Definitions
Offices
Membership
Voting Rights
Property Rights and Rights of Enjoyment
Purpose and Powers
Directors
Compensation
Meetings of the Board
Notices
Officers
The President
The Vice President
The Secretary and Assistants
The Treasurer and Assistants
The Executive Committee
Fidelity Bonds
Directors Annual Statements
Checks
Fiscal Year
Seal
Members Meetings
Transfer of Membership
Indemnification
Management
Construction
Amendments

AMENDED BYLAWS OF
PALMAS DEL MAR HOMEOWNERS ASSOCIATION, INC.
A NONPROFIT ORGANIZATION

DEFINITIONS

1. “Association” shall mean and refer to the Palmas del Mar Homeowners Association, Inc., a nonprofit corporation organized and existing under the laws of the Commonwealth of Puerto Rico.

2. “Board of Directors” or “Board” shall mean and refer to the Board of Directors of the Association.

3. “Common Properties” shall mean and refer to those tracts of land identified as such in official Company plats or which are actually deeded or leased to the Association and designated in said deed or lease as Common Property. The term “Common Properties” shall also include any personal property acquired by the Association unless such is used within or on “Restricted Common Property.” All Common Properties are to be devoted to and intended for the common use and enjoyment of the Owners of property, within the Palmas del Mar Development, including corporations or trusts, dwelling unit Owner’s families, persons occupying dwellings, places or accommodations of owners, on a guest or tenant basis, and invited members of the general public subject to the fee schedules and operating rules adopted by the Association, (to the extent permitted by Law) provided, however, that any lands, buildings or facilities which are leased by the Association for use as Common Properties, shall lose their character as Common Properties upon the expiration of such lease. Common Properties shall not include those tracts of land, buildings or facilities falling within the definition of “Restricted Common Properties” or Purchased Common Properties.

4. “Covenants“, “Declarations“, “Declaration of Covenants and Restrictions” or “Restrictive Covenants“. In the course of these Bylaws, reference is made to the Declaration of Covenants and Restrictions for Palmas del Mar Development at Humacao and Yabucoa, Puerto Rico, and provisions or the Palmas del Mar Homeowners Association, Inc. This will be understood to refer to Public Deed Number 13 executed on September 14, 1972, before Notary Public Guillermo A. Nigaglioni, and to such other public deeds as may be executed amending, restating., or in any manner modifying said Deed Number 13 and duly recorded or presented for recordation in the Registry of Property of Puerto Rico, Humacao Section. A copy of these Covenants is attached to these Bylaws and is incorporated herein by reference each and every time said Covenants are referred to by these Bylaws.

5. “Delegate” shall be that person, or his alternate, appointed by the Board of Directors of a regime, condominium, association or a Neighborhood Area to represent the association or Neighborhood Area at any meeting of the Association. The use of the term Delegate shall also refer to his alternate, when, at such times, the Delegate is unable to perform his duties.

6. “Development” or “Palmas del Mar Development” shall mean Palmas del Mar, either the existing development or future development to be constructed on the Properties.

7. “Developer” or “Company” shall mean Palmas del Mar Company, its successors and such of its assigns with the rights and to the extent prescribed in the Restrictive Covenants.

8. “Family Dwelling Unit” shall mean and refer to any improved property, for which a use or occupancy permit has been issued, intended for use as a single family detached dwelling, patio house, condominium unit, or town house unit, located within the Properties.

9. “Member” or “Membership” shall mean and refer to all those Owners who are Members of the Association to the extent and as provided in Section A of Article III of the Restrictive Covenants.

10. “Neighborhood Area” shall mean and refer to those parcels, tracts or lots of land located in close proximity to each other which are approved by the Board of Directors of the Association as a “Neighborhood Area” pursuant to such rules and regulations as may be established by the Board.

11. “Owner” shall mean and refer to the Owner as shown by the records in the Registry of the Property of Puerto Rico, Humacao Section, whether it be one or more persons, firms, associations, corporations, or other legal entities, of fee simple title to any Residential Lot, Family Dwelling Unit, Community Facilities, Commercial Unit or Rural Tract situated upon the Properties but, notwithstanding any applicable theory of a mortgage, shall not mean or refer to the mortgagee, its successors and assigns, unless and until such mortgagee has acquired title pursuant to foreclosure or a proceeding of deed in lieu of foreclosure.

The term “Owner” shall not mean or refer to any lessee or tenant of an Owner.

In the event that there is a recorded in the office of the Registry of the Property of Puerto Rico, Humacao Section, a long term contract of sale covering any lot or parcel of land within the Properties, the Owner of such lot or parcel of land shall be the purchased under said contract and not the fee simple title bolder. A long term contract of sale shall be one where the purchaser is required to make payment of the property for a period extending beyond nine months from the date of the contract and where the purchaser does not receive title to the property until such payments are made although the purchaser is given the use of said property.

12. “The Properties” or “Property” shall mean and refer to all the property described in Article II, Section A of the Covenants and such additions thereto as may hereafter be brought within the jurisdiction of the Association as provided for in Article II, Section B, thereof.

13. “Purchased Common Properties” shall mean and refer to those tracts of land with any improvements thereon acquired by the Association to be operated as a membership recreational facility with membership criteria, user costs and operating rules to be selected and determined by mutual agreement between the Association’s Board and the Company or other owner of such facilities.

14. “Referendum” shall mean and refer to power of all or some specific portion of the Members to vote by mailed ballots on certain actions by the Board of Directors of the Association as provided in the Restrictive Covenants and/or the Bylaws.

15. “Residential Lot” shall mean any unimproved parcel of land located within the properties, with the exception of the common Properties, Restricted Common Properties and Purchased Common Properties, which is intended for use as a site for a single family detached dwelling or patio dwelling, duly recorded or presented for recordation in the Registry of Property of Puerto Rico, Humacao Section as a separate, distinct and individual parcel pursuant to the execution of a deed of segregation to such effect. A Residential Lot shall be deemed to be unimproved until the improvements being constructed thereon are completed and a use or occupancy permit is issued for such improvements.

16. “Residential Unit” shall mean any Family Dwelling Unit for which a Use Permit has beef issued.

17. “Restricted Common Properties” shall mean and refer to those tracts of land with any improvements thereon, buildings or facilities which are actually deeded or leased to the Association and designated in such deed or lease as “Restricted Common Properties.” All Restricted Common Properties are to be devoted to and intended for the common use and enjoyment of Owners of Residential Lots and Family dwelling Units, their immediate families, guests accompanying such Owners and tenants of Owners holding leases of six (6) months duration or longer and the Company, and to be closed, to the use of:

  • 1) tenants of such Owners holding leases of less than six (6) months duration;
  • 2) resort accommodation “paying guests”; and
  • 3) visiting members of the general public.

All use of Restricted Common Properties will be subject to the fee schedules and operating rules adopted by the Association. Any lands, buildings or facilities, which are leased by the Association for use as Restricted Common Properties shall lose their character as Restricted Common Properties upon the expiration of such lease.

18. “Rural Tract” shall mean and include all property within the Properties not otherwise classified in the Covenants, including undeveloped lands owned by the Company.

19. “Voting Certificate” shall be a document signed by the President of the Board of Directors of a regime, condominium or other association, or by the Neighborhood Area chairman, authorizing the Delegate from the regime, condominium or other association, or Neighborhood Area, to cast the votes of that regime, condominium or other association or Neighborhood Area at a Membership meeting of the Association in the manner reflecting the results of the votes cast by the Owners in that regime, condominium or other association or Neighborhood Area.

20. “Voting Districts” shall mean a geographic area established by the Board, which area shall be entitled to elect one (I) Director to the Association Board of Directors.

21. “At Large Class B Directors” shall mean that Director obligated through the Nominating Committee hor the purpose of either filing a Director position if the Board of Directors which would not otherwise be Oiled because there area not enough Voting Districts to do so and/or because a Voting District has not elected its Director.

22. “Voting District Class B Director” shall mean Director elected following the procedure herein below established.

OFFICES

23. The principal office of the Association shall be located at Palmas del Mar Development Humacao, Puerto Rico.

24. For the purpose of service of process the Association shall designate a registered agent w designation may be changed from time to time, and his office shall be deemed an office or: Association for the purpose of service of process.

MEMBERSHIP

25. Membership in the Association shall be as set forth in Article III of the Covenants.

26. The rights of membership are subject to the payment of annual and special assessment levied by the Association the obligation of which assessments is imposed against each Os of, and becomes a lien upon, the Property against which such assessments are made as provided by Article V of the Covenants.

27. The membership rights, including voting rights of any person whose interest in The Properties is subject to assessments under Article V of the Covenants, whether or not he be personally obligated to pay such assessment, shall be suspended during the period when the assessment remain(s) past due and unpaid for a period of thirty (30) days. Upon payment of such assessment and/or the approval of and compliance with payment or other plan by the Board of Directors rights and privileges shall be automatically restored. For voting rights at the Annual Meeting of the Owners of record as of thirty (30) days prior to the Annual Meeting will have voting privileges. If the Directors have adopted and published rules and regulations governing the use o Common Properties and Restricted Common Properties, they may, in their discretion, suspend the rights of any such person for violation of such rules and regulations for a period not to ex sixty (60) days. Notwithstanding the aforesaid, or anything to the contrary in these ByLaws or the Covenants, nothing herein shall be construed or interpreted as adversely affecting or it manner or form, diminishing or lessening the existing rights and privileges of the Company granted in these Bylaws or pursuant to the Covenants.

VOTING RIGHTS

28. Voting rights in the Association shall be as set forth in Article III, Section B, of the Covenants.

29. Members to Have Power of Referendum in Certain Instances. The Members, or some specific portion thereof, shall have the power to approve or reject certain actions proposed to be taken by the Association by Referendum including, without limitation, whether the Association shall accept any offer by the Company to convey to the Association any “Purchased Common Properties”, the levy by the Board of Directors of the Association of any Special Assessment in excess of those authorized by the Covenants and the addition or deletion of functions or services which the Association is authorized to perform. In the event two thirds (2/3) or more, of the total votes of the Membership of the Association, as represented by the Delegates, shall be in favor of such action, the Referendum shall be deemed to “pass” and the action voted upon will be deemed to have been authorized by the Members. If a higher percentage vote required to “pass” any Referendum and is specifically expressed herein, or in the Covenants, that higher percentage shall control in that instance. The Board of Directors may not undertake any action requiring a Referendum without complying with the provisions thereof. In the event of a dispute as to whether a Referendum is required, the following action may be taken: within sixty (60) days after the adoption by the Directors of any action which is, in the opinion of the Members, subject to a Referendum, a petition signed by those Members representing not less than twenty five percent (25%) of the votes of the total Membership of the Association may be filed with the Secretary of the Association, requesting that any such action be either repealed or submitted to a vote of the Members.

PROPERTY RIGHTS AND RIGHTS OF ENJOYMENT OF COMMON PROPERTIES AND RESTRICTED COMMON PROPERTIES/a>

30. Each member shall be entitled to the rights in% use and enjoyment or the Common Properties and Restricted Common Properties as provided by Article IV of the Covenants

31. Any Member may delegate his rights of enjoyment in the Common Properties and facilities to the members of his family who reside upon the Properties or, subject to the limitations upon rights in Restricted Common Properties, to any of his tenants or renters who lease or rent a dwelling unit within the Properties from him for a period of six (6) months or longer. Such ember shall notify the Secretary of the, Association in writing of the name of any or persons and of the relationship of the Member to such person or persons The rights mid privileges of such person or persons are subject to suspension to the same extent as those of the Member.

PURPOSES AND POWERS

32. Purposes. The Association has been organized for the purposes set forth in the Certificate of Incorporation.

33. Additions and/or Reductions to Properties. Additions and/or Reductions to Properties described in Article II, Section A of the Covenants may be made as provided in Article II, Section B of the Covenants.

34. Mergers and Consolidations. Subject to the provisions of the recorded Covenants and Restrictions applicable to The Properties, and to the extent permitted by law, the Association may participate in mergers and consolidations with other nonprofit corporations organized for the same purposes, provided that any such merger or consolidation shall have the assent of three fourths (3/4) of the vote of the total Membership, as represented by the Delegates, at a duly called meeting of the Association, written notice of which shall be mailed to all Members at least thirty (30) days in advance and shall set forth the purpose of the meeting.

35. Mortgage and Pledge Subject to the approval of the delegates representing a majority of its Members as expressed at a regular or special meeting of Members or in a Referendum, the Board of Directors of the Association shall have the power and authority to mortgage the property of the Association and to pledge the revenues of the Association as security for loans made to the Association. Said loans shall be used by the Association in performing its authorized functions; provided, however, that such prior approval of Members for the aforesaid actions shall not be required in the event of emergencies such as those due to acts of God, equipment and installation repairs and the like.

36. Dedication of Properties or Transfer of Function to Public Agency or Utility. The Association shall have the power to dispose of its real Properties only as authorized under the Covenants.

DIRECTORS

37. The Property and business of the Association shall be managed by its Board of Directors which may exercise all such powers of the Association and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these Bylaws or by the Covenants directed or required to be exercised or done by the Members. These duties of the Board of Directors shall include, but not be limited to, the following:

(a) to call special meetings of the Members whenever it deems necessary and it shall call a meeting at any time upon request as provided in Paragraph 60 hereof;

(b) to appoint and remove at pleasure all officers, agents and employees of the Association, prescribe their duties, fix their compensation, if any, and require of them such security or fidelity bond as it may deem expedient. Nothing contained in these Bylaws shall be construed to prohibit the employment of any Member, officer, or Director of the Association in any capacity whatsoever;

(c) to establish Voting Districts pursuant to the provisions of Article III of the Covenants;

(d) to adopt and publish rules and regulations governing the use of the Common Properties, Restricted Common Properties and Purchased Common Properties and facilities and the personal conduct of the Members and their tenants and guests thereon;

(e) in the event that any member of the Board of Directors of this Association shall be absent from three (3) consecutive regular meetings of the Board of Directors without excuse, the Board may, by action taken at the meeting during which said third absence occurs, declare the office of said absent Director to he vacant;

(f) to cause to he kept, a complete record of all its acts and Corporate affairs;

(g) to supervise all officers, agents and employees of this Association, and to see that their duties are properly performed;

(h) pursuant to the provisions of the Covenants:

1. To fix the amount of the assessment against each Member for each assessment period;

2. to prepare a roster of the Properties and assessments applicable there to which shall be kept in the office of the Association and shall be open to inspection by any Member, upon 48 hours notice, during the regular working hours of the Association;

3. make available to the Delegates a roster of Unit Owners within the Delegate’s regime, condominium or other association or Neighborhood Area;

4. to send written notice of each assessment to every Owner subject thereto;

(i) to furnish upon demand by the Member liable for an assessment a certificate in writing signed by an officer of the Association setting forth whether any assessment owed by such Member has been paid. Such certificate shall be conclusive evidence against all but the Member of payment of any assessment therein stated to have been paid.

(j) to see that all provisions of the Covenants and these Bylaws are complied with.

38.The number of Directors which shall constitute the whole Board shall be thirteen (13). The Directors shall be divided into two (2) classes, known as Class A and B; (Class A Directors shall be appointed by Palmas del Mar Company, their successors or assigns; (Class B Directors shall all be Members of the Association and elected according to the procedure herein established.

Upon approval by the Membership of the amendments to the Declaration, Certificate of Incorporation and these Bylaws, the following provisions shall become effective:
Commencing with those Directors elected at the Annual Meeting of the Membership to be held in 1997, until the Company achieves the stages of development defined below, the Board shall be composed of not more than five (5) Class A Directors and eight (8) Class B Directors elected by the Members of the Association. One third of the Directors elected by the Class B Members shall serve for a term of three (3) years, one third (1/3) for a period of two (2) years and one third for a period of one (I) year. For example, if eight (8) Class 13 Members are elected, three (3) Directors shall serve for a term of three (3) years, three (3) Directors shall serve for a term of two (2) years and two (2) Directors shall for a term of one (1) year.
At the expiration of the initial term of office of each member of the Board, his successor shall be elected to serve a term of three (3) years. Class B Directors shall hold office until their successors have been elected and hold their first meeting. Class B Directors may not be elected to serve more than two (2) consecutive full terms of office; a partial term of less than three (3) years does not constitute a full term.

After the date of recordation of the amendments to the Declaration, representation on the Board of Directors shall be reduced as follows:

After the closing of the next one thousand (1,000) residential units in Palmas del Mar, the Company shall be entitled to appoint four (4) Directors;

After the closing of the next two thousand (2,000) residential units in Palmas del Mar, the Company shall be entitled to appoint three (3) Directors;

After the closing of the next three thousand (3,000) residential units in Palmas del Mar, the Company shall be entitled to appoint two (2) Directors.

Until the last residential unit in Palmas del Mar is closed, the Developer shall be entitled to appoint any two (2) Directors to the Board:

a) At such time that the Voting Districts are established, each Voting District shall elect one (1) Director from the Voting District in the manner and form provided for herein below. The remaining Class B Directors necessary to fill all Class B seat in the Board of Directors and/or need to fill the Seat of a Director from a Voting District shall be elected at large from a total vote of the Membership.

b) The election of Class B Directors from the Voting Districts shall he conducted and will be seated as follows:

The Director for each Voting District shall be elect it least sixty (60) days prior to the Annual Meeting in which said seat will become vacant. Such election shall be by the majority vote of the Presidents, or their appointed representatives, of each regime, condominium or other association and/or the Chairman of the Neighborhood Areas within said Voting District. Each President, Chairman or appointed representative shall have one (1) vote in the election of said Director regardless of the number of units or homes within his regime, condominium, association or neighborhood areas.

The Voting District will formally notify the Secretary of the Board, or his appointed representative, of the election of its Director at least forty five (45) days prior to the Annual Meeting in which said seat will become vacant.

The newly elected Director will be seated at the Annual Meeting and his term will commence thereupon.

c) Notwithstanding the above, the terms of the Directors serving as President and Vice President during the last year of their full term as a Director will be extended for one (1) additional year.

d) If needed, the Board shall appoint a Nominating Committee, which shall consist of the Chairman, who shall be a Class B Member of the Board, and three (3) Members of the Association. The Nominating Committee shall nominate candidates for the position of At Large Class B Directors. This list of candidates shall be submitted to the Secretary not less than thirty (30) days prior to the Annual Meeting and shall be included in the Proxy Statement and/or Proxy related to the Annual Meeting to be sent to each Member.

e) If needed, votes of the Members for at large candidates proxy. Proxies must be in writing and filed with the Secretary of the Association at least twenty four (24) hours prior to the start of the annual meeting. Every proxy shall been revocable, but shall continue to be valid until so revoked or until it terminates.

39. If the office of one or more at large Class B Directors becomes vacant by reason of death, resignation, retirement disqualification, removal from office, or otherwise, a majority of the remaining Directors, though less than a quorum, shall choose a successor or successors, in the following manner, who shall hold office until the next Annual Meeting. Class B Directors shall appoint a replacement to fill the vacant at large directorship of a Class B Member to serve until the next Annual Meeting. At the next Annual Meeting the Membership shall elect a successor for the replacement of each At Large Class B Director. Said successor shall serve during the unexpired portion of the term of the Director for which he is substituting.

If the office of a Director from a Voting District becomes vacant, by reason of death, resignation, retirement, disqualification, removal from office, or otherwise, the president, or his representative, of each condominium or other association, or the Chairman of a Neighborhood Area within the Voting District, shall elect a Director to hold office until the next annual meeting.

The Company shall be entitled to appoint a successor for any vacancy on the Board resulting from the death, disability or resignation of a Director appointed by the Company as a Class

A Member of the Board.

40. At large Class B Directors may be removed with or without cause by an affirmative vote of a majority of the votes entitled to be cast for the election of such Director at a duly held meeting of the Association, and a successor may then and there be elected by the Members to fill the at large vacancy thus created. Any Director whose removal has been proposed to the Members shall be given an opportunity to be heard at the meeting. Directors representing Voting Districts may be removed by a vote of the majority of the Members within that Voting District.

41. The Directors may hold their meetings and kept the books of the Association at the office of the Association in Palmas del Mar Development, Humacao, Puerto Rico, or at such other place within Palmas del Mar Development, Humacao, Puerto Rico, as they may from time to time determine.

COMPENSATION OF DIRECTORS

42. Directors, as such, shall not receive any salary for their services, provided that nothing herein contained shall be construed to preclude any Director from serving the Association in any other capacity and receiving compensation therefor. The salaries for Directors for services other than as such shall be fixed by the Board of Directors.

MEETINGS OF THE BOARD

43. The first meeting of the newly elected Board of Directors shall be held immediately following the meeting of the members of the Association at which the Board of Directors was elected or within ten (10) ten days of election. No notice shall be necessary to the newly elected members of the Board of Directors in order to hold such a meeting providing a majority of the members of the Board of Directors is present at such meeting. End of Page 12

44. Regular meetings of the Board of Directors may be held at such time and place as shall be determined from time to time by a majority of the Board, but at least four (4) meetings shall be held during the fiscal year, with at least one (1) per quarter. Notice of regular meetings shall be given by the Secretary of the Association, or other designated person, to each Director at least ten (10) days prior to the date of such meeting.

45. Special meetings of the Board may be called by the President on five (5) days notice to each Director, either personally, by mail, by telegram or by any other approved electronic means which notice shall state the date, time, place and purpose of the meeting.
Special meetings shall be called by the President or Secretary in like manner and on like notice on the written request of at least two (2) Directors. Notice of any and all meetings of the Board may be waived by appropriate written waiver.

46. At all meetings of the Board a majority of the Directors shall be necessary and sufficient to constitute a quorum for the transaction of business and the act of a majority of the Directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Certificate of Incorporation or by these ByLaws. If a quorum shall not be present at any meeting of Directors the Directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

NOTICES

47. Whenever, under the provisions of the statutes or of the Certificate of Incorporation or of these Bylaws, notice is required to be given to any Director or Member, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, depositing the same in a post office or letter box, in a postpaid sealed wrapper, addressed to such Director or Member at such address as appears on the books of the Association, and such notice shall be deemed to be given at the time when the same shall be thus mailed.

48. Whenever any notice is required to be given under the provisions or the statutes or of the Certificate of Incorporation, or of these Bylaws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Attendance by a Director at any meeting of the Board shall be a waiver of notice by him of the time, place and purpose hereof. [f all members of the Board are present at a

Meeting of the Board, no notice shall be required and any business may be transacted at such meeting.

OFFICERS

49. The officers of the Association shall be chosen by the Directors and shall be a President, Vice President, a Secretary and a Treasurer. The Board of Directors may also choose one or more Assistant Secretaries, and Assistant Treasurers.

50. The Board of Directors at its first meeting after election shall elect the officers of the Association, none of whom except for the President and the Vice President need be a member of the Board.

51. The Board may appoint such agents as it deems necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board.

52. The officers of the Association shall hold office until their successors are chosen and qualify in their stead. Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the whole Board of Directors. If the office of any officer becomes vacant for any reason, the vacancy shall be filled by the Board of Directors.

THE PRESIDENT

53. The President shall he the chief executive officer of the Association he shall preside at all meetings of the Members and Directors, shall be ex officio member or all standing committees, shall have general and active management of the business of the Association, and shall sec to all duties which are usually vested in the office of president of a corporation, including but not limited to the appointment of the committees from among the Members as he may decide are appropriate to assist in the conduct of the affairs of the Association.

54. The President shall execute all documents and contracts requiring a seal of the Association, except where the same are required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Association.

THE VICE PRESIDENT

55. The Vice President shall, in the absence or disability of the President, perform the duties and exercise the powers of the President and shall perform such other duties as the Board of Directors shall prescribe.

THE SECRETARY AND ASSISTANTS

56. The Secretary shall attend all sessions of the Board and all meetings of the Members and record all votes and the minutes of all proceedings in the book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the Members and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or President, under whose supervision he shall be. He shall keep in safe custody the Seal of the Association and, when authorized by the Board, affix the same to any instrument requiring it and, when so affixed, it shall he attested by his signature or by the signature of the Treasurer or an Assistant Secretary.

57. Assistant Secretaries in order of their seniority shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shill perform such other duties as the Board shall prescribe.

THE TREASURER AND ASSISTANTS

58. The Treasurer shall have the custody of the Association’s funds and securities and shall cause to be kept fall and accurate accounts of receipts and disbursements in books belonging to the Association and shall cause to be deposited all monies and other valuable effects in the name and to the credit of the Association in such depositories as may be designated by the Board of Directors.

59. He shall disburse or cause to he disbursed the funds of the Association as may be ordered by the Board, assuring the taking of proper vouchers for such disbursements, and shall render to the President and Directors at the regular meetings of the Board, of whenever they may require it, an account of all of his transactions as Treasurer and of the financial condition of the Association.

60. Assistant Treasurers in the order of their seniority shall, in the absence or disability of the Treasurer, perform the duties, exercise the powers and assume the obligations of the Treasurer and shall perform such other duties as the Board of Directors shall prescribe.

EXECUTIVE COMMITTEE

61. The Board of Directors may, by resolution passed by a majority of the whole Board, designate an Executive Committee to consist of three or more of the Directors of the Association which, to the extent provided in said resolution, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Association, and may have power to authorize the Seal of the Association to be affixed to all papers which may require it, provided the said resolution shall so provide. The Executive Committee shall include at least one (1) Class A Director.

62. The following shall apply to the Executive Committees:

a) Each member of the Executive Committee shall hold office until the next regular Annual Meeting of the Board of Directors or until his successor is designated as a member of the Committee and is elected and qualified, or until the Committee is dissolved by a majority of the whole Board or the member is removed as hereinafer provided.

b) The Executive Committee shall meet from time to time on call of the President or of the Chairman of the Elective Committee or of any 2 or more members of the said Committee. Notice of each such meeting stating the place, day and hour thereof, shall be served personally on each member of the Executive Committee, or shall be mailed, telegraphed, telephoned or electronically sent to his address on the books of the Association, at least two (2) days before the meeting. No such notice of the time or place of any meeting of the Executive Committee need be given to any member thereof who attends in person or who, in writing executed and filed with the records of the meeting either before or after the holding thereof, waives such notice. No notice need be given of an adjourned meeting of the Executive Committee. Meetings of the Executive Committee may be held at such place or places, either within or outside of the Commonwealth of Puerto Rico as the Executive committee shall determine, or as may be specified and fixed in the respective notices or waivers thereof.

c) Any action that may be taken without a meeting if a consent in writing, setting forth the action to be taken, shall be signed by all of the members of the Committee and filed with the minutes of the Committee, which action shall be effective as of the date stated in such consent.

d) Any vacancy of the Executive Committee may be filled by resolution adopted by a majority of the Board of Directors, except that the vacancy of a Class A Member shall he filled by a Class A Member unless the Company shall otherwise approve, in writing, of the replacement of said Class A Member.

e) Any Class B Member of the Executive Committee may be removed at any time with or without cause by resolution adopted by a majority of the Board of Directors. Any member of the Executive Committee may resign from the Committee at any time by giving written notice to the Chairman of the Board or Secretary of the Association and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

f) The Chairman of the Executive Committee shall, if present, preside at all meetings of the Committee. The Executive Committee may fix its own rules of procedure, which shall not be inconsistent with the Certificate or these Bylaws. The Executive Committee shall keep, regular minutes of its proceedings and report its proceedings at the next meeting of the Board of Directors.

g) The presence of at least a majority of the members of the be necessary to constitute a quorum for the transaction of business, and the vote of the majority of the members present it any meeting at which a quorum is present, shall be the act of the Executive Committee.

FIDELITY

63. If required by the Board of Directors, any officer or employee of the Association handling or responsible for the Association’s funds shall give the Association’s bond, the premium therefor to be paid by the Association, in such sum, and with such surety or sureties as shall be satisfactory to the Board for the faithful performance of the duties of his office and for the restoration to the Association, in case of his death, resignation, retirement or removal from office of all his books, papers, vouchers, money and other property of whatever kind or his possession or under his control belonging to the Association.

DIRECTORS’ ANNUAL STATEMENT

64. The Board of Directors shall present at each Annual Meeting, and when called for by the vote of the Members at any special meeting of the Members, a full and clear statement of the business and condition of the Association. The annual statement shall include profit and loss statements and balance sheets prepared in accordance with sound business and accounting practice, and generally accepted accounting principles and copies thereof shall be available to each of the Members in the Association office. The Board of Directors shall also present to the Members a statement of all resolutions approved by the Board during the previous fiscal year, a summary of major contracts authorized by the Board during the previous fiscal year and details of any major contracts authorized that were not subject to bid, if applicable.

CHECKS

65. All checks or demands for money and notes of the Association shall be signed by any two officers or such other persons as the Board of Directors may from time to time designate.

FISCAL YEAR

66. The Association shall operate upon the calendar year beginning on the First day of January and ending on the 31st. day of December of each year. The Board of Directors is expressly authorized to change from a calendar year basis to that of a fiscal year whenever deemed expedient for the best interest of the Association.

SEAL

67. The Corporate Seal shall have inscribed thereon the name of the Association, the year of its organization and words “Corporate Seal, Commonwealth of Puerto Rico.” Said seal may be used by causing it, or a facsimile thereof to he impressed, affixed, reproduced or otherwise affixed to any document(s).

MEMBERS’ MEETINGS

68. All meetings shall be held at the office of the Association or at such other place convenient to the Members as is designated by the Board of Directors.

69. An Annual Meeting of Members shall be held on the first Saturday after Easter each year, if not a legal holiday, and if so, on the next secular day following. At said Annual Meeting, the respective Voting District Class B Directors will be seated on the Board of Directors. At large Class B Directors, if needed, shall be elected by a majority of the Members present in person or by proxy. The meeting shall transact any other business as may properly be brought before it. Minutes of the Annual Meeting shall be made available to the Members within sixty (60) days after the Annual Meeting.

Within ninety (90) days, but not later than fortyfive (45) days, prior to the Annual Meeting of the Members, the Board of Directors shall advise the Delegates, in writing, of any issues that will require a vote of the Membership.

70. Written notice of the Annual Meeting shall be served upon or mailed to each member entitled to vote thereat, at such address as appears on the books of the Association at least thirty (30), but not more than fifty (50), days prior to the meeting. The Association’s Audited Financial Statements, as well as any other information the Board may deem of interest to Members, shall be included with the Notice of the Meeting. Such notice shall state the time and place of the meeting.

71. At least thirty (30) days before every membership meeting, a complete list of the members entitled to vote at said meeting, arranged alphabetically, with the residence of each Member, shall be prepared by the Secretary. Such list shall he available at the Association during normal working hours for said thirty (30) days for the examination of any member and shall he produced and kept at the time and place of the meeting during the whole time thereof, and subject to the inspection of any Member who may be present.

72. Special meetings of the Members, for any purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation, may be called by the President, or Secretary at the request in writing of the majority of the Board of Directors, or at the request in writing signed by Members having twenty five percent (25%) of the total number of votes of all Members of the Association. Such request shall state the purpose or purposes of the proposed meeting. Such special meetings shall be held not less than ten (10) nor more than thirty (30) days from the receipt date of such request.

73. Referendum ballots or notice of any meeting shall be given to the Members by the Secretary or other agent of the Association as designated by the Board of Directors. Referendum ballots or notice may be given to the Member either personally, or by sending copy of the ballot or notice through the mail, postage thereon fully prepaid to his address appearing on the books of the Association. Each Member shall register his address with the Secretary and ballots or notices of meetings shall be mailed to his said address. Notice of any meeting, regular or special, shall set forth in general the nature of the business to be transacted, provided, however, that if the business of any meeting shall involve and be governed by the Certificate of Incorporation or by the Covenants, or any action for which other provision is made in these Bylaws, notice of such meeting shall be given or sent as therein or herein provided. Anything herein to the contrary notwithstanding, any ballot or notice required to be given to any Member or Owner shall be deemed to have been properly given if sent to the person or entity who appears as Owner in the records of the Association, on the record date set for such meeting. Notice to one (1) or two (2) or more co-owners shall constitute notice to all co-owners. It shall be the obligation of every Member to immediately notify the Secretary of the Association of any change of address or any change in the ownership of property entitling one to be a Member of the Association.

74. The quorum required for any action governed by these Bylaws shall be as follows, unless otherwise provided: The presence at the meeting of Delegates representing Members, entitled to cast fifty one (51%) percent of the total vote of the Membership who are entitled to vote shall constitute a quorum If the required quorum is not forthcoming at any such meeting, a second meeting may be called, subject to the filing of proper notice, and the required quorum at such subsequent meeting shall be the presence at the meeting of Delegates representing Members or of proxies entitled to cast thirty (30%) percent of the total vote of the Membership who are entitled to vote.

75. When a quorum is present at any meeting, the vote of a majority of the Members, as represented by their Delegates, shall decide any question brought prior to such meeting, unless the question is one upon which by express provision of the statutes, or of the Certificate of Incorporation or of these Bylaws, a different provision shall govern and control the decision of such question.

76. AI any meeting of the Members, the Delegates will cast the vote of the Members as determined by the vote of those Members it their association or Neighborhood Area and confirmed in a Voting Certificate authorized by the association or Neighborhood Board of Directors. All proxies must be filed with the Secretary. No proxy shall extend beyond a period of eleven (11) months, and every proxy shall automatically cease upon sale by the Member of his interest in the Properties.

If any new issue is proposed and voted upon at the Annual Meeting of the Members, and that issue was not subject to a prior vote of the Members, each Member present at the Annual Meeting of the Members, in person or by proxy shall have the right to vote the number of votes relative to the Property they own. Delegates shall also have the number of votes relative to the Property they own and shall not have the right to vote for the members they represent.

TRANSFER OF MEMBERSHIP

77. Membership in the Association may be transferred only as an incident to the transfer of real property located within the Properties.

INDEMNIFICATION

78. The Association may indemnity any person made a party to an action by or in the right of the Association to procure a judgment in its favor by reason of his being or having been a Director, officer, or committee member of the Association against the reasonable expenses, including attorney’s fees, actually and necessarily incurred by him in connection with the defense or settlement of such action, or in connection with an appeal therein, except in relation to such matters as to which such Director, officer or committee member is adjudged to have been guilty of negligence or misconduct in the performance of his duty to the Association.

79. The Association shall indemnity any person made a party to an action, and of proceeding No( ceding other than one by or in the right of the Association No procure a judgment in its favor, whether civil or criminal, brought to impose a liability or penalty on such person for an act alleged to have been committed by such person in his capacity as a Director, officer or committee member of the Association, against judgments, fines, amounts paid in settlement and reasonable expenses, including attorney’s fees, actually and necessarily incurred as a result of such action, suit or proceeding, or any appeal therein, if such Director or officer acted in good faith in the reasonable belief that such action was in the best interest of the Association, and in criminal actions or proceedings, without reasonable ground for belief that: such action was unlawful. The termination of any such civil or criminal action, suit or proceeding by judgment, settlement, conviction or upon a plea of nolo contendere shall not in itself create a presumption that any such Director, officer or committee member did not act in good faith in the reasonable belief that such action was in the best interests of the Association or that he had reasonable grounds to believe that such action was unlawful.

MANAGEMENT

80. The Board of Directors may employ for the Association a professional management agent or agents at a compensation established by the Board of Directors. Said management agent or agents shall perform such duties and services as the Board shall authorize.

CONSTRUCTION

81. Wherever the masculine singular form of the pronoun is used in these Bylaws, it shall be construed to mean masculine or feminine, singular or plural wherever the context so requires, and shall include and apply to a corporation.

82. In the case of any conflict between the Certificate of Incorporation and these Bylaws, the Certificate shall control; and in the case of any conflict between the Covenants referred to in Section 1, and these By-laws, the Covenants shall control.

AMENDMENT OF BYLAWS

83. Those Bylaws may be amended by the affirmative vote or written consent, or any combination thereof, of Members, as represented by their Delegates, representing two thirds (2/3) of the total vote of the Membership and consent of the Company, as long as it owns any Property in the Palmas del Mar community.

Notwithstanding the above, the percentage of votes necessary to amend a specific clause shall not be less than the prescribed percentage of affirmative votes required for action to be taken under that clause.