ARTICLE V- THE ASSOCIATION

Section 1. Purposes and Powers. The Developer has incorporated under the laws of the State of Florida, as a not for profit corporation, The Hammock Beach Estates Home Owner's Association, Inc., true and complete copies of the Article of Incorporation and the By-Laws of which are annexed hereto and made a part hereof as Exhibits A and B, respectively. The purposes of the Association are to promote the health, safety and welfare of the members and to implement, administer, enforce and interpret the provisions of the Declaration. In furtherance thereof, the Association has the following powers:

A. To acquire the fee simple record title to (i) the "Recreation Facility" and all improvements thereon, which will be conveyed to it by the Developer, as hereinafter provided and (ii) any lots used exclusively for the installation of "Developer Improvements".

B. To hold, operate, manage, improve, replace, maintain and beautify the "Recreation Facility" and "Developer Improvements" without profit to itself, for the use, benefit and enjoyment of the Members of the Association.

C. To implement, administer, enforce and interpret the provision of this Declaration, the Articles of Incorporation and the By-Laws.

D. To establish, make, levy and collect annual operating and special assessments against each Member and against each Member's lot.

E. To make, establish and enforce reasonable rules and regulations governing the use and enjoyment of the "Recreation Facility"

F. To operate, manage and maintain "Developer Improvements" as provided by the Developer.

G.  Except as may otherwise be provided in this  Declaration,  the Articles of Incorporation or the By-laws, the corporation shall have all of the powers and privileges granted to corporations not for profit under the laws of the State of Florida.

Section 2.  Membership. The following shall be Members of the Association and no other person or entity shall be Member of the Association:

        Every person or entity (including the Developer so long as it is the record owner of a fee or undivided fee simple interest in any Lot) who is the record owner of a fee or undivided fee simple interest in any Lot (as this term is defined in the Declaration) which is subject by covenants of record to assessment by the Association shall automatically be a Member of the Association, provided that any such person or entity who holds such interest as a security for the performance of an obligation shall not be a Member, except if such person or entity acquires such interest pursuant to foreclosure or any proceeding in lieu of foreclosure. At such time as a person or entity is no longer the record owner of such interest, the membership in the Association of such person or entity shall automatically terminate. The interest of a Member in the funds, assets or real property of the Association cannot be conveyed, assigned, hypothecated or otherwise transferred except as an appurtenance to such Member's lot. No Member shall bring or have the right to bring any action for partition or division.

3.  Association Control During Development. Anything hereinabove to the contrary notwithstanding, until the completion of the Development Period, as defined below, no action of the membership shall be effective or binding without the consent of the Board of Directors of the Association. The Developer shall have the right to appoint all directors of the Association until record title to the 25th lot in The Hammock Beach Estates Neighborhood District shall have been transferred to an individual purchaser. After such transfer and until the expiration of the Development Period, the Association membership shall have the right to elect one of three directors of the Association, and the Developer sha1l have the right to appoint two of the directors of the Association. the Developer shall have the right to appoint the majority of the board members and the Association shall have the right to elect the remaining board members.  "The Development Period" shall be that period of time commencing with the record pi this Declaration in the Public Records of Flagler County, Florida, and ending with a date forty-five (45) days after the transfer of the fee simple title to the last lot  one hundred thirty third (133rd) lot.  At the end of the Development Period, the Association membership shall have the right to elect all board members, subject to the right of the Developer to appoint one member to the board so long as the Developer holds for sale in the ordinary course of business at least one lot.  Notwithstanding the above, the Developer retains the right to maintain a Model Home, Signage and Sales Office until such time as the last lot is sold, so long as the Signage and Sales Office are used exclusively for the marketing and sale of Lots in Hammock Beach Estates.