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HomeMy WebLinkAboutOrdinances - ORD-05-1285 - 10/03/2005 - AUTHORIZE ANNEX AGMT GILGER PROPERTYORDINANCE NO. ORD-05-1285 AN ORDINANCE AUTHORIZING THE EXECUTION OF THE TOWNHOMES OF PRAIRIE LAKES ANNEXATION AGREEMENT FOR A 32 ACRE PROPERTY LOCATED ON THE SOUTH SIDE OF BULL VALLEY ROAD, IN MCHENRY COUNTY, ILLINOIS WHEREAS, SW McHenry LLC ("OWNER") holds fee simple title to certain real estate located on the south side of Bull Valley Road, in McHenry County, Illinois; and WHEREAS, the OWNER, and the City desire to enter into an annexation agreement to provide for the development of said real estate; and WHEREAS, notice of a public hearing was published in the Northwest Herald, a newspaper of general circulation in the City of McHenry, within the time provided by law, notifying the public of a hearing on said Annexation Agreement before the Corporate Authorities of the City of McHenry; and WHEREAS, the Corporate Authorities of the City of McHenry have held the public hearing as required by law and have found that entry into said Annexation Agreement is in the best interest of the City. NOW, THEREFORE, BE IT ORDAINED BY THE MAYOR AND CITY COUNCIL OF THE CITY OF MCHENRY, MCHENRY COUNTY, ILLINOIS AS FOLLOWS: SECTION 1: The annexation agreement, bearing the date of 9/23/05, between the City of McHenry, a Municipal Corporation in the State of Illinois, and SW McHenry LLC, be and the same is hereby approved. A complete and accurate copy of said annexation agreement, labeled "The Townhomes of Prairie Lakes Annexation Agreement", is attached to this ordinance and incorporated herein by reference. SECTION 2: The Mayor and City Clerk are hereby authorized to affix their signatures as Mayor and City Clerk to said annexation agreement for the uses and purposes therein set forth. SECTION 3: All Ordinances or parts thereof in conflict with the terms and provisions hereof are hereby repealed to the extent of such conflict. SECTION 4: This Ordinance shall be published in pamphlet form by and under the authority of the corporate authorities of the City of McHenry, McHenry County, Illinois. SECTION 5: This Ordinance shall be in full force and effect from and after its passage, approval, and publication in pamphlet form as provided by law. PASSED THIS 3Rm ; DAY OF 0Q-TORER 32005 '► oil: u :1 1 uu 1► 1►11 1 NAYS: G LAB ABSTAINED: NONE ABSENT: NONE NOT VOTING: NONE APPROVED THIS 3RD DAY OF OCTOBER , 2005 AYOR ATTEST: Execution Copy 9/23/05 THE TOWNHOMES OF PRAIRIE LAKES ANNEXATION AGREEMENT This Agreement made and entered into this 3Rn_ day of �G gzR 2005 by and between the CITY OF MCHENRY, an Illinois municipal corporation (hereinafter referred to as "CITY'), and SW MCHENRY, LLC ("OWNER"). RECITALS .pr,h; b; 4- A. The OWNER holds fee simple title to the reaestate legally described on Exhibit A 1 and depicted on the Plat of Annexation A-2, attached hereto and made a part of this Agreement by reference, hereinafter referred to as the "SUBJECT PROPERTY'. B. The OWNER, as successor in interest to William J. and Peggy S. Gilger, has filed with the City Clerk a Petition for Annexation of the SUBJECT PROPERTY to the CITY, contingent upon the terms and provisions of this Agreement, which Petition has been filed in accordance with 65 ILCS 5/7-1-8, and the ordinances of the CITY. C. The SUBJECT PROPERTY is currently improved With a tree -farm including an office building, and is zoned A-1, Agricultural, pursuant to the McHenry County Zoning Ordinance. D. The SUBJECT PROPERTY has no electors residing thereon. E. The SUBJECT PROPERTY consists of one contiguous tract of land which is not within the corporate boundaries of any municipality or subject to an Annexation Agreement with any other municipality, and is presently contiguous to and may be annexed to the CITY in accordance with 65 ILCS 5/7-1-1, et seq. F. The OWNER desires to annex the SUBJECT PROPERTY to the CITY in accordance with the terms of this Agreement. G. The CITY has determined that the annexation of the SUBJECT PROPERTY in accordance with the terms of this Agreement is in the best interest of the CITY, 1 will promote sound planning and growth of the CITY, and otherwise enhance and promote the general welfare of the CITY and its residents. H. The CITY does not provide library or fire protection services to the SUBJECT PROPERTY, so notice to the Fire Protection District or Public Library District of the annexation of the SUBJECT PROPERTY is not required. I. This Agreement is made pursuant to and in accordance with the provisions of 65 ILCS 5/11-15.1-1, et seq. J. Prior to the date of this Agreement, all public hearings were held upon proper notice and publications as are required for the CITY to effect the terms of this Agreement. NOW THEREFORE, in consideration of their respective agreements set out herein, the CITY and OWNER HEREBY AGREE AS FOLLOWS: 1. Annexation. Upon execution of this Agreement, as allowable by law, the CITY shall enact an ordinance annexing the SUBJECT PROPERTY. A copy of said ordinance, together with an accurate plat of the SUBJECT PROPERTY, shall be filed with the County Clerk of McHenry County and recorded with the Recorder of Deeds of McHenry County. This Agreement in its entirety, together with the aforesaid Petition for Annexation, shall be null, void and of no force and effect unless the SUBJECT PROPERTY is zoned and classified as provided in this Agreement by the adoption of ordinances by the CITY immediately following the execution of this Agreement. 2. Zoning. Immediately following the annexation of the SUBJECT PROPERTY, the CITY shall adopt an ordinance granting a zoning -map amendment-to-RM-2, High - Density Multi -Family Residential District, for the SUBJECT PROPERTY. Maximum Number of Residential Units. OWNER shall be permitted to construct up to but not to exceed a total of 180 new residential dwelling units on the SUBJECT PROPERTY. 4. Limitation on Number of Units Allowed Per Year. Upon application by the OWNER and review by the CITY, the maximum number of building permits for dwelling units (excluding building permits for model units) issued for each one year period shall be as follows: Year 1- Forty -Five (45), Year 2 — Forty -Five (45), Year 3 — Forty -Five (45), Year 4 — Forty -Five (45). The first one-year period shall 2 begin upon recordation of the first final plat of subdivision for the development. The maximum number of building permits for dwelling units allowed shall not be cumulative from one year to the next. 6. Preliminary Plat Approval. The Preliminary Plat, prepared by SHEFLOW ENGINEERS, dated July 22, 2005, attached hereto as Exhibit made a part of this Agreement by reference (hereinafter referred to as "Preliminary Plat"), is hereby approved. It is understood that the representations on the Preliminary Plat regarding the public rights -of -way, open space layout, stormwater management facilities and the configuration of lots is preliminary in nature and the final road, open space layout, stormwater management facilities location and configuration and lot layout will be determined at the time of final platting for the SUBJECT PROPERTY. OWNER agrees, however, that representations regarding the proposed zoning designation, the provision of a collector road, the maximum number of allowable units and landscaping buffers along Bull 'Valley Road and along the Chicago & Northwestern Railroad shall be binding and any amendments to such representations, except as otherwise provided herein, shall require an amendment to this Agreement. 7. Preliminary Engineering Approval. The Preliminary Engineering, prepared by SCHEFLOW ENGINEERS, dated July 22, 2005 (hereinafter referred to as "Preliminary Engineering"), is hereby approved. OWNER agrees, however, that the representations on the Preliminary Engineering regarding the public rights -of - way, public utility services, easements and locations, stormwater management facilities, and detention ponds are preliminary in nature and the final calculations, public utility service line sizes and locations, all easements, stormwater management facilities and rights -of -ways will be determined at the time of final engineering for the SUBJECT PROPERTY. 8. Building Design. OWNER agrees that the proposed buildings constructed on the SUBJECT PROPERTY shall have an appearance substantially in accordance with Exhibit C entitled "Conceptual Building Elevation" attached hereto and made a part of this Agreement by reference. Notwithstanding the foregoing, OWNER agrees that the elevation depicted on Exhibit C shall be deemed to be the minimum standard for buildings located on the SUBJECT PROPERTY, and the phrase "substantially in accordance" shall not be construed in a manner which enables OWNER to employ less brick, brick or masonry veneers, natural or case stone veneers or other masonry materials (determined on a percentage basis) with respect to any building. The CITY hereby approves the architecture of the proposed buildings subject to the terms of this Paragraph 8. The City will grant a 3 variance to "Exterior Wall Materials" Section 7-19 of the Municipal Code. 9. Landscape Plans. OWNER shall install and maintain landscaping, berming, right-of-way landscaping, fencing and other improvements in accordance with Exhibit D entitled "Landscape Plan for Prairie Lakes McHenry Illinois Sheet 1 and Sheet 2", prepared by Gary R Weber Associates, Inc. dated 7/20/05, attached hereto and made a part of this Agreement by reference (hereinafter referred to as "Landscape Plans"), in all areas of the SUBJECT PROPERTY. Prior to issuance of an Occupancy Permit in any given building by the CITY, OWNER shall install the landscaping appurtenant to such building in accordance with the Landscape Plans, unless weather prevents the installation of said landscaping, berming and fencing, and in that event, temporary occupancy permits may be issued to the OWNER. The CITY shall not issue Occupancy Permits for the final 10% of units on the SUBJECT PROPERTY until such time as landscaping in accordance with the Landscape Plans is complete (including without limitation the landscape buffers along Bull Valley Road and along the Chicago & Northwestern Railroad), unless weather prevents the installation of said landscaping, berming and fencing, and in that event, temporary occupancy permits may be issued to the OWNER. OWNER shall incorporate into the covenants and restrictions placed on the SUBJECT PROPERTY provisions for maintenance of the landscaping depicted on the Landscape Plans prior to CITY approval of the first final plat of subdivision within the SUBJECT PROPERTY. 10. Covenants and Maintenance. OWNER agrees to provide Declarations, in substantially the same form attached hereto as Exhibit E and made part of this agreement, for implementation, enforcement, and maintenance of all Landscape Plans, private paths, open space, private recreational facilities, storm water and drainage systems, including detention basins and retention ponds, storm sewer easements, sanitary sewer easements, and public utility easements, as provided on Exhibit B by creating a "homeowners' association" or appropriate organization. The provisions of the homeowners' association corporate charter and bylaws and any covenants used in its enforcement shall be in substantial conformance with Exhibit E as submitted to the CITY. It is acknowledged and agreed that the CITY shall have the right, but not the obligation, to enforce all provisions of the homeowners' association charters, bylaws, and covenants, as they relate to storm water and drainage systems, including detention basins and retention ponds, storm sewer easements, sanitary sewer easements, and public utility easements, and that all such documents shall so provide. It is further acknowledged and agreed that all homeowners' associations bylaws and covenants will specifically provide that these shall not be amended as they relate to such implementation, E enforcement, and maintenance, and the means for providing funds therefore, without the prior approval of the CITY. 11. Back -Up Special Service Area. Prior to CITY approval of the first final plat of subdivision for the SUBJECT PROPERTY, OWNER agrees to establish a Special Service Area over the SUBJECT PROPERTY zoned RM-2 to finance special municipal services as a back-up measure to the private "homeowners' association." Such Special Service Area shall include provisions for levying an assessment against the "homeowners' association" for its failure to perform in accordance with the Declarations in order to ensure the continued maintenance of the private subdivision improvements, including open space, landscaping, storm water and drainage systems, including detention basins and retention ponds, storm sewer easements, sanitary sewer easements, and public utility easements, and other amenities as provided in this Agreement. 12. Curb, Gutter and Sidewalks. OWNER shall install public sidewalks on at least one side of the street and a bike path on the opposite side of the street along Cunat Drive. OWNER shall install public sidewalks on both sides of the street along the interior Windsor Lane. All public rights -of -way shall include, concrete curb and gutter, and an enclosed storm sewer system, designed and constructed in accordance with the ordinances of the CITY. 13. Sanitary Sewer and Water. a. The SUBJECT PROPERTY shall be developed with municipal sanitary sewer and water. OWNER will be allowed to extend the municipal water and sewer lines to service the SUBJECT PROPERTY, and the CITY will service the development with water and sanitary sewer treatment facilities. Water and sanitary treatment plant and main capacity will be made available to the development on the same basis as it is made available to other developments. b. The CITY acknowledges that there is NOT currently sanitary sewer treatment plant capacity available from the CITY to service the SUBJECT PROPERTY; however, the CITY anticipates that sanitary sewer capacity will be available prior to December 31, 2006 (the "Increased Capacity") for the SUBJECT PROPERTY upon completion of construction for the Increased Capacity. No action of the CITY regarding application to the Illinois or U.S. Environmental Protection Agency for permission to construct sanitary sewer lines on any part of the SUBJECT PROPERTY shall be construed to constitute any 5 representation, warranty, or reservation by the CITY to OWNER that municipal sanitary sewer treatment plant or sanitary sewer main capacity or municipal water will be available to service the SUBJECT PROPERTY when OWNER applies to the CITY for connection permits. c. A 12" water line will need to be extended from Ridgeview Drive to this property. d. The CITY shall exercise its power of eminent domain, if necessary, to assist OWNER in obtaining all necessary easements, not already in existence, to enable the installation of the aforesaid sanitary sewer and water improvements. OWNER shall pay all eminent domain costs and expenses incurred by the CITY, including but not limited to attorney's fees, title charges, appraisals, surveying cost, deposition cost, witness fees, litigation expenses and judgments in the acquisition of any easement. 14. Reimbursement Provision. Upon development of any portion of the SUBJECT PROPERTY, the CITY reserves the right to request OWNER to construct additional, expanded or oversized municipal public improvements onsite which benefit not only the SUBJECT PROPERTY, but also other properties being or to be developed in the relevant service areas for such improvements. In the event the OWNER makes such improvements, the following provisions shall apply and be included in a subsequent reimbursement agreement ("Reimbursement Agreement"): a. The properties which may reasonably be expected to benefit directly or indirectly from the construction and installation of such additional onsite expanded or oversized improvements ("Benefited Property") will be determined by the CITY's Consulting Engineer. b. The CITY shall endeavor to collect a pro rata sum of money from the owners of the Benefited Property. The total sum subject to reimbursement to the OWNER, as well as the pro rata sum to be collected from the Benefited Property owners shall be determined by the CITY's Consulting Engineer taking into account the following factors: construction and easement costs; professional fees; testing and analysis fees; and legal and administrative expenses. The OWNER shall be entitled to interest on amounts due and payable from Benefited Property owners at a per annum rate approved by the City from the date specified in paragraph (g), below, to the date of payment to 0 OWNER. c. Subject to a nonappealable final court order, directing CITY to act otherwise, the CITY shall not issue any building permits until Benefited Property owners pay the reimbursement charge set forth in this paragraph. d. The CITY will use its best effort to collect the cost provided herein from the Benefited Property owners but shall not be liable to OWNER if the CITY is, for any reason, unable to collect said cost. The CITY's liability to reimburse OWNER shall be limited to payment from funds actually collected from Benefited Property owners. e. The CITY and OWNER reserve the right to, at any time during the term of this Annexation Agreement, file the Reimbursement Agreement with the McHenry County Recorder of Deeds and notify the owners of the Benefited Property of the terms of this reimbursement provision. f. OWNER shall reimburse and indemnify CITY for all costs, engineering and attorney's fees and liability incurred by the CITY in attempting to collect the reimbursement amount subject to this reimbursement provision. g. This reimbursement provision shall have a commencement date when the CITY Engineer issues a letter indicating completion of the public improvements which are the subject of the Reimbursement Agreement and shall terminate upon the earlier of ten years thereafter or upon reimbursement by the Benefited Property owners of the charges referred to in this reimbursement provision. 15. Model Homes; Sales Trailers: Construction Trailers. Upon the annexation of the SUBJECT PROPERTY and with any final plat of subdivision or engineering approval, the OWNER shall be permitted, at the OWNER'S sole risk, to construct, maintain and occupy construction trailers, sales trailers and model home units in one or more product lines being offered by the OWNER and to construct and maintain other appurtenant facilities for said model units, including temporary sales trailers and temporary sanitary facilities and systems and other requirements (when all applicable permits are received from the McHenry County Health Department and the CITY) in advance of the construction of sanitary, storm sewer, and water mains; provided, however, no such construction shall prejudice the power and right of the CITY to review, approve and disapprove final plats of subdivision and engineering plans for any parcel containing said models. rA a. Construction Trailers. Construction storage trailers used to build dwelling units shall be allowed at locations to be approved by the Community Development Department of the CITY. Upon the occupancy of 90% of the units, all construction storage trailers shall be removed from that phase of development. At all times during development of the SUBJECT PROPERTY, construction storage trailers shall be parked no closer than 300 feet from the nearest occupied home. b. Sales Trailers. OWNER shall have the to right to locate and use said temporary sales trailers for sales, sales promotions and offices for sales personnel, all as may be desirable or in any way connected with the sales of dwellings on the SUBJECT PROPERTY. The CITY agrees to allow the OWNER to construct temporary parking facilities paved to the sidewalk with curb depressed or other appurtenances to the sales trailers subject to the approval of the Community Development Department of the CITY and compliance with all applicable codes of the CITY. c. Model Homes. OWNER shall have the to right to use said models home units, as well as their garages, for sales, sales promotions and offices for sales personnel, all as may be desirable or in any way connected with the sales of dwellings on the SUBJECT PROPERTY. The CITY agrees to allow the OWNER to construct temporary parking facilities paved to the sidewalk with curb depressed or other appurtenances to the model units and sales offices subject to the approval of the Community Development Department of the CITY and compliance with all applicable codes of the CITY. 16. Underground Utilities. OWNER shall install underground, at OWNER's cost, all new electricity, gas, telephone lines and any other utility or cable devices, lines, or conduits necessary to service the development of the SUBJECT PROPERTY. 17. Road Improvements / Traffic Signal Contribution. OWNER agrees to pay to the CITY Ninety Thousand Dollars ($90,000.00) as its contribution towards the construction and installation of a traffic control signal at the intersection of Bull Valley Road and the proposed Collector Road on the SUBJECT PROPERTY, as depicted on the Preliminary Plat. Such contribution shall be due and payable within thirty (30) days following recordation of the first final plat of subdivision for the SUBJECT PROPERTY. No permits shall be issued until the contribution described above is paid. The CITY shall be entitled to apply the proceeds of the contribution described above within its sole and 0 absolute discretion, it being understood and agreed that OWNER shall not be obligated to make additional contributions towards or improvements to such intersection or roadways except to the extent required by McHenry County. As the County may require additional right-of-way, the CITY will also require a 30' municipal easement to be located within the landscape easement depicted on the Landscape Plans. OWNER further agrees to either (a) pay to the CITY an amount equal to the estimated cost of installing a sidewalk South of Bull Valley Road from Cunat Drive to the Prairie Path West of the Chicago & Northwestern Railroad (the "Sidewalk Contribution") or (b) to install such sidewalk within the landscape buffer depicted on the Landscape Plans. In the event OWNER elects to provide the Sidewalk Contribution in lieu of constructing the sidewalk, such contribution (x) shall be due and payable within thirty (30) days following recordation of the first final plat of subdivision for the SUBJECT PROPERTY and (y) shall be applied by the CITY within its sole and absolute discretion. 18. Donations, Contributions, and Fees. OWNER acknowledges that the development of the SUBJECT PROPERTY will impact on schools, parks, library and fire protection districts and other public services within the CITY. To reduce the effects of this impact, and as a condition of this Agreement, OWNER shall be obligated to pay and/or donate, or cause to be donated to the CITY, or provide improvements for the benefit of the CITY as follows: a. Annexation Fees. i. OWNER shall pay to the CITY the lump sum of $31,010 (representing $1,000 per acre zoned residential) within ninety (90) days following recordation of this Agreement for annexation of the SUBJECT PROPERTY to the CITY. ii. OWNER shall pay to the CITY the sum of $600 per residential unit for multi -family units, constructed on the SUBJECT PROPERTY upon issuance of each Certificate of Occupancy. iii. OWNER shall pay to the CITY the sum of $2,025 per residential unit ($1,093 to School District No. 15, $810 to School District No. 156, $61 to the McHenry Public Library District and $61 to the McHenry Township Fire Protection District) constructed on the SUBJECT PROPERTY upon issuance of each Building Permit. 9 b. Cash Donations. i. OWNER shall pay to the CITY certain Cash Donations per residential unit constructed on the SUBJECT PROPERTY upon issuance of each building permit. The Cash Donations payable by the OWNER to the CITY shall be calculated as follows: School Districts Parks Library Dist. Fire Dist. Total per Unit Single -Family Attached 1 Bedroom $0 $0 $0 $2,005 $281 $281 $2,567 2 Bedrooms $1,888 $755 $1,133 $3,346 $281 $281 $5,796 3 Bedrooms $2,137 $855 $1,282 $4,020 $281 $281 $6,719 4 Bedrooms $5,145 $2,058 $3,087 $5,285 $281 $281 $10,992 The Cash Donations referred to in this chart shall collectively be referenced to as "Minimum Cash Contribution Amounts". ii. In the event the Minimum Cash Contribution Amounts, as calculated above, are less than the cash donation amounts set forth in the CITY's ordinances as amended from time to time, an amount equal to the amounts specified in the CITY's ordinances shall be paid, rather than the Minimum Cash Contribution Amount provided in this Agreement. iii. In the event the CITY's cash contribution ordinance, or any other ordinance of the CITY relating to cash contributions for schools, parks, library and fire protection districts, is repealed or declared by a court of law to be found unenforceable and all appeals have been exhausted, OWNER agrees to pay, subsequent to such final court action, the Minimum Cash Contribution Amounts set forth in this Agreement. In the event such final court order requires the CITY or School Districts to return or refund monies paid by the OWNER pursuant to the CITY's ordinances, OWNER expressly agrees to allow the CITY or School Districts to retain the Minimum Cash Contribution Amounts previously paid by the OWNER. It is the express intent of the OWNER to release the CITY and School Districts from any liability or obligation to refund the Minimum Cash Contribution Amount paid pursuant to this paragraph under any 10 circumstances. c. Release. OWNER hereby releases the CITY, School Districts 15 and 156, McHenry Public Library District, and McHenry Township Fire Protection District from any and all liability or damage to OWNER and waives the right to challenge, by lawsuit or otherwise, the validity, legality or enforceability of the donations and fees set forth in this Agreement, or the purpose for which the money is spent. OWNER agrees not to pay any fees under protest. d. Donations Distinquished from Fees. Other than the donations specified in the foregoing paragraphs, during the term of this Agreement, and irrespective of any existing, new or revised donation ordinances of the CITY, OWNER shall not be required to donate any land or money to the CITY, or by action of the CITY, to any other governmental body. Building permit fees, water and sewer connection and capital development fees, and other similar fees which are charged for specific services provided by the CITY, shall be payable in accordance with the CITY ordinances in existence and as amended from time to time, except as specifically provided in this Agreement. 19. Distribution. That portion of these fees to be distributed to the schools, as determined exclusively by the CITY, may be distributed for the benefit of some or all schools within School Districts 15 and 156, at the discretion of the City Council. To the extent any of these funds are distributed to said School Districts, they may be used for operating expenses at those schools within School Districts 15 and 156, as directed by the City Council, at the time of distribution. In the event a distribution agreement in a form approved by the CITY is not executed by the School Districts prior to distribution of said funds to the School Districts, the CITY may retain the entire amount paid pursuant to this paragraph for CITY use. Nothing herein is intended to create third party beneficiary rights in School Districts 15 and 156, the McHenry Public Library District, or the McHenry County Fire District. 20. Annual Adjustment. At the end of each one-year period, with the first adjustment occurring May 1, 2006, the fees referenced in the preceding Paragraph 18 a) ii, a) iii, and b) i, shall be adjusted upward by the percent that the Chicago Area Consumer Price Index has moved upwards since December 31, 2004, and every December 31st thereafter. For the purpose of this paragraph, the price index to be used for comparative purposes shall be that index for the annual average Chicago area CPI-U, as published by the United States Department of Labor, Bureau of Labor Statistics. 11 21. Binding Effect and Term. This Agreement shall be binding upon and inure to the benefit of the parties hereto, successor owners of record and their heirs, assigns, and lessees, and upon successor municipal authorities of the CITY and successor municipalities for a period of twenty (20) years from the date of execution hereof, and any extended time agreed to by amendment to this Agreement. 22. Amendment. This Agreement may only be amended by written instrument executed by all parties hereto. Provided, however, in the event title to the SUBJECT PROPERTY, in whole or part, is transferred to successors in interest, future amendments relating to the SUBJECT PROPERTY may be made by and between the CITY and the title holders to the parcel specifically requesting the amendment without consent required by other record owners of the SUBJECT PROPERTY. 23. Notice and Default. Before any failure of any party to this Agreement to perform its obligations under this Agreement shall be deemed to be a breach of this Agreement, the party alleging the breach shall provide notice to the party alleged to be in default specifying the nature of said default, and thirty (30) days elapses from the receipt of said default notice without the default being cured. Notice shall be in writing and delivered via certified mail, addressed as follows: CITY City Administrator Douglas K. Maxeiner ,333 S. Green Street McHenry, IL 60050 OWNER SW McHENRY, LLC 1550 Todd Farm Drive Elgin, IL 60123 24. Stop Orders. The CITY will issue no stop orders directing work stoppage on buildings or parts of the development without setting forth the section of CITY ordinances or of this Agreement allegedly violated by OWNER and OWNER may forthwith proceed to correct such violations as may exist; provided, however, that the CITY shall give notice in advance to the OWNER of its intention to issue stop orders at least twenty-four (24) hours in advance of the actual issuance of such 12 stop orders, except in the event a health, life or safety emergency is deemed to exist by the CITY. 25. Ordinance Changes; Conflict. Except as otherwise specified herein, all ordinances of the CITY and other applicable jurisdictions shall apply to the SUBJECT PROPERTY, OWNER, and all successors and assigns in title. If during the term of this Agreement, the provisions of the existing ordinances and regulations which may relate to the development, subdivision, construction of improvements, buildings, appurtenances and all other development of the SUBJECT PROPERTY (collectively, "City Codes"), are amended or modified in any manner so as to impose more restrictive requirements, such more restrictive requirements shall be enforceable as applied to the SUBJECT PROPERTY, so long as such amendments or modifications are non-discriminatory in their application and in effect throughout the CITY or other applicable jurisdictions; it being understood and agreed that notwithstanding any such more restrictive requirement in the City Codes, OWNER shall be permitted to construct up to but not to exceed a total of 180 dwelling units on the SUBJECT PROPERTY. To the extent of any conflict, ambiguity or inconsistency between the terms, provisions or standards contained in this Agreement and the terms, provisions or standards contained in the City Codes, the terms, provisions and standards of this Agreement shall govern and control. Notwithstanding the foregoing, if any City Codes hereafter adopted, or are amended or interpreted so as to be less restrictive upon OWNER with respect to development of the SUBJECT PROPERTY than is the case under existing law, such less restrictive amendment or interpretation shall control. 26. Obligations. All obligations of the OWNER in this Agreement, including monetary obligations in existence now and in the future, as a result of this Agreement, shall constitute covenants running with the land and such monetary obligations shall also be liens upon the land. OWNER hereby consents to the filing of a lien on the SUBJECT PROPERTY or parts thereof for which obligations are owed when any obligations are more than ninety (90) days overdue. 27. Enforceability. It is agreed that the parties to this Agreement may enforce and compel performance, whether by law or in equity, by suit, mandamus, injunction, declaratory judgment, or other court procedure, only in courts of the State of Illinois; no such action may be brought in any Federal court. In the event that either party to the Agreement files suit to compel performance by the other, the prevailing party shall be entitled to recover, as part of the costs otherwise allowed, its reasonable attorney's fees incurred therein. 13 28. Waiver. The failure of the CITY to insist, in any one or more instances, upon performance of any terms or conditions of this Agreement, shall not be construed as a waiver of future strict performance of any such term, covenant or condition and the obligations of the OWNER shall continue in full force and effect. 29. Severability. If any provision of this Agreement, other than the provisions relating to the requested zoning changes and Preliminary Plat described herein and the ordinances adopted in connection therewith, is held invalid by any court of competent jurisdiction, such provision shall be deemed to be excised herefrom and the invalidity thereof shall not affect any of the other provisions contained herein. 30. Owner's Agreement not to Disconnect the SUBJECT PROPERTY. Notwithstanding any rights that the OWNER may have to disconnect the SUBJECT PROPERTY from the CITY pursuant to the Illinois Municipal Code (the "Code"), including, but not limited to, Section 7-3-6 of the Code, the OWNER hereby (i) waives any and all rights to disconnect the SUBJECT PROPERTY or any portion thereof from the CITY in exchange for the benefits conferred upon the SUBJECT PROPERTY by this Agreement, and (ii) agrees, at no time, to disconnect the SUBJECT PROPERTY or any portion thereof from the CITY unless at the time of disconnection the CITY is in default hereunder and such default continues after notice thereof has been given to the CITY and the applicable cure period has expired. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 14 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date indicated above. CITY OF HENRY By: Z :�4— `Mayor Susan E. Low Attest: Ci CI k Janie . Jones OWNER SW McHENRY, LLC By: Its: Manager, Jay L. Cope 15 Exhibit A-Y Legal Description of the SUBJECT PROPERTY All that part of the North Half of the Southwest Quarter of Section 3, Township 44 North, Range 8 East of the Third Principal Meridian, which lies Westerly of the Westerly right-of-way line of the Chicago and Northwestern Railway Company, (excepting therefrom the West 264 feet thereof and also excepting all that part thereof which falls in the Plat of Dedication of a Public Highway commonly known as Bull Valley Road, according to the Plat thereof recorded in the Recorder's Office as McHenry County, Illinois as Document No. 607444), in McHenry County, Illinois. PIN: 14-03-300-005-0000 16 THIS INSTRUMENT PREPARED BYAND SHOULD BE RETURNED TO: Todd N. Bundrant, Esq. Windsor Development Corporation 1550 Todd Farm Drive Elgin, Illinois 60123 DECLARATION FOR THE TOWNHOMES OF PRAIRIE LAKES This Declaration is made by SW Venture IV, LLC, an Illinois limited liability company ("Declarant"). RECITALS The Premises subject to this Declaration are legally described in Exhibit A hereto. Some or all of the Premises shall be the subject of a development called The Townhomes of Prairie Lakes (the "Development"). The Development shall include dwelling units and other areas that will be maintained by the Association. All portions of the Premises not improved with a Home, shall be maintained by the Association as more fully described in Article Three. In order to provide for the orderly and proper administration and maintenance of the Premises, the Declarant has formed (or will form) the Association under the Illinois General Not -For -Profit Corporation Act. The Association shall have the responsibility for administering and maintaining the Townhome Common Area and certain portions of the Home Exteriors and shall set budgets and fix assessments to pay the expenses incurred in connection with such duties. Each Owner of a Home shall be a member of the Association and shall be responsible for paying assessments with respect to the Home owned by such Owner. During the construction and marketing of the Development, the Declarant shall retain certain rights set forth in this Declaration, which rights shall include, without limitation, the right, prior to the Turnover Date, to appoint all members of the Board, as more fully described in Article Nine, the right to come upon the Premises in connection with Declarant's efforts to sell Homes and other rights reserved in Article Nine. NOW, THEREFORE, the Declarant hereby declares as follows: ARTICLE ONE Definitions For the purpose of brevity and clarity, certain words and terms used in this Declaration are defined as follows: 1.01 ASSOCIATION: The Prairie Lakes Townhome Owners Association, an Illinois not -for -profit corporation, its successors and assigns. 1.02 BOARD: The board of directors of the Association, as constituted at any time or from time to time, in accordance with the applicable provisions of Article Five. 1.03 BY-LAWS: The By -Laws of the Association. 1.04 CHARGES: The Townhome Common Assessment, any special assessment levied by the Association and/or any other charges or payments which an Owner is required to pay or for which an Owner is liable under this Declaration or the By -Laws. 1.05 COUNTY: McHenry County, Illinois or any political entity which may from time to time be empowered to perform the functions or exercise the powers vested in the County as of the Recording of this Declaration. 1.06 DECLARANT: SW Venture IV, LLC, an Illinois limited liability company, its successors and assigns. 1.07 DECLARATION: This instrument with all Exhibits hereto, as amended or supplemented from time to time. 1.08 FIRST MORTGAGEE: The holder of a bona fide first mortgage, first trust deed or equivalent security interest covering a Home. 1.09 HOME: That portion of the Premises which is improved with a dwelling unit. 1.10 HOME EXTERIOR: The roof, gutters, downspouts, foundation, footings, sidewalks, steps, decks, patios and outer surface of exterior walls of a Home. The Home Exterior shall not include windows, window frames, window glass, doors (including storm doors) or screening which are part of a Home. 1.11 MUNICIPALITY: The City of McHenry, Illinois or any political entity which may from time to time be empowered to perform the functions or exercise the powers vested in the Municipality as of the Recording of this Declaration. 1.12 NON -OWNER: A person other than an Owner. 2 1.13 OWNER: A Record owner, whether one or more persons, of fee simple title to a Home, including a contract seller, but excluding those having such interest merely as security for the performance of an obligation. The Declarant shall be deemed to be an Owner with respect to each Home owned by the Declarant. 1.14 PERSON: A natural individual, corporation, partnership, trustee or other legal entity capable of holding title to real property. 1.15 PREMISES: The real estate described in Exhibit A hereto with all improvements thereon and rights appurtenant thereto, as Exhibit A may be amended as provided in Section 10.01. 1.16 RECORD: To record in the office of the Recorder of Deeds for the County. 1.17 RESIDENT: An individual who resides in a Home. 1.18 TOWNHOME COMMON AREA: Those portions of the Premises which are not improved with a Home and all improvements thereto and landscaping thereon. 1.19 TOWNHOME COMMON ASSESSMENT: The amounts which the Association shall assess and collect from the Owners to pay the Townhome Common Expenses and accumulate reserves for such expenses, as more fully described in Article Six. 1.20 TOWNHOME COMMON EXPENSES: The expenses of administration (including management and professional services) of the Association; the expenses of the operation, maintenance, repair, replacement of landscaping and improvements located on Townhome Common Area; the expenses of the maintenance, repair and replacement of Homes and Home Exteriors which are designated as Townhome Common Expenses hereunder; premiums for insurance policies maintained by the Association hereunder; the cost of general and special real estate taxes, if any, levied or assessed against the Townhome Common Area; and any expenses designated as Townhome Common Expenses hereunder. 1.21 TURNOVER DATE: The date on which the rights of the Declarant to designate the members of the Board are terminated under Section 9.05. 1.22 VOTING MEMBER: The individual who shall be entitled to vote in person or by proxy at meetings of the Owners, as more fully set forth in Article Five. ARTICLE TWO Scope of Declaration/Certain Easements 2.01 PROPERTY SUBJECT TO DECLARATION: Declarant, as the owner of fee simple title to the Premises, expressly intends to and by Recording this Declaration, does hereby subject the Premises to the provisions of this Declaration. 3 2.02 CONVEYANCES SUBJECT TO DECLARATION: All easements, restrictions, conditions, covenants, reservations, liens, charges, rights, benefits, and privileges which are granted, created, reserved or declared by this Declaration shall be deemed to be covenants appurtenant, running with the land and shall at all times inure to the benefit of and be binding on any Person having at any time any interest or estate in the premises, and their respective heirs, successors, personal representatives or assigns, regardless of whether the deed or other instrument which creates or conveys the interest makes reference to this Declaration. 2.03 DURATION: Except as otherwise specifically provided herein the covenants, conditions, restrictions, easements, reservations, liens, and charges, which are granted, created, reserved or declared by this Declaration shall be appurtenant to and shall run with and bind the land for a period of forty (40) years from the date of Recording of this Declaration and for successive periods of ten (10) years each unless revoked, changed or amended in whole or :in part as provided in Section 10.02. 2.04 ACCESS EASEMENT: Each Owner of a Home shall have a non-exclusive perpetual easement for ingress to and egress from his Home to public streets and roads over and across the driveways and walkways located on the Premises, which easement shall run with the land, be appurtenant to and pass with title to every Home. Any governmental authority which has jurisdiction over the Premises shall have a non-exclusive easement of access over roads and driveways located on the Premises for police, fire, ambulance, waste removal, or for the purpose of furnishing municipal or emergency services to the Premises. The Association, its employees, agents and contractors, shall have the right of ingress to, egress from, and parking on the Townhome Common Area, and the right to store equipment on the Townhome Common Area, for the purpose of furnishing any maintenance, repairs or replacements of the Premises as required or permitted hereunder. 2.05 RIGHT OF ENJOYMENT: Each Owner shall have the non-exclusive right and easement to use and enjoy the Townhome Common Area other than any Parking Area assigned to other Owners pursuant to Section 3.08 and the exclusive right to use and enjoy the Owner's Home, Home Exterior, and Parking Area assigned to the Owner pursuant to Section 3.08. Such rights and easements shall run with the land, be appurtenant to and pass with title to every Home, and shall be subject to and governed by the laws, ordinances and statutes of jurisdiction, the provisions of this Declaration, the By -Laws, and the reasonable rules and regulations from time to time adopted by the Association, including the right of the Association to come upon and enter a Home to furnish services hereunder. 2.06 DELEGATION OF USE: Subject to the provisions of this Declaration, the By - Laws, and the reasonable rules and regulations from time to time adopted by the Association, any Owner may delegate his right to use and enjoy the Townhome Common Area and the Owner's Home and Home Exterior to Residents of the Owner's Home. An Owner shall delegate such rights to tenants and contract purchasers of the Owner's Home who are Residents. 4 2.07 RULES AND REGULATIONS: The use and enjoyment of the Premises shall at all times be subject to reasonable rules and regulations duly adopted by the Association from time to time. 2.08 UTILITY EASEMENTS: The Municipality and all public and private utilities (including cable companies) serving the Premises are hereby granted the right to lay, construct, renew, operate, and maintain conduits, cables, pipes, wires, transformers, switching apparatus and other equipment, into and through the Townhome Common Area for the purpose of providing utility services to the Premises. 2.09 EASEMENTS, LEASES, LICENSES AND CONCESSIONS: The Association shall have the right and authority from time to time to lease or grant easements, licenses, or concessions with regard to any portion or all of the Townhome Common Area for such uses and purposes as the Board deems to be in the best interests of the Owners and which are not prohibited hereunder, including, without limitation, the right to grant easements for utilities or any other purpose which the Board deems to be in the best interests of the Owners. Any and all proceeds from leases, easements, licenses or concessions with respect to the Townhome Common Area shall be used to pay the Townhome Common Expenses. Also, the Association shall have the right and power to dedicate any part or all of the roads or parking areas located on the Townhome Common Area to the Municipality or other governmental authority which has jurisdiction over the Townhome Common Area. Each person, by acceptance of a deed, mortgage, trust deed, other evidence of obligation, or other instrument relating to Home ownership, shall be deemed to grant a power coupled with an interest to the Board, as attorney - in -fact, to grant, cancel, alter or otherwise change the easements provided for in this Section. Any instrument executed pursuant to the power granted herein shall be executed by the President and attested to by the Secretary of the Association and duly Recorded. 2.10 ASSOCIATION'S ACCESS: The Association shall have the right and power to come onto and enter any Home, or Home Exterior for the purpose of furnishing the services required to be fiirnished hereunder or enforcing its rights and powers hereunder. 2.11 NO DEDICATION TO PUBLIC USE: Except for easements granted or dedications made as permitted in Section 2.09, nothing contained in this Declaration shall be construed or be deemed to constitute a dedication, express or implied, of any part of the Townhome Common Area to or for any public use or purpose whatsoever. 2.12 EASEMENT FOR ENCROACHMENT: In the event that by reason of the construction, repair, reconstruction, settlement or shifting of an improvement to a Home, any improvement which is intended to service and/or be part of the Home shall encroach upon any part of any other Home or upon the Townhome Common Area or any improvement to the Townhome Common Area shall encroach upon any part of a Home, then there shall be deemed to be an easement in favor of and appurtenant to such encroaching improvement" -for the continuance, maintenance, repair and replacement thereof, provided, however, that in no event shall an easement for any encroachment be created in favor of any Owner (other than Declarant), if such encroachment occurred due to the intentional, willful, or negligent conduct of such Owner E or his agent. Without limiting the foregoing, the Owner of each Home shall have an easement appurtenant to his Home for the continuance, maintenance, repair and replacement of the following improvements, if any, which encroach onto another Home or the Townhome Common Area: - (a) the eaves, gutters, downspouts, facia, flashings, and like appendages which serve the Home; (b) the chimney which serves the Home; (c) the air conditioning equipment which serves the Home; or (d) balconies, steps, porches, decks, fences, door entries and patios which serve the Home. The Person who is responsible for the maintenance of any encroaching improvement for which an easement for continuance, maintenance, repair and replacement thereof is granted under this Section shall continue to be responsible for the maintenance of such encroaching improvement and the Person who is responsible for the maintenance of the real estate upon which such improvement encroaches shall not have the duty to maintain, repair or replace any such encroaching improvement unless otherwise provided in this Declaration. 2.13 LEASE OF HOME: Any Owner shall have the right to lease all (and not less than all) of his Home subject to the provisions of subsections (a), (b) and (c) below: (a) No Home shall be leased for less than thirty (30) days or for hotel or transient purposes; (b) Any lease shall be in writing and shall provide that such lease shall be subject to the terms of this Declaration and that any failure of the lessee to comply with the terms of this Declaration shall be a default under the lease. A lessee shall be bound by the provisions hereof regardless of whether the lease specifically refers to this Declaration; and (c) No Person may be an Owner at any time of more than two (2) Homes which are subject to this Declaration. (d) The provisions of subparagraphs (a), (b) and (c) above shall not apply to Homes owned by Declarant. ARTICLE THREE Maintenance 3.01 IN GENERAL: The restrictions and limitations contained in this Article shall be subject to the rights of the Declarant set forth in Article Nine. 0 3.02 MAINTENANCE BY THE ASSOCIATION: The Association shall furnish the following and the cost thereof shall be Townhome Common Expenses: (i) Maintenance (including cleaning and snow removal), repair and replacement of driveways and walkways located on the Premises; (ii) Subject to the provisions of Section 3.06 and 3.07, grass cutting and maintenance of grass and landscaping located on the Premises; however, the watering of grass, shrubs, trees and other foliage on the Premises shall be furnished by the Owners and/or Residents pursuant to rules, regulations and procedures adopted from time to time by the Board; (iii) Maintenance of the water and sanitary sewer lines from each Home Exterior to the point where such lines connect into the water and sewer mains owned and operated by the Municipality; (iv) Maintenance (including periodic painting), repairs and replacements to Home Exteriors, excluding, however, exterior window washing which shall be the responsibility of the Owner of each Home; and (v) Maintenance, repair and replacements of improvements which are installed by the Declarant on the Townhome Common Area. 3.03 MAINTENANCE BY OWNER: (a) Except as otherwise specifically provided for in this Declaration, each Owner shall be responsible for the maintenance, repair and replacement of his Home and Home Exterior. (b) The maintenance (other than periodic exterior painting), repairs and replacements of windows, window frames, window glass, doors (including garage doors and storm doors) and screening on a Home and the patio or deck, if any shall be the responsibility of the Owner of the Home; however, at the option of the Board, such work shall be furnished by the Association and the cost thereof charged to the Owner of the Home with respect to which the work is done based on actual cost, as determined by the Board in its reasonable judgment. (c) If, in the judgment of the Board, an Owner fails to maintain those portions of the Owner's Home which the Owner is responsible for maintaining hereunder in good condition and repair or the appearance of such portions is not of the quality of that of other Homes in the Development or in compliance with rules and regulations adopted by the Board from time to time, then the Board may, in its discretion, take the following action: (i) advise the Owner of the work which must be done and allow the Owner at least twenty (20) days (or less in the case of an emergency) to cause the work to be done; and 7 (ii) if the work is not done to the satisfaction of the Board, in its sole judgment, then the Board may seek injunctive relief, levy a fine and/or cause such work to be done and the cost thereof shall be a Charge payable by the Owner to the Association upon demand. (d) Repairs and replacements which are required due to occurrences which are normally covered by insurance required to be obtained by the Association under Section 4.01 shall be made as provided in Section 4.06. 3.04 CERTAIN UTILITY COSTS: Certain utility costs incurred in connection writh the use, operation and maintenance of the Townhome Common Area and Home Exteriors may not be separately metered and billed to the Association. Without limiting the foregoing, the Association shall have the right to use water from taps or spigots which are located on a Home for the purpose of watering the green areas in the Townhome Common Area. If the cost for such water or other utilities is metered and charged to individual Homes rather than being separately metered and charged to the Association, then the following shall apply: (a) If in the opinion of the Board, each Owner is sharing in a fair and equitable manner the cost for such service, then no adjustment shall be made and each Owner shall pay his own bill; or (b) If in the opinion of the Board, the Owner of a Home is being charged disproportionately for costs allocable to the Townhome Common Area and Home Exteriors, then the Association shall pay, or reimburse such Owner, an amount equal to the portion of the costs which in the reasonable determination of the Board is properly allocable to the Townhome Common Area and Home Exteriors and the amount thereof shall be Townhome Common Expenses hereunder. Any determinations or allocations made hereunder by the Board shall be final and binding on all parties. 3.05 DAMAGE BY RESIDENT: If, due to the act or omission of a Resident of a Home, or of a household pet or guest or other authorized occupant or invitee of the Owner of a Home, damage shall be caused to the Townhome Common Area or a Home Exterior and maintenance, repairs or replacements shall be required thereby, then the Owner of the Home shall pay for such damage and such maintenance, repairs and replacements, as may be determined by the; Board, and the cost thereof shall be a Charge payable by the Owner to the Association upon demand. 3.06 ALTERATIONS. ADDITIONS OR IMPROVEMENTS TO THE TOWNHOME COMMON AREA: (a) Other than those made by Declarant, no alterations, additions or improvements shall be made to the Townhome Common Area without the prior approval of the Board; and 8 (b) The Association may cause alterations, additions or improvements to be made to the Townhome Common Area, and the cost thereof shall be paid from a special assessment, as more fully described in Section 6.05. 3.07 ALTERATIONS, ADDITIONS OR IMPROVEMENTS TO HOMES AND HOME EXTERIORS: No additions, alterations or improvements (including without limitation, changes in the exterior color of a Home or construction of an outbuilding, awnings, antenna, satellite dish, installation of a garden, privacy screening around a deck, or similar changes) shall be made to any Home Exterior or any part of the Home which is visible from outside the Home by an Owner without the prior written consent of the Board and, until the Declarant no longer owns or controls title to any portion of the Premises, the Declarant. The Board may (but shall not be required to) condition its consent to the making of an addition, alteration or improvement to a Home Exterior or Home which requires the consent of the Board upon the Owner's agreement either (i) to be solely responsible for the maintenance of such addition, alteration or improvement, subject to such standards as the Board may from time to time set, or (ii) if the addition, alteration or improvement is required to be maintained hereunder by the Association as part of the Townhome Common Expenses, to pay to the Association from time to time the additional cost of maintenance as a result of the addition, alteration or improvement. If an addition, alteration or improvement which requires the consent of the Board and Declarant hereunder is made to a Home Exterior or Home by an Owner without the prior written consent of the Board or Declarant, or both, as applicable, then (i) the Board may, in its discretion, take any of the following actions; and (ii) until such time as the Declarant no longer owns or controls title to any portion of the Premises, the Declarant may, in its discretion take either of the following actions: (a) Require the Owner to remove the addition,, alteration or improvement and restore the Home Exterior to its original condition, all at the Owner's expense; or (b) If the Owner refuses or fails to properly perform the work required under (a), the Board may cause such work to be done and may charge the Owner for the cost thereof as determined by the Board and the cost thereof shall be a Charge payable by the Owner to the Association upon demand; or (c) Ratify the action taken by the Owner, and the Board may (but shall not be required to) condition such ratification upon the same conditions which it may impose upon the giving of its prior consent under this Section. 3.08 PARKING AREAS: Those portions of the Townhome Common Area located a distance of eighteen (18) feet in front of the garage door of the Home in which the Resident resides are reserved for the exclusive use of the Residents of a particular Home as a Parking Area ("Parkinjz Area"). The Resident shall have the exclusive right to park no more than two (2) automobiles in the Parking Area. The right to use a Parking Area which is assigned to a Home shall run with title to the Home. E ARTICLE FOUR Insurance/Condemnation 4.01 HAZARD INSURANCE: The Board shall have the authority to and shall obtain insurance for the Premises and all improvements thereto against loss or damage by fire and such other hazards as may be required under applicable requirements of Fannie Mae from time to time, as the Board may deem desirable, or as reasonably required by First Mortgagees, for the full insurable replacement cost of the Homes. Premiums for such insurance shall be Townhome Common Expenses. Such insurance coverage shall be written in the name of, losses under such policies shall be adjusted by, and the proceeds of such insurance shall be payable to, the Board as trustee for the Owners. All such policies of insurance (i) shall contain standard mortgage clause endorsements in favor of the First Mortgagees as their respective interests may appear, (ii) shall provide that the insurance, as to the interests of the Board, shall not be invalidated by any act or neglect of any Owner, (iii) to the extent possible, shall provide that such policy shall not be cancelled or substantially modified (including cancellation for nonpayment of premium) without at least thirty (30) days' written notice to the First Mortgagee of each Home, and (iv) shall contain waivers of subrogation with respect to the Association and its directors, officers, employees and agents (including the managing agent), Owners, occupants of the Home, First Mortgagees, and the Declarant and shall name all such parties as additional insured parties as their interests may appear. 4.02 INSURANCE TRUSTEE/USE OF PROCEEDS: The Board may engage the services of any bank or trust company authorized to do trust business in Illinois to act as trustee, agent or depository on behalf of the Board for the purpose of receiving and disbursing the insurance proceeds resulting from any loss, upon such terms, as the Board shall determine consistent with the provisions of this Declaration. The fees of such corporate trustee shall be Townhome Common Expenses. In the event of any loss in excess of $100,000.00 in the aggregate, the Board shall engage a corporate trustee as aforesaid. In the event of any loss resulting in the destruction of the major portion of one or more Homes, the Board shall engage a corporate trustee as aforesaid upon the written demand of the First Mortgagee or any Owner of any Home so destroyed. The rights of First Mortgagees under any standard mortgage clause endorsement to such policies shall, notwithstanding anything to the contrary therein contained, at all times be subject to the provisions of this Declaration with respect to the application of insurance proceeds to the repair or reconstruction of the Homes. Payment by an insurance company to the Board or to such corporate trustee of the proceeds of any policy, and the receipt of a release from the Board of the company's liability under such policy, shall constitute a full discharge of such insurance company, and such company shall be under no obligation to inquire into the terms of any trust under which proceeds may be held pursuant hereto, or to take notice of any standard mortgage clause endorsement inconsistent with the provisions hereof, or see to the application of any payments of the proceeds of any policy by the Board or the corporate trustee. 4.03 OTHER INSURANCE: The Board shall also have the authority to and -'shall obtain the following insurance: IN (a) Comprehensive public liability and property damage insurance against claims for personal injury or death or property damage suffered by the public or by any Owner occurring in, on or about the Premises or upon, in or about the streets, private drives and passageways and other areas adjoining the Premises, in such amounts as the Board shall - deem desirable (but not less than $1,000,000 covering all claims for personal injury and/or property damage arising out of a single occurrence). (b) Such workers compensation insurance as may be necessary to comply with applicable laws. (c) Employer's liability insurance in such amount as the Board shall deem desirable. (d) Fidelity bond indemnifying the Association, the Board and the Owners for loss of funds resulting from fraudulent or dishonest acts of any employee of the Association or of any other person handling the funds of the Association, the Board or the Owners in such amount as the Board shall deem desirable and as required applicable regulations of Fannie Mae. (e) Directors and officers liability insurance. (f) Such other insurance in such reasonable amounts as is required under applicable regulations of the Federal National Mortgage Association or the Board shall deem desirable. Such insurance coverage shall include cross liability claims of one or more insured parties against other insured parties. To the extent possible, all of such policies shall provide that they may not be cancelled or substantially modified (including cancellation for nonpayment of premium) without at least thirty (30) days' prior written notice to the Association and First Mortgagees who specifically request such notice. The premiums for such insurance shall be Townhome Common Expenses. 4.04 OWNER'S RESPONSIBILITY: Each Owner shall obtain his own insurance on the contents of his own Home and fin-nishings and personal property therein, and his personal liability to the extent not covered by the liability insurance for all of the Owners obtained as part of the Townhome Common Expenses as above provided, and the Board shall have no obligation whatsoever to obtain any such insurance coverage on behalf of the Owners. Each Owner shall promptly report, in writing to the Board, any betterments or improvements to his Home without prior request from the Board. Unless otherwise specifically agreed to by the Board, the Owner shall be responsible for insuring any such betterments and improvements to his Home and the Board shall not be responsible for obtaining insurance on such betterments or improvements and shall not be obligated to apply any insurance proceeds from policies it is obligated=to-maintain hereunder to restore the affected Home to a condition better than the condition existing prior to the making of such betterments or improvements. 11 4.05 WAIVER OF SUBROGATION: Each Owner hereby waives and releases any and 'all claims which he may have against any other Owner, the Association, its directors and officers, the Declarant, the manager and the managing agent if any, and their respective employees and agents, for damage to the Home or to any personal property located in the Homes caused by fire or other casualty, to the extent that such damage is covered by fire or other form of casualty insurance, and to the extent this release is allowed by policies for such fire or other casualty insurance. 4.06 REPAIR OR RECONSTRUCTION: (a) In the case of damage by fire or other disaster to any Home (a "Damaged Improvement") where the insurance proceeds are sufficient to repair or reconstruct the Damaged Improvement, then the proceeds shall be used by the Association to repair or reconstruct the Damaged Improvement. (b) In the case of damage by fire or other disaster to any Home or building which contains Homes where the insurance proceeds are insufficient to repair or reconstruct the Damaged Improvement or the Damaged Improvement cannot be reconstructed as originally designed and built because of zoning, building or other applicable laws, ordinances or regulations, the following procedure shall be followed: (1) A meeting of the Owners shall be held not later than the first to occur of (i) the expiration of thirty (30) days after the final adjustment of the insurance claims or (ii) the expiration of ninety (90) days after the occurrence which caused the damage. (2) At the meeting, the Board shall present a plan for the repair or reconstruction of the Damaged Improvement and an estimate of the cost of repair or reconstruction, together with an estimate of the amount thereof which must be raised by way of special assessment and a proposed schedule for the collection of a special assessment to pay the excess cost. (3) A vote shall then be taken on the question of whether or not the Damaged Improvement shall be repaired or reconstructed based on the information provided by the Board under (2) above, including the proposed special assessment. The Damaged Improvement shall be repaired or reconstructed and the proposed special assessment shall be levied only upon the affirmative vote of Voting Members representing at least two - third (2/3) of the votes cast. (4) If the Voting Members do not vote to repair or reconstruct the Damaged Improvement at the meeting provided for in (1) above, then the Board may, at its discretion, call another meeting or meetings of the Owners to reconsider the question of whether or not the Damaged Improvement shall be repaired or reconstructed. (5) If the Voting Members do not vote to repair or reconstruct the Damaged Improvement under Subsection (4) above, then the Board may, with the consent of 12 Owners representing two-thirds (2/3) of the Homes in the damaged building and First Mortgagees representing two-thirds (2/3) of the Homes (by number) subject to Mortgages in the building, amend this Declaration to withdraw the building which includes the Damaged Improvement from the terms hereof (except as provided below). Alternatively, the Owners of all of the Homes in the damaged building may agree to pay the cost of repairing or reconstructing the building which includes the Damaged Improvement over and above the insurance proceeds in amounts agreed to among such Owners, in which case, the damaged building shall be repaired and reconstructed. The payment of just compensation, or the allocation of any insurance or other proceeds to any withdrawing or remaining Owner shall be made to such Owner and his First Mortgagee, as their interests may appear, on an equitable basis, determined by the Board. From and after the effective date of the amendment referred to above in this paragraph, the Owner of a Home located in the Building which is withdrawn shall have no responsibility for the payment of assessments which would have been payable with respect to the Home if the amendment had not been Recorded; provided, that, the Home shall continue to be subject to the provisions of Section 3.07 hereof and upon issuance of an occupancy permit for a Home removed from the terms hereof as provided above, the Home shall thereupon be subject to the terms hereof. (c) If the Damaged Improvement is repaired or reconstructed, it shall be done in a workmanlike manner and the Damaged Improvement, as repaired or reconstructed, shall be substantially similar in design and construction to the improvements on the Premises as they existed prior to the damage, with any variations or modifications required to comply with applicable law. (d) If the Damaged Improvement is not repaired or reconstructed, then the damaged portion of the building shall be razed, or secured and otherwise maintained in conformance with the rules or standards adopted from time to time by the Board. Any reconstruction of the building shall be subject to the provisions of Section 3.07. ARTICLE FIVE The Association 5.01 IN GENERAL: Declarant has caused or shall cause the Association to be incorporated as a not -for -profit corporation under Illinois law. The Association shall be the governing body for all of the Owners for the administration and operation of the Townhome Common Area and to the maintenance repair and replacement of the Townhome Common Area and certain portions of the Home Exteriors as provided herein. 5.02 MEMBERSHIP: Each Owner shall be a member of the Association. There shall be one membership per Home. Membership shall be appurtenant to and may not be separated from ownership of a Horne. Ownership of a Home shall be the sole qualification for membership. The Association shall be given written notice of the change of ownership of a Home within ten (10) days after such change. 13 5.03 VOTING MEMBERS: Subject to the provisions of Section 9.05, voting rights of the members of the Association shall be vested exclusively in the Voting Members. One individual shall be designated as the "Voting Member" for each Home. The Voting Member or his proxy shall be the individual who shall be entitled to vote at meetings of the Owners. If the Record ownership of a Home shall be in more than one person, or if an Owner is a trustee, corporation, partnership or other legal entity, then the Voting Member for the Home shall be designated by such Owner or Owners in writing to the Board and if in the case of multiple individual Owners no designation is given, then the Board at its election may recognize an indi- vidual Owner of the Home as the Voting Member for such Home. 5.04 BOARD: Subject to the rights retained by the Declarant under Section 9.05, the Board shall consist of that number of members provided for in the By -Laws, each of whom shall be an Owner or Voting Member. 5.05 VOTING RIGHTS: Prior to the Turnover Date, all of the voting rights at each meeting of the Association shall be vested exclusively in the Declarant and the Owners shall have no voting rights. From and after the Turnover Date, all of the voting rights at any meeting of the Association shall be vested in the Voting Members and each Voting Member shall have one vote for each Home which the Voting Member represents. From and after the Turnover Date any action may be taken by the Voting Members at any meeting at which a quorum is present (as provided in the By -Laws) upon an affirmative vote of a majority by the Voting Members present at such meeting, except as otherwise provided herein or in the By -Laws. 5.06 DIRECTOR AND OFFICER LIABILITY: Neither the directors nor the officers of the Association shall be personally liable to the Association or the Owners for any mistake of judgment or for any other acts or omissions of any nature whatsoever as such directors and officers except for any acts or omissions found by a court to constitute criminal conduct, gross negligence or fraud. The Association shall indemnify and hold harmless the Declarant and each of the directors and officers, and his heirs, executors or administrators, against all contractual and other liabilities to the Owners, the Association or others arising out of contracts made by or other acts of the directors and officers on behalf of the Owners or the Association or arising out of their status as directors or officers unless any such contract or act shall have been made criminally, fraudulently or with gross negligence. It is intended that the foregoing indemnification shall include indemnification against all costs and expenses (including, but not limited to, counsel fees, amounts of judgments paid and amounts paid in settlement) actually and reasonably incurred in connection with the defense of any claim, action, suit or proceeding, whether civil, criminal, administrative, or other in which any such director may be involved by virtue of such person being or having been such director or officer; provided, however, that such indemnity shall not be operative with respect to (i) any matter as to which such person shall have been finally adjudged in such action, suit or proceeding to be liable for criminal conduct, gross negligence or fraud in the performance of his duties as such director or officer, or (ii) any matter settled or compromised, unless, in the opinion of independent counsel selected by or.in a -manner determined by the Board, there is not reasonable ground for such person being adjudged liable for criminal conduct, gross negligence or fraud in the performance of his duties as such director or officer. 14 5.07 MANAGING AGENT: The Declarant (or an entity affiliated with the Declarant) may be engaged by the Association to act as the managing agent for the Association and as managing agent shall be paid a reasonable fee for its services as fixed by a written agreement - between the Association and the Declarant (or an entity controlled by the Declarant). Any management agreement entered into by the Association prior to the Turnover Date shall have a term of not more than two years and shall be terminable by the Association without payment of a termination fee on ninety (90) days written notice. 5.08 DISSOLUTION: To the extent permissible under applicable law, in the event of the dissolution of the Association, any Townhome Common Area owned by the Association shall be conveyed to the Owners as tenants in common. 5.09 LITIGATION: No judicial or administrative proceedings shall be commenced or prosecuted by the Association without first holding a special meeting of the members and obtaining the affirmative vote of Voting Members representing at least seventy-five percent (75%) of the Homes to the commencement and prosecution of the proposed action. This Section shall not apply to (a) actions brought by the Association to enforce the provisions of this Declaration, the By -Laws or rules and regulations adopted by the Board (including, without limitation, an action to recover Charges or to foreclose a lien for unpaid Charges) or (b) counterclaims brought by the Association in proceedings instituted against it. 5.10 ATTENDANCE AT BOARD MEETINGS BY OWNERS: Owners may attend meetings of the Board only if, and to the extent, permitted by the Board in its discretion. It is not the intention that Owners shall have the right to attend meetings of the Board in the same manner as provided for members of condominium associations under the Illinois Condominium Property Act. ARTICLE SIX Assessments 6.01 PURPOSE OF ASSESSMENTS: The assessments levied by the Association shall be exclusively to administer the affairs of the Association, to pay the Townhome Common Expenses, and to accumulate reserves for any such expenses. 6.02 TOWNHOME COMMON ASSESSMENT: Each year on or before December 1, the Board shall adopt and furnish each Owner with a budget for the ensuing calendar year, which shall show the following with reasonable explanations and itemizations: (a) The estimated Townhome Common Expenses; (b) The estimated amount, if any, to maintain adequate reserves for = T ownhome Common Expenses including, without limitation, amounts to maintain the Capital Reserve; 15 (c) The estimated net available cash receipts from the operation and use of the Townhome Common Area, plus estimated excess funds, if any, from the current year's assessments; (d) The amount of the "Townhome Common Assessment" payable by the Owners, which is hereby defined as the amount determined in (a) above, plus the amount determined in (b) above, minus the amount determined in (c) above; (e) That portion of the Townhome Common Assessment which shall be payable by the Owner of each Home which is subject to assessment hereunder each month until the next Townhome Common Assessment or revised Townhome Common Assessment becomes effective, which monthly amount shall be equal to the Townhome Common Assessment, divided by the number of Homes, divided by twelve (12), so that each Owner shall pay equal Townhome Common Assessments for each Home owned. Anything herein to the contrary notwithstanding the provisions of this paragraph shall apply with respect to the period prior to the Turnover Date. Any budget ("Stabilized Budget") prepared by the Board prior to the Turnover Date shall be based on the assumptions that (i) the Development has been fully constructed as shown on Declarant's then current plan for the Development ("Current Development Plan") and (ii) all proposed Homes in the Current Development Plan have been sold and are occupied. The Current Development Plan shall be kept on file with the Association and may be modified from time to time by Declarant. Prior to the Turnover Date, each owner of a Home (other than Declarant) shall pay a Townhome Common Assessment equal to the total cash needs, as shown on the Stabilized Budget, divided by the total number of proposed Homes, as shown on the Current Development Plan, divided by 12, so that each Owner (other than Declarant) will pay, with respect to each Home owned, a monthly Townhome Common Assessment equal to what such Owner would be paying with respect to the Owner's Home if the Development were fully constructed pursuant to the Current Development Plan and all proposed Homes have been built and are occupied. Declarant shall not be obligated to pay any Townhome Common Assessments to the Association prior to the Turnover Date. However, if with respect to the period commencing on the date of the Recording of this Declaration and ending on the Turnover Date, the amount of Townhome Common Assessments and contributions under Section 6.07 payable by Owners (other than Declarant) less the portions thereof which are to be added to Reserves is less than the Townhome Common Expenses actually incurred with respect to such period, then the Declarant shall pay the difference to the Association. From time to time prior to the Turnover Date, the Declarant shall deposit with the Association amounts which reasonably approximate Declarant's obligation hereunder as estimated by the Declarant. A final accounting and settlement of the amount., if any, owed by Declarant to the Association, or vice versa, shall be made as soon as practicable after the Turnover Date. 6.03 PAYMENT OF TOWNHOME COMMON ASSESSMENT: On or before the 1st day of January of the ensuing calendar year, and on the first day of each month thereafter until the effective date of the next annual or revised Townhome Common Assessment, each Owner of a Home whidh is subject to assessment shall pay to the Association, or as the Board may direct, 16 that portion of the Townhome Common Assessment which is payable by each Owner of a Home under Section 6.02(e). For purposes hereof, a Home shall only be subject to assessment hereunder from and after such time as an occupancy certificate has been issued with respect to such Home. 6.04 REVISED ASSESSMENT: If the Townhome Common Assessment proves inadequate for any reason (including nonpayment of any Owner's assessment) or proves to exceed funds reasonably needed, then the Board may increase or decrease the assessment payable under Section 6.02(e) by giving written notice thereof (together with a revised budget and explanation for the adjustment) to each Owner not less than ten (10) days prior to the effective date of the revised assessment. 6.05 SPECIAL ASSESSMENT: After the Turnover Date, the Board may levy a special assessment as provided in this Section: (i) to pay (or build up reserves to pay) expenses other than Townhome Common Expenses incurred (or to be incurred) by the Association from time to time for a specific purpose including, without limitation, to make alterations, additions or improvements to the Townhome Common Area, or any other property owned or maintained by the Association; or (ii) to cover an unanticipated deficit under the prior year's budget. Any special assessment shall be levied against all of the Homes in equal shares. No special assessment shall be adopted without the affirmative vote of Voting Members representing at least two-thirds (2/3) of the votes cast on the question. The Board shall serve notice of a special assessment on all Owners by a statement in writing giving the specific purpose and reasons therefor in reasonable detail, and the special assessment shall be payable in such manner and on such terms as shall be fixed by the Board. Any assessments collected pursuant to this Section (other than those to cover an unanticipated deficit under the prior year's budget) shall be segregated in a special account and used only for the specific purpose set forth in the notice of assessment. 6.06 CAPITAL RESERVE: The Association shall segregate and maintain special reserve accounts to be used solely for malting capital expenditures in connection with the Townhome Common Area and those portions of the Home Exteriors with respect to which the Association is responsible for repair and replacement (the "Capital Reserve"). The Board shall detennine the appropriate level of the Capital Reserve based on a periodic review of the; useful life of improvements to the Townhome Common Area, the portions of the Home Exteriors for which the Association is responsible and other property owned by the Association and periodic projections of the cost of anticipated major repairs or replacements to the Townhome Common Area, the portions of the Home Exteriors for which the Association is responsible and the purchase of other property to be used by the Association in connection with its duties hereunder. Each budget shall disclose that percentage of the Townhome Common Assessment which shall be added to the Capital Reserve and each Owner shall be deemed to make a capital contribution to the Association equal to such percentages multiplied by each installment of the Townhome Common Assessment paid by such Owner. 6.07 INITIAL CAPITAL CONTRIBUTION: Upon the closing of the first sale of a Home by the Declarant to a purchaser for value, the purchasing Owner shall make a capital 17 contribution to the Association in an amount equal to two (2) months' Townhome Common Assessment at the rate which shall be effective with respect to the Home as of the closing. Said amount shall be held and used by the Association for its working capital needs. 6.08 PAYMENT OF ASSESSMENTS: Assessments levied by the Association shall be collected from each Owner by the Association and shall be a lien on the Owner's Home and also shall be a personal obligation of the Owner in favor of the Association, all as more fully set forth in Article Seven. ARTICLE SEVEN Collection of Charges and Remedies for Breach or Violation 7.01 CREATION OF LIEN AND PERSONAL OBLIGATION: The Declarant hereby covenants, and each Owner of a Home by acceptance of a deed therefor (whether or not it shall be so expressed in any such deed or other conveyance) shall be and is deemed to covenant and hereby agrees to pay to the Association all Charges made with respect to the Owner or the Owner's Home. Each Charge, together with interest thereon and reasonable costs of collection, if any, as hereinafter provided, shall be a continuing lien upon the Home against which such Charge is made and also shall be the personal obligation of the Owner of the Home at the time when the Charge becomes due. The lien or personal obligation created under this Section shall be in favor of and shall be enforceable by the Association. 7.02 COLLECTION OF CHARGES: The Association shall collect from each Owner all Charges payable by such Owner under this Declaration. 7.03 NON-PAYMENT OF CHARGES: Any Charge which is not paid to the Association when due shall be deemed delinquent. Any Charge which is delinquent for thirty (30) days or more shall bear interest at the rate of eighteen percent (18%) per annum or the maximum rate permitted by law, whichever is less, from the due date to the date when paid. The Association may (i) bring an action against the Owner personally obligated to pay the Charge to recover the Charge (together with interest, costs and reasonable attorney's fees for any such action, which shall be added to the amount of the Charge and included in any judgment rendered in such action), and (ii) enforce and foreclose any lien which it has or which may exist for its benefit. In addition, the Board may add a reasonable late fee to any installment of an assessment which is not paid ""thin thirty (30) days of its due date. No Owner may waive or otherwise escape personal liability for the Charges hereunder by nonuse of the Townhome Common Area or by abandonment or transfer of his Home. 7.04 LIEN FOR CHARGES SUBORDINATED TO MORTGAGES: The lien for Charges, provided for in Section 7.01, shall be subordinate to the First Mortgagee's mortgage on the Home which was Recorded prior to the date that any such Charge became due: -Except as hereinafter provided, the lien for Charges, provided for in Section 7.01, shall not be affected by any sale or transfer of a Home. Where title to a Horne is transferred pursuant to a decree of foreclosure o� the First Mortgagee's mortgage or by deed or assignment in lieu of foreclosure of 18 the First Mortgagee's mortgage, such transfer of title shall extinguish the lien for unpaid Charges which became due prior to the date of the transfer of title. However, the transferee of the Home shall be personally liable for his share of the Charges with respect to which a lien against his Home has been extinguished pursuant to the preceding sentence where such Charges are reallocated among all the Owners pursuant to a subsequently adopted annual or revised Townhome Common Assessment or special assessment, and non-payment thereof shall result in a lien against the transferee's Home, as provided in this Article. 7.05 SELF-HELP BY BOARD: In the event of a violation or breach by an Owner of the provisions, covenants or restrictions of the Declaration, the By -Laws, or rules or regulations of the Board, where such violation or breach may be cured or abated by affirmative action, then the Board, upon not less than ten (10) days' prior written notice to the Owner, shall have the right to enter upon that part of the Premises where the violation or breach exists to remove or rectify the violation or breach; provided, that, if the violation or breach exists within a Home, judicial proceedings must be instituted before any items of construction can be altered or demolished. 7.06 OTHER REMEDIES OF THE BOARD: In addition to or in conjunction with the remedies set forth above, enforcement of any of the provisions contained in this Declaration or any rules and regulations adopted hereunder the Board may levy a fine or the Board may bring an action at law or in equity in the name of the Association against any person or persons violating or attempting to violate any such provision, either to restrain such violation, require performance thereof, to recover sums due or payable (including fines) or to recover damages, and against the Home to enforce any lien created hereunder; and failure by the Association to enforce any provision shall in no event be deemed a waiver of the right to do so thereafter. 7.07 COSTS AND EXPENSES: All costs and expenses incurred by the Board in connection with any action, proceedings or self-help in connection with exercise of its rights and remedies under this Article, including, without limitation, court costs, attorneys' fees and all other fees and expenses, and all damages, liquidated or otherwise, together with interest thereon at the rate of eighteen percent (18%) per annum or the maximum rate permitted by law, whichever is less, until paid, shall be charged to and assessed against the defaulting Owner, and the Association shall have a lien for all the same, upon his Home as provided in Section 7.01. 7.08 ENFORCEMENT BY OWNERS: Enforcement of the provisions contained in this Declaration and the rules and regulations adopted hereunder may be by any proceeding at law or in equity by any aggrieved Owner against any person or persons violating or attempting to violate any such provisions, either to restrain such violation or to recover damages, and against a Home to enforce any lien created hereunder. ARTICLE EIGHT Use Restrictions 8.01 INDUSTRY/SIGNS: No industry, business, trade, occupation or profession of any kind shall be conducted, maintained or permitted on any part of the Townhome Common Area, nor shall any "For Sale" or "For Rent" signs or any other advertising be maintained or permitted 19 on any part of the Townhome Common Area or any Home Exterior, except as permitted by the 'Board or as permitted under Article Nine. Without limiting the foregoing, except as placed by Declarant, no more than one (1) sign may be placed in a window or on the front lawn of a Home, subject to the reasonable rules and regulations of the Board. 8.02 UNSIGHTLY USES: No clothes, sheets, blankets, laundry of any kind or other articles shall be hung out on any portion of any Home Exterior or the Townhome Common Area, The Premises shall be kept free and clear of all rubbish, debris and other unsightly materials and no waste shall be committed thereon. The Board shall have the right to adopt reasonable rules and regulations concerning window treatment or other decorating within a Home which is visible from outside the Home. 8.03 SATELLITE DISHES/ANTENNAE: Subject to applicable federal, state and local regulations, laws and ordinances, no television antenna, radio receiver or transmitter or other similar device shall be attached to or installed on any portion of any Home Exterior or the Townhome Common Area; provided, that, a satellite dish of eighteen inches or less in diameter maybe installed in a location (i) determined by the Declarant; or (ii) the Board. Without limiting the foregoing, the provisions of this paragraph shall not apply to the Association with respect to the installation of equipment necessary for a master antenna system, cable television system or other similar systems within the Premises. 8.04 RESIDENTIAL USE ONLY: Each Home shall be used only as a residence; provided that no Owner shall be precluded, with respect to his Home, from (i) maintaining a personal professional library, (ii) keeping his personal business records or accounts therein, (iii) handling his personal business or professional calls or correspondence therefrom, or (iv) conducting an in -home business not prohibited by ordinances of the Municipality. 8.05 PARKING: Unless expressly permitted by the Board, no boats, trucks larger than 3/4 ton, recreational vehicles, trailers, commercial vehicles or other similar vehicles shall be parked or stored on any portion of the Premises (other than a garage which is part of a Home) for more than twenty-four (24) hours at a time. Except for emergencies, no repairs or maintenance work shall be performed on any vehicle on the Premises (other than within a garage). The Resident of a Home shall have the exclusive right to park no more than two (2) automobiles in the Parking Area which serves the Home, as more fully provided in Section 3.08. Owners and Residents shall be prohibited from parking in parking areas which are designated from time to time: by the Board as "Guest Parking Areas". 8.06 OBSTRUCTIONS: Except as permitted under Section 9.03 there shall be no obstruction of the Townhome Common Area, and nothing shall be stored in the Townhome Common Area without the prior written consent of the Board. All rubbish and refuse shall be deposited in such areas and in such receptacles as shall be designated from time to time by the Board or the Municipality. 8.07 PETS: No animal of any kind shall be raised, bred or kept in the Townhome Common Area. The Board may from time to time adopt rules and regulations governing the (a) 20 keeping of pets in the Home, which may include prohibiting certain species of pets from being kept in the Home, and (b) use of the Townhome Common Area by pets, including, without limitation, rules and regulations which require an Owner to clean up after his pet. Any pet causing or creating a nuisance or unreasonable disturbance shall be permanently removed from the Premises upon three (3) days written notice from the Board to the Owner of the Home containing such pet and the decision of the Board shall be final. 8.08 NO NUISANCE: No noxious or offensive activity shall be carried on within the Premises nor shall anything be done therein, either willfully or negligently, which may be or become an annoyance or nuisance to the Residents. 8.09 STRUCTURAL IMPAIRMENT: Nothing shall be done in, on or to any part of the Premises which would impair the structural integrity of any Home located thereon. 8.10 FENCES: No fencing, other than fencing installed by the Declarant, shall be installed on any portion of the Premises without the prior written consent of the Board. ARTICLE NINE Declarant's Reserved Rights and Special Provisions Covering Development Period 9.01 IN GENERAL: In addition to any rights or powers reserved to the Declarant under the provisions of this Declaration or the By -Laws, the Declarant shall have the rights and powers set forth in this Article. Anything in this Declaration or the By -Laws to the contrary notwithstanding, the provisions set forth in this Article shall govern. Except as otherwise provided in this Article, the rights reserved to the Declarant in this Article shall terminate at such time as the Declarant is no longer vested with or in control of title to any portion of the Premises. 9.02 PROMOTION OF PROJECT: The Declarant shall have the right and power, within its sole discretion, to (i) construct such temporary or permanent improvements, or to do such acts or other things in, on, or to the Premises as the Declarant may, from time to time, determine to be necessary or advisable, (ii) construct and maintain model homes, sales or leasing offices, parking areas, advertising signs, lighting and banners, or other promotional facilities at such locations and in such forms as the Declarant may deem advisable and to use such model homes (including model homes which are sold and leased back to the Declarant), sales or leasing offices or other facilities, and to use photographs taken of Homes and/or portions of the Premises, for the purpose of selling or leasing Homes on the Premises or at other properties in the general location of the Premises which are being offered for sale by the Declarant or any of its affiliates, without the payment of any fee or charge whatsoever to the Association. Declarant, its agents, prospective purchasers and tenants, shall have the right of ingress, egress and parking in and through, and the right to use and enjoy the Townhome Common Area, at any and all reasonable times without fee or charge. The Declarant shall have the right and power to lease any Home owned by it to any person or entity which it deems appropriate in its sole discretion and it need not comply with the provisions of Section 2.13. 21 9.03 CONSTRUCTION ON PREMISES: In connection with the construction of improvements to any part of the Premises, the Declarant, its agents and contractors, shall have the right, at the Declarant's own expense, (but shall not be obligated) to make such alterations, additions or improvements to any part of the Premises including, without limitation, the construction, reconstruction or alteration of any temporary or permanent improvements to any structure which shall contain Homes or the Townhome Common Area which the Declarant deems, in its sole discretion, to be necessary or advisable, and the landscaping, sodding or planting and replanting of any unimproved portions of the Premises. In connection with the rights provided in the preceding sentence, the Declarant, its agents and contractors, shall have the right of ingress, egress and parking on the Premises and the right to store dirt, construction equipment and materials on the Premises without the payment of any fee or charge whatsoever. 9.04 GRANT OF EASEMENTS AND DEDICATIONS: Declarant shall have the right to dedicate portions of the Townhome Common Area to the Municipality or other governmental authority which has jurisdiction over such portions. Declarant shall also have the right to reserve or grant easements over the Townhome Common Area to any governmental authority, public utility or private utility for the installation and maintenance of electrical and telephone conduit and lines, gas, sewer, water lines and cable television, or any other utility services serving any Home. 9.05 DECLARANT CONTROL OF ASSOCIATION: The first and all subsequent Boards shall consist solely of three (3) persons from time to time designated by the Declarant, which persons may, but need not, be members under Section 5.02. Declarant's rights under this Section to designate the members of the Board shall terminate on the first to occur of (i) such time as Declarant no longer holds or controls title to any part of the Premises, (ii) the giving of written notice by Declarant to the Association of Declarant's election to terminate such. rights, (iii) ten (10) years from the date of Recording hereof, or (iv) the date required under applicable law. The date on which the Declarant's rights under this Section shall terminate shall be referred to as the "Turnover Date". From and after the Turnover Date, the Board shall be constituted and elected as provided in the By -Laws. Prior to the Turnover Date all of the voting rights at each meeting of the Owners shall be vested exclusively in the Declarant and the Owners shall have no voting rights. 9.06 OTHER RIGHTS: The Declarant shall have the right and power to execute all documents and do all other acts and things affecting the Premises which, in Declarant's opinion, are necessary or desirable in connection with the rights of Declarant under this Declaration. 9.07 ASSIGNMENT BY DECLARANT: All rights which are specified in this Declaration to be rights of the Declarant are mortgageable, pledgeable, assignable or transferable. Any successor to, or assignee of, the rights of the Declarant hereunder (whether as the result of voluntary assignment, foreclosure, assignment in lieu of foreclosure, or otherwise) shall hold or be entitled to exercise the rights of Declarant hereunder as fully as if named as such paiiy herein. No such successor assignee of the rights of Declarant hereunder shall have or incur any liability for the acts of any other party which previously exercised or subsequently shall exercise such rights. 22 ARTICLE TEN Amendments 10.01 SPECIAL AMENDMENTS: Anything herein to the contrary notwithstanding, Declarant reserves the right and power to Record a special amendment ("Special Amendment") to this Declaration at any time and from time to time which amends this Declaration (i) to comply with requirements of the Fannie Mae, the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Veteran's Administration, or any other governmental agency or any other public, quasi -public or private entity which performs (or may in the future perform) functions similar to those currently performed by such entities, (ii) to induce any of such agencies or entities to make, purchase, sell, insure, guarantee or otherwise deal with first mortgages covering Homes, (iii) to correct omissions, errors, ambiguities or inconsistencies in the Declaration or any Exhibit, (iv) to bring the Declaration into compliance with applicable laws, ordinances or governmental regulations, or (v) to amend Exhibit. A to include additional real estate. In furtherance of the foregoing, a power coupled with an interest is hereby reserved and granted to the Declarant to make or consent to a Special Amendment on behalf of each Owner. Each deed, mortgage, trust deed, other evidence of obligation, or other instrument affecting a Home and the acceptance thereof shall be deemed to be a grant and acknowledgment of, and a consent to the reservation of, the power to the Declarant to make, execute and Record Special Amendments. The right and power to make Special Amendments hereunder shall terminate at such time as Declarant no longer holds or controls title to a portion of the Premises. 10.02 AMENDMENT: Subject to Section 10.01 and Article Eleven, the provisions of this Declaration may be amended, abolished, modified, enlarged, or otherwise changed in whole or in part by the affirmative vote of Voting Members representing at least Seventy -Five percent of the total votes or by an instrument executed by Owners of at least Seventy -Five Percent (75%) of the Homes; except, that (i) the provisions of this Section 10.02 may be amended only by an instrument executed by all of the Owners and all First Mortgagees, and (ii) Article Nine or any other provisions relating to the rights of Declarant may be amended only with the written consent of the Declarant. No amendment which removes any portion of the Premises from the provisions of this Declaration shall be effective if as a result of such removal, an Owner of a Home shall no longer have the legal access to a public way from his Home. No amendment shall become effective until properly Recorded. ARTICLE ELEVEN First Mortgagees Rights 11.01 NOTICE TO FIRST MORTGAGEES: Upon the specific, written request of First Mortgagee or the insurer or guarantor of a First Mortgagee's mortgage, such party shall -receive some or all of the following: 23 (a) Copies of budgets, notices of assessment, or any other notices or statements provided under this Declaration by the Association to the Owner of the Home covered by the First Mortgagee's mortgage; (b) Any audited or unaudited financial statements of the Association which are prepared for the Association and distributed to the Owners; provided, that, if an audited statement is not available, then upon the written request of the holder, insurer or guarantor of a Mortgage, the Association shall permit such party to have an audited statement for the preceding fiscal year of the Association prepared at such party's expense; (c) Copies of notices of meetings of the Owners; (d) Notice of any proposed action that requires the consent of a specified percentage of Eligible First Mortgagees (as such term is defined below); (e) Notice of any substantial damage to any part of the Townhome Common Area or the Home subject to the First Mortgagee's mortgage; (f) Notice of the commencement of any condemnation or eminent domain proceedings with respect to any part of the Townhome Common Area or the Home subject to the First Mortgagee's mortgage. (g) Notice of any default by the Owner of the Home which is subject to the First Mortgagee's mortgage under this Declaration, the By -Laws or the rules and regulations of the Association which is not cured within 30 days of the date of the default; (h) The right to examine the books and records of the Association at any reasonable times; (i) In the case of a First Mortgagee, the right to be listed on the records of the Association as an "Eligible First Mortgagee" for purpose of Section 11.02 below; and 0) A lapse, cancellation or material modification of any insurance policy or fidelity bond maintained by the Association. The request of any such party shall specify which of the above it desires to receive and shall indicate the address to which any notices or documents shall be sent by the Association. 11.02 CONSENT OF FIRST MORTGAGEES: (a) In addition to any requirements or prerequisites provided for elsewhere -in this Declaration, the consent of First Mortgagees holding, in the aggregate, the first mortgages on at least two-thirds (2/3) of the Homes (by number) which are subject to first mortgages held by First Mortgagees which specifically request to be treated as "Eligible First Mortgagees" under Section 24 11.01(i) above will be required for the Association to do or permit to be done any of the following: (1) Adoption of an amendment to this Declaration which (i) changes Article Six or otherwise changes the method of determining the Townhome Common Assessments or other Charges which may be levied against an Owner; (ii) changes Section 7.04 or Article Ten, (iii) changes this Article Eleven or any other provision of this Declaration or by By - Laws which specifically grants rights to First Mortgagees, (iv) materially changes insurance and fidelity bond requirements, (v) changes voting rights, or (vi) imposes a right of first refusal or similar restriction on the right of an Owner to sell, transfer or otherwise convey his Home; or (2) The withdrawal of the Premises from the provisions of this Declaration; (b) Whenever required, the consent of an Eligible First Mortgagee shall be deemed granted unless the party seeking the consent is advised to the contrary, in writing, by the Eligible First Mortgagee within thirty (30) days after making the request for consent. 11.03 INSURANCE PROCEEDS/CONDEMNATION AWARDS: In the event of (i) any distribution of any insurance proceeds hereunder as a result of damage to, or destruction of, any part of the Premises or (ii) any distribution of the proceeds of any award or settlement as a result of condemnation or eminent domain proceedings with respect to any part of the Townhome Common Area, any such distribution shall be made to the Owners and their respective First Mortgagees, as their interests may appear, and no Owner or other party shall be entitled to priority over the First Mortgagee of a Home with respect to any such distribution to or with respect to such Home; provided, that, nothing in this Section shall be construed to deny to the Association the right (i) to apply insurance proceeds to repair or replace damaged improvements or (ii) to apply proceeds of any award or settlement as a result of eminent domain proceedings as provided in Article Four. ARTICLE TWELVE [Reserved] ARTICLE THIRTEEN Party Walls 13.01 PARTY WALL: Every wall, including the foundations therefor, which is built as a part of the original construction of a building and placed on the boundary line between separate Homes shall constitute and be a "Party Wall", and the Owner of a Home immediately adjacent to a Parry Wall shall have the obligation and be entitled to the rights and privilege's' of -these covenants and, to the extent not inconsistent herewith, the general rules of law regarding party walls. 25 13.02 RIGHTS IN PARTY WALL: Each Owner of a Home, which is adjacent to a Party 'Wall, shall have the right to use the Party Wall for support of the structure originally constructed thereon and all replacements thereof and shall have the right to keep, maintain, repair and replace therein all pipes, conduit, and ducts originally located therein and all replacements thereof. - 13.03 DAMAGE TO PARTY WALL: (a) If any Party,Wall is damaged or destroyed through the act or acts of any Owner of a Home which is adjacent to such Party Wall, or his agents, servants, tenants, guests, invitees, licensees, or members of his family, whether such act is willful, negligent or accidental, such Owner shall forthwith proceed to rebuild or repair as promptly as reasonably possible the same to as good a condition as in which such Party Wall existed prior to such damage or destruction without costs therefor to the Owner of the other adjoining Home. (b) Any Party Wall damaged or destroyed by some act or event other than one caused by the Owner of a Home which is adjacent to such Party Wall, or his agents, servants, tenants, guests, invitees, licensees, or members of his family, shall be rebuilt or repaired by the Owners of the adjacent Homes to as good a condition as in which such Parry Wall existed prior to such damage or destruction at joint and equal expense of such Owners, and as promptly as is reasonably possible; provided that the cost of repairing or replacing any portion thereof which is part of a Home Exterior with respect to which the Association is responsible for furnishing maintenance, repairs or replacements hereunder shall be paid by the Association as a Townhome Common Expense to the extent not covered by insurance. (c) In the event that any Owner shall fail, within a reasonable time after the occurrence of damage or destruction referred to in this Section, to perform the necessary repair or rebuilding, then, the Board may cause such repairs or rebuilding to be performed in the manner as provided in this Section and the cost thereof shall be charged to such Owner as his personal obligation and shall be a continuing lien on the Owner's Home. 13.04 CHANGE IN PARTY WALL: Any Owner of a Home who proposes to modify, rebuild, repair or make additions to any structure upon his Home in any manner which requires the extension, alteration or modification of any Party Wall shall first obtain the written consent thereto, as to said Party Wall, of the Owner of the other adjacent Home and the Board, in addition to meeting any other requirements which may apply including, without limitation, those of the Municipality. In the event that a Party Wall is altered, regardless of whether all required consents have been obtained, any express or implied warranties made by the Declarant concerning the structural integrity of the Party Wall or either of the Homes adjacent to the Party Wall shall be null and void and the Owner who alters the Party Wall shall be responsible for any and all damage caused to either of the adjacent Homes or improvements thereto. 13.05 ARBITRATION: In the event of a disagreement between Owners of -Homes adjoining a Party Wall with respect to their respective rights or obligations as to such Party Wall, upon the written request of either of said Owners to the other the matter shall be submitted to the Board and the' decision of the Board shall be final and binding. 26 ARTICLE FOURTEEN Miscellaneous 14.01 NOTICES: Any notice required to be sent to any Owner under the provisions of this Declaration or the By -Laws shall be deemed to have been properly sent if (i) mailed, postage prepared, to his or its last known address as it appears on the records of the Association at the time of such mailing, (ii) transmitted by facsimile or e-mail to his or its facsimile number or e-mail address as either appears on the records of the Association at the time of such transmittal, or (iii) when personally delivered to his or its Home. The date of mailing, or the date of transmission if the notice is sent by facsimile or e-mail, shall be deemed the date of service. 14.02 CAPTIONS: The Article and Section headings are intended for convenience only and shall not be construed with any substantive effect in this Declaration. In the event of any conflict between statements made in recitals to this Declaration and the provisions contained in the body of this Declaration, the provisions in the body of this Declaration shall govern. 14.03 SEVERABILITY: Invalidation of all or any portion of any of the easements, restrictions, covenants, conditions, or reservations, by legislation, judgment or court order shall in no way affect any other provisions of this Declaration which shall, and all other provisions, remain in full force and effect. 14.04 PERPETUITIES AND OTHER INVALIDITY: If any of the options, privileges, covenants or rights created by this Declaration would otherwise be unlawful or void for violation of (a) the rule against perpetuities or some analogous statutory provision, (b) the rule restricting restraints on alienation, or (c) any other statutory or common law rules imposing time limits, then such provisions shall continue only until twenty-one (21) years after the death of the survivor of the now living lawful descendants of the President of the United States at the time this Declaration is Recorded. 14.05 TITLE HOLDING LAND TRUST: In the event title to any Home is held by a title holding trust, under the terms of which all powers of management, operation and control of the Home remain vested in the trust beneficiary or beneficiaries, then the beneficiaries thereunder from time to time shall be responsible for payment of all Charges and for the performance of all agreements, covenants and undertakings chargeable or created under this Declaration against such Home. No claim shall be made against any such title holding trustee personally for payment of any lien or obligation hereunder created and the trustee shall not be obligated to sequester funds or trust property to apply in whole or in part against such lien or obligation. The amount of such lien or obligation shall continue to be a charge or lien upon the Home and the beneficiaries of such trust notwithstanding any transfers of the beneficial interest of any such trust or any transfers of title to such Home. - 14.06 WAIVER OF IMPLIED WARRANTY OF HABITABILITY AND OTHER WARRANTIES: Illinois courts have held that every contract for the construction of a new home 27 in Illinois carries with it a warranty that when completed, the home will be free of defects and will be fit for its intended use as a home. The courts have also held that this "Implied Warranty of Habitability" does not have to be in writing to be a part of the contract and that it covers not only structural and mechanical defects such as may be found in the foundation, roof, masonry, - heating, electrical and plumbing, but it also covers any defect in workmanship which may not easily be seen by the buyer. However, the courts have also held that a seller -builder and buyer may agree in writing that the Implied Warranty of Habitability is not included as a part of their particular contract. Each buyer of a Home from Declarant agreed in the purchase contract that the Declarant has excluded and disclaimed the Implied Warranty of Habitability and all other implied warranties, whether created judicially, statutorily or by common law, including the implied warranty of fitness for a particular purpose. Such exclusion and disclaimer shall apply to and bind any subsequent Owner of a Home and, accordingly, no Owner of a Home shall be able to assert a claim against Declarant for a breach of the Implied Warranty of Habitability or any other implied warranty. ARTICLE FIFTEEN Rights of the Municipality 15.01 IN GENERAL: In addition to any rights, powers, or easements granted to the Municipality elsewhere in this Declaration, the Municipality shall have the rights, powers, and easements set forth in this Article. 15.02 ENFORCEMENT: The Municipality is hereby, granted the right, but not the obligation, to enforce covenants and obligations of the Association or the Owners. If the Association or one or more Owners fail to comply with any such covenants and obligations, the Municipality shall have the right (but shall not be obligated) to give notice to the Association or the offending Owner or Owners of its, his or their failure to perform its, his or their obligations. If such notice is given and the Association or the offending Owner or Owners do not perform to the satisfaction of the Municipality within fifteen (15) days after the giving of such notice, then the Municipality may (but shall not be obligated to) enter upon the Premises and perform any and all work which it deems necessary and appropriate, either directly or through contractors engaged by the Municipality (except that in cases of genuine emergency no prior notice shall be required). 15.03 MAINTENANCE: The Association shall maintain the Townhome Common Area in compliance with all applicable laws and ordinances of the Municipality and all governmental bodies having jurisdiction over the Premises, as such laws and ordinances may be amended and enforced from time to time. 15.04 BACKUP SSA: The Municipality may (but shall not be obligated to) establish a special service area to serve as what is commonly referred to as a "Backup Speciail -Service Area", to give the Municipality the power to levy taxes to pay the cost of maintaining the Townhome Common Area if the Association fails to do so and the Municipality chooses to furnish such" services. The Declarant and each Owner shall not object to the Municipality IT adopting ordinances proposing establishment of such a special service area and ratifying the establishment of such special service area. Dated: , 2005 DECLARANT: SW VENTURE IV, LLC, an Illinois limited liability company Its: 29 STATE OF ILLINOIS ) ) SS COUNTY OF ) L , a Notary Public in and for said County and State, do hereby certify that the of SW VENTURE IV, LLC, an Illinois limited liability company,(the "Company"), and, as such, appeared before me this day in person and acknowledged that signed, sealed and delivered said instrument as free and voluntary act, and as the free and voluntary act of the Company for the uses and purposes therein set forth. GIVEN under my hand and Notarial Seal this day of , 20 Notary Public 30 CONSENT OF MORTGAGEE , as holder of a mortgage dated and recorded in the office of the Recorder of Deeds of McHenry County, Illinois, on , as Document No. , with respect to the Premises, hereby consents to the recording of this Declaration to which this Consent is attached and agrees that its mortgage shall be subject to the terms of this Declaration. Dated: 9200 ATTEST: By: Its: STATE OF MLINOIS ) SS. COUNTY OF ) By:_ Its: The undersigned, a Notary Public in and for said County and State, do hereby certify that and , the --and respectively, of , and, as such, appeared before me this day in person and acknowledged that they signed, sealed and delivered said instrument as their free and voluntary act, and as the free and voluntary act of for the uses and purposes therein set forth. GIVEN under my hand and Notarial Seal this day of ., 200_. My Commission Expires: Notary Public 31 EXHIBIT A TO DECLARATION FOR THE TOWNHOMES OF PRAMS LAKES The Premises All that part of the North Half of the Southwest Quarter of Section 3, Township 44 North, Range 8 East of the Third Principal Meridian, which lies Westerly of the Westerly right- of-way line of the Chicago and Northwestern Railway Company, (excepting therefrom the West 264 feet threrof and also excepting all that part thereof which falls in the Plat of Dedication of a Public Highway commonly known as Bull Valley Road, according to the Plat thereof recorded in the Recorder's Office as McHenry County, Illinois as Document No. 607444), in McHenry County, Illinois. P17V: 14-03-300-005-0000 32