Oct 9 2004 San Felipe, Baja California, Mexico

OWNERS ASSOCIATION

VILLA DE  LAS PALMAS SUBDIVISION

STATUTES

CHAPTER I

ORGANIZATION

ARTICLE 1.-      The name of the Association shall be: Owners’ Association of the Villa de Las Palmas Subdivision, followed by the words “Civil Association” or the letters  A.C.  hereinafter called “the Association”.

ARTICLE 2.-      The location of the Association shall be the Municipality of Mexicali, B.C.

ARTICLE 3.-       The life of the Association will be indefinite beginning with the date of the Act to establish said Association.

ARTICLE 4.-       This Association is created to comply with Article 5 of the Permit to Subdivide the “Villa de las Palmas” subdivision in the Delegation and Port of San Felipe, Municipality of Mexicali, Baja California, dated November 26, 1984, and published in the Official Newspaper of the State, dated November 30, 1984, hereinafter called the Permit to Subdivide.

CHAPTER II

OBJECT OF THE ASSOCIATION

ARTICLE 5.-       The Owners’ Association of the Villa de las Palmas Subdivision is a non-profit civil association that must not involve itself in any problem of a political or religious nature. The object of  the Villa de las Palmas Owners’ Association is to group together the owners, legal title holders and holders of bank trusts of lots in the Villa de las Palmas Subdivision, ( hereinafter called Associates), for a better mutual understanding and to protect their common interests. In order to achieve these purposes, the Association will have the following goals or aims:

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       a)      Cooperate and help the Authorities in complying with Federal, State and

                Municipal laws that are in force.

• Coordinate actions destined to the betterment, conservation and maintenance of

the Subdivision and its surroundings carrying out actions for the protection and defense of the individual and collective patrimony of the Associates.

• Strive for the common well-being of the Associates where the common good prevails rather than individual interests, always maintaining union, harmony and togetherness of the Associates.

• Represent all the Associates, individually or collectively, before the Federal, State or Municipal Authorities as well as before all other persons or entities in matters related to the Subdivision.

• Insure compliance of the by-laws of the Association referred to in paragraphs 5 and 6 of the Permit to Subdivide.

• Establish and collect dues for the fulfillment of the aims and goals herein stated. These will be voted by the General Assembly on the recommendation of the Board of Directors and the Treasurer will be charged with the collection and handling of the funds. Pay the obligations and debts legally acquired by the Association as well as personnel and administrative costs.

• Acquire and/or rent all real and personal property which the Association may  require for the achievement of its goals.

• Initiate all civil, mercantile, labor-related or any other type of contract; carry out any operations which may be required to accomplish the aims and goals of the Association.

• Promote events allowed by the Law which have as their object the entertainment, education, enjoyment or welfare of the Associates, or the enhancement of the social well-being.

• Perform legal acts which may be considered as forwarding the aims or goals or which would benefit the Association or its Associates.

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                                                       CHAPTER III

                                                   THE ASSOCIATES

ARTICLE 6.-       The members of the Association will be all the owners, legal title holders and holders of bank trusts of lots in the Subdivision “Villa de las Palmas” in the Port of San Felipe, Municipality of Mexicali, B.C. Each Associate will have a voice and a vote in the General Assembly, and he will be able to delegate his vote to another Associate or a delegate with a power of attorney. The holder of the power of attorney need not be an Associate.

ARTICLE 7.-       One vote per lot will be allowed, and in the case of lots with condominiums or co-owners, one of the owners must be named to carry out the representation. The presence of the remaining co-owners or condominium owners will be at the sole discretion of the Board of Directors. Only the named representative will have a voice and a vote.

ARTICLE 8.-       The Board of Directors shall have the right to require proof from the owners, legal title holders and holders of bank trusts with documentation such as sales contracts, notary acts, bank trusts, powers-of-attorney, receipts for property taxes, etc., to insure the validity of their presence and vote in the General Assembly. No person who is not an Associate nor any representative may be present without previous permission having been granted.

ARTICLE 9.-       The Associates must behave in the Assemblies with courtesy and decorum and be willing to listen and respect the opinions of their Co-Associates.

ARTICLE 10.-      “ All foreign persons who, at the Act of Formation or at any subsequent time, acquire an interest or participation in a Society, will be considered by this simple act as a Mexican with respect to that interest or participation, and it will be understood that he agrees not to invoke the protection of his Government, under the pain of, if he fails to live up to this covenant, he will lose this interest or participation to the benefit of the Mexican nation.”

The composition of the Associates of the “Villa de las Palmas” Subdivision is made up of  bilingual persons, English/Spanish and of foreigners who only speak English. The Board of Directors will do everything possible to translate documents, letters, discussions, etc., as a courtesy. The Association or the Board of Directors will not be responsible for inaccurate translations or misunderstandings since the Spanish version will be considered as the only official one.

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CHAPTER IV

THE RIGHTS OF THE ASSOCIATES

ARTICLE 11.-       The  Associates will have the following rights: 

• Be elected to carry out the duties of the Board of Directors, or of any other group, commission or committee which the Association may create.

• Attend the General Assemblies and be able to speak and vote in accordance with what was established in CHAPTER III of these Statutes; however, if the Associate has not paid his ordinary or special dues, he will not have the right to vote until the payment of his dues is up to date.

• Request and receive complete accounting reports every three months, including financial balances, projections and copies of receipts and invoices paid during each three month period.

• Request from the Board of Directors or from the President of that same body, convocation of a Special General Assembly only when at least twenty per cent of the Associates sign the request.

• Be able to speak during the Ordinary or Special Assemblies. The right to speak shall have a time limit of five minutes.

• Attend the Quarterly Meetings of the Board of Directors, as an auditing Associate, without the right to speak or vote.

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CHAPTER V

THE OBLIGATIONS OF THE ASSOCIATES

ARTICLE 12.-       Aside from what is stated in CHAPTER III the Associates have the following obligations:

• Present as soon as possible all relevant documents to the Board of Directors in order to join as an Associate.

• Attend in person or through a representative the General Assemblies that are held in accordance with the current Statutes.

• Comply faithfully with the mandates of these Statutes, with the By-Laws and with the agreements of the General Assemblies and the Board of Directors.

• Pay the dues determined and approved by the General Assembly, whether they are ordinary or special.

• Fulfill the charges and commissions entrusted to them by the General Assembly and the Board of Directors and ensure a faithful compliance with the aims and goals of the Association.

• Refrain from committing acts that might be contrary to the aims and goals of the Association, or that might damage its performance, reputation or prestige, above all before unconnected institutions or persons.

• Maintain property in good condition, including exterior paint, with special attention that the exterior colors chosen reflect harmony in the community. Decorations, landscaping and maintenance of the property must be in good taste.

• Not commit acts that could damage the property of others.

• Not commit acts that damage the environment and/or the ecosystem of the locality, specifically inside the Subdivision.

• Not throw trash on vacant lots, or leave any waste or garbage outside of the containers for that purpose.

• Not park vehicles out of the parking area in front of the Associate’s property, in common areas or on vacant lots. Not park permanently mobile homes or motor homes in any area of the community.

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CHAPTER VI

THE EXCLUSION OF THE ASSOCIATES

ARTICLE 13.-  The Associates will automatically lose their rights as members of the Association upon selling, transferring or relinquishing their rights to the lots they acquired.

ARTICLE 14.  The Associates will have their voting rights suspended under the following circumstances, whenever the General Assembly approves by a majority vote the suspension:

• Violation of the rules for behavior as stated in ARTICULO 9 of these Statutes.

• Failure to pay the ordinary and special dues that are assessed by the General Assembly.

• Illegal or immoral public actions or demonstrations that jeopardize the image, reputation or prestige of the Subdivision, of the Association or of the Associates.

• Violation of the By-Laws or resolutions of the General Assembly or the Board of Directors.

• Failure to comply with the obligations placed upon the Associates under ARTICLE 12, clauses g,h,i,j, y k.

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           In every case and before beginning the proceedings to suspend the rights of an Associate, he will be given the opportunity to argue his case in his own defense.

ARTICLE 15.-   The Associate that was excluded will automatically lose all of the rights and privileges enumerated in CHAPTER III, however the obligations as a property owner and in accordance with ARTICLE 12, clauses c,d,e,f,g , he will not undergo any changes as it relates to his responsibility. No act relieves the excluded Associate from the obligation as an owner, legal title holder or holder of a bank trust of a lot, to pay the ordinary and special dues designated for the maintenance of the community services of the Subdivision.

CHAPTER VII

THE ASSETS OF THE ASSOCIATION

ARTICLE 16.-       The assets of the Association are formed by:

• The initial contribution to establish the present Association.

• The special and ordinary dues.

• Donations received from Associates, institutions and third parties.

• The real and personal property that, in accordance with Mexican law, the Association may acquire to achieve its aims.

ARTICLE 17.-   The assets will be used ensure the fulfillment of the aims of the Association, and may not be used for any other purpose.

ARTICLE 18.-   The assets of the Association figure in the inventory and the accounting books , which must be the specific duty of the Treasurer, and in his absence the Board of Directors, being these the responsible parties before the General Assembly of the Association.   

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CHAPTER VIII

THE STRUCTURE OF THE ORGANIZATION

ARTICLE 19.-      The Association will have the following structure:

• The General Assembly of Associates which is the governing body.

• The Board of Directors, which will be elected by the General Assembly and will consist of three Associates who will assume the positions of President, Secretary and Treasurer.

• The Board of Directors consisting of the President, the Secretary and the Treasurer, who will exercise the powers mentioned in ARTICLES 23, 24, 25 and 26 of these statutes, will be in charge of the functioning and representation of the Association.

• The committees, commissions and groups of any other type that may be considered necessary and are approved by the General Assembly of Associates, proposed by the Board of Directors with the sole purpose of improving the functioning and administration of the Association.

CHAPTER IX

THE ADMINISTRATION

ARTICLE 20.-     The administration of the Association will be the duty of the Board of Directors consisting of a President, a Secretary and a Treasurer. The members or persons comprising the Board of Directors must necessarily be Associates and fulfill their duties free of charge. The Association will defray the costs incurred directly due to Association business as long as two of the three members of the Board of Directors approve the legitimacy of the expense. The term for each office of the Board of Directors is one year and they may be reelected only for two consecutive terms. They will remain in their office until the end of the period for which they were elected, and until the time that the General Assembly revokes their term and elects successors who will take possession at that time.

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In case of an exclusion, resignation or unjustified absence for more than six months of any one of the members of the Board of Directors, the remaining members will call for a meeting of the General Assembly of the greatest urgency to fill the vacancy(s).

CHAPTER X

POWER OF THE BOARD OF DIRECTORS

ARTICLE 21.-   The Board of Directors will be the administrative organ of the Association and will represent it before all types of persons and administrative, judicial, labor, or any other authorities, with faculty of a General Power-of-Attorney for lawsuits and collections, for administrative acts, and for acts of ownership, with all the General and Special Powers which require special clauses in accordance with the Law, under the terms of the first three paragraphs of Article two thousand four hundred twenty eight of the Civil Code of the State of Baja California.

In declarative but not limiting language, the Board of Directors as a group will be able to:

• Execute the agreements reached in the General Assembly of Associates, whether it be by the dictates of the law or these statutes.

• Grant general or special powers for legal issues and collections or for administrative acts.

• Administer and direct the interests of the Association.

• Open and close bank accounts and perform active and passive transactions with banking institutions.

• Subscribe in any manner all kinds of securities relating to the business of the Association.

• Acquire real and personal property, in accordance with Mexican laws, for the achievement of the aims and goals of the Association, without the authorization to encumber, rent or transfer them unless it is of an unavoidable urgency and with the authorization of three-fourths of the Associates present at the General Assembly of Associates.                                                                                                                                                                                                                                                                 

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• Represent the Association before any authority with the most ample power, with faculties to request and desist from the protection of the law; challenge judges; initiate and desist from actions and appeals; make commitments; to commit to arbitration and sign the arbitration agreement; agree to conventional procedures; submit to, or deny, jurisdiction; express and answer arguments; make offers, raises and adjustments; request awards of property; file complaints and criminal law suits, and give pardons if suitable. In labor relations, it will in addition, have the right to appear in person, or to authorize others to appear on its behalf, at all kinds of hearings, particularly in conciliation hearings, being empowered to make all kinds of arrangements, agreements or transactions. It can delegate any one of its members the right to execute concrete acts. Or if the pending matter, legal or penal, requires a legal solution and has to be resolved before any legal Federal, State or Municipal entity, it will require the services of a lawyer before whom they must appear to represent the legal interests of the Association.

• Exercise the required actions to collect the ordinary and special dues, specifically taking recourse in civil or mercantile law, whichever is advisable, with the purpose of collecting dues in arrears by suing for material damages due to lack of compliance for legal fees and expenses.

• Take steps to make collections, make payments, present all types of writs and documents including income tax returns, receive all types of writs and documents, including checks for the return or reimbursement of taxes.

ARTICLE 22.-     The Board of Directors has the power to:

• Appoint and remove all technical and administrative personnel that the Association may require whether their services be honorific or remunerative.

• Contract any personnel required for work that the Association may require assigning them their wages, salaries or benefits and approving contracts they have entered into with them.

• Prepare the program of activities of the Association, along with the annual budget of income and outgo of the same, which will be submitted for discussion, modification and approval, depending on the case, for consideration by the Ordinary General Assembly.

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ARTICLE 23.-      The duties of the President of the Board of Directors are the following:

•  Convene and preside over the General Assemblies, signing the

                  corresponding minutes.

•  Convene and preside over the Assemblies of the Board of Directors, signing                                                           acts and accords decide by a majority vote. 

• Authorize and sign documents drawn up by the Association, including checks and other bank instruments that are signed jointly with the Treasurer.

• Comply with and enforce compliance with the accords of the General Assembly and the Board of Directors.

• Comply and enforce compliance with the provisions of the Statutes of the Association as well as the By-Laws of the Association.

• Promote before the General Assembly the changes to the Statutes that have been approved by a majority vote and present the means that would be considered to facilitate the achievement of the aims and goals of the Association.

• Promote by whatever legal means are within his reach, the activities of the Association that further the achievement of the aims and goals of the Association.

• Substitute the Treasurer in his absence.

ARTICLE 24.-       The President must follow the instructions and mandates of the Board of Directors and the General Assembly and will have the power that ARTICLE 21 confers upon him, with the exception of the clauses reserved for the Treasurer,  and powers to acquire securities, which remain reserved exclusively for the Board of Directors and ultimately for the General Assembly before approval.

ARTICLE 25.-        The Secretary of the Board of Directors will be in charge of the books containing the minutes, and will sign the minutes of the Board  together with the President. He will substitute the President in his temporary absence, and must report to the president on his conduct, and ultimately to the General Assembly. He will be directly responsible to maintain an updated list of the Associates, with their addresses and other particulars. He will have the responsibility of being the official vote counter in the General Assemblies.

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ARTICLE 26.-      The Treasurer will oversee the management of the income, will supervise the compliance with all fiscal obligations, will be able to open and close bank accounts, and jointly with the President will be able to sign checks and with previous consent from the Board of Directors authorize the normal payments of the Association, as well as those agreed upon by the Board of Directors and the General Assembly. He will substitute the Secretary in his absence, with the duty of reporting to the Secretary on his conduct, and ultimately to the General Assembly. He will be responsible to prepare the balances and quarterly statements and must provide each Associate with a copy of said report. In addition, he will present a copy of the following year’s budget to the Ordinary General Assembly every year. The Treasurer will maintain updated financial information  available to the Associates. He will have the authority to provide financial information to any Associate who requests it in writing, as long as said request has been approved by the Board of Directors.

CHAPTER XI

THE GENERAL ASSEMBLY

ARTICLE 27.-      The General Assembly is the governing body of the Association, and can modify or change the acts of the Board of Directors or its members, the acts of committees, commissions or groups created by itself or by the Board of Directors, and in exceptional cases, with a vote of seventy five per cent of the members present, can rescind partially or totally the decision of a previous assembly.

ARTICLE 28.-     The General Assemblies of the Association may be Ordinary or Special. The Ordinary General Assembly will be held at the location of the Association on the date that coincides with the holiday in the United States of America known as Memorial Day, approximately the last Monday of the month of May. The Ordinary Special Assemblies will be held at the place, date and time indicated on the Convocation. The Convocations must be sent to the Associates in the manner that the Board of Directors deems most appropriate with thirty days notice for the Ordinary General Assembly, and fifteen in the case of a Special Assembly, and/or at the discretion of the Board of Directors by means of just one publication of the Convocation in one of the newspapers most widely circulated at the location of the Association, with the information already provided.

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ARTICLE 29.-      The Convocations, aside from citing the date, the time and place of the Assembly, will contain an agenda indicating the topics to be discussed at the Assembly and a section apart for general matters which must be different from the topics mentioned in the agenda.

ARTICLE 30.-       The General Ordinary and Special Assemblies will be considered to be legally constituted with the presence of two of the members of the Board of Directors and with the presence of at least fifty percent of the Associates. In the second Convocation, it will be legally considered to be constituted with the presence of at least one of the directives and however many Associates that may be present.

ARTICLE 31.-       The Assemblies will be presided over by the President of the Board of Directors, or in his absence, by the Secretary. The Secretary, or in his absence, the Treasurer, will take notes to prepare the official minutes of the Assembly. The first act of the President will be to verify to his satisfaction that the presence of all of the attendees is valid in accordance with the provisions of CHAPTER III and the present chapter of these Statutes, and that the list of attendees is collected in order to incorporate it into the minutes. It will be verified immediately if there is a quorum according to the list, and if there is not, this fact will be duly noted and put on record, the result of which will be the holding of a second Convocation.

ARTICLE 32.-        Voting may be by acclamation or by a show of hands. The Secretary, being the vote-counter, has ample powers to oversee and verify the votes.

ARTICLE 33.-       In the Ordinary General Assemblies the decisions will be made by a simple majority, with the President having the final vote in case of a tie.

In the following cases a majority vote of over seventy five percent of the Associates present is required to arrive at a decision:

• Exclusion or reinstatement of the rights of an Associate.

• Imposition or modification of special or ordinary dues.

• Modifications or changes to these Statutes.

• Rescind totally or partially the decisions of a previous General Assembly.

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ARTICLE 34.-      The accords and decisions of the General Assemblies under the terms of these Statutes will be obligatory for each and every one of the Associates, even those who are absent and those who do not agree.

CHAPTER XII

THE MINUTES

 ARTICLE 35.-      The minutes of the General Assemblies and the sessions of the Board of Directors will be placed in the respective books which are the responsibility of the Secretary, and they must be signed in each instance by those serving as President, Secretary and Treasurer of said Assembly or session, and they may be signed by other Associates if they so desire. The minutes are open and available to the Associates, who have the right to review them and request copies if they so desire.

CHAPTER XIII

THE DISSOLUTION

ARTICLE 36.-      The Association may agree upon its dissolution with seventy five percent of the votes of the Associates present in a Special General Assembly, but a previous vote of the same percentage is required to determine the disposition of the remaining assets of the Association. It could be one of the following:

• Distribution among the Associates that are up to date in the payment of their

dues.

• Donation to a succeeding entity with similar aims and goals or with

         philanthropic or altruistic aims and goals.             

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RESOLUTIONS AND CHANGES

ARTICLE 37.-      In the case that the Association were to become inactive for a period of more than twelve months, due to the temporary or permanent absence of the members of the Board of Directors, an Extraordinary and Emergency Meeting will be called for in order to determine whether to dissolve or reactivate the Association. The Associates present during the Emergency Extraordinary Meeting, by a majority vote must resolve to decide on reactivating the Association, at that time a new Board of Directors will be elected and all legal actions will be taken to declare null and void the previously registered Board of Directors and it will be dismissed due to abandonment of activities and failure to comply with its obligations.

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