Covenants

This DECLARATION OF COVENANTS

CONDITIONS AND RESTRICTIONS FOR

MORNINGSIDE MEADOWS

THIS DECLARATION is made as of this 7^th day of Dec. ,
1999, by Knotts-Stallings, LLC, a North Carolina limited liability company,
referred to in this instrument as "Developer."

STATEMENT OF PURPOSE

Developer is the owner of those certain parcels of land which are known as

Morningside Meadows, located in Union County, North Carolina, more
particularly described on Plat recorded in Plat Cabinet F , File
844 in the Union County Public Registry (the "Submitted Property").

It is in the best interest of Developer, as well as to the benefit, interest
and advantage of each person or other entity later acquiring any property in
Morningside Meadows, that certain covenants, conditions, easements,
assessments, liens and restrictions governing and regulating the use and
occupancy of the same be established, fixed and set forth and declared to be
covenants running with the land.

Developer desires to provide for the preservation of the values and amenities
and the desirability and attractiveness of the real property in Morningside
Meadows and for the continued maintenance and operation of such recreational
and common areas as may be provided.

DECLARATION

In consideration of the premises and for the purposes stated, Developer hereby
declares that all of the Submitted Property shall be held, sold and conveyed
subject to the following easements, restrictions, covenants and conditions
(all of which are collectively referred to in this instrument as
"restrictions"), which restrictions shall be construed as covenants running
with the land and shall be binding on all parties having any right, title

Drawn by and Mail to: Cheryl D. Steele

Horack. Talley, Pharr & Lowndes, P.A.

301 South College Street, Suite 2600

Charlotte, North Carolina 28202-6038

or interest in the described real property or any part thereof, and their
heirs, successors and assigns, and shall inure to the benefit of each owner
thereof.

ARTICLE I: DEFINITIONS

The following words when used in this Declaration or any Supplemental

Declaration (unless the context shall prohibit) shall have' the following
meanings:

(1.1) "Association" shall mean Morningside Meadows Homeowners Association,

Inc., a non-profit corporation organized and existing under the laws of the
State of North Carolina and its successors and assigns.

(1.2) "Builder" shall mean the record owner of a fee simple title to any Lot
whose sole purpose in owing the Lot is to construct a residential dwelling to
be sold to a third party.

(1.3) "Owner" shall mean the record owner, whether one or more persons or
entities, of a fee simple title to any Lot which is a part of Morningside
Meadows but excluding those having such interest merely as security for the
performance of an obligation.

(1.4) "Properties" shall mean the Submitted Property and such real property as
may subsequently be brought within the jurisdiction of the Association.

(1.5) "Common Area" shall mean all real property and/or easements over real
estate acquired by the Association in Morningside Meadows for the common use
and enjoyment of members of the Association lying within the boundaries of the
Properties. Common Areas, with respect to the Properties subject to this
Declaration, shall be: (i) shown on the plats of Morningside Meadows recorded
in the Union County Public Registry and designated thereon as "Common Area" or
"Common Area Easements" or "Sign& Landscape Esmt." and (ii) all entrance
islands within the public rights of way, if any.

.

(1.6) "Lot" shall mean any numbered plot of land to be used for residential
purposes shown upon any recorded subdivision plat of the Properties subject to
this Declaration.

(1.7) "Developer" shall mean and refer to Knotts-Stallings, LLC and its
successors and assigns.

(1.8) "Person" shall mean a natural person, as well as a corporation,
partnership, firm, association, trust or other legal entity. The use of the
masculine pronoun shall include the neuter and feminine, and the use of the
singular shall include the plural where the context so requires. .

(1.9) "Morningside Meadows" shall mean the, Submitted Property, together with
such additions thereto as may from time to time be designated by Developer in
accordance with Article II hereof, whether or not such additions are
contiguous with or adjoin the boundary lines of the Submitted Property.

(1.10) "FHA and VA" shall mean and refer to the Federal Housing
Administration, U.S. Department of Housing and Urban Development, and the
Veteran's Administration, respectively. If either or both of these federal
agencies shall hereafter cease to exist or perform the same or similar
functions they now serve, references hereto to FHA, or VA shall be deemed to
mean and refer to such agency or agencies as may succeed to the duties and
services now performed by either or both of these departments.

ARTICLE II: PROPERTY SUBJECT TO THIS DECLARATION

(2.1) The Submitted Property shall be held, transferred, sold, conveyed and
occupied subject to this Declaration. Only the Submitted Property is hereby
made subject to this Declaration provided however, Developer shall have the
right to subject other real property to these restrictions as provided in
Section 2.2.

(2.2) Without further assent or permit, Developer hereby shall have the right,
within seven (7) years from the date of this Declaration, exercisable from
time to time, to subject other real property within the area described on
Exhibit A attached hereto in order to extend the scheme of this Declaration to
other property to be developed as part of Morningside Meadows and thereby
bring such additional properties within the jurisdiction of the Association
(provided that the FHA and the VA determine that the annexation of such area
is in accord with Developer's general plan of development of Morningside
Meadows as previously approved by them, if such determination and approval are
necessary).

(2.3) Any addition of-real property shall be made by filing of record one or
more Supplemental Declarations in respect to the property to be then made
subject to this Declaration, and the jurisdiction of the Association shall
thereby then extend to such property and subject such addition to the
assessments provided in this instrument for a just and proportionate 'share of
the Association's expenses. Each Supplemental Declaration may contain such
complementary additions and modifications of the covenants, conditions and

restrictions contained herein as may be necessary to reflect the different
character of the added properties and as are not inconsistent with the
provisions of this Declaration.

ARTICLE III: PROPERTY RIGHTS

(3.1) Owner's Easements of Enjoyment. Every Owner shall have a
nonexclusive right and easement of enjoyment in and to the Common Area which
shall be appurtenant to and shall pass with the title to every Lot subject to
the provisions of this Declaration, including but not limited to the
following:

(a) The right of the Association to limit the use of the Common Area to
Owners, their families and guests;

(b) . The right of the Association to suspend the voting rights of an Owner
for any period during which any assessment against his Lot remains unpaid, or
for any infraction of the Association's published rules and regulations, if
any;

(c) The right of the Association to dedicate or transfer all or any part of
the Common Area to any public agency, authority or utility for such purposes
and subject to such conditions as may be agreed to by the Association members.
No such dedication or transfer shall be effective unless the members entitled
to at least two-thirds (2/3) of the vote appurtenant to Class A Lots and Class
B Lots agree to such dedication or transfer and signify their agreement by a
signed and recorded written document, provided that this paragraph shall not
preclude the Board of Directors of the Association from granting easements for
the installation and maintenance of electrical, telephone, cablevision, water
and sewerage utilities' and drainage facilities upon, over, under and across
the Common Area without the assent of the membership if such easements are
requisite for the convenient use and enjoyment of the Properties.

(3.2) Delegation and Use. The right and easement of enjoyment granted
to every Owner in Section 3.1 of this Article may be exercised by members of
Owner's family and guests thereof. An Owner may delegate to his tenants his
rights of enjoyment in and to the Common Area and such facilities thereon as
may be provided, in accordance with the Association's Bylaws and rules and
regulations, if any.

ARTICLE IV: MEMBERSHIP AND VOTING RIGHTS

(4.1) Membership. Every Owner of a Lot which is subject to assessment
shall be a member of the Association. Membership shall be appurtenant to and
may not be separated from ownership of any Lot which is subject to assessment.

(4.2) Voting and Voting Rights. The Association shall have two classes
of voting membership:

(a) Class A. Class A members shall be all Owners with the exception of

Developer and shall be entitled to one vote for each Lot owned. When more than
one person holds an interest in any Lot, all such persons shall be members.
The vote for such Lot shall be exercised as they among themselves determine;
but in no event shall more than one vote be cast with respect to any Lot. .

(b) Class B. The Class B member shall be Developer and shall be entitled to
three (3) votes for each Lot owned. The Class B membership shall cease and be
converted to Class A membership on the happening of any of the following
events, whichever first occurs:

(i) When the total votes out Standing in the Class A membership equator exceed
the total votes .outstanding in Class B membership; or

(ii) . Seven (7) years from the date of recording of this Declaration; or

(iii) When the Developer voluntarily relinquishes majority control of the
Association by a duly recorded instrument.

(4.3) Suspension of Rights. During any period in which a member shall
be in default in the payment of any annual, special or other periodic
assessment levied by the Association, the voting rights of such member may be
suspended by the Board of Directors until such assessment, is paid. In the
event of violation by a member of any rules or regulations established by the
Board of Directors, such member's voting rights may be suspended by the board
after a hearing. Such hearings shall only be held by the board or a committee
thereof after giving a member ten (10) days prior written notice specifying
each alleged violation and setting the time, place and date of the hearing.
Determination of the violation shall be made by a majority vote of the board
or the committee thereof.

ARTICLE V: COVENANT FOR MAINTENANCE ASSESSMENTS.

(5.1) Purpose of Assessment. The assessments levied by the Association
shall be used: (a) to provide funds for maintenance" upkeep, landscaping and
beautification of the Common Area in Morningside Meadows; (b) to provide
services for the association members to promote the health, safety and welfare
of the residents of Morningside Meadows, and in particular for the
acquisition, improvement and maintenance of properties, services and
facilities related to the use and enjoyment of the Common Area,

including but not limited to the cost of repair, replacement and additions
thereto; (c) for the payment of taxes assessed against the Common Area, for
insurance. related to Use Common Area, for the employment of attorneys,
accountants and other professionals to represent the Association when
necessary or useful, the employment of security personnel; (d) the provision
of any service which is not readily available from any governmental authority
related to the use, occupancy and enjoyment of the properties and which the
Association shall decide to provide; and (e) for the payment of monthly
electric and water bills and other expenses resulting from the maintenance or
beautification of entrance monuments, signs, and landscaping.

(5.2) Creation of the Lien and personal Obligation of Assessments. The

Developer, for each Lot owned within the Property, hereby covenants, and each
Owner of any Lot by acceptance of a Deed there for whether or not it shall be
so expressed in said Deed, is deemed to covenant and agree to pay to the
Association;

(a) Annual assessments ("Annual Assessments") for the purposes specified in
Section 5.1 in the amount hereinafter set forth; and

(b) Special assessments ("Special Assessments") for the purposes specified in
Section 5.1 as may be approved by the members, to be established, and
collected as provided herein.

In order to secure payment of the Annual and Special Assessments, such charges
as may be levied by, the Association against any Lot, together with interest,
costs of collection and reasonable attorney's fees, shall be a continuing lien
upon the Lot against which each such assessment or .charge is made. Each such
assessment, together with interest, late charges, costs of collection and
reasonable attorney’s fees shall also be the personal obligation of the person
who is the Owner of such Lot .at the time when the assessment fell due. The
personal obligation for delinquent assessments shall not pass to an Owner's
successor in title unless expressly assumed by them. Such assumption shall not
relieve an Owner of his obligation.

(5.3) Exempt property. The assessments, charges and liens created under
this

Article shall not apply to the Common Area, nor shall they apply to any Lot
the title to which is vested either in any first mortgagee subsequent to
foreclosure or in the Secretary of Housing and Urban Development or the
Administrator of Veterans Affairs or any other state or federal governmental
agency which acquires title by reason of such agency’s guarantee or insurance
of a foreclosed mortgage loan; provided, however. That upon the resale of such
property by such first mortgagee or such governmental agency the assessments
shall again accrue on such Lot. Any Lot which Developer may hereafter
designate for common use as part of the Common Areas shall also be exempt and
all land

granted to or used by a utility company shall be exempt from the assessments
created herein.

(5.4) Maximum Annual Assessments. Until January 1 of the year
immediately following the conveyance of the first Lot to an Owner, the maximum
Annual Assessment shall be Two Hundred Forty and No/lOO Dollars ($240.00) on
each Lot.

(a) From and after January 1 of the year immediately following the conveyance
of the first Lot to an Owner, the maximum Annual Assessment may be increased
each year above the maximum assessment for the previous year without a vote
'of the membership not more than the greater of (1) ten percent (10%) or (2)
the increase in the Consumer Price Index from the previous year.

(b) From and after January 1 of the year immediately following the, conveyance
of the first Lot to an Owner, the maximum Annual Assessment may be increased
above the greater of ten percent (10%) or the previous year increase in the
Consumer Price Index by a vote of two-thirds (2/3) of each class of members
who are voting in person or by proxy, at a meeting duly called for this
purpose.

(c) The Board of Directors may fix the Annual Assessment at an amount not in
excess of the maximum herein provided.

(5.5) Special Assessments. In addition to the annual assessment
authorized above, the Association may levy, in any assessment year, a Special
Assessment applicable to that year only provided that any such assessment
shall have the assent of two-thirds (2/3) of the votes of each Class of the
Association members who are voting in person or by proxy at a meeting duly
called for this purpose. .

(5.6) Notice and Quorum for Any Action Authorized Under Sections 5.4 and
5.5. Written notice of any meeting called for the purpose of taking any
action authorized under Sections 5.4 and 5.5 of this Article shall be sent to
all members not less than ten (10) days or more than fifty (50) days in
advance of the meeting. At the first such meeting called the presence in
person or by proxy of members entitled to cast ten percent (10%) of all the
votes of each class shall constitute a quorum. If the required quorum is not
present, another meeting may be called subject to the same notice requirement
and the required quorum at the subsequent meeting shall be one-half of the
required quorum applicable to the meeting adjourned for lack of a quorum. The
quorum requirement shall continue to be reduced by fifty percent (50%) from
that required at the previous meeting, as previously reduced, until such time
as a quorum is present and business can be conducted.

(5.7) Date of Commencement of Annual Assessments; Due Dates; Certificate of
Payment. The Annual Assessments shall commence as to all Lots on the later
to occur of the first day of the month following the date such property is
submitted to the provisions of this Declaration or when activated by the
Developer. From the date on which the

Annual Assessments commence on a Lot until the date on which the Lot is sold
by the

Developer, the Developer shall be liable for Annual Assessments at a rate
which is one third of the rate otherwise payable except that Developer shall
not be liable for Annual Assessments on any Lots if the Association is
operating without a deficit. The first Annual Assessment shall be adjusted
according to the number of months remaining in the calendar year when filed.
At least thirty (30) days before January 1 of each year, the Board of
Directors shall fix the amount of the Annual Assessment against each Lot and
in the event the Board elects not to fix such assessment rate as herein
provided, the amount of the prior year's Annual Assessment shall be the fixed
amount. Written notice of any change in assessment rate shall be sent to every
owner. The Annual Assessments shall be due and payable in advance on January 1
of each year unless the Board of Directors votes to collect such assessments
on a' monthly basis and the due dates for the payment of Special Assessments
shall be established by the Board of Directors. The Association shall, upon
demand and for a reasonable charge, furnish a certificate signed by an officer
of the Association setting forth whether the assessments on a specified Lot
have been paid to date.

(5.8) Effect of Non-Payment of Assessment: Remedies of the Association.
Any

Assessment not paid within thirty (30) days after the due date shall be
assessed a late charge as determined by the Board of Directors and bear
interest from the due date at an annual rate of eight percent (8%) but in no
event above the then maximum legal rate, and to the extent allowed by law. The
Association, or its agent or representative, may bring an action at law
against the Owner personally obligated to pay the same or foreclose the lien
against the Lot to which the assessment relates, and interest costs and
reasonable attorney’s fees for such action or foreclosure shall be added to
the amount of such assessment to the extent allowed by law. No Owner may waive
or otherwise escape liability for the assessments provided for herein by
non-use of the Common Area or abandonment of his Lot. .

(5.9) Subordination of the Lien to First Mortgages. The lien of the
assessments provided for herein shall be subordinate to the lien of any first
priority deed of trust or first mortgage. Sale or transfer of any Lot shall
not affect the assessment lien. However the sale or transfer of any Lot which
is subject to any first mortgage pursuant to a foreclosure thereof or under a
power of sale or any proceeding in lieu of foreclosure thereof shall
extinguish the lien of such assessment as to payments which became due prior
to such sale or transfer. No sale or transfer shall relieve such Lot from
liability for any assessment thereafter becoming due or from the lien thereof.

(5.10) Collection Upon Sale by Developer of Builder. Upon the sale of a
Lot by

Developer or Builder, the purchaser shall pay to the Association at the
closing of the sale that amount of money that is equal to that portion of the
Annual Assessment attributable to the balance of the period in which the
closing takes place. After receipt of said payment, any amounts prepaid by the
Developer or Builder shall be refunded by the Association. Any Special
Assessment made before, but falling due after, the date of closing of the sale
of a Lat by Developer or Builder shall be paid in full to the Association by
the purchaser at the closing of the sale.' In addition each original purchaser
shall pay an amount equal to the Annual Assessment as a contribution to the
Working Capital Fund of the Association.

ARTICLE VI: ARCHITECTURAL. MAINTENANCE AND USE RESTRICTIONS

(6.1) Architectural Control Committee. Developer shall appoint an
Architectural

Control Committee consisting of not less than three members to serve as
representatives of the Association’s Board of Directors and enforce the
restrictions hereafter set forth.

Prior to the formation of said Committee, Developer shall have the
responsibility

of enforcing the restrictions set forth in this Article. Upon the later of the
following two.

dates, the Architectural Cantral Committee shall be appointed by the Board of
Directors:

(1) Upon the Developer voluntarily relinquishing control of the Architectural
Control

Committee; or (2) seven (7) years following the date of recording of this
Declaration.

Reference herein to the Committee shall mean the Developer until such
Committee is appointed. The following architectural, maintenance and use
restrictions shall apply to each and every Lot now or hereafter subject
to.this Declaration.

(6.2) Approval of Plans and Architectural Control Committee. No
construction, reconstruction, remodeling, alteration, roofing or addition to
any structure, building, fence, wall, drive or walkway, or exterior color
change, shall be conunenced or maintained upon any Lot, nor shall any exterior
addition to or change or alteration therein be made after completion of
construction of said dwelling, unless and until the plans and specifications
showing the nature, kind, shape, height, color, material and location of the
same shall have been mailed to.the Architectural Cantral Committee by
certified mail with return receipt requested and approved in writing as
to.harmany of external design and location in relation to.surraunding
structures and topography by the Architectural Cantral Committee If the
Architectural Cantral Committee fails to.approve or disapprove such design and
location within thirty (30) days after said plans and specifications shall
have been submitted"to.it, further approval will not be required and this
Article will be deemed to have been fully complied with. Upon giving approval
to.such plans and specifications, construction shall be started and prosecuted
to completion promptly and in strict

conformity with such plans as have been previously approved by the
Architectural Control Committee. The Architectural Control Committee or the
Board of Directors of the Association shall be entitled to stop any
construction in violation of these restrictions.

(6.3) Residential Use. All Lots shall be used for residential purposes
only.

(6.4) Building Line Requirements. No building shall be located nearer
to the front property line than the front building setback line as shown on
the recorded maps of the Property, and no building shall be located nearer to
the side street line than the side street setback line shown on the recorded
maps of the Property. It is provided however that eaves, steps, stoops,
porches and chimneys shall not be considered a part of the building for
purposes of interpreting this paragraph of this Declaration. Minimum setback
lines which may be shown on any recorded plat of the Properties are not
necessarily intended to create uniformity of setbacks; they are meant
primarily to avoid overcrowding and monotony. It is intended that setbacks may
be staggered where appropriate so as to preserve the trees and other natural
vegetation, and to insure each Owner the greatest benefit and enjoyment of
his/her Lot. Any deviation from the building line requirements not in excess
of ten (10) percent thereof shall not be construed as a violation of the
building line requirements. .

(6.5) Building Requirements. No dwelling shall be erected or placed on
any Lot having a heated living area (exclusive of uncovered porches, stoops,
terraces, attached garages or carports) of less than 1500 square feet. All
homes shall have at a minimum, a single enclosed garage and a concrete
driveway to the street. All homes shall have a minimum roof pitch of 6/12 for
the majority of the roof areas. All slab foundations shall have a brick face
on the slab.

(6.6) Walls, Fences and Hedges. No fence, hedge or wall of any type or
kind shall be erected or maintained on a Lot except such fences, hedges or
walls as may be installed, constructed or erected with the initial
construction of the main dwelling located on said Lot, or as may later be
approved by the Architectural Control Committee as described in Paragraph
(6.2) above. No metal fences, except for a 2 x 4 wire mesh inside of an
approved wooden fence to contain pets, are allowed on a Lot. No solid fence is
allowed on the perimeter of any Lot. All perimeter fences on a Lot must be
rail type or picket fences with at least 50% of surface area open. Privacy
fences are permitted around pools or patios with a maximum height of six (6)
feet. Fences shall be no closer to the right-of-way of any street than the
front comer of the house upon any such Lot. The Architectural Control
Committee shall have the authority to grant exceptions to the above referenced
fence and wall guidelines.

(6.7) Use of Outbuildings and Similar Structures. No structure of a
temporary nature shall be erected or allowed to remain on any Lot, and no
trailer, shed, tent, garage; carport, or any other structure of a similar
nature shall be used as a residence either temporarily or permanently.
Provided, however, this paragraph shall not be construed to prevent the
Developer or Builder from using sheds or other temporary structures during
construction for such purposes as Developer or Builder deems necessary or
later approved by the Association. No television satellite dishes shall be
erected on any Lot, except that a television satellite dish not exceeding 30
inches in diameter which is attached to the house and is not visible from the
street shall be permitted. No radio or television antenna shall be allowed on
the roof of any house or structure located on a Lot and no separate towers for
antenna shall be erected on any Lot. No metal storage buildings, metal sheds,
metal trailers or metal garages shall be permitted on any Lot. All other types
of storage buildings, sheds, trailers or garages shall not be allowed on a Lot
unless approved by the Architectural Control Committee as described in
Paragraph (6.2) above.

(6.8) Animals and Pets. No animals, livestock or poultry of any kind
shall be raised, bred, pastured, or maintained on any Lot, except household
pets which may be kept thereon in reasonable numbers as pets for the sole
pleasure and use of the occupants, but not for any commercial use or purpose.
All household pets shall be kept under Owner's control so as not to be a
nuisance to other Owners. Birds shall be confined in cages.

(6.9) Signs. No advertising signs of any type or kind shall be erected,
placed or

permitted to remain upon or above any Lot or Common Area with the exception of
a single sign "For Rent" or "For Sale," which sign shall not exceed two feet
by two feet in dimension and shall refer only to the premises on which
displayed, there being only one

Sign to a Lot. Notwithstanding the above, the Developer or Builder may erect
and place permanent and temporary signs on or above any unsold Lot. Developer
or Builder shall also have the right of ingress, egress and regress over the
aforesaid Lots in order to maintain and replace any such signs until 100% of
the Lots have been sold.

(6.10) Nuisances. No offensive or illegal activity shall be carried on
upon any Lot, nor shall anything be done thereof which is or may become an
annoyance or nuisance to any other Owner. No Lot shall be used in whole or in
part for storage of rubbish of any character whatsoever, nor for the storage
of any property or thing that will cause such Lot to appear in any unclean or
untidy condition or that is unsightly; nor shall any substance, thing or
material be kept upon any Lot that will emit a foul odor or that will cause
any noise that will or might disturb the .peace and quiet of the occupants of
surrounding Lots.

No trash, rubbish, stored materials, wrecked, unlicensed or inoperable
vehicles, boats and/or trailers, recreational vehicles or similar unsightly
items shall be allowed to remain on any Lot outside an enclosed structure.
However, the foregoing shall not be construed to prohibit temporary deposits
of trash, rubbish and other such debris for pick up by

governmental and other similar garbage and trash removal service units. In the
event any

Owner fails or refuses to keep his Lot free from unsightly objects, weeds or
underbrush in a manner satisfactory to a majority of the Association Board of
Directors, the Association may, through its agent or representative, five days
after posting a notice on such Lot or mailing a notice to the Owner thereof at
his property requesting the Owner to comply with the requirements of this
paragraph, enter and remove all such unsightly objects, debris or other
vegetation at Owner's expense and Owner by acquiring any Lot subject to this
Declaration, agrees to pay such costs incurred by the Association in the
enforcement of this paragraph promptly upon demand. The Association or its
agent or representative may bring an action at law against the Owner
personally obligated to pay the same or foreclose the lien against the Lot and
interest costs and reasonable attorney's fees for such action or foreclosure
shall be added to the amount due to the extent allowed by law. No such entry
as provided herein shall be deemed a trespass. The foregoing provisions shall
not apply to the Developer while constructing residences upon any Lots.

(6.11) Clotheslines. Garbage Cans. Etc. All clotheslines, garbage cans,
lawnmowers and equipment shall be kept, in an enclosed structure or screened
by adequate planting or fencing so as to conceal same from the view of
neighboring Owner and Streets. Incinerators for garbage, trash or other refuse
shall not be used nor permitted to be erected or placed on any Lot.

(6.12) Use of Common Areas. No planting or gardening by individual
Owners shall be done upon any Common Area without approval of the Board of
Directors. Except for the right of easement of enjoyment in and to the Common
Areas herein given to each Owner, Owners are hereby prohibited and restricted
from using any of the Common Area except as may be allowed and prescribed by
the Association Is Board of Directors or as expressly provided for herein. It
is Developer's intent that this paragraph inure to the mutual benefit of all
Owners within the Properties.

(6.13) Maintenance.

(a) Exterior maintenance, upkeep and repair to the main dwelling on each Lot,
yard, fence, walkway and shrubbery shall be the sale responsibility and
expense of the Owner of the Lot subject to such reasonable requirements as may
from time to time be established by the Committee to insure the continuity and
harmony of exterior design of Morningside Meadows. Should a majority of the
Association Board of Directors determine that any Owner has failed or refused
to discharge properly his obligations with respect to such maintenance, upkeep
and repairs, the Association, through its agent or representative, may provide
same as it may deem necessary and proper.

(b) All Lots, together with the exterior of all improvements thereon, shall be
maintained in a neat and attractive condition by their respective Owners. Such
maintenance shall include, but shall not be limited to, painting, repairing,
replacing or caring for roofs, gutters, downspouts, building surfaces, trees,
shrubs, walks or other exterior improvements. In the event an Owner shall fail
to maintain the premises and the improvements thereon in a manner satisfactory
to the Association Board of Directors, the Association may, through its agent
or representative, after approval by two-thirds (2/3) vote of the Board, have
the right to enter upon said Lot and repair, maintain and restore the Lot and
the exterior of the buildings and any other improvements thereon. The cost of
such exterior maintenance shall be added to and become part of the assessment
to which such Lot is subject and the Owner shall be personally liable to the
Association for the costs of such maintenance, and the cost, until paid, shall
be a permanent charge and lien upon such Lot, enforceable to the same extent
and collectible as provided for in Article V. Such entry as provided herein
shall not be a trespass, nor shall the Association be liable for doing
anything reasonably necessary or appropriate in connection with carrying out
those provisions, provided such entry shall be at reasonable times and places
so as not to interfere with the right of quiet enjoyment of the individual Lot
Owner.

(6.14) Above Ground Swimming Pools. No above ground swimming pools,
except for small wading pools, are permitted on any Lot.

(6.15) Decorative Structures. No decorative statues, birdbaths,
fountains, or figurines, or any other decorative structures or items are
permitted in the front or side yards of any Lot.

(6.16) Boats, Commercial Vehicles and Recreational Vehicles. No boats,
boat

Trailer, Commercial vehicles larger than a full-size pickup truck or full-size
van, or recreational vehicles shall be permitted on any Lot except in an
enclosed garage or

Screened area approved by the Architectural Control Committee.

(6.17) Mailboxes. Mailboxes on each Lot shall conform to specifics set
forth by the Architectural Control Committee.

ARTICLE VII: EASEMENTS

(7.1) General. Each Lot now or hereafter subjected to this Declaration
shall be subject to .all easements shown or set forth on the recorded plat or
plats of survey upon which such Lot is shown. No structure of any type shall
be erected or placed upon any

part of a Lot or the Common Area which will interfere with rights and use of
any and all easements shown on said recorded plat.

(7.2) Utility and Drainage. An easement on each Lot is hereby reserved
by

Developer for itself and its successors and assigns along, over, under and
upon a strip of land ten feet (10') in width parallel and contiguous to the
rear or back Lot line of each Lot and easements five feet (5') in width over,
under and along the side lot lines of each Lot, in addition to such other
easements as may appear on a recorded subdivision plat for Morningside
Meadows. The purpose of these easements shall be to provide, install,
maintain, construct and operate drainage facilities now or in the future and
utility service lines to, from or for each of the Lots. Within these
easements, no structure, planting or other material shall be placed or
permitted to remain which may damage or interfere with the installation or
maintenance of utilities, or which may change the direction or flow of
drainage channels in the easements without approval of the Architectural
Control Committee. The easement area of each and all improvements in it shall
be maintained continuously by Owner, except for those improvements for which a
public authority or utility company is responsible. With ten (10) days prior
written notice to Owner, Developer may exercise the right to remove
obstructions in such easements upon Owner's failure to do so. For the purpose
of this covenant, Developer reserves the right to modify or extinguish the
herein reserved easements along any Lot lines when in its sale discretion
adequate reserved easements are otherwise available for the installation of
drainage facilities and/or utility service lines. For the duration of these
restrictions, no such utilities shall be permitted to occupy or otherwise
encroach upon any of the easement areas reserved without first obtaining the
prior written consent of Developer; provided, however, local service from
utilities within easement areas to residences constructed upon any such Lots
may be established without first obtaining separate consents there for from
Developer. The Association may likewise reserve and grant easements for the
installation and maintenance of sewerage, utility and drainage facilities in,
across, under and over the Common Area.

(7.3) Emergency. There is hereby reserved without further assent or
permit and to the extent allowed by law, a general easement to all firemen,
ambulance personnel, policemen and security guards employed by Developer and
all similar persons to enter upon the Properties or any portion thereof, in
the performance of their respective duties.

(7.4) Entry Monuments. Signs and Landscaping Easements. Declarant
hereby grants the Association perpetual easements over the portion of those
Lots which are designated "Sign & Landscape Esmt." or "Common Open Space"
on all recorded maps of Morningside Meadows. Easements over these areas shall
be for the purpose of the installation, maintenance and repair of all
Morningside Meadows entry monuments, walls, signs and landscaping and the
Association is also granted a perpetual easement for ingress,

egress and regress over these areas to fulfill these purposes. Declarant also
hereby grants perpetual easements over all entrance islands within public
rights of way and the easement over these areas shall be for the installation
and maintenance of landscaping on the entrance islands.

ARTICLE VIII: GENERAL PROVISIONS

(8.1) Covenants Running with the Land. All provisions of this
Declaration shall be construed to be covenants running with the land, and with
every part thereof and interest therein, and every Owner or any other person
or legal entity claiming an interest in any Lot, and his heirs, executors,
administrators, successors and assigns, shall be bound by all of-the
provisions of this Declaration.

(8.2) Duration. The covenants, conditions and restrictions of this
Declaration shall be binding for a term of twenty (20) years from the date
this Declaration is recorded after which time they shall be automatically
extended for successive and additional periods of ten (10) years each.

(8.3) Amendments and Termination. This Declaration may be terminated
during the first twenty (20) year period by an instrument signed by not less
than ninety percent (90%) of the Owners, and thereafter may be terminated by
an instrument signed by not less than seventy-five percent (75%) of the
Owners. This Declaration may be amended upon the affirmative vote or written
consent, or any combination thereof, of at least sixty-seven percent (67%) of
the Owners and the consent of the Developer; provided, however, that the
Developer may amend this Declaration to correct minor and clerical errors, as
determined by the Developer, without approval of Owners arid should the FHA,
VA, Federal National Mortgage Association (FNMA) or the Federal Home Loan
Mortgage Corporation (FHLMC) subsequently delete any of their requirements
which necessitate certain provisions of this Declaration or make any such
requirements less stringent, the Developer, without approval of Owners, may
amend this Declaration to reflect such changes. Any such amendment or
termination shall not be effective until an instrument evidencing such change
has been filed of record in the Union County Public Registry.

(8.4) FHA/VA Approval. In the event the Declarant has arranged for and
provided purchasers of Lots with FHA insured or VA mortgage loans, then as
long as any Class B lot exists, as provided in Article VI hereof, the
following actions will require the prior approval of the Federal Housing
Administration or the Veterans Administration: annexation of additional
properties, other than as provided in Article n hereof, deeding, mortgaging or
dedication of Common Area to persons other than the Association and amendment
of this Declaration.

(8.5) Enforcement. If any Owner shall violate or attempt to violate any
of these restrictions, failure to comply with any of the same shall be grounds
for an action to recover sums due, for damages or injunctive relief, or both,
maintainable by the Board of Directors on behalf of the Association, or, in
proper case, by an aggrieved Owner. Any failure by Association or any other
Owner to enforce any of the foregoing restrictions or other provisions shall
in no event be deemed a waiver of their right to do so thereafter.
Invalidation of any covenant condition or restriction or other provision of
this declaration shall not affect the validity of the remaining portions
thereof which shall remain in full force and effect.

(8.6) Headings. Headings are inserted only for convenience and are in
no way to be constructed as defining, limiting, extending or otherwise
modifying or adding to the particular paragraphs to which they refer.

(8.7) Unintentional Violation of Restrictions. In the event of
unintentional violation of any of the foregoing restrictions with respect to
any Lot, the Developer or its successors reserves the right (by and with the
mutual written consent, of the then Owner or Owners of such Lot) to change,
amend, or release any of the foregoing restrictions as the same may apply to
that particular Lot.

(8.8) Severability. The provisions of this Declaration are severable
and the invalidity of one or more provisions hereof shall not be deemed to
impair or affect in any manner the validity, enforceability or effect of the
remainder hereof.

IN WITNESS WHEREOF, the Developer has caused this Declaration to be executed
under seal on the day and year first above written.

Knotts-Stallings, LLC, a North Carolina limited

liability company

BY:________________________________(SEAL)

#CCR-MORNINGSIDE 1