CHARLES ALLEN SMITH, is the sole present owner of the following described tract, to-wit:

A 210.33 acre tract of land out of Section 120, Block 12, EL&RR Railway Company Survey, Lynn County, Texas described by metes and bounds as follows:

BEGINNING at a point in the North line of Section 120 in P.M. Highway 1730 as described in Volume 2, Page 546 of the Commissioners' Court Records of Lynn County, Texas for the Northeast comer of this tract, the Northeast comer of Section 120 bears S 88°16'48"E a distance of 1778.45 feet;

THENCE S 01°39'12"W, at 40.00 feet pass a 1 inch iron pipe found in the South right-of-way line of said highway continuing a total distance of 5292.68 feet to a 1 inch iron pipe found in the South line of Section 120 for the Southeast corner of this tract;

THENCE N88°17'20"W along the South line of Section 120 a distance of 1731.00 feet to a '/2 inch steel rod with cap set for the Southwest corner of this tract;

THENCE N OF39'12"E at 5252.95 feet pass a !/2 inch steel rod with cap set in said highway right-of-way continuing a total distance of 5292.95 feet to a point in the North line of Section 120 for the Northwest comer of this tract;

THENCE S 88°16'48"E a distance of 1731.00 feet to the POINT OF BEGINNING; And does hereby impress all of said 210.43 acre tract with the following Restrictive Covenants, each running with the land as follows, to-wit:

I. LAND USE RESTRICTIONS

(1) CHARLES ALLEN SMITH owns all of the property described and shown on the attached "Plat of Lots 1 through 113 of The Palms of Kitty Hawk an addition to Lynn County, Texas" which is made a part hereof for all purposes, does hereby contractually agree that each conveyance hereafter made of any tract shown on the attached "Map of survey for identification purposes" or any portion thereof, shall be made subject to those certain easements designated as "Runway Easement" and "Road Easement".

(2) The Runway Easement shown on the attached map shall be for airplane use only and no motorcycle(s), automobile(s), or other contrivance(s) shall ever have use of said Runway Easement except for emergency purposes or upon written consent of each and every owner of each of the tracts shown on the attached "Map of survey for identification purposes" or any portion thereof. All tract owners who accept a deed or other conveyance to any portion of any of the tracts described on the attached "Plat of Lots 1 through 113 of The Palms of Kitty Hawk an addition to Lynn County, Texas" shall by the acceptance of such deed or other instrument of conveyance, accept the responsibility of keeping any guest, licensee or invitee of each owner off of the Runway Easement situated on their tract so as to not interfere with air traffic or to create a danger to any such owner, his family members or his guest, licensees or invitees.

(3) No structure of any kind or any tree, fence or other object of any kind shall ever be placed or permitted to exist on the portion of any tract shown on the attached "Plat of Lots 1 through 113 of The Palms of Kitty Hawk an addition to Lynn County, Texas" as being impressed with the Runway Easement.

Further, no activity shall be permitted on any tract that interferes directly or indirectly with the maintenance of an obstruction free runway or directly or indirectly interferes with the flight of planes landing or taking off from the runway that shall hereafter be situated upon the Runway Easement.

(4) Each owner of any tract described on the attached "Plat of Lots 1 through 113 of The Palms of Kitty Hawk an addition to Lynn County, Texas" or any portion thereof shall maintain his tract or any portion thereof in a neat, clean and attractive manner and condition and shall keep the same weed free.

(5) No unsightly items such as old cars, planes or unsightly or offensive personal property, will be allowed to remain in the open and items may be covered with a tarpaulin or other opaque cover, as long as they are not offensive to sight.

(6) In the future, no owner shall convey any portion of any of the tracts described on the attached "Plat of Lots 1 through 113 of The Palms of Kitty Hawk an addition to Lynn County, Texas" other than as originally conveyed to them by the developer.

(9) No structure shall ever be placed or permitted to exist upon any tract or any portion thereof of the tracts described on the attached "Plat of Lots 1 through 113 of The Palms of Kitty Hawk an addition to Lynn County, Texas" which shall exceed 45 feet in height.

(10) No old building will be moved onto any lot, unless the design for converting can be shown to be attractive to the area, and the conversion will proceed immediately after the old building or structure is moved on the premises.

(11) No mobile homes nor modular houses/homes shall be allowed, on any tract or any portion thereof described on the attached "Plat of Lots 1 through 113 of The Palms of Kitty Hawk an addition to Lynn County, Texas" , except on a temporary basis while construction of a permanent home is in progress, and the maximum time allowed shall be twelve (12) months.

(12) Recreation vehicles such as a motor home shall be allowed, if not parked so as to be a nuisance to neighbors and not used as a residence.

(13) Metal buildings will be allowed for use as hangars or combination living unit and hangar if design is approved by the home owners' association.

(14) Each separate tract described on the attached "Plat of Lots 1 through 113 of The Palms of Kitty Hawk an addition to Lynn County, Texas" or any portion thereof or any lot existing hereafter shall be tied into a septic tank and field tile system, approved by the Home Owners Association and other authorities, required by law. Town Houses may be on a single septic tank system if they have party walls.

(15) Lot grading around units shall have drainage to front and rear, with minimum side drainage.

(16) A maximum of three separate buildings shall be allowed per dedicated tract, consisting of a residence, hangar and barn or storage building. There will be no multi-family residences.

(17) Maximum lot coverage by buildings shall be 50% of the total acreage in any lot. Town House coverage (all buildings) shall be 50% of the total acreage area for each lot. All residences shall be 100% brick.

(18) No commercial or flight training operation will be conducted on the airstrip.

(19) An office may be maintained in a residence but no sign may be displayed other than an eight inch square sign at the entrance door of the residence.

(20) No residence shall be less than 2,000 square feet unless contained inside a hangar as an apartment.

(21) No animals of any kind shall be raised, bred or kept on any lot or lots except for not more than two dogs, cats or other similar domesticated household pet. Provided further, that there shall be no animal or animals kept for any commercial purpose. The keeping of any pet shall be subject to any rules and regulations adopted by the Home Owners Association through it's Board of Directors. The Home Owners Association, through its Board of Directors shall have standing to enforce any and all such rule and regulations. No animals shall be permitted that are obnoxious, overly noisy, offensive, vicious or dangerous. No Pit Bulls nor snakes shall be permitted as pets. All animal must be kept and maintained in the rear yard of the Lot or on a leash.

(22) Curbs and gutter will not be required on the road easement and roads may be all weather unpaved roads, unless "The Road Easement" is dedicated for public use at a later date and in that event any County Order or other applicable Order or Ordinance shall apply.

(23) Each owner will pay his pro rata share of the reasonable cost of utility lines and roads, and/or the cost of maintaining, repairing or constructing roads and any runway construction hereafter. A vote of 75% of owners is required to authorize and bring these improvements in, if capital outlay is required.

(24) Town Houses may be developed but not more than 30% of land coverage allowed, all setbacks shall remain the same as other lots.

(25) No rubbish, trash garbage, debris or other waste shall be dumped or allowed to remain on any Lot.

(26) No clothesline may be maintained on any Lot, unless enclosed by a hedge or other type of screening enclosure as approved by the Home Owners Association.

(27) No antenna, tower, or other similar vertical structure shall be erected on any Lot for any purpose; however, a flagpole will be permitted where approved in writing by the Home Owners Association. No antenna or tower shall be affixed to the outside of any Dwelling Unit on any Lot without the prior written consent of the Home Owners Association. No satellite reception device or equipment used in the reception of satellite signals shall be allowed on any Lot or structure unless approved in writing by the Home Owners Association and approval will be granted only where the devices are reasonably concealed from view of any street, public areas and neighboring Lots, and structures. No satellite dishes will be permitted which are larger than one meter in diameter. The Declarant and/or the Home Owners Association shall have the right, without obligation, to erect or install an aerial, satellite dish, master antenna, cable system, or other apparatus for the transmission of television, radio, satellite or other signals for the benefit of all or a portion of the Properties. The Declarant by promulgating this Section is not attempting to violate the Telecommunications Act of 1996 (the "Act"), as may be amended from time to time. This Section shall be interpreted to be as restrictive as possible while not violating the Act.

(28) No oil drilling, oil development operation, oil refining, or quarrying or mining operations of any kind hall be permitted on or in any Lot, nor shall oil wells, tanks, tunnels, mineral excavations or shafts be permitted on or in any Lot. No derrick or other structure designed for use of boring for oil and/or natural gas shall be erected, maintained or permitted on any Lot. Oil development and or drilling will be allowed with permission of the Home Owners Association upon the unplatted tract located in the Southeast Corner of the property described in the first paragraph of this Dedication Deed.. Under no circumstances shall any oil development or drilling operations shall be any closer to any structure on any lot in this subdivision than 750 feet.

(29) No sign of any kind shall be displayed to the public view on any Lot, except one professional sign of not more than five (5) square feet advertising the property for sale, or a sign used by Declarant or a Homebuilder to advertise the building of Improvements on such property during the construction and sales period.

(30) Each single-family residential dwelling erected on any Lot shall provide garage space for a minimum of two (2) conventional automobiles, unless otherwise specifically approved by the Home Owners Association. Each Owner, Member and Resident shall use their respective best efforts to park and store their automobiles within the garage. All garage doors shall be closed at all times when not in use. Carports are not encouraged but may be permitted under limited rigid circumstances if, as and when, in the absolute opinion of the Home Owners Association, the exterior surface and appearance will substantially compare with a garage and if absolutely no storage of items which would otherwise be visible, will occur thereunder. Any and all proposed garage or carport plans and specifications must be submitted to the Home Owners Association for review and approval. A garage will be situated on the Lot in such a manner that the garage door or entry will face not less than a ninety degree (90°) angle away from the street upon which the Lot is situated. The Home Owners Association may adjust this angle as necessary to accommodate the particular dimensions of each Lot; however, an effort must be made to face the garage doors away from the abutting street. On corner Lots, no garage will face either the front street or the side street, and no driveway will be permitted from a side street. Aircraft hangers or enclosures are exempt from this paragraph's requirements. Each Owner, Resident and Member shall use their respective best efforts to refrain from:

(a) habitually parking any automobile or vehicle on any Lot outside of an approved garage area between any Dwelling Unit and the abutting front street or between any Dwelling Unit and an abutting side street and

(b) performing, permitting or allowing repair or maintenance work to any automobile or other vehicle outside the garage and visible to the abutting street(s).

Under no circumstances or conditions shall any automobile, boat or other vehicle be parked on a non-paved portion of any Lot, except that a trailer, motor home, boat or recreational vehicle be parked at a location to the side or rear of the Dwelling Unit provided that it is concealed from view of all other Lots and from public streets which border such Lot. Any Structure designed to house, store or conceal a trailer, motor home, boat or recreational vehicle shall be subject to approval by the Home Owners Association, and such approval will be limited to such Structures which use designs and materials which are compatible with the Dwelling Unit.

(31) Each Dwelling Unit will face the street which abuts the front of the Lot upon which the Dwelling Unit is to be situated; however, for all comer lots, the Home Owners Association will determine the location of the Dwelling Unit in accordance with the Plans submitted by each Owner. No Structure shall be placed within the following setback lines:

(a) 50 feet from the front property line of the Lot;

(b) 25 feet from any public street or right-of-way (other than a street abutting the front property line of the Lot);

(c) 20 feet from the rear property line of the Lot;

(d) 15 feet from any side property line of the Lot; except that if an Owner owns two or more adjacent Lots and desires to construct one Dwelling Unit on such Lots, construction of which Dwelling Unit would violate the side lot setback lines provided herein, the Home Owners Association may waive, in writing, said side lot setback line as to such Dwelling Unit, and such Lots shall be considered to be one Lot solely for purposes of determining the setback lines.

The following Structures are expressly excluded from the setback restrictions:

(a) structures below and covered by the ground;

(b) steps, walks, below ground-level swimming pools, uncovered patios, driveways and curbing;

(c) landscaping as approved by the Home Owners Association pursuant to Article VIII hereof;

(d) planters, walls, fences or hedges, not to exceed 8 feet in height, and which comply with the restrictions set forth in this declaration;

(e) any other Structures exempted from the setback restrictions by the Home Owners Association on a case-by-case basis and as provided in Article VIII hereof.

In no event shall the Home Owners Association exempt from the setback restrictions, any roofed structure other than swimming pool equipment houses, cabanas, greenhouses, barns and storage sheds; and, in the case of swimming pool equipment house, cabanas, greenhouses, barns and storage sheds, such structures may in no event be exempted from side setback restrictions, and such structures may in no event be situated within ten (10) feet of the rear property line of the Lot; and further, such structures must be situated wholly within a fence on the Lot, and must meet any other design and construction requirements as established by the Home Owners Association.

(32) Fences. Any fence to be constructed on a Lot must conform to the following requirements:

(A) A perimeter fence shall be constructed (i) across the rear property line of each Lot and (ii) along,the side of each Lot from the rear fence corner to a point which is not behind the rear building line of the Dwelling Unit on the Lot nor in front of the front building line of such Dwelling Unit. The side perimeter fences shall be connected to the Dwelling Unit by a fence running from the front corner of such side perimeter fence to the Dwelling Unit. If not sooner constructed, all such fences must be constructed within one (1) year following the date on which construction of the Dwelling Unit is completed on the Lot. No fence, wall or hedge (which serves as a barrier) shall be erected, placed or altered on any Lot without the approval of the Home Owners Association. Notwithstanding the foregoing, no fence shall be constructed within a twenty-five foot "visibility triangle." As used herein, a "visibility triangle" shall mean a triangle sight area, at all street and county road intersections, which shall include that portion of public right-of-way and any corner Lot within a triangle formed by a diagonal line extending through points on the two property lines twenty-five feet from the street or county road corner intersection of the property line (or that point of intersection of the property lines extended) and intersecting the curb lines.

(B) Fences and walls shall not be permitted within the front yard of any Lot; provided, however, decorative fences and walls shall be allowed which do not exceed thirty inches in height and which are approved by the Home Owners Association. Notwithstanding the preceding sentence, Lots 1, 2, 3, 4, 5, 6 and 7, which abut Slide Road (FM 1730), are each required to have a fence along the front property line of the Lot (except where driveways are located) to be constructed of wrought iron, except that the fence columns shall be of the same masonry or exterior finish utilized on the Dwelling Unit; and further, the columns shall be spaced not more than 25 feet apart on center. On Lots 2 and 3, the front yard fence shall not extend along the entire front property line, but will connect to the side fence as described below in this Section 33, and so as to maintain a 30 ft. visibility triangle. Gates should be set back 15 feet from the front property line of Lots 1 through 7, inclusive, and the front fence should be angled to connect to the gate or gates. In order to promote a uniform appearance, all front yard fences on Lots abutting Slide Road (Lots 1 through 7, inclusive) shall be 6 feet in height and shall be of an Home Owners Association architectural style and construction as will conform to the design of the Dwelling Unit, as determined and approved by the Home Owners Association. In addition to the front yard fence required by this paragraph, Lot 2 shall have a fence, set back ten feet from the South property line of said Lot running from the front corner of the front yard fence (except that a 30 ft. visibility triangle shall be maintained) to the rear property line of said Lot; and, such fence shall be constructed of the same materials and be of the same design as the front yard fence. In addition to the front yard fence required by this paragraph, Lot 3 shall have a fence, set back ten feet from the North property line of said Lot, running from the front corner of the front yard fence (except that a 30 ft. visibility triangle shall be maintained) to the rear property line of said Lot; and, such fence shall be constructed of the same materials and be of the same design as the front yard fence. The area of each Lot between the boundary line of the Lot and the fence shall be landscaped as approved by the Home Owners Association and maintained by the Owner or Resident of the lot. Although Declarant or the Association may, but shall not be required, to plant or provide trees on selected Lots, each Owner will maintain, water and care for the trees located on his or her Lot, and neither Declarant not the Association shall have any duty or obligation to maintain or replace the trees which it may have provided or planted.

(C) Except as otherwise provided in section s 32 or 33, all perimeter fences located on a Lot which face or abut a street or county road (as shown by the recorded plat of the Subdivision) shall be constructed of brick, stone, masonry, or flat-top cedar pickets (provided that any fence constructed of flat-top cedar pickets shall incorporate brick columns spaced not more than 2.5 ft. apart on center), and shall be of such design and construction as conform to the design of the Dwelling Unit, and as are approved by the Home Owners Association. Fences not otherwise provided for in this Section 34 shall be constructed of such materials and design as approved by the Home Owners Association; however, the Home Owners Association shall not approve a fence

(a) except as otherwise provided in this Declaration, and except as prohibited by City or County ordinances and regulations, no fence constructed on a Lot shall be less than six feet not more than eight feet in height.

(b) All perimeter fences shall be located wholly within the boundaries of a Lot and shall not encroach across such boundaries; provided, however, that the Owners of adjoining Lots may agree to construct a fence along the common boundary of such Lots which extend onto each Lot. Any such agreement must be in writing and must be recorded in the Lynn County Clerk's office in Tahoka, Texas. To the extent any such common perimeter fence is constructed, the Owners of the Lots on which it is located shall be jointly and severally responsible for the maintenance and repair thereof.

(35) Construction Standards for Lots. In addition to meeting all applicable building codes, all improvements and Structures on each Lot shall meet with the following requirements (except as may be modified in writing by'the Home Owners Association)

(A) EXTERIOR WALLS: The exposed exterior wall area, exclusive of doors, windows and covered porch area, shall be at least 100 percent brick, stone, or other materials approved by the Home Owners Association. Any exposed exterior area not covered by brick or stone shall be covered by wood or siding (metal or synthetic) having the appearance of wood, and as approved by the Home Owners Association. The Home Owners Association is specifically authorized to require a continuous uniform surface with respect to all Structures which directly face the street or county road or another Lot.

(B) ROOFING DESIGN AND MATERIAL: Flat roofs, mansard roofs and other "exotic" roof forms shall not be permitted. All roofing materials utilized on any Structure on a Lot must be approved by the Home Owners Association. The Home Owners Association will not approve of a roof of crushed stone, marble or gravel, it being intended that each roof shall be constructed only of metal, composition or wood shingles (provided that any composition shingles must be at least 300 pound shingles), tile, slate, or other materials approved by the Home Owners Association taking into account harmony, conformity, color, appearance, quality and similar considerations.

(C) CHIMNEYS: All fireplace chimneys shall be constructed of the same brick, stone, or stucco, as appropriate, used for the Dwelling Unit.

(D) GARAGES: in addition to meeting the requirements stated in Section 30, all garages shall be given the same Home Owners Association architectural treatment as the Dwelling Unit located on such Lot. All garage doors shall remain closed when not in use. The interior walls of all garages must be finished (taped, floated and painted as a minimum). No garage shall be enclosed for living area or utilized for any other purpose than storage of automobiles and related normal uses.

(E) EXTERIOR LIGHTING: No exterior light shall be installed or situated such that neighboring Lots are unreasonably lighted by the same, and all exterior lighting to be located within the front yard or side yard of a Lot must be approved by the Home Owners Association. All freestanding exterior lights located between the property lines and the Dwelling Unit shall be Home Owners Associationhitecturally compatible with the Dwelling Unit, and shall be approved by the Home Owners Association.

(F) DRIVEWAYS: Driveways shall be a minimum of 12-feet wide. The driveway shall be constructed of concrete, or other material as may be approved by the Home Owners Association. Any concrete or other material utilized must have a minimum strength of 2500 psi with steel reinforcing.

(G) WINDOW UNITS: No structure shall utilize window mounted or wall-type air conditioners or heaters.

(H) SKYLIGHTS: Skylights shall be permitted on the roof of a Dwelling Unit, subject to approval by the Home Owners Association. No other equipment, including without limitation, heating or air conditioning units, solar panels, solar collection units, satellite dishes, and antennas, shall be located on the roof of any Dwelling Unit or Structure, unless the same are concealed from view from adjoining Lots and public streets, and do not materially alter the roof line of the dwelling Unit or Structure; and further, plans and designs for such equipment to be located on a roof must be submitted with the Plans required pursuant to Article V hereof, and the design, plans, and installation of skylights, and all equipment located on the roof, are subject to the approval of the Home Owners Association.

(35) SWIMMING POOLS: No above-ground swimming pools shall be permitted on any Lot. However, an above-ground spa or hot tub may be constructed on a Lot provided that ehe same is located on a porch or deck associated with the Dwelling Unit. Any in-ground swimming pool shall be located in the rear yard of the Lot, and shall be securely enclosed by a fence and gates designed to prevent children and animals from accidently entering the pool enclosure. An enclosed in-ground pool may be constructed at the rear of the Dwelling Unit (either attached to the Dwelling Unit or as a separate Structure), provided that the enclosure for such pool shall be of the same materials used on, and in the same Home Owners Associationhitectural style, as the Dwelling Unit. All swimming pools, and all swimming pool enclosures, must be approved by the Home Owners Association.

(36) TENNIS COURTS: No tennis court shall be constructed on any Lot unless and until the design, plans and specifications for the tennis court have been approved by the Home Owners Association. Approval will be limited to those tennis courts which are located only in the rear yard of the Lot, and which: (I) utilize only "low profile" lighting: (ii) have no chain-link fencing or chain-link backstops; (iii) are fenced with material compatible with those materials utilized on the exterior of the Dwelling Unit; and (iv) are concealed to the greatest extent possible from view from any street, neighboring Lot, or other public area.

(37) SEPTIC SYSTEMS: No cesspool, outhouse or outside toilet shall be permitted on any Lot. Toilets located in any Structure, shall be connected to either an approved public sewage disposal system or to a septic tank located in the front yard of the Lot on which such Structure is constructed. Sewage disposal facilities and septic tanks must comply in all respects with all applicable state, county and/or other governmental laws, rules and regulations. Septic tanks on each Lot shall be restricted to the front yard of each Lot.

(a) WATER WELLS: Water wells on a Lot must comply in all respects with all applicable state, county and/or governmental laws, rules and regulations. Water wells on a Lot shall be restricted to the rear yard of each Lot, and shall be located not closer than 50 feet to any side property line or the rear property line. Only submersible pumps having not more than one and one-half (11/2) horsepower in capacity shall be used in any water wells located on the Lot except that on Lots 1 through 7, inclusive, submersible pumps having not more than five horsepower in capacity shall be permitted. Under no circumstances shall any above ground irrigation motors or similar devices (whether gasoline or electric) be located on a Lot and/or used in connection with providing water to that Lot for household use and watering of landscaping. All water wells shall be ceased from the surface to the water formation. Owners and Residents may utilize water from a water well for domestic purposes only, and all water produced from a well shall be utilized solely on the Lot from which the water is removed. No Owner or resident may remove or sell water from their Lot to the public, or to any person or entity.

(b) SLIDE ROAD (FM 1730): All Lots fronting Slide Road (FM 1730) must receive approval from both the Home Owners Association and the Texas Department of Transportation for the location of driveways and any other access from Slide Road to the Lot, and no driveway or entranceway will be constructed unless and until written approval has first been obtained from both the Home Owners Association and the Texas Department of Transportation.

(38) MAILBOXES: Mailbox location and design will be subject to approval by the Home Owners Association, and all mailboxes must be harmonious with the Dwelling Unit.

(39) APPROVED STRUCTURES OTHER THAN DWELLING UNIT: No Structure or Improvement shall be permitted on any Lot other than the Dwelling Unit and such permanent Structures and Improvements as are approved in writing by the Home Owners Association, such as swimming pool equipment houses, cabanas, greenhouses, barns and storage sheds; however, in no event will the Home Owners Association approve a Structure or Improvement that is not of the same Home Owners Association design as the Dwelling Unit, and constructed of the same materials as used on the Dwelling Unit. Further, such Structure or Improvement must be of the same percentage of brick, stucco, stone other material as required for the Dwelling Unit.

(40) LANDSCAPING OF LOTS: Construction of each and every Dwelling Unit within the Properties shall include the installation and placement of appropriate landscaping. All landscaping shall be completed by no later than one year after final completion of the Dwelling Unit, weather permitting. Landscaping must (I) permit reasonable access to public and private utility lines and easements for installation and repair; (ii) provide an aesthetically pleasing variety of trees, shrubs, groundcover and plants; and (iii) provide for landscaping of all portion of the Lot not covered by Improvements. Landscaping shall include, groundcover, trees, shrubs, vegetation and other plant life. Landscaping shall not include gravel, concrete, timber or rocks except where used as borders, walkways, accent pieces, or as otherwise approved by the Home Owners Association. A swimming pool, where approved by the Home Owners Association, may be considered landscaping. Except for typical garden hoses having a diameter of not more than one- inch, and common portable yard sprinklers that may be attached to such hoses. No pipes, hoses, sprinklers, or other parts of any irrigation system for watering of landscaping on a Lot shall be located above the ground. An under-ground irrigation system adequate to suitably water all landscaping located in the front yard and side yard of each Lot shall be installed at the time the Dwelling Unit is constructed.

(41) SCREENING: All utility meters, equipment, air conditioning compressors, swimming pool filters, heaters, heaters and pumps and any other similar exposed mechanical devises on any lot must be screened so that the same are not visible from other Lots or any public street or county road on which the Lot borders. All Screens must be solid and constructed in the same Home Owners Association style and of the same material as the Dwelling Unit on a Lot.

(39) UTILITIES: All public or private utility and service connections including, but not limited to gas, water, electricity, telephone, cable television or security system, or any wires, cables, conduits or pipes used in connection therewith, located upon any Lot shall be underground; except that fire plugs, gas meters, supply pressure regulators, electric service pedestals, pad mount transformers, and street lights may be located above ground only when necessary to furnish the service required by the use of such utilities. In no event shall any poles be permitted, other than for street lights or as otherwise permitted herein, and no wires or transmission lines to or from such street lights shall exist above the ground. There is herein reserved upon all of the lots adjacent to any alley as platted herein, an easement for the location of above ground fire plugs, gas meters, supply pressure regulators, electrical service pedestals, pad mount transformers and street lights.

(40) TRASH CONTAINER: All dumpsters and other trash containers shall be located in the alley at the rear of each Lot. Declarant and the Association reserve the right to place dumpsters and other trash containers within any alley in the Subdivision, or on the Common Properties. Such containers shall be placed as close to the rear fence on the Lot as reasonably possible so that said container will not interfere with use of the alley. Each Owner at Owner's expense, shall contract with a public or private trash service for the regular pickup of all trash and other debris (all of which shall be placed in the dumpsters or other trash containers, it being understood that at no time shall any Owner pile or stack trash or other debris in the alley or on a Lot).

(41) CONSTRUCTION DEBRIS: During the construction or installation of any Improvement or Structure on any Lot, construction debris shall be removed from the Lot on a regular basis and the Lot shall be kept as clean as possible.

(42) STOPPAGE OF CONSTRUCTION: Once commenced, construction shall be diligently pursued to the end that it will be completed within 18 months from the date commenced. For purposes of this instrument, construction shall be deemed to be commence on the earlier of (I) the date on which any governmental authority shall issue any building permit or other permission, consent or authorization required in connection with such construction, or (ii) the date on which excavation or other work for the construction of the footings and/or foundation of any Improvements or Structures shall begin.

(41) EASEMENTS; UTILITIES. Easements for the installation and maintenance of utilities and drainage facilities are reserved in this Declaration and as shown on the recorded subdivision plat. Utility service may be installed along or near the front and/or side and/or real Lot lines and each Lot Owner shall have the task and responsibility of determining the specific location of all such utilities. Except as may be otherwise permitted by the Home Owners Association (e.g. fencing, flatwork, landscaping, etc.), no Owner shall erect, construct or permit any obstructions or permanent Improvements or Structures of any type or kind to exist within any easement area, nor shall anything be done or permitted within an easement area which would restrict or adversely affect drainage. Electrical (and possibly other utility) easements are likely to be located at or near or along the rear Lot line(s), and each Lot Owner assumes full, complete and exclusive liability and responsibility for all cost and expense related to damage, repair, relocation and restoration of such improvements or fence. Except as to special street lighting or other aerial facilities which may be required by Lynn County, Texas or which may be required by the franchise of any utility company or which may be installed by the Declarant pursuant to its development-plan, no aerial utility facilities of any type (except meters, risers, service pedestals and other surface installations necessary to maintain or operate appropriate underground facilities) shall be erected or installed on the Subdivision whether upon individual Lots, easements, streets or rights-of-way of any type, either by the utility company or any other person or entity, including, but not limited to any person owning or acquiring any part of the Subdivision, and all utility service facilities (including, but not limited to, water, sewer, gas, electricity and telephone) shall be buried underground unless otherwise required by a public utility. All utility meters, equipment, air condition compressors, water wells and similar items must be visually screened and located in areas designated by the Home Owners Association. The Association or the Home Owners Association shall have the right and privilege to designate the underground location of any CATV-related cable. Each Owner shall assume full and complete responsibility for all costs and expenses arising out of or related to the repair, replacement or restoration of any utility equipment damaged or destroyed as a result of the negligence or mischief of any Resident of the Owner. Each Owner agrees to provide, at the sole cost and expense of each Owner, such land and equipment and apparatus as are necessary and appropriate to install and maintain additional lighting and security-related measures which becomes technologically provident in the future.

(42) DUTY OF MAINTENANCE: Each Owner of any Lot shall have the responsibility, at his or her sole cost and expense, to keep such Lot, including any Improvements thereon, in a well maintained, safe, clean and attractive condition at all times. Such maintenance shall include, but is not limited to the following:

(a) Prompt removal of all litter, trash, refuse and waste, and regular cutting of weeds and grasses on the Lot prior to and during construction of any Improvement;

(b) Regular moving of grasses;

(c) Tree and shrub pruning;

(d) Keeping landscaped areas alive, free of weeds, and attractive;

(e) Watering;

(f) Keeping parking areas and driveways in good repair;

(g) Complying with all government health and police requirements;

(h) Repainting of Structures and Improvements;

(i) Repair of exterior damages to Improvements.

Each Owner of any Lot shall have the responsibility, at his or her sole cost and expense, to keep all areas located between the boundaries of such Lot and the paved portion of any streets or roads on which such Lot borders in a well maintained, safe, clean and attractive condition.

The Association, and its agents, during normal business hours, shall have the right (after 5 days written notice to the Owner of any Lot involved, setting forth the specific violation or breach of this covenant and the action required to be taken, and if at the end of such time reasonable steps to accomplish such action have not been taken by the Owner), to enter on the subject premises (without any liability whatsoever for damages for wrongful entry, trespass or otherwise to any person or entity) and to take the action(s) specified in the notice to remedy or abate said violation(s) or breach(es). The cost of such remedy or abatement will be paid to the Association upon demand and if not paid within thirty (30) days thereof, shall become a lien upon the Lot affected. The Association, or its agent, shall further have the right (upon like notice and conditions), to trim or prune, at the expense of the Owner, any hedge, tree or any other planting that, in the written opinion of the Association, by reason of its location on the Lot, or the height, or the manner in which it is permitted to grow, is detrimental to the adjoining Lots, is dangerous or is unattractive in appearance. The lien provided under this section will constitute a lien retained against such property with the same force and effect as the Payment and Performance Lien for assessment set forth in these Covenants.

(43) The developer, Charles Allen Smith, represents that the unplatted property, contiguous to the East line of the runway, is in all respects in compliance with all of the terms and conditions contained herein. No property owner shall have the right to contest whether or not the Developer's house is or is not in compliance with the terms and conditions herein.

II. HOME OWNER'S ASSOCIATION

(25) A Home Owners' organization will be formed. Charles Allen Smith shall be the initial President of the Home Owner's Association and shall serve until such time as sufficient tracts are sold in order for the Home Owner's Association to organize, elect a Board of Director's and elect Officer's of the Home Owner's Association.

(26) One meeting annually shall be the minimum for the entire home owners' organization.

(27) Each member shall have one vote at any meeting(s), whether he owns ten acres or one lot or any number of lots in between.

(28) A home owners' board of governors shall be elected annually at the prescribed home owners' organization annual meeting. The board chairman will preside at any home owners' meeting.

(29) The number of the board of governors shall be five.

(30) The five members of this board shall elect from the board members a president, vice- president and a secretary-treasurer. Two signatures of the board members must be on all checks issued.

(31) This board shall meet at any called meetings by the president, as deemed necessary.

(32) This board shall serve as the design approval authority for approval of what is to be built on said land involved in the overall project and shall made decisions involving bank depository, whether violations of these covenants has occurred and general handling of complaints by the membership, and other business pertaining to the project and shall sign checks to pay bills.

(33) A special general membership meeting may be called at any time by the president of the organization, to rule on major decisions, such as locations hi setback requirements or other deviations from these covenants.

(34) Each owner, regardless of the amount of property he owns, shall pay into the organization, twenty five ($25.00) dollars per month for maintenance or improvements to the roads and or airstrip.

(35) The board may increase or decrease these payments as much as twenty percent (20%) per twelve (12) month period.

(36) Any increase involving more than twenty per cent (20%) increase during a year must be voted on by the entire membership in either the annual meeting or a special called meeting, by the president, and a 75% vote shall be required.

(37) A mailed or hand carried notice must be sent to each landowner member seven (7) days prior to any general meeting, (unless notice is waived in writing) designating the time and place of said meeting.

(38) Various committees may be appointed by the board, such as: Runway Committee, Roads Committee, Design Approval Committee, or any other committees deeded necessary by the board. The board may act on all these items if it decides assistance in these fields is not necessary. The board may call upon any landowner to act as a non voting advisor on any matter.

(39) An assessment of money, in order to meet general obligations or make improvements may be made at the annual or called general meeting of the owners' organization, provided seventy-five percent (75%), minimum, of the home owners' vote in favor.

(40) The Home Owners Association, may in it's sole descretion, appoint an Architectural Review Committee to review and approve any items required to be reviewed and approved by the Home Owners Association or this Dedication Deed. There shall be no appeal of any decision made by the Architectural Review Committee.

III. DEFINITIONS

1. The term "Organization" or "Association" shall mean and refer to the "Home Owner's Association". Association which shall include and mean a duly incorporated Texas non-profit corporation, its successors and assigns, if formed hereafter. If formed, such association shall have the power to collect and disburse any maintenance assessments or any other assessments referred to herein.

2. The term "Owner" shall mean and refer to the record owner, whether one or more persons or entities of a fee simple title to any tract or any portion thereof or any lot which is a part of the property described on "Plat of Lots 1 through 113 of The Palms of Kitty Hawk an addition to Lynn County, Texas".

3. CHARLES ALLEN SMITH does hereby impose on each tract or any portion thereof described on the attached "Plat of Lots 1 through 113 of The Palms of Kitty Hawk an addition to Lynn County, Texas", "Maintenance Assessments", and hereby covenants and each owner of each tract hereafter shall by acceptance of a deed thereof, whether or not it shall be so expressed in such deed, be deemed to covenant and agree to pay to any such "Association" hereinafter formed any assessments or charges referred to herein. Any such assessments or charges together with interest, cost and reasonable attorney's fees shall be a charge on the land and shall be continuing lien upon the property against which each such assessment is made. Each such assessment together with interest, cost and reasonable attorney's fees shall also be a personal obligation of the person who is the owner of such tract or any portion thereof described on the attached "Map of survey for identification purposes" or any lot conveyed by any tract owner or any person thereof. Appropriate recitation in any deed conveying any tract, any portion thereof, or any lot to the effect that the same is made subject to these Restrictive Covenants, or words to that effect shall have the effect of and shall be evidence pf the retention of a Vendor's Lien by the Grantor of any such deed for the purpose of a securing payment of any said charge that may hereafter be assigned to any such tract, without recourse on CHARLES ALLEN SMITH in any manner for the payment of such charge and indebtedness. The purpose of any such assessments levied by the association hereafter shall be used exclusively to promote health, safety and welfare of the residents of the properties for the improvement and maintenance of any common areas, if any.

Any assessment not paid within thirty (30) days after the due date shall bear interest from the due date at the rate often per cent (10%) per annum. The association may bring an action at large against the owner personally obligated to pay the same or foreclose the lien against the property. No owner may waive or otherwise escape liability for the assessment provided for herein by non-use of the common area, any easement tract or by abandonment of his property.

The lien of the assessment provided herein shall be subordinate to the bona fide lien of any first mortgage, or any bona fide mortgage of purchase price or improvements. Sale or transfer of any tract or any portion thereof of any lots shall not affect the assessment lien. No sale or transfer shall release such lot from liability of any assessments thereafter becoming due or from the lien thereon.

IV. ENFORCEMENT

(A) The association referred to hereinabove or any owner of any tract described on the "Plat of Lots 1 through 113 of The Palms of Kitty Hawk an addition to Lynn County, Texas" or any portion thereof or of any lot hereafter coming into existence, shall have the right to enforce by any proceeding at law or in equity all restrictions, conditions, covenants , reservations, liens and charges heretofore, now or hereafter imposed by the provisions of these restrictions. Failure by the Association or by any owner to enforce any covenant or restriction herein shall in no event be deemed a waiver of the right to do so hereafter.

(B) In the event of breach of any covenant herein contained dealing with;

(1) requirement of payment of any assessment or charge for maintenance, construction or improvement;

(2) any requirement that property be maintained, kept clean, neat and weed free, or free from nuisance, or

(3) pertaining to the protection of the Runway Easement or the protection of obstruction free flights,

(4) including but not limited to paragraphs I (2), I (3), I (4), I (23), II (34), II (35), II (39), then

title to any lot or tract owned by any breaching party shall revert to the original GRANTOR, CHARLES ALLEN SMITH, upon 30 days notice to the breaching party unless any such breach is cured within 30 days from the date of delivery of such notice, by certified mail, return receipt requested.

(C) The impressing of the covenants is not intended to constitute a public dedication or to create a subdivision and no obligation is intended to be imposed upon the County of Lynn unless and until each owner of each tract executes a dedication instrument, dedicating the property described herein for public purposes.

V. AMENDMENT TO THE RESTRICTIONS

The covenants and restrictions of this declaration shall also be referred to as a "Declaration of Restrictive Covenants" and shall run with and bind the land permanently unless all owners of each tract or any portion thereof, from the date of this declaration forward unanimously agree in writing. This declaration may be amended during the first ten years thereof by an instrument signed by not less than seventy-five per cent (75%) of each tract owner or any portion thereof. Any amendment must be duly acknowledged and recorded.

WITNESS THE EXECUTION HEREOF, on this _____ day of _____________ , 2007.

_____________________________
Charles Allen Smith

STATE OF TEXAS

COUNTY OF TERRY

BEFORE ME, THE UNDERSIGNED AUTHORITY, on this day personally appeared CHARLES ALLEN SMITH, known to me to be the person whose name is subscribed in the foregoing instrument, and acknowledged to me that he executed the same for the purposes and consideration therein expressed.

GIVEN UNDER MY HAND AND SEAL this ______ day of ______________, 2007.

________________________
Notary Public in and for
Terry County, Texas