polcy n such aount or aounts as the oard of rectors shall dee approprate fro te to te, but n any event wth a nu cobned lt of $1,000, per occurrence. Such coprehensve publc lablty nsurance polcy shall cover all of the Coon Areas and shall nsure the Assocaton, the oard of rectors, Offcers, any cottee or organ of the Assocaton or oard, any Managng Agent apponted or eployed by He Assocaton, the eclarant and all persons actng or who ay coe to act as agents or eployees of any of the foregong wth respect to the Real Estate, all Owners of Lots and all other persons enttled to occupy any Lot or wellng Unt. Such publc lablty nsurance polcy shall contan a "severablty of nterest" clause or endorseent whch shall preclude the nsurer fro denyng the cla of an Owner because of neglgent acts of the Assocaton or other Owners. SPECAL NOTE: F AN WHEN THE TTLES TO A PORTON OF THE LAKE ECOMES TTLE N OTHER THAN THE ECLARANT SUCH TTLEOWNER S URGE TO CONSULT WTH THER NSURANCE CONSULTANT RELATVE TO LALTY COVERAGE WHCH MGHT NCLUE THEM AS AN ALLEGE PARTY Y VRTUE OF ENG A TTLEOWNER AS TO NCENTS OCCURRNG N THE LAKE. Secton 3. Other nsurance. The Assocaton shall also obtan any other nsurance requred by law to be antaned, ncludng but not lted to worken's copensaton and occupatonal dsease nsurance, and such other nsurance as the oard of rectors ay fro te to te dee necessary, advsable or approprate, ncludng but not lted to, lablty nsurance on vehcles owned or leased by the Assocaton and offcers' and drectors' lablty polces. Such nsurance coverage shall also provde for and cover cross lablty clas of one nsured party aganst another nsured party. Such nsurance shall nure to the bene of each Owner, the Assocaton, the oard of rectors and any Managng Agent actng on behalf of the Assocaton. Each Owner shall be deeed to have delegated to the oard of rectors hs rght to adjust wth the nsurance copanes all losses under the polces purchased by the oard of rectors the proceeds of whch are payable to the oard or the Assocaton. Secton 4. General Provsons. The preus for all nsurance herenabove descrbed shall be pad by the Assocaton as part of the Coon Expenses. Upon request of any Owner or Mortgagee whose nterest ay be affected thereby, the Assocaton shall provde such Owner or ortgagee wth a descrpton of the nsurance coverage antaned by the Assocaton. 28

44 n no event shall any dstrbuton of nsurance proceeds be ade by the oard of rectors drectly to an Owner where there s a ortgagee endorseent on the certfcate of nsurance or nsurance polcy as t apples to such Owner's share of such proceeds. n such event any rettances shall be to the Owner and hs Mortgagee jontly. The sae ethod of dstrbuton shall also apply to the dstrbuton of any condenaton awards n connecton wth any takng of any of the Coon Areas. Notwthstandng the foregong, under no crcustances shall any dstrbuton of nsurance proceeds or condenaton awards be ade by the Assocaton to any Owners or Mortgagees f to do so would be n volaton of the Act or f the sae would consttute a dstrbuton of earnngs., pros or pecunary gan to the Mebers of the Assocaton; n any such event, any such nsurance proceeds or condenaton awards shall be retaned by the Assocaton for use n the payent of ts expenses of operaton. Secton 5. nsurance by Owners. Each Owner shall be solely responsble for and ay obtan such addtonal nsurance as he dees necessary or desrable, at hs own expense, affordng coverage upon hs personal property, hs Lot, hs wellng Unt, the contents of hs wellng Unt, hs personal property stored anywhere on the Real Estate, and for hs personal lablty, but all such nsurance shall contan the sae provsons for waver of subrogaton as referred to n the foregong provsons for the aster casualty nsurance polcy to be obtaned by the Assocaton. ARTCLE XV Casualty and Restoraton n the event of daage to or destructon of any of the Coon Areas due to fre or any other casualty or dsaster, the Assocaton shall proptly cause the sae to be repared and reconstructed. The proceeds of nsurance carred by the Assocaton, f any, shall be appled to the cost of such repar and reconstructon. f the nsurance proceeds, f any, receved by the Assocaton as a result of any such fre or any other casually or dsaster are not adequate to cover the cost of repar and reconstructon of the Coon Areas, or n the event there are no nsurance proceeds, the cost for restorng the daage and reparng and reconstructng the Coon Areas so daaged or destroyed (or the costs thereof n excess of nsurance proceeds receved, f any) shall be assessed by the Assocaton aganst all of the Owners n equal shares. Any such aounts assessed aganst the Owners shall be assessed as part of the Coon Expenses and shall consttute a hen fro the te of assessent as provded heren. For purposes of ths Artcle, repar, reconstructon and restoraton shall ean constructon or rebuldng the Coon Areas to as near as possble the sae condton as they exsted edately pror to the daage or destructon and wth the sae archtecture and aterals. edately aer a fre or other casualty or dsaster causng daage to any property for whch the oard of rectors or Assocaton has the responsblty of antenance and repar hereunder, the oard shall obtan relable and detaled estates of the cost to replace the 29

45 daaged property n a condton as good as that before the casualty. Such costs ay nclude professonal fees and preus for such bonds as the oard of rectors desres or dees necessary. Encroachents upon any Lot whch ay be created as a result of such reconstructon or repar of any of the Coon Areas shall not consttute a cla or bass of a proceedng or acton by the Owner upon whose Lot such encroachent exsts, provded that such reconstructon was ether substantally n accordance wth the plans and specfcatons or as the Coon Areas were orgnally constructed. ARTCLE XV Annexaton eclarant hereby reserves the rght, fro te to te and at any te, to annex any porton of "Addtonal Property" nto The Kerrngton Proper County. As of the date on whch eclarant annexes any porton of ths real estate nto the county (the "Annexed Real Estate"), the Annexed Real Estate shall be deeed to be (for all purposes) ncluded wthn Kerrngton Proper County; all references n these covenants and restrctons or n the eclaraton to the "subdvson" or to the " Kerrngton Proper County" shall be deeed to nclude the Annexed Real Estate: all references n these covenants and restrctons or n the eclaraton to "Real Estate" shall be deeed to nclude all parcels of land wthn the Annexed Real Estate; all references n these covenants and restrctons or n the eclaraton to "Lots" shall be deeed to nclude all Lots wthn the Annexed Real Estate, and all -easeents created by these covenants and restrctons or n the eclaraton shall bnd, bene, burden and run, wth the Annexed Real Estate. As of the date on whch eclarant annexes any porton of the "Addtonal Property" nto the subdvson, the owners of the Annexed Real Estate shall be deeed to be (for all purposes) owners of lots wthn the Kerrngton Proper County: all references n these covenants and restrctons or the eclaraton to "Owner(s)" shall be deeed to nclude all owners of Lots wthn the annexed Real Estate: and all easeents created heren shall bnd, bene and burden the owners of Lots wthn the Annexed Real Estate and the ortgages, grantees, hers, assgns and successors of such owners, as provded. THE AOVE SHALL E ACCOMPLSHE Y FLNG OF A RECORE PLAT LAELE "KERRNGTON PROPER" WTH THE JOHNSON COUNTY RECORER'S OFFCE WHCH MAKES REFERENCE TO THS ECLARATON AN LEGALLY ESCRES THE PORTON OF THE ATONAL PROPERTY ENG SUJECTE TO THE TERMS, OLGATONS, AN CONTONS OF THS ECLARATON. NO ANNEXATON OF ATONAL PROPERTY MAY E MAE AFTER THE EXPRATON OF TEN (10) YEARS FROM THE ATE OF RECORNG THS ECLARATON. CONSEUENTLY, ANY PORTON OF THE ATONAL PROPERTY NOT SO PLATTE WLL NOT E SUJECT TO THS ECLARATON AN WLL NOT E PART OF THE KERRNGTON PROPER COMMUNTY. ARTCLE XV Aendent of eclaraton 30

46 Secton 1, Generally. Except as otherwse provded n ths eclaraton, aendents to ths eclaraton shall be proposed and adopted n the followng anner: (a) Notce, Notce of the subject atter of any proposed aendent shall be ncluded n the notce of the eetng at whch the proposed aendent s to be consdered. (b) Resoluton. A resoluton to adopt a proposed aendent ay be proposed by the oard of rectors or Owners havng n the aggregate at least a ajorty of the votes of all Owners. (c) Meetng. The resoluton concernng a proposed aendent ust be adopted by the desgnated vote at a eetng duly called and held n accordance wth the provsons of the ylaws. (d) Adopton. Any proposed aendent to ths eclaraton ust be approved by a vote of not less than seventy-fve percent (75% n the aggregate of the votes of all Owners). n the event any Lot or wellng Unt s subject to a frst ortgage, the Mortgage shall be notfed of the eetng and the proposed aendent n the sae anner as an Owner f the Mortgagee has gven pror notce of ts ortgage nterest to the oard of rectors n accordance wth the provsons hereof. (e) Specal Aendents. No aendent to ths eclaraton shall be adopted whch changes (1) the applcable share of an Owner's lablty for the Coon Expenses, or the ethod of deternng the sae, or (2) the provsons of Artcle X of ths eclaraton wth respect to casualty nsurance to be antaned by the Assocaton, or (3) the provsons of Artcle XV of ths eclaraton wth respect to reconstructon or repar of the Coon Areas n the event of fre or any other casualty or dsaster, or (4) the provsons of ths eclaraton establshng the Cottee and provdng for ts functons, wthout, n each or any of such crcustances, the unanous approval of all Owners and of all Mortgagees whose ortgage nterests have been ade known to the oard of rectors n accordance wth the provsons of the eclaraton. (f) Recordng. Each aendent to the eclaraton shall be executed by the Presdent and Secretary of the Assocaton and shall be recorded n the offce of the Recorder of Johnson County, ndana, and such aendent shall not becoe effectve untl so recorded. Secton 2. Aendents by eclarant Only. Notwthstandng the foregong or anythng else contaned heren, the eclarant shall have and hereby reserves the rght and power actng alone and wthout the consent or approval of the Owners, the Assocaton, the oard of rectors, any Mortgagees or any other Person to aend or suppleent ths eclaraton at any te and fro te to te f eclarant records the odfcaton n the Offce of the Recorder of Johnson County, ndana, and f such aendent or suppleent s ade (a) to coply wth requreents of the Federal Natonal Mortgage Assocaton, the Governent Natonal Mortgage Assocaton, the Federal Hoe Loan Mortgage Assocaton, the epartent of Housng and Urban evelopent, the Veterans Adnstraton, or any other governental agency or any other publc, quas-publc or prvate entty whch perfors (or ay n the future perfor) functons slar to those currently perfored by such enttes., (b) to nduce any of such 31

47 agences or enttes to ake, purchase, sell, nsure or guarantee frst ortgages coverng Lots and wellng Unts, (c) to brng ths eclaraton nto coplance wth any governental requreents, (d) to coply wth or satsfy the requreents of any nsurance underwrters, nsurance ratng bureaus or organzatons whch perfor (or ay n the future Perfor) functon slar to those perfored by such agences or enttes, to subject addtonal property to these restrctons, (f) to correct clercal or typographcal errors n ths eclaraton or any Exhbt hereto or any suppleent or aendent thereto, (g) to clarfy, further defne or lt any easeent, or otherwse exercse any rghts reserved heren, or (h) change the substance of one or ore covenants, condtons, ters or provsons hereof but (A) does not aterally ncrease the oblgaton(s) of any owner under any covenant, condton, ter or provson wthout such owner's consent or () s necessary to coply wth a bona fde governental requreent, ncludng applcable laws, ordnances, regulatons or orders of any uncpalty or court havng jursdcton, h furtherance of the foregong, a power coupled wth an nterest s hereby reserved by (and granted by each Owner to) the eclarant to vote h favor of, ake, or consent to any aendents descrbed n ths Secton 2 or behalf of each Owner as proxy or attorney-n-fact, as the case ay be. Each deed, ortgage, trust deed, other evdence of oblgaton, or other nstruent affectng a Lot or wellng Unt and the acceptance thereof shall be deeed to be a grant and acknowledgent of, and a consent to the reservaton of, the power to the eclarant to vote n favor of, ake, execute and record any such aendents. The rght of the eclarant to act pursuant to rghts reserved or granted under ths Secton 2 shall ternate at such te as the eclarant no longer holds or controls ttle to any part or porton of the Real Estate. ARTCLE XV Acceptance and Ratfcaton All present and future Owners, Mortgagees, tenants and occupants of the Lots and wellng Unts, and other Persons clang by, through or under the, shall be subject to and shall coply wth the provsons of ths eclaraton, the Artcles, the ylaws and the rules, regulatons and gudelnes as adopted by the oard of rectors and (to the extent of ts jursdcton) the Cottee, as each ay be aended or suppleented fro te to te. The acceptance of a deed of conveyance of the act of occupancy of any Lot or wellng Unt shall consttute an agreeent that the provsons of ths eclaraton, the Artcles, the ylaws and rules, regulatons and gudelnes, as each ay be aended, or suppleented fro te to te, are accepted and ratfed by such Owner, tenant or occupant, and all such provsons shall be covenants runnng wth the land and shall bnd any Person havng at any te any nterest or estate n an Lot or wellng Unt or the Real Estate, all as though such provsons were rected and stpulated at length n each and every deed, conveyance, ortgage or lease thereof. All Persons who ay own, occupy, use, enjoy or control a Lot or wellng Unt or any part of the Real Estate n any anner shall be subject to ths eclaraton, the Artcles, the ylaws, and the rules, regulatons and gudelnes applcable thereto as each ay be aended or suppleented fro te to te. 32

48 ARTCLE XV Neglgence Each Owner shall be lable for the expense of any antenance, repar or replaceent rendered necessary by hs neglgence or by that of any eber of hs faly hs or ther guests, eployees, agents, nvtees or lessees, to the extent that such expense s not covered by the proceeds of nsurance carred by the Assocaton. An Owner shall pay the aount of any ncrease n nsurance preus occasoned by hs volaton of any of the Restrctons or any volaton thereof by any eber of hs faly or hs or ther guests, eployees, agents, nvtees or tenants. ARTCLE XX ene and Enforceent Secton 1. Covenants Appurtenant to Land. These covenants are to run wth the land, and shall be bndng on all partes and all persons clang under the for a perod of twenty-fve (25) years fro the date these covenants are recorded, at whch te sad covenants shall be autoatcally extended for successve perods oen (10) years each, unless at any te aer feen (15) years a ajorty of the then owners of the lots n ths subdvson agree to change (or ternate) sad covenants n whole or n part and on the condton that an nstruent to that effect sgned by the lot owners votng n favor of such change has been recorded; provded, however, that no change or ternaton of sad covenants shall affect any easeent hereby created or granted unless all persons enttled to the benefcal use of such easeent shall consent thereto. Secton 2. Prosecuton of Volatons. t shall be lawful for the Assocaton, the Cottee (as to atters for whch t has responsblty) or any other person ownng any real property stuated n ths subdvson to prosecute any proceedngs at law or n equty aganst the person or persons volatng, or atteptng to volate any covenant, condtons, provsons or restrctons contaned heren ether to prevent such person or persons fro dong so; or to recover daages or other dues for such volaton, or to requre the reoval of structures erected n volaton hereof. All costs of ltgaton and attorneys' fees resultng fro volaton of these covenants and restrctons shall be the fnancal responsblty of the Lot Owner or Owners found to be n volaton. nvaldaton of any one of these covenants by judgent or court order shall n no way affect any of the other provsons whch shall rean n full force and effect. Falure to enforce any specfc requreent of the covenant shall not be consdered as a waver of the rght to enforce any covenant heren, thereaer. Notwthstandng the foregong, any volaton of these covenants or the eclaraton ay be waved by a ajorty of the then owners of the Lots n ths subdvson. The Assocaton ay as respects an Owner who volates these restrctons, aer wrtten notce to the Owner detalng the nature of the volaton wth a te perod establshed by the Assocaton to cure or confor, dsqualfy the votng rghts and rght to hold offce whle the volaton contnues and ay further n the oard's sole dscreton, pose a fne., n whole or n part, wth each day aer the cure perod beng a separate volaton at a chargeable rate of up to one hundred dollars ($100.00) per volaton per day. Ths fne, f not pad when requred, wll be processed n the sae anner as assessents. As respects the Lot owners edately 33

49 surroundng the Lake as shown on Exhbt C the Assocaton, n addton to ts reedes for volatons stated heren, ay deny these Lake owners soe or all of the uses of the Lake rrespectve of ther beng ttleowner of a porton of the Lake. ARTCLE XX Non-Lablty of Johnson County ranage oard The Johnson County ranage oard shall not be responsble n any way for, and dsclas any lablty for, any defect n any plans, specfcatons or other aterals approved by t n connecton wth the stor dranage syste for the Kerrngton Proper Project, or for any defects n the constructon thereof. ARTCLE XX Mscellaneous Secton 1. Costs and Attorneys' Fees. n any proceedng arsng because of falure of an Owner to ake any payents requred by ths eclaraton, the Artcles or the ylaws, or to coply wth any provson of ths eclaraton, the Artcles, the ylaws, or the rules, regulatons and gudelnes adopted pursuant thereto, as each ay be aended fro te to te, the Assocaton shall be enttled to recover ts costs and reasonable attorneys' fees ncurred n connecton wth such default or falure. Secton 2. Waver. No Owner ay exept hself fro lablty for hs contrbuton toward the Coon Expenses by waver of the use of enjoyent of any of the Coon Areas or by abandonent of hs Lot or wellng Unt. Secton 3. Severablty Clause. The nvaldty of any covenant, restrcton, condton, ltaton or other provson of ths eclaraton, the Artcles or the ylaws shall not par or affect n any anner the valdty, enforceablty or effect of the rest of ths eclaraton, the Artcles or the ylaws and each shall be enforceable to the greatest extent pertted by law. Secton 4. Pronouns. Any reference to the asculne, fenne or neuter gender heren shall, unless the context clearly requres the contrary, be deeed to refer to and nclude all genders. Words h the sngular shall nclude and refer to the plural, and vce versa, as approprate. Secton 5. nterpretaton, The captons and ttles of the varous artcles, sectons, sub-sectons, paragraphs and subparagraphs of ths eclaraton are nserted heren for ease and convenence of reference only and shall not be used as an ad n nterpretng or construng ths eclaraton or any provson hereof. N WTNESS WHEREOF, Kerrngton Proper evelopent, LLC, by ts duly authorzed Manager, eclarant heren, has executed ths eclaraton on the day and year frst herenabove set forth. 34

50 Kerrngton Proper evelopent, LLC y: Gregory V. Costelow, Manager 35

51 STATE OF NANA ) )SS: » t COUNTY OF JOHNSON ) efore e, a Notary Publc n and for sad County and State, personally appeared Gregory V. Costelow, who acknowledged the executon of the above and foregong nstruent for and on behalf of sad lted lablty copany, and, who havng been duly sworn, stated that any representatons contaned theren are true. WTNESS y hand and Notaral Seal ths My Cosson Expres: Resdent of, Ths struent was prepared by: Rayond Good LOCKE REYNOLS LLP 201 North llnos Street, Sute 1000 P.O. ox ndanapols, N (317)

52 EXHT A w Phase 1 Part of the Northwest uarter of Secton 28, Townshp 13 North, Range 3 East of the Second Prncpal Merdan, Whte Rver Townshp, Johnson County, ndana, descrbed K as follows: egnnng at the Southeast corner of sad quarter secton; thence South 88 degrees 28 9 nutes 42 seconds West (assued bearng) along the South lne of sad quarter secton feet thence North 00 degrees 09 nutes 13 seconds West 972,10 feet: thence & North 90 degrees 00 nutes 00 seconds East feet; thence North 36 degrees 09 _ nutes 58 seconds East feet; thence North 00 degrees 05 nutes 51 seconds West feet; thence North 88 degrees 26 nutes 17 seconds east feet; thence * North 39 degrees 31 nutes 02 seconds East feet to a non-tangent curve concave Southwestwardly the radus of sad curve bears South 35 degrees 29 nutes 56 seconds West feet; thence Northwestwardly along sad curve through a «central angle of 02 degrees 34 nutes 34 seconds feet; thence North 32 degrees 55 nutes 22 seconds East feet; thence North 00 degrees 16 nutes 09 seconds 0 East feet: thence South 89-degrees 43 nutes 51 seconds East feet; thence North 00 degrees 31 nutes 41 seconds East feet; thence North 89 g degrees 43 nutes 51 seconds West feet; thence North 80 degrees 46 nutes. 49 seconds West feet to a non-tangent curve concave Southeasterly the radus of sad curve bears South 80 degrees 46 nutes 49 seconds East feet; thence * Northeasterly.along sad curve through a central angle of 12 degrees 30 nutes 32 9 seconds feet; thence North 68 degrees 16 nutes 17 seconds West feet; thence North 00 degrees 16 nutes 09 seconds East feet to the South lne of. eed ook 167, Page 299 recorded n the -Offce of the Recorder of Johnson County, ndana, The next Two (2) courses follow South and East lnes thereof: 1) Thence North 88 degrees 35 nutes 52 seconds East feet; 2) Thence North 00 degrees 16 nutes 09 seconds East feet to the North lne of sad quarter secton; thence North 88 degrees 35 nutes 52 seconds East along last sad North lne feet to 1 the West lne of eed ook 250, Page 548 recorded n the Of?ce of sad Recorder, the next Two (2) courses follow the West and South lnes thereof; 1) Thence South 00 * degrees 30 nutes 41 seconds West feet; 2) Thence North 88 degrees 35 nutes 52 seconds East feet to the Southwest corner of eed ook 259, Page 692 n the Records of the Offce of sad Recorder. The next three (3) courses follow the West, North, and East lnes thereof; 1") Thence North 00 degrees 30.nutes 41 seconds S o East feet to the Northlne of sad-quarter secton; 2} Thence North 88 degrees 35 nutes 52 seconds East along last sad North lne feet; 3) Thence' South 00 9 degrees 06 nutes 29 seconds East feet to the Southwest Corner of nstruent Nuber recorded n the Offce of sad Recorder; thence North 89 degrees 47 g nutes 16 seconds East along the South lne of last sad nstruent Nuber and the * South lne of eed ook.259^-p^ge-692.ecorde«j.the-ofece of sad jecojder * 'feet to the East lne of sad uarter Secton; -thence South 00 degrees 00 nutes 00

53 seconds West feet to the Pont of egnnng contanng acres, ore or less, subject to all pertnent Rghts-of-Way, Easeents and Restrctons. EXCEPT: Part of the Northwest uarter of Secton 23, Townshp 13 North, Range 3 East of the Second Prncpal Merdan, Whte Rver Townshp, Johnson- County, ndana descrbed b as follows: Coencng at the Southeast corner of sad quarter secton; thence North 88 degrees» 28 nutes 42 seconds West (assued bearng) along the South lne of sad quarter secton feet; thence North 00 degrees 09 nutes 13 seconds West feet to b the Pont of egnnng of ths descrbed tract; thence contnung North 00 degrees 09 nutes 13 seconds West feet; thence North 90 degrees 00 nutes 00 seconds East feet; thence North 36 degrees 09 nutes 58 seconds East feet;» thence North 53 degrees 11 nutes 52 seconds East feet; thence North 89 % degrees 24 nutes 59 seconds East feet; thence South 00 degrees 05 nutes 51 fe seconds East feet; thence South 68 degrees 36 nutes 10 seconds WTest feet; thence South 89 degrees 50 nutes 47 seconds West feet to the Pont of egnnng contanng acres- ore or less, subject to all pertnent Rghts-of-Way} * Easeents and Restrctons t s the ntent of ths descrpton to descrbe Lot 24 n the un-recorded Plat of t Kerrngton Proper Secton One. * Contanng acres less excepton. 0

54 » EXHT Phase 2 KERRNGTN PROPER OVERALL OUNARY PART.OF THE NORTHWEST UARTER OF SECTON 28, TOWNSH8P 13 NORTH, RANGE 3 EA3T.6? THE SECON PRNCPAL MERAN, WHTE RVER KJWNSHP, JOHNSON COUNTY /M>tANA ESCRE AS FOLLOWS: HEGJNN5NU AT THE, SOUTHEAST CORNER OF SA UARTER SECKSt; THENCES0TH 88 EGREES 28MWTES 42 SECCTOSWEST (ASSUMS> SECTON MNUTES 09^05 EAST 2386^ OCE-O? Tff RECORER OF JOf^SON COt^Y^ TWO (2) COURTS FOLLOW THE SOUTH AN EAST L teef; 1) THENCE NORTH 88 EGREES 35 MNUTES 52 SECONS EAST FEET; 2} THENCE NORTH 00 EGREES 16 MNUTES 09 SECONS EAST FEET TO 6 SOUTH UNES THEREOF; 1) THENCE SOXJTH 00 EGR ES^3fMNUTES 41 SECONS WEST 312,56 FEET; & THENCE NORTH «<H 3^.35M*UTES 52 SE<X^^ EAST fefer TO THE SOUTHWEST GGSMERCT EH>:OC^. 259, PAGE 692 W THE R^^S OF THE OFFCE OT^^'RCC^e THE,J^EfflfH ^A! E> EAST LNES CE N n oo ^GRES 30 - MNUTES 16 LNE 0 AST3*--NST3Rf0M«T NU1MER HEET TO THE.E^T ^E OF SA UAKER SOTH EE 00 EC3NNKG O3NTAMNG 78:943 ACRES, MORE OR LESS, SJ3ECT TO ALL PERTNENT RGHS-OF-WAY> EASEMENTS AN RESTRCTONS, ESCEF; THE NORTHWEST UARTER OF SECTON 28, TOW^SKP 13 NORTH, OF THE SECON PRNCPAL MERAN, WSSE RVER JOHNSON (XO^TY/NANA ESOUEASFCMXOWS: