Ocean Villas
Outer Banks, NC Timeshare Resort
Legal Documentation
Ocean Villas of Nags Head

Legal Documentation

BY-LAWS of OCEAN VILLAS HOMEOWNERS ASSOCIATION, INC.

a North Carolina Non-Profit Corporation

organized June 22, 1983

under the Laws of the State of North Carolina

as ADOPTED by the Board of Directors on September 24, 1988,

and AMENDED by the Board of Directors on August 7, 1991,

and AMENDED by the General Membership on November 9, 1991,

and AMENDED by the Board of Directors on July 25, 1992,

and AMENDED by the General Membership on November 5, 1994,

and AMENDED by the Board of Directors on November 9, 1996,

and AMENDED by the Board of Directors on June, 5, 1999,

and AMENDED by the Board of Directors on April 15, 2000,

and AMENDED by the Board of Directors on June 28, 2000,

and AMENDED by the General Membership on November 4, 2000

and AMENDED by the Board of Directors on September 24, 2006

PREAMBLE

Section 1. (as AMENDED by the Membership on November 5,1994)

These are the By-Laws of OCEAN VILLAS Homeowners Association, Inc., a North Carolina non-profit corporation, (the “Association”), the Articles of Incorporation (the “Articles”) of which have been filed in the Office of the North Carolina Secretary of State.

For purposes of these By-Laws, terms specifica11y defined in the Non-profit Corporation Act, Chapter 55A, North Carolina Genera1 Statutes (the “Non-Profit Corporation Act”), shall have the same meaning herein.

Section 2. (as AMENDED by the Membership on November 5, 1994)

The purpose or purposes for which the non-profit corporation is organized are:

a. To manage and operate OCEAN VILLAS, a time-share homeowners association established by filing the Declaration thereof in the Office of the Register of Deeds for Dare County and to achieve that objective:

i . To make and collect assessments against members to defray and pay costs, expenses and losses of the Association.

ii. To use the proceeds of assessments in the exercise of its power and duties.

iii. To maintain, repair, replace and operate the Association property.

iv. To purchase insurance upon the Association property and insurance for the protection of the Association and its members.

v. To reconstruct improvements after damage hereto and to further improve the property.

vi. To make, amend and rescind reasonable regulations respecting the use of the property of the Association.

vii. To enforce by lawful means the provisions of the Declaration, the Articles, these By-Laws of the Association and the regulations for the use of the Association property.

viii. To contract for the management of the Association and to delegate to such manager or management firm all powers and duties of the Association except such as are specifically required by the Declaration to have approval of the Board of Directors or the membership of the Association.

ix. To contract for the management or operation of portions of the Common Areas and Facilities susceptible to separate management or operation, and to lease such portions.

x. To employ personnel to perform the services required for proper operation of the Association.

b. To perform and do any and all other acts permitted by the Non- Profit Corporation Act of the North Carolina General Statutes, Chapter 55A, necessary and desirable for the conduct of a time-share homeowners association.

ARTICLE I

Offices

Section 1. (as AMENDED by the Membership on November 5, 1994)

Principal Office. The principal office of the Corporation shall be located at OCEAN VILLAS, 7031 South Virginia Dare Trail, 161/4 Mile Post, Nags Head, Dare County, North Carolina. (27959)

Section 2. (as AMENDED by the Membership on November 5, 1994)

Registered Office. The registered office of the Corporation which by law is required to be maintained in the State of North Carolina, shall be located at OCEAN VILLAS, 7031 South Virginia Dare Trail, 16 1/4 Mile Post, Nags Head, Dare County, North Carolina (27959) , or at such other place within the State of North Carolina as may, from time to time, be fixed and determined by the

Section 3. As adopted by the Directors on September 24,1988)

Other Offices. The Corporation may have other offices at such places, either within or outside the State of North Carolina, as the Board of Directors may from time to time determine, or as the affairs of the corporation may require.

ARTICLE I

Members’ Meetings and Voting

Section 1. (as adopted by the Directors on September 24, 1988)

Place. Meetings of the members shall be held at the place designated in the notice of such meeting, within or outside the State of North Carolina, or if no place is designated in said notice, the meeting shall be held at the principal office of the Corporation.

Section 2 (as amended by the Directors on April 15,2000)

Annual Meeting. The annual meeting of the members for the election of directors and for the transaction of such other business as may properly come before the meeting, shall be held at t o’clock on the 45th Saturday in each year, if not a legal holiday,

And if a legal holiday, then on the next following Saturday.

Section 3. (as adopted by the Directors on September 24, 1988)

Substitute Annual Meeting. If the annual meeting shall not be held on the date designated by these By-Laws, a substitute annual meeting may be called in the manner provided for the call of a special meeting in accordance with the provisions of Section 4 of this Article II, and a substitute annual meeting so called shall designated as and shall be treated, for all purposes, as the annual meeting/

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Section 4. (as adopted by the Directors on July 25, 1992)

Special Meetings. Special meetings of the members may be called at any time by the by the president or by any two members of the Board of Directors or by any Director pursuant to the written request of the members who own not less than ten percent (10%) of the undivided interest in the common elements of the Association property so defined in the Declaration.

Section 5. (as ADOPTED by the Directors on September 24, 1988)

Notices. Written or printed notice of all meetings of the members, stating the time and place, shall be given by the President or Secretary or other person authorized to call such meetings to the members entitled to vote at such meeting, not less than ten (10) nor more than fifty (50) days prior to the date of such meeting. If mailed, such notice shall be directed to each member at the address of such member as set forth on the records of the Corporation, except that if any member shall have filed with the Secretary a written request that notices intended for such member be mailed to some other address, then all notices to such members shall be mailed to the address designated in such request.

A statement of the business to be transacted at an annual or substitute annual meeting of members need not be set forth in the notice of such meeting, except that if any matter is to be considered or acted upon, other than the election of directors, of which the vote of members is required under the provisions of the North Carolina Non-Profit Corporation Act, then a specific statement shall be sent forth in such notice.

In the case of a special meeting, the notice shall set forth the nature of the business to be transacted.

If a meeting shall be adjourned for more than thirty (30) days, notice of such adjourned meeting shall be given as in the case of the original meeting, and if the adjournment shall be for less than thirty (30) days, no notice thereof need be given, except that such adjournment shall be approved at the meeting at which adjournment is taken.

Notice of a meeting need not be given if each member entitled to notice thereof shall, in person, or by attorney thereunto duly authorized, waive notice thereof in writing, either before or after such meeting

Section 6. (as AMENDED by the Directors on July 25, 1992)

Quorum. Except as otherwise provided by statute, or by the Charter of the Corporation, or by these By-Laws, the presence in person or by proxy of members who own not less than ten percent (10%) of the undivided interest of the Association property shall be necessary to constitute a quorum for the transaction of business.

Section 7. (as AMENDED by the Directors on Sept 24, 2006)

Voting. At each meeting of members, every member shall have a vote in the affairs of the Corporation. All questions, except as otherwise provided by statute, or by the Charter of the corporation, or by these By-Laws, shall be determined by the votes so cast by a majority of those present, whether in person or by proxy, and entitled to vote.

Where any unit/week is owned as tenants in common or as tenants by the entirety, said tenants may determine between or among themselves how the vote they are entitled to shall be cast, but the Chairman of a meeting of the Association shall not accept any division of a vote that said owners would otherwise be entitled to cast if said tenants do not unanimously agree between or among themselves on how their vote should be cast.

Any member entitled to vote may vote by proxy, provided that the instrument authorizing such proxy to act shall have been executed in writing by the member or his duly authorized attorney, and received by the Chairman of the Registration Committee by the Wednesday preceding the annual meeting. One recognized owner may sign a proxy on be half of all recognized owners. No proxy shall be valid after the expiration of twelve (12) months from the date of its execution. Each instrument designating a proxy shall be filed with the Secretary of the meeting and retained until after the Minutes of that meeting have been approved at a subsequent meeting.

The Board may authorize the filing of special proxies for the limited purpose of voting, at a specific meeting, on changes to Covenants or the Corporation Charter. Proxy votes to amend covenants or the Corporation Charter shall be restricted to special proxies filed for that purpose. Proxy voting to elect Board members, adopt a budget, and other business which may be brought before an Association meeting shall be restricted to regular proxies filed for that purpose.

Whenever unit/weeks have been deeded to the Association and remain unsold at the time of an Association meeting, except when membership Removal of Directors is being considered under Article III, Section 4, the Board may cast all membership votes associated with unsold unit/weeks. When an issue requiring a recorded vote is ready to be voted, the Chairman of a meeting of the Association will call for a momentary recess during which a majority of Board Members present will determine how the membership votes representing Association-owned unit/weeks will be cast.

The Chairman of a meeting of the Association may cast the vote for one or more unit/weeks personally owned at the same time as other votes are being cast. Should a vote count result in a tie, or be within one vote of a tie, or be within one vote of achieving

a greater than a simple majority approval requirement, the Chairman may cast one additional vote representing the 460th unit of the Association, the common property.

Section 8. (as ADOPTED by the Directors on September 24, 1988)

Informal Action by Members. Any action that may be taken at a meeting of the members, may be taken without a meeting if such action is authorized in a writing setting forth the action taken and is signed by all of the persons who would be entitled to vote upon such action at a meeting and filed with the Secretary of the Corporation. Any consent so filed with the Secretary of the Corporation shall be filed in the Corporate Minute Book in like manner as minutes of a meeting. Any such consent shall have the same force and effect as a unanimous vote of the members.

Section 9 (as ADOPTED by the Board of Directors Sept. 24, 2006)

Registration Committee - Prior to the mailing of the meeting notices and proxies, the president shall appoint, with consent of the board of directors, three members of a Registration Committee, and designate one of them as chairman. No member of the Registration Committee nor their spouse shall be eligible to seek any office elected at the meeting for which they serve.

The Registration Committee shall review proxies received and register in-person attendees of the meeting for which they serve, and certify attendance in person or by proxy to the meeting, and after certification shall file the proxies with the secretary.

ARTICLE III

Directors

Section 1. (as ADOPTED by the Directors on September 24, 1988)

General Powers. The property, affairs and business of the Corporation shall be managed by the Board of Directors, in addition, without limiting the rights of any member, actions may be brought by the Board of Directors in the discretion of the Board of Directors, on behalf of two or more members of the Association, as their respective interests may appear, with respect to any course of action relating to the Common Areas or Facilities or more than one unit.

Section 2. (as ADOPTED by the Directors on September 24, 1988)

Number, Term of Office and Qualifications. The number of directors shall be five (5), terms staggered. During the annual meeting of November, 1988, one (1) director will be elected to hold office for a period of one (1) year; two (2) directors will be elected to hold office for a period of two (2) years; and two (2) directors will be elected to hold office for a period of three (3) years. Thereafter, directors shall be elected for three (3) year terms at the end of each respective term.

Each director shall continue in office until the annual meeting of the members held at the expiration of the term and until his successor shall have been elected and qualified, or until his death, or until he shall resign or shall have become disqualified or removed in the manner hereinafter provided.

Directors need not be residents of the State of North Carolina but must be persons representing memberships in good standing of the Association.

Section 3. (as AMENDED by the Directors on Sept. 24, 2006)

Election of Directors. Except as provided in Section 2 of this Article III, the directors shall be elected at the annual meeting of members and the persons who shall receive a plurality of votes cast on a single ballot shall be elected directors. If prior to voting for the election of directors, demand therefor shall be made by or on behalf of any members entitled to vote at such meeting, the election of directors shall be by confidential ballots.

In the event that more persons have declared candidacy for the office of director than there are seats availible, each member shall be sent the same number of written ballots as they own unit/weeks at Ocean Villas which are in good standing listing the names of all candidates who have declared candidacy, which shall be sent with their notice and proxy form. These written ballots shall be of a different color from those distributed to in-person attendees. The ballots may be returned with the proxy form and if no ballots are attached, the vote for the office of director shall be conferred on the holder of the proxy. It is recommended but will not require the ballots be returned in a sealed envelope. The ballot shall contain a space for a write-in. Names on the ballot shall alternate from year to year in reverse alphabetical order and alphabetical order.

Each candidate for the office of director shall designate one person to serve as a teller for counting votes for director. The persons so designated, together with the Chairman of the Registration Committee, shall count the votes and report the results to the meeting.

Any candidate who fails to win election by three votes or less may demand a recount immediately after the results are announced. Any recount shall be conducted immediately in view of all members who desire to view the count. Any recount shall be final. The ballots shall be destroyed at the conclusion of the meeting.

Section 4. (as AMENDED by the Directors on July 25, 1992)

Removal of Directors. The Board of Directors or any individual director may be removed from office, with or without cause, by a vote of the members owning a majority of the percentages of the members’ undivided interest in the Association property entitled to vote at an election of directors. If any directors are so removed, new directors may be elected at the same meeting.

Section 5. (as ADOPTED by the Directors on September 24, 1988)

Vacancies. Any vacancy in the Board of Directors shall be filed for the remainder of the term by a majority of the remaining directors, though less than a quorum, or by the sole remaining director. The members may elect a director at any time to fill any vacancy not filled by the directors. In the event of the resignation of a director to take effect at a future date, the Board of

Directors or the members at a time after tender of such resignation, may elect a successor to such director to take office as of the effective date of such resignation.

Section 6. (as ADOPTED by the Directors on September 24, 1988)

Compensation of Directors. The Board of Directors may not cause the Corporation to compensate directors for their services as directors, but it may provide for the payment by the Corporation of all expenses incurred by the directors in attending regular or special meetings of the Board.

Section 7. (as adopted by the Directors on September 24, 1988)

Committees. The Board of Directors by the vote of a majority of the directors in office may designate one or more committees, each of which shall consist of two ore more directors, which committees, to the extent provided in such resolution, shall have and may exercise all of the authority of the Board of Directors in the management of the corporation, but the designation of such committees and the delegation thereto of authority shall not operate to relieve the Board of Directors or any individual director of any responsibility imposed upon it or him by law.

A committee appointed pursuant to this Section 7 shall have no authority as to: the dissolution, merger or consolidation of the Corporation, the amendment of the Charter of the Corporation, the sale, lease or exchange of all or substantially all of the property of the Corporation, the designation of any such committee, the filling of vacancies on the Board of Directors or any such committee, the amendment or repeal of any resolution of the Board of Directors which by its terms shall not be so amendable or repealable.

ARTICLE IV

Meetings of Directors

Section 1. (as AMENDED by the Directors on September 24, 1988)

Regular Meetings. A regular meeting of the Board of Directors shall be held immediately after, and at the same place as, the annual meeting of the members. In addition, the Board of Directors may provide by resolution for the holding additional regular meetings.

Section 2. (as ADOPTED by the Directors on September 24, 1988)

Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the President, Vice President or any director.

Section 3. (as AMENDED by the Directors on April 15, 2000)

Open Meetings. All meetings, regular or special, of the Board of Director, shall be deemed open unless a personnel or legal matter is to be discussed and a majority of Board Members present vote to temporarily close the meeting.

Section 4. (as ADOPTED by the Directors on September 24, 1988, and RENUMBERED by the Directors on November 9, 1996)

Place of Meeting. All meetings of the Board of Directors shall be held at the principal office of the Corporation, except that such meetings may be held at such other place, within or outside of the State of North Carolina, as may be designated in a duly executed waiver or notice of such meeting, or as may be otherwise agreed upon in advance of the meeting my a majority of the directors.

Section 5. (as AMENDED by the Directors on April 15, 2000)

Notice of Meetings. Regular meetings of the Board of Directors may be held without notice.

Special meetings shall be called with not less than three (3) days prior notice. Notice of a special meeting need not state the purpose thereof and such notice shall be directed to each director at his resident or usual place of business by mail, cable, telegram, fax, e-mail, or may be delivered personally. The presence of a director at a meeting shall constitute a waiver of notice of that meeting except and only when such director attends the meeting solely for the purpose of objecting to the transaction of any business thereat, on the grounds that the meeting has not been lawfully called, and does not otherwise participate in such meeting.

Section 6. (as ADOPTED by the Directors on September 24, 1988, and RENUMBERED by the Directors on November 9, 1996)

Quorum and Manner of Acting. A majority of the directors then in office shall constitute a quorum for the transaction of business at any meeting of the Board.

Except as otherwise expressly provided in this Section, the act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.

The vote of a majority of the number of directors holding office shall be required to adopt a resolution appointing a committee pursuant to Section 7 of Article III of these By-Laws.

Section 7. (as AMENDED by the Directors on September 24, 2006) and RENUMBERED by the Directors on November 9, 1996)

Informal Action of Directors. Action taken by a majority of the directors without a meeting shall constitute Board action if written consent to the action in question is signed by four/fifths (4/5) of the directors and filed with the minutes of the proceedings of the Board, whether done before or after the action so taken. The directors may not amend the by-laws by informal action.

Section 8. (as ADOPTED by the Directors on September 24, 1988, and RENUMBERED by the Directors on November 9. 1996)

Resignations. Any director may resign at any time by giving written notice to the President or Secretary of the Corporation. Such resignation shall take effect at the time specified therein, or if no time is specified therein, at the time such resignation is received by the President or Secretary of the Corporation, unless it shall be necessary to accept such resignation before it becomes effective, in which event the resignation shall take effect upon its acceptance by the Board of Directors. Unless otherwise specified therein, the acceptance of any such resignation not shall be necessary to make it effective.

Article V

Officers

Section 1. (as ADOPTED by the Directors on September 24, 1988)

Number of Officers. The officers of this Corporation shall be a President, one or more Vice Presidents, a Secretary, and a Treasurer, and such other officers as may be appointed in accordance with the provisions of Section 3 of this Article V. A person may hold one or more of such offices at one time, except the offices of President and Secretary, but no officer shall sign or execute any document in more than one capacity.

Section 2. (as ADOPTED by the Directors on September 24, 1988)

Election. Term of Office and Qualifications. Each officer, except such officers as may be appointed in accordance with the provisions of Section 3 of this Article V, shall be chosen by the Board of Directors and shall continue in office until the annual meeting of the Board of Directors held after his election and until his successor shall have been chosen and qualified, or until his death, or until he shall resign, or shall have become disqualified, or shall have been removed from office.

Section 3. (as ADOPTED by the Directors on September 24, 1988)

Subordinate Officers and Agents. The Board of Directors from time to time may appoint other officers or agents, each of whom shall hold office for such period, have such authority, and perform

such duties as the Board of Directors from time to time may deter- mine. The Board of Directors may delegate to any officer or agent the power to appoint any subordinate officer or agent and to pre- scribe his respective authority and duties.

Section 4. (as ADOPTED by the Directors on September 24, 1988)

Removal. Any officer elected or appointed may be removed by the persons authorized to elect or appoint such officer whenever in their judgment the best interests of the Corporation will be served thereby. The removal of any person from office shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights.

Section 5. (as ADOPTED by the Directors on September 24, 1988)

Resignations. Any officer may resign at any time by giving written notice to the Board of Directors or to the President or the Secretary of the Corporation, or if he was appointed by an officer or agent in accordance with Section 3 of this Article V, by giving written notice to the officer or agent who appointed him. Unless otherwise specified therein, the acceptance of any such resignation shall not be necessary to make it effective.

Section 6. (as ADOPTED by the Directors on September 24, 1988)

Vacancies. Any vacancy in any office because of death, resignation, removal or disqualification, or any other cause, shall be filled for the unexpired portion of the term in the manner pre- scribed by these By-Laws for regular appointments or elections to such offices.

Section 7. (as ADOPTED by the Directors on September 24, 1988)

President. The President shall be the chief executive officer of the Corporation, and, subject to the instructions of the Board of Directors, shall have charge of the business, affairs and property of the Corporation and control over its other officers, agents and employees. He shall preside at all meetings of the members and of the Board of Directors at which he may be present. He shall sign, with the Secretary, any deeds and/or mortgages, executed on behalf of the Corporation except where required or permitted by law to be otherwise signed and executed, and except where the signing and execution thereof shall be delegated by the Board of Directors to some other officer or agent. The President shall do and perform such other duties as from time to time may be assigned to him by the Board of Directors.

Section 8. (as ADOPTED by the Directors on September 24, 1988)

Vice President. At the request of the President, or in his absence or disability, the Vice President, and if there be more than one Vice President, the Vice President designated by the Board of Directors, or in the absence of such designation, the Vice President designated by the President, shall perform all duties of the President, and when so acting shall have all the powers of and be subject to all the restrictions upon the President. The Vice President shall perform such other duties and have such authority as from time to time may be assigned by the Board of Directors.

Section 9. (as ADOPTED by the Directors on September 24, 1988)

Secretary. The Secretary shall keep the minutes of all meetings and actions of the Board of Directors and of the members and shall see that all notices are duly given in accordance with the provisions of these By-Laws or as required by law. He shall be custodian of the records, books, reports, statements and other documents of the Corporation and of the seal of the Corporation, and see that the seal is affixed to all documents requiring such seal. He shall keep at the Corporation’s registered office or its principal office in the State of North Carolina a record of the names and addresses of all members entitled to vote. In general, he shall perform all duties and possess all authority incident to the office of Secretary and shall perform such duties and have such other authority as from time to time may be assigned to him by the Board of Directors.

Section 10. (as ADOPTED by the Directors on September 24, 1988)

Treasurer. The Treasurer shall have supervision over the funds, securities, receipts and disbursements of the Corporation. He shall keep full and accurate accounts of the finances of the Corporation in books especially provided for that purpose, and he shall cause a true statement of its assets and liabilities, as of the close of each fiscal year, and of the result of its operations for such fiscal year, all in reasonable detail, to be made and filed at the registered or principal office of the Corporation within four (4) months after the end of such fiscal year. The statement so filed shall be kept available for inspection by any member for a period of ten (10) years and the Treasurer shall mail or otherwise deliver a copy of the latest such statement to any member upon his written request for the same. He shall in general perform all duties and shall have all authority incident to the office of Treasurer and shall perform such other duties and have such other authority as from time to time may be assigned or granted to him by the Board of Directors. He may be required to give a bond for the faithful performance of his duties in such form and amount as the Board of Directors may determine.

Section 11. (as ADOPTED by the Directors on September 24, 1988)

Duties of Officers May Be Delegated. In case of the absence of any officer of the Corporation, or for any other reason that the Board may deem sufficient, the Board may delegate the powers or duties of such officer to any other officer or to any director for the time being, provided a majority of the entire Board of Directors concurs therein.

Section 12. (as AMENDED by the Directors on April 15, 2000)

Compensation of Officers. No officer of the Corporation shall be prevented from receiving a salary as such officer or from voting thereon by reason of the fact that he is also a director of the Corporation. The salaries of the officers of the Corporation, including such officers as may be directors of the Corporation, shall be fixed from time to time by the Board of Directors, except that the Board of Directors may delegate to any officer who has been given power to appoint subordinate officers or agents, as provided in Section 3 of this Article V, the authority to fix the salaries or other compensation of any such officer or agents appointed by him. An officer may be reimbursed for expenses in connection with official duties as an officer.

ARTICLE VI

Contracts. Loans. Deposits. Checks. Draft. Etc.

Section 1. (as ADOPTED by the Directors on September 24, 1988)

Contracts. Except as otherwise provided in these By-Laws, the Board of Directors may authorize any officer or officers, agent or agents to enter into any contract or to execute or deliver any instrument on behalf of the Corporation, and such authority may be general or confined to specific instances.

Section 2. (as ADOPTED by the Directors on September 24, 1988)

Loans. No loans shall be contracted on behalf of the Corporation and no evidence of indebtedness shall be issued in its name, unless and except as authorized by the Board of Directors. Any officer or agent of the Corporation thereunto so authorized may effect loans or advances for the Corporation and for such loans and advances may make, execute and deliver promissory notes, bonds or other evidences of indebtedness of the Corporation. Any such officer or agent, when thereunto so authorized, may mortgage, pledge or transfer as security for the payment of any and all loans, evidences, indebtedness and liabilities of the Corporation any real property and stocks, bonds, other securities and other personal property at any time held by the Corporation, and to that end may endorse, assign and deliver the same, and do every act and thing necessary or proper in connection therewith. Such authority may be general or confined to specific instances.

Section 3 (as ADOPTED by the Directors on September 24, 1988)

Deposits. All funds of the Corporation shall be deposited from time to time to the credit of the Corporation in such banks or trust companies or with such bankers or other depositories as the Board of Directors may select, or as may be selected by any officer or officers, agent or agents of the Corporation to whom such power may from time to time be given by the Board of Directors.

Section 4. (as ADOPTED by the Directors on September 24, 1988)

Checks. Drafts. Etc.. All notes, drafts, acceptances, checks, and endorsements or other evidences of indebtedness shall be signed by the President or a Vice President and by the Secretary or Treasurer, or in such other manner as the Board of Directors from time to time may determine. Endorsements for deposit to the credit of the Corporation in any of its duly authorized depositories will be made by the President or Treasurer or by any officer or agent who may be designated by resolution of the Board of Directors in such manner as such resolution may provide

Section 5. (as ADOPTED by the Directors on September 24, 1988

Loans to Directors and Officers. No loan shall be made by the Corporation to any of its directors or officers. The directors who vote or assent to the making of such loan shall be jointly and severally liable to the Corporation for the amount of such loan until the repayment thereof.

ARTICLE VII

Membership in the Corporation

Section 1. (as AMENDED by the Directors on July 25, 1992)

Membership. Every person who is an owner, by deed or contract, of a one/four hundred sixtieth (1/460th) undivided interest in the Association property, which interest is subject to the assessments of the Association, shall be a member of the Association. For the purpose of these By-Laws, owners shall be defined as any person, firm, corporation or other entity holding said undivided interest by deed or contract.

Section 2. (as ADOPTED by the Directors on September 24, 1988)

Voting Members. The voting members of the Corporation shall consist of all owners as defined above, whether one or more persons or entities, whether entirely or jointly or in common with others, owning, by deed on contract, a one/four hundred sixtieth (1/460th) undivided interest in the Corporation property together with rights appurtenant thereto, but not including any mortgagee or subsequent holder of a mortgage unless and until such mortgagee or holder has acquired pursuant to foreclosure or any proceeding or conveyance in lieu of foreclosure. Said owners shall have full rights to receive notice of, appear, participate in and be heard at all membership meetings and shall otherwise possess all rights and obligations afforded voting members.

Section 3. (as AMENDED by the Membership on November 4, 2000)

Terminating Membership. A members’s membership in the corporation is automatically terminated upon his death or upon the title and/or interest in and to his unit/week being transferred out of him in any manner, whether by voluntary conveyance, a foreclosure for taxes due any governmental authority or foreclosure of a mort- gage or deed of trust, or by execution against the real property to satisfy any lien or judgment. Whenever payments of a member’s annual maintenance fees shall be in arrears nine days after the current year occupancy date, the Board of Directors shall declare the membership abandoned and proceed with arrangements for public sale of that unit/week under the appropriate North Carolina statutes. The proceeds of such sale shall be allocated: 1st to the costs of the sale; 2nd to annual fees, collection fees, and interest due the Corporation; and 3rd to the former member. If the whereabouts of the former member is unknown, any residue shall be placed in escrow in the contingency fund described in Article VIII, Section 6, but may be reclaimed by the former member within ten years of the date of the sale. Any assets of the Corporation remaining after the satisfaction of all liabilities of the Corporation shall be divided pro rata among those members of the Corporation in the same percentages as the percentage of each member’s undivided interest in the Association property.

Section 4 (as AMENDED by the Directors on April 15, 2000)

Transfer of Membership. Each membership in the Corporation shall be appurtenant to the ownership of a unit/week in OCEAN VILLAS and no membership shall be transferred or assigned except upon the transfer of the record title to the unit/week itself.

Section 5. (as AMENDED by the Directors on April 15, 2000)

Suspension of Membership. The Board of Directors shall have the authority to suspend a membership, including the right to vote on any matter requiring a membership vote, if that member is in default in excess of $25 in the payment of the Assessment for Common Expenses levied by the Corporation, and said suspension shall remain in effect until such assessment has been paid. The Board of Directors further shall have the authority to suspend a membership, after due notice and hearing, for any violation of any rule or regulation established by the Declaration of OCEAN VILLAS, these By-Laws or by the Board of Directors governing the use of the Common Areas and Facilities, and said suspension shall remain in effect until said violation has been corrected, terminated or satisfied.

ARTICLE VIII

Administration of the Corporation

Section 1. (as AMENDED by the Directors on July 25, 1992)

Management. The management of the Corporation shall be the responsibility of the Board of Directors pursuant to the general powers vested in said Board in Section 1 of Article III above. The Board of Directors shall be responsible for contracting with various individuals, firms and corporations, whether one or more, for the maintenance and operation of all the Common Elements of the Association property, said contract not to exceed a term of three (3) years. The Board of Directors shall have the authority to revise, alter or terminate all contracts and agreements, or dismiss any personnel, wherein the service to be performed or undesirable, or is not of the caliber of that contracted for. The Board of Directors shall direct the Treasurer to pay all routine maintenance costs anticipated and set out in the annual operating budget and also to pay for all services contracted for by the Board of Directors pursuant to the terms of any and all such contracts. All other expenditures shall be made only after the written consent has been obtained from a majority of the Board of Directors then in office. The Treasurer shall file such written consents with the books of the Corporation.

Section 2. (as AMENDED by the Directors of June 28, 2000)

Common Assessments. All unit/week owners shall pay their share of the Common Assessments according to the Declaration as determined by the budget which shall be adopted at each annual meeting of the members, or subsequently amended by any special meeting of the members, by the 31st day of January of the assessment year or be subject to a $15 late payment collection fee and interest at a rate of 1.5% per month thereafter, unless said late payment fee and interest are waived by the Board of Directors. When a unit/week owner, for reasons of hardship acceptable to 80% of the Board membership, is unable to pay maintenance fees due for a previous year or years, the Board may waive prior year fees conditional upon the unit/week owner’s payment of current year fees within ninety days of the Board’s granting of a waiver. The Board of Directors shall, prior to the annual meeting of the members, prepare and adopt a budget for the ensuing year showing anticipated receipts and disbursements for said year to be recommended to the membership for its adoption at its annual meeting. A copy of the proposed budget indicating each unit/week owner’s proposed Assessment shall be sent to each unit/week owner with notice of the annual meeting.

The budget shall contain a provision for a reserve fund sufficient to meet the anticipated replacement of personal property, fixtures and equipment that are Common Elements that will be re- placed due to ordinary wear and tear. There shall be adopted a schedule of depreciation for such property in accordance with good and acceptable accounting practices, and the reserve fund shall be maintained in an amount equal to the accumulated depreciation in accordance with this schedule.

Section 3. (as ADOPTED by the Directors on September 24, 1988)

Administrative Regulations. The Board of Directors shall have the power and authority to adopt and amend administrative rules and regulations governing the details of the operation and use of the Common Areas and Facilities and governing the personal conduct of the members and their guests or lessors thereon, and such rules and regulations shall remain in force and effect until rescinded or amended by the Board of Directors, or until repealed or altered my the members as hereinafter provided.

Section 4 (as AMENDED by the Directors on July 25, 1992)

Receipts and Expenditures. The Board of Directors shall keep detailed, accurate records in chronological order of the receipts and expenditures affecting the Common Areas and Facilities, specifying and identifying the maintenance and repair expenses of the Common Areas and Facilities and any other expenses incurred. Both said records and the vouchers supporting the entries thereupon shall be available for examination by all the unit/week owners, their duly authorized agents or attorneys, at convenient hours on working days that shall be set and announced for general knowledge. All books and records shall be kept in accordance with good and accepted accounting practices.

An Audit Committee of 3-5 Association members, a majority of whom shall not be current Board members, shall be appointed by the President, with the approval of the Board, to audit during February or March of each year all Association financial records for the preceding year. The Board may authorize use of unoccupied units by Audit Committee members and provide for reimbursement of travel and meal costs, as appropriate.

Section 5. (as AMENDED by the Directors on April 15, 2000)

Assessment Statements. The Board of Directors upon request of a grantee of a unit/week, shall furnish said grantee a statement of the unpaid assessments against said grantee’s grantor, and such grantee shall not be liable for, nor shall the unit/week conveyed to said grantee be subject to a lien for, any unpaid assessments in excess of the amount therein set forth.

Section 6. (as ADOPTED by the Directors on September 24, 1988)

Contingency Fund. Commencing in 1990, every budget adopted must provide for the creation or continuation of a contingency fund to be used in the event of any casualty loss to any Common Element or Facility. To establish or continue the contingency fund, the periodic payments which each member would otherwise be required to pay, as determined by the budget without reference to the contingency fund, shall be increased by a least five percent (5%) .The payments are herein provided for the contingency fund shall be effective at all times unless otherwise approved by the members in the adoption of the budget.

The contingency fund so collected shall be maintained in a separate account and may be used only to replace or repair Common Elements or Facilities which are lost or destroyed by fire, storm, theft, or other casualty not adequately covered by insurance. The term “other casualty” shall be deemed to include any event due to some sudden, unexpected or unusual cause, but in no event shall the contingency fund be used for the payment of that portion of any loss or damage due to ordinary wear and tear.

Section 7. (as ADOPTED by the Members on November 9, 1991

Reserve for Delinquent Accounts. The Board may include in its annual budget recommendation, for allocation to a Reserve for Delinquent Accounts, an amount not-to-exceed 6% of the estimated needs for operations and additions to other reserve accounts. un- paid annual maintenance fees as of December 31 shall be charged to this account. Subsequent late annual maintenance fee collections shall be credited to this account. The account balance (plus or minus} at the time of annual budget preparations shall be the prime factor in the Board’s determination of the amount it will recommend in the budget for the forthcoming year.

Section 8. (as ADOPTED by the Board of Directors on June 5, 1999)

Ad Hoc Committees. The President may from time to time appoint Ad Hoc Committees of Association Members, including always at least one current Board Member on each such committee, subject to approval of a majority of the Board of Directors. Each such committee shall be appointed for a specific purpose and shall report its findings to the Board within a designated time period.

ARTICLE IX

General Provisions

Section 1. (as ADOPTED by the Directors on September 24, 1988)

Corporate Seal. The corporate seal shall be in such form as shall be approved from time to time by the Board of Directors.

Section 2. (as ADOPTED by the Directors on September 24, 1988)

Fiscal Year. The fiscal year of the Corporation shall be established by resolution of the Board of Directors.

Section 3. (as ADOPTED by the Directors on September 24, 1988)

Dividends. No dividend shall be paid and no part of the income shall be distributed to members, directors, or officers.

Section 4. (as ADOPTED by the Directors on September 24, 1988)

Stock. The Corporation shall not have nor issue stock.

Section 5. (as ADOPTED by the Directors on September 24, 1988)

Waiver of Notice. Whenever any notice is required to be given to any member or director under the provisions of the North Carolina Non-Profit Corporation Act, or under the provisions of the Charter or By-Laws of this Corporation, a waiver thereof in writing signed by the person entitled to such notice, whether before or

after the time stated therein, shall be equivalent to the giving of such notice.

Section 6 (as ADOPTED by the Directors on September 24, 1988)

Inspection of Books and Records. Any member, his agent or attorney, has the right to inspect all the books and records of the Corporation for any purpose at any reasonable time.

Section 7. (as AMENDED by the Directors on September 24, 2006)

Amendments. Except as otherwise herein provided, these By-Laws may be amended or repealed and new By-Laws may be adopted by the affirmative vote of those persons representing not less than sixty percent (60%) of those present in person or by proxy at a regular or special meeting of the members; or by not less than four/fifths (4/5) of the members of the Board of Directors then in office. All members of the Corporation shall immediately be bound by any amendment enacted as herein specified. Notice of proposed amendments shall be provided in writing prior to the meeting at which they are considered. By-law amendments to be considered by the board shall be provided to all board members at least three days before the meeting at which they are considered. By-law amendments to be considered by the membership shall be provided to all members prior to or simultaneous with the mailing of proxy forms for the meeting at which they are to be considered.

Section 8. (as AMENDED by the Membership on November 5, 1994)

Definitions. The definitions of terms used in the North Carolina Non-Profit Corporation Act and the Declaration of Unit Ownership of OCEAN VILLAS Homeowners Association shall be applied where such terms are used in these By-Laws.

DECLARATION OF COVENANTS AND RESTRICTIONS

Whereas, First Flight Builders, Inc. trading as Ocean Villas, is the fee simple owner of that certain tract or parcel of land with improvements thereon located in the Town of Nags

Head, Nags Head Township, Dare County, North Carolina and more particularly described in the following deeds: (1) that certain deed dated the 31st day of March, 1983, by Sea Foam Corporation to First Flight Builders, Inc. and recorded in Book 341, Page 1039, Dare County Registry; and that certain deed dated August 26, 1983 by Surf Beach Club, Inc. to First Flight Builders, Inc. and recorded in Book 350, Page 128, Dare County Registry; and

Whereas, said tract or parcel of land is shown on that certain map or plat entitled “Physical Survey of Lots 17, 16, 15 and the Southern 20’ of Lot 14, Block 5, Whalebone Beach for First Flight Builders” dated April 14, 1983 by George W. Midgette, Jr., Land Surveyor, and recorded in Plat Cabinet B, Slide 218, in the Office of the Register of Deeds of Dare County, North Carolina, and has constructed thereon nine (9 ) Dwelling Units (hereinafter defined), together with the Common Areas (hereinafter defined) for the use and benefit of the Owners

(hereinafter) defined and their guests; and

Whereas, First Flight Builders, Inc. desires to provide for the preservation of the values and amenities in the Development (hereinafter defined) and for the maintenance of said Common Areas and, to this end, desires to subject the real property described herein to the covenants, restrictions, easements, charges and liens hereinafter set forth (hereinafter

The “Declaration” , each and all of which are for the benefit of the said tract or parcel of land and each Owner; and

Whereas , First Flight Builders, Inc. has deemed it desirable, for the efficient preservation of the values and amenities in the Development, that there be an entity to which will be delegated and assigned the powers of maintaining, managing and administering the Development, administering and enforcing the covenants and restrictions, and levying, collecting and disbursing the assessments and charges hereinafter permitted and described; and

Whereas, there has been incorporated under the laws of the State of North Carolina, as a nonprofit organization, the Ocean Villas Homeowners Association, Inc. for the purpose of exercising aforesaid functions;

Now, therefor, First Flight Builders, Inc. declares that the real property described herein and shown on that certain plat entitled “Physical Survey of Lots 17, 16, 15 and the Southern 20’ of Lot 14, Block 5, Whalebone Beech for First Flight Builders” dated April 14, 1983 by George W. Midgette, Jr., Land Surveyor, and recorded in Plat Cabinet B, Slide 218, Dare County Registry, is and shall be held, transferred, sold, conveyed and occupied subject to the covenants, restrictions, easements, charges and liens (sometimes also referred to as “covenants and restrictions”) hereinafter set forth.

Article I

Definitions

The following words when used in this Declaration or any Supplemental Declaration (unless the context shall otherwise require) shall have the following meaning:

(a) The “Association” shall mean Ocean Villas Homeowners Association, Inc., its successors and assigns.

(b) The “Development” shall mean the real property described herein and shown on that certain plat entitled “Physical Survey of Lots 17, 16, 15 and the Southern 20’ of Lot 14, Block 5, Whalebone Beech for First Flight Builders” dated April 14, 1983 by George W. Midgette, Jr., Land Surveyor, and recorded in Plat Cabinet B, Slide 218, Dare County Registry, together with all existing or future buildings and improvements thereon.

(c) The “Common Areas” shall mean all those areas of land except Dwelling Units (herein defined), including the existing or future improvements thereon, owned by the Association and described herein and shown on that certain plat entitled “Physical Survey of Lots 17, 16, 15 and the Southern 20’ of Lot 14, Block 5, Whalebone Beech for First Flight Builders” dated April 14, 1983 by George W. Midgette, Jr., Land Surveyor, and recorded in Plat Cabinet B, Slide 218, Dare County Registry or any recreational amenities the right to the use of which may hereafter be conveyed to the Association for the benefit of its Members. Said areas are intended to be devoted to the common use and enjoyment of the Members of the Association only and are not dedicated for use by the general public.

(d) “Dwelling Unit” shall mean any one of nine (9) residential dwelling units located in the Development, but shall not include the Commons Areas.

(e) “Owner” shall mean the record owner, whether one or more persons or entities, whether entirely or jointly in common with others, owning a one four hundred sixtieth (1/460th) undivided interest in the Development together with rights appurtenant thereto, but shall not mean or refer to any mortgagee or subsequent holder of a mortgage, unless or until such mortgagee or holder had acquired title pursuant to foreclosure or any proceeding or conveyance in lieu of foreclosure.

(f) The “Developer” shall mean First Flight Builders, Inc., its successors and assigns.

(g) “Member” shall mean and refer to all those who Owners who are member of the Association as provided in Article II, Section I hereof.

(h) “Management Agreement” shall mean that certain Agreement attached to this Declaration between the Ocean Villas Homeowners Association, Inc., acting through its Board of Directors and First Flight Builders, Inc., trading as Ocean Villas, or any other management of the Development.

(i) “Management Firm” shall mean First Flight Builders, Inc., trading as Ocean Villas, in its function under the Management Agreement pursuant to which it will manage the Development, or its successors or assigns under said Agreement. In the event no Management Agreement is then in effect, all references to the Management Firm herein shall be deemed to refer instead to the Association, its being specifically intended that all authority and responsibility placed with the Management Firm hereby shall in such event rest with the Association, unless it shall have been otherwise delegated or assigned by the Association consistent with the provisions hereof.

(j) “Board of Directors” or “Board” shall mean the Board of Directors of the Ocean Villas Homeowners Association, Inc., its successors and assigns.

(k) “Occupant” shall mean any person or persons in possession of a Dwelling Unit or any part thereof.

(l) “Person” shall mean and include individuals, partnerships, corporations and all other legal entities.

(m) “Time Share Ownership” shall mean the ownership of an undivided interest in fee simple in the Development together with the right to the exclusive use of a Dwelling Unit during one or more Time Share Weeks (hereinafter defined).

(n) “Time Share Week” shall mean the seven-day period designated by a number as hereinafter provided appurtenant to each individual one four hundred sixtieth (1/460th) ownership interest in fee simple in the Development. Unit Week One shall be the seven-day period commencing at 12:00 o’clock noon on the first Saturday of each year. Unit Week Two shall be the seven-day period next succeeding, with each following Unit Week to and including Unit Week 51, determined in alike manner. Unit Week 52 shall be the seven-day period following Unit Week 51, plus any days remaining prior to the commencement of the following Unit Week One. Pursuant to the Occupancy Agreement set forth hereinafter, the person owning an undivided one four hundred sixtieth (1/460th) interest in the Development will be entitled to use, occupation and possession of a specified Dwelling Unit during the Time Share Week purchased by said person. The Time Share Week shall be inalienable from the one four hundred sixtieth (1/460th) undivided interest in the fee simple title to the Development to which it is appurtenant. “Time Share Week” and “Unit Week” are synonymous.

(o) “Occupancy Agreement”. Purchasers of any undivided interest in fee simple in the Development and a Time Share Week or Weeks in a particular Dwelling Unit appurtenant thereto are bound by this Occupancy Agreement. The Owner of each Unit Week shall be entitled to the exclusive use and occupancy of the said Dwelling Unit, and the personal property located therein, as well as the right to use the Common Areas in the Development to the exclusion of all other owners of said Dwelling Unit during that particular Unit Week purchased by said person. Said exclusive use and occupancy rights shall constitute an agreement among the Developer, the Association and all of said of said owners of undivided interest in the Development and a Time Share Week or Weeks in a Dwelling Unit appurtenant thereto, which said agreement shall be a covenant appurtenant to said Dwelling Unit which shall run with the title thereto and be enforceable against all parties acquiring any interest therein, and it shall be deemed absolutely not subject to challenge that all of said parties agree to the provisions thereof by the acquisition of said interest. Each Owner of an undivided interest in the Development and a Time Share Week or Weeks in a Dwelling Unit appurtenant thereto will relinquish occupancy for the first two (2) hours and the last two (2) hours of each unit week to allow four (4) hours (from 10:00 o’clock a.m. to 2:00 o’clock p.m. on each Saturday) for cleaning, repairs, maintenance and other services to the Dwelling Unit involved. Further, each person each person owning a Time Share Week shall not be permitted to remove any of the furnishings, appliances, and other items of personal property located in the said Dwelling Unit from the Dwelling Unit at any time. This Occupancy Agreement shall be for a term commencing upon the recording of this Declaration, and terminating upon December 31, 2003, unless the term is or has been renewed as hereinafter provided.

(p) “Personal Property”. All of the personal property owned by the Developer and originally installed (and the replacements therefor) within Dwelling Units shall be deemed a part of the Dwelling Unit for the purposes of ownership, use and possession.

(q) “Maintenance Weeks”. In each of the Dwelling Units only fifty-one (51) Units Weeks will be conveyed. The remaining one (1) week in each calendar year (plus any additional days) shall be set aside for maintenance and general repair. During these Maintenance Weeks, only First Flight Builders, Inc., its successors and assigns, shall be entitles to possession, occupation and use of the Dwelling Unit. However, at such time as four hundred sixty four hundred sixtieths (460/460th) undivided interests in the Development have been conveyed, First Flight Builders, Inc. shall be entitled to possession and use of the Dwelling Units during Maintenance Weeks only with the express permission of the Association whether pursuant to the Management Agreement or otherwise.

Article II

Membership and Voting Rights in the Association

Section 1. Membership. Every person who is an owner of a1/460th undivided interest in the Development, which interest is subject to this Declaration’s assessment (or the assessment of any supplement thereto) by the Association shall be a member of the Association.

Section 2. Voting Rights. The Association shall have two classes of voting membership.

Class A. Class A Members shall be Owners except for the Developer. Each Class A Member shall be entitled to on vote in the Association for each one four hundred sixtieth (1/460th) undivided interest that he owns in the Development.

Class B. The Class B Member shall be the Developer, its successors and assigns. The Class B Member shall be entitled to three votes sin the Association for each unsold 1/460th undivided interest in the Development , provided upon the happening of either of the following events, whichever first occurs, the Class B Membership in the Association shall cease and be converted to Class A Membership: (a) when the total votes outstanding in the Class A Membership in the Association equals 330, or (b) on December 31, 1990.

When Owner takes title to a 1/460th undivided interest in the Development from the Developer, the purchaser becomes a Class A Member of the Association and the membership of the Developer with respect to the Owner’s 1/460th undivided interest in the Development shall cease.

Article III

Property Rights and Common Areas

Section 1. Members Rights. Subject to the provisions of Section 3 of this Article III , every member of the Association shall have a right and easement of enjoyment in and to the Common Areas and such easement shall be appurtenant to and shall pass with the title to every 1/460th undivided interest in the Development.

Section 2. Common Areas. The Developer herby covenants for itself, its successors and assigns, that after the sale and conveyance of four hundred fifty-nine four hundred sixtieths (459/460ths) undivided interests in the Development, it will convey to the Association all of its rights, title and interest in and to the Development including the Common Areas, free and clear of all encumbrances and liens except covenants, restrictions, rights, easements, encumbrances and liens created by or pursuant to this Declaration, easements of record, land use regulations, zoning and building ordinances and any other reservations of record.

Section 3. Extent of Members’ Rights. The rights and easement granted Members hereby shall be subject to the following:

(a) The Rights of the Association in accordance with the Articles of Incorporation and By-Laws, to borrow money for the purpose of improving the Development or Common Areas and in aid thereof, to mortgage or otherwise secure such borrowings by creating a lien or other security interest in all or any portion of the said Development and/or the Common Areas, and the and the right of any mortgagee of said property or others holding s security interest created for the purpose aforesaid shall be superior to the rights of the Owners hereunder.

(b) The right of the Association to take such steps as are reasonable necessary or desirable to protect the Development of Common Areas against foreclosure.

(c ) The right of the Association to suspend the enjoyment rights of any Member to the Development and/or Common Areas for any period during which any assessment remains unpaid or for any infraction of any uniform and reasonable rules and regulations duly promulgated by the Association.

(d) The right of the Association to charge reasonable admission and other fees for the use of the Common Areas or any portion thereof.

(e) The right of the Association to dedicate or transfer all or any part of the Development to any public agency, authority or utility for such purposes and subject to such conditions as may be agreed to by the Members, provided that no such dedication, transfer or determination as to the purposes or as to the conditions thereof shall be effective unless an instrument signed by Members entitled to cast two-thirds of the votes of the Class A Members and two-thirds of the votes of the Class B Members, if any, has been recorded, agreeing to such dedication, transfer, purpose or condition, and unless written notice of the action is sent to every Member not less than 10 nor more than 50 days in advance of any such action taken.

(f) The right of the Developer, unilaterally and/or in conjunction with the Association, to grant and reserve easements and rights of way through, under, over, and across the Development or any portion thereof, for the installation, maintenance and inspection of the lines and appurtenances for public and private water, sewer, drainage, fuel oil, cablevision and any other utilities and services, and the right of the Developer to grant and reserve easements and rights of way through, over, upon or across the Development for the construction of improvements in the Development and for the operation and maintenance of the Development.

(g)The right of the Developer to unilaterally grant and reserve the right and easement of enjoyment in common with other Owners in and to the Commons Areas to every other Owner of a 1/460th undivided interest in the Development, which right and easement shall be appurtenant to and shall pass with the title to every 1/460th undivided interest in the Development.

(h)The right of the Developer to unilaterally grant and reserve the exclusive right and easement of enjoyment of a Time Share Week or Weeks in and to a particular Dwelling Unit to every Owner of a 1/460th undivided interest in the Development, which right and easement shall be appurtenant to and shall pass with the title to every 1/460th undivided interest in the Development.

(i)The right of the Developer to unilaterally grant, reserve and assign the right, easement, or license to Owners to use portions of the Commons Areas and Dwelling Units for parking, storage and similar purposes.

Section 4. Restraint Upon Partition. During the initial term of the Declaration or any extension thereof the undivided interest of each Owner in the Development shall remain undivided and no Owner and so successor, assignee, creditor, judgment creditor, lienor of the Owner or any person claiming by, under or through the Owner, shall bring or have any right to bring any judicial action or other proceeding for partition or division.

Article IV.

Completion, Maintenance and Operation of Development and Covenants for assessments Therefor

Section 1. Completion of the Development by the Developer.

(a) Prior to conveyance of the first undivided interest in the Development, the Developer shall complete all improvements.

(b) The Developer’s obligation to complete the construction of said improvements, at the Developer’s sole cost and expense, shall survive the conveyance of all the Developer’s right, title and interest in the Development to the Association.

Section 2. Operation and Maintenance of the Development. Commencing on the date of sale of the first undivided interest of the Development, the Association shall operate and maintain the Development as its sole expense.

Section 3. Assessments.

(a) Commencing on the date of the sale of the first undivided interest in the Development and thereafter, the Developer, for each undivided interest in the Development owned by the Developer, hereby covenants, and each subsequent Owner of any such undivided interest in the Development by acceptance of a deed or other conveyance, shall be deemed to covenant and agree to pay to the Association: (1) periodic maintenance assessments, and (2) special assessments for capital improvements, such assessments to be fixed, established and collected from time to time as hereinafter provided.

(b) The assessments levied by the Association shall be used exclusively for the purpose of promoting the recreation, health, safety and welfare of the residents in the Development in connection with their use and enjoyment of the Development, and Commons Areas, including, but not limited to, the payment of taxes, insurance premiums and debt service on mortgages, if any, any repair, replacement and addition to the Development, the cost of labor, equipment, materials, management and supervision of the Development, and providing water, sewerage, garbage collection and other services to the Development or Common Areas, or for creating reserves for such purposes, all of which obligations the Association hereby assumes as of the date of the recordation of this Declaration. The Developer shall have no obligation to operate and maintain the Common Areas on and after the sale of the first undivided interest in the Development.

(c ) With the exception of First Flight Builder, Inc., its successors and assigns, with respect to Dwelling Units and Unit Weeks remaining unsold, each Owner shall pay in addition to assessment for maintenance and improvements to the Developments, a prorata share (said prorata share to be the amount determined by the Management Firm in its discretion to be the prorata share attributable to said Owner’s Unit Week or Weeks) of all other costs incurred by the Management Firm and Association in the maintenance, upkeep and operation of all Dwelling Units in the Development, including but not limited to, the funds necessary for repair and replacement of furniture, fixtures, appliances, carpeting, utensils, linens and all other Personal Property appurtenant to said Dwelling Unit, and reserve necessary therefor; casualty, liability, hazard and contents insurance; real estate, personal property and other taxes against the Development or said Dwelling Units or their contents; maid service; and any other expenses incurred in the normal operation and maintenance of the Development or all such Dwelling Units. First Flight Builders, Inc. shall be responsible for actual operating expenses in excess of the collections of said assessments to the extent that said excess would be otherwise payable for Unit Weeks then remaining unsold.

(d) The Owner’s said prorata share of said costs shall be billed, enforced and collected in the same manner as other assessments as provided herein.

(e) Each Owner in a Dwelling Unit shall pay his prorata share of the cost of maintaining, repairing and operating the Development as hereinabove provided, but shall make no alterations, repairs or replacements within any Dwelling Unit or the said Development without the prior written consent of the Management Firm, as well as all other Owners of Unit Weeks in said Dwelling Unit. All expense of repairs or replacement occasioned by the specific use or abuse by any Owner, or any person occupying a Dwelling Unit with his consent, shall be borne in full by said Owner. The Management Firm shall have the authority to determine the interior color scheme, décor and furnishing of all Dwelling Units, as well as the proper time for redecorating each said Dwelling Unit and replacing furnishings or other property therein, and to judge normal wear and tear, and to determine the amount to be assessed against any Owner causing or allowing damage or abuse to the Dwelling Unit, its furnishings, the Common Areas or all or any other portion of the Development.

(f) The Management Firm, the Association, First Flight Builder, Inc., and their respective agents, employees and contractors, shall have the right to enter any Dwelling Unit or any other portion of the Development for the purpose of inspecting, maintenance, repairs, and replacements. In the event any Owner fails to meet his maintenance obligations, the Association or Management Firm shall be entitled to take legal action against said defaulting Owner, and to levy a special assessment against the defaulting Owner to make said repairs, maintenance and replacements, for which, as well as costs reasonably incurred in connection therewith and reasonable attorney’s fees, a lien shall exist against said Owner’s interest in his Dwelling Unit as provided in this Declaration for other assessments.

(g) In the event of the invalidation of the assessment scheme contained in this Article IV by judgment or court order, each Owner shall be assessed the sum of $200.00 per Unit Week per year.

Section 4. Amount and Payment of Periodic Maintenance Assessments. The Association shall from time to time fix the amount of the periodic maintenance assessment at a sum sufficient to pay the anticipated costs of maintaining and Operating the Development and Providing water, sewerage, garbage collection and other services as contemplated by this Article IV and any operating deficits previously sustained. The proportionate share of the aggregate assessments of the Association chargeable to each undivided interest shall be the said aggregate periodic maintenance assessment divided by the number of undivided interests owned by Class A and Class B Members. An Owner’s obligation shall be payable as directed by the Association. The periodic maintenance assessment due the Association from each Owner for the year 1983 shall be $150.00.

Section 5. Special Assessments for Capital Improvements. In addition to the periodic maintenance assessments authorized by Section 4 of this Article IV, the Association may levy special assessments (which shall be fixed in accordance with the proportions set forth in this Section 4 of this Article IV) for all undivided interests for the purpose of defraying , in whole or in part, the cost of any construction, reconstruction or replacement of a capital improvement in the Development of Common Areas, including the necessary fixtures and personal property related thereto, provided that any such special assessments shall have the assent of two-thirds of the votes of each class of Members who are voting in person or by proxy at a meeting duly called for this purpose, written notice of shall be sent to all Members not less than 10 days not more than 50 days in advance of the meeting, setting forth the purpose of the meeting. The due date of any specified assessments shall be fixed in the resolution authorizing such assessments.

Section 6. Duties of the Board of Directors. In the event in any change in the periodic maintenance assessments as set forth above, the Board of Directors of the Association shall fix the date of commencement and the amount of the assessment against each undivided interest or such assessment period at least 30 days in advance of such date or period and shall, at that time, prepare a roster of the Owners of the undivided interest and assessments applicable thereto, which shall be maintained by the Association and shall be open to inspection by any Owner.

Written notice of the assessments shall thereupon be sent to every Owner subject thereto.

The Association or Management Firm shall, upon demand at any time, furnish to any Owner liable for said assessment, a certificate in writing, signed by an officer or agent of the Association or Management Firm, setting forth whether said assessment has been paid. Such certificate shall be conclusive evidence of payment of any assessment therein stated to have been made.

Section 7. Nonpayment of Assessment; The Personal Obligation of the Owner; The Lien and Remedies of the Association. Every assessment, together with each interest thereon and cost of collection thereof as are hereinafter provided, from the time made until paid, shall constitute and continue as a lien on each undivided interest, and shall also be a personal obligation of the Owner of the undivided interest on the date when such assessment is due and payable, but the personal obligation for assessments made but unpaid shall not thereafter pass to the successors in title of the Owner unless responsibility therefor shall be assumed by them in writing. If any such assessment is not paid in 30 days after the date upon which it is due and payable, such assessment shall bear interest from the date on which it is due and payable at a rate of 18% per annum or the highest contract interest rate permitted by law whichever is greater.

The Association may bring a legal action against any Owner personally obligated to pat any assessment and/or may enforce the lien (in the same manner as the enforcement of a laborer’s and materialmen’s lien under then existing North Carolina law) against the undivided interest of the Owner in respect of which any assessment, or interest thereon, has not been paid. In that event a judgment shall include interest on the assessment as above-provided and a sum, to be fixed by the Court, to reimburse the Association for all costs, disbursements and expenses (including, without limitation, reasonable attorney’s fees) incurred by the Association in connection with said action.

Section 8. Subordination of the Lien to Mortgages. The lien of the assessments provided for herein shall be subordinate to the lien of any mortgage, deed of trust or other security interest now or hereafter placed upon any undivided interest. Any and all assessments which may become due and payable prior to a sale or transfer of the undivided interest pursuant to a decree of foreclosure, or by conveyance in lieu of foreclosure shall be paid by the purchaser, except where the purchaser is the holder of the obligation secured by any such mortgage, deed of trust or security interest.

Article V

Use of Property

Section 1. There shall be no obstruction of the Common Areas nor anything stored in the Common Areas without prior written consent of the Management Firm or the Association.

Section 2. No Owner, other than the Developer, shall plant or install any trees, bushes, shrubs or other plantings or authorize the same to be done, in any Common Areas, without the written approval of the Management Firm or the Association.

Section 3. (a) Perpetual easements in the Development for the installation and maintenance of sewer, water, gas, electricity, telephone, cablevision, drainage facilities, and other utility services, for the benefit of the Owners or any municipality having jurisdiction over the Development, or any municipal, public or private utility company ultimately operating such facilities, are reserved to the Developer, its successors and assigns, for the purpose of dedication to such persons or entities.

(b) Easements in general in and over each lot for the installation and maintenance of sewer, water, electric, cablevision, gas, telephone and other service facilities are reserved to the Developer, its successors and assigns.

Section 4. All Dwelling Units in the Development shall be used for single-family residential purposes only. No commercial activity of any kind shall be carried on in the Development except sales and promotional activities by the Developer.

Section 5. No advertising signs or posters shall be placed on a Dwelling Unit or the Common Areas except by the Developer.

Section 6. No animals, livestock or poultry of any kind, including household pets, shall be kept in any Dwelling Unit or in the Commons Areas.

Section 7. No detached toilets of privies may be erected of maintained.

Section 8. No vehicles may be parked on the Common Areas except in designated parking areas.

Section 9. All cars must have current license plates and inspection stickers to remain in the Development. No commercial vehicles may be parked in the Development without prior written permission from the Association. Towing will be enforced at the offending or responsible Owner’s expense, and the cost thereof shall be a lien against the undivided interest of the Owner in the Development and enforced in the same manner as assessments.

Section 10. No alcoholic beverages shall be permitted to be served or consumed in or around and Common Areas without written permission of the Management Firm or the Association.

Section 11. No peddling, soliciting or similar commercial activity (except sales and promotional activities by the Developer) is allowed in the Development without prior written permission of the Management Firm or the Association.

Section 12. Any improvements or alterations to any Dwelling Unit or the Common Areas must be approved in writing by the Management Firm or the Association prior to the commencement of construction.

Damage to or destruction of any one or all of the Dwelling Units and/or other improvements shall be promptly repaired and restored by the Management Firm or the Association using the proceeds of insurance for that purpose ad provided in this Declaration. All repairs and reconstructions where practical shall be made substantially in accordance with the plans and specifications used for the original structures with any such changes as may be necessary to conform to then existing applicable codes, ordinances and regulations.

Section 13. Each Owner shall have the exclusive right to occupy his Dwelling Unit, to use and enjoy Common Areas described in the Declaration, and the rights and easements appurtenant to his Dwelling Unit during each of the Unit Week (s) owned by said Owner, and to authorize others to do so, together with the non-exclusive right in common with all other Owners to have the Association or Management Firm maintain and repair the Dwelling Unit during Maintenance Weeks. No Owner shall occupy his Dwelling Unit, or exercise any of his rights by reason of his fee interest in the Dwelling Unit (including the use of any Common Areas) during any other Unit Week (s) unless expressly authorized by the Owner of said Unit Week (s). Each Owner shall keep his Dwelling Unit in good condition and repair during the Unit Week (s) he owns, vacate the Dwelling Unit at the expiration of his Unit Week (s), remove all personal belongings of the Owner therefrom, leave the Dwelling Unit and Personal Property therein in good and sanitary condition, and repair and otherwise comply with such reasonable check-out and other procedures and regulations promulgated by the Association and/or Management Firm.

Section 14. The right of occupancy and use of a Dwelling Unit and the Common Areas by an Owner shall be limited to the Unit Week (s) owned by said Owner. Should any Owner, or any person occupying his Dwelling Unit, occupy said Dwelling Unit and thereby infringe upon the use thereof by another Owner, the Owner involved shall pay the aggrieved Owner the sum of Three Hundred Dollars ($300.00) per day or any part thereof that such use or occupancy is infringed upon, and said aggrieved Owner , as well as the Management Firm and the Association , shall have a lien upon the offending Owner’s interest in the Dwelling Unit for payment thereof, plus reasonable attorney’s fees, as provided in the Declaration for assessments for periodic maintenance. Upon collection of said sum by the Association or the Management Firm, said funds shall thereupon be paid to the aggrieved Owner.

Section 15. Upon giving notice to the Owner, First Flight Builders, Inc., the Association of the Management Firm, or their respective agents or employees, shall have the right to enter any Dwelling Unit for inspection and cleaning thereof at all reasonable hours whenever necessary to make repairs and alterations to the Dwelling Unit. The Owner shall not make any alterations to the Dwelling Unit or Personal Property therein. The Owner shall at his sole expense keep the Dwelling Unit in as good order and repair as it is on the date of commencement of his Unit Week (s), reasonable wear and tear excepted.

Section 16. As used in this Declaration, the term “ ownership of a unit week” or any similar term, shall mean owner ship of one four hundred sixtieth (1/460th) undivided ownership interest in fee simple of a Dwelling Unit together with the right of use, possession and occupation of the Dwelling Unit for the week specified in the said Owner’s Agreement or deed.

Section 17. No Owner of a Unit Week may dispose of said Unit Week without disposing of his entire interest therein.

Section 18. In as much as it is intended that each Owner shall have the use of his Dwelling Unit during his Unit Week (s) during the term of the Occupancy Agreement and any renewal thereof, no person having any interest in the Dwelling Unit shall seek or obtain through any legal procedure, judicial partition of the Dwelling Units or sale of the Dwelling Units in lieu of partition any time prior to the expiration thereof, except that this provision shall not prohibit a judicial scale of a Unit Week in lieu of partition as between co-owners of said Unit Week.

Section 19. The Association or the Management Firm shall have the authority to prorate the ad valorem Owners, to collect said taxes and assessments and pay said taxes to the taxing authorities. A lien shall exist for the payment thereof by the respective Owners as provided in the Declaration for other assessments.

Section 20. The Association or Management Firm shall obtain casualty, liability and any other insurance with respect to the Development, all Dwelling Units and Common Areas in amounts considered by the Association or Management Firm to be adequate, the premiums for which shall constitute part of the Association of the Management Firm’s period maintenance assessments as provided in Article IV.

Article VI

General Provisions

Section 1. Duration and Amendment. The covenants and restrictions of this Declaration shall run with and bind the land, and shall insure to the benefit of and be enforceable by the Association, or any Owner, their respective heirs, successors and assigns, until December 31, 2003, unless otherwise expressly limited herein, after which time said covenants and restrictions shall automatically be extended for successive periods of ten (10) years unless an instrument singed by the Owners of 230/460ths of the undivided interests in the Development has been recorded, agreeing to change or terminate the said covenants and restrictions. Provided, however, that no such agreement to change shall be effective unless made and corrected two (2) years in advance of the effective date of such change and unless written notice of the proposed agreement is sent to every Owner at least ninety (90) days in advance of any action taken.

This Declaration may be amended at any time by an instrument signed by Members holding not less than two-thirds (2/3) of the votes of all classes of the membership. Any amendment must be recorded in the Office of the Register of Deeds of Dare County to be effective.

At any time prior to the expiration of the initial Occupancy Agreement term (as described hereinabove in the definition of “Unit Week”), or any then existing renewal of said term, as in hereinafter provided, the Owners shall have the option of renewing and extending said term for an additional period of twenty (20) years after the expiration of said then existing initial or renewal term, by a two-thirds (2/3rds) vote or consent in writing of the affected Owners.

Section 2. Notices. Any notice required or permitted to be sent by any Member or Owner under the provisions of this Declaration shall be deemed to have been properly sent when mailed via first class mail, postage prepaid, to the last known address of the person who appears as Member or Owner on the records of the Association or Management Firm at the time of such mailing.

Section 3. Enforcement. The Developer, Association, Management Firm, Member or any Owner, shall have the right to enforce these covenants and restrictions against any person or person violating or attempting to violate any covenants or restriction, to restrain violations, to require specific performance and/or recover damages; and against the land the enforce any lien created by the covenants (in the same manner as the enforcement of a laborer’s and materialmen’s lien under then existing North Carolina law); and failure by the Developer, Association, Management Firm, Member or any Owner to enforce and covenants or restrictions herein contained shall in event be deemed a waiver of the right to do so thereafter. The expense of enforcement (including reasonable attorney’s fees) shall be chargeable to the Owner violating these covenants and restrictions and the expense so incurred by the Association or Management Firm shall constitute a lien on such Owner’s undivided interest, collectible in the same manner as assessments hereunder.

Section 4. Dissolution of Association. In the event the Association is dissolved in accordance with the provisions of the Association’s Articles of Incorporation and the assets, both real and personal, of the Association are transferred or dedicated to a governmental authority having ad valorem taxing powers, the covenants and restrictions contained herein, other than those applying to assessments, shall remain in full force and effect. It shall be an obligation of the Association, prior to said dissolution, to establish an appropriate authority, corporation or other entity for enforcing the liens and restrictions contained herein.

In the event that such dedication to a governmental authority is effused acceptance, such assets shall be granted, conveyed and assigned to any non-profit corporation, association, trust or other organization to be devoted to purposes nearly as practicable the same as those to which they were required to be devoted by the Association. In such event the covenants and restrictions contained in the Declaration, including those applying to assessments, shall remain in full force and effect. No such disposition of the properties of the Association shall be effective to divest or diminish any right or title of any Member vested in him under this Declaration and deed applicable to his property unless made in accordance with the provisions of this Declaration shall control.

Section 6. Severability. Invalidation of any one of these covenants or restrictions by judgment or court order shall in no way effect the validity of any other provisions, which shall remain in full force and effect.

ARTICLES OF INCORPORATION

State of North Carolina Department of the Secretary of State

To all whom these presents shall come, Greeting: I, Thad Eure, Secretary of
State of North Carolina, do hereby certify the following and hereto attached (6 sheets)
to be a true copy of the Articles of Incorporation of Ocean Villas Homeowners Association,
Inc. and the probates thereon, the original of which was filed in this office on the 22nd
day of June 1983, after having been found to conform to law.

In Witness Whereof, I have hereunto set my hand and affixed my official seal.

Done in Office, at Raleigh, this 22nd day of June in the year of our Lord 1983.

Articles of Incorporation for

Ocean Villas Homeowners Association, Inc.

I, the undersigned, being a natural person of full age, do make and acknowledge
these Articles of Incorporation for the purpose of creating a nonprofit corporation
under the laws of the State of North Carolina, as contained in Chapter 55A of the General
Statutes of North Carolina, entitled “Nonprofit Corporation Act,” and the several
amendments thereto:

ARTICLE I

The name of the corporation is Ocean Villas Homeowners Association, Inc.

ARTICLE II

The period of duration of the corporation shall be perpetual.

ARTICLE III

The purposes for which this corporation is organized are:

(a) To acquire, construct, maintain, manage and operate common areas,
recreation facilities and other improvements in a residential development to be
developed by First Flight Developers, Inc. on land situated in the Town of Nags
Head, Nags Head Township, Dare County North Carolina;

(b) To enforce any and all covenants, restrictions and agreements applicable
to the common areas, lots and dwelling units in the development and particularly
any Declarations of Covenants and Restrictions or similar declaration which may
hereafter be made with respect to the development and which may hereafter be
recorded in the Dare County Registry;

(c) To make and perform any contracts and do any acts and things, and
exercise any powers suitable, convenient, proper or incidental for the
accomplishment of any objects enumerated herein;

(d) To have any and all powers, rights and privileges which a corporation
organized under the laws of North Carolina, as contained in Chapter 55A of the
General Statutes of North Carolina entitled “Nonprofit Corporation Act,” by law

may now or hereafter exercise.

ARTICLE IV

The corporation shall have members, as provided in the by-laws.

ARTICLE V

Except for the initial Board of Directors whose names are set forth in these
Articles of Incorporation, the Board of Directors shall be elected or appointed as
provided in the by-laws.

ARTICLE VI

The address of the initial registered office of the corporation is Southern
Shores Law Building, Juniper Trail, Southern Shores, Dare County, North Carolina,
27949; and the name of its initial registered agent at such address is Norman W. Shearin, Jr.

ARTICLE VII

The number of directors constituting the initial Board of Directors shall be three
(3); and the names and addresses of the persons who are to serve as directors until
the first meeting of the corporation or until their successors are elected and qualified are:

Name Address

Gerald J. Friedman 6057 River Crescent

Norfolk, VA 23505

Nancy Friedman 6057 River Crescent Norfolk, VA 23505

Peter Rowland Nags Head, NC 27959 ARTICLE VIII

The corporation shall have all the powers granted corporations under the laws
of the state of North Carolina. However, notwithstanding anything herein to the
contrary, the corporation shall exercise only such powers as are in furtherance of
the exempt purposes of the organizations set forth in the subsection of Section 501
( c ) of the Internal Revenue Code of 1954 under which the corporation chooses to
qualify for exemption, as the same now exists, or as it may be amended from time
to time.

ARTICLE IX

In the event of the dissolution of the Association, no member shall be entitled
to any distribution or division of its remaining property or its proceeds, and the
balance of all money and other property received by the Association from any
source, after the payment of all debts and obligations of the Association, shall be
used or distributed exclusively for the purposes within the intendment of Section
501 ( c )of the Internal Revenue Code as the same now exists or as it may be
amended from time to time.

ARTICLE X

The name and address of the incorporator is:

Name Address

Norman W. Shearin, Jr. Southern Shores Law Building 9 Juniper trail

Post Office Box

Kitty Hawk, NC 27949