ARTICLE III*

Restrictive Covenants as to Use of Lots

1. All lots shall be used exclusively for single family residential purposes. No business
activities shall be conducted on any lot, although this prohibition against business activities
shall not apply to the Declarant in the development and marketing of the property or to the
Association in the conduct of its business. Common areas owned or leased by the Declarant or
by the Association shall not be subject to this residential use restriction.

2. Any residence constructed within Fountain Trace Subdivision shall contain a minimum
of 1,150 sq. ft. of heated finished floor space. No building, fence, wall, residence, or other
structure shall be commended, erected, maintained or improved, altered, made or done
without the prior written approval of the Board of Directors. No metal fence may be
constructed on the property of any owner. Ornamental wood fences not exceeding 4 feet in
height may be constructed with the approval of the Board of Directors. If the Board of
Directors fails to approve, modify or disapprove in writing an application within 30 days after
the plans and specifications in writing have been submitted to it, approval will be deemed
granted. The Board of Directors is expressly authorized and empowered to refuse to approve
any application on any grounds it may determine, including aesthetics.

3. No trailer, mobile home, camper, tent, shack or out building may be used temporarily
or permanently as a residence.

4. No animals shall be kept on the property except normal domestic household pets
ordinarily kept in homes. Such pets may not be kept or bred for any commercial purpose and
shall have such care and restraint as is necessary to permit them from being or becoming
obnoxious or offensive on account of noise, odor, unsanitary conditions or other nuisance. No
savage or dangerous animal shall be kept or permitted on the property. No pets may be
permitted to run loose upon the property, and any owner who causes or permits any animal to
be brought or kept upon the property shall indemnify and hold the Association harmless for
and from any loss, damage or liability which it sustains as a result of the presence of such
animal on the property, regardless of whether the Association or the Board has given its
permission therefor. Whenever a pet is allowed outside the owners lot, the pet must be on a
leash and any animal droppings which occur during such time as the pet is outside the home
must be immediately collected by the owner.

5. No peddling or soliciting will be permitted upon the property.

 6. The following may not be parked or stored in or on the property unless specifically
approved by the Declarant or by the Board of Directors: commercial vehicles, campers, trailers,
mobile homes, boats, or other recreational vehicles, trucks with a carrying capacity of 1 ton, or
vehicles that are not road worthy. All vehicles owned by residents shall be parked or stored in
designated parking areas or driveways and may not be stored or maintained on any of the
roads or lawns of the subdivision. Vehicle maintenance (other than cleaning and washing)
shall not be performed except inside a garage. The prohibitions of this paragraph shall not
apply to a builder during the construction of improvements upon the property.

7. No signs, advertisements, billboards, or display boards of any type shall be placed on

any lot or exposed to public view except: (a) signs permitted in accordance with uniform rules
established by the Board of Directors and (b) one for sale or for rent sign containing not
more than 4 sq. ft. may be placed upon a lot. In the absence of the adoption of such rules all
other signage shall be prohibited. Any sign, advertisement, notice or lettering so displayed in
violation of this restrictive covenant shall be subject to removal without notice. The Declarant,
the Association, and Builders shall be exempt from this provision. Signs designed to advertise
the property during the construction and sales period may be placed upon the property by the
Declarant, the Association, and Builders.

8. No lot or common area shall be used for temporary or permanent storage of supplies,
personal property, trash or refuse of any kind, except in trash receptacles placed in designated
areas or in storage buildings approved by the Board of Directors. In general, no activity shall
be carried on nor condition maintained by any owner if such activity will despoil, or tend to
despoil, the appearance of the property. It is expressly acknowledged and agreed that this
section is for the mutual benefit of all owners and is necessary for the protection of the owners
and is enforceable by the Board of Directors or any one or more owners.

9. No nuisance shall be allowed upon the property and no person shall engage in any use,
practice or activity upon the property which is obnoxious, offensive or a source of annoyance
to other owners or which unreasonably interferes with the peaceful and proper use of the
property by another owner. No owner shall permit or allow any loud noises which interfere
with the rights, comforts, or convenience of other owners.

10. Each owner shall keep his lot and the improvements thereon in good condition and
repair and in a clean and sanitary condition.

11. No rubbish, refuse, trash or garbage shall be allowed to accumulate and no fire
hazards shall be allowed to exist. Any owner who dumps or places any rubbish, refuse, trash
or garbage upon any portion of the property shall be liable to the Association for the actual
cost of the removal thereof and the same shall be added to and become a part of the
assessment next coming due to which the owner is subject. All rubbish, refuse, trash and
garbage shall be placed in containers screened from view or underground, and the tops
thereof shall be kept closed.
12. No owners shall do anything or allow any condition to exist which unreasonably
increase the insurance rates of other lot owners.

13. No immoral, improper or unlawful use shall be made of the property. All valid laws,
zoning ordinances and regulations of governmental bodies having jurisdiction thereof shall be
observed.

14. There shall be no exterior antennas (including satellite dishes) for television, radio,
citizens band or ham radio, nor any other exterior fixture or appliance for electronic devices or
for transmission or receipt of communication signals except with the express written
permission of the Board of Directors. Receiving antennas may, however, be placed within attic
areas. Transmitting antennas are expressly prohibited, whether interior or exterior. Any
permission granted by the Board of Directors may be subsequently revoked at will upon 15
days written notice.

15. Exterior clothes lines shall not be visible from any common area, including streets
within the subdivision.

16. No owners shall obstruct or permit the obstruction of any of the streets, roads or
sidewalks within the subdivision or leading from the subdivision to Jones Gap Road (S.R.
1711).

17. With the exception of the Declarant or of a lender in possession of a lot following a
default in a mortgage, a foreclosure, no owner shall be permitted to lease his lot for transient
or hotel purposes. No owner may lease less than the entire lot for transient or hotel purposes.
No owner may lease less than the entire lot or for periods of less than six months.
Notwithstanding this, temporary occupancy of lots shall be permitted by purchasers or sellers
of lots to facilitate the transfer of the lot from a seller to a purchaser (by way of example, by
agreement between a seller and a purchaser, a seller may continue to occupy a lot after its sale
or a purchaser may occupy a lot prior to closing on the purchase of the lot). Any lease
agreement shall be in writing and shall provide that the terms of the lease shall be subject to
the provisions of this Declaration, the Charter, By-Laws and the Rules and Regulations, and
that any failure by the lessee to comply with the terms of such documents shall be a default
under the lease.

18. Each owner shall immediately report to the Board of Directors any conveyance by any
owner of any interest in any lot. The owner shall report to the Board of Directors the name
and address of the transferee of the lot. The Board of Directors shall maintain a current list of
the owners for the purpose of facilitating notification to owners.

19. The Board of Directors may from time to time promulgate reasonable rules and
regulations respecting the restrictive covenants set out in this Article, but such rules and
regulations shall be consistent with these restrictions and not in derogation of or intended as
an amendment thereof. All owners and their successors and assigns shall be bound by such
rules and regulations.

20. The Declarant (or any subsequent developer of the property) shall be exempt from the
restrictive covenants as to the use of lots set forth in this Article III. The Association shall be
exempt from the restrictive covenants set forth in this Article III as to the use of common areas.

*NOTE: This only is a partial list of the restrictive covenants as they apply to the Fountain
Trace Subdivision. A complete Declaration of the Restrictive Covenants for the Fountain Trace
Subdivision should have been provided to all property owners by the sellers upon purchase of
their property, and should also be available at the Henderson County Courthouse. This partial
list is provided as a courtesy for the residents of the Fountain Trace Subdivision.