DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS

FOR

MORRISON RANCH

This Declaration of Covenants, Conditions, and Restrictions for Morrison Ranch (the "Declaration") is made this _____ day of ______________, 2002, by MBR Land II, L.L.P., an Arizona limited liability partnership, J & M Land And Investment Company Limited Partnership, an Arizona limited liability limited partnership and B & K Land And Investment Company, an Arizona limited partnership (collectively, the "Declarants")

INTRODUCTION

A. Morrison Ranch is a mixed use master planned development located in the Town of Gilbert, Arizona. The Declarants are the owners of fee title to the real property described on Exhibit A attached to this Declaration which is to be subjected to this Declaration.

B. By executing and recording this Declaration with the County Recorder of Maricopa County, Arizona, the Declarants intend to impose upon the Property mutually beneficial covenants, conditions, restrictions and easements to establish a flexible and reasonable procedure for the overall development, administration, maintenance, use and preservation of the Property. The Declarants intend for this Declaration to create equitable servitudes and covenants appurtenant to and running with the Property and which will be binding upon all future Owners of all or any portion of the Property and any other Person acquiring any right, title or interest in or to all of any portion of the Property.

C. The Declarants desire to provide for the creation of a nonprofit corporation under the laws of the State of Arizona to administer and maintain, repair and replace the Areas of Council Responsibility and to provide for the levying and collecting of Assessments and other charges by the Council for the purpose, among other things, of paying all costs and expenses incurred or to be incurred by the Council in connection with the maintenance, repair and replacement and administration of the Areas of Council Responsibility and the enforcement of the covenants, conditions and restrictions contained in this Declaration. The Council also may provide community services benefiting all or a portion of Morrison Ranch, promote compliance with the Council Documents through education and communications programs and develop and implement programs and services to encourage interaction and a sense of community among owners and residents of Morrison Ranch.

D. The Declarants also desire to provide for the creation of a nonprofit corporation under the laws of the State of Arizona which will have the authority to approve or disapprove the installation, construction or modification of any Improvement within Morrison Ranch.

ARTICLE 1

DEFINITIONS

Unless otherwise defined, the following words and phrases when used in this Declaration shall have the meanings set forth in this Article.

1.1 "Additional Property" means any real property, together with all Improvements situated thereon, within the boundaries of Morrison Ranch as shown on the Development Plan.

1.2 “Alleged Defect” means an alleged deficiency in the planning, design, engineering, grading, construction or development of the Council Common Area or any Lot or Parcel, or any Improvement constructed on the Council Common Area or a Lot or Parcel.

1.3 "Apartment" means a dwelling unit within an Apartment Project.

1.4 "Apartment Project" means a development consisting of one or more buildings containing dwelling units which are not intended for separate ownership and which are rented or offered for rent for residential occupancy.

1.5 "Areas of Council Responsibility" means: (a) all Council Common Area; and (b) all land, and the Improvements situated thereon, located within the boundaries of a Lot or Parcel or a public right-of-way which the Council is obligated to maintain, repair and replace pursuant to the terms of this Declaration, a Supplemental Declaration or other Recorded document executed by the Community Master Planner or the Council.

1.6 "Articles" means the Articles of Incorporation of the Council, as amended from time to time.

1.7 "Assessable Lot" means a Lot owned by a Person other than a Declarant or the Community Master Planner.

1.8 "Assessable Parcel" means a Parcel owned by a Person other than a Declarant or the Community Master Planner.

1.9 "Assessment" means a Regular Assessment, Special Assessment, Enforcement Assessment, Benefited Property Assessment or Initial Development Assessment.

1.10 "Assessment Lien" means the lien created and imposed by Article 6.

1.11 "Assessment Period" means the period set forth in Section 6.8.

1.12 "Benefited Property Assessment" means an assessment levied against less than all of the Lots and Parcels pursuant to Section 6.6.

1.13 "Benefited Property Assessment Area" means a portion of Morrison Ranch designated in a Supplemental Declaration as an area containing Limited Common Area or as an area in which the Council will provide Special Services.

1.14 "Benefited Property Expenses" means the actual or estimated expenses, including allocations to reserves, incurred or anticipated to be incurred by the Council for the maintenance, repair and replacement of Limited Common Area or to provide Special Services to the Owners, Lessees and Residents in a Benefited Property Assessment Area.

1.15 "Board" means the Board of Directors of the Council.

1.16 "Bylaws" means the Bylaws of the Council, as amended from time to time.

1.17 "Builder" means (a) any Person who purchases six or more Residential Lots for the purpose of resale in the ordinary course of such Person’s business, or (b) any Person engaged in the construction of commercial or industrial buildings on Lots or Parcels.

1.18 "Collection Costs" means all costs, fees, charges and expenditures including, without limitation, attorneys' fees (whether or not a legal action is filed), court costs, filing fees and recording fees incurred by the Council in collecting and/or enforcing payment of Assessments, monetary penalties, late fees, demand fees, interest or other amounts payable to the Council pursuant to this Declaration.

1.19 "Community Association" means any homeowners association, condominium association or similar association formed or organized pursuant to any Community Declaration.

1.20 "Community Association Common Area" means all real property, and all Improvements located thereon, owned or leased by a Community Association for the common use and benefit of the members of the Community Association.

1.21 "Community Declaration" means any Declaration of Covenants, Conditions and Restrictions, Condominium Declaration or similar instrument (other than this Declaration or a Supplemental Declaration) recorded against any part of Morrison Ranch.

1.22 "Community Master Planner" means Morrison Ranch, Inc., an Arizona corporation, or such other Person as may be designated as the Community Master Planner by the Declarants as provided in Section 2.7.

1.23 "Condominium Development" means a condominium within any part of Morrison Ranch established pursuant to the Arizona Condominium Act, A.R.S. § 33-1201, et seq.

1.24 "Condominium Unit" means a unit within a Condominium Development.

1.25 "Council" means the Morrison Ranch Community Council, an Arizona nonprofit corporation, and its successors and assigns.

1.26 "Council Common Area" means: (a) all land, together with the Improvements situated thereon, which is designated or identified on a Plat executed by the Declarant, the Community Master Planner or the Council or identified in a Supplemental Declaration or in any other Recorded instrument signed by the Declarant or the Council as property to be owned by the Council; and (b) all land, together with all Improvements situated thereon, which the Council at any time owns in fee or in which the Council has a leasehold interest for as long as the Council is the owner of the fee or leasehold interest, except that Council Common Area shall not include any Lot or Parcel the Council acquires by the foreclosure of the Assessment Lien or by any deed in lieu of foreclosure.

1.27 "Council Documents" means, collectively, this Declaration, the Articles, the Bylaws, the Council Rules, Morrison Ranch Guidelines and the Supplemental Declarations, all as amended from time to time.

1.28 "Council Expenses" means the actual and estimated expenses incurred or anticipated to be incurred by or on behalf of the Council including any allocations to reserves determined by the Board to be necessary and appropriate, and all other financial liabilities of the Council.

1.29 "Council Rules" means the rules adopted by the Board pursuant to Section 5.8.

1.30 "Declarant Control Period" means the period commencing upon the Recording of this Declaration and ending on the earlier of: (a) when none of the Declarants own any Lot or Parcel or any part of the Additional Property, or (b) when all of the Declarants have given written notice to the Council consenting to the termination of the Declarant Control Period as of a specified date.

1.31 "Declarants" means, collectively: (a) MBR Land II, L.L.P., an Arizona limited liability partnership, J & M Land And Investment Company, an Arizona limited liability limited partnership and B & K Land And Investment Company, an Arizona limited partnership; (b) any Person designated as a Declarant in a Declaration of Annexation executed and Recorded pursuant to Section 2.2 or in a Supplemental Declaration; and (c) any Person to whom any Declarant may expressly assign any or all of its rights under this Declaration by a Recorded instrument. Each of the Declarants shall be referred to in this Declaration as a "Declarant".

1.32 "Declaration" means this Declaration of Covenants, Conditions, and Restrictions for Morris Ranch, as amended from time to time.

1.33 "Design Review Board" means the Morrison Ranch Design Review Board, an Arizona nonprofit corporation, its successors and assigns.

1.34 "Development Plan" means the Development Plan for Morrison Ranch approved by the Common Council of the Town of Gilbert as Ordinance No. 1129, as amended by Ordinance No. 1232, and as it may be further amended from time to time.

1.35 "Eligible Votes" means the total number of votes allocated to Owners pursuant to Section 5.6.

1.36 "Enforcement Assessment" means an assessment levied pursuant to Section 6.5.

1.37 "First Mortgage" means any mortgage or deed of trust on a Lot or Parcel which has priority over all other mortgages and deeds of trust on the same Lot or Parcel.

1.38 "First Mortgagee" means the holder or beneficiary of any First Mortgage.

1.39 "Improvement" means: (a) any Residence, building, fence or wall; (b) any swimming pool, tennis court, basketball goal, backboard or apparatus or playground equipment; (c) any road, driveway or parking area; (d) any trees, plants, shrubs, grass or other landscaping improvements of any type and kind; (e) any statuary, fountain, artistic work, craft work, figurine or ornamentation of any type or kind; and (f) any other structure of any type, kind or nature.

1.40 "Initial Development Assessment" means an assessment levied by the Council pursuant to Section 6.7.

1.41 “Irrigation Water Delivery Authority” means the irrigation water delivery district, community facilities district, Town or other governmental of quasi-governmental body or entity that is responsible for the management and operation of the lakes and the delivery of irrigation water from the lakes to property within Morrison Ranch.

1.42 “Land Use Classification” means the Land Use Classification established for a Lot or Parcel by the Community Master Planner either in a Supplemental Declaration or pursuant to Section 6.2.

1.43 "Lessee" means the lessee or tenant under a lease, oral or written, of any Lot or Parcel including an assignee of the lessee’s or tenant’s interest under a lease.

1.44 "Limited Common Area" means real property, and the Improvements situated thereon, which are part of the Council Common Area and which are designated in a Supplemental Declaration as being for the sole or primary benefit of the Owners, Lessees and Residents of a particular part of Morrison Ranch. Limited Common Areas may include, without limitation, private streets, access gates, guardhouses, drainage or retention areas or landscape medians.

1.45 "Lot" means a parcel of land within Morrison Ranch, whether improved or unimproved, intended for independent ownership and use and designated as a “lot" on a Plat and any Residence, building, structure or other Improvements situated thereon.

1.46 "Maintenance" means care, inspection, maintenance, operation, repair, repainting, remodeling, restoration, improvement, renovation, alteration, replacement and reconstruction.

1.47 "Maintenance Standard" means the standard of Maintenance of Improvements situated on Lots or Parcels established from time to time by the Board or, in the absence of any standard established by the Board, the standard of Maintenance of Improvements situated on Lots or Parcels generally prevailing throughout Morrison Ranch.

1.48 "Morrison Ranch" means the real property described on Exhibit A attached to this Declaration, together with all Improvements located thereon, and any other part of the Additional Property, and all Improvements situated thereon, which is annexed and subjected to this Declaration pursuant to Section 2.2.

1.49 "Morrison Ranch Guidelines" means the procedures, standards and guidelines adopted by the Design Review Board pursuant to Section 3.10, as amended or supplemented from time to time.

1.50 "Owner" means the record owner, whether one or more Persons, of beneficial or equitable title (and legal title if the same has merged with the beneficial or equitable title) to the fee simple interest of a Lot or Parcel. Owner shall not include Persons having an interest in a Lot or Parcel merely as security for the performance of an obligation or a Lessee. In the case of a Lot or Parcel subject to a Recorded option, the optionor shall be deemed to be the Owner. Owner shall include a purchaser under a Recorded contract for the conveyance of real property subject to the provisions of A.R.S. § 33-741 et. seq. Owner shall not include a purchaser under a purchase contract and receipt, escrow instructions or similar executory contracts which are intended to control the rights and obligations of the parties to the executory contracts pending the closing of a sale or purchase transaction. In the case of Lots or Parcels subject to a deed of trust pursuant to Arizona Revised Statutes, Section 33-801, et seq., the Trustor shall be deemed to be the Owner. In the case of the Lots or Parcels the fee simple title to which is vested in a trustee pursuant to a subdivision trust agreement or similar agreement, the beneficiary of any such trust who is entitled to possession of the trust property shall be deemed to be the Owner.

1.51 "Parcel" means each separately owned contiguous area of real property within Morrison Ranch other than a Lot, Council Common Area, Limited Common Area or Community Association Common Area, except that for purposes of Article 3 only, the term “Parcel” shall include Community Association Common Area.

1.52 "Person" means a natural person, corporation, business trust, estate, trust, partnership, association, joint venture, limited liability company, government, governmental subdivision or agency, or other legal or commercial entity.

1.53 "Plat" means any subdivision plat or condominium plat recorded against all or any part of Morrison Ranch.

1.54 "Purchaser" means any Person (other than a Declarant or the Community Master Planner) who by means of a voluntary transfer becomes the Owner of a Lot or Parcel, except for: (a) a Person who purchases a Lot and then leases it to the Declarant for use as a model in connection with the sale or lease of other Lots; or (b) a Person who, in addition to purchasing a Lot or Parcel, is assigned any or all of the rights of one or more of the Declarants under this Declaration.

1.55 "Recording" means placing an instrument of public record in the office of the County Recorder of Maricopa County, Arizona, and Recorded means having been so placed of public record.

1.56 "Residence" means any building, or portion of a building, situated upon a Lot and designed and intended for independent ownership and for use and occupancy as a residence.

1.57 "Resident" means each person occupying or residing in any Residence.

1.58 "Special Assessment" means any assessment levied and assessed pursuant to Section 6.4.

1.59 "Special Services" means services designated in a Supplemental Declaration as being for the sole or primary benefit of the Owners, Lessees and Residents of a particular part of Morrison Ranch. Special Services may include, without limitation, guard services (including the maintenance of guard gates or guardhouses) and landscape maintenance services for landscaping situated on Lots and/or Parcels.

1.60 "Supplemental Declaration" means a Supplemental Declaration executed by the Community Master Planner and Recorded pursuant to Section 2.3.

1.61 “Town” means the Town of Gilbert, a municipal corporation.

1.62 "Visible From Neighboring Property" means, with respect to any given Improvement, that such Improvement is or would be visible to a natural person six feet tall, standing at ground level on any part of any Lot, Parcel, Council Common Area, Limited Common Area, Community Association Common Area or any public street within or adjacent to Morrison Ranch.

ARTICLE 2

PROPERTY AND PERSONS BOUND BY DECLARATION; ESTABLISHMENT OF DEVELOPMENT PLAN OF DEVELOPMENT

2.1 Purpose and Binding Effect.

Declarants are the record owners of fee title to Morrison Ranch. Declarants intend by this Declaration to impose upon Morrison Ranch covenants, conditions, restrictions and easements to create a general plan of development for Morrison Ranch and to provide a flexible and reasonable procedure for the administration, maintenance, preservation, use and enjoyment of Morrison Ranch. The Declarants declare that all of Morrison Ranch shall be held, sold, used and conveyed subject to the easements, restrictions, conditions and covenants set forth in this Declaration which are for the purpose of protecting the value, desirability and appearance of Morrison Ranch. Declarants further declare that all of easements, restrictions, conditions and covenants in this Declaration shall run with Morrison Ranch and shall be binding upon and inure to the benefit of the Declarants, the Community Master Planner and all Owners, Lessees and Residents and all other Persons having or acquiring any right, title or interest in Morrison Ranch or any part thereof, their heirs, successors, successors in title and assigns. Each Person who acquires any right, title or interest in the Property, or any part thereof, agrees to abide by all of the provisions of the Council Documents. This Declaration shall be binding upon and shall be for the benefit of and enforceable by the Council. Declarants make no warranties or representations, express or implied, as to the binding effect or enforceability of all or any portion of the Council Documents or as to the compliance of any of the provisions of the Council Documents with public laws, ordinances and regulations applicable thereto.

2.2 Annexation of Additional Property.

During the Declarant Control Period, the Community Master Planner shall have the right to annex and subject to this Declaration all or any portion of the Additional Property. The annexation of all or any portion of the Additional Property shall be effected by the Community Master Planner Recording a Declaration of Annexation setting forth the legal description of the Additional Property being annexed and stating that such portion of the Additional Property is annexed and subjected to this Declaration. If the portion of the Additional Property being annexed is not owned by the Community Master Planner, the Declaration of Annexation must be signed by the Owner of fee title to the portion of the Additional Property being annexed.

The Additional Property may be annexed as a whole, at one time or in one or more portions at different times, or it may never be annexed, and there are no limitations upon the order of annexation or the boundaries thereof. The property annexed by the Community Master Planner pursuant to this Section need not be contiguous with other property already subject to this Declaration, and the exercise of the right of annexation as to any portion of the Additional Property shall not bar the further exercise of the right of annexation as to any other portion of the Additional Property. The Community Master Planner makes no assurances as to which, if any, part of the Additional Property will be annexed.

After the termination of the Declarant Control Period, the Council may annex and subject all or any part of the Additional Property to this Declaration by executing and Recording a Declaration of Annexation containing the information required for a Declaration of Annexation Recorded by the Community Master Planner pursuant to this Section, provided the annexation is approved by Owners holding at least two-thirds (2/3) of the Eligible Votes and the Declaration of Annexation is signed by the owners of fee title to the portion of the Additional Property being annexed.

2.3 Supplemental Declarations.

The Community Master Planner shall have the right to record one or more Supplemental Declarations for various parts of Morrison Ranch. If the property covered by the Supplemental Declaration is not owned by the Community Master Planner, then the Supplemental Declaration must also be signed by the owners of fee title to the property covered by the Supplemental Declaration. A Supplemental Declaration may (a) establish the Land Use Classification for the Lots or Parcels covered by the Supplemental Declaration for purposes of determining the Assessment Units to be allocated to the Lots or Parcels pursuant to Section 6.2; (b) designate Council Common Areas or other Areas of Council Responsibility, (c) impose such covenants, conditions, restrictions and easements as the Community Master Planner deems appropriate for the property to be covered by the Supplemental Declaration, and (d) designate Benefited Property Assessment Areas, Limited Common Area and Special Services. If a Supplemental Declaration designates any Limited Common Areas or Special Services, the Supplemental Declaration shall also designate the Benefited Property Assessment Areas containing the Lots and Parcels which will be subject to a Benefited Property Assessment. During the Declarant Control Period, a Supplemental Declaration may be amended unilaterally by the Community Master Planner. After the termination of the Declarant Control Period, a Supplemental Declaration may be amended by the affirmative vote of Owners holding at least two-thirds (2/3) of the Eligible Votes held by Owners of all Lots and Parcels subject to the Supplemental Declaration or such greater percentage of Eligible Votes as may be required by Supplemental Declaration, provided the amendment to the Supplemental Declaration is approved by the Council and the Council's approval is set forth on the amendment. If an amendment to a Supplemental Declaration adds, deletes or changes any Limited Common Areas or Special Services or any Benefited Property Assessment Areas, then such amendment must also be approved by at least two-thirds (2/3) of the Eligible Votes held by Owners of Lots and Parcels affected thereby or by such greater percentage of Eligible Votes as may be required by the Supplemental Declaration.

2.4 Withdrawal of Property.

During the Declarant Control Period, the Community Master Planner shall have the right to withdraw property from Morrison Ranch and this Declaration without the consent of any other Owner or Person. The withdrawal of all or any portion of Morrison Ranch and this Declaration shall be effected by the Community Master Planner Recording a Declaration of Withdrawal setting forth the legal description of the property being withdrawn. If the Community Master Planner does not own the property to be withdrawn, then the Declaration of Withdrawal must be signed by the owners of fee title to the property to be withdrawn. Upon the withdrawal of any property from Morrison Ranch pursuant to this Section, such property shall no longer be subject to any of the covenants, conditions and restrictions set forth in this Declaration or in any other Council Document.

2.5 Disclaimer of Implied Covenants.

Nothing contained in this Declaration and nothing which may be represented to a purchaser by real estate brokers or salesmen shall be deemed to create any implied covenants, servitudes or restrictions with respect to the use of any property subject to this Declaration or any part of the Additional Property.

2.6 Development Plan.

Notwithstanding any other provision of this Declaration to the contrary, the Community Master Planner or a Declarant, with the approval of the Town but without obtaining the consent of any other Owner or Person, shall have the right to make changes or modifications to the Development Plan with respect to any property owned by such Declarant in any way which such Declarant desires including, but not limited to, changing the density of all or any portion of the property owned by such Declarant or changing the nature or extent of the uses to which the property may be devoted.

2.7 Designation of Successor Community Master Planner.

The Declarants may appoint a Person other than Morrison Ranch, Inc. to exercise the rights, powers and privileges of the Community Master Planner under this Declaration and to perform the obligations of the Community Master Planner under this Declaration by executing and Recording a Designation of Successor Community Master Planner. Any Designation of Successor Community Master Planner must be signed by all of the Declarants who at the time of such Designation of Successor Community Master Planner own any Lot or Parcel.

2.8 Further Subdivision, Property Restrictions, Rezoning and Timeshares.

Without the prior written approval of the Community Master Planner and the Council, no Owner other than a Declarant shall do any of the following: (a) further subdivide a Lot or Parcel or separate a Lot or Parcel into smaller lots or parcels; (b) convey or transfer less than all of a Lot or Parcel; or (c) replat a Lot or Parcel or combine a Lot or Parcel with other Lots or Parcels. No further covenants, conditions, restrictions or easements shall be recorded by any Owner, Lessee or other Person other than a Declarant against any Lot or Parcel without the provisions thereof having been first approved in writing by the Community Master Planner and the Council. No application for zoning, variances or use permits pertaining to any Lot or Parcel shall be filed with any governmental authority by any Person other than a Declarant unless the application has been approved by the Community Master Planner and the Council and the proposed use otherwise complies with this Declaration. No Lot or Parcel shall be subjected to or used for any timesharing, cooperative, weekly, monthly or any other type of revolving or periodic occupancy by multiple owners, cooperators, licensees or timesharing participants without the prior written approval of the Community Master Planner and the Council. In addition to other reasons the Council or the Community Master Planner may have for disapproving a subdivision plat for a Parcel, the Council and the Community Master Planner may disapprove a subdivision plat for a Parcel if the Council or the Community Master Planner determines that the dedication on the subdivision plat is insufficient to insure that ownership of all irrigation system improvements to be installed within the subdivision are or will be dedicated to the public or to the Irrigation Water Delivery Authority either upon the recording of the subdivision plat or at a later date.

2.9 Airport Proximity Disclosure.

The Williams Gateway Airport is located within the vicinity of Morrison Ranch. Aircraft using the Williams Gateway Airport may fly over portions of Morrison Ranch. All Owners and Residents are advised that the flight of aircraft over Morrison Ranch is likely to cause aircraft noise that may be of concern to Owners, Residents and other Persons. Further information concerning the operation of Williams Gateway Airport and the effect that the operation of Williams Gateway Airport may have upon Morrison Ranch and the Owners and Residents thereof may be obtained by contacting Williams Gateway Airport.

2.10 Irrigation Water Delivery Authority.

The current Development Plan contemplates that three interconnected lakes will be constructed within Morrison Ranch to provide irrigation water to the Council and to the Owners, Residents and Lessees of Lots and Parcels within Morrison Ranch. The lake beds will be owned by the Council, and the water in the lakes will be owned and managed by the Irrigation Water Delivery Authority. The Council may enter into such agreements with the Irrigation Water Delivery Authority as the Council deems necessary or desirable with respect to the management and operation of the lakes. Water for the lakes will come from reclaimed water obtained by the Irrigation Water Delivery Authority from the Town. The Irrigation Water Delivery Authority will own the water within the lakes and all pipes, canals, ditches, connections, meters, pumps, lines and equipment necessary to deliver irrigation water from the lakes to property within Morrison Ranch. Neither the Council, the Declarants nor the Community Master Planner shall be responsible for or have any liability for the operation or management of the lakes or the water delivery system of the Irrigation Water Delivery Authority. In addition, neither the Council, the Declarants nor the Community Master Planner shall have any control over or liability or responsibility for, the filling of the lakes or the water level maintained in the lakes. Neither the Declarants, the Council nor the Community Master Planner make any representations or warranties with respect to when the lakes will be initially filled with water or what water level will be maintained in the lakes by the Irrigation Water Delivery Authority. The initial development of infrastructure improvements in each Parcel shall include the construction and installation of pipes, canals, ditches, pumps and equipment necessary to allow for the delivery of irrigation water by the Irrigation Water Delivery Authority. At the request of the Irrigation Water Delivery Authority or the Community Master Planner, all such pipes, canals, ditches, connections, meters, pumps and equipment shall be conveyed or dedicated to the Irrigation Water Delivery Authority.

ARTICLE 3

ARCHITECTURAL CONTROL

3.1 Approval Required.

As used in this Article 3, "Construction" means any devegetation, excavation or grading work or the construction, erection or installation of an Improvement on a Lot or Parcel, and "Modification" means an addition, alteration, repair, change or other work which in any way alters the exterior appearance of any Improvement located on a Lot or Parcel. No Construction or Modification shall be made or done without the prior written approval of the Design Review Board.

Any Owner desiring approval of the Design Review Board for any Construction or Modification shall submit to the Design Review Board a written request for approval specifying in detail the nature and extent of the Construction or Modification which the Owner desires to perform. The request for approval must be accompanied by plans or specifications showing the nature, kind, color, shape, height, materials and location of the Improvements and such other information as may be required by the Morrison Ranch Guidelines. Any Owner requesting the approval of the Design Review Board shall also submit to the Design Review Board any additional information, plans and specifications which the Design Review Board may request.

In the event that the Design Review Board fails to approve or disapprove a complete application for approval within forty-five (45) days after the application, together with any fee payable pursuant to Section 3.6 and all supporting information, plans and specifications requested by the Design Review Board have been submitted to the Design Review Board, approval will not be required and this Section will be deemed to have been complied with by the Owner who requested approval of such plans. The approval by the Design Review Board of any Construction or Modification shall not be deemed a waiver of the Design Review Board's right to withhold approval of any similar Construction or Modification subsequently submitted for approval.

Any approval by the Community Master Planner for any Construction or Modification granted prior to the incorporation of the Design Review Board shall be binding on the Design Review Board and shall constitute approval of the Construction or Modification for purposes of this Article 3. Notwithstanding any other provision of the Council Documents to the contrary, after the termination of the Declarant Control Period, the provisions of this Article 3 shall not apply to any Lots or Parcels having a Land Use Classification of Commercial Use or Apartment Development Use.

3.2 Review of Plans.

In reviewing plans and specifications for any Construction or Modification, the Design Review Board may consider any and all factors which the Design Review Board, in its sole and absolute discretion, determines to be relevant including, but not limited to: (a) the harmony of the proposed Improvements with existing Improvements in Morrison Ranch or with Improvements previously approved by the Design Review Board but not yet constructed; (b) the location of the proposed Improvements in relation to existing topography, finished grade elevations, roads, Council Common Area and other structures; (c) the exterior design, finish materials and color of the proposed Improvements; and (d) compliance of the proposed Improvements with this Declaration and the Morrison Ranch Guidelines. The Design Review Board may disapprove plans and specifications for any Construction or Modification even though the plans and specifications may be in substantial compliance with this Declaration and the Morrison Ranch Guidelines if the Design Review Board, in its reasonable discretion, determines that the proposed Construction or Modification, or some aspect or portion thereof, is undesirable or unattractive.

Decisions of the Design Review Board may be based on purely aesthetic considerations. Each Owner acknowledges that determinations as to such matters are purely subjective and opinions may vary as to the desirability and attractiveness of certain Improvements. Each Owner agrees that the decision of the Design Review Board shall be final on all matters submitted to it pursuant to this Declaration.

The provisions of this Article do not apply to, and approval of the Design Review Board shall not be required for, the Construction or Modification of any Improvements or any other work made by, or on behalf of, a Declarant or the Community Master Planner. The approval required of the Design Review Board pursuant to this Article 3 shall be in addition to, and not in lieu of, any approvals or permits which may be required under any federal, state or local law, statute, ordinance, rule or regulation.

The Design Review Board may exempt certain Construction or Modifications from the application and approval requirements of this Article, provided such Construction or Modifications are undertaken in strict compliance with the requirements of such exemption. No approval shall be required to repaint the exterior of a structure in accordance with the originally approved color scheme or to rebuild in accordance with originally approved plans and specifications. Any Owner may remodel, paint or redecorate the interior of a Residence or other building without approval so long as such activity does not affect the exterior appearance of the Residence.

3.3 Variances.

The Design Review Board may grant variances from compliance with any provision of the Morrison Ranch Guidelines in circumstances where the design meets the intent of the provision sought to be varied and where granting of the variance would enhance design innovation and excellence, or when circumstances such as topography, natural obstructions, economic or procedural hardship, or aesthetic or environmental considerations so require, and the Design Review Board determines, in its reasonable discretion, that the objective of the particular requirement can still be achieved. No variance approved by the Design Review Board shall be effective until the variance is set forth in a written document signed by or on behalf of the Design Review Board. No variance shall amend or modify any provision of this Declaration or estop the Design Review Board from denying a variance in other circumstances. For purpose of this Section, the inability to obtain approval of any governmental agency, issuance of any permit, or the terms of any financing shall not constitute economic or procedural hardships.

3.4 Construction of Improvements.

Upon receipt of approval from the Design Review Board for any Construction or Modification, the Owner who had requested such approval shall proceed with the Construction or Modification approved by the Design Review Board as soon as practicable and shall diligently pursue such Construction or Modification so that it is completed as soon as reasonably practicable and within such time as may be prescribed by the Design Review Board.

3.5 No Changes Without Approval.

Any Construction or Modification approved by the Design Review Board must be done or performed in accordance with the plans and specifications approved by the Design Review Board. No change, deletion or addition to the plans and specifications approved by the Design Review Board may be made without the prior written approval of the Design Review Board.

3.6 Review Fee.

The Design Review Board shall have the right to charge the a fee for reviewing requests for approval of any Construction or Modification, which fee shall be payable by the Owner at the time the application for approval is submitted to the Design Review Board. The fee charged by the Design Review Board may include the actual or estimated fees or costs incurred or anticipated to be incurred by the Design Review Board in consulting with, or having the application reviewed by, architects, engineers or other professionals and an amount to be used by the Design Review Board to enforce the provisions of this Article 3. The Design Review Board may retain architects, engineers or other persons as deemed necessary to review applications.

3.7 New Construction.

All Improvements constructed on Lots or Parcels shall be of new construction, and no buildings or other structures shall be removed from other locations onto any Lot or Parcel.

3.8 No Warranty; Limitation of Liability.

The approval by the Design Review Board of any Construction or Modification shall not be deemed a warranty or representation by the Design Review Board as to the quality of such Construction or Modification or that such Construction or Modification conforms to any applicable building codes or other federal, state or local law, statute, ordinance, rule or regulation. The Design Review Board shall not be liable or bear any responsibility for (a) ensuring the structural integrity, quality, soundness or workmanship of any Construction or Modification approved by the Design Review Board, (b) ensuring compliance with building codes or other governmental requirements or (c) ensuring that all Improvements are of comparable quality, value, size or similar design.

3.9 Improvements to Areas of Council Responsibility.

If plans and specifications submitted to the Design Review Board pertain to an Improvement which is within an Area of Council Responsibility so that the Council is responsible for the maintenance, repair and replacement of such Improvement, the Design Review Board may condition its approval of the plans and specifications for the proposed Construction or Modification with respect to the Improvement on the agreement of the Owner to reimburse the Council for the future cost of the repair, maintenance or replacement of such Improvement.

3.10 Morrison Ranch Guidelines.

The Design Review Board may adopt, amend and repeal architectural guidelines, standards and procedures to be used in rendering its decisions. The Morrison Ranch Guidelines may include, without limitation, provisions regarding: (a) the size and height of Residences, buildings or other improvements; (b) architectural design, with particular regard to the harmony of the design with the surrounding structures and typography; (c) placement of Residences and other buildings including establishing building envelopes; (d) landscaping design, content and conformance with the character of Morrison Ranch and permitted and prohibited plants; (e) requirements concerning exterior color schemes, exterior finishes and materials; (f) signage; (g) perimeter and screen wall design and appearance; (h) time periods for commencement and completion of any approved construction or modification; and (i) rules and regulations governing construction activities; and (j) standards and procedures for submissions and approval of plans.

The Design Review Board may establish one or more subcommittees consisting of one or more members of the Design Review Board and may delegate to such subcommittee or subcommittees the authority and power of the Design Review Board to approve or disapprove any Construction or Modification within a specified portion of Morrison Ranch. The Design Review Board may also delegate to a Community Association the authority to review and approve or disapprove any Construction or Modification within the property subject to the jurisdiction of the Community Association. Any delegation by the Design Review Board of its authority or power under this Article 3 shall be subject to such conditions and limitations as may be imposed by the Design Review Board and may be revoked at any time by the Design Review Board by written notice to the Person to whom the power or authority had been delegated.

3.11 Security Deposit.

The Design Review Board shall have the right, on a case-by-case basis in its sole discretion, to condition the approval by the Design Review Board of plans submitted by an Owner, upon the receipt by Design Review Board of a deposit (the “Security Deposit”) to secure the performance of such Owner’s obligations as provided in Section 7.7 to clean up and/or remove equipment, building materials, dirt, debris and similar materials, and to protect from damage and repair any damage to improvements sustained, in connection with construction activities by or for the benefit of Owner. The Security Deposit shall be in such amount as may reasonably be determined by the Design Review Board, and shall be delivered to and held by the Design Review Board. The Design Review Board may apply the Security Deposit toward payment of any costs incurred by the Design Review Board or the Council or any Community Association with respect to any construction cleanup or removal required and/or the repair or replacement of any damaged or destroyed improvements, the cost for which Owner is responsible pursuant to Section 7.7. Promptly following receipt by the Design Review Board of a written request from an Owner delivered subsequent to the completion of Owner’s construction within Morrison Ranch, and following confirmation by the Design Review Board that any necessary cleanup work or damages attributable to the Owner or Owner’s Agents (as defined in Section 7.7) has been properly performed, repaired or replaced, as applicable, and that all costs attributable to Owner in connection therewith have been paid in full, the Design Review Board shall return to such Owner the portion of the Owner’s Security Deposit not applied against any necessary cleanup, repairs or replacements. The liability of an Owner to promptly cleanup such Owner’s Lot or Parcel and any surrounding area of Morrison Ranch and to repair or replace any improvements damaged or destroyed by Owner or Owner’s Agents (as defined in Section 7.7) shall not be limited to the amount of such Owner’s Security Deposit, and in no event shall the posting of a Security Deposit limit or prejudice the right of the Design Review Board, the Council or any Community Association to pursue any available legal remedies against the Owner or any of Owner’s Agents causing the need for cleanup or causing the damage or destruction.

ARTICLE 4

EASEMENTS AND DEVELOPMENT RIGHTS

4.1 Easements for Use of Common Area.

Every Owner, Lessee and Resident and their guests shall have a right and easement of enjoyment in and to the Council Common Area, which right shall be appurtenant to and shall pass with the title to every Lot or Parcel, subject to:

(a) The right of the Council, subject to Section 5.11, to dedicate, convey, transfer, lease or encumber the Council Common Area; provided, however, that if access to a Lot or Parcel is over any part of the Council Common Area, any conveyance, lease or encumbrance of such Council Common Area shall be subject to an easement for ingress and egress in favor of the Owner and Residents of the Lot or Parcel and their guests and invitees.

(b) The right of the Board to adopt rules, regulations or policies regulating the use of the Council Common Area including rules, regulations and policies limiting the number of guests who may use the Council Common Area and restricting or prohibiting access to such portions of the Council Common Area (such as landscaped areas) not intended for use by the Owners, Lessees or Residents.

(c) The right of the Council to suspend the right of an Owner and such Owner's family, tenants and guests to use the Council Common Area (other than the right of an Owner and such Owner's family, tenants and guests to use any streets which are part of the Common Area for ingress or egress to the Owner's Lot or Parcel) if such Owner is more than fifteen (15) days delinquent in the payment of Assessments or other amounts due to the Council or if the Owner has violated any other provisions of the Council Documents and has failed to cure such violation within fifteen (15) days after the Council notifies the Owner of the violation.

(d) The rights and easements reserved by or granted to the Declarants or the Community Master Planner by this Declaration.

(e) The right of the Council to rent or lease any portion of the Council Common Area on a short-term basis to an Owner or Resident for the exclusive use of such Owner or Residents and their guests and invitees.

(f) The right of the Council to charge reasonable admission or other fees for the use of any recreational facility or amenity situated on the Council Common Area.

(g) The right of the Council to permit the use of any recreational facility or amenity situated on the Council Common Area by persons other than Owners or Residents and their guests upon payment of such fees as may be established by the Board.

(h) The rights and easements, if any, reserved or granted to the Declarants, the Community Master Planner, a Builder or any other Person in the deed conveying the Council Common Area to the Council.

The right of easement and enjoyment of the Council Common Area may not be transferred or assigned except upon the conveyance or transfer of the Lot or Parcel to which such right is appurtenant.

4.2 Utility and Development Easements.

A non-exclusive, perpetual blanket easement is hereby granted over, under and through the Council Common Area and any public utility easements shown on any Plat executed by a Declarant or approved by the Community Master Planner for the purpose of: (a) installing, constructing, operating, maintaining, repairing or replacing equipment used to provide to any portion of Morrison Ranch or adjacent land any utilities (including, without limitation, water, sewer, drainage, gas, electricity, telephone, digital and other data transmission service and television service), whether public or private; and (b) ingress and egress to install, construct, operate, maintain, repair and replace such equipment and (c) storm water management and storm water drainage, as necessary or desirable for the orderly development of the Morrison Ranch. Such easement is hereby granted to any Person providing the aforesaid utilities or installing, constructing, maintaining, repairing or replacing equipment related thereto. Any pipes, conduits, lines, wires, transformers and any other apparatus necessary for the provision or metering of any utility may be installed or relocated only where permitted by the Community Master Planner, where contemplated on any site plan approved by the Community Master Planner or where approved by resolution of the Board. Equipment used to provide or meter such utilities or services may be installed above ground during periods of construction if approved by the Community Master Planner. The Person providing a service or installing a utility pursuant to this easement shall install, construct, maintain, repair or replace the equipment used to provide or meter the utility as promptly and expeditiously as possible, and shall restore the surface of the land and the surrounding vegetation and improvements to their original condition as soon as possible.

If the Person installing the utility or providing a service requests a specific easement by separate recordable documents, then during the Period of Declarant Control, the Community Master Planner and thereafter, the Council shall have the power to record a document locating such easements.

4.3 Rights and Easements to Facilitate Development.

Each Declarant hereby reserves to itself and its successors and assigns and grants to the Community Master Planner a non-exclusive blanket easement over and through Morrison Ranch for all purposes reasonably related to the development and completion of Improvements on Morrison Ranch, including without limitation: (a) easements for the temporary storage of supplies of building materials and equipment necessary to complete Improvements; and (b) easements for the construction, installation and Maintenance of such Improvements as a Declarant or the Community Master Planner determines, in its reasonable discretion, to be necessary or desirable.

Each Declarant hereby reserves to itself, its successors and assigns and grants to the Community Master Planner the right to: (a) use any Lots or Parcels owned or leased by a Declarant or the Community Master Planner, any other Lot or Parcel with written consent of the Owner thereof or any portion of the Council Common Area as models, management offices, sales offices, a visitors’ center, construction offices, customer service offices or sales office parking areas; and (b) install and maintain on the Council Common Area, any Lot or Parcel owned or leased by a Declarant or the Community Master Planner or any other Lot or Parcel with the consent of the Owner thereof, such marketing or promotional flags and flag poles and such marketing, promotional, identification, direction or other signs which a Declarant or the Community Master Planner deems necessary for the development, sale or lease of Morrison Ranch. The Declarants hereby grant to the Community Master Planner the right to grant and reserve easements, rights-of-way and licenses over and through the Council Common Area for the purposes set forth in this Section or for any other purpose necessary or desirable for the orderly development of the Property. A Declarant or the Community Master Planner may make any dedications and grant any easements, rights-of-way and licenses required by any government or governmental agency over and through all or any portion of the Council Common Area.

Any and all conveyances made to the Council or any Owner shall be conclusively deemed to incorporate these reservations of rights and easements, whether or not set forth in such grants. The easements granted and reservations made to the Declarants and the Community Master Planner in this Declaration shall not terminate or merge and shall continue to run with the land, notwithstanding the common law doctrine of merger and the common ownership of all of Morrison Ranch by a Declarant or the Community Master Planner. Upon written request of a Declarant, the Council and each Owner shall from time to time sign, acknowledge and deliver to such Declarant such further assurances of these reservations of rights and easements as may be requested.

In the event of any conflict or inconsistency between this Section and any other provision of the Council Documents, this Section shall prevail.

4.4 Easement for Maintenance and Enforcement.

The Council and its directors, officers, agents, contractors and employees, the Design Review Board and any other Persons authorized by the Board are hereby granted the right of access over and through any Lots (excluding the interior of any Residence) and Parcels, for: (a) the exercise and discharge of their respective powers and responsibilities under the Council Documents; (b) making inspections in order to verify that all Improvements on the Lot or Parcel have been constructed in accordance with the plans and specifications for such Improvements approved by the Design Review Board and that all Improvements are being properly maintained as required by the Council Documents; (c) correcting any condition originating in a Lot or Parcel or in any Council Common Area threatening another Lot or Parcel, the Council Common Area or any Community Association Common Area; (d) performing installations or Maintenance of utilities, landscaping or other Improvements located on Areas of Council Responsibility situated within the boundaries of the Lots or Parcels; or (e) correcting any condition which violates the Council Documents.

4.5 Easements for Encroachments.

If any Improvements on any Lot or Parcel or portion of the Council Common Area or Community Association Common Area now or hereafter encroach on any other property by reason of: (a) the original construction thereof; (b) deviations within normal construction tolerances in the Maintenance of any Improvement; or (c) the settling or shifting of any land or Improvement, an easement is hereby granted to the extent of any such encroachment for the period of time the encroachment exists. The Owner of the encroaching Improvement shall also have an easement for the limited purpose of Maintenance of the encroaching Improvement. This easement does not relieve any Owner or any other Person from liability for such Owner’s or other Person’s negligence or willful misconduct.

4.6 Rights of Builders.

Notwithstanding any other provision of this Declaration to the contrary, a Builder shall have the right to maintain model homes and sales offices on Lots or Parcels owned or leased by the Builder and to construct and maintain parking areas for the purpose of accommodating persons visiting such model homes and sales offices provided: (a) the plans and specifications for the model homes and sales offices, and related landscaping, have been approved in writing by the Design Review Board; (b) the location and design of the parking areas incidental to such model homes and sales offices has been approved in writing by the Design Review Board; (c) the opening and closing hours for such model homes and sales offices have been approved in writing by the Design Review Board; and (d) the construction, operation and maintenance of such model homes and sales offices otherwise complies with all provisions of this Declaration. Any home constructed as a model home shall cease to be used as a model home and any sales office shall cease to be used as a sales office at any time the Builder is not actually engaged in the construction and sale of Lots. Notwithstanding any other provision of this Declaration to the contrary, a Builder may store supplies of brick, block, lumber and other building materials on a Lot or Parcel owned or leased by a Builder during the course of construction of Improvements on Lots or Parcels provided such materials are kept in areas approved in writing by the Design Review Board which may require the screening of such storage areas. Normal construction activities of the Builder in connection with the construction of Improvements shall not be considered a nuisance or otherwise prohibited by this Declaration. A Builder constructing Improvements on Lots or Parcels shall keep the Lots and Parcels in a clean, safe and neat condition free of weeds, trash and debris throughout the construction process.

4.7 Irrigation Water Delivery Authority Easement.

A non-exclusive, perpetual blanket easement is hereby granted to the Irrigation Water Delivery Authority over, under and across all Lots and Parcels for the purpose of installing, constructing, operating, maintaining, repairing and replacing all pipes, canals, ditches, pumps and equipment for or related to the delivery of irrigation water. If the Irrigation Water Delivery Authority damages or disturbs any Lot or Parcel in the exercise of its easement rights under this Section 4.7, the Irrigation Water Delivery Authority shall promptly restore the damaged and disturbed land and improvements to their prior condition. Within fifteen (15) days after being requested to do so by the Irrigation Water Delivery Authority, an Owner of a Lot or Parcel shall execute and deliver to the Irrigation Water Delivery Authority a specific easement for the portion of the Owner’s Lot or Parcel on or under which pipes, ditches, canals, pumps, connections, meters or equipment for or related to the delivery of irrigation water has been constructed or installed.

ARTICLE 5

THE COUNCIL

5.1 Formation and Powers of the Council.

The Council shall be an Arizona nonprofit corporation. The Council shall have all of the common law and statutory powers conferred upon nonprofit corporations under Arizona law and all powers necessary or desirable to perform the Council's duties and obligations, to exercise the rights and powers of the Council set forth in the Council Documents and to foster and promote the common good and general welfare of Morrison Ranch and the Owners, Residents and Lessees. The Council shall not have any members. The Council shall be managed by a Board of Directors. Until the termination of the Declarant Control Period, the Community Master Planner shall have the right to appoint and remove the members of the Board. After the termination of the Declarant Control Period, the members of the Board shall be elected by the Owners in accordance with the Articles and Bylaws.

The Council may create profit or nonprofit subsidiaries which may be tax exempt organizations and delegate to such subsidiaries portions of the powers and authority of the Council under the Council Documents. The Council may engage in activities to benefit persons other than Owners, Lessees and Residents and may operate, manage and maintain property not owned by the Council (including, without limitation, property dedicated to public use) if the Council determines in its discretion that such action confers some benefit upon Morrison Ranch.

5.2 Authorized Community Activities, Services and Programs.

In order for the Council to fulfill its mission and carry out its responsibilities and duties, the Council may organize, fund and administer community-building activities, services and programs as the Council deems necessary, desirable or appropriate. Examples of such activities, services and programs include, but are not limited to, the following:

(a) Operation and management of the Areas of Council Responsibility;

(b) Primary and adult education programs;

(d) Activities designed to promote compliance with the Council Documents through education and communication;

(e) Public relations activities on behalf of Morrison Ranch;

(f) Cultural, arts, environmental and wellness programs;

(g) Community service activities for the benefit of Residents and Owners of Morrison Ranch and the surrounding community;

(h) Community internet and intranet sites;

(i) Charter clubs and other volunteer organizations and activities;

(j) Other services, activities and programs which advance the Council's mission to enhance the sense of community in Morrison Ranch.

Nothing in this Section shall be construed as a representation by the Community Master Planner, any Declarant or the Council as to what, if any, activities, services and programs will be provided by the Council. In addition, the Council may modify or cancel existing activities, services and programs in its discretion. Nonuse of any activities, services or programs offered by the Council shall not exempt any Owner from the obligation to pay Assessments.

5.3 Relationship with Other Entities.

The Council may enter into cooperative agreements and expend funds for facilities used, shared services, development of projects and activities and procedures which benefit Morrison Ranch and the surrounding community. The Council may provide, or provide for, such services and facilities for all of the Owners, Lessees and Residents and their Lots and Parcels, and the Council is authorized to enter into and terminate contracts or agreements with other entities, including the Community Master Planner or its affiliate, to provide such services and facilities. The Council may charge use or service fees for any such services and facilities provided, but may also include all or a portion of the cost thereof in the Council's budget as a Council Expense and assess it as part of the Regular Assessment if the services and facilities are provided to all Lots and Parcels or may also include all or a portion of the cost thereof in a Benefited Property Assessment if the services and facilities are provided to less than all of the Lots and Parcels.

In any contracts or agreements with third parties for the provision of services within Morrison Ranch, the Council may assign to the service provider the right to bill Owners directly and to pursue all legal or equitable remedies otherwise available to the Council for the collection of such bills. Any charge billed directly to an Owner in accordance with such a contract between the Council and the service provider shall be a charge and continuing lien in favor of the service provider against each Owner's Lot or Parcel, enforceable by the service provider or the Council in the same manner as enforcement of the Assessment Lien by the Council under Article 6.

Nothing in this Section shall be construed as a representation by the Community Master Planner, any Declarant or the Council as to what, if any, services will be provided. In addition, the Council may modify or cancel existing contracts for services in its discretion. Nonuse of services provided to Owners or Residents shall not exempt any Owner from the obligation to pay Assessments.

The Community Master Planner or the Council may create, and enter into agreements or contracts with, or grant exclusive and/or non-exclusive easements over the Areas of Council Responsibility to nonprofit, tax exempt organizations, the operation of which confers some benefit upon Morrison Ranch. The Council may contribute money, real or personal property or services to such entities, so long as such contributions benefit, if determined in the Council's sole discretion, its Owners, Residents and Lessees or the surrounding community. Any such contribution shall be a Council Expense. A "tax exempt organization" shall mean an entity which is exempt from federal income taxes under the Internal Revenue Code (including, without limitation, Sections 501(c)(3) or 501(c)(4), as amended from time to time).

The Council Common Area is private property and, in general, is not available for use by Persons other than Owners, Residents and Lessees. However, in the Council's discretion and pursuant to such rules and regulations as the Council may adopt, the Council may provide services to or permit use of Council Common Area by third parties, including the general public. The Council may, but is not required, to charge and collect use or consumption fees from such third parties. Such services and fees may vary among parties to whom the Council grants the right to use the Council facilities and services.

5.4 Oversight of Community Associations.

The Council shall have oversight of authority over any action taken or proposed by a Community Association and may, in its discretion, veto any action or decision of a Community Association determined to be contrary to the general scheme of development for Morrison Ranch. In addition, the Council shall have the power to take action against, or require that specific action be taken by, a Community Association, and to enforce the terms of any Community Declaration. Such actions may include requiring specific maintenance or repairs to Community Association Common Area. With respect to portions of Morrison Ranch not subject to a Community Declaration, the Council shall have the right to enforce the Council Documents and any of the covenants, conditions and restrictions recorded against such property.

5.5 Relationship to Design Review Board.

The Design Review Board will be a separate nonprofit corporation formed under the laws of the State of Arizona. The Design Review Board shall have no members. The affairs and operations of the Design Review Board will be conducted by a Board of Directors appointed or elected in accordance with the Articles of Incorporation and Bylaws of the Design Review Board. During the Declarant Control Period, the Community Master Planner shall appoint and remove the members of the Board of Directors of the Design Review Board. After the termination the Declarant Control Period, the Board of Directors of the Design Review Board shall be appointed and removed by the Board. If requested to do so by the Design Review Board, the Council shall transfer to the Design Review Board such funds as may be requested by the Design Review Board in order to provide the Design Review Board with sufficient funds to conduct its operations and to enforce the provisions of Article 3 by any manner provided in the Council Documents or available at law or in equity, including, but not limited to, the filing of a lawsuit to obtain an injunction to restrain and enjoin any violation of the Council Documents or requiring an Owner, at the Owner's expense, to remove any structure or Improvement on such Owner's Lot or Parcel in violation of the Council Documents and to restore the Lot or Parcel to its previous condition or to recover a judgment for any fines imposed by the Design Review Board as a result of a violation of the Council Documents.

5.6 Allocation of Votes to Owners.

In the election of directors by the Owners after the termination of the Period of Declarant Control and with respect to any other vote of the Owners that may be required or taken pursuant to the Council Documents, each Owner of an Assessable Lot or Assessable Parcel shall have one vote for each Assessment Unit allocated to the Owner's Lot or Parcel by Section 6.2.

5.7 Board of Directors and Officers.

The affairs of the Council shall be conducted by the Board and such officers as the Board may elect or appoint in accordance with the Articles and the Bylaws. During the Declarant Control Period, the Board shall be appointed and may be removed by the Community Master Planner. After the termination of the Declarant Control Period, the Board shall be elected by the Owners as provided in the Bylaws.

5.8 The Council Rules.

The Board may adopt, amend and repeal rules and regulations pertaining to: (a) the management, operation and use of the Areas of Council Responsibility including, but not limited to, any recreational facilities situated upon the Areas of Council Responsibility; (b) minimum standards for the Maintenance of Lots and Parcels; or (c) restrictions on the use of Lots and Parcels. In the event of any conflict or inconsistency between the provisions of this Declaration and the Council Rules, the provisions of this Declaration shall prevail. The Council Rules shall be enforceable in the same manner and to the same extent as the covenants, conditions and restrictions set forth in this Declaration.

5.9 Personal Liability.

No director, officer, employee or agent of the Council or the Design Review Board or of any committee of the Council or the Design Review Board, and no other person acting on behalf of the Council or the Design Review Board shall be personally liable to any Person for any damage, loss or prejudice suffered or claimed on account of any act, omission, error, or negligence in the discharge of such person’s duties and responsibilities under the Council Documents provided such person acted in good faith.

5.10 Implied Rights.

The Council may exercise any right or privilege given to the Council expressly by the Council Documents and every other right or privilege reasonably to be implied from the existence of any right or privilege given to the Council by the Council Documents or reasonably necessary to effectuate any such right or privilege.

5.11 Conveyance, Lease or Encumbrance of Common Area.

The Council may dedicate parts of the Council Common Area (including, without limitation, the lakes) to the Town, the Irrigation Water Delivery Authority or any public agency, authority or utility for such purposes and subject to such conditions as the Board may determine to be in the best interests of Morrison Ranch. The Council may convey portions of the Council Common Area for the purpose of adjusting the boundary lines between the Council Common Area, Limited Common Area and adjoining Lots or Parcels or dedicated rights-of-way. The Council may grant permits, licenses and easements on, over, under and through the Council Common Area for utilities, roads and other purposes reasonably necessary or useful for the proper maintenance and operation of Morrison Ranch. The Council may lease all or any part of the Council Common Area for such purposes and on such terms and conditions as the Board determines to be necessary or desirable; provided, however, that any lease entered in to after the termination of the Period of Declarant Control must be approved by Owners entitled to cast more than fifty percent (50%) of the Eligible Votes.

ARTICLE 6

COVENANT FOR ASSESSMENTS AND CREATION OF LIEN

6.1 Creation of Lien and Personal Obligation of Assessments.

Each Declarant, for each Lot or Parcel owned by it, hereby covenants and agrees, and each Owner, other than a Declarant, by becoming the Owner of a Lot or Parcel, is deemed to covenant and agree to pay to the Council all Assessments, Collection Costs and all other fees and costs which may become payable by the Owners to the Council under the Council Documents. All Assessments shall be established and collected as provided in this Declaration.

Each Assessment, together with all interest thereon, shall also be the personal obligation of the Person who was the Owner of the Lot or Parcel at the time when the Assessment became due. The personal obligation for delinquent Assessments shall not pass to the successors in title of the Owner unless expressly assumed by them.

No Owner shall be exempt from liability for Assessments because of such Owner’s non-use of the Council Common Area, abandonment of such Owner’s Lot or Parcel or other circumstance. The obligation to pay Assessments is a separate and independent obligation on the part of each Owner. No diminution or abatement of Assessments or set-off shall be claimed or allowed for any alleged failure of the Council, the Board or the Design Review Board to take some action or perform some function required of them.

6.2 Allocation of Assessment Units.

For the purposes of computing Assessments against the Assessable Lots and Assessable Parcels, each Assessable Lot and Assessable Parcel shall be allocated to one or more Assessment Units. The number of Assessment Units to be allocated to each Assessable Lot and Assessable Parcel shall depend upon the Land Use Classification of the Assessable Lot or Assessable Parcel. Each Assessable Lot and Assessable Parcel shall have a Land Use Classification of Residential Use, Commercial Use or Apartment Project Use. The Land Use Classification may be established by the Community Master Planner in a Supplemental Declaration. If the Land Use Classification for a particular Assessable Lot or Assessable Parcel is not established by a Supplemental Declaration, then the Community Master Planner shall establish the Land Use Classification for such Assessable Lot and Assessable Parcel based upon the use specified for the Lot or Parcel in the Development Plan or the use for which the Assessable Lot or Assessable Parcel could be used under the applicable zoning classification for the Assessable Lot or Assessable Parcel under the zoning ordinances of the Town. The Community Master Planner's determination of the Land Use Classification for an Assessable Lot or Assessable Parcel shall be final and binding upon all Owners.

The Assessment Units allocated to each Assessable Lot and Assessable Parcel shall be determined as follows:

(a) An Assessable Lot having a Land Use Classification of Residential Use shall have one-half (½) Assessment Unit until the earlier of: (i) completion of a Residence on the Lot; (ii) six (6) months from commencement of construction of a Residence on the Lot; or (iii) two (2) years from the date the Lot is conveyed to an Owner other than a Builder or a Declarant. Thereafter, the Lot shall be allocated one (1) Assessment Unit.

(b) Each Assessable Parcel having a Land Use Classification of Residential Use shall be allocated one (1) Assessment Unit for each Residence that could be constructed on the Parcel under the Development Plan and the zoning ordinances of the Town or for each Residence permitted under the Supplemental Declaration applicable to the Parcel, whichever is less. The Community Master Planner's determination of the number of Residences which could be constructed on the Parcel shall be final and binding upon all Owners. If a subdivision plat or other instrument creating Lots is Recorded covering all or part of the area within the Parcel, the number of Assessment Units allocated to the Parcel shall be reduced by a number equal to the number of Lots in the Recorded subdivision plat, since the Lots in the Recorded subdivision plat shall be allocated Assessment Units pursuant to Subsection (a) of this Section.

(c) Unless otherwise specified in a Supplemental Declaration, each Assessable Parcel having a Land Use Classification of Commercial Use and containing less than two (2) gross acres of land shall be allocated one (1) Assessment Unit. Unless a different number of Assessment Units is specified in a Supplemental Declaration, each Assessable Parcel having a Land Use Classification of Commercial Use and containing two (2) or more gross acres of land shall be allocated one (1) Assessment Unit for each gross acre of land within the Parcel. For purposes of this Subsection, a gross acre shall be 43,560 square feet. For purposes of illustration, but not of limitation, if a Parcel contained 100,000 square feet of land, the Parcel would be allocated two (2) Assessment Units.

(d) Each Parcel having a Land Use Classification of Apartment Project Use shall be allocated one (1) Assessment Unit for each seven (7) completed Apartments situated on the Parcel and one (1) Assessment Unit for each ten (10) additional Apartments that could be constructed upon the Parcel under the applicable Supplemental Declaration or under the Development Plan and zoning ordinances of the Town, whichever is less.

The Board's determination of the number of Assessment Units for each Assessable Lot and Assessable Parcel in accordance with this Section 6.2 shall be final and binding upon all Owners.

6.3 Regular Assessments.

At least thirty (30) days prior to the commencement of each Assessment Period, the Board shall prepare and adopt a budget (the "Budget") of the estimated Council Expenses for the next Assessment Period, including any contribution to be made to a reserve fund. The Budget shall also reflect the sources and estimated amounts of funds to cover such Council Expenses which may include any surplus to be applied from prior years, any income expected from sources other than Assessments and the amount to be generated through Assessments against the Lots and Parcels. The amount of increase, if any, in the Regular Assessment from one Assessment Period to the next Assessment Period shall be subject to such limitations as may be imposed by Arizona law.

The amount of the Regular Assessment to be levied against each Assessable Lot and Assessable Parcel shall be computed by multiplying the full amount to be assessed as shown on the Budget by a fraction, the numerator of which is the number of Assessment Units allocated to the Lot or Parcel and the denominator of which is the total Assessment Units allocated to all Lots and Parcels.

The Board shall give notice of the Regular Assessment to each Owner at least thirty (30) days prior to the beginning of each Assessment Period, but the failure to give such notice shall not affect the validity of the Regular Assessment established by the Board nor relieve any Owner from its obligation to pay the Regular Assessment. If the Board fails to adopt a budget for any Assessment Period, then until and unless such budget is adopted and a Regular Assessment is levied by the Board for such Assessment Period, the amount of the Regular Assessment for the immediately preceding Assessment Period shall remain in effect.

If the Board determines during any Assessment Period that the funds budgeted for that Assessment Period are, or will, become inadequate to meet all Council Expenses for any reason, including, without limitation, nonpayment of Assessment, the Board may amend the Budget and increase the Regular Assessment for that Assessment Period and the revised Regular Assessment shall commence on the date designated by the Board.

6.4 Special Assessments.

The Council may levy against each Assessable Lot and Assessable Parcel a Special Assessment for the purpose of (a) obtaining funds to pay the cost of any construction, reconstruction, repair or replacement of an Improvement upon the Council Common Area (including fixtures and personal property related thereto), or (b) to pay unbudgeted expenses or expenses in excess of the amount budgeted. The Special Assessment for each Assessable Lot and Assessable Parcel shall be the product of the number of Assessment Units allocated to the Lot or Parcel pursuant to Section 6.2 multiplied by the amount obtained by dividing the total Special Assessment by the total number of Assessment Units allocated to all Assessable Lots and Assessable Parcels.

6.5 Enforcement Assessment.

There shall be imposed against an Owner as an Enforcement Assessment the following expenses: (a) any Collection Costs incurred by the Council in attempting to collect Assessments or other amounts payable to the Council by the Owner; and (b) any monetary penalties levied against the Owner. The Enforcement Assessment shall be automatically imposed against an Owner at such time as the Collection Cost or other amounts are incurred by the Council or, in the case of a monetary penalty, the date the monetary penalty is imposed on the Owner by the Board.

6.6 Benefited Property Assessments.

All Council Expenses pertaining to the Maintenance of Limited Common Areas or pertaining to the providing of Special Services shall be shown separately in the budget adopted by the Board. The Council Expenses pertaining to the Maintenance of a Limited Common Area or to the providing of Special Services shall be assessed solely against the Lots and Parcels within the Benefited Property Assessment Area as established by the Supplemental Declaration designating the Benefited Property Assessment Area. No Council Expenses pertaining to the Maintenance of Limited Common Area or pertaining to providing Special Services shall be used in computing the Regular Assessments to be levied pursuant to Section 6.3. Unless otherwise provided for in the applicable Supplemental Declaration, Benefited Property Assessments shall be levied against the Assessable Lots and Assessable Parcels within the Benefited Property Assessment Area at a uniform amount per Assessment Unit. If the Board determines during any Assessment Period that any Benefited Property Assessment is, or will, become inadequate to pay all Council Expenses to be paid by the Benefited Property Assessment for any reason, including, without limitation, nonpayment of Benefited Property Assessments by Owners, the Board may increase the Benefited Property Assessment for that Assessment Period and the revised Benefited Property Assessment shall commence on the date designated by the Board.

6.7 Initial Development Assessment.

The Council shall have the right, but not the obligation, to assess against Assessable Lots and Assessable Parcels all or any portion of the costs and expenses incurred by the Council in the design and construction of improvements on Council Common Area. With respect to the design, development or construction of each Council Common Area, the Council shall determine, in its sole discretion, the Assessable Lots and Assessable Parcels that will be assessed an Initial Development Assessment to reimburse the Council for the costs and expenses incurred by the Council in the design, development and construction of the Improvements on that portion of the Council Common Area. The Council shall then assess to each such Assessable Lot and each Assessable Parcel an Initial Development Assessment in such amount as the Council determines to be fair and reasonable. Each Initial Development Assessment shall be due and payable at such times as the Board of Directors determines, and the Board of Directors can provide for the payment of the Initial Development Assessment in installments. The Initial Development Assessment need not be the same for every Assessable Lot and Assessable Parcel against which the Council levies an Initial Development Assessment. In addition, the Council shall not be obligated to assess an Initial Development Assessment against every Assessable Lot and Assessable Parcel. No more than one Initial Development Assessment may be assessed against any Assessable Lot or Assessable Parcel.

6.8 Assessment Period.

The period for which the Regular Assessment is to be levied shall be the calendar year, except that the first Assessment Period shall commence upon the conveyance of the first Lot or Parcel to a Purchaser and terminate on December 31 of such year. The Board in its sole discretion from time to time may change the Assessment Period.

6.9 Rules Regarding Billing and Collection Procedures.

Regular Assessments and Benefited Property Assessments shall be collected on a quarterly basis or such other basis as may be selected by the Board. Special Assessments may be collected as specified by the Board. The Board shall have the right to adopt rules and regulations setting forth procedures for the purpose of making Assessments and for the billing and collection of the Assessments provided that the procedures are not inconsistent with the provisions of this Declaration. The failure of the Council to send a bill to an Owner shall not relieve any Owner of such Owner's liability for any Assessment or charge under this Declaration. The Council shall be under no duty to refund any payments received by it even though the ownership of a Lot or Parcel changes during an Assessment Period but successor Owners of Lots or Parcels shall be given credit for prepayments, on a prorated basis, made by prior Owners.

6.10 Effect of Nonpayment of Assessments; Remedies of the Council.

Any Assessment, or any installment of an Assessment, not paid within fifteen (15) days after the Assessment, or the installment of the Assessment, first became due shall bear interest from the due date at the rate of interest set from time to time by the Board. In addition, the Board may establish a late fee to be charged to any Owner who has not paid any Assessment, or any installment of an Assessment, within fifteen (15) days after such payment was due.

The Council shall have a lien on each Lot and Parcel for: (a) all Assessments levied against the Lot or Parcel or the Owners thereof together with interest thereon as provided in this Section; (b) all monetary penalties imposed on the Owner of the Lot or Parcel; (c) any amounts payable to the Council pursuant to Section 7.3 or Section 7.4; and (d) any other amounts payable to the Council pursuant to the Council Documents.

The Recording of this Declaration constitutes record notice and perfection of the Assessment Lien. The Council may, at its option, record a Notice of Lien setting forth the name of the delinquent Owner as shown in the records of the Council, the legal description or street address of the Lot or Parcel against which the Notice of Lien is recorded and the amount claimed to be past due as of the date of the Recording of the Notice, including interest, lien recording fees and reasonable attorneys' fees. Before recording any Notice of Lien against a Lot or Parcel, the Council shall make a written demand to the defaulting Owner for payment of the delinquent Assessments, together with interest, late charges and reasonable attorneys' fees, if any, and all other amounts secured by the Assessment Lien. Each default shall constitute a separate basis for a demand, but any number of defaults may be included within the single demand. If the amounts specified in the demand are not paid within ten (10) days after delivery of the demand, the Council may proceed with recording a Notice of Lien against the Lot or Parcel. If the Council records a Notice of Lien, the Council may charge the Owner of the Lot or Parcel against which the Notice of Lien is Recorded a lien fee in an amount established from time to time by the Board.

The Assessment Lien shall have priority over all liens or claims except for: (a) tax liens for real property taxes; (b) assessments in favor of any municipal or other governmental body; and (c) the lien of any First Mortgage. Any First Mortgagee or any other Person acquiring title or coming into possession of a Lot or Parcel through foreclosure of the First Mortgage, purchase at a foreclosure sale or trustee sale, or through any equivalent proceedings, such as, but not limited to, the taking of a deed in lieu of foreclosure shall acquire title free and clear of any claims for unpaid assessments and charges against the Lot or Parcel which became payable prior to the acquisition of such Lot by the First Mortgagee or other Person. Any Assessments and charges against the Lot or Parcel which accrue prior to such sale or transfer shall remain the obligation of the defaulting Owner of the Lot or Parcel. The Council shall not be obligated to release the Assessment Lien until all delinquent Assessments and all other sums payable to the Council by the Owner of the Lot or Parcel have been paid in full.

The Council shall have the right, at its option, to enforce collection of any delinquent Assessments and any other sums due to the Council in any manner allowed by law including, but not limited to: (a) bringing an action at law against the Owner personally obligated to pay the delinquent Assessments and such action may be brought without waiving the Assessment Lien; or (b) bringing an action to foreclose the Assessment Lien against the Lot or Parcel in the manner provided by law for the foreclosure of a realty mortgage. The Council shall have the power to bid in at any foreclosure sale and to purchase, acquire, hold, lease, mortgage and convey any and all Lots and Parcels purchased at such sale.

6.11 Purposes for which Council's Funds May Be Used.

The Council may use all funds and property collected and received by it (including the Assessments, fees, loan proceeds, surplus funds and all funds and property received by it from any other source) for the purpose of: (a) discharging and performing the Council's duties and obligations under the Council Documents or applicable law; (b) exercising the rights and powers granted to the Council by the Council Documents or applicable law; (c) providing or promotion activities and services the Board deems appropriate, necessary or desirable to foster or promote the common good and general welfare of Morrison Ranch and the Owners, Lessees and Residents; (d) contracting for services (including, without limitation, cable television) to be provided to Owners, Lessees and Residents; and (e) taking such other action as the Council deems necessary, appropriate or desirable for the management and administration of the Council or for the benefit of the Council or of Morrison Ranch.

6.12 Surplus Funds.

The Council shall not be obligated to spend in any year all the Assessments and other sums received by it in such year, and may carry forward as surplus any balances remaining. The Council shall not be obligated to reduce the amount of the Regular Assessment in the succeeding year if a surplus exists from a prior year, and the Council may carry forward from year to year such surplus as the Board in its discretion may determine to be desirable for the greater financial security of the Council and the accomplishment of its purposes.

6.13 Initial Operating Capital Contribution.

Each Purchaser of a Lot or Parcel (other than a Builder) shall pay to the Council immediately upon becoming the Owner of the Lot or Parcel a sum equal to one-sixth (1/6th) of the then current Regular Assessment for the Lot or Parcel. Funds paid to the Council pursuant to this Section may be used by the Council for payment of operating expenses or any other purpose permitted under the Council Documents. Payments made pursuant to this Section shall be nonrefundable and shall not be considered as an advance payment of any Assessments levied by the Council pursuant to this Declaration. Payments made pursuant to this Section shall be deemed a contribution to the capital of the Council.

6.14 Contribution to Reserves.

Except as otherwise provided in this Section, each Purchaser of a Lot or Parcel (other than a Builder) shall pay to the Council immediately upon becoming the Owner of the Lot or Parcel a sum equal to one-sixth (1/6th) of the then current Regular Assessment for the Lot or Parcel, as applicable (the "Reserve Contribution"), as a contribution to the Council’s reserves for the construction of additional community recreation facilities or amenities, the expansion or addition to existing community recreation facilities and amenities or the future periodic maintenance, repair or replacement of the Areas of Council Responsibility. The Reserve Contribution shall be in addition to, and not in lieu of, any other Assessments or amounts payable to the Council by the Owner making the Reserve Contribution, and the Reserve Contribution shall be secured by the Assessment Lien. The Reserve Contribution shall be deemed a contribution to the capital of the Council.

No Reserve Contribution shall be payable with respect to: (a) the transfer or conveyance of a Lot or Parcel by a Declarant or the Community Master Planner; (b) the transfer or conveyance of a Lot or Parcel by devise or intestate succession; (c) a transfer or conveyance of a Lot or Parcel to a family trust, family limited partnership or other Person for bona fide estate planning purposes; (d) a transfer or conveyance of a Lot or Parcel to a corporation, partnership or other entity in which the grantor owns a majority interest unless the Board determines, in its sole discretion, that a material purpose of the transfer or conveyance was to avoid payment of the Reserve Contribution; or (e) the transfer or conveyance of a Lot or Parcel as a result of a trustee's sale under a deed of trust, the foreclosure of a realty mortgage or the forfeiture or foreclosure of a purchaser's interest under a recorded contract for the conveyance of real property subject to A.R.S. 33-741, et seq.

All Reserve Contributions may only be used to pay costs and expenses related to the design or construction of recreational facilities and amenities on the Council Common Area, for the design and construction of additions to or expansions of existing community recreational facilities and amenities situated on the Council Common Area or the maintenance, repair or replacement of the Areas of Council Responsibility.

6.15 Reserves.

The Council, in its discretion, may include in the Budget amounts to be designated as reserves for the future periodic maintenance, repair or replacement of all or a portion of the Areas of Council Responsibility. All amounts designated as reserves and received by the Council shall be deposited by the Board in a separate bank account (the "Reserve Account") and are to be segregated from and not commingled with any other funds of the Council. Such reserves shall be deemed a contribution to the capital account of the Council.

6.16 Transfer Fee.

Each Purchaser of a Lot or Parcel (other than a Builder) shall pay to the Council immediately upon becoming the Owner of the Lot or Parcel a transfer fee in such amount as is established from time to time by the Board to compensate the Council for the administrative cost resulting from the transfer of a Lot or Parcel.

ARTICLE 7

MAINTENANCE

7.1 Areas of Council Responsibility.

The Council shall be responsible for the management, operation and Maintenance of all Areas of Council Responsibility, and all Improvements located thereon, except for any part of the Areas of Council Responsibility which any governmental entity or utility is maintaining or is obligated to maintain. The Board shall be the sole judge as to the appropriate Maintenance of all Areas of Council Responsibility, but the Areas of Council Responsibility, and the Improvements located thereon, shall be maintained in good condition and repair at all times. No Owner, Resident or other Person shall construct or install any Improvements on the Areas of Council Responsibility or alter, modify or remove any Improvements situated on the Areas of Council Responsibility without the approval of the Board. No Owner, Resident or other Person shall obstruct or interfere with the Council in the performance of the Council's management, operation or Maintenance of the Areas of Council Responsibility, and the Improvements located thereon.

7.2 Lots.

Each Owner of a Lot or Parcel shall be responsible for the Maintenance of his Lot or Parcel, and all buildings, Residences, landscaping or other Improvements situated thereon, except for any portion of the Lot or Parcel, or any Improvement situated thereon, which is an Area of Council Responsibility. All buildings, Residences, landscaping and other Improvements shall at all times be kept in good condition and repair. All grass, hedges, shrubs, vines and plants of any type on a Lot or Parcel shall be irrigated, mowed, trimmed and cut at regular intervals so as to be maintained in a neat and attractive manner. Trees, shrubs, vines, plants and grass which die shall be promptly removed and replaced with living foliage of like kind, unless different foliage is approved in writing by the Design Review Board. No yard equipment, wood piles or storage areas may be maintained so as to be Visible From Neighboring Property or streets. All Parcels and Lots upon which no Residences, buildings or other structures, landscaping or Improvements have been constructed shall be maintained in a weed free and attractive manner.

7.3 Assessment of Certain Costs of Maintenance and Repair.

In the event that the need for Maintenance of an Area of Council Responsibility is caused through the willful or negligent act of any Owner, his family, tenants, guests or invitees, the cost of such Maintenance shall be paid by such Owner to the Council upon demand and payment of such amounts shall be secured by the Assessment Lien.

7.4 Improper Maintenance and Use of Lots or Parcels.

In the event (a) any portion of any Lot or Parcel is so maintained as to present a public or private nuisance, or as to substantially detract from the appearance or quality of the surrounding Lots or Parcels or other areas of Morrison Ranch, (b) any portion of a Lot or Parcel is being used in a manner which violates this Declaration, or (c) the Owner of any Lot or Parcel is failing to perform any of its obligations under the Council Documents, the Board may give notice to the offending Owner of the corrective action that must be taken and the date by which the corrective action must be completed. If the required corrective action is not completed by the completion date established by the Board, the Board shall be authorized and empowered to cause such action to be taken and the cost thereof shall be paid by such Owner to the Council upon demand and payment of such amounts shall be secured by the Assessment Lien.

7.5 Boundary Walls.

Each wall or fence which is located between two Lots or Parcels shall constitute a boundary wall and, to the extent not inconsistent with this Section, the general rules of law regarding boundary walls shall apply.

The Owners of contiguous Lots or Parcels who share a boundary wall shall both equally have the right to use such wall provided that such use by one Owner does not interfere with the use and enjoyment of same by the other Owner.

Except as otherwise provided in this Section, the Owners of contiguous Lots or Parcels who share a boundary wall shall each pay one-half (½) of the cost of any maintenance, repair or replacement of the boundary wall. Either of such Owners may perform any necessary repair, maintenance or replacement of the boundary wall and in such event, such Owner shall be entitled to reimbursement from the other Owner for one-half (½) of such cost.

In the event that any boundary wall is damaged or destroyed through the negligence or willful act of an Owner, his agents, tenants, licensees, guests or family, it shall be the obligation of such Owner to rebuild and repair the boundary wall without cost to the other Owner or Owners who share the boundary wall.

The right of any Owner to contribution from any other Owner under this Section shall be appurtenant to the land and shall pass to such Owner's successors in title. In addition to meeting the other requirements of this Declaration and of any other building code or similar regulations or ordinances, any Owner proposing to modify, make additions to or rebuild a boundary wall shall first obtain the written consent of the adjoining Owners.

In the event any boundary wall encroaches upon a Lot or Parcel less than one foot, a valid easement for such encroachment and for the maintenance of the boundary wall shall and does exist in favor of the Owners of the Lots or Parcels which share such boundary wall for so long as the boundary wall exists. If the encroachment exceeds one foot, the Owner of the Lot or Parcel on which the wall encroaches shall have the right to require the adjoining Owner to relocate the wall so that the wall does not encroach by more than one foot.

7.6 Maintenance of Walls other than Boundary Walls.

Walls (other than boundary walls) located on a Lot or Parcel shall be maintained, repaired and replaced by the Owner of the Lot or Parcel. Any wall which is placed on the boundary line between a Lot or Parcel and an Area of Council Responsibility shall be maintained, repaired and replaced by the Owner of the Lot or Parcel, except that the Council shall be responsible for the repair and maintenance of the side of the wall which faces the Area of Council Responsibility. In the event any such wall encroaches upon the Area of Council Responsibility, an easement for such encroachment shall exist in favor of the Council or the Owner of the Lot or Parcel, as the case may be, for so long as the wall exists. Any wall which is placed on the boundary line between a Lot or Parcel and public right-of-way shall be maintained, repaired and replaced by the Owner of the Lot or Parcel, except that the Council shall be responsible for the repair and replacement of the surface of the wall which faces the Lot or Parcel. In the event of any conflict or inconsistency between the provisions of a Supplemental Declaration and this Section, the Supplemental Declaration shall control.

7.7 Nuisances, Construction Activities. No rubbish or debris of any kind shall be placed or permitted to accumulate upon or adjacent to any Lot or Parcel and no odors shall be permitted to arise or emit therefrom so as to render any such Lot or Parcel or any portion thereof, or activity thereon, unsanitary, unsightly, offensive or detrimental to any other property in the vicinity thereof or to the occupants of such other property. No other nuisance shall be permitted to exist or operate upon any Lot or Parcel so as to be offensive or detrimental to any other property in the vicinity thereof or to its occupants. Without limiting the generality of any of the foregoing provisions, no exterior speakers, horns, whistles, firecrackers, bells or other sound devices, except security devices used exclusively for security purposes, shall be located, used or placed on any such Lot or Parcel; provided, however, that the foregoing shall not be construed to prohibit the installation of a reasonable number of exterior speakers in the backyard of a Lot so long as the volume level of sound emitted therefrom does not create a nuisance to any other property in the vicinity thereof or to the occupants of such other property, as determined by the Board in its sole discretion. Normal construction activities and parking in connection with the building of Improvements on a Lot or Parcel shall not be considered a nuisance or otherwise prohibited by this Declaration. The Board, in its sole discretion, shall have the right to determine the existence of any such nuisance. The Design Review Board may adopt rules limiting the hours and/or days construction may take place and Lots and Parcels shall be kept in a neat and tidy condition during construction periods, trash and debris shall not be permitted to accumulate and supplies of brick, block, lumber and other building materials shall be piled only in such areas as may be approved by the Design Review Board. In addition, any construction equipment and building materials stored or kept on any Lot or Parcel during construction of improvements may be kept only in areas approved by the Design Review Board. The Design Review Board may also require screening of said storage areas. Each Owner shall be obligated to: (a) keep such Owner’s Lot or Parcel, as well as surrounding areas of Morrison Ranch, including, without limitation, all pedestrian and road rights-of-way and drives, reasonably clean and clear of equipment, building materials, dirt, debris and similar materials in connection with or related to construction activities by or for the benefit of such Owner; and (b) make reasonable efforts to protect from damage, and in any event to promptly repair or rebuild, any buildings, structures, landscaping or other improvements (including without limitation any improvements that are, or are intended to be, Council Common Area, Community Association Common Area, Areas of Council Responsibility or owned and/or maintained by the Town or any political subdivision or utility provider, e.g., pavement, curbs, sidewalks, landscaping, drainage facilities, hydrants, grade stakes, surveyor markers, etc.) that are damaged or destroyed through the act of any Owner, or an Owner’s agents, employees, invitees, licensees, contractors or subcontractors (the foregoing collectively, “Owner’s Agents”) in connection with or related to construction activities by or for the benefit of such Owner, whether or not such act is negligent or otherwise culpable.

ARTICLE 8

DISPUTE RESOLUTION

8.1 Agreement to Resolve Certain Disputes Without Litigation.

As used in this Article 8, the term "Claim" shall mean: (a) any claim or cause of action arising out of or related in any way to an Alleged Defect; or (b) any claim or cause of action against a Declarant or the Community Master Planner or any employee, agent, director, member or officer of a Declarant or the Community Master Planner arising out of or in any way related to the development of Morrison Ranch or the management or operation of the Council, including, without limitation, any claim for negligence, fraud, intentional misconduct or breach of fiduciary duty. The Council, the Declarants, the Community Master Planner, all Owners, Lessees, Residents and other Persons bound by this Declaration, and any Person not otherwise bound by this Declaration who agrees to submit to this Article (collectively, the "Bound Parties") agree that the dispute resolution procedures set forth in this Article shall apply to all Claims.

8.2 Notice of Claim.

Any Bound Party who has or alleges to have a Claim (a "Claimant") against any other Bound Party (a "Respondent") shall notify each Respondent in writing of the Claim (the "Claim Notice"), within sixty (60) days after the Claimant knows or, in the exercise of reasonable diligence, should have known of the Claim. The Claim Notice shall state plainly and concisely: (a) the nature of Claim, including, date, time, location, Persons involved, and Respondent's role in the Claim; (b) the factual and legal basis of the Claim; and (c) what Claimant wants Respondent to do or not do to resolve the Claim. If a Claimant does not issue a Claim Notice within the time period provided for in this Section, the Claimant shall be deemed to have waived the claim and each Person who might otherwise have been a Respondent shall be released and discharged from all liability with respect to the Claim.

In the event the Claimant is the Council, the Council must provide written notice to all Owners prior to the issuance of a Claim Notice or the initiation of any legal action, proceeding, reference or arbitration against a Declarant or the Community Master Planner which notice shall (at a minimum) include: (a) a description of the Claim, (b) a description of the attempts of any Declarant or the Community Master Planner to correct such Alleged Defect and the opportunities provided to Declarant to correct such Alleged Defect, (c) the estimated cost to repair such Alleged Defect, (d) the name and professional background of the attorney retained by the Council to pursue the claim against a Declarant or the Community Master Planner and a description of the relationship between such attorney and member(s) of the Board (if any), (e) a description of the fee arrangement between such attorney and the Council, (f) the estimated attorneys’ fees and expert fees and costs necessary to pursue the claim against a Declarant or the Community Master Planner and the source of the funds which will be used to pay such fees and expenses, (g) the estimated time necessary to conclude the action against a Declarant or the Community Master Planner, and (h) an affirmative statement from the Board that the action is in the best interests of the Council and the Owners. If the Alleged Defect is alleged to be the result of an act or omission of a person licensed by the State of Arizona under Title 20 or Title 32 of the Arizona Revised Statutes (a "Licensed Professional"), then the notice from the Council must be accompanied by an affidavit from a Licensed Professional in the same discipline as the Licensed Professional alleged to be responsible for the Alleged Defect. The affidavit must contain the information required to be contained in a preliminary expert opinion affidavit submitted pursuant to Section 12-2602B of the Arizona Revised Statutes.

8.3 Mediation.

If the parties do not resolve the Claim through negotiation within thirty (30) days after the date of the Claim Notice or within such longer period as may be agreed upon by the Parties ("Termination of Negotiations"), Claimant shall have thirty (30) additional days within which to submit the Claim to mediation under the auspices of the American Arbitration Association or such other mediator or mediation service mutually agreed upon by the Claimant and Respondent.

If Claimant does not submit the Claim to mediation within thirty (30) days after Termination of Negotiations, Claimant shall be deemed to have waived the Claim, and Respondent shall be released and discharged from any and all liability to Claimant on account of such Claim.

If the parties do not settle the Claim within thirty (30) days after submission of the matter to the mediation process, or within such time as determined reasonable or appropriate by the mediator, the mediator shall issue a notice of termination of the mediation proceedings ("Termination of Mediation Notice"). The Termination of Mediation Notice shall set forth when and where the Parties met, that the Parties are at an impasse, and the date that mediation was terminated.

8.4 Binding Arbitration.

In the event a Claim is not resolved by Mediation, the Claimant shall have fifteen (15) days after the date of the Termination of Mediation Notice to submit the Claim to binding arbitration in accordance with this Section. If the Claimant fails to timely submit the Claim to arbitration, then the Claim shall be deemed waived and abandoned and the Respondent shall be relieved of any and all liability to Claimant arising out of the Claim. If the Claimant submits the Claim to binding arbitration in accordance with this Section, the arbitration shall be conducted in accordance with the following rules:

(a) Initiation of Arbitration. The arbitration shall be initiated by either party delivering to the other a Notice of Intention to Arbitrate as provided for in the American Arbitration Association ("AAA") Commercial Arbitration Rules, as amended from time to time (the "AAA Rules").

(b) Governing Procedures. The arbitration shall be conducted in accordance with the AAA Rules and A.R.S. § 12-1501, et seq. In the event of a conflict between the AAA Rules and this Section 8.4, the provisions of this Section 8.4 shall govern.

(c) Appointment of Arbitrator. The parties shall appoint a single Arbitrator by mutual agreement. If the parties have not agreed within ten (10) days of the date of the Notice of Intention to Arbitrate on the selection of an arbitrator willing to serve, the AAA shall appoint a qualified Arbitrator to serve. Any arbitrator chosen in accordance with this Subsection (c) is referred to in this Section 8.4 as the "Arbitrator".

(d) Qualifications of Arbitrator. The Arbitrator shall be neutral and impartial. The Arbitrator shall be fully active in such Arbitrator's occupation or profession, knowledgeable as to the subject matter involved in the dispute, and experienced in arbitration proceedings. The foregoing shall not preclude otherwise qualified retired lawyers or judges.

(e) Disclosure. Any candidate for the role of Arbitrator shall promptly disclose to the parties all actual or perceived conflicts of interest involving the dispute or the parties. No Arbitrator may serve if such person has a conflict of interest involving the subject matter of the dispute or the parties. If an Arbitrator resigns or becomes unwilling to continue to serve as an Arbitrator, a replacement shall be selected in accordance with the procedure set forth in Subsection (c) above.

(f) Compensation. The Arbitrator shall be fully compensated for all time spent in connection with the arbitration proceedings in accordance with the Arbitrator's usual hourly rate, unless otherwise agreed to by the parties, for all time spent by the Arbitrator in connection with the arbitration proceeding. Pending the final award, the Arbitrator's compensation and expenses shall be advanced equally by the parties.

(g) Preliminary Hearing. Within thirty (30) days after the Arbitrator has been appointed, a preliminary hearing among the Arbitrator and counsel for the Parties shall be held for the purpose of developing a plan for the management of the arbitration, which shall then be memorialized in an appropriate order. The matters which may be addressed include, in addition to those set forth in the AAA Rules, the following: (i) definition of issues; (ii) scope, timing and types of discovery, if any; (iii) schedule and place(s) of hearings; (iv) setting of other timetables; (v) submission of motions and briefs; (vi) whether and to what extent expert testimony will be required, whether the Arbitrator should engage one or more neutral experts, and whether, if this is done, engagement of experts by the Parties can be obviated or minimized; (vii) whether and to what extent the direct testimony of witnesses will be received by affidavit or written witness statement; and (viii) any other matters which may promote the efficient, expeditious, and cost-effective conduct of the proceeding.

(h) Management of the Arbitration. The Arbitrator shall actively manage the proceedings as the Arbitrator deems best so as to make the proceedings expeditious, economical and less burdensome than litigation.

(i) Confidentiality. All papers, documents, briefs, written communication, testimony and transcripts as well as any and all arbitration decisions shall be confidential and not disclosed to anyone other than the Arbitrator, the parties or the parties’ attorneys and expert witnesses (where applicable to their testimony), except that upon prior written consent of all parties, such information may be divulged to additional third parties. All third parties shall agree in writing to keep such information confidential.

(j) Hearings. Hearings may be held at any place within Maricopa County, Arizona designated by the Arbitrator and, in the case of particular witnesses not subject to subpoena at the usual hearing site, at a place where such witnesses can be compelled to attend.

(k) Final Award. The Arbitrator shall promptly (within thirty (30) days of the conclusion of the proceedings or such longer period as the parties mutually agree) determine the claims of the parties and render a final award in writing. The Arbitrator may award the prevailing party in the proceeding all or a part of such party’s reasonable attorneys’ fees and expert witness fees, taking into account the final result of arbitration, the conduct of the parties and their counsel in the course of the arbitration, and other relevant factors. The Arbitrator shall not award any punitive damages. The Arbitrator shall not award indirect, consequential or special damages regardless of whether the possibility of such damage or loss was disclosed to, or reasonably foreseen by the party against whom the claim is made; provided, however, that such damages may be deemed by the Arbitrator to be direct damages in an award reimbursing payments made by a party therefor to a third party. The Arbitrator shall assess the costs of the proceedings (including, without limitation, the fees of the Arbitrator) against the non-prevailing party.

8.5 Right to Enter, Inspect, Repair and/or Replace.

Within a reasonable time after the receipt of a Claim Notice pertaining to an Alleged Defect, the Respondent shall have the right, upon reasonable notice to Claimant and during normal business hours, to enter onto or into, as applicable, the Council Common Area, any Parcel or Lot, including any Residence or building constructed thereon, and/or any Improvements for the purposes of inspecting and/or conducting testing to determine the validity of the Claim and, if deemed necessary by the Respondent, to correct, repair and/or replace the Alleged Defect. In conducting such inspection, testing, repairs and/or replacement, the Respondent shall be entitled to take any actions as it shall deem reasonable and necessary under the circumstances.

Nothing set forth in this Section shall be construed to impose any obligation on a Declarant, the Community Master Planner or any other Person to inspect, test, repair, or replace any item or Alleged Defect for which a Declarant, the Community Master Planner or other Person is not otherwise obligated under applicable law or any limited warranty provided by a Declarant, the Community Master Planner or any other Person in connection with the sale of the Lots or Parcels and/or the Improvements constructed thereon. The right of a Respondent to enter, inspect, test, repair and/or replace reserved hereby shall be irrevocable and may not be waived or otherwise terminated except by a writing, in recordable form, executed and Recorded by the Respondent. In no event shall any statutes of limitations be tolled during the period in which a Respondent conducts any inspection or testing of any Alleged Defects.

8.6 Use of Funds.

In the event the Council recovers any funds from a Declarant, the Community Master Planner or any other Person as a result of a Claim involving an Alleged Defect, the funds shall first be used to correct and or repair the Alleged Defect or to reimburse the Claimant for any costs actually incurred by such Claimant in correcting and/or repairing the Alleged Defect, and any remaining funds shall be paid into the Council's reserve fund.

8.7 Approval of Litigation.

After the expiration of the Declarant Control Period, the Council shall not deliver a Claim Notice to any Bound Party, commence any legal action or arbitration proceeding against any Bound Party or incur any expenses (including, without limitation, attorneys' fees) in connection with any Claim without the written approval of Owners entitled to cast more than two-thirds (2/3) of the Eligible Votes, excluding the votes of any Owner who would be a defendant in such proceedings. The Council must pay for any such legal action or arbitration proceeding with monies that are specifically collected for such purposes and may not borrow money or use reserve funds or other monies collected for specific Council obligations other than legal fees. In the event that the Council commences any legal action or arbitration proceeding involving a Claim, all Owners must notify prospective purchasers of such legal action or arbitration proceeding and must provide such prospective purchasers with a copy of the notice received from the Council in accordance with Section 8.2.

ARTICLE 9

INSURANCE

9.1 Scope of Coverage.

Commencing not later than the time of the first conveyance of a Lot or Parcel to a Purchaser, the Council shall maintain, to the extent reasonably available, the following insurance coverage:

(a) Comprehensive general liability insurance, including medical payments insurance, in an amount determined by the Board, but not less than $1,000,000. Such insurance shall cover all occurrences commonly insured against for death, bodily injury and property damage arising out of or in connection with the use, ownership or maintenance of the Areas of Council Responsibility and all other portions of Morrison Ranch which the Council is obligated to maintain under this Declaration, and shall also include hired automobile and non-owned automobile coverages with cost liability endorsements to cover liabilities of the Owners as a group to an Owner;

(b) Property insurance on all Areas of Council Responsibility insuring against all risk of direct physical loss, insured against in an amount equal to the maximum insurable replacement value of the Areas of Council Responsibility, as determined by the Board; provided, however, that the total amount of insurance after application of any deductibles shall not be less than one hundred percent (100%) of the current replacement cost of the insured property, exclusive of land, excavations, foundations and other items normally excluded from a property policy.

(d) Such other insurance as the Board shall determine from time to time to be appropriate to protect the Council or the Owners;

(e) The insurance policies purchased by the Council shall, to the extent reasonably available, contain the following provisions: (i) that there shall be no subrogation with respect to the Council, its agents, servants, and employees, with respect to Owners and members of their household; (ii) no act or omission by any Owner, unless acting within the scope of his authority on behalf of the Council, will void the policy or be a condition to recovery on the policy; (iii) that the coverage afforded by such policy shall not be brought into contribution or proration with any insurance which may be purchased by Owners or their mortgagees or beneficiaries under deeds of trust; (iv) a "severability of interest" endorsement which shall preclude the insurer from denying the claim of an Owner because of the negligent acts of the Council or other Owners; (v) statement of the name of the insured as the Council ; and (vi) for policies of hazard insurance, a standard mortgagee clause providing that the insurance carrier shall notify the first mortgagee named in the policy at least ten (10) days in advance of the effective date of any substantial modification, reduction or cancellation of the policy. The premiums for any insurance obtained by the Council pursuant to this Section 9.1 shall be included in the budget of the Council and shall be paid by the Council.

9.2 Certificates of Insurance.

An insurer that has issued an insurance policy under this Article 9 shall issue a certificate or a memorandum of insurance to the Council and, upon request, to any Owner, mortgagee or beneficiary under a deed of trust. Any insurance obtained pursuant to this Article 9 may not be cancelled until thirty (30) days after notice of the proposed cancellation has been mailed to the Council, each Owner and each mortgagee or beneficiary under a deed of trust to whom certificates of insurance have been issued.

9.3 Payment of Insurance Proceeds.

With respect to any loss to any Area of Council Responsibility covered by property insurance obtained by the Council in accordance with this Article 9, the loss shall be adjusted with the Council, and the insurance proceeds shall be payable to the Council and not to any mortgagee or beneficiary under a deed of trust. Subject to the provisions of Section 9.4, the proceeds shall be disbursed for the repair or restoration of the damage to the Area of Council Responsibility.

9.4 Repair and Replacement of Damaged or Destroyed Property.

Any portion of the Areas of Council Responsibility which is damaged or destroyed shall be repaired or replaced promptly by the Council unless repair or replacement would be illegal under any state or local health or safety statute or ordinance. The cost of repair or replacement in excess of insurance proceeds and reserves shall be paid by the Council. If all of the Areas of Council Responsibility are not repaired or replaced, insurance proceeds attributable to the damaged Areas of Council Responsibility shall be used to restore the damaged area to a condition which is not in violation of any state or local health or safety statute or ordinance.

ARTICLE 10

GENERAL PROVISIONS

10.1 Enforcement.

The Council may enforce the Council Documents in any manner provided for in the Council Documents or by law or in equity, including, but not limited to:

(a) imposing reasonable monetary fines after notice and an opportunity to be heard by the Board or a hearing officer or committee appointed by the Board is given to the Owner or other violator. An Owner shall be responsible for payment of any fine levied or imposed against a Lessee or Resident of the Owner’s Lot or by any guest or invitee of the Owner or any Lessee or Resident;

(b) suspending an Owner’s right to vote;

(c) suspending any Person’s right to use any recreational facilities within the Council Common Area; provided, however, nothing herein shall authorize the Board to limit ingress or egress to or from a Lot or Parcel;

(d) suspending any services provided by the Council to an Owner or the Owner’s Lot or Parcel if the Owner fails to pay any Assessment or other charge owed to the Council within fifteen (15) days after demand for payment is made;

(e) exercising self-help or taking action to abate any violation of the Community Documents;

(f) requiring an Owner, at the Owner’s expense, to remove any structure or Improvement on such Owner’s Lot or Parcel in violation of this Declaration and to restore the Lot or Parcel to its previous condition and, upon failure of the Owner to do so, the Board or its designee shall have the right to enter the property, remove the violation and restore the property to substantially the same condition as previously existed and any such action shall not be deemed a trespass;

(g) without liability to any Person, prohibiting any contractor, subcontractor, agent, employee or other invitee of an Owner who fails to comply with the terms and provisions of this Declaration or the Morrison Ranch Guidelines from continuing or performing any further activities in the Morrison Ranch;

(h) towing vehicles which are parked in violation of this Declaration or the Council Rules;

(i) filing a suit at law or in equity to enjoin a violation of the Council Documents, to compel compliance with the Council Documents, to recover fines or money damages or to obtain such other relief as to which the Council may be entitled;

(j) record a written notice of a violation by any Owner, Lessee or Resident of any restriction or other provision of the Council Documents. The notice shall be executed by an officer of the Council and shall contain substantially the following information: (i) the name of the Owner, Lessee or Resident violating, or responsible for the violation of, the Council Documents; (ii) the legal description of the Lot or Parcel against which the notice is being Recorded; (iii) a brief description of the nature of the violation; and (iv) a statement of the specific steps which must be taken by the Owner or occupant to cure the violation. Recordation of a notice of violation shall serve as notice to the Owner and Resident, and any subsequent purchaser of the Lot or Parcel, that there is such a violation. Failure by the Council to Record a notice of violation shall not constitute a waiver of any such violation, constitute any evidence that no violation exists with respect to a particular Lot or Parcel or constitute a waiver of any right of the Council to enforce the Council Documents.

The Council shall not be obligated to take any enforcement action if the Board determines, in its sole discretion, that because of the strength of any possible defenses, the time and expense of litigation or other enforcement action, the likelihood of a result favorable to the Council, or other facts deemed relevant by the Board, enforcement action would not be appropriate or in the best interests of the Council. All rights and remedies of the Council under the Council Documents or at law or in equity are cumulative, and the exercise of one right or remedy shall not waive the Council's right to exercise another right or remedy.

Each Owner, the Council, each Declarant and the Community Master Planner shall have the right to enforce this Declaration in any manner available at law or in equity. The failure of the Council, a Declarant, the Community Master Planner or an Owner to take enforcement action with respect to a violation of the Council Documents shall not constitute or be deemed a waiver of the right of the Council, a Declarant, the Community Master Planner or any Owner to enforce the Council Documents in the future. If any lawsuit is filed by the Council, a Declarant, the Community Master Planner or any Owner to enforce the provisions of the Community Documents or in any other manner arising out of the Council Documents or the operations of the Council, the prevailing party in such action shall be entitled to recover from the other party all attorney fees incurred by the prevailing party in the action.

10.2 Duration; Termination.

This Declaration, as it may be amended pursuant to Section 10.3, shall run with the land and bind Morrison Ranch and be in full force and effect in perpetuity unless terminated as provided in this Section. This Declaration may be terminated at any time if such termination is approved, by the Community Master Planner, each Declarant that then owns one or more Lots or Parcels or any part of the Additional Property, and by the Owners holding ninety percent (90%) or more of the Eligible Votes. If the necessary votes and consents are obtained, the Board shall cause to be Recorded a Certificate of Termination, duly signed by the President or Vice President and attested by the Secretary or Assistant Secretary of the Council, with their signatures acknowledged. Following the Recording of a Certificate of Termination, this Declaration shall have no further force and effect, and the Council shall be dissolved pursuant to the terms set forth in its Articles.

10.3 Amendments.

During the Declarant Control Period, this Declaration may be amended unilaterally by the Community Master Planner. After the termination of the Declarant Control Period, the Declaration may be amended by Owners holding at least sixty-seven percent (67%) of the Eligible Votes; provided, however, that any amendment to Sections 6.2, 6.3, 6.4, 6.6 or 6.7 must also be approved by Owners holding at least sixty-seven percent (67%) of the total Eligible Votes allocated to Owners of Lots or Parcels having a Land Use Classification of Commercial Use. Any amendment must be Recorded. Unless a later effective date is provided for in the amendment, any amendment to this Declaration shall be effective upon the Recording of the Amendment.

10.4 Interpretation.

Except for judicial construction, the Council shall have the exclusive right to construe and interpret the provisions of this Declaration. In the absence of any adjudication to the contrary by a court of competent jurisdiction, the Council's construction or interpretation of the provisions hereof shall be final, conclusive and binding as to all Persons and property benefited or bound by this Declaration. In the event of any conflict between this Declaration and the Articles, Bylaws, Council Rules or Morrison Ranch Guidelines, this Declaration shall control. In the event of any conflict between the Articles and the Bylaws, the Articles shall control. In the event of any conflict between the Bylaws and the Council Rules, the Bylaws shall control. Except for judicial construction, the Design Review Board shall have the exclusive right to construe and interpret the Morrison Ranch Guidelines. In the absence of any adjudication to the contrary by a court of competent jurisdiction, the Design Review Board’s construction or interpretation of the Morrison Ranch Guidelines shall be final, conclusive and binding as to all Persons and property benefited or bound by this Declaration.

10.5 Severability.

Any determination by any court of competent jurisdiction that any provision of this Declaration is invalid or unenforceable shall not affect the validity or enforceability of any of the other provisions hereof.

10.6 Change of Circumstances.

Except as otherwise expressly provided in this Declaration, no change of conditions or circumstances shall operate to extinguish, terminate or modify any of the provisions of this Declaration.

10.7 Laws, Ordinances and Regulations.

The covenants, conditions and restrictions set forth in this Declaration and the provisions requiring Owners and other persons to obtain the approval of the Board or the Design Review Board with respect to certain actions are independent of the obligation of the Owners and other persons to comply with all applicable laws, ordinances and regulations, and compliance with this Declaration shall not relieve an Owner or any other person from the obligation to also comply with all applicable laws, ordinances and regulations.

Any violation of any state, municipal, or local law, ordinance or regulation pertaining to the ownership, occupation or use of any property within Morrison Ranch is hereby declared to be a violation of this Declaration and subject to any or all of the enforcement procedures set forth herein.

10.8 References to this Declaration in Deeds.

Deeds to and instruments affecting any Lot or Parcel or any other part of Morrison Ranch may contain the covenants, conditions and restrictions herein set forth by reference to this Declaration; but regardless of whether any such reference is made in any Deed or instrument, each and all of the provisions of this Declaration shall be binding upon the grantee-Owner or other person claiming through any instrument and his heirs, executors, administrators, successors and assignees.

10.9 Gender and Number.

Wherever the context of this Declaration so requires, words used in the masculine gender shall include the feminine and neuter genders; words used in the neuter gender shall include the masculine and feminine genders; words in the singular shall include the plural; and words in the plural shall include the singular.

10.10 Captions and Titles.

All captions, titles or headings of the Articles and Sections in this Declaration are for the purpose of reference and convenience only and are not to be deemed to limit, modify or otherwise affect any of the provisions hereof or to be used in determining the intent of context thereof. Unless otherwise specified, all references in this Declaration to Articles or Sections are to Articles and Section of this Declaration.

10.11 Notices.

All notices, demands, statements or other communications required to be given or served under this Declaration shall be in writing and shall be deemed to have been duly given and served if delivered personally, sent by Federal Express or other overnight delivery service or sent by United States mail, postage prepaid, as follows: (a) if to an Owner, at the address which the Owner files with the Secretary of the Council for the purpose of notice or, if no such address is designated, at the address of the Lot or Parcel of such Owner; (b) if to the Council, at the principal place of business of the Council as shown on the records of the Arizona Corporation Commission or at such other address as shall be designated by notice in writing to the Owners pursuant to this Section; or (c) if the Design Review Board, at the principal place of business of the Design Review Board as shown on the records of the Arizona Corporation Commission or at such other address as shall be designated by notice in writing to the Owners pursuant to this Section. Notice given by personal delivery or overnight delivery service shall be deemed to have been received by the Person to whom the notice was addressed when the notice is actually received. A notice given by United States mail shall be deemed to have been received by the Person to whom the notice was addressed on the earlier of the date the notice is actually received or three days after the notice is mailed. If a Lot or Parcel is owned by more than one Person, notice to one of the Owners shall constitute notice to all Owners of the same Lot or Parcel.

MBR LAND II, L.L.P., an Arizona limited liability partnership

By:

Its:

J & M LAND AND INVESTMENT COMPANY LIMITED PARTNERSHIP, an Arizona limited liability limited partnership

By:

Its:

B & K LAND AND INVESTMENT COMPANY, an Arizona limited partnership

By:

Its:

State of Arizona )

) ss.

County of Maricopa )

Acknowledged before me this _____ day of ____________________, 2002, by _______________________, the _____________________ of MBR Land II, L.L.P., an Arizona limited liability partnership, on behalf of the partnership.

Notary Public

My Commission Expires:

State of Arizona )

) ss.

County of Maricopa )

Acknowledged before me this _____ day of ____________________, 2002, by _______________________, the _____________________ of J & M Land and Investment Company Limited Partnership, an Arizona limited liability limited partnership, on behalf of the partnership.

Notary Public

My Commission Expires:

State of Arizona )

) ss.

County of Maricopa )

Acknowledged before me this _____ day of ____________________, 2002, by _______________________, the _____________________ of B & K Land And Investment Company, an Arizona limited partnership, on behalf of the partnership.

Notary Public

My Commission Expires:

TABLE OF CONTENTS

INTRODUCTION

ARTICLE 1

ARTICLE 2

ARTICLE 3

EASEMENTS AND DEVELOPMENT RIGHTS

ARTICLE 6

COVENANT FOR ASSESSMENTS AND CREATION OF LIEN

ARTICLE 7

ARTICLE 8

EXHIBIT A