MASTER DECLARATION OFCOVENANTS, CONDITIONS, RESTRICTIONS

AND RESERVATION OF EASEMENTSFOR

MARINA HILLS PLANNED COMMUNITYORANGE COUNTY, CALIFORNIA

THIS MASTER DECLARATION OF COVENANTS, CONDITIONS,RESTRICTIONS AND RESERVATION OF EASEMENTS FOR MARINA HILLSPLANNED COMMUNITY is made this 1st day of September ,1987, by TAYLOR WOODROW HOMES CALIFORNIA LIMITED, a Californiacorporation ("TAYLOR WOODROW"), with regard, to the followingfacts:

P R E A M B L E

A. TAYLOR WOODROW (the "Declarant") is the owner ofthat certain real property located in the County of Orange,State of California, defined in Article I below as the FirstSubdivision and the Annexable Area.

B. Declarant proposes to develop the First Subdivisionand other properties to be later annexed for residential andcommercial use and in furtherance thereof desires to establisha general plan for their maintenance, care, use and manage-ment.

C. This Master Declaration is designed to createequitable servitudes and covenants applicable to and runningwith all property made subject hereto. Declarant may causeadditional property to be annexed and thereby subject to thisMaster Declaration by causing to be recorded a Declaration ofAnnexation. Such Declaration of Annexation shall not conflictwith the provisions of this Master Declaration, but may imposefurther conditions, covenants and retrictions for the oper-ation, protection and maintenance of the property to beannexed, -taking into account the -unique aspects of—suchproperty. Such Declaration of Annexation may provide for aSub-Association of Owners (as hereinafter defined) with rightsand powers reasonably necessary to control the operation andmaintenance of the annexed property, including, withoutlimitation, the right to assess the Owners within such annexedproperty for the cost of such operation and maintenance.

D. Declarant hereby declares that the FirstSubdivision and those portions of the Annexable Area hereafterbecoming subject to this Master Declaration in accordance withthe provisions of Article III, below, shall, from the date

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declared to be subject to this Master Declaration inaccordance with the provisions hereof, be owned, encumbered,used, occupied, maintained, altered, and improved subject tothe covenants, conditions, restrictions, limitations, reser-vations, exceptions and terms hereinafter set forth for theduration hereof, all of which are declared to be part of,pursuant to, and in furtherance of a common and general planof development, improvement, enhancement and perfection of theFirst Subdivision, and those portions of the Annexable Areawhich eventually become subject hereto in accordance with theprovisions hereof. The provisions of this Master Declarationare expressly intended to and shall run with the land, andshall until their expiration in accordance with the termshereof, bind, be a charge upon and inure to the benefit of allof the properties made subject hereto, Declarant and itssuccessors or assigns, and all persons having or acquiring anyright, title or interest in such properties, and their heirs,successors, executors, administrators and assigns.

E. Each Owner of any of the property made subjecthereto will acknowledge, by acceptance of a deed or otherconveyance, or by recordation of a notice of addition thereon,that the covenants, conditions, restrictions and reservationsherein are reasonable and that Declarant has a substantialinterest to be protected with regard to assuring compliancewith, and the enforcement of the covenants, conditions,restrictions and reservations herein. •

F. Notwithstanding the foregoing, no provision of thisMaster Declaration shall be construed as to prevent or limitthe right of Declarant to complete development of any propertymade subject hereto or the construction of any improvementsthereon, nor the right of Declarant to maintain model homes,construction, sales or leasing offices or similar facilitieson any portion of the property owned by Declarant or theMaster Association (as defined herein), nor the right ofDeclarant to post signs incidental to construction, sales orleasing.

ARTICLE IDEFINITIONS

Unless otherwise expressly provided, the following wordsand phrases when used in this Master Declaration shall havethe meanings hereinafter specified:

Section 1.1. Annexable Area: "Annexable Area" shallmean the real property described in Exhibit "A", which isattached hereto and incorporated herein by this reference.

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Section 1.2. Annexed Land: "Annexed Land" shall meanthat portion of the Annexable Area which has been annexed intothe property which is subject to this Master Declarationpursuant to Article III hereof.

Section 1.3. Architectural Committee: "ArchitecturalCommittee" shall mean the architectural and landscapingcommittee created pursuant to Article IX hereof.

Section 1.4. Architectural Committee Rules: "Archi-tectural Committee Rules" shall mean the rules adopted by theArchitectural Committee pursuant to Article IX hereof.

Section 1.5. Articles: "Articles" shall mean theArticles of Incorporation of the Master Association as filedin the Office of the Secretary of the State of California.

Section 1.6. Association Property: "AssociationProperty" shall mean all Master Association Maintenance Areasand all real and personal property now or hereafter owned infee by the Master Association.

Section 1.7. Beneficiary: "Beneficiary" shall mean amortgagee under a mortgage or a beneficiary under a deed oftrust, as the case may be, and the assignees of such mortgageeor beneficiary.

Section 1.8. Board; "Board" shall mean the Board ofDirectors of the Master Association, elected in accordancewith the Bylaws and the Master Declaration.

Section 1.9. Bylaws: "Bylaws" shall mean the Bylaws ofthe Master Association, as adopted by the Board and approvedby the Members of the Master Association.

Section 1.10. Capital Improvement Assessment: "CapitalImprovement Assessment" shall mean a charge against each Ownerand his Lot or Condominium, representing a portion of thecosts of the Master Association for installation or construc-tion of any improvements on any portion of the MasterAssociation Maintenance Areas which the Master Association mayfrom time to time authorize, pursuant to the provisions ofthis Master Declaration.

Section 1.11. Close of Escrow: "Close of Escrow" shallmean the date on which a deed or long-term ground leaseconveying any portion of the Properties is recorded in theOffice of the County Recorder.

Section 1.12. Commercial Area: "Commercial Area" shallmean all of the real property which may be classified fromtime to time as commercial under a Declaration of Annexation

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covering such property. Owners in any such Commercial Areashall be subject to those provisions of this MasterDeclaration as specifically referred to in such Declaration ofAnnexation, and such other provisions as may be included insuch Declaration of Annexation covering such Commercial Area.

Section 1.13. Common Area: "Common Area" shall mean anyportion of the Properties designated as a Common Area for theprimary benefit of the Owners of Lots within a particularPlanned Development, or the Owners of Condominiums within aCondominium Project, to be owned (a) in common by such Owners(within a Condominium Project) or (b) by a Sub-Association inwhich all such Owners shall be entitled to membership.

Section 1.14. Common Assessment: "Common Assessment"shall mean the annual charge against each Owner and his Lot orCondominium, representing a portion of the total, ordinarycosts of maintaining, improving, repairing, replacing, manag-ing and operating the Association Property and for otherCommon Expenses, which charge is to be paid by each Owner tothe Master Association, as provided herein.

Section 1.15. Common Expenses; "Common Expenses" shallmean and refer to the actual and estimated costs ofmaintenance, management, operation, repair, replacement andimprovement of the Association Property (including unpaidSpecial Assessments, Common Assessments, ReconstructionAssessments, and Capital Improvement Assessments); costs ofany gardening, utilities and other services benefiting theAssociation Property and any recreational facilities which maybe constructed thereon; costs of management and administrationof the Master Association, including, without limitation,compensation paid by the Master Association to managers,recreational directors, accountants, attorneys and otheremployees; costs of bonding Members of the Board; taxes paidby the Master Association; amounts paid by the MasterAssociation for discharge of any lien or encumbrance leviedagainst the Association Property, or any portion thereof; andthe costs of any other item designated by the MasterAssociation for any reason whatsoever in connection with theProperties, for the benefit of all of the Owners.

Section 1.16. Condominium: "Condominium" shall mean acondominium located in the Properties as defined in Section783 of the California Civil Code, or any similar Californiastatute hereafter enacted.

Section 1.17. Condominium Project: "CondominiumProject" shall mean a project located in the Properties asdefined in Section 1351(f) of the California Civil Code, orany similar California statute hereafter enacted.

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Section 1.18. Declarant: "Declarant" shall mean TAYLORWOODROW HOMES CALIFORNIA LIMITED, a California corporation,its successors, and any other Person to which it shall haveassigned any rights hereunder by an express written assign-ment.

Section 1.19. Declaration of Annexation: "Declarationof Annexation" shall mean any declaration of covenants,conditions and restrictions, or similar document, which may inthe future be imposed by Declarant or a Participating Builderor which may have been imposed upon any of the real propertyincluded in the Annexable Area and which subjects suchproperty to this Declaration and the jurisdiction of theMaster Association.

Section 1.20. Deed of Trust: "Deed of Trust" shall meana mortgage or a deed of trust, as the case may be.

Section 1.21. Delegate: "Delegate" shall mean, a personselected by the Owners within any Planned Development orCondominium Project to represent all of the Owners within suchPlanned Development or Condominium Project to vote on theirbehalf, as further provided in this Master Declaration and inthe Bylaws.

Section 1.22. Delegate District: "Delegate District"shall mean a geographical area in the Properties in which allof the Members owning Lots or Condominiums shall elect asingle Delegate to represent their collective voting power inthe Master Association, all as provided herein.

Section 1.23. Family: "Family" shall mean (a) a groupof natural persons related to each other by blood or legallyrelated to each other by marriage or adoption, or (b) a groupof not more than five (5) persons not all so related,inclusive of their domestic servants, who maintain a commonhousehold in a Residence on a Lot or in a Condominium Unit.

Section 1.24. First Subdivision: "First Subdivision"shall mean the real property described in Section 2.1, below.

Section 1.25. Improvements: "Improvements" shall meanall structures and appurtenances thereto of every type andkind, including, but not limited to, buildings, outbuildings,walls, fences, walkways, bicycle trials, sprinkler pipes,garages, screening walls, retaining walls, stairs, decks,landscaping,, hedges, windbreaks, plantings, planted trees andshrubs, poles, signs, exterior air conditioning and watersoftener fixtures or equipment.

Section 1.26. Lot: "Lot" shall mean any lot or parcelof land shown upon any recorded subdivision map or recorded

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parcel map of the Properties, including, without limitation, aresidential lot or parcel of land and a lot or parcel of landdeveloped as a rental apartment project containing one or moreapartment buidings, but excepting any Common Areas, the MasterAssociation Maintenance Areas, Sub-Association MaintenanceAreas and any Condominiums.

Section 1.27. Manager: "Manager" shall mean the Personemployed by the Master Association, pursuant to the provisionshereof, and delegated the duties, power or functions- of theMaster Association as limited by the terms hereof.

Section 1.28. Master Association: "Master Association"shall mean the MARINA HILLS PLANNED COMMUNITY ASSOCIATION, aCalifornia non-profit mutual benefit corporation, itssuccessors and assigns.

Section 1.29. Master Association Maintenance Area:"Master Association Maintenance Area" shall mean all of thereal property, which may include, without limitation, vegeta-tion, equestrian trails, sidewalks, bicycle pathways, themedian strip within Marina Hills Drive, recreation buildingsand other Improvements, which is located in the Properties tobe (a) owned by the Master Association or (b) maintained bythe Master Association and so classified in accordance withany Declaration of Annexation, if and after such Declarationof Annexation is recorded.

Section 1.30. Master Declaration:' "Master Declaration"shall mean this Master Declaration of Covenants, Conditions,Restrictions and Reservation of Easements for MARINA HILLSPLANNED COMMUNITY, as it may be amended from time to time.

Section 1.31. Member: "Member" shall mean every Personholding a membership in the Master Association.

Section 1.32. Mortgage: "Mortgage" shall mean anymortgage or deed of trust or other conveyance of a Lot,Condominium or other portion of the Properties to secure theperformance of an obligation, which conveyance will bereconveyed upon the completion of such performance. The term"Deed of Trust" or "Trust Deed" when used shall be synonymouswith the term "Mortgage".

Section 1.33. Mortgagee: "Mortgagee" shall mean aperson or entity to whom a Mortgage is made and shall includethe beneficiary of a Deed of Trust. The term "Beneficiary"shall be synonymous with the term "Mortgagee".

Section 1.34. Mortgagor: "Mortgagor" shall mean aperson or entity who mortgages his or its property to another(i.e., the maker of a Mortgage), and shall include the Trustor

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of a Deed of Trust. The term "Trustor" shall be synonymouswith the term "Mortgagor".

Section 1.35. Notice and Hearing: "Notice and Hearing"shall mean written notice and a public hearing before theforum appointed by the Board, at which the Owner concernedshall have an opportunity to be heard in person, or by counselat the Owner's expense, in the manner further provided in theBylaws.

Section 1.36. Owner: "Owner" shall mean the Person orPersons, including Declarant and any Participating Builder,holding a fee simple or long-term leasehold interest of recordto a Lot or Condominium, including sellers under executorycontracts of sale, but excluding those having such interestmerely as security for the performance of any obligation. Thefee owner of a Lot on which an apartment building or buildingsare or may be constructed shall be deemed to be an "Owner"subject to the terms of this Master Declaration.

Section 1.37. Participating Builder: "ParticipatingBuilder" shall mean a Person which acquires a portion of theProperties for the purpose of improving such portion forresale to Owners.

Section 1.38. Person: "Person" shall mean a naturalindividual, a corporation or any other entity with the legalright to hold title to real property.

Section 1.39. Planned Development: "Planned Develop-ment" shall mean an area of the Properties, other than aCondominium Project or apartment project, which may or may notbe defined as a planned development in Section 1351(c) of theCalifornia Civil Code.

Section 1.40. Properties: "Properties" shall mean allproperty which is or may hereafter become subject to thisMaster Declaration and to the jurisdiction of the MasterAssociation as provided herein.

nSection 1.41. Records, Recorded, Filed and Recordation:

"Records", "recorded", "filed" and "recordation" shall mean,with respect to any document, the recordation or filing ofsuch document in the Office of the County Recorder.

Section 1.42. Reconstruction Assessment: "Reconstruc-tion Assessment" shall mean a charge against each Owner andhis Lot or Condominium, representing a portion of the cost tothe Master Association for reconstruction of any portion ofthe improvements on the Association Property pursuant to theprovisions of this Master Declaration.

Section 1.43. Residential Area: "Residential Area"shall mean those portions of the Properties which may be soclassified in accordance with Article III.

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Section 1.44. Residential Lot: "Residential Lot" shallmean a Lot located within a Residential Area, together withthe improvements, if any, thereon intended for use as asingle-family residence.

Section 1.45. Residence: "Residence" shall mean adwelling on a Residential Lot intended for use and occupancyby a single Family.

Section 1.46. Rules and Regulations: "Rules and Regu-lations" shall means such rules and regulations as adopted bythe Board governing the use and occupancy of the Properties orany portion thereof.

Section 1.47. Special Assessment: "Special Assessment"shall mean a charge against a particular Owner and his Lot orCondominium, directly attributable to the Owner, equal to thecost incurred by the. Master Association or those acting underits direction for corrective action, pursuant to the pro-visions of this Master Declaration.

Section 1.48. Sub-Association: "Sub-Association" shallmean a non-profit mutual benefit California corporation, orunincorporated association, or its successors in interest,organized and established or authorized pursuant to or inconnection with a Declaration of Annexation and of which theMembership is composed of Owners of Lots or Condominiumswithin a portion of the Properties.

Section 1.49. Sub-Association Maintenance Areas: "Sub-Association Maintenance Areas" shall mean any portion of theProperties owned separately by individual Owners (within aPlanned Development) over which a Sub-Association has aneasement for maintenance purposes.

Section 1.50. Subdivision: "Subdivision" shall mean aparcel of real property which has been divided or separatedinto Lots, or a single Lot, as shown on a recorded SubdivisionMap or recorded Parcel Map.

ARTICLE IIFIRST SUBDIVISION

Section 2.1. Property Description: Declarant herebydeclares that the following described real property is herebymade subject to this Master Declaration (the "FirstSubdivision"), and is more particularly described as follows:

Tract 12675 as shown on Map recorded in Book 572,Pages 1, 2 and 3 of Miscellaneous Maps, OfficialRecords of Orange County, California.

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Section 2.2. Land Classification: All that real prop-erty described above as the First Subdivision shall be and ishereby designated as the Master Association Maintenance Area.

Section 2.3. Conveyance to Master Association:Declarant hereby covenants for itself, its successors andassigns that fee simple title to the First Subdivision shallbe conveyed to the Master Association prior to the Close ofEscrow for the sale of the first Lot or Condominium- of anySubdivision in the Annexable Area to an Owner. In the eventthat fee simple title to such property is conveyed to theMaster Assocation, such title shall be conveyed free and clearof all encumbrances and liens, except current real propertytaxes, which taxes shall be prorated to the date of transfer,and except dedications, easements, conditions and reserva-tions then of record including those set forth in this MasterDeclaration. For purposes of this section, easements forutilities and any easement in favor of the general public oversidewalks or bicycle pathways conveyed to the MasterAssociation for ingress to and egress from any sales office ormodel home complex of Declarant, shall not constitute a lienor encumbrance, and shall not preclude the conveyance to theMaster Association of such property. As each Subdivision inthe Properties is developed by Declarant or by a ParticipatingBuilder, Declarant covenants for itself, its successors andassigns that it will similarly convey, or cause to be conveyedto the Master Association, an easement over, or title to, anyMaster Association Maintenance Areas within that Subdivision,prior to or concurrently with the Close of Escrow for the saleto an Owner of the first Lot or Condominium, as the case maybe, in that Subdivision.

ARTICLE IIIANNEXATION

Section 3.1. By Declarant/Consents: Declarant may,but shall not be required to, from time to time, add to thereal property which is covered by this Master Declaration allor any portion of the real property described above as theAnnexable Area by recording a Declaration of Annexation withrespect to the real property to be annexed ("Annexed Land").If any proposed annexation under this Section 3.1 shall not beeffected prior to the third (3rd) anniversary of the originalissuance of the most recently issued Final Subdivision PublicReport from the California Department of Real Estate for anincrement in the Annexable Area ("Third Anniversary"), thensuch annexation shall further require the vote or writtenconsent of Delegates representing at least two-thirds (2/3rds)of the total voting power of the Master Assocation plus two-thirds (2/3rds) of the votes of Members excluding Declarantand all Participating Builders; provided, however, that if any

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delay beyond such Third Anniversary is the result of causesbeyond the reasonable control of Declarant, then a proposedannexation may be made by Declarant without such 'vote orwritten consent of Delegates for the period of such delay butnot extending beyond one year following the Third Anniversarywithout such consent.

Section 3.2. Effect of Annexation: Upon the recorda-tion of a Declaration of Annexation, this Master Declarationshall apply to the Annexed Land in the same manner as if suchAnnexed Land had originally been subject to this MasterDeclaration and had originally constituted a portion of theProperties; and thereafter the rights, privileges, duties andliabilities of the parties to this Master Declaration withrespect to the Annexed Land shall be the same as with respectto the First Subdivsion, and the rights, obligations,privileges, duties and liabilities of the Owners, lessees andoccupants of Lots or Condominiums on or in the Annexed Landshall be the same as though the Annexed Land had originallybeen subject to this Master Declaration; provided, however,that membership rights in the Master Association shall notaccompany ownership of property in any Commercial Area.

Section 3.3. FEA/VA Approval: For so long as andprovided the Federal Housing Admnistration ("FHA") or theVeterans Administration ("VA") is insuring or guaranteeingloans on any portion of the Properties, or has agreed toinsure or guarantee such loans, then a condition precedent tosuch annexation shall be that the annexation be in accordancewith and approved by the FHA or VA. Moreover, in the eventthat any Commercial Area is annexed to the Properties, themanner in which such areas shall participate shall be setforth with particularity in the applicable Declaration ofAnnexation and shall be subject to the prior approval of theFHA, VA and any other applicable agency.

Section 3.4. Declaration of Annexation: Each Declara-tion of Annexation shall contain at least the followingprovisions:

(a) A reference to this Master Declaration and anyamendments hereof, which shall include the date ofrecordation and the book and page numbers where thisMaster Declaration and any amendments hereof are re-corded.

(b) A statement that this Master Declaration shallapply to the Annexed Land as set forth herein.

(c) An exact description of the Annexed Land.

(d) The use classification of the Annexed Land.

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The provisions of any Declaration of Annexation shall notconflict with the provisions hereof but may impose suchfurther conditions, covenants, restrictions, land uses andlimitations as Declarant may deem advisable, taking intoaccount the particular requirements of each increment. ThisMaster Declaration shall control in the event of any conflictbetween any Declaration of Annexation and the provisions ofthis Master Declaration, although the documents shall beconstrued to be consistent with one another to the extentpossible.

Section 3.5. Execution of Declaration of Annexation:For so long as Declarant has the right to annex real propertywithout the approval of the Delegates as provided herein, eachDeclaration of Annexation relative to real property owned byDeclarant must be signed only by Declarant. From and afterthe date on which any annexation shall require the approval ofthe Delegates as herein provided, each Declaration ofAnnexation must also be signed by at least two (2) officers ofthe Master Association, certifying that such approval has beengiven.

Section 3.6. Sub-Associations: A Declaration ofAnnexation may, but need not, provide for the establishment ofa Sub-Association, to be composed of Owners of Lots orCondominiums within the real property subject to suchDeclaration of Annexation.

Section 3.7. Notice of Deletion: Declarant may deleteall or any portion of the Annexed Land from the coverage ofthis Master Declaration and rescind any Declaration ofAnnexation, provided Declarant is the sole owner of all of thereal property described in the Declaration of Annexation to berescinded, and provided further that such deletion andrescission is in accordance with the provisions of Section11018.7 of the California Business and Professions Code, orany similar California statute hereafter enacted. Suchdeletion shall be effective by the recordation of a Notice ofDeletion of Territory, signed by Declarant, in the same manneras the Declaration of Annexation to be rescinded was recorded.

ARTICLE IVMASTER ASSOCIATION

Section 4.1. Organization: The Master Association isorganized as a California non-profit mutual benefit corpora-tion under the California Non-profit Corporation Law. TheMaster Association is charged with the duties and vested withthe powers prescribed by law and as set forth in the Articles,Bylaws, and this Master Declaration. Neither the Articles norBylaws shall, for any reason, be amended or otherwise changed

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so as to be inconsistent with this Master Declaration." In theevent that there should exist any ambiguity in any provisionof the Articles or Bylaws, then such provision shall beconstrued, to the extent possible, so that such provisionshall be consistent with the provisions of this MasterDeclaration. Nothing in this Master Declaration shall preventthe creation, by provision therefor in Declarations ofAnnexation, of Sub-Associations to assess, regulate, maintainor manage the portions of the Properties subject "to suchDeclarations of Annexation, or to own or control portionsthereof for the common use or benefit of the Owners of Lots orCondominiums in the portion of the Properties subject to suchDeclarations of Annexation.

Section 4.2. Membership: Each Owner of one or moreLots or Condominiums in a Residential Area of the Propertiesshall be a Member of the Master Association and subject tothis Master Declaration, the Articles, the Bylaws, and theRules and Regulations. An Owner may be a member of a Sub-Association, as well as a Member of the Master Association.Memberships in the Master Association shall not be assignable,except to the successor-in-interest of the Owner, and allmemberships in the Master Association shall be appurtenant tothe Lot or Condominium owned by such Owner. The membershipsin the Master Association shall not be transferred, pledged oralienated in any way except upon the transfer of title to saidLot or Condominium, and then only to the transferee of titleto said Lot or Condominium. Any attempt to make a prohibitedmembership transfer shall be void and will not be reflected onthe books of the Master Association.

Section 4.3. Easement Over Association Property: Annon-exclusive easement of use and enjoyment in and to allAssociation Property is hereby granted to all Members. Sucheasement shall be appurtenant to and shall pass with the titleto such Lot or Condominium. A Member shall have the right todelegate his rights of use and enjoyment of the AssociationProperty to a lessee or tenant of his Lot or Condominium.

Section 4.4. Delegate System: In order to provide ameans by which the Members may vote on matters concerning theMaster Association, including the election of Directors, thereis hereby established a Delegate system of voting whereby aMember is elected to be a Delegate and thereby empowered tocast votes on behalf of certain Members, all in accordancewith the following:

(a) Election of Delegates; Removal. The Proper-ties shall be divided by the Declarant into DelegateDistricts. Each Delegate District shall elect one (1)Delegate to the Master Association to exercise the votingpower of all of the Members in such Delegate District.

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Such Delegate shall serve for a period of one (l) year,or until his successor is elected, whichever is,- later,unless the Delegate is removed as herein provided- Inthe event a Delegate District fails to elect a Delegate,the Board may appoint a Delegate to serve until aDelegate is duly elected. The chairman of any meeting atwhich a Delegate is elected shall certify in writing tothe Board the name and address of the Delegate elected,the time and place of the meeting at which the electionoccurred and the Delegate District which the Delegaterepresents. A Delegate may be removed without cause bythe vote in person or by proxy at any duly constitutedmeeting of at least a majority of the Members in theDelegate District. . Only Members of the MasterAssociation shall be eligible for election as Delegates.Upon termination of any Delegate's membership in theMaster Association, such Delegate's term of office shallimmediately terminate and a new Delegate shall be electedin his place.

(b) Voting By Members. The election of a Delegateand other actions to be taken by the Members shall be sotaken by Members holding a majority of the voting powerin such Delegate District in accordance with the votingprocedures set forth below:

(i) Voting Classes. Within any such DelegateDistrict, there shall be two classes of votingmemberships:

Class A. Initially, Class A Membersshall be all Members except Declarant and anyParticipating Builder. Each Class A Membershall be entitled with respect to single-Family Residential Lots or Condominiums, toone (1) vote for each such Lot or Condominiumwhich he owns within the Delegate District,and, with respect to multiple-Family Lotsdeveloped as rental apartments, one (1) votefor each three (3) apartment units includedwithin each Lot owned by that Member in theDelegate. District. In the event that there isa fraction remaining after dividing the numberof apartment units located on any one Lot insuch Delegate District subject to this MasterDeclaration by the integer three, then theOwner of such Lot shall be entitled to cash one(1) entire vote for such fraction. Declarantand any Participating Builder shall becomeClass A Members, with regard to Lots orCondominiums owned by Declarant or anyParticipating Builder upon the conversion of

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Class B memberships to Class A memberships asprovided below.

Class B. Declarant and the ParticipatingBuilders shall be the sole Class B Members.The Class B Members shall be entitled to three(3) times the number of votes to which theClass B Members would have been entitled as aClass A Member. The Class B Members shallcease as to that Delegate District and beconverted to Class A Members on the happeningof either of the following events, whicheveroccurs earlier:

(aa) When the total votes outstand-ing in the Class A memberships for thatDelegate District equal the total votesoutstanding in the Class B membershipsfor that Delegate District, or

(bb) Two (2) years from the date ofthe original issuance of the most recentPublic Report by the CaliforniaDepartment of Real Estate for any portionof that Delegate District, or

(cc) The tenth (10th) anniversary ofthe original issuance of the Final PublicReport for the first phase of theProperties.

(ii) Record Owners. Those Members appearing,in the Official Records of the County Recorder at8:00 a.m. on a date fifteen (15) business days priorto the date of any meeting of the Members requiredor permitted to be held under this subsection (b) ,as record Owners of Lots or Condominiums located inDelegate District shall be entitled to attend anysuch meeting, either in person or by proxy. Ifthere is more than one record Owner of any Lot orCondominium, any and all of the Members owning suchLot or Condominium may attend any meeting of theMembers, but the vote attributable to the Lot orCondominium so owned shall not be increased byreason thereof. The vote attributable to such Lotor Condominium, and to the Members owning such Lotor Condominium, shall be cast only by the Memberholding a majority interest in such Lot orCondominium. No vote may be cast or counted for aLot or Condominium without a majority Owner untilnotice has been-filed with the Board prior to suchmeeting indicating who shall be entitled to cast the

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vote attributable to such Lot or Condominium. Inthe event that no such notice has been filed for anyLot or Condominium without a majority Owner, then novote with respect to such Lot or Condominium shallbe cast or counted. In all instances in which theMembers owning a Lot or Condominium are husband andwife, unless written notice to the contrary signedby either spouse is given to the Board prior to themeeting, then either one spouse attending in personor by proxy shall be entitled to cast the entirevote attributable to both spouses, but if bothspouses attend in person or by proxy and attempt tovote separately, then no vote shall be counted forsuch Lot or Condominium. In the event of anydispute as to entitlement of any Member to vote orthe results thereof, the Board shall act asarbitrators and a decision of a disinterestedmajority of the Board shall, if rendered in writing,be final and binding as an arbitration award andshall be acted upon in accordance with theCalifornia Arbitration Act; provided, however, thatthe Board shall have no jurisdiction to determineany matters relating to the entitlement of Declarantto vote or the manner of its exercise thereof.

(iii) Proxies. Every Member entitled to at-tend, vote at or exercise consents with respect toany meeting of the Members in a Delegate Districtmay do so either in person, or by a representative,known as a proxy, duly authorized by an instrumentin writing, filed with the Board prior to themeeting to which it is applicable. Any designationof a representative to act for a Member may berevoked at any time by written notice to the Boardor by attendance in person by said Member at themeeting for which such designation was given. Suchpowers of designation and revocation may be exer-cised by the guardian of any such Member's estate orby his conservator, or in the case of a minor havingno guardian, by the parent entitled to his custody,or during the administration of any such Member'sestate, by his executor or administrator where thelatter's interest in said property is subject toadministration in his estate.

(iv) Appurtenant to Lot. The right to vote inany such Delegate District may not be severed orseparated from the ownership of the Lot orCondominium to which it is appurtenant, except thatany Member may give a revocable proxy in the mannerdescribed above, or may assign his right to vote toa lessee or tenant actually occupying his Lot or

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Condominium or to a Mortgagee of the -Lot orCondominium concerned, for the term of the lease ormortgage, and any sale, transfer or conveyance ofsuch Lot or Condominium to a new Owner shall operateautomatically to transfer the appurtenant vote tothe new Owner, subject to any assignment of theright to vote to a lessee or Mortgagee as providedherein.

(c) Meetings of Members.

(i) Annual Meeting. There shall be an annualmeeting of the Members in any such Delegate Districtto elect a Delegate to serve for the succeeding yearand to vote on such other matters as are properlybefore the Members, which meeting shall be held notless than ten (10) days nor more than sixty (60)days prior to every annual meeting of the MasterAssociation. The first meeting of the Members insuch Delegate District, whether annual or special,shall be held no later than forty-five (45) daysafter escrow shall have closed for the sale of amajority of the Lots or Condominiums authorized forsale under the first Public Report issued by theCalifornia Department of Real Estate for suchDelegate District, and in no event shall the firstmeeting be held later than six (6) months after theClose of Escrow for the sale of the first Lot orCondominium in such Delegate District. Such meetingshall be held in the Delegate District or at suchother convenient location on or near the Propertiesand within the County of Orange, California, as maybe designated in the notice of the meeting. Writtennotice of the time, place and purpose of each annualmeeting shall be sent by the Board by first-classmail no later than ten (10) days prior to themeeting to each Member of record within the DelegateDistrict as shown upon the records of such DelegateDistrict upon the date which is twenty (20) daysprior to the meeting date.

(ii) Special Meeting. A special meeting of theMembers in such Delegate District may be called atany reasonable time and place by written notice (aa)by the Participating Builder, for so long as it is aClass B Member, (bb) by Declarant, for so long asDeclarant is the sole Class B Member, (cc) by theDelegate representing Members in such DelegateDistrict, (dd) by the Members in the DelegateDistrict having five percent (5) of the total voteswithin such Delegate District, or (ee) so long asDeclarant or any Participating Builder owns any Lot

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or Condominium in such Delegate District, by "Membersin the Delegate District representing fifteen per-cent (15%) of the voting power residing in Membersother than Declarant. Such notice must be sent byfirst-class mail to all Members not less than ten(10) days prior to the date fixed for such specialmeeting, specifying the date, time and place thereofand the nature of the business to be undertaken.

(iii) Quorum. The presence at any meeting, inperson or by written proxy, of the Members entitledto vote at least twenty-five percent (25%) of thetotal votes within such Delegate District shallconstitute a quorum. If any meeting cannot be heldbecause a quorum is not present, the Memberspresent, either in person or by proxy, may, exceptas otherwise provided by law, adjourn the meeting toa time not less than five (5) nor more than thirty(30) days from the time the original meeting wascalled. If a time and place for the adjournedmeeting is not fixed by those in attendance at theoriginal meeting or if for any reason a new date isfixed for the adjourned meeting after adjournment,notice of the time and place of the adjournedmeeting shall be given to Members in the mannerprescribed for regular meetings.

(iv) Vote Required. Except as provided inSubsection 4.4(c)(v), below, any action authorizedhereunder may only be taken at any meeting of suchMembers in which a quorum is present.

(v) Actions Without a Meeting. The Membersmay take actions authorized hereunder without ameeting if the Members consent in writing to theaction to be taken in accordance with the proceduresfor actions without a meeting as set forth in theBylaws.

(d) Voting By Delegates. Each Delegate will beentitled to cast the total number of votes entitled to becast by the Members within the Delegate _.Districtrepresented by such Delegate, including Declarant and anyParticipating Builder, after giving effect to theprovisions of Subsection 4.4(b)(i) regarding two-classvoting and those provisions of the Bylaws regardingcumulative voting. Each Delegate shall cast all of thevotes in his or her District in the same proportion, asnearly as possible without counting fractional votes, asthe Members actually voting in such Delegate Districthave voted "for" and "against" such issue. Each Delegateshall be entitled to cast the votes representing each

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Member in his Delegate District only during such periodsas such Member may be entitled to cast votes for theelection of a Delegate as provided herein.

(e) Representation of Owners. Whenever a matter isto be acted upon by the Members, written notice of thesubstance of the matter shall be given to the Delegatesat least sixty (60) days prior to the date on which thematter shall be discussed at a meeting of the Delegatesor the date on which the matter shall become effective ifadopted without a meeting by written consent of theDelegates. During the 60-day period prior to the meetingof the Delegates called to consider a proposition or theeffective date of any unanimous written consent without ameeting, the Delegates shall submit the proposition to avote of the Members within their respective DelegateDistricts.

(f) Presumption of Authority. It will be presumedfor all purposes of Master Association business that anyDelegate casting votes on behalf of the Members owningLots or Condominiums in his Delegate District will haveacted with the authority and consent of all such Members.All agreements and determinations lawfully made by theMaster Association in accordance with the voting pro-cedures established herein, and in the Bylaws, shall bedeemed to be binding on all Members, Owners and theirrespective successors and assigns.

(g) Notice of Votes Cast By Delegate. EachDelegate shall deliver to the chairman of the meeting ofthe Delegates, or to the Secretary of the MasterAssociation in the case of action to be taken by writtenconsent, a written notice listing (i) the total number ofvotes belonging to his or her Delegate District, (ii) thetotal number of votes actually being cast in suchDelegate District, (iii) the number of votes in suchDelegate District not attributable to Lots orCondominiums owned by . Declarant and any and allParticipating Builders, and (iv) the total number ofvotes cast by such Delegate in favor of the matter beingvoted upon that are attributable to Members other thanDeclarant and all Participating Builders.

(h) Delegate Appointed by Declarant. Declarantshall have the right to appoint one (1) Delegate to theMaster Association, which Delegate shall have only one(1) vote, until the earliest to occur of the following:

(i) At such time as the Close of Escrow to thepublic shall have occurred for the sale by Declarantand any Participating Builders of at least one

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thousand four hundred ninety (1,490) Lots orCondominiums (for purposes of this subsection (i)each apartment unit located on any Lot in theProperties shall count as the sale of one (1) Lotupon the rental or lease of such apartment unit); or

(ii) At such time as neither Declarant nor anyParticipating Builder has any authority to annexreal property in the Annexable Area to theProperties without the consent of the Delegates asprovided in Article III; or

(iii) December 31, 2000.

(i) Suspension of Voting Rights. The Board shallhave the authority to suspend the voting rights of anyMember to vote in any meeting of the Members in anyDelegate District, for any period during which thepayment of any Common, Capital Improvement orReconstruction Assessments against such Member and thereal property owned by such member remains delinquent, itbeing understood that any suspension for nonpayment ofany Assessment shall not constitute a waiver or dischargeof the Member's obligation to pay Assessments providedfor herein.

ARTICLE V

FUNCTIONS OF MASTER ASSOCIATION

Section 5.1. Powers and Duties: The MasterAssociation shall have all of the powers of a California non-profit mutual benefit corporation, subject only to suchlimitations upon the exercise of such powers as are expresslyset forth in the Articles, the Bylaws or this MasterDeclaration. It shall have the power to do any and all lawfulthings which may be authorized, required or permitted to bedone by the Master Association under and by virtue of thisMaster Declaration, the Articles, and the Bylaws, and to doand perform any and all acts which may be necessary or properfor or incidental to the exercise of any of the express powersof the Master Association. Without in any way limiting thegenerality of the foregoing provisions, the Master Associationshall have the power and obligation at any time:

(a) Meetings; Appointment of Delegates. To takesuch actions as necessary to notice and conduct meetingsof the Members and to appoint Delegates in accordancewith Section 4.4, above.

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(b) Assessments . To levy assessments on the" Ownersof Lots and Condominiums within the Properties and toenforce payment of such assessments in accordance withthe provisions of Article VI hereof.

(c) Rights of Entry and Enforcement. After Noticeand Hearing, without being liable to any Owner or Sub-Association, to enter upon any Common Area, Lot orCondominium, for the purpose of enforcing by peacefulmeans this Master Declaration, or for the purpose ofmaintaining or repairing any such area if for any reasonwhatsoever the Owner thereof fails to maintain or repairany such area as required by this Master Declaration.Unless there exists an emergency, there shall be no entryinto a Condominium unit or into a dwelling unit on a Lotwithout the prior consent of the Owner thereof. TheMaster Association shall also have the power andauthority from time to time in its own name, on itsbehalf or on behalf of any Owner or Owners who consentthereto, to commence and maintain actions and suits torestrain and enjoin any breach or threatened breach ofthis Master Declaration and to enforce, by mandatoryinjunctions or otherwise, all of the provisions of thisMaster Declaration. In the event of any action broughtby the Master Association, the prevailing party shall beentitled to reasonable attorneys' fees to be fixed by thecourt.

(d) Easements and Rights-of-Way. To grant andconvey with the consent of Declarant (which consent shallnot be unreasonably withheld) for so long as Declarantmay appoint a Delegate to the Master Association, to anyPerson, easements, rights-of-way, parcels or strips ofland, in, on, over or under any portion of the MasterAssociation Maintenance Area or other AssociationProperty for the purpose of constructing, erecting,operating or maintaining thereon, therein and there-under: (i) roads, streets, walks, driveways, parkwaysand park areas; (ii) overhead or underground lines,cables, wires, conduits, or other devices for thetransmission of electricity for lighting, heating,-power,-television, telephone and other similar purposes;(iii) sewers, storm water drains and pipes, watersystems, sprinkling systems, water, heating and gas linesor pipes; and (iv) any similar public or quasi-publicImprovements or facilities.

(e) Repair and Maintenance of Association Prop-erty. To paint, plant, maintain and repair in a neat andattractive condition all Master Association MaintenanceArea and any other Association Property and allImprovements thereon, and to pay for utilities, gardening

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service and other necessary utility or other services forthe said Master Association Maintenance Areas and anyother Association Property; provided, however, that theMaster Association shall have no responsibility toprovide the services referred to in this paragraph withrespect to any Improvement which is not classified as aportion of the Association Property in a Declaration ofAnnexation. Such responsibility shall be that of theOwner concerned, as provided in this Master Declaration,or as described in the Declaration of Annexation.

(f) Manager. To retain and pay for the services ofa professional person or firm to manage the MasterAssociation Maintenance Area and any other AssociationProperty (the "Manager"), as well as such other personnelas the Board shall determine shall be necessary or properfor the operation of the Association Property or theconduct of the business of the Master Association,whether such personnel are employed directly by theMaster Association or are furnished by the Manager. TheMaster Association and the Board may delegate any oftheir duties, powers or functions to the Manager,provided that any such delegation shall be revocable uponnotice by the Master Association or Board.

(g) Legal and Accounting Services. To retain andpay for legal and accounting services necessary or properin the operation of the Association Property, enforcementof this Master Declaration, or in performing any of theother duties or rights of the Master Association.

(h) Insurance. To obtain and maintain in force thefollowing policies of insurance:

(i) Fire and extended coverage insurance onall Improvements, if any, under the control orownership of the Master Association, the amount ofsuch insurance to be not less than one hundredpercent (100%) of the aggregate full insurablevalue, meaning actual replacement value. Suchinsurance shall insure the Master Association andits Mortgagees, as their interests may appear. Asto each such policy, which will not be voided orimpaired thereby, the Association hereby waives andreleases all claims against the Board, the Owners,the Manager, Declarant, and the agents and employeesof each of the foregoing, with respect to any losscovered by such insurance, whether or not caused bynegligence of or breach of any agreement by saidpersons, but only to the extent that insuranceproceeds are received in compensation for such loss.

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(ii) Bodily injury liability insurance", withlimits of not less than One Million Dollars($1,000,000.00) insuring against liability forbodily injury, death and property damage arisingfrom the activities of the Master Association orwith respect to property under its jurisdiction,including, if obtainable, a cross-liability en-dorsement insuring each insured against liabilityto each other insured.

(iii) Worker's Compensation insurance to theextent necessary to comply with any applicable laws.

(iv) Such other insurance, including maliciousmischief, medical payments, liquor liability, di-rectors and officers errors and omissions in-surance, indemnity and other bonds, as the Boardshall deem necessary or expedient to carry out theMaster Association functions as set forth herein orin the Articles and Bylaws.

The liability insurance referred to above shall nameas separately protected insureds, Declarant, the MasterAssociation, the Board, and their representatives,members and employees, with respect to any liabilityarising out of the maintenance or use of any AssociationProperty. Every policy of insurance obtained by theMaster Association shall contain an express waiver, ifavailable, of any and all rights of subrogation againstDeclarant, the Board, and their representatives, mem-bers, employees and successors in interest.

Said fire and liability insurance policies may beblanket policies covering the Association Property andproperty of Declarant or Participating Builder, in whichcase the Master Association and Declarant orParticipating Builder shall each pay their proportionateshare of the premiums. With respect to insuranceproceeds from the Association Property only, the MasterAssociation shall be deemed trustee of the interests ofall Members and Owners in any insurance proceeds paid toit under any such_policies, and shall have full power toreceive and to receipt for their interests in suchproceeds and to deal therewith. In the event that theproceeds of such insurance policies are inadequate to payfor the entire cost of repair, replacement or reconstruc-tion of the Master Association Maintenance Areas and anyother Association Property, the Board may levy aReconstruction Assessment on each Owner and his respec-tive Lot or Condominium in accordance with Section 6.4,below. Notwithstanding any other provisions herein, theMaster Association shall continuously maintain in effect

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such casualty, flood and liability insurance and afidelity bond meeting the insurance and fidelity bondrequirements for planned unit development established bythe Federal National Mortgage Association ("FNMA"), theGovernment National Mortgage Association ("GNMA") andthe Federal Home Loan Mortgage Association ("FHLMC"), solong as any of which is a Mortgagee or Owner of a Lot orCondominium within the Properties, except to the extentsuch coverage is not available or has been waived inwriting by the FNMA, GNMA and FHLMC, as applicable.

(i) Construction on Association Property. TheMaster Association (by action of the Board) may constructnew Improvements or additions to the AssociationProperty, or demolish existing Improvements, additionsor demolition (other than maintenance or repairs toexisting Improvements) in accordance with the provisionsof this Master Declaration.

(j) Contracts. Neither Declarant, nor anyParticipating Builder nor any of their agents, shallenter any contract which would bind the MasterAssociation or the Board for a period in excess of one(1) year and shall be terminable by either party theretowithout cause or payment of a termination fee upon ninety(90) days written notice thereof, and shall be terminablefor cause on thirty (30) days written notice, except asprovided in the Bylaws. The Master Association, actingthrough the Board, may enter into contracts withDeclarant, Sub-Associations, Lot or Condominium Ownersor other Persons in the Developed Area or the AnnexableArea to maintain and repair slope areas and other areassubject to the provisions of this Master Declaration. NoMaster Association contract or Sub-Association contractmay be awarded to any firm or entity, other thanDeclarant, in which any Board member or relative of anymember of the Board of either the Master Association orany Sub-Association has any financial or other interest.This restriction applies to all contracts for twelve (12)months after a member of the Board leaves his position ona Board.

(k) Audit. The Board shall provide for an annualindependent audit of the accounts of the Manager andMaster Association and for delivery of a copy of suchaudit to each Owner in the manner provided in the Bylaws.Any Owner, accompanied by an accountant, may at any timeand at his own expense cause an audit or inspection to bemade of the books and records of the Manager or theMaster Association; provided that such audit or inspec-tion is made during normal working hours and withoutunnecessary interference with the opertions of theManager or the Master Association.

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(1) Maintenance of Flood Control Facilities andOther Areas. To maintain, inspect, repair and re-construct flood control facilities on or servicing theProperties, including emergency services, and to repairslope easements, slopes, roads, roadways, roadwayrights-of-way, parkways and decorative signs identifyingthe Properties not maintained by governmental entities tothe extent deemed advisable by the Board; and inparticular, to maintain medians and circles on thosepublic roadways located on the Properties.

Section 5.2. Rules and Regulations: The Board mayadopt such Rules and Regulations as it deems proper for theuse and occupancy of the Association Property. A copy of theRules and Regulations, as they may from time to time beadopted, amended or repealed, shall be posted in a conspicuousplace in the Association Property and may be mailed orotherwise delivered to each Owner. Such Rules and Regulationsmay, but need not be, recorded; provided, however, that anydecision to record the Rules and Regulations shall be firstmade by a majority vote of the Delegates. If the Rules andRegulations are recorded pursuant to this provision, and dulyadopted amendments to the Rules and Regulations shall berecorded by the Board. Upon such mailing, delivery orrecordation, or posting, the Rules and Regulations shall havethe same force and effect as if they were set forth and were apart of this Master Declaration; provided, however; that theRules and Regulations shall be enforceable only to the extentthat they are consistent with this Master Declaration, theArticles and the Bylaws, and the Rules and Regulations may notbe used to amend any of said documents. In addition, as to anyOwner having actual knowledge of any given Rules andRegulations, such Rules and Regulations shall have the sameforce and effect and may be enforced against such Owner.

Section 5.3. Liability; Indemnification: No Member ofthe Board, Delegate, Declarant, Participating Builder nor theManager shall have any liability to the Master Association orits Members based upon any alleged failure " to properlydischarge their respective powers and duties under thisArticle V as long as such persons perform such powers andduties in a manner not expressly contrary to law and in amanner such persons believe to be in the best interests of theMaster Association and with such care, including reasonableinquiry, as an ordinarily prudent person in a like positionwould use under similar circumstances. Such persons shall beentitled to rely on information in any form prepared orpresented by employees or agents of the Master Associationwhom such persons believe to be reliable and competent in thematters presented and to rely on the information and advice ofother outside consultants which such persons believe to bewithin such outside consultants' professional or expert

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competence. Such persons shall be indemnified to the fullextent allowed by the California Corporations Code withoutlimitation.

Section 5.4. Taxes: Each Owner shall execute suchinstruments and take such action as may reasonably bespecified by the Master Association to obtain separate realestate tax assessments of each Lot or Condominium. If anytaxes or assessments may, in the opinion of the MasterAssociation, nevertheless be a lien on the AssociationProperty, or any part thereof, they may be paid by the MasterAssociation, and each Owner shall be obligated to pay or toreimburse the Master Association for, as the case may be, thetaxes and assessments assessed by the County Assessor or othertaxing authority against the Association Property and attri-butable to his own Lot or Condominium and interest in theAssociation Property.

Section 5.5. Limitation on Certain Actions; Notwith-standing any contrary provision in this Master Declaration orin the Articles or Bylaws of the Master Association, theamount of Common Assessments levied in any fiscal year of theMaster Association upon each Owner shall not be less than theamount reflected in the Final Subdivision Public Report forthe First Subdivision per Lot or Condominium prior to the dateon which Declarant has lost the power to appoint a Delegate tothe Master Association, unless the consent of Declarant hasfirst been obtained (in addition to any other vote, consent orapproval required).

Section 5.6. Actions Without a Meeting: The Board maytake actions and exercise those powers and duties specified inthis Master Declaration or otherwise authorized by the Bylawsor statute without a meeting if all of the Directors consentin writing to the action to be taken. If the Board resolves byunanimous written consent to take an action, an explanation ofthe action taken shall be posted in a prominent place orplaces within the Common Area as the Directors may directwhich is convenient to the Owners within three (3) days afterthe written consents of all Directors have been obtained.

ARTICLE VI

ASSESSMENTS

Section 6.1. Covenant To Pay: Declarant and anyParticipating Builder, for each Lot or Condominium owned byit, hereby agrees to pay, and each Owner of a Lot orCondominium by accepting a deed or other conveyance creatingin such Owner the interest required to be deemed an Owner,whether or not it shall be so expressed in any such deed or

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other conveyance, is deemed to agree to pay to the MasterAssociation all Assessments as provided herein.

Section 6.2. Common Assessments: Sums sufficient topay Common Expenses shall be assessed as Common Assessmentsagainst the Owners of Lots in the Subdivision for which thefirst Final Subdivision Public Report is issued by theCalifornia Department of Real Estate (hereinafter "DRE") inthe amounts as set forth in the Master Association budget onfile with the DRE. As Common Assessments commence withrespect to additional Subdivisions annexed to the Propertiespursuant to Article III hereof, the Common Assessments shallbe revised, subject to the limitations of Section 6.2(c),below, in accordance with the combined budget of the MasterAssociation filed with the DRE for the such additionalSubdivisions annexed to the Properties.

(a) Equal Assessments. Those items of CommonExpenses of the Master Association shall be assessedequally against all Owners, based upon the number of Lotsor Condominiums owned by each Owner, or in the case of anOwner of a Lot developed as a multi-Family project forrental apartments, the number of apartment units locatedon such Lot.

(b) Basis of Maximum Common Assessment. Until thefirst day of the fiscal year immediately followingconveyance of the first improved Lot or Condominium inthe Properties to an Owner, the maximum Common Assessmentunder this Article shall be the amount set forth in theFinal Subdivision Public Report issued for the FirstSubdivision of the Properties. Thereafter, the maximumCommon Assessments shall be increased only in accordancewith the following:

(i) The maximum Common Assessment may beincreased by the Board without a vote of the Membersin an amount no more than ten percent (10%) abovethe maximum Common Assessment for the previous year.

(ii) The maximum Common Assessment may be. increased more than ten percent (10%) above the

maximum Common Assessment for the previous year,only by the vote or written assent of both (1)Declarant, for so long as Declarant may appoint aDelegate to the Master Association and (2) amajority of the total voting power of the Membersand a majority of the votes of Members other thanthe Declarant and any Participating Builders.

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(iii) The Board shall not in any year levy aCommon Assessment in excess of the maximum-CommonAssessment as such maximum may be annually increasedpursuant to this section. The levy of a CommonAssessment less than the maximum Common Assessmentin one (1) year shall not affect the Board's rightto levy a Common Assessment in the amount of themaximum Common Assessment in subsequent years. Ifthe Board shall levy a Common Assessment in anamount of less than the maximum for any calendaryear and thereafter, during such calendar year,determine that the important and essential func-tions of the Master Association cannot be funded bysuch lesser Common Assessment, the Board may, bymajority vote, levy one or more supplemental CommonAssessments. In no event shall the sum of theinitial and supplemental Common Assessments forthat year exceed the maximum Common Assessment.

(iv) The provisions of Subsections 6.2(b)(i),(ii) and (iii), above, shall not limit assessmentincreases for (aa) the maintenance or repair of theAssociation Properties, including, but not limitedto, the payment of insurance premiums, the paymentof utility bills, the costs incurred in maintainingor repairing Improvements, and funding reserves, or(bb) addressing emergency situations; provided, theBoard shall not increase the maximum CommonAssessment in any year for any purpose more thantwenty percent (20%) above the maximum CommonAssessment for the previous year without the vote orwritten assent of a majority of the total votingpower of the members other than the Declarant.

(c) Budget Estimate. The Board shall cause to beprepared an annual operating statement reflecting incomeand expenditures of the Master Association for eachfiscal year, and shall cause to be distributed a copy ofsuch statement to each Member as provided in the Bylaws.Not less than forty-five (45) nor more than sixty (60)days prior to the beginning of each fiscal year, and sub-ject to the provisions of Section 6.2, above, the Boardshall prepare and distribute to the Delegates of theMaster Association, a written, itemized pro forma opera-ting budget which shall include all of the following:

(i) The estimated revenue and expenses of theMaster Association on an accrual basis.

(ii) The identification of the total cashreserves currently set aside.

(iii) The identification of the estimated re-maining life of, and the methods of funding used todefray the future repair, replacement or addition

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to, those major components which the MasterAssociation is obligated to maintain.

(iv) A general statement addressing the pro-cedures used for the calculation and establishmentof those reserves to defray the future repair,replacement, or additions to those major componentsthat the Association is obligated to maintain.

In calculating the Common Assessments of the MasterAssociation for each fiscal year, the Board- shallallocate the estimated expenses of the Master Associationequally against all Owners in the Properties.

(d) Commencement of Common Assessments. CommonAssessments shall commence as to each Lot or Condominiumin any phase of a Subdivision for which a FinalSubdivision Public Report has been issued (which mayconstitute only a portion of a phased Subdivision), uponthe first day of the first month following the month inwhich escrow closes for the sale of the first Lot orCondominium in the phase in which such Lot or Condominiumis located. Each such Lot or Condominium in such phaseshall thenceforth be subject to a pro rata share of thethen established Common Assessment for that Subdivision.

(e) Payment of Common Assessments. All CommonAssessments shall be due and payable to the MasterAssociation by the assessed Owners (including Declarantand any Participating Builders) during the fiscal year inmonthly, or quarterly, or semi-annual installments, on orbefore the first day of each month, or in such othermanner as the Board may designate in its sole andabsolute discretion.

(f) Excess Assessments. At the end of any fiscalyear of the Master Association, the Delegates maydetermine that all excess funds over and above theamounts used for the operation of the Properties shall beretained by the Master Association and used to reduce thefollowing years' Common Assessment. Notwithstandinganything in the Articles or Bylaws to the contrary, ifprior to dissolution of the Master Association the MasterAssociation has not obtained tax exempt status from boththe federal and state government, then upon dissolutionof the Master Association, any amounts remaining shall bedistributed to or for the benefit of the Membersproportionately.

Section 6.3. Capital Improvement Assessments: Subjectto the provisions of Section 6.5, below, the Board may levy,in any fiscal year, a Capital Improvement Assessment appli-cable to that year only for the purpose of defraying, in wholeor in part, the cost of any construction, reconstruction,repair or replacement of a Capital Improvement upon the

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Association Property, including fixtures and personal pro-perty related thereto. All Capital Improvement Assessmentsmust be fixed at a uniform rate for all Lots or Condominiums,and they may be collected on a monthly basis.

Section 6.4. Reconstruction Assessments: Subject tothe provisions of Section 6.5, below, in the case of damage byfire or other casualty to the Master Association MaintenanceAreas and any other Association Property, and provided theproceeds of any insurance payable by reason thereof shall beinadequate to pay for the entire cost of repair, replacementor reconstruction of such property, the Board may levy aReconstruction Assessment to make good any deficiency on eachOwner and his respective Lot or Condominium in a proportionequal to the proportion in which such Owner is assessed CommonAssessments. The collection of such Reconstruction Assessmentshall be enforceable in the same manner as the collection ofCommon Assessments.

Section 6.5. Limitation on Assessments: The aggre-gate Capital Improvement Assessments collected in accordancewith Section 6.3, above, and the Reconstruction Assessmentscollected in accordance with Section 6.4, above, in any fiscalyear may not exceed five percent (5%) of the budgeted grossexpenses of the Master Association for that fiscal year,unless such excess shall have been approved by the vote orwritten assent of both (a) Declarant, for so long as Declarantmay appoint a Delegate to the Master Association and (b) amajority of the total voting power of the Members and amajority of the votes of Members other than the Declarant andany Participating Builders.

Section S.6. Special Assessments: A SpecialAssessment may be levied against and collected from aparticular Owner and his Lot or Condominium by a majority voteof the Board after Notice and Hearing, to reimburse the MasterAssociation for certain costs or expenses that have beenincurred by the Master Association or Declarant with respectto bringing the Owner and his Lot or Condominium intocompliance with the terms of this Declaration or with respectto materials or services furnished to such Owner or his Lot orCondominium at his request or on his behalf as may be providedherein.

-Notwithstanding the foregoing, a fine imposed by theBoard pursuant to the provisions of Section 8.21 below, as adisciplinary measure for failure of an Owner to comply withthe terms of this Master Declaration, or as a means ofreimbursing the Master Association for costs incurred by theMaster Association for which the Owner was allegedly respons-ible or in bringing the Owner and his Lot into compliance withthe Master Declaration, shall not be levied or enforced as aCommunity Assessment nor shall the same become a lien againstsuch Owner's Lot or Condominium enforceable by sale asprovided in Section 6.9 below.

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Section 6.7. Late Charges and Interest: If anyinstallment of an Assessment, whether Common, Special,Reconstruction or Capital Improvement, assessed to any Owneris not paid within fifteen (15) days after it is due, theOwner may be required by the Board to pay a late charge of TenDollars ($10.00) or ten percent (10%) of the full Assessment,whichever is greater. Any installment of a Common Assessment,Capital Improvement Assessment, Special Assessment or Recon-struction Assessment, together with the reasonable costs ofcollection and late charges, not paid within thirty (30) daysafter the due date of such installment shall accrue interestat the annual percentage rate of twelve percent (12%).

Section 6.8. Waiver of Enjoyment: No Member may exempthimself from personal liability for Assessments duly levied bythe Master Association, nor release the Lot or Condominiumowned by him from the liens and charges hereof, by anyattempted waiver of enjoyment of the Master AssociationMaintenance Areas or any other Association Property and thefacilities -thereon or by abandonment of his Lot orCondominium.

Section 6.9. Unpaid Assessments as Liens: No actionshall be brought to enforce any lien of any Assessment,whether Common, Special, Reconstruction or CapitalImprovement, assessed to any Owner, until a Notice ofDelinquent Assessment (hereinafter "Notice") has been re-corded stating the amount of the Assessment or installment, asthe case may be, the interest, late charges and costs whichhave accrued thereon, the legal description and street addressof the Lot or Condominium against which it has been assessed,the name of the record Owner thereof and the name and addressof any trustee authorized by the Board to enforce the lien bynon-judicial sale. Such Notice shall be signed and acknowl-edged by an officer of the Master Association. Suchassessment lien shall be prior to any declaration of homesteadrecorded after the recording of this Master Declaration. Thelien shall continue until fully paid or otherwise satisfied.When all amounts stated in the Notice and all otherassessments and costs which may have then accrued have beenfully paid or satisfied, a further notice releasing the lienshall be recorded, upon payment by the defaulting Owner of areasonable fee, determined by the Board, to cover the costs ofpreparing and recording such release. Such lien may beforeclosed in the same manner as is provided in the laws ofthe State of California applicable to the exercise of powersof sale in mortgages and deeds of trust, or in any othermanner provided by law. No action shall be brought by theBoard or by its agent to foreclose the assessment lien or toproceed under any power of sale thereunder, until thirty (30)days have elapsed after the date that the Notice is depositedin the United States Mail, certified or registered, postageprepaid, to the Owner of • such Lot or Condominium. Acertificate executed and acknowledged by an officer or. dulyauthorized agent of the Master Association stating theindebtedness secured by the liens upon any Lot or Condominium

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created hereunder shall be conclusive upon the MasterAssociation and the Owners as to the amount of suchindebtedness as of the date of the certificate, in favor ofall persons who rely thereon in good faith, and suchcertificate shall be furnished to any Owner upon request at areasonable fee, as determined by the Board, to cover the costof furnishing such certificate. Liens established pursuanthereto shall be junior to any assessment liens levied by anySub-Association in the Properties under a Declaration ofAnnexation. Each assessment shall be payable in the amountspecified in the Notice, and no offsets against such amountshall be permitted for any reason, including, withoutlimitation, a claim that the Master Association, the Board,the Delegates, or Declarant is not properly exercising itsduties and powers as provided in this Master Declaration.

Section 6.10. Mortgage Protection: Notwithstanding allother provisions hereof, no lien created under this Article VInor any breach of this Master Declaration, nor the enforcementof any provision hereof or of any Declaration of Annexationhereto shall defeat or render invalid the rights of theBeneficiary under any recorded first deed of Trust upon a Lotmade in good faith and for value; provided that after suchBeneficiary or some other third party obtains title to suchLot by judicial foreclosure or by means of the powers setforth in such Deed of Trust, such Lot or Condominium shallremain subject to this Master Declaration and the payment ofall Assessments accruing subsequent to the date suchBeneficiary or other Persons obtain title.

Section 6.11. Marina Hills Maintenance Funds: TheBoard shall establish no fewer than two (2) separate accounts(the "Marina Hills Maintenance Funds") into which shall bedeposited all monies paid to the Master Association, and fromwhich disbursements shall be made, as provided herein, in theperformance of functions by the Master Association under thisMaster Declaration. Each of the Marina Hills MaintenanceFunds shall be established as separate trust savings or trustchecking accounts at a banking institution. The Marina HillsMaintenance Funds shall include: (a) a Operating Fund forcurrent expenses of the Master Association, and (b) a CommonArea Reserve Fund for replacements, painting and repairs ofthe landscaping, Improvements and all other AssociationProperty, to the extent necessary under the provisions ofthis Master Declaration. The Board shall not commingle anyamounts deposited into any of the Marina Hills MaintenanceFunds with amounts deposited into any other Marina HillsMaintenance Fund.

All amounts deposited into the Operating Fund and theCommon Area Reserve Fund must be used solely for the commonbenefit of all of the Members for purposes authorized by thisMaster Declaration, as may be amended from time to time.Disbursements from the Operating Fund shall be made by theBoard for such purposes as are necessary for the discharge ofits responsibilities herein for the common benefit of all the

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¥-502874Members, other than those purposes for which disbursementsfrom the Common Area Reserve Fund are to be used. Nothing inthis Master Declaration shall be construed in such a way as topermit the Master Association to use any Assessments to abateany annoyance or nuisance emanating from outside the physicalboundaries of the Properties. Nothing contained herein shalllimit, preclude or impair the establishment of other funds byany Sub-Association pursuant to any additional conditions,covenants or restrictions or other provisions contained in anyDeclaration of Annexation which makes other properties subjectto this Master Declaration, or the establishment of additionalMarina Hills Maintenance Funds by the Master Associationearmarked for specified purposes authorized by this MasterDeclaration. The Common Area Reserve Fund shall be funded byregularly scheduled monthly, quarterly, semi-annual or annualpayments rather than by large Special Assessments.

Section 6.12. Amendments to Article VI: Amendments tothis Article VI (but not this Section 6.12 which is covered bySection 11.2(b) of this Master Declaration and amendments tosections of other Articles which are referred to in thisArticle or which relate to this Article) shall only beeffective upon the vote or written consent of both (a)Declarant, for so long as Declarant may appoint a Delegate tothe Master Association, and (b) the majority of all Delegatesto the Master Association and the majority of the votes ofMaster Association not attributable to property owned by theDeclarant and any Participating Builders.

Section 6.13. Exemption From Assessments. Owners shallbe exempt from the payment of that portion of any CommonAssessment which is for the purpose of defraying expenses andreserves directly attributable to the existence and use of aresidential structure which is not complete at the time theCommon Assessment commences. Such exemption may include: (a)roof replacement; (b) exterior maintenance; (c) walkway andcarport lighting; (d) refuse disposal, if any; (e) cabletelevision; (f) domestic water supplied to living units, ifany; and (g) insurance on uncompleted structures. Any sucnexemption from the payment of Common Assessments shallterminate upon the earlier of the recordation of the notice ofcompletion of the residential structure, occupation or use ofa structural improvement which is a dwelling unit, orcompletion of all elements of the residential structure whichthe Association is obligated to maintain.

Owner shall be exempt from the payment of that portion ofany Common Assessment which is for the purpose of defrayingexpenses and reserves directly attributable to the existenceand use of a common facility which at the time of thecommencement of such Common Assessment is not complete. Anysuch exemption from the payment of Common Assessments shallterminate upon the earlier of the recordation of a notice ofcompletion of the common facility or at such time as thecommon facility is placed into use.

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ARTICLE VII

DAMAGE TO OR CONDEMNATION OF ASSOCIATION PROPERTIES

Section 7.1. Damages By Members; Each Member shall beliable to the Master Association for any damage to AssociationProperty not fully covered by insurance which may be sustainedby reason of the negligence or willful misconduct of saidMember, or the persons deriving their right and easement ofuse and enjoyment of the Association Property from saidMember, or of his respective Family and guests, both minor andadult. Notwithstanding the foregoing, the Master Associationreserves the right, after Notice and Hearing, to charge aSpecial Assessment equal to the amount of such damage notcovered by insurance together with the increase, if any, inthe insurance premium directly attributable to the damagecaused by such member or the Persons for whom such Member maybe liable as described above, and to impose a fine upon suchMember in accordance with Section 8.21, below. In the case ofjoint ownership of a Lot or Condominium, the liability of suchOwners shall be joint and several, except to the extent thatthe Master Association has previously contracted in writingwith such joint Owners to the contrary.

Section 7.2. Repair of Damage: In the case of damageby fire or other casualty to the Association Property, anyinsurance proceeds payable by reason thereof shall be paid tothe Master Association, which thereupon shall contract torepair or replace all the Association Property so damaged.The Master Association shall levy a Reconstruction Assessmenton all Members to make good any deficiency in accordance withSection 6.4, above.

If at any time all or any portion of the AssociationProperty, or any interest therein, be taken for any public orquasi-public use, under any statute, by right of eminentdomain or by private purchase in lieu of eminent domain, theaward in condemnation shall be paid to the holder or holdersof fee title to such area, and their Mortgagees, as theirinterests may appear. Any such award shall be deposited inthe operating fund. No Member shall be entitled toparticipate as a party, or otherwise, in any proceedingsrelating to such condemnation. The Master Association shallhave the exclusive right to participate in such proceeding andshall, in its name alone, represent the interests of allMembers.

Section 7.3. Sale by Unanimous Consent: If an actionfor condemnation of all or a portion of the AssociationProperty is proposed or threatened by any governmental agencyhaving the right of eminent domain, then, on unanimous writtenconsent of all of the Owners and after written notice to at

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least sixty-seven percent (67%) of all first Mortgagees, theAssociation Property, or a portion of it, may be sold..

Section 7.4. Distribution of Proceeds of Sale orCondemnation Award: On a sale occurring under Section 7.3,above, or upon a taking through judgment of condemnation, theproceeds shall be retained in the general fund of theAssociation.

ARTICLE VIII

GENERAL RESTRICTIONS

All real property within the Properties shall be held,used and enjoyed subject to the following limitations andrestrictions, subject to the exemption of Declarant set forthherein.

Section 8.1. Residential Areas: All property within aresidential Area (including any Common Areas for the primarybenefit of the Owners of Lots or Condominiums on suchResidential • Area) shall be improved and used solely forsingle-Family Residential use; provided, however, that thisprovision shall not preclude any Owner in the Properties fromrenting or leasing all of his Lot or Condominium by means of awritten lease or rental agreement subject to this MasterDeclaration. The Declaration of Annexation recorded for aResidential Area shall designate such residential use for thatarea to be single-Family Residences, a Planned Development,Condominium Project, an apartment project, or a combinationthereof.

Section 8.2. No Further Subdivision; No Lot, CommonArea or Master Association Maintenance Area may be furthersubdivided without the prior written approval of the Board;provided, however, that nothing in this section shall bedeemed to prevent an Owner from, or require the approval ofthe Board for: (a) selling a Lot or Condominium, or (b)transferring or selling any Lot or Condominium to more thanone person to be held by them as tenants in common, jointtenants, tenants by the entirety or as community property.

Section 8.3. Improvement, Landscaping and Alterations.Except as set forth in Article X, hereof, without the priorapproval of the Architectural Committee as provided inArticle IX hereof, there shall be no excavation, construction,alteration or landscaping on any part of the Properties, otherthan minor repairs or rebuilding pursuant to Section 8.4 orSection 9.9. There shall be. no violation of the setback orsideyard requirements of the local governmental authority.

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Section 8.4. Exterior Maintenance and Repair; Owner'sObligations: Each Improvement shall at all times be kept ingood condition and repair. All landscaping, including, butnot limited to, lawns, hedges, shrubs and trees shall beperiodically trimmed and pruned so as to be maintained in aneat, clean, safe and attractive manner and so as not tounreasonably obstruct the view of adjacent Owners; provided,the reasonableness or unreasonableness of any such obstructionshall be determined solely by the Architectural Committee, inthe event that any Owner or Sub-Association shall permit anyImprovement, which is the responsibility of such Owner or Sub-Association to maintain, to fall into disrepair so as tocreate a dangerous, unsafe, unsightly or unattractive condi-tion affecting a neighboring Planned Development orCondominium, the Board, after consulting with theArchitectural Committee, and after affording the Owner of suchproperty Notice and Hearing, shall have the right but not theobligation to correct such condition, and to enter upon suchowner's Lot, Condominium or such Common Area for the purposeof doing so, and such Owner or Sub-Association, as the casemay be, shall promptly reimburse the Master Association forthe cost thereof. Such cost shall be a Special Assessment andshall create a lien enforceable in the same manner as otherassessments as set forth in the Master Declaration. The Ownerof the offending property shall be personally liable, and hisproperty may be subject to a mechanic's lien, for all costsand expenses incurred by the Master Association in taking suchcorrective acts, plus all costs incurred in collecting theamounts due. Each Owner shall pay all amounts due for suchwork within ten days (10) days after receipt of written demandtherefor, or the amounts may, at the option of the Board, beadded to the amounts payable by such Owner as CommonAssessments.

Section 8.5. Antennae; No exterior radio antenna,television antenna, "C.B." antenna, "satellite dish" or otherantenna of any type shall be erected or maintained on any ofthe Properties, except by Declarant or the Master Association.

Section 8.6. Signs: No sign, poster, billboard,advertising device or other display of any kind shall bedisplayed so as to be visible from outside the Properties,except (a) such signs as may be used by Declarant - orParticipating Builders in connection with the development ofthe Properties and sale of Lots or Condominiums, or (b) onesign of reasonable and customary dimensions as may bedisplayed on or from any Improvement on any Lot or Condominiumin a Residential Area advertising the sale or lease of suchLot or Condominium, provided such sign shall not be attachedto the exterior of any Improvements on any Lot or anyCondominium in a manner which requires fasteners to beembedded in any manner in such exterior.

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Section 8.7. Window Coverings: No window in anyResidence or Condominium shall be covered with aluminum foilor other reflective material and, unless approved by theArchitectural Committee in accordance with Section 9.2, below,no exterior surface of any window covering shall bear anydesign or any color other than white or beige.

Section 8.8. Unsightly Articles: No unsightlyarticles shall be permitted to remain on any -Lot orCondominium so as to be visible from any public street or fromany part of the Properties. Without limiting the generalityof the foregoing, refuse, garbage and trash shall be kept atall times in such covered, sanitary containers or other areasas may be provided by either the Master Association or by anSub-Association.

Section 8.9. Utility Areas: All utility and storageareas and all laundry rooms, including all areas in whichclothing or other laundry is hung to dry, must be completelycovered and enclosed from view from the neighboring parts ofthe Properties.

Section 8.10. Nuisances: No rubbish or debris of anykind shall be placed or permitted to accumulate anywherewithin the Properties, and no odor shall be permitted to arisetherefrom so as to render the Properties or any portionthereof unsanitary, unsightly, offensive or detrimental fromany public street or to any other part of the properties inthe vicinity thereof or to their occupants. No noise or othernuisance shall be permitted to exist or operate upon anyportion of the Properties so as to be offensive or detrimentalto any other part of the Properties in the vicinity thereof orto their occupants. Without limiting the generality of theforegoing provisions, no exterior speakers, horns, whistles,bells or other sound devices (other than security devices usedexclusively for security purposes) , noisy or smoke-emittingvehicles, large power equipment or large power tools,unlicensed off-road motor vehicles or other items which mayunreasonably disturb Owners in neighboring parts of theProperties shall be located, used or placed on any portion ofthe Properties.

Section 8.11. Animals: No insects, reptiles, birds oranimals of any kind shall be raised, bred or kept, on theProperties except that a total combination of three (3) dogs,cats or birds may be kept, provided all three of such animalsare not of the same type and provided that they are not kept,bred or maintained for any commercial purpose, nor inviolation of any other provision of this Master Declarationand such limitations as may be set forth in the Rules andRegulations. The Master Association, acting through theBoard, shall have the right to prohibit maintenance of any

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animal which constitutes, in the opinion of the Board, anuisance to other Owners. Animals belonging to Owners,occupants or their licensees, tenants or invitees within theProperties must be either kept within an enclosure, anenclosed yard or on a leash being held by a person capable ofcontrolling the animal. Furthermore, any Owner shall beabsolutely liable to each and all remaining Owners, theirfamilies, guests, tenants and invitees, for any unreasonablenoise or damage to person or property caused by any animalsbrought or kept upon the Properties by an Owner or by membersof his Family, his tenants or his guests; and it shall be theabsolute duty and responsibility of each such Owner to cleanup after such animals which have used any portion of theMaster Association Maintenance Areas or other AssociationProperties, if any.

Section 8.12. No Hazardous Activities; No activitiesshall be conducted, nor shall any Improvements be constructed,on any part of the Properties which are or might be unsafe orhazardous to any Person, Lot or Condominium in any other partof the' Properties.

Section 8.13. No Temporary Structures: No tent or shackor other temporary building, Improvement or structure shall beplaced upon any portion of the Properties.

Section 8.14. No Mining and Drilling; No portion of theProperties shall be used for the purpose of mining, quarrying,drilling, boring or exploring for or removing water, oil, gasor other hydrocarbons, minerals, rocks, stones, gravel orearth.

Section 8.15. Insurance Rates; Nothing shall be done orkept in the Properties which will increase the rate ofinsurance on any Association Property without the approval ofthe Board, nor shall anything be done or kept in theProperties which would result in the cancellation of insuranceon any Association Property or which would be in violation ofany law.

Section 8.16. Drainage; There shall be no interferencewith the established drainage pattern over any part of theProperties so as to affect any real property inside or outsideof the Properties. For the purpose hereof, "established"drainage is defined as the drainage which exists at the timethe overall grading of any part of the Properties is completedby Declarant, which may include drainage from the AssociationProperties over any Lot or Common Areas or Master AssociationMaintenance Areas in the Properties.

Section 8.17. Water and Sewer Systems: No individualwater supply system, water softener system or sewage disposal

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system shall be permitted on any Lot or Condominium unlesssuch system is designed, located, constructed and equipped inaccordance with the requirements, standards and recommenda-tions of any applicable water district and any applicablegovernmental health authority having jurisdiction.

Section 8.13. Parking; Garages: Except as provided inthe applicable Declaration of Annexation covering anyCommercial Area, no trailer, motor home, truck in excess of3/4 ton, camper, boat or van of eighteen (18) feet or more inlength, or any vehicle with advertising on it other than anautomobile shall be kept or maintained anywhere on theProperties in such a manner as to be visible from other partsof the Properties. No vehicle or boat shall be constructed orrepaired upon any property or street (public or private) insuch a manner as to be visible from any other parts of theProperties. All other vehicles must be parked within theOwner's garage; provided, in the event the number of vehiclesowned by any Owner exceeds the number of vehicles for whichsuch Owner's garage was designed to accomodate, the excessvehicles may be parked in such Owner's driveway. No Ownershall be permitted at any time to park or otherwise maintain avehicle of any kind on the streets within the Properties.Garage doors must remain closed at all times except whenvehicles are entering or leaving the garage. For purposes ofthis Section, "parking" shall be defined as leaving a vehicleunattended for a period in excess of one (1) hour.

Section 8.19. Maintenance and Control of Master Associ-ation Maintenance Areas; The Master Association MaintenanceAreas shall be maintained for recreational facilities, slopemaintenance, erosion control and landscaping purposes pri-marily, and no Improvements other than recreational facili-ties, landscaping, fences, sprinklers, other similar ameni-ties incidental to such purposes as constructed by Declarant,and public or private utility lines or facilities which do notinterfere with slope maintenance use, shall be erected ormaintained thereon.

Section 8.20. Violation of Law: Any violation of anystate, municipal or local law, ordinance or regulationpertaining to the ownership, occupation or use of any portionof the Property is hereby declared to be a violation of thisDeclaration and subject to any and all of the enforcementprocedures herein set forth.

Section 8.21. Violation of Restrictions: There shallbe no violation of this Master Declaration, including, withoutlimitation, the Rules and Regulations, once adopted by theBoard after Notice and Hearing. If any Member, his family,guest, or any licensee, lessee or invitee violates this MasterDeclaration, the Board may impose upon such Owner, in addition

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to any Special Assessment as provided in Section 6.6, above, afine ("Fine") in an amount not to exceed One Hundred Dollars($100.00) for each violation. The maximum amount of the Finemay be increased by action of the Board, in the Board's solediscretion, in an amount no more than ten percent (10%) abovethe maximum Fine for the previous fiscal year. No Fine may beimposed by the Board until Notice and Hearing are afforded tothe affected Member.

ARTICLE IX

ARCHITECTURAL COMMITTEE

Section 9.1. Members of Committee: The ArchitecturalCommittee shall consist of five (5) members, the initialmembers of which shall be chosen by the Declarant, and whoshall hold office until the election of the first Board ofDirectors by the Members. Thereafter, the ArchitecturalCommittee members shall be chosen as follows:

(a) By Declarant. Declarant shall have the rightto appoint a majority of the members of the ArchitecturalCommittee until the earliest to occur of the following:

(i) At such time as the Close of Escrow to thepublic shall have occurred for the sale by Declarantand any Participating Builders of at least onethousand four hundred ninety (1,490) Lots orCondominiums in the real property constituting theAnnexable Area as of the date of Recordation of thisMaster Declaration (for purposes of this subsection(i) each apartment unit located on any Lot in theProperties shall count as the sale of one (1) Lotupon the rental or lease of such apartment unit); or

(ii) At such time as neither Declarant or anyParticipating Builder has any authority to annexreal property in the Annexable Area to theProperties without the consent of the Delegates asprovided in Article III; or

(iii) December 31, 2000.

Declarant's appointees to the Committee need not beMembers.

(b) By the Board. The Board shall have the rightto appoint such members of the Architectural Committeewhich Declarant is not authorized to appoint until suchtime as Declarant's rights of appointment shall haveexpired, and thereafter the Board shall have the right toappoint and remove all members of the Architectural

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Committee. Architectural Committee members appointed bythe Board shall be Members and serve for a term of one(1) year or until their respective successors are appoin-ted.

(c) Removal. Members of the Architectural Com-mittee may be removed at any time without cause by thePerson appointing such member as provided herein.

(d) Notice of Appointment; Whenever an Archi-tectural Committee member is appointed or removed whileboth Declarant and the Board have rights of appointment,written notice of such appointment or removal shall givenby the appointing party to the other party.

Section 9.2. Review of Plans and Specifications: TheArchitectural Committee shall consider and act upon any andall plans and specifications submitted for its approval underthis Master Declaration and perform such other duties as fromtime to time shall be assigned to it by the Board, includingthe inspection of construction in progress to assure itsconformance with plans approved by the Architectural Committeeas follows:

(a) Criteria For Approval. The ArchitecturalCommittee shall approve plans and specifications sub-mitted for its approval only if it deems that the con-struction, alterations, or additions contemplatedthereby in the locations indicated will not be detri-mental to the appearance of the surrounding area of theProperties as a whole, will not unreasonably restrict orimpair an Owner's view, as determined solely by theArchitectural Committee, or will not unreasonably inter-fere with an Owner's privacy, as determined solely by theArchitectural Committee, that the appearance of anystructure affected thereby will be in harmony with thesurrounding structures, that the construction thereofwill not detract from the beauty, wholesomeness orattractiveness of the Master Association MaintenanceAreas or the enjoyment thereof by the Members, and thatthe upkeep and maintenance therefor will not become aburden on the Master Association.

(b) Conditions of Approval. The ArchitecturalCommittee may condition its approval of proposals orplans and specifications for any Improvement (i) on suchchanges therein as it deems appropriate, (ii) upon theagreement by the Person (referred to in this Section 9.2as "applicant") submitting the same to grant appropriateeasements to the Master Association for the maintenanceof the Improvement, or (iii) upon the agreement of theapplicant to reimburse the Master Association for thecost of such maintenance, or all three, and may requiresubmission of additional plans and specifications or

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other information prior to approving or disapprovingmaterial submitted.

(c) Rules and Guidelines. The ArchitecturalCommittee may also issue rules or guidelines settingforth procedures for the submission of plans for approvalwhich may require a fee to accompany each application forapproval, or include additional factors which it willtake into consideration in reviewing submissions. TheArchitectural Committee may provide that the amount ofsuch fee shall be uniform, or that it may be determinedin any other reasonable manner, such as based upon thereasonable cost of the construction, alterations, oradditions contemplated. The Architectural Committee mayrequire such detail in plans and specifications submittedfor its review as it deems proper, including, withoutlimitation, floor plans, site plans, drainage plans,elevation drawings and description or samples of exteriormaterial and colors. Until receipt by the ArchitecturalCommittee of any required plans and specifications, theArchitectural Committee may postpone review of any plansubmitted for approval.

(d) Notice of Decision. Decisions of the Archi-tectural Committee and the reasons therefor shall betransmitted by the Architectural Committee to the appli-cant at the address set forth in the application forapproval, within forty-five (45) days after receipt bythe Architectural Committee of all materials required bythe Architectural Committee. Any application submittedpursuant to this Section 9.2 shall be deemed approved,unless written disapproval or a request for additionalinformation or materials by the Architectural Committeeshall have been transmitted to the applicant withinforty-five (45) days after the date of receipt by theArchitectural Committee of all required materials.

(e) Submission By Declarant . and ParticipatingBuilder. Declarant need not seek approval of theArchitectural Committee with respect to its activitiesuntil Close of Escrow for the sale of the last Lot orCondominium in the Properties from Declarant (i) to aParticipating Builder or (ii) to a member of the publicpursuant to a Final Subdivision Public Report issued bythe California Department of Real Estate. All Partici-pating Builders must seek such approval in the mannerherein provided until Declarant has lost the power toappoint a majority of the members of the ArchitecturalCommittee. After Declarant has lost the power to appointa majority of the members of the Architectural Committee,the Participating Builders need not seek approval of theArchitectural Committee with respect to its new construc-tion activities until Close of Escrow for the sale of the

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last Lot or Condominium owned by such ParticipatingBuilder to a member of the public.

Section 9.3. Meetings of the Architectural Committee:The Architectural Committee shall meet from time to time asnecessary to perform its duties hereunder. The ArchitecturalCommittee may from time to time by resolution unanimouslyadopted in writing designate an Architectural CommitteeRepresentative (who may, but need not, be one of its members)to take any action or perform any duties on behalf of theArchitectural Committee, except the granting of variancespursuant to Section 9.8. In the absence of such designation,the vote of a majority of the members of the ArchitecturalCommittee, or the written consent of a majority of the membersof the Architectural Committee taken without a meeting, shallconstitute an act of the Architectural Committee.

Section 9.4. No Waiver of Future Approvals: Theapproval of the Architectural Committee to any proposals orplans and specifications or drawings for any work done orproposed or in connection with any other matter requiring theapproval and consent of the Architectural Committee, shall notbe deemed to constitute a waiver of any right to withholdapproval or consent as to any similar proposals, plans andspecifications, drawings or matter whatever subsequently oradditionally submitted for approval or consent.

Section 9.5. Compensation of Members: The members ofthe Architectural Committee shall receive no compensation forservices rendered, other than reimbursement by the MasterAssociation for expenses incurred by them in the performanceof their duties hereunder.

Section 9.6. Corrections of Defects: Inspection ofwork and correction of defects therein shall proceed asfollows:

(a) Inspection. The Architectural Committee orits duly authorized representative may at any timeinspect any Improvement for which approval of plans isrequired under this Article IX; provided, however, thatthe Architectural Committee's right of inspection ofImprovements for which plans have been submitted andapproved shall terminate sixty (60) days after such workor Improvement shall have been completed and the respec-tive Owner shall have given written notice to theCommittee of such completion. The ArchitecturalCommittee's rights of inspection shall not terminatepursuant to this subsection in the event that plans forthe work of Improvement have not previously been sub-mitted to and approved by the Architectural Committee.If, as a result of such inspection, the ArchitecturalCommittee finds that such Improvement was done withoutobtaining approval of the plans therefor or was not done

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in substantial compliance with the plans approved by theArchitectural Committee, it shall notify the Owner inwriting of failure to comply with this Article IX withinsixty (60) days from the inspection, specifying theparticulars of noncompliance. The Owner shall remedysuch noncorapliance or remove the same within a period ofnot more than forty-five (45) days from the date thatnotice of the Architectural Committee ruling is given tothe Owner. The Architectural Committee shall have theauthority to require the Owner to take such action as itdeems necessary to remedy the noncompliance.

(b) Failure to Remedy or Remove. If the Owner doesnot comply with the Architectural Committee ruling withinsuch 45-day period, the Architectural Committee, at itsoption, may peacefully remove the noncomplying Improve-ment or otherwise peacefully remedy the noncompliance,and the Owner shall reimburse the ArchitecturalCommittee, upon demand, for all expenses incurred inconnection therewith. If such expenses are not promptlyrepaid by the Owner to the Architectural Committee, theBoard shall levy a Special Assessment against such Ownerfor reimbursement as provided in this Master Declaration.Upon failure to pay such Special Assessment when due theBoard may record a Notice of Delinquent Assessment in theOffice of the County Recorder of Orange County. Theright of the Architectural Committee to remove a noncom-plying Improvement or otherwise remedy the noncomplianceshall be in addition to all other rights and remedieswhich the Architectural Committee and the MasterAssociation may have at law, in equity or in this MasterDeclaration.

(c) Failure to Notify Deemed Approval. If for anyreason the Architectural Committee fails to notify theOwner of any noncompliance with previously submitted andapproved plans within sixty (60) days after receipt ofsaid written notice of completion from the Owner, theImprovement shall be deemed to be in accordance with saidapproved plans.

Section 9.7. Nonliability of Architectural CommitteeMember: Neither the Architectural Committee, nor any memberof the Architectural Committee, nor the Architectural Com-mittee's duly authorized representative shall be liable to theMaster Association or to any Owner for any loss, damage orinjury arising out of or in any way connected with theperformance of the Architectural Committee's duties here-under, unless due to the willful misconduct or bad faith ofthe Architectural Committee. The Architectural Committeeshall review and approve or disapprove all plans submitted toit for any proposed Improvement, alteration or addition,solely on the basis of aesthetic considerations and the over-all benefit or detriment which would result to the immediate

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vicinity and the Properties generally. The ArchitecturalCommittee shall take into consideration the aesthetic aspectsof the architectural designs, placement of buildings-,' land-scaping, color schemes, exterior finishes and materials andsimilar features. The Architectural Committee's approval ordisapproval shall be based solely on the considerations setforth in this Article IX and the Architectural Committee shallnot be responsible for reviewing, nor shall its approval ofany plan or design be deemed approval of, any plan or designfrom the standpoint of structural safety or conformance withbuilding or other codes.

Section 9.8. Variances: The Architectural Committeemay authorize variances from compliance with any of the archi-tectural provisions of this Master Declaration or anyDeclaration of Annexation, including restrictions uponheight, size, floor area, or placement of structures, orsimilar restrictions, when circumstances such as topography,natural obstructions, hardship, aesthetic or environmentalconsideration may require. Such variances must be evidencedin writing, must be signed by at least a majority of all of themembers of the Architectural Committee, and shall becomeeffective upon Recordation in the Office of the CountyRecorder of Orange County. If such variances are granted, noviolation of the covenants, conditions and restrictions con-tained in this Master Declaration or in any Declaration ofAnnexation shall be deemed to have occurred with respect tothe matter for which the variance was granted. The grantingof such a variance shall not operate to waive any of the termsand provisions of this Master Declaration or of any Declara-tion of Annexation for any purpose except as to the particularproperty and particular provision hereof covered by the vari-ance, nor shall it affect in any way the Owner's obligation tocomply with all governmental laws and regulations affectinghis use of the premises, including, but not limited to, zoningordinances and Lot set-back lines or requirements imposed byany governmental authority.

Section 9.9. Solar Heating Equipment: Notwithstandingany other provisions of this Master Declaration concerningapproval of plans and specifications by the ArchitecturalCommittee, the installation of any solar heating equipmentwhich meets all applicable zoning regulations, the UniformBuilding Code, all associated ordinances and regulations andany reasonable requirements of the Architectural Committee ishereby deemed to have been approved by the ArchitecturalCommittee.

Section 9.10. Amendment to Article IX: So long asDeclarant owns any portion of the Properties, this Declarationcannot be amended or modified to change or eliminate theprovision of this Article IX without the prior writtenapproval of Declarant, and any attempt to do so shall be nulland void.

44.

ARTICLE X

RIGHTS OF DECLARANT

• It is acknowledged that the First Subdivision is aportion of a larger parcel of land which Declarant is causingto be developed into a planned community known as MARINA RILLSPLANNED COMMUNITY. Declarant, in cooperation with the Countyof Orange, has created a master plan for its developmentwhereby modern town masterplanning objectives may be realizedfor the common good and enhancement of property values withinthe community. In furtherance thereof, Declarant, for itselfand its successors and assigns, reserves the following rightsand easements:

(a) Easements over the Properties for the instal-lation and maintenance of electric, telephone, cabletelevision, water, gas, and sanitary sewer lines anddrainage facilities.

(b) Easements over any Master AssociationMaintenance Area and Common Area for construction,display, maintenance, sales, and exhibit purposes inconnection with the construction, development and sale orlease of the Properties or any portion thereof until thesale by Declarant of all portions of the Properties ownedby Declarant, provided, however, that the exercise ofsuch easements by Declarant shall not unreasonablyinterfere with the reasonable use and enjoyment of theProperties by the Owners. Until the sale of all portionsof the Properties owned by Declarant, Declarant may useany of the Lots or Condominiums owned by it as model homesites and any Common Area • or Master AssociationMaintenance Area as incidental parking.

(c) The right of Declarant (and its agents,employees and representatives) to enter on any portion ofthe Properties to construct improvements on theProperties or upon any adjacent land which may be annexedto the Properties and which is annexed into theProperties and to make repairs and remedy constructiondefects if such entry shall not unreasonably interfere

- with the use of any occupied Lot or Condominium;provided, however, that the Declarant shall be respon-sible for the timely repair of any damage caused to anyMaster Association Maintenance Area, Common Area, Lot orCondominium by the Declarant (and its agents, employeesand representatives) in exercising this right.

(d) For itself and for the benefit of the MasterAssociation, easements of access, use and repair over anyareas of the Properties through which irrigation waterlines and other equipment have been or will be placed.

45.

(e) The right of free access by Declarant, theMaster Association, Sub-Association and Owners ofadjacent Lots or Condominiums to slopes or drainage wayslocated on any Owner's property when such access isrequired for the maintenance or permanent stabilizationof said slopes, or maintenance of such drainage facilityor for the protection and use of property other than theLot or Condominium on which the slope or drainage way islocated.

(f) The right of Declarant to subdivide or resub-divide any portion of the Properties, or to completeexcavation and grading and construction of Improvementsto and on any portion of the Properties owned byDeclarant, or to alter the foregoing and its constructionplans and designs, or to construct such additionalImprovements as Declarant deems advisable in the courseof development of the Properties so long as any Lot orCondominium in the Properties remains unsold.

(g) Each Owner by accepting a deed to a Lot orCondominium hereby acknowledges that any construction byDeclarant, Master Association or any ParticipatingBuilder may impair the view of such Owner and herebyconsents to such impairment.

(h) This Master Declaration shall not limit theright of Declarant at any time prior to acquisition oftitle to a Lot or Condominium by a purchaser fromDeclarant to establish on that Lot or Condominium, as thecase may be, additional licenses, easements, reserva-tions and rights of way to itself, to utility companies,or to others as may from time to time be reasonablynecessary to the proper development and disposal of theProperties, subject to the rights of the VeteransAdministration and the Federal Housing Administration toapprove such grants as provided herein in the event thatthey are insuring or guaranteeing a loan on any Lot orCondominium on the Properties.

(i) The rights, or any portion of the rights ofDeclarant hereunder and elsewhere in this MasterDeclaration may be assigned by Declarant to any successorin interest to any portion of Declarant's interest in anyportion of the Properties, by an express writtenassignment recorded in the Office of the County Recorder.

(j) So long as Declarant owns any portion of theProperties, this Declaration cannot be amended ormodified to change or eliminate the easements and otherrights reserved herein to Declarant without the priorwritten approval of Declarant, and any attempt to do soshall be null and void.

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87-502874ARTICLE XI

MISCELLANEOUSSection 11.1. Term: The covenants, conditions and

restrictions of this Master Declaration as they may be amendedfrom time to time, shall run until December 31, 2035, unless awritten instrument executed by the Delegates holding at leastseventy-five percent (75%) of the voting power of the MasterAssociation has been recorded within one (1) year prior tosuch date agreeing to terminate such restrictions in whole orin part, and such written instrument is recorded with theOrange County Recorder. After December 31, 2035, suchcovenants, conditions and restrictions shall be automaticallyextended for successive periods of ten (10) years each, unlessextinguished by a written instrument executed by the Delegatesholding at least seventy-five percent (75%) of the votingpower of the Master Association, and such written instrumentis recorded with the Orange County Recorder.

Section 11.2. Amendment:

(a) By Declarant and Participating Builders. Un-til the Close of Escrow for the sale of any portion ofthe Properties to a Participating Builder, the provisionsof this Master Declaration may be amended or terminatedby recordation of a written instrument signed only byDeclarant setting forth such amendment or termination.Following Close of Escrow for the sale of any portion ofthe Properties to a Participating Builder but prior tothe sale of a Lot or Condominium to a member of thepublic in accordance with a Final Subdivision PublicReport issued by the California Department of RealEstate, the provisions of this Master Declaration may beamended or terminated by recordation of a writteninstrument signed by Declarant and each ParticipatingBuilder setting forth such amendment or termination.

(b) By Owners. Except Paragraph D of the Preamblehereto, Sections 3.1, 5.5 and 8.6, and Articles IX and X(which provisions may not be amended without the writtenconsent of Declarant only so long as Declarant owns a Lotor Condominium in the Properties) , the provisions of thisMaster Declaration, other than Article VI and thisSection 11.2, may be amended by an instrument in writingsigned and acknowledged by the president and secretary ofthe Master Association certifying that such amendment hasbeen approved by the vote or written assent of theDelegates holding at least fifty-one percent (51%) of thetotal voting power of the Master Association and at leastfifty-one percent (51%) of the voting power of the MasterAssociation excluding' votes attributable to property

47.

owned by Declarant and any Participating Builders, andsuch an amendment shall be effective upon its recordationwith the County Recorder. Any amendment to Section 6.12or to this Section 11.2 shall require the vote or writtenassent of the Delegates holding at least sixty-sevenpercent (67%) of the voting power of the MasterAssociation and a majority of the voting power of theMaster Association, excluding the votes attributable toproperty owned by Declarant or any ParticipatingBuilders, and Declarant, for so long as Declarant mayappoint a Delegate to the Master Association.

(c) Veto By County. Notwithstanding anythingcontained herein to the contrary, so long as any propertysubject to this Master Declaration lies outside theboundaries of an incorporated city, the County of Orangeshall have the power to veto any purported amendment ortermination of this Master Declaration, based uponwhether the Properties, after such termination oramendment, will continue to enjoy adequate provisions forpreservation and maintenance of the Master AssociationMaintenance Areas and the Association Property. Noamendment or written agreement purporting to terminate ormodify the maintenance provisions of this MasterDeclaration shall be effective without the mailing ofwritten notice thereof, return receipt requested, to theAssistant Director, EMA - Regulation and the CountyCounsel of Orange County. If no veto has been exercisedby the Assistant Director or the County Counsel withinfifteen (15) days of the receipt of such notice, suchamendment or termination shall thereafter become effec-tive.

Section 11.3. Mortgage Protection; Notwithstanding anyother provision of this Master Declaration, no amendment ofthis Master Declaration shall operate to defeat and renderinvalid the rights of the Beneficiary under any Deed of Trustupon a Lot or Condominium made in good faith and for value,and recorded prior to the recordation of such amendment,provided that after the foreclosure of any such Deed of Trustsuch Lot or Condominium shall remain subject to this MasterDeclaration, as amended. Notwithstanding any and allprovisions of this Master Declaration to the contrary, inorder to induce the Federal Home Loan Mortgage Corporation("FHLMC"), the Government National Mortgage Association("GNMC") and the Federal National Mortgage Association("FNMA") to participate in the financing of the sale of Lotsor Condominiums within the Properties, the following pro-visions are added hereto (and to the extent these addedprovisions, pertaining to the rights of Mortgagees, FHLMC,FNMA, GNMA, VA and FHA, conflict with any other provisions of

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this Master Declaration or any other of this --MasterDeclaration, these added restrictions shall control:

(a) Notice of Default. Each first Mortgagee of aMortgage encumbering any Lot or Condominium, upon filinga written request for notification with the Board, isentitled to written notification from the MasterAssociation of any default by the Mortgagor of such Lotor Condominium, in the performance of such Mortgagor'sobligations under this Master Declaration, the Articlesor the Bylaws (collectively referred to as the "ProjectDocuments"), which default is not cured within sixty (60)days after the Master Association learns of such default.

(b) Right of First Refusal. Every Owner, includingevery first Mortgagee of a Mortgage encumbering any Lotor Condominium, which obtains title to such Lot orCondominium, pursuant to the remedies provided in suchMortgage, or pursuant to foreclosure of the Mortgage, orby deed (or assignment) in lieu of foreclosure, shall beexempt from any "right of first refusal."

(c) Foreclosure. Each first Mortgagee of aMortgage encumbering any Lot or Condominium, whichobtains title to such Lot or Condominium, pursuant tojudicial foreclosure or the powers provided in suchMortgage, shall take title to such Lot or Condominiumfree and clear of any claims for unpaid assessments orcharges against such Lot or Condominium which accruedprior to the time such holder acquires title to such Lotor Condominium.

(d) Mortgagee Approval. Except as provided bystatute in case of condemnation or substantial loss,unless at least sixty-seven percent (67%) of the firstMortgagees (based upon one vote for each Mortgage owned)or sixty-seven percent (67%) of the Members other thanDeclarant and any Participating Builders have given theirprior written approval, neither the Master Association orthe Owners shall:

(i) Subject to the provision of theCalifornia General Non-profit Corporation Law tothe contrary, by act or omission seek to abandon,partition, subdivide, encumber, sell or transferthe Association Property or the Improvements there-on which are owned, directly or indirectly, by theMaster Association (the granting of easements forpublic utilities or for other public purposesconsistent with the intended use of such property bythe Master Association shall not be deemed atransfer within the meaning of this clause);

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(ii) Change the method of determining obli-gations, assessments, dues or other charges whichmay be levied against any Owner, or the method ofallocating distributions of hazard insurance pro-ceeds or condemnation awards;

(iii) By act or omission, dissolve this MasterAssociation, terminate the Project, or change,waive or abandon any scheme of regulations, orenforcement thereof, pertaining to the architec-tural design or the exterior appearance of thedwelling units on the Lots, the exterior maintenanceof the dwelling units on the Lots or Condominiums,the maintenance of the Association Property and anyImprovements thereon, including, but not limitedto, walks, fences and driveways, or the upkeep oflawns and plantings on the Properties;

(iv) Fail to maintain Fire and ExtendedCoverage on insurable Association Property on acurrent replacement cost basis in an amount at leastone hundred percent (100%) of the insurable value(based on current replacement cost);

(v) Use hazard insurance proceeds for lossesto any Association Property for other than therepair, replacement or reconstruction of suchAssociation Property;

(vi) Change the pro rata interest or obliga-tions of any individual Lot or Condominium for thepurpose of: (aa) levying assessments or charges orallocating distributions of hazard insurance pro-ceeds or condemnation awards, or (bb) determiningthe pro rata share of ownership of each Lot orCondominium in the Common Area, if any;

(vii) Terminate professional management and as-sume self-management of the Master Association;

(viii) Amend a material provision of this MasterDeclaration, the Bylaws or the Articles; forpurposes herein, the term "material provision"shall mean and. refer to those provisions affectingthe following:

(aa) The • percentage interest of theOwners in the Common Area;

(bb) The fundamental purpose for whichthe project was created (such as a change fromresidential use to a different use);

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(cc) Voting;

(dd) Assessments, assessment liens, andsubordination thereof;

(ee) The reserve for maintenance, repairand replacement of Association Property,Master Association Maintenance Area, CommonArea and Common Area facilities;

(ff) Property maintenance obligations;

(gg) Casualty and liability insurance;

(hh) Reconstruction in the event ofdamage or destruction;

(ii) Rights to use the Common Area,Association Property or Master AssociationMaintenance Areas;

(jj) Rights to annex additional property;and

(kk) Any provision, which by its terms,is specifically for the benefit of firstMortgagees, or specifically confers rights onfirst Mortgagees.

(e) Books, Records and Notice of Meetings. FirstMortgagees, upon written request, shall have the right to(i) examine the books and records of the MasterAssociation during normal business hours, (ii) requirefrom the Master Association the submission of auditedannual financial reports and other financial data, (iii)receive written notice of all meetings of the Owners,(iv) designate in writing a representative to attend allsuch meetings.

(f) Notice to Mortgagees. All first Mortgageesshall be given (i) thirty (30) days written notice priorto the effective date of any proposed material amendmentto this Master Declaration or the Articles or Bylaws, andprior to the effective date of any termination of anagreement for professional management of the propertiesfollowing a decision of the Owners to assume self-management of the Properties; and (ii) immediate writtennotice as soon as the Board receives notice or otherwiselearns of any damage to other Association Propertywhenever the cost of reconstruction exceeds Ten ThousandDollars ($10,000.00), and as soon as the Board receivesnotice or otherwise learns of any condemnation or eminent

51.

domain proceedings or other proposed acquisition, withrespect to any portion of the Properties.

(g) Defaults. First Mortgagees may, jointly orsingly, pay taxes or other charges which are in defaultand which may or have become a charge against anyAssociation Property and may pay any overdue premiums onhazard insurance policies or secure new hazard insurancecoverage for such property in case of lapse of a policy,and first Mortgagees making such payments shall be owedimmediate reimbursement therefor from the MasterAssociation.

(h) Professional Management. The Board shallcontract for professional management of the Propertieswith a professional Manager. The agreement between theMaster Association and its agent for such professionalmanagement shall provide that the management contract maybe terminated be either party thereto, without cause, andwithout payment of a termination fee, upon ninety (90)days written notice, and the term of such contract shallnot exceed three (3) years.

(i) Fidelity Bond.- The Board shall secure andcause to be maintained in force at all times a fidelitybond for any person or entity handling funds of theMaster Association, including, but not limited to,employees of the professional Manager.

(j) Leases. Any agreement for the leasing orrental of a Lot or Condominium shall provide that theterms of such agreement shall be subject in all respectsto the provisions of this Master Declaration, theArticles and the Bylaws. All such agreements shall be inwriting and shall provide that any failure by the lesseeto comply with the terras of this Master Declaration, theArticles and the Bylaws shall be a default under the

(k) Agreements for Financing. In addition to theforegoing, the Board may enter into such contracts oragreements on behalf of the Master Association as arerequired in order to satisfy the guidelines of the VA,the FHA, the FHLMC, the FNMA or the GNMA or any similarentity, so as to allow for the purchase, guaranty orinsurance, as the case may be, by such entities of firstMortgages encumbering Condominiums or Lots with dwellingunits thereon. Mortgagees are hereby authorized tofurnish information to the Board concerning the status ofany Mortgage encumbering a Lot or Condominium.

52.

Section 11.4. Notices: Any notice permitted., or required to be delivered as provided herein shall be in "writingand may be delivered either personally or by mail. Ifdelivery is made by mail, it shall be deemed to have beendelivered seventy-two (72) hours after a copy of the same hasbeen deposited in the United States mail, postage prepaid,addressed to any person at the address given by such person tothe Master Association for the purpose of service of suchnotice, or to the residence of such Person if no address hasbeen given to the Master Association. Such address" may bechanged from time to time by notice in writing to the MasterAssociation.

Section 11.5. Enforcement and Non-Waiver:

(a) Right of Enforcement. Except as otherwiseexpressly provided herein, Declarant, the Board, anyOwner of any Lot or Condominium within the Properties,and the County Flood Control District (but only forpurposes of enforcing maintenance of flood controlfacilities as set forth in Section 5.1(k) herein), shallhave the right to enforce any or all of the provisions ofthis Master Declaration against any property within theProperties and the Owners thereof. Such right shallinclude an action for damages, as well as an action toenjoin any violation of the Master Declaration.

(b) Violations and Nuisance.. Every act or omissionwhereby any provision of this Master Declaration isviolated in whole or in part is hereby declared to be anuisance and may be enjoined or abated, whether or notthe relief sought is for negative or affirmative actionby Declarant or the Master Association or any Owner orOwners of Lots or Condominiums within the Properties.However, any other provision to the contrary notwith-standing, only Declarant, the Master Association, theBoard or a duly authorized agent of any of them, mayenforce by self-help any of the provisions of this MasterDeclaration, and only if such self-help is preceded byreasonable Notice and Hearing.

(c) Violation of Law. Any violation of any state,municipal or local law, ordinance or regulation per-taining to the ownership, occupation or use of anyproperty within the Properties is hereby declared to be aviolation of this Master Declaration and subject to allof the enforcement procedures set forth in this MasterDeclaration.

(d) Remedies Cumulative. Each remedy provided bythis Master Declaration is cumulative and not exclusive.The Master Association may, at its option, without

53.

waiving the right to enforce its lien against theCondominium or Lot, bring a suit at law to enforce eachassessment obligation.

(e) Non-Waiver. The failure to enforce any of theprovisions of this Master Declaration at any time shallnot constitute a waiver of the right thereafter toenforce any such provision or any other provisions ofthis Master Declaration.

(f) Attorneys' Fees. Any judgment rendering in anyaction or proceeding hereunder shall include a sura forattorneys fees in such amount as the Court may deemreasonable in favor of the prevailing party, as well asthe amount of delinquent payment (if applicable),interest thereon, late charges (if any) and court costs.

Section 11.6. FHA/VA Approval: As long as Declarant ora Participating Builder has effective voting control of theMaster Association, and provided they are insuring orguaranteeing loans, as the case may be, on a portion of theProperties, the following actions will require the priorapproval of the Federal Housing Administration or the VeteransAdministration: annexation or deannexation of additional realproperty to the Properties pursuant to Article III of thisMaster Declaration; dedication of the Master AssociationMaintenance Area to any public agency; grants of additionaleasements, rights-of-way, or licenses' by Declarant in theProperties; establishment of additional reservations byDeclarant in the Properties; amendment of this MasterDeclaration; and mergers or consolidations of the MasterAssociation.

Section 11.7. Interpretation:

(a) Restrictions Construed Together. All of theprovisions of this Master Declaration shall be liberallyconstrued together to promote and effectuate the funda-mental concepts of the Properties as set forth in thepreamble to this Master Declaration. This MasterDeclaration shall be construed and governed by the lawsof the State of California.

(b) Restrictions Severable. Notwithstanding theprovisions of the foregoing subparagraph (a) , each of theprovisions of this Master Declaration shall be deemedindependent and severable, and the invalidity or partialinvalidity of any provision or portion thereof shall notaffect the validity or enforceability of any otherprovision.

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(c) Singular Includes Plural. Unless the contextrequires a contrary construction, the singular shallinclude the plural and the plural the singular; and themasculine, feminine or neuter shall each include themasculine, feminine and neuter.

(d) Captions. All captions and titles used in thisMaster Declaration are intended solely for convenience ofreference and shall not affect that which is set forth inany of the provisions hereof.

Section 11.8. Reservation of Easements: Declarant ex-pressly reserves for the benefit of all Properties reciprocaleasements for access, ingress and egress for all Owners to andfrom their respective Lots and Condominiums, for installationand repair of utility services; for encroachments ofImprovements constructed by Declarant for drainage of waterover, across and upon adjacent Lots and Condominiums, andAssociation Property resulting from the normal use ofadjoining Lots, Condominiums or Association Property, and fornecessary maintenance and repair of any Improvement. Sucheasements may be used by Declarant, its successors, pur-chasers, the Master Association, and all Owners, their guests,tenants and invitees, residing on or temporarily visiting theProperties, for pedestrian walkways, vehicular access and suchother purposes reasonably necessary for the use and enjoymentof a Lot, Condominium or the Association Property.

Section 11.9. No Representations or Warranties; Norepresentations or warranties of any kind, express or implied,have been given or made by Declarant or its agents oremployees in connection with the Properties or any portion ofthe Properties, or any Improvement thereon, its physicalconditions, zoning, compliance with applicable laws, fitnessfor intended use, or in connection with the subdivision, sale,operation, maintenance, cost of maintenance, taxes or regula-tion thereof as a Planned Development, except as specificallyand expressly set forth in this Master Declaration and exceptas may be filed by Declarant from time to time with theCalifornia Department of Real Estate, the County, the VA, theFHA, the FHLMC, the FNMA, the GNMA or any other governmentagency.

Section 11.10. Special Provision for Enforcement of Cer-tain Bonded Obligations: In the event that (a) anyImprovements on any Master Association Maintenance Arealocated on any phase of development of the Properties are notcompleted, prior to the issuance of a Final Subdivision PublicReport for that phase by the California Department of RealEstate ("DRE"), and (b) the Master Association is obligedunder a bond or other arrangement ("Bond") required by the DRSto secure performance of the commitment of Declarant to

6ccl5a 55

complete the Improvements, the following provisions of thissection will be applicable:

(a) The Board shall consider and vote on thequestion of action by the Master Association to enforcethe obligations under the Bond, with respect to any suchImprovement for which a Notice of Completion has not beenfiled, within sixty (60) days after the completion datespecified for that Improvement in the Planned Construc-tion Statement appended to the Bond. If the MasterAssociation has been given an extension in writing forthe completion of any such Improvement, the Board shallbe directed to consider and vote on the aforesaidquestion, if a Notice of Completion has not been filed,within thirty (30) days after the expiration of theextension.

(b) A special meeting of Delegates, for the purposeof voting to override a decision by the Board not toinitiate action to enforce the obligations under the Bondor on the failure of the Board to consider and vote onthe question, shall be held no fewer than thirty-five(35) days nor more than forty-five (45) days afterreceipt by the Board of a petition for such a meetingsigned by Delegates representing five percent (5%) ormore of the total voting power of the Master Association.A vote of a majority of the voting power of the MasterAssociation residing in Members other than Declarant totake action to enforce the obligations under the Bondshall be deemed to be the decision of the MasterAssociation, and the Board shall therefter implement thisdecision by initiating and pursuing appropriate action inthe name of the Master Association.

IN WITNESS WHEREOF, Declarant has executed this Declarantof Covenants, Conditions, Restrictions and Reservation ofEasements as of the date first above written.

TAYLOR WOODROW HOMES CALIFORNIALIMITED, a California corporation

56

STATE OF CALIFORNIA )) ss.

COUNTY OF ORANGE )

On September 1, , 19 87, before me, the undersigned, aNotary Public in and for said State, personally appearedGORDON TIPPELL, known to me to be the President, and CARSTENSCHNEPEL, known to me to be the Secretary of the corporationthat executed the within Instrument, known to me to be thepersons who executed the within Instrument on behalf of thecorporation therein named, and acknowledged to me that suchcorporation executed the within instrument pursuant to itsbylaws or a resolution of its board of directors.

WITNESS my hand and official seal.

Notary Public in and for saidCounty and State

57

EXHIBIT "A"

A parcel of land in the unincorporated territory of the County of

Orange, State of California, being a portion of Parcel 1 of Parcel Map

No. 83-117 as per map filed in Book 201, pages 11 through 14,

inclusive, of Parcel Maps in the Office of the County Recorder of said

County described as follows:

Beginning at a point on that certain curve in the Northeasterly

boundary of said Parcel 1, said curve shown on said map as being

concave Southerly, having a radius of 1850.00 feet, a central angle of

24°06'13" and a length of 778.27 feet, said point being distant

thereon Easterly along said certain curve through a central angle of

15°25'54", a length of 498.27 feet from the Westerly terminus thereof;

thence, along the boundary of said Parcel 1 through the following

courses: Westerly along said certain curve through a central angle of

15°25'54", a length of 498.27 feet, N.17°15'54"W. 100.00 feet,

N.32°47t00"W. 779.73 feet, S.54°49'0Q"W. 740.59 feet, S.68°28'00"'W.

1790.00 feet, South 200.00 feet, West 345.00 feet and S.45°5r00"W.

1256.06 feet to the most northerly corner of Tract No. 12675 as per

map filed in Book 572, pages 1 through 3, inclusive, of Miscellaneous

Maps in the Office of the County Recorder of said county; thence along

the boundary of said Tract No. 12675, through the following courses:

S.11°00'00"E. 251.11 feet, N.77°O5IOO"E. 301.64 feet, S.77°57'OO"E.

July 17, 1987Page 1 of 3W.0. 042-12086XH & A Legal No. 1522BFH

S.79°18'54"W. 109.71 feet, Westerly along a tangent 6746.00 foot

radius curve, concave Southerly, through a central angle of 3°56'53" a

length of 464.84 feet, S.18°38'00"W. 271.48 feet, S.84o28'00MW. 105.76

feet, Southwesterly along a 1100.00 foot radius curve, concave

Northwesterly, through a central angle of 42°01'45M a length of 806.90

feet, S.40°34lll"W., 655.95 feet, Southerly along a tangent 2000.00

foot radius curve, concave Easterly, through a central angle of

53°35<16" a length of 1870.57 feet, S.13°01'05"E. 571.47 feet,

Southerly along a tangent 1800.00 foot radius curve, concave Westerly,

through a central angle of 20o02'24", a length of 629.58 feet,

S.7°01'19"W. 408.71 feet, N.86°21' 15"E. 47.83 feet, N.7°01l19"E.

399.86 feet, Northerly along a 1847.00 foot radius curve, concave

Westerly, through a central angle of 13°53'27" a length of 447.79

feet, N.71°32'33"E. 279.64 feet, N.58°53'00*E, 460.11 feet,

N.42°42'19"E. 758.09 feet, N.60°31'53"E. 776.79 feet, N.53°55'01E.

756.86 feet, S.89°12'34"E. 624.73 feet, N.85°18'50"E. 1006.30 feet,

S.89o59'06"E. 245.00 feet, N.46°11'28"E, 1205.87 feet, N.8O13'39"W.

1081.17 feet and N.21°02'42"E. 1439.00 feet to the Southwesterly ter-

minus of that certain course in the Easterly boundary of Parcel A of

Lot Line Adjustment No. LL 85-19 as per Instrument No. 85-350781,

Official Records of said county; thence along said boundary

N.50°34'00"E. 359.72 feet and N.17°O3'OO"E. 827.95 feet to the Point

of Beginning.

July 17, 1987Page 3 of 3W.0. 042-12086XH i A Legal No. 1522BFH

148.00 feet, N.12°03t00"E., 100.00 feet, S.77°57'OO"E. 40.46 .feet,

Southeasterly along a tangent 17.00 foot radius curve, concave

Southwesterly, through a central angle of 88°33'07" a length of 26.27

feet, Southerly along a tangent reverse 578.00 foot radius curve, con-

cave Easterly, through a central angle of 8°55'33" a length of 90.04

feet, S.88°19'26"E., 56.00 feet, Northerly along a 522.00 foot radius

curve, concave Easterly through a central angle of 13°23'02H a length

of 121.93 feet, Easterly along a 386.00 foot radius curve, concave

Northerly, through a central angle of 39°15'35" a length of 264.49

feet, N.75O59'47"E. 191.03 feet, S.87°55'00"E., 142.30 feet,

Northeasterly along a 250.00 foot radius curve, concave Northwesterly

through a central angle of 62°10'00", a length of 271.25 feet,

N.5°25l00"E. 78.61 feet, S.84o06'36"E. 116.41 feet, S.53°55'00"E.

46.71 feet, S.66o48'00"E. 58.15 feet, S.78°20'00"E. 54.15 feet,

S.88°40'00"lE. 48.67 feet, N.41°25'00"E. 9.95 feet, S.12°50'00"E. 97.70

feet, S.17°21'45"E. 57.00 feet, Westerly along a 1807.00 foot radius

curve, concave Northerly, through a central angle of 8°48'25" a length

of 277.75 feet, S.81°26'40"W. 709.71 feet, S.8o23'20"E. 43.00 feet,

S.81°26'40"W. 200.00 feet, S.36°26'40"W. 24.04 feet, S.81°26'4O"W.

56.00 feet, S.8°33'20"E. 33.00 feet, S.81°26'40"W. 530.14 feet and

N.9°30'39"W. 46.87 feet to the Northeasterly terminus of that certain

course in the Northerly boundary of said Parcel 1 shown on said Parcel

Map No. 83-117 as "N.79°18'54"E., 109.71 feet"; thence, along the

boundary of said Parcel 1 through the following courses:

July 17, 1987Page 2 of 3W.0. 042-12086XH & A Legal No. 1522BFH