WHEREAS, the undersigned is the owner of a parcel of land containing approximately 98.48 acres lying in Shoal Creek Township, from Betty Jones, widow of Tom E. Jones, et ux to Jeffrey A. House dated October 13, 1997, and recorded in book 809, page 68, Cherokee County Registry, reference to which is made for particular description and another parcel of land containing approximately 60.51 acres, more particularly described in deed from Johnny N. and wife, Mava Janet Yates, ut ux to Timberwood Development Corporation dated September 22, 1997 and recorded in book 804, page 60, Cherokee County Registry, reference to which is made for particular description.

AND WHEREAS, it is the plan of the undersigned to devote said lands exclusively for residential purposes in an equestrian setting and as part of the development plan of said properties that the same shall be restricted according to the use and development herein intended by the Grantors.

NOW, THEREFORE, Grantors declares that all of the property described above is held and shall be held, conveyed, hypothecated, encumbered, leased, rented, used, occupied, and improved subject to the following provisions, restrictions, conditions, easements, covenants, agreements, liens and charges, all of which are declared and agreed to be in furtherance of a plan for subdivision improvements and sale of said real property and are established and agreed upon for the purpose of enhancing and protecting the value, desirability, and attractiveness of said real property and every part thereof, all of which shall run with the land, be appurtenant thereto and shall be binding on all parties having acquired any part thereof.

1.

A non-exclusive road and utilities right of way or easement is reserved on all roads and a non-exclusive utilities right of way or easement on some specific riding trails in the subdivision (the width of which will be designated on the plats from time to time made of the subdivision) for the benefit of grantor, his heirs, successors and assigns, for ingress, egress and regress to all lots in the subdivision, and for the benefit of other lands owned, acquired, to be acquired or designated by grantor. All lot owners are hereby granted a non-exclusive road and utilities easement over the roads in the subdivision to the public highway as a permanent means of ingress, egress and regress to their lot or lots.

2.

All lots are conveyed subject to a blanket easement given or to be given by grantor to Tri-State Electric Membership Corporation, the only company to be servicing the subdivision, which easement was required by said electric company as a condition to obtain their agreement to make electricity available to the subdivision, recorded in book 1002, page 365 & 366, Cherokee County Registry.

3.

An association of the owners to be known as "Timberwood Springs Owners Association" will govern the affairs of the subdivision. Each lot, whether owned by grantors or a purchaser, shall constitute membership in the association and the owners of said lot shall be entitled to one vote in the affairs of the subdivision or development. Portions of the 98.48 acres and the 60.51 acres included in this subdivision which are not laid out into subdivided lots may be voted by the developer on the basis of one vote for each one and a half acres plus all surveyed unsold lots. All owners are required to be members of the association.

The Timberwood Springs Owner's Association will be formed during the first scheduled annual association meeting after that period of time when at least fifty (50%) percent of the subdivision is sold or when deemed appropriate by the grantor or developer. Until the first scheduled annual association meeting the grantor or developer will be entitled to enforce the covenants and restriction's provisions which include collection of any maintenance fees. It will be at this first annual meeting the maintenance responsibilities will be given to the lot owners and the election of the association directors and maintenance committee will take place. Thereafter, the members of the association shall meet annually on the first Saturday in October at 1:00 PM at some place in the subdivision for transaction of association business and for election of directors. All matters before the association will be determined by vote of a majority of memberships represented at each meeting. Lot owners will elect a president, a secretary and a treasurer on an annual basis as well as a Maintenance Committee for subdivision roads, community common areas, riding trails, subdivision sign, gate, sign and gate area, and community well systems. Special meetings of association members may be called by the president on at least two weeks notice to all members by first class mail addressed to the last known address of each owner.

After the first schedules annual association meeting or when deemed appropriate by the grantor or developer, the Timberwood Springs Owner's Association will have the authority to collect fees/or assessments for the annual community maintenance fees and for the community water maintenance fees. The accounting of the annual community maintenance fees and for the community water maintenance fees shall be segregated and maintained on a separate and ongoing basis. To accomplish this, the Owner's Association shall maintain two separate bank accounts (one for the annual community maintenance fees and one for the community water maintenance fees). These two separate bank accounts will be opened only after the maintenance fees collected exceed the amount needed for maintenance or soon after the first annual meeting at which point in time when at least fifty (50%) percent of the subdivision has been sold or as determined by the grantor or developer. Until the first annual meeting, it will be the grantors or developer's responsibility to control the repairs and maintenance by deciding what repair or maintenance will take place, how it will be performed and when it will be completed.

4.

The N. C. Department of Transportation has not accepted the subdivision roads into the public road system. The grantor will perform road maintenance on completed roads, community common areas, riding trails, subdivision sign, gate, sign and gate areas, and community well systems when expenses exceed the amount of community maintenance fees collected until such time when 50% of the lots are sold, but thereafter, property and/or lot owners will be responsible for maintenance and repairs of said items on the basis of each lot owner (including developers lots) paying a proportionate share calculated on the number of lots owned as compared to the total number of lots laid out. Until the first annual meeting it will be the grantors or developer's responsibility to control the repairs or maintenance by deciding what repair or maintenance will take place, how it will be performed and when it will be completed. The maintenance committee elected by the association will be empowered to arrange for such maintenance and repair and to determine fair apportionment of maintenance cost. By purchasing a lot in the subdivision each purchaser agrees to pay a fair share of maintenance costs and association expense. Unpaid assessments as fixed by the maintenance committee shall be a lien on property owners' lot or lots, enforceable by civil action.

5.

There will be an annual community maintenance fee of $250.00 payable in January of each year. Said amount shall be subject to change by the developer as long as the developer owns a majority of lots in the subdivision or by a majority vote of the Owner's Association during a regularly scheduled annual meeting or a special meeting. In the event a lot owner shall desire to construct a residence on his or her lot, a road impact fee of $300.00 will be due upon commencement of construction; if road damage due to construction exceeds the $300.00 impact fee for repair, the lot owner will be responsible for restoring the road to its original condition. By purchasing a lot in the subdivision each purchaser agrees to pay a fair share of maintenance costs and association expense. If fifty percent (50%) or more of the lots in the development have been sold by the developer, and thereafter, the developer constructs a home on any of the lots owned by the developer, a road impact fee of $300.00 shall be assessed to the developer.

Each assessment, together with such interest thereon as hereinafter provided, shall be a permanent and continuing lien upon said lot against which it relates, and shall be joint and several person obligation of each property owner and each property owner by acquiring or holding an interest in any lot shall thereby covenant to pay such amount as when the same shall become due. If an assessment is not paid on the date when due, as hereinabove provided, such assessment shall bear interest from the date of delinquency at the rate of sixteen (16%) percent per annum or that rate of interest which at the time of delinquency represents the maximum rate of interest which does not constitute a usurious rate of interest by law, and the grantor or developer or the association may bring legal action against the property owner, personally obligated to pay the same, or foreclose its lien against the lot to which it relates or pursue either such course at the same time or successively. Each property owner, by his or her acceptance of a deed or other conveyance to a lot, vests in the grantor or developer or the association the right and power to bring all actions against him or her personally for the collection of such charges as a debt and to foreclose the aforesaid lien in any appropriate proceeding in law or in equity. The grantor or developer or the association shall have the power to bid on the lot at any foreclosure sale and to acquire, hold, lease, mortgage and convey the same. No property owner may be released from any liability for the assessments provided for herein due to non-use of his or her lot. Provided, however, that the lien for the annual assessments authorized herein with respect to any lot is hereby made subordinate to the lien of any mortgage or its assigns placed upon such lot if, but only if, all such assessments with respect to such lot which have a due date on or prior to the date such mortgage is filed for record have been paid.

6.

After original purchase lots may be subdivided only if all resulting subdivided lots contain at least two acres. The developer reserves the right to subdivide any property or lot within the subdivision into any size deemed appropriate by the developer.

7.

Except that as to those areas which may be designated on a plat or otherwise for a common enjoyment and use by all lot owners, lots in the subdivision shall be used for single family dwelling purposes only. Only one single-family residence with two out buildings may be constructed on any lot. Outbuildings must be constructed in harmony with the main dwelling. However, no metal structures maybe used as outbuildings and no metal buildings or structures maybe erected on any of the lots or property. The outside dwelling house paint and color shall be one of which blends with the outbuildings and environment. Any propane gas tanks placed on lots shall be buried underground.

House Trailers, Mobile Homes, Prefabricated Homes or Modular Homes are not allowed in the subdivision; (a.) Constructed dwellings must contain at least one thousand, eight hundred (1800) square feet of enclosed floor space exclusive of garages, carports, screened areas, porches, patios, terraces and decks; (b.) Recreation vehicles and travel trailers may be used if permanent dwelling is under construction, but construction to shell home stage must be completed within one year from start of construction. No commercial vehicles including tractor trailers and semi-tractor trailers shall be permitted to be stored or parked on any lot within the subdivision. However, motor homes, recreation vehicles and campers may be stored upon said lots after construction is completed so long as said motor homes, recreation vehicles and campers are not used for living quarters or residences.

8.

Fences made of wood are permitted. The developer retains the right to determine if any other types of fences will be allowed.

9.

Two, three or four wheeled vehicles or 4X4's may not be operated on the riding trails. However two, three or four wheeled vehicles may be operated on the subdivision roads if licensed and are not a nuisance. No inoperable vehicle or vehicle without current registration and licensing will be allowed to remain on any lot or premises. No unusable or salvaged household appliance or part thereof, shall be placed or left anywhere on any lot outside of any enclosed building or on the right of way of any subdivision road.

10.

Noxious or offensive activities shall not be carried on upon any lot, nor shall anything be done thereon tending to cause embarrassment, discomfort, annoyance, or nuisance to the neighborhood. All lots shall be kept free of accumulations of brush, trash, junk, building materials, inoperable automobiles or other unsightly things. After fourteen (14) days of written notice to the Owner, sent to the address contained in the list maintained by the association and/or the developer, the association and/or developer, reserves the right of entry for the purpose of clearing away any such violations, assessing the cost thereof against the Owner and such assessments shall be enforceable against the Owner as other liens herein provided for. The developer shall not be required to comply with these provisions by anyone until all development work has been completed and the common properties, if any, deeded to the association.

11.

No animals or livestock including Cattle, Mules, Sheep, Chickens, Hogs or Goats may be kept in the subdivision. Dogs, Cats and other household pets are permitted so long as they are kept within the lot boundary lines and are not raised for commercial purposes.

This is an equestrian community and horses shall be permitted so long as the lot owner has at least two (2) acres of land; one (1) horse per acre. Lot owners can include the common area's acreage and add it to there own acreage to come to a total for this formula.

12.

No commercial activities shall be carried on anywhere in the subdivision, particularly no auto repair business. However, the grantor reserves the right to sell or lease approximately one to two acres of property located near the south end of the Jeffrey A. House 98.48 acre tract on or near the highest elevation for the purpose of a telecommunications tower for commercial use but a commercial office will not be permitted. The grantor reserves the right to use the subdivision road to service and maintain the telecommunications tower or grant access to service and maintain said tower. This reservation may or may not be utilized.

13.

Each dwelling shall be equipped with septic tank and field lines that conform to the sanitation and health laws of Cherokee County and the State of North Carolina. Installation of said septic tank facilities shall be the responsibility of the lot or property owner, except septic tanks provided for by the developer. No outdoor toilets or outhouses shall be erected or maintained on any lot or premises.

14.

Each property or lot owner shall be responsible for providing his own water supply unless community well system rights were negotiated either in their deed or time of contract or thereafter. If the community well system hookup has been paid for, the property owner will be deeded access to a community well system and shall be responsible for annual community water maintenance fees of $250.00 per year after hookup. These annual community water maintenance fees will be due on January 1st of each year and held exclusively in the Timberwood Springs Community Water Maintenance Account. If the property or lot owner is providing his or her own water supply, installation of said water supply shall conform to the sanitation and health laws of Cherokee County and the State of North Carolina. Lot owners supplying their own water who are not deeded to a community water system will not be liable for any community water maintenance fees or any special assessments resulting from community water system failures. Community water system failures or repairs will be paid exclusively from the Timberwood Springs Community Water Maintenance Account.

15.

Each property or lot owner shall provide proper containers for garbage. Containers shall be kept in areas not generally visible from the road. Garbage containers and storage shall comply with all sanitation and health laws. No lot shall be used or maintained as a dumping ground for trash or garbage. Each property or lot owner shall be responsible for the disposal of his or her own garbage or trash.

Property or lot owners shall enclose any fuel storage tanks on any lot so as to render it not visible from any road, adjoining water, or other common area, if any, within the subdivision.

Storing any toxic chemicals, wastes or pesticides on any property or lot is prohibited.

16.

It shall be the responsible of each property or lot owner to prevent the development of any unclean, unsightly or unkempt condition(s) of building or grounds on such lot which shall tend to substantially decrease the beauty of the neighborhood as a whole or of the specific area. Excavation and landscaping of a lot shall conform to approved practices of the appropriate County or State agency having jurisdiction over such matters.

In the event of failure of the property or lot owner to maintain the lot and/or the improvements thereon in good condition, the association may make such repairs and perform such maintenance as may be necessary for the general benefit of the remaining owners. The cost thereof shall be assessed against the owner and such assessment shall be enforced as other liens as herein provided.

17.

Any aggrieved property or lot owner shall have the right to petition the courts for injunctive relief against violators of these covenants and restrictions or to enforce its provisions.

18.

This instrument may be amended at any time by an instrument in writing signed by persons owning a majority of lots in the subdivision. So long as the grantor owns a majority of said property or lots the grantor may amend same without joiner of purchases. Thereafter determination of a majority shall include property and lots owned by grantor. Portions of the 98.48 acres and the 60.51 acres included in this subdivision not at that time laid out into lots may be voted by the developer on the basis of one vote for each one and one half acres not laid out into lots. To be effective such amendment shall be signed and acknowledged in the manner required for execution of deeds and recorded in the office of the Register of Deeds for Cherokee County, North Carolina. The signatures of spouses who are not owners will not be required.

The preceding information is accurate but not warranted. Upon visiting the Timberwood Springs subdivision or purchasing a lot in the Timberwood Springs subdivision a copy of the Covenants and Restrictions will be provided.