THIS DECLARATION made this 3rd day of February 1969. By PAN-PACIFIC DEVELOPMENT Co., a California corporation, hereinafter called "Declarant."

WHEREAS, Declarant Is the owner of the real property described on Exhibit "A" attached hereto and made a part hereof by this reference;

AND WHEREAS, Declarant will convey the said properties, subject to certain protective covenants, conditions, restrictions, reservations, easements, liens and charges as hereinafter set forth.

NOW, THEREFORE, Declarant hereby declares that all of the properties described above shall be held, sold and conveyed subject to the following easements, restrictions, convenants and conditions, liens and charges, all of which are for the purpose of enhancing and protecting the value, desirability and attractiveness of the real property. These easements, covenants, restrictions and conditions, liens and charges shall run with the real property and shall be binding on all parties having or acquiring any right, title or interest in the described properties or any part thereof and shall inure to the benefit of each owner thereof.

Article I - Definitions

Section 1

"Association" shall mean and refer to BALLENA BAY TOWNHOUSE ASSOCIATION NO. 1, a California non-profit corporation, its successors and assigns.

Section 1

"Board" shall mean and refer to the Board of Directors of the Association.

Section 2

"Properties" shall mean and refer to that certain real property described on Exhibit "A" attached hereto, and such additions thereto as may hereafter be brought within the jurisdiction of the Association.

Section 3

"Common Area" shall mean and refer to those areas of land shown on any recorded subdivision map of the properties and intended to be devoted to the common use and enjoyment of the owners of the Properties. Said Common Area is described on Exhibit "A" attached hereto as Lot A of Blocks 1 and 3.

Section 4

"Residence Lot" shall mean and refer to Lots 1 through and including 28 of Block 1 Lots 1 through and including 16 of Block 3. together with all improvements now and hereafter constructed thereon, as said property is described on Exhibit "A" attached hereto.

Section 5

"Member" shall mean and refer to every person or entity who holds membership in the Association.

Section 6

"Owner" shall mean and refer to the record Owner, whether one or more persons or entities, of a fee simple title to each Residence Lot which Is a part of the Properties, Including contract sellers, but excluding those having such interest merely as security for the performance of an obligation.

Section 7

"Declarant" shall mean and refer to PAN-PACIFIC DEVELOPMENT CO., A California corporation, its successors and assigns, if such successors or assigns would acquire more than one undeveloped Residence Lot from the Declarant for the purpose of development.

Section 8

"Mortgage" shall also mean and refer to and be interchangeable with Deed of Trust. "Mortgagee" shall also mean and refer to and be interchangeable with beneficiary of a Deed of Trust.

Article II - Annexation of Additional Properties

Section 1

The Declarant shall have the right to bring within the scheme of this Declaration additional properties in future stages of the development. Said additional properties shall be within the area described on Exhibit "B" attached hereto.

The additions authorized under this section shall be made by filing of record a Supplementary Declaration of Covenants and Restrictions with respect to that portion of the additional property to be annexed thereto. Upon such annexation, all of the property subject thereto shall be and become a part of the development subject to these Restrictions, the Articles of Incorporation of the Association and the By-Laws, which shall be applicable to the entire development from and after the date of such annexation with the same force and effect as if the property annexed had been a part of the property described on Exhibit "A".

The Supplementary Declaration may contain such complementary additions and modifications of the covenants and restrictions contained in this Declaration as may be necessary to reflect the different character, if any, of the added properties, and as are not Inconsistent with the scheme of this Declaration. In no event, however, shall such Supplementary Declaration revoke, modify or add to the covenants established by this Declaration with respect to the property described on Exhibit "A" attached hereto.

Section 2

Upon approval in writing of the Association pursuant to an affirmative vote of seventy-five percent (75%) of its members who are voting in person or by proxy at a meeting duly called for this purpose, written notice of which shall be sent to all members not-less-than seven (7) nor more-than sixty (60) days in advance of the meeting, setting forth the purpose of the meeting, the Owner of any property, other than the property referred to In Section 1 of this Article, who desires to add it to the scheme of this Declaration and to subject it to the jurisdiction of the Association, may file of record a Supplementary Declaration of Covenants and Restrictions in the form and manner set forth In Section 1 of this Article.

Article III - Membership

Every Owner shall be a member of the Association. No Owner shall have more than one (1) membership. Membership shall be appurtenant to and may not be separated from ownership of any Residence Lot which is subject to assessment by the Association. Ownership of such Residence Lot shall be the sole qualification for membership.

VOTING RIGHTS

Each member in the Association shall be entitled to cast one vote for each Residence Lot owned by such member in all elections or other matters which, by the terms of these Restrictions, the Association's Articles of Incorporation or the By-Laws, require the vote of the members. Where two or more persons own interests in the fee simple estate in a Residence Lot, each such person shall be entitled to share in the benefits of membership subject to all of the terms hereof; provided, however, that the vote or votes attributable to any such membership shall only be cast with the unanimous consent of all those persons owning interests in the Residence Lot upon which such membership is predicated.

Article V - Property Rights

Section 1 - Members' Easements of Enjoyment

Each member shall have a right and easement of enjoyment in and to the Common Area and such easement shall be appurtenant to and shall pass with the title to every Residence Lot, subject to the following limitations:

(a)

The right of the Association, in accordance with its Articles and By-Laws, to borrow money for the purpose of improving the Common Area and facilities, and in aid thereof to mortgage said property, and the rights of such mortgagee in such properties shall be subordinate to the rights of the Owners hereunder;

(b)

The right of the Association to dedicate or transfer all or any part of the Common Area to any public agency, authority, or utility for such purposes and subject to such conditions as may be agreed to by the members. No such dedication or transfer shall be effective unless an instrument signed by Members entitled to cast three-fourths (3/4) of the votes of the membership has been recorded, agreeing to such dedication or transfer, and unless written notice of the proposed action Is sent to every member no-less-than seven (7) nor more-than sixty (60) days in advance.

(c)

Provided, however, that each member's right and easement of enjoyment over that portion of the Common Area upon which a dock has been constructed shall be limited to the use of and enjoyment of the dock that is constructed In the Common Area for the Residence Lot of each Member as hereinafter provided in Article XIV.

Section 2 - Use

Members of family, tenants or contract purchasers residing on the property may have the same rights of enjoyment and use of the Common Area and facilities as the member.

Section 3 - Title to the Common Area

The Declarant shall convey legal title to the Common Area free and clear of liens and encumbrances to the Association prior to the date of issuance of the Final Subdivision Public Report on the land described on Exhibit "A" by the Real Estate Commissioner of the State of California. Prior to said conveyance, the Declarant shall enter into an agreement with the Association providing for the construction of all improvements to the Common Area as planned by the Declarant. Such construction shall be at no cost or expense to the Association.

Section 4 - Master Television Antennas

To avoid the necessity of a separate television antenna for each Residence lot, master antennas may be located upon certain Residence Lots throughout the Properties with connections thereto being located within or upon the roof structure of the various residences. Said antennas and connections shall be maintained in good order and repair by the Association.

Article VI - Covenant for Maintenance Assessments

Section 1 - Creation of the Lien and Personal Obligation of Assessments

The Declarant, for each Residence Lot owned within the Properties, hereby covenants, and each Owner of any Residence Lot by acceptance of a Deed therefor, whether or not it shall be so expressed in any such Deed or other conveyance, is deemed to covenant and agree to pay to the Association: (1) annual assessments or charges, and (2) special assessments for capital improvements, such assessments to be fixed, established and collected from time to time as hereinafter provided. The annual and special assessments, together with such interest thereon, and costs of collection thereof, as hereinafter provided, shall be a charge on the land and shall be a continuing lien upon the Residence Lot against which each such assessment is made. Each such assessment, together with such Interest, costs and reasonable attorney's fees shall also be the personal obligation of the person who was the Owner of such property at the time when the assessment fell due. The personal obligation shall not pass to his successors in title unless expressly assumed by them.

Section 2 - Annual Assessments

Said annual assessments shall include and the Association shall acquire and pay for out of the funds derived from said annual assessments the following:

(a)

Maintenance and repair of storm drains, sanitary sewers, private driveways, docks, gangways, banks and slope protection, waterways and channels, and private roadways lying within the Common Area.

(b)

Maintenance and repair of television antenna systems for all the homes situated upon the Properties, if said television antenna systems are installed by Declarant.

(c)

Fire insurance covering the full insurable replacement value of the improvements to the Common Area.

(d)

Liability insurance insuring the Association against any liability to the public or to any Owner, their invitees or tenants incident to their occupation and/or use of the Common Area and the Residence Lots, with limits of comprehensive liability, including personal injury, not-less-than Five Hundred Thousand And No/100 Dollars ($500,000.00) for any one person injured and for any one accident, and not-less-than Two Hundred Fifty Thousand And No/100 Dollars ($250,000.00) for broad form property damage each occurrence (such limits and coverage to be reviewed at least annually by the Association and increased in its discretion).

(e)

Fire insurance with extended endorsement and vandalism and malicious mischief endorsement covering the Residence Lots and improvements thereon as set forth in Article X of this Declaration.

(f)

Workmen's Compensation Insurance to the extent necessary to 'comply with any applicable laws.

(g)

Painting, maintenance, repair, replacement and all landscaping of the Common Area and such fixtures and equipment for the Common Area as the Association shall determine are necessary and proper.

(h)

Painting, maintenance and nonstructural repair of the exterior surfaces of the residences including, but without limitation, painting as often as the same shall be necessary, replacement of trim, caulking and other repairs of the roof covers, and other miscellaneous repairs, not of a structural nature.

(i)

Maintenance and repair of the banks and slope protection of the Residence Lots.

(j)

Landscape planting and maintenance service for the front yard area of the Residence Lots upon which no building, patio or garage exists. No landscaping inside enclosed patio or side or rear yard areas shall be provided or maintained by the Association.

(k)

Removal and replacement of any part of a patio, fence or overhanging eave that extends into or over the Common Area under authority of an easement when access to a utility line underneath such patio, fence or overhanging eave is requested by any utility company.

(l)

Any other materials, supplies, furniture, labor, services, maintenance, repairs, structural alterations, insurance, taxes or assessments which the Association is required to secure or pay for pursuant to the terms of these restrictions or by law or which in the opinion of the Board shall be necessary or proper for the operation of the Common Area, or for the benefit of the Residence Lot Owners, or for the enforcement of these restrictions.

Section 3 - Determination of Annual Assessments

The Board of the Association shall fix the annual assessments.

Section 4 - Special Assessments for Capital Improvements

In addition to the annual assessments authorized above, the Association may levy in any assessment year, a special assessment applicable to that year only, for the purpose of defraying, in whole or in part, the cost of any construction or reconstruction, unexpected repair or replacement of a described capital improvement upon the Common Area, including the necessary fixtures and personal property related thereto, provided that any such assessment where the total amount thereof is in excess of One Thousand And No/100 Dollars ($1,000.00) shall require the affirmative vote of fifty-one percent (51%) of all the members.

Section 5 - Special Assessments for Violations

The Association may levy a special assessment against any Owner for violation of any of the covenants contained in this Declaration or the violation of any of the rules duly adopted by the Association covering the use of the Common Area. The Association shall have the authority to adopt rules for the use of the Common Area. The Association shall have the authority to adopt a schedule of fines and penalties for the violation of any of the covenants herein contained and the violation of any such rules duly adopted. Said schedule of fines and penalties for the violation of rules duly adopted and covenants herein contained, save and except the covenant to pay assessments, shall not exceed suspensions of rights to use the Common Area and facilities for a period of thirty (30) days and fines and penalties of Fifty And No/100 Dollars ($50.00) for each such violation. Such schedule of fines and penalties shall not become effective until approved by at least three-fourths (3/4) of the votes of the Members who are voting in person or by proxy at a meeting duly called for this purpose, written notice of which shall be sent to all members not less than seven (7) days nor more than sixty (60) days in advance of the meeting setting forth the purpose of the meeting. If after due notice as shall be required by such rules the Owner continues to violate such covenant or rule or fails to cure such violation, the Association shall assess such Owner and shall enforce such assessment in the manner hereinafter provided for nonpayment of assessments.

Section 6 - Quorum for Any Action Authorized under Section 5

At the first meeting called, as provided in Section 5 hereof, the presence at the meeting of Members or of proxies entitled to cast sixty percent (60%) of all the votes of the membership shall constitute a quorum. If the required quorum is not forthcoming at any meeting, another meeting may be called, subject to the notice requirement set forth in Section 5, and the required quorum at any such subsequent meeting shall be one-half (1/2) of the required quorum at the preceding meeting. No such subsequent meeting shall be held more than sixty (60) days following the preceding meeting.

Section 7 - Uniform Rate of Assessment

Annual assessments must be fixed at a uniform rate for all Residence Lots. The annual assessment shall be collected on a monthly quarterly1 basis.

Section 8 - Date of Commencement of Annual Assessments: Due Dates

The annual assessments provided for herein shall commence as to all Residence Lots on the first day of the month following the conveyance of the Common Area by Declarant to the Association and on the first day of each calendar year thereafter. The first annual assessment shall be adjusted according to the number of months remaining in the calendar year. The board shall fix the amount of the annual assessment against each Residence Lot at least thirty (30) days in advance of each annual assessment period. Written notice of the annual assessment shall be sent to every Owner subject thereto. The annual assessment shall be payable on a monthly quarterly2 basis and the due dates shall.be established by the Board. The Association shall upon demand at any time furnish a certificate in writing signed by an officer of the Association setting forth whether the assessments on a specified Residence Lot have been paid. A reasonable charge may be made by the Board for the issuance of these certificates. Such certificate shall be conclusive evidence of payment of any assessment therein stated to have been paid.

Section 9 - Effect of Nonpayment of Assessments: Remedies of the Association

A lien shall attach against each Residence Lot for the amount of the annual assessment as of January 1 of each calendar year for that calendar year's assessment. The lien for the first annual assessment shall attach as of the commencement of such assessment as hereinabove provided. Any assessments which are not paid when due shall be delinquent. If the assessment is not paid within thirty (30) days after the due date, the assessment shall bear interest from the date of delinquency at the rate of nine percent 9% per annum. In the event of a default or defaults in payment of any assessment and in addition to any other remedies herein or by law provided, the Association may enforce each such obligation as follows:

(a) By suit or suits at law to enforce each such assessment ob1igation. Any judgment rendered in any such action shall include, where permissible under law, a sum for reasonable attorney's fees in such amount that the Court may adjudge against such defaulting Owner. Upon full satisfaction of any such judgment, it shall be the duty of the Association by any authorized officer thereof to execute and deliver to the judgment debtor an appropriate satisfaction thereof.

(b) At any time within ninety (90) days after the delinquency of any assessment, the Association may give a notice to the defaulting Owner, which said notice shall state the date of the delinquency, the amount of the delinquency, and the interest charge for such delinquency, and make a demand for payment thereof. If such delinquency and interest is not paid within ten (10) days after delivery of such notice, the Association may elect to file a claim of lien against the Residence Lot of such delinquent Owner. Such claim of lien shall state (1) the name of the delinquent Owner or reputed Owner. (2) a description of the Residence Lot against which the claim of lien is made, (3) the amount claimed to be due and owing (with any proper offset allowed), (4) that the claim of lien is made by the Association pursuant to the terms of these restrictions (giving the date of execution and the date, book and page reference of the recording hereof in the Office of the Recorder of the County of Alameda), and (5) that a lien is claimed against said described Residence Lot In an amount equal to the amount of the stated delinquency plus interest. Any such claim of lien shall be signed and acknowledged by an authorized officer of the Association. Each delinquency may constitute a separate basis for a claim of lien. Any such claim of lien may be foreclosed

by appropriate action in Court or in the manner provided by law for the foreclosure of a mortgage under power of sale. In the event such foreclosure is by action in Court, reasonable attorney's fees shall be allowed to the extent permitted by law. In the event the foreclosure is as in the case of a mortgage under power of sale, any authorized officer of the Association shall be deemed to be acting as the agent of the lienor (mortgagee) and shall be entitled to actual expenses and such fees as may be allowed by law or as may be prevailing at the time the sale Is conducted. A certificate of sale shall be executed and acknowledged by any authorized officer of the Association or by the person conducting the sale. A deed upon foreclosure shall be executed In like manner.

No Owner may waive or otherwise escape liability for the assessments provided for herein by non-use of the Common Area or abandonment of his Residence Lot.

Section 10 - Subordination of the Lien to Mortgages

The lien of the assessments provided for herein shall be subordinate to the lien of any recorded first mortgage (meaning a mortgage with first priority over other mortgages). Sale or transfer of any Residence Lot shall not affect the assessment lien. However, the sale or transfer of any Residence Lot which is subject to any recorded first mortgage, pursuant to a decree of foreclosure or trustee sale under such mortgage or any proceeding in lieu of foreclosure thereof, shall extinguish the lien of such assessments as to payments thereof which become due prior to such sale or transfer. Pursuant to the terms of Section 9 (b) hereof, liens may be created on the interest of the purchasor at such foreclosure sale to secure all assessments, whether regular or special, assessed hereunder to such purchaser as an Owner after the date of such foreclosure sale, which said lien shall have the same effect and be enforced In the same manner as provided herein.

Section 11 - Exempt Property

The following property subject to this Declaration will be exempt from the assessments created herein: (a) all properties dedicated to and accepted by a local public authority; and (b) the Common Area. No land or improvements devoted to dwelling use shall be exempt from said assessments.

Article VII - Party Walls

SectIon 1 - General Rules of Law to Apply

Each wall which is built as a part of the original construction of the homes upon the Properties and placed on the dividing line between the Residence Lots shall constitute a party wall, and, to the extent not inconsistent with the provisions of this Article, the general rules of law regarding party walls and of liability for property damage due to negligence or willful acts or omissions shall apply thereto.

Section 2 - Sharing of Repair and Maintenance

The cost of reasonable repair and maintenance of a party wall shall be shared equally by the Owners who make use of the wall.

Section 3 - Destruction by Fire or Other Casualty

If a party wall is destroyed or damaged by fire or other casualty, any Owner who has used the wall may restore it, and if the other Owners thereafter make use of the wall, they shall contribute to the cost of restoration thereof in proportion to such use without prejudice, however, to the right of any such Owners to call for a larger contribution from the others under any rule of law regarding liability for negligent or willful acts or omissions.

Section 4 - Weatherproofing

Notwithstanding any other provision of this Article, an Owner who by his negligent or willful act causes the party wall to be exposed to the elements shall bear the whole cost of furnishing the necessary protection against such elements.

Section 5 - Right to Contribution Runs with Land

The right of any Owner to contribution from any other Owner under this Article shall be appurtenant to the land and shall pass to such Owners successors in title.

SectIon 6 - Arbitration

In the event of any dispute arising concerning a party wall, or under the provisions of this Article, each party shall choose one arbitrator, and such arbitrators shall choose one additional arbitrator, and the decision shall be a majority of all the arbitrators.

Article VIII - Architectural Control

Section. 1 - Architectural Control Procedure

No building, fence, wall, boat berth cover or other structure shall be commenced, erected or maintained upon the properties, nor shall any painting, finishing or any exterior addition to or change or alteration therein be made until the plans and specifications showing the nature, kind, shape, height, materials, color and location of the same shall have been submitted to and approved in writing as to harmony of external design, color and location in relation to surrounding structures and topography by the Board of the Association, or by an architectural review committee composed of three (3) or more representatives appointed by the Board, to serve at the pleasure of the Board. In the event said Board or its designated committee fails to approve or disapprove such design and location within thirty (30) days after said plans and specifications have been submitted to it, approval will not be required and this Article will be deemed to have been fully complied with. Owners who have complied with the requirements of this Article VIII shall be entitled to obtain from the Board a certificate in recordable form so stating upon demand and upon payment of a reasonable fee which shall in no event exceed the sum of Twenty And No/100 Dollars ($20.00). In any event, if no suit to enjoin or abate any structure or improvement constructed in violation hereof is commenced within one (1) year after the completion thereof, compliance with the terms hereof shall be conclusively presumed.

Section 2 - Minimum Standards

In addition to the requirements hereinabove set forth, each dwelling unit constructed on a Residence Lot on the Properties shall at least meet the following minimum standards:

(a)

One thousand five hundred (1,500) square feet of living area in size (the term "living area" as used herein shall exclude garage area, patio area and balcony area).

(b)

Two and one-half (2 1/2) baths and two (2) bedrooms.

(c)

Twenty Thousand and No/100 Dollars ($20,000.00) cost of construction of each dwelling unit.

(d)

All plans and specifications for the dwelling units shall be prepared and signed by a licensed architect.

(e)

The plans and specifications for the foundation for each dwelling unit shall be prepared and signed by a registered civil engineer.

(f)

Each dwelling unit may be constructed on one (1) or more Residence Lots.

Article IX - Exterior Maintenance

In addition to maintenance upon the Common Area, the Association shall provide exterior maintenance upon each Residence Lot which is subject to assessment hereunder, as follows: paint, repair. replace and care for roofs, gutters, downspouts, exterior building surfaces, banks and slope protection and other exterior improvements. Landscape planting and maintenance shall be provided for front yards only, If any such front yards exist. Such exterior maintenance shall not include glass surfaces.

In the event that the need for maintenance or repair is caused through the willful or negligent act of the Owner, his family, guests, invitees, or tenants, the cost of such maintenance or repairs shall be added to and become a part of the assessment to which such Residence Lot is subject.

Article X - Obligation to Rebuild

Section 1 - Residence Insurance

The Association shall have the duty to purchase, carry and at all times to maintain in force fire insurance with extended coverage endorsement covering all of the Residence Lots, the improvements thereon and appurtenant thereto, for the interest of the Association and of all Owners and their mortgagees, as their interests may appear, in such amounts and with such endorsements and coverage as shall be considered good sound insurance coverage for properties similar in construction, location -and use to Residence Lots and improvements. Such insurance will be in an amount which shall be equal to the maximum insurable replacement value, excluding foundation and excavation costs, as determined annually by the Insurance carrier.

Section 2 - Damage and Destruction Affecting Residences - Insurance Proceeds

If all or any portion of any residence is damaged or destroyed by fire or other casualty, then the following rules shall be applicable:

(a)

If the cost of repairing or rebuilding the residence or residences does not exceed the amount of insurance proceeds initially offered or paid by the insurance carrier by more than One Thousand Five Hundred And No/100 Dollars ($l,500.00) per residence,

(1)

All insurance proceeds shall be paid to Alameda First National Bank or any such other bank or trust company as may be designated by amendment hereof, to be held for the benefit of the Owners of the damaged residence or residences and the mortgagees, as their interest shall appear.

(2)

The Board of the Association shall levy a special assessment against the Owners of the Residence Lots upon which the casualty has occurred equal to the difference between the cost of repairing or rebuilding and the amount of available insurance proceeds, which said sums shall be secured by the lien provided for herein and shall be payable into the fund held by the Insurance trustee. The Board may advance the amount of the special assessment to the insurance trustee from Association general funds or reserves if the Board determines that the residence, as so rebuilt and reconstructed, will furnish adequate security for the repayment of said advances by operation of the assessment lien.

(3)

When the amount held by the Insurance trustee is sufficient to pay the costs of repair and reconstruction, the Board, as agent for the Owners, shall thereupon contract for the repair or reconstruction of the residences, paying the cost of such work from the amount held by the insurance trustee, said repair or reconstruction to be for the purpose of returning the residences substantially to their appearance and condition Immediately prior to the casualty.

(4)

Notwithstanding the foregoing, any Owner of a Residence which has suffered damage may apply to the Board for reconstruction, rebuilding or repair of his Residence In a manner which will provide for an exterior appearance and design different than that which existed prior to the date of the casualty. Application for such approva1 shall be made in writing together with full and complete plans, specifications, working drawings and elevations showing the proposed reconstruction and the end result thereof. The Board shall grant such approval only if the design proposed by the Owner would result In a finished residence in harmony of exterior design with other Residences on the Properties, and the Owner shall have deposited with the insurance trustee any additional monies required to complete reconstruction in such changed manner. Failure of the Board to act within sixty (60) days after receipt of such a request in writing coupled with drawings and plot plans showing the full and complete nature of the proposed change shall constitute approval thereof.

(5)

In any event, the Owner or Owners of any damaged Residence and the Board shall be obligated to proceed with all due diligence hereunder and commence reconstruction within six (6) months after the damage occurs and complete reconstruction within one (1) year after the damage occurs, unless prevented by causes beyond their reasonable control.

(b)

If subparagraph (a) is inapplicable with respect to any residence, then all insurance proceeds with respect thereto shall be paid to the insurance trustee above named, and

(1)

The Owner of such Residence shall elect in writing among the following alternatives:

(I)

To rebuild and reconstruct the Residence substantially in accordance with the condition It was in Immediately prior to the casualty; or

(II)

To rebuild and reconstruct the Residence in a different manner subject to the approval of the Board applicable thereto and provided that such changed Residence shall provide for reconstruction and proper support for all party walls upon the Residence Lots; or to

(III)

To provide such support as may be required by reconstruction of any and all party walls damaged by such casualty, to remove from the balance of the Residence Lot all wreckage or remains of the Residence and leave the Lot in a level, clean and landscaped condition.

The election shall be exercised by a written notice given to the Board within sixty (60) days after the date of such damage or destruction (or within thirty (30) days after the amount of Insurance award initially offered becomes known, whichever is the later) which said notice shall plainly state the alternative which has been elected and shall be submitted together with the Items required pursuant to the provisions hereof. In the event that any Owner fails to make an election as required pursuant to the terms hereof, then the Board shall have the power and authority as agent for the Owner, said agency being coupled with an interest, to make the election on the Owner's behalf. Said election shall be binding upon and inure to the benefit of the Owner, his successors and assigns. In accordance with the terms of any such election, the Board shall be entitled to draw upon and make use of the insurance proceeds awarded or paid for the account of said Owner by reason of the casualty as herein provided.

(2)

Any Owner who elects the first alternative set forth In paragraph (1) above shall deposit with the insurance trustee cash or security satisfactory to the Board in an amount sufficient to pay the cost of reconstructing his Residence over and above the available insurance proceeds.

(3)

Any Owner who elects the second alternative set forth in paragraph (1) above shall provide with his written election plans, specifications, drawings and elevations sufficient to show the work which he proposes to be performed and the finished product which will result therefrom upon his residence lot. The Board shall approve such proposal only if it finds that the reconstructed and rebuilt residence which would result therefrom is compatible in exterior design with the other residences and structures upon the Properties and provides the structural support required to fulfill the Owner's party wall obligations. Failure of the Board to approve or reject any such proposed change within sixty (60) days after the date of submission thereof shall be conclusively deemed an approval thereof. In the event the Board approves such a proposed change, the Owner, within ten (10) days thereafter, shall deposit with the Insurance trustee cash or security satisfactory to the Board In an amount sufficient to pay the cost of reconstructing the Residence as so changed over and above the available insurance proceeds. In the event the Board denies the proposed change, the Owner shall, within thirty (30) days thereafter, elect as between alternatives one and three set forth in paragraph (1) above.

(4)

Any Owner who elects the third alternative set forth in paragraph (1) above shall deposit with the insurance trustee cash or security satisfactory to the Board over and above the available insurance proceeds In an amount sufficient to provide the requisite structural support of any party walls In accordance with the Owner's party wall obligations, to demolish any remnants of the damaged Residence upon the Lot and to clear, level and landscape the surface thereof.

(c)

In the event that any Owner does not promptly and diligently perform the obligations on his part to be performed pursuant to the terms of this paragraph and the Board does not diligently proceed to enforce the terms hereof, then any Owner or mortgagee of any Residence Lot within the Properties or any part thereof, or interest therein, may bring an action in equity to enforce the performance of such obligation.

(d)

In any event, if there is a damage or destruction affecting any Residence Lot which is not fully repaired or reconstructed within two (2) years from the date thereof (with extension for delays not the fault of the Owner thereof), then the Board shall be authorized to use any insurance proceeds available by reason of said damage or destruction for the purpose of pursuing the third alternative paragraph (1) above restoring the site to a level, clean and landscaped condition subject only to such structural supports as may be required In connection with the maintenance of any party wall thereon.

Article XI - Use Restrictions

Section 1 - Residence Lots and Common Area

Residence Lots and Common Area shall be occupied and used as follows:

(a)

Each Residence Lot shall be used as a single-family residence and for no other purpose.

(b)

No business of any kind shall be conducted on any Residence Lot with the exception of the business of Declarant in completing the construction of Residences on the Properties and disposing of the same by sale, lease or otherwise.

(c)

Nothing shall be stored in the Common Area without the prior consent of the Association.

(d)

Nothing shall be done or kept in the Common Area which will increase the rate of insurance on the Common Area without the prior written consent of the Association. No Owner shall permit anything to be done or kept on his Residence Lot or in the Common Area which will result in the cancellation of insurance on any Residence or any part of the Common Area or which would be in violation of any law. No waste will be committed in the Common Area.

(e)

No sign of any kind shall be displayed to the public view on or from any Residence Lot or the Common Area without the prior written consent of the Association, excepting therefrom customary name and address signs and one "For Rent" and "For Sale" sign for each Residence Lot which shall not exceed twelve (12) inches by twenty-four (24) Inches In dimension, and such signs as may be erected by Declarant in connection with that subdivision sale or leasing of any or all of the Properties.

(f)

No animals, livestock or poultry of any kind shall be raised, bred or kept on any Residence -Lot or in the Common Area, except that dogs, cats or other household pets may be kept on Residence Lots subject to rules and regulations adopted by the Association. No dog shall be allowed on the Common Area without being held on a leash. The Association may adopt rules and regulations providing for the removal to a pound of any dog found on the Common Area without being held on a leash.

(g)

No noxious or offensive activity shall be carried on, in or upon any Residence Lot or in the Common Area, nor shall anything be done therein which may be or become an annoyance or nuisance to the other Owners.

(h)

No outside television antenna or aerial or radio pole shall be erected, constructed or maintained on any Residence Lot located in such a manner as to be visible from the outside of such Residence Lot except as provided in Section 4 of Article V of this Declaration or by written consent from the Association.

(i)

Nothing shall be altered or constructed in or removed from the Common Area except upon the written consent of the Association.

(j)

All automobiles, trailers, trucks or campers owned or used by Residence Lot Owners or occupants and kept on the Properties shall be parked inside garages overnight. No such vehicles shall be parked at any time in parking areas designated for visitors by the Board of the Association or in parking areas designated on Lot 3, Block 2, as said property is described on Exhibit "C" attached hereto. Boats owned or used by Residence Lot Owners or occupants and kept on the Properties shall be kept Inside garages or moored at all times only In the appropriate slip provided for each Residence Lot.

(k)

The term "boat' shall mean and refer to any conventional pleasure craft designed for and capable of being propelled on water by sail, motor, paddles or oars. No rafts, similar floating objects, non.-powered houseboats or vessels designed primarily for living aboard or designed for some purpose other than navigating on water and which are not designed or capable of self-propulsion on water shall be kept on the Properties without the written permission of the Association.

(l)

All boats moored in the slips provided for each Residence Lot shall comply with the following:

(1)

No part of the boat as it is moored in the slip shall extend over the headfloat system.

(2)

No part of the boat as it is moored in the slip shall extend beyond the end of the mooring slip fingers more than ten percent (10%) of the total overall length of the boat. The total overall length of the boat shall include, but shall not be limited to, the bow sprit, stern sprit, davits and any other appendages of the boat that extend beyond the water line length.

(3)

Boats shall be of such beam width that they may be moored so as not to bear continuously against either or both of the mooring slip fingers.

(m)

No basketball standard or fixed sports apparatus shall be attached to the exterior surfaces of any Residence or garage except where such exterior surface faces an interior patio.

(n)

There shall .be no violation of rules for the use of the Common Area adopted by the Association and furnished in writing to the Owners; and the Association is authorized to adopt such rules.

Article XII - Right on Entry

For the purpose of performing the exterior maintenance authorized by Article IX, and the repair and restoration authorized by Article X, the Association through its duly authorized agents or employees shall have the right after reasonable notice to the Owner to enter upon arty Residence Lot at reasonable hours on any day.

Article XIII - Private Roadway and Utilities

A part of the Common Area designated as Lot A., Block 1, as described on Exhibit "A" attached hereto extends on one side to the center line of a private roadway adjacent to Lots 1 through and Including 28 of Block 1. Said entire private roadway is shown on the recorded Final Subdivision Map of the Properties as Private Roadway "A". The Association shall pay for twenty percent (20%) of the cost of the maintenance of said entire Private Roadway "A" and twenty percent (20%) of the cost of the maintenance of the storm and sanitary sewers underlying said entire Private Roadway 'A". Said costs and expenses shall be a part of the regular annual assessments provided for by Article VI of this Declaration. The Association shall enter into a joint private roadway and utility maintenance agreement between the Association and the record title holders of the real property described on Exhibit "C" attached hereto. The real property described on Exhibit "C" attached hereto encompasses the remaining fee interest in said Private Roadway "A". Said joint Private Roadway and utility maintenance agreement shall provide that the record title holders of the fee interests in said entire Private Roadway "A" shall pay the following percentages of the total cost for the maintenance of' said entire Priva1~e Roadway "A" and storm and sanitary r~ewers underlying said roadway:

Real Property Percentage of Maintenance Cost The Association (Lot A, Block 1 - Exhibit "A") 20% Lot 1, Block 2 (Exhibit "C") 45% Lot 2, Block 2 (Exhibit "C") 30% Lot 3, Block 2 (Exhibit "C") 5% Article XIV - Docking Easements

Docks shall be constructed In the waterways encompassed by Lot A, Block 1, and Lot A, Block 3, as said Common Area is described on Exhibit "A" attached hereto. Each said dock shall be constructed to provide a separate private mooring place for each of the Residence Lots. There is hereby reserved for each of said Residence Lots as dominant tenements an easement appurtenant over the Common Area as servient tenement to enter upon said dock and use the mooring slip provided for each Residence Lot. Said easement shall extend to the right of ingress and egress over common gangways to reach the mooring slip provided for each Residence Lot. No Owner shall build any boat berth Cover or structure of any kind or make any alteration, change or addition on or to said dock or gangways without prior written approval of the Board or architectural review committee as set forth in Article VIII.

Article XV - Easements

SectIon 1. Reservation of Easements

There is hereby reserved the following easements:

(a)

Nonexclusive easements appurtenant for ingress and egress over Private Roadway "A" to be constructed on a part of Lot A, Block 1, and a part of Lots 1, 2, and 3, Block 2, as servient tenements are hereby reserved for Lots 1 through and including 28 of Block 1, and Lots 1 through and including 16 of Block 3, as dominant tenements.

(b)

Nonexclusive easements appurtenant for ingress and egress over Private Roadway "A" to be constructed on a part of Lot A, Block 1, as servient tenement, are hereby reserved for Lots 1, 2 and 3, Block 2, and any subdivision or subdivisions thereof as dominant tenements.

(c)

A nonexclusive easement appurtenant for private roadway maintenance and underlying utility maintenance over that part of Lots 1, 2 and 3 of Black 2, as servient tenements, upon which Private Roadway "A" shall be constructed is hereby reserved to Lot A, Block 1, as dominant tenement.

(d)

Nonexclusive easements appurtenant for private roadway maintenance and underlying utility maintenance over that part of Lot A, Block 1, on which Private Roadway "A" shall be constructed are hereby reserved for Lots 1, 2 and 3, Block 2, and any subdivision or subdivisions thereof as dominant tenements.

(e)

A nonexclusive easement appurtenant for ingress and egress for the public and ingress and egress for construction vehicles over that part of Lot A, Block 1, and Lots land 2, Block 2, on which Private Roadway "A" will be constructed as servient tenements, is hereby reserved for Lot 3, Block 2, and any subdivision or subdivisions thereof as dominant tenement or tenements as the case may be.

(f)

Nonexclusive easements appurtenant for Ingress and egress over Private Roadway "A" constructed on a part of Lots 2 and 3, Block 2, and Private Roadway "B" to be constructed on part of Lot 2, Block 2, as servient tenements are hereby reserved for Lot 1, Block 2, as dominant tenement.

(g)

Nonexcluslve easement appurtenant for ingress and egress over Private Roadway "A" to be constructed on a part of Lots 1 and 3, Block 2, and Private Roadway "B" to be constructed on a part of Lot 1, Block 2, as servient tenements are hereby reserved for Lot 2, Block 2, as dominant tenement.

(h)

Nonexclusive easements appurtenant for private roadway maintenance and underlying utility maintenance over those parts of Lots 1 and 2,Block 2, as servient tenements on which Private Roadway "A" shall be constructed are hereby reserved for Lot 3, Block 2, as dominant tenements.

(i)

Nonexclusive easements appurtenant for private roadway maintenance and underlying utility maintenance over those parts of Lots 1 and 3, Block 2, as servient tenements, upon which Private Roadways "A" and "B" shall be constructed are hereby reserved for Lot 2, Block 2, or any subdivision or subdivisions thereof, as dominant tenements.

(j)

Nonexclusive easements appurtenant for private roadway maintenance and underlying utility maintenance over those parts of Lots 2 and 3, Block 2, as servient tenements, upon which Private Roadways "A" and "B" shall be constructed are hereby reserved for Lot 1, Block 2, or any subdivision or subdivisions thereof, as dominant tenements.

(k)

Exclusive easements appurtenant for private driveway use and private sidewalk use over Lot A, Block 1, and Lot A, Block 3, as servient tenements, are hereby reserved for Lots 1 through and including 28 of Block 1 and Lots 1 through and including 16 of Block 3, as dominant tenements. Each such easements shall be exclusive for the benefit of each lot and shall cover the area where the private driveway and the private sidewalk shall be constructed for each lot.

(l)

Exclusive easements appurtenant for encroachments for overhanging eaves or roofs as originally constructed and for encroachments due to settlement or shifting of structures or any other cause over all Residence Lots and over Lot A, Block 1 and Lot A, Block 3, as servient tenements, are hereby reserved for all contiguous Residence Lots as dominant tenements. Said overhanging eaves or roof encroachments shall not exceed three (3) feet. Said encroachment easements shall not be valid or apply if the encroachment results from the action of the Association or an Owner after construction of the original improvements on the Residence Lots and Common Area.

(m)

Exclusive easements appurtenant for party wall maintenance and repair and common foundation footing maintenance and repair over all Residence Lots, as servient tenements, are hereby reserved for all contiguous Residence Lots, as dominant tenements.

(n)

To the extent required to effectuate the master television antenna plan set forth in Article V, Section 4, there is hereby reserved an easement appurtenant for each Residence Lot over all other Residence Lots, as servient tenements, for the purpose of providing connection of that Residence Lot with the master antenna most convenient thereto. Said easements shall include provision for the passage through the roof structure of television connections from all of said Residence Lots to the master antenna most convenient thereto. Each Residence Lot shall be subject to a further easement appurtenant for the placement thereon by the Association of a master antenna and appurtenances. All of the easements reserved in this subparagraph (n) are reserved subject to the condition that their use and enjoyment shall not unreasonably interfere with the use, occupancy or enjoyment of all or any part of the Residence Lot servient to them or to which they are appurtenant.

(o)

Exclusive easements appurtenant for the use of storm drainage facilities installed in Lot A, Block 1, as servient tenement, are hereby reserved for Lots 1 and 2, Block 2, as dominant tenements. Such easements shall be limited to the right of discharging storm waters from Lots 1 and 2, Block 2, into storm drainage facilities existing in Lot A, Block 1, and shall not be construed to give any rights to discharge storm waters over any part of Lot A, Block 1, where no such facilities have been constructed.

(p)

An exclusive easement appurtenant for storm water drainage over Private Roadway "A" to be constructed on a part of Lot 2, Block 2, as servient tenement, is hereby reserved for Lot 1, Block 2, as dominant tenement.

(q)

An exclusive easement appurtenant for storm water drainage over Lot 3, Block 2, as servient tenement, is hereby reserved for Lot 1, Block 2, as dominant tenement.

(r)

An exclusive easement appurtenant for storm water drainage over Lot 3, Block 2, and for storm drainage facilities installed in Lot 3, Block 2, as servient tenement is hereby reserved for Lot 2, Block 2, as dominant tenement.

(s)

An exclusive easement appurtenant for storm water drainage over Private Roadway "B" to be constructed on a part of Lot 1, Block 2, as servient tenement, is hereby reserved for Lot 2, Block 2, as dominant tenement.

(t)

An exclusive easement appurtenant for storm water drainage over Private Roadway "B" to be constructed on a part of Lot 2, Block 2, as servient tenement, Is hereby reserved for Lot 1, Block 2, as dominant tenement.

Section 2 - Easements - Conditional

Easements hereinabove reserved by Section 1, subparagraphs (b), (d) and (o) of this Article XV, for the benefit of Lots 1, 2 and 3, Block 2, as dominant tenements over Private Roadway. "A" to be constructed on a part of Lot A, Block 1, as servient tenement, are expressly conditional upon the execution and recordation of a joint private roadway and utility maintenance agreement between the Association and the record title holders of Lots 1, 2 and 3, Block 2. Said agreement shall also grant to the Association and reciprocal easements for private roadway maintenance and underlying utility maintenance as set forth above in Section 1, subparagraph (c) of this Article XV.

Article XVI - General Provisions

Section 1 - Enforcement

The Association or any Owner shall have the right to enforce, by any proceeding at law or in equity, all restrictions, conditions, covenants, reservations, liens and charges now or hereafter imposed by the provisions of this Declaration. Failure by the Association or by any Owner to enforce any covenant or restriction herein contained shall in no event be deemed a waiver of the right to do so thereafter.

Section 2 - Severability

Invalidation of any one of these covenants or restrictions by judgment or court order shall in no wise effect any other provision which shall remain in full force and effect.

Section 3 - Amendment

The covenants and restrictions of this Declaration shall run with and bind the land, and shall inure to the benefit of and be enforceable by the Association, or the Owner of any Residence Lot subject to this Declaration, their respective legal representatives, heirs, successors, and assigns, for a term of forty (40) years from the date this Declaration is recorded, after which time said covenants shall be automatically extended for successive periods of ten (10) years. The covenants and restrictions of this Declaration may be amended by an instrument signed by not-less-than seventy-five percent (75%) of the Residence Lot Owners. Any amendment must be properly recorded.

IN WITNESS WHEREOF, the undersigned, being the Declarant herein, has hereunto set its hand and seal this 3rd day of February, 1969.

PAN-PACIFIC DEVELOPMENT CO.

By: /S/ William B. Kirkland. Jr., President

By: /S/ Shirley D. Nelson, Secretary

STATE OF CALIFORNA, COUNTY OF ALAMEDA

On February 3, 1969, before me, /S/ Jeannette c. Mihalak Notary Public personally appeared /s/ William B. Kirkland, Jr. known to me to be the President of PAN-PACIFIC DEVELOPMENT CO., and /s/ ShIrley D. Nelson, known to me to be the Secretary of PAN-PACIFIC DEVELOPMENT CO., the corporation that executed the within instrument and acknowledged to me that such corporation executed the same.

/S/ Jeannette c. Mihalak

Notary Public In and for the County of Santa Clara, State of California. My Commission expires 7/22/72.

Consent and Subordination

The undersigned, CALIFORNIA FINANCIAL CORPORATION, as beneficiary under that certain Deed of Trust dated March 10, 1967, recorded March 30, 1967, Reel 1938, Image 633, Series No. AZ/28378, Official Records of the County Recorder of the County of Alameda, executed by PAN-PACIFIC DEVELOPMENT CO., a corporation, as Trustor, to Corporate Agency, a corporation, as Trustee, does hereby consent to the execution and recordation of the attached Declaration of Covenants, Conditions and Restrictions and does hereby subordinate the lien of said Deed of Trust to said Declaration of Covenants, Conditions and Restrictions, to the same extent and with the same force and effect as if said Declaration of Covenants, Conditions and Restrictions had been executed and recorded prior to the execution and recordation of said Deed of Trust.

IN WITNESS WHEREOF, the undersigned has executed this Consent and Subordination this 3rd day of February, 1969.

CALIFORNIA FINANCIAL CORPORATION

By: /s/ Finnegan, President

By /s/ Shirley D. Nelson, Asst. Secy.

STATE OF CALIFORNIA, COUNTY OF SANTA CLARA

On February 3rd. 1969, before me,________________________, ANotary Public personally appeared _________, known to me to be the ______________of CALIFORNIA FINANCIAL CORPORATION, and __________, known to me to be the_______________ of CALIFORNIA FINANCIAL CORPORATION, the corporation that executed the within instrument and acknowledged to me that such corporation executed the same. /s/ Jeannette C. Mihalak, Notary Public in and for the County of Santa Clara, State of California. My commission expires 7/22/72.

Exhibit "A"

All that certain real property situated in the City of Alameda, County of Alameda, and State of California, particularly described as follows:

Lots 1 to 28, inclusive, of Block 1;

Lot A of Block 1;

Lots 1 to 16, inclusive of Block 3;

Lot A of Block 3;

of Tract 3011, Ballena Bay Community, according to the map thereof filed September 13, 1968, in the office of the County Recorder of said Alameda County, and of record in Map Book 59, Pages 6 to 9 inclusive.

Exhibit "B"

All that certain real property situated In the City of Alameda, County of Alameda, State of California, particularly described as follows:

Block 4 and Block 5;

of Tract 3011 , Ballena Bay Community, according to the map thereof filed September 13, 1968, in the office of the County Recorder of said Alameda County, and of record In Map Book 59, Pages 6 to 9 Inclusive.

Exhibit "C"

All that certain real property situated in the City of Alameda, County of Alameda, State of California, particularly described as follows:

Lots 1 to 3, inclusive, of Block 2;

of Tract 3011, Ballena Bay Community, according to the map thereof filed September 13, 1968, in the office of the County Recorder of said Alameda County, and of record in Map Book 59, Pages 6 to 9 Inclusive.

We hereby certify that this is a true and correct copy of the original of this instrument recorded February 10, 1969, on Reel 2343, Image 199, Recorder's Series No. 15096, Alameda County Records.

TITLE INSURANCE AND TRUST COMPANY

By: /s/ Charles J. Lehner

1 (Changed by members - Annual Meeting, September, 1973. See Minutes)

2 (Changed by members - Annual Meeting, September, 1973. See Minutes)