SGC Covenants

APPROVAL AND REGISTRATION

The following covenants have been approved by the Santa Cruz Gardens’ Lot Owners Association, hereinafter SCG-LOA, on ……………… 2006.

A copy of these covenants has been deposited with Santa Cruz Island’s Real Estate Registrar.

These covenants apply to the Santa Cruz Gardens subdivision and are to be followed, where applicable, by the lot owners, administrators, tenants, workers and visitors to the site.

These covenants are consubstantial to each lot in Santa Cruz and applicable regardless of lot ownership.

ADMINISTRATION

The SCG-LOA will be governed by the Santa Cruz Gardens General Assembly (SCG-GA), the Santa Cruz Gardens Board, hereinafter SCG-B, and its management will be carried out by its President, Vice-President and Secretary.

All lot owners in this subdivision shall be members of the Santa Cruz Gardens Lot Owners Association, and they will be subject to its Rules and Regulations. All lot owners will be compelled to abide by these Covenants and by the resolutions taken by the Santa Cruz Lot Owners Association (SCG-LOA) even if they did not participate in the respective decision making or if they voted against a resolution adopted by majority of votes.

Santa Cruz Gardens General Assembly

Resolutions adopted by the SCG-LOA and that do not change these covenants may be approved by simple majority of vote, unless otherwise specified herein.

A two third majority of the lot owners may modify these covenants. In any case no modifications can be made if there will be a negative impact on the ecosystem. Furthermore, to make sure no deviation from the principles is had any modification will also require the approval of the SCG-B. Additionally, in order to guarantee that no deviations from its Basic principles occur, any modification will also require the unanimous approval of the SCG-B

Meetings of the Santa Cruz Gardens General Assembly

The SCG-GA will meet ordinarily once a year during the first quarter of each year, and extraordinarily when summoned by the President, the Board, or lot owners representing at least 10% of the lots in Santa Cruz Gardens.

The SCG-GA, once a year, shall be informed of, shall issue a pronouncement and approve, as the case may be, the following issues:

• President’s report
• Financial Report
• Budget for the fiscal year and communal expenses for the year,
• President, Vice-President and Secretary Election, if applicable,
• Any other topic previously submitted to the President by lot owners.

CONVOCATION AND PROCEDURES

The President or the Secretary, as the case may be, shall convoke the meetings of the lot owners’ General Assembly by means of a communication sent to each one of its members. Such communication shall be sent to the e-mail addresses of each lot owner. The list of e-mail addresses shall be maintained and updated by the Secretary.

The Secretary shall notify the lot owners about the issues to be discussed at the assembly.

The lot owners shall have five (5) days from the date when the communication is sent to formulate comments or observations to the proposal.

The Secretary shall immediately retransmit to the lot owners all comments and observations as they are received by him or her, along with comments from the President or other project administrators, if applicable.

Within the three (3) days following the termination of the initial five (5) day period, the Secretary shall reformulate the proposal to be submitted to consideration of the lot owners, who will have an additional period of five (5) days to vote either in favor, against or to abstain from voting, and who will have the opportunity to express their comments in dong so.

The Secretary shall record the lot owners’ replies and formulate minutes containing the name of all those lot owners that have replied, their vote and a brief summary of their position or comments, if applicable. These minutes will be sent to all lot owners so that they may certify their content via a confirmation reply e-mail.

The SCG-GA may meet anywhere and anytime, and such meetings or the pronouncements about the topics discussed in the Assembly generated therein may be expressed via the Internet.

Santa Cruz Gardens Board of Directors.

The SCG-B shall be made up of three permanent members and their respective substitutes.

The Board will meet once a year during the first quarter of every year. Nonetheless , the Board can meet at any time. The Board can meet and decide on matters that fall under its responsibility through the Internet.

Minutes of the resolutions adopted by the Board will be kept on file. Once the Board has agreed on a resolution, such resolution’s text will be circulated amongst the Board members by the Board Secretary, who is the same person as the General Assembly’s Secretary. The ratification via email or fax will be valid. The Secretary will certify to this .

SCG-B Powers and Obligations

Santa Cruz Gardens ’ Board of Directors will have the following powers and obligations:

• Review SCG’s situation
• Ensure compliance with these covenants and with SCG’s environmental and social principles
• Provide guidance to the President, Vice-President and Secretary
• Authorize the President to carry out acts whose amount exceeds US$ 5,000 (individually or in aggregate).
• Approve the hiring of personnel for SCG, as well as their compensation, whose funds will be sourced from the communal expenses.
• Approve any architectural modification to the designs suggested for SCG.
• Approve any modification to these covenants, as may be suggested by the General Assembly.
• Study and adjust the amount of communal expenses and extraordinary contributions.
• All others invested in it by the SCG-GA.

President, Vice-President and Secretary

The President, Vice-President and Secretary shall be appointed by the SCG-GA for a two-year term. They may be replaced at any time by a simple majority of votes of the SCG-GA or may be reelected for successive terms.

The President, Vice-President and Secretary need not be lot owners in Santa Cruz Gardens.

The SCG-GA will establish the salaries to be paid to the President and Secretary. The Vice-President will not receive compensation . The funds for the foregoing compensations will be sourced from the communal expenses.

President Powers and Obligations:

The President shall have the following attributions and obligations:

• The President shall be the representative of the lot owners’ association.
• The President shall be in charge of ensuring and striving to achieve Santa Cruz Gardens’ adequate operation, adequate up-keeping of SCG’s facilities and communal areas as well as the supervision of SCG’s administrative personnel.
• The President’s responsibilities and attributions include hiring employees and workers required for SCG’s adequate operation, assigning them their respective responsibilities and salaries, prior Board of Directors’ approval.
• The President shall ensure that SCG, its lot owners, administrators, employees and visitors comply with SCG’s concepts and principles.
• The President shall formulate, for the General Assembly’s information and approval, all budgets and / or the support for any required extraordinary expense.
• The President may enter into any contract or carry out any act that does not exceed the monthly amount of US$ 5,000, without the Board of Directors’ prior written consent. Such act shall subsequently be duly justified and explained before the Board of Directors.
• The President is the lot owners association’s representative and the person in charge of channeling and solving all doubts, coordinating and verifying the performance of everything related of the lot owners.
• The President shall be one of the three members of the SCG Board of Directors.

Vice-President Powers and Obligations:

The Vice-President shall substitute the President during the latter’s absence or impediment, until the SCG-GA appoints the President, as the case may be.

The Secretary

All lot owners shall entrust their permanent e-mail addresses or home addresses to the Secretary. The Secretary shall maintain a list containing this information and shall record any and all changes that may occur on such list.

It is the lot owners’ exclusive responsibility to make sure that their updated addresses are on file in SCG’s books and records, through its Secretary. To this end, the Secretary shall confirm such information’s receipt from every individual sender.

The Santa Cruz Gardens Secretary shall also be the SCG-GA Secretary.

The Secretary will also act as SCG treasurer and, as such, shall keep a duly supported accounting registry of all inflows and outflows.

Secretary Powers and Obligations:

• The Secretary shall maintain a list of all lot owners containing their complete name, nationality, e-mail address, home address and telephone numbers.
• The Secretary shall inform all lot owners about the decisions adopted by the Board of Directors and the General Assembly.
• The Secretary shall certify the Board of Directors’ and the General Assembly’s resolutions.
• All other attributions imposed by these covenants, or that may be delegated to it by Santa Cruz Gardens’ President.

LOT OWNERS

Lot Owners’ Rights

The lot owners shall have the following rights:

• Be members of the Lot Owners Association
• Participate and vote in the General Assembly
• Have access to SCG’s accounting books and accounts
• Suggest any change, improvement or other for SCG
• Have the right to have the President inform them or solve any doubt they may have with respect to SCG.
• Have access to a be able to use SCG’s services and communal areas.

Lot Owners’ Obligations

The lot owners make the commitment to:

• Submit themselves to the SCG covenants contained herein.
• Pay their dues on time, both ordinary as well as extraordinary
• Have a generous and proactive attitude towards the fulfillment of SCG’s precepts.
• Look after the communal goods.
• Submit themselves to the Assembly’s resolutions
• Not migrate nor foster migration to the Galapagos
• Pay yearly property taxes.
• Any damage in the communal area or on third parties’ property caused by any lot owner or his or her guests shall be repaired at such lot owner’s expense and cost.

LOTS AND HOUSES

No individual lot may be subdivided into smaller lots.

Lot owners understand and accept that their lots could have easements on them for services or even for environmental purposes and accept to facilitate such easements’ establishment .

No temporary or unfinished structures are allowed. All commenced structures shall be finished in 18 months at the latest.

Houses will be no smaller than 1.000 square feet and will be no larger than 2.500 square feet.

Only one house can be constructed per lot. The use of two or more lots for the construction of each single home is highly encouraged, whenever possible.

Home owners will lay underground facilities so no above ground cables are had.

One and a half story houses will be permitted up to a maximum of 16 feet from ground level.

All constructions must adhere to local zoning laws and to these covenants and must have local-authority approvals .

Each house shall be located no nearer than ten (10) feet ( 3 m) from any side lot line, with the exception of the front, which will have a minimum separation at least 16.4 feet (5m).

No non-natural fences may be erected in the site or fences or barriers that significantly limit natural transit from one area to another.

Live fences are allowed provided endemic plants of the area are used. The maintenance of these live fences is the responsibility of each respective lot owner.

Mesh wire within natural fences may be used if research determines it has no detrimental effect on the zone’s fauna.

Natural Integrity

Lot owners shall respect the trees and plants in their lots removing or trimming only those essential for the placement of the house and the establishing of access ways.

The view will not prevail over the integrity of the plants and trees.

If lot owners perceive degradation of the natural state of their lots they will endeavor to revert this in an informed way through the planting of native plant species and the exercise of the greatest care.

Very minor landscaping will be allowed provided native plants from the zone are used. If this is to be done, we encourage it only be done in the access way to the house and possibly a bit at the front, with care not to alter the traditional natural setting of the area.

No non-native plants of the zone may be introduced.

No animals or pets are allowed.

No Motorized Vehicles

Lot owners commit to have no motorized land vehicles in the Galapagos, except, occasionally, a scooter or ATV, whenever justified.

The introduction of such vehicles is highly discouraged. Nonetheless, if the introduction of such vehicles was necessary, all local requirements shall be complied with.

The use of bicycles is encouraged as a fun and healthy alternative to motorized transportation.

Garbage, debris and other

No noxious or offensive activity shall be carried on upon any lot, nor shall anything be done on the site which may be or may become an annoyance or nuisance to the neighborhood or the environment.

No garbage or other debris shall be allowed to accumulate on the property.

Lot owners will endeavor to use construction materials and techniques which are sensitive to the environment. For example, the use of lead free paints, etc. This commitment will also apply to any contractor performing labors at SCG.

All trash and garbage shall be kept in covered containers. The lot shall not be permitted to become cluttered, littered or unsightly. Waste requiring specific disposal practices should be treated accordingly.

USES

Homes are to be used for private residence and not for commercial use. Homeowners may, however, rent or lend their homes to third parties, who will, in turn, abide by the rules of conduct set forth herein. No sign or display indicating from the exterior that the building is being utilized in whole or in part for any purpose other than that of a dwelling unit is to be used .

RESPONSIBILITY

Lot owners are ultimately responsible for any damages that they, their guests or tenants cause in the Communal Areas of Santa Cruz Gardens, as well as to SCG’s assets such as bicycles, kayaks and others that may be available to them.

Communal Areas

The Communal Areas are for the exclusive use of the lot owners and their guests and friends while staying in a home within the Santa Cruz Gardens premises.

The rules for the use of the Communal areas will be drawn up by the Board and approved by the General Assembly .

GENERAL

Lot Owners commit to maintaining the wooded integrity of the Subdivision and therefore agree to make all diligent efforts to save as many trees as possible , carrying out reforestation activities whenever necessary.

No campfires are allowed

The lot owners understand the special nature of the Galapagos and the privilege of owning land there. Consequently they will endeavor to fully comply with the Galapagos National Park regulations and with the Santa Cruz Gardens Principles, including these covenants, and will not allow to be troubled by the normal and at times even desirable limitations such a natural place may impose upon them.

The lot owners will hold the developer or land seller harmless should there be changes in legislation, inherent limitations, acts of god or nature, or non anticipated encumbrances upon the site or lots. The Lot owners understand that the Developers have made a diligent effort to provide soundness to the project.

The directors and administrators of the Association shall not be liable to the Lot Owners or any other third party for any error or mistake of judgment in carrying out their duties and responsibilities as directors or officers of the Association, except for their own individual willful misconduct, bad faith or gross negligence .

MAINTENANCE AND FEES

The maintenance of the inner roads, communal areas and services of Santa Cruz Gardens, as well as their eventual improvements will be the responsibility of the lot owners

The same applies to the monthly communal expenses, set in a fixed rate per lot, which may be adjusted from time to time by the Lot Owners Association .

The Board of Directors, once a year or whenever deemed convenient, shall analyze the amount of the monthly maintenance fees, and fees for extraordinary works and acts.

The ensuing proposal shall be submitted to the SCG-GA’s consideration for its approval.

Fees are set per lot, and not per house.

Monthly communal expenses must be paid semi-annually in advance to the SCG account that will be opened for this purpose. Payments will be made during the first five (5) days of the months of January, and July. Should the initial fees be payable on any month other than the foregoing, the initial advance payment will cover the number of months or fraction thereof until the next semi-annual period begins (i.e. either one or two months).

In case a lot owner fails to pay his or her semiannual dues, he or she shall pay in favor of the SCG-LOA a penalty fee corresponding to 25% of the semiannual fee due for every month of lateness, up to a total of 100% of the original amount.

If any fee remains unpaid for more than three months, SCG’s President, with full authority, may exercise legal actions seeking the collection, including auctioning off the real estate property through the corresponding order issued by the competent authority.

Notwithstanding the foregoing, at least three attempts will be made to notify of delinquent fees, and one reminder will be sent before fees become due, as follows:

• Fifteen days prior to the payment due date of communal expenses and/or any other fee contemplated herein, an e-mail reminder will be sent to all lot owners (at the e-mail addresses that each one is responsible for maintaining up to date with the LOA’s Secretary).
• If payment is not received by the due date, three consecutive e-mail notifications will be sent, 15 days apart, counted from the due date.
• Along with the second e-mail remainder, a written notification will be postage mailed to the registered address of the owner who has not paid, thus providing three attempts to notify delinquent fees electronically and by regular mail, with ample response time to settle all dues.

Note that the foregoing is based on the Association’s right to enforce the lien herein imposed to the same extent, including a foreclosure sale, and subject to the same procedures, as in the case of mortgages under applicable law, and the amount due by such owner shall include the fees outstanding plus the cost of such proceedings, including a reasonable attorney’s fee, and the applicable interest.

Therefore, each lot owner hereby covenants and agrees (i) that such owner will pay to the Association all Fees and Communal Expenses established herein, ordinary or extraordinary, including any interest charges imposed herein and the costs of enforcing the lien as provided above; (ii) that all Fees and Communal Expenses established herein, ordinary or extraordinary, including any interest charges imposed herein and the costs of enforcing the lien as provided above, and with the continuing obligation to pay all future fees assessed in all future years, shall be and remain a first charge against, and a continuing first lien upon the Real Estate Property he or she owns, and that such fees and liens shall be superior to any and all other charges, fees, liens or encumbrances which may hereinafter in any manner arise or be imposed upon such property.

Use of funds

Ordinary maintenance fees will be used for maintenance expenses, payment of services and payment of SCG’s administration, and to pay all other expenses that will have to be incurred in order for the subdivision’s up keeping and efficient operation.

Extraordinary Fees:

From time to time, the President or the Board of Directors may suggest the General Assembly the payment of extraordinary fees to pay for improvements or repairs that may be necessary to the subdivision’s communal areas, or to hire services, or for environmental improvements or donations.

Once the amount of the extraordinary fees have been approved by simple majority of votes in the Assembly, their payment becomes compulsory for all lot owners independently of whether or not they took part in the voting process or of whether or not they voted in favor of it.

ENVIRONMENTAL

Great sensibility should be exercised in the use of water and electricity, as well as other resources.

Soaps and detergents to be used in Santa Cruz Gardens will be biodegradable.

No animal shall be harmed or startled on purpose (this includes purposely chasing animals, scaring them or throwing anything at them), or in any way affected (which includes, among others, not feeding them, not trying to capture them, not touching them, etc.) .

All outside lighting in Santa Cruz Gardens will be low key and as efficient as possible. Such should not result in excessive glare toward the street or neighboring properties.

There shall be no application of herbicides or pesticides on the land, unless they are approved by local conservation authorities, they are used closely following their usage instructions and they are freely sold in Puerto Ayora .

All lot owners will exercise respect for the local community and its customs and will endeavor to contribute to their wellbeing through frequent use of their services, the purchase of their products, and educational interaction.

Protection and reserve zones will remain pristine (except for any initial infrastructure work; provided, however, that all such work will strive to cause the lowest possible impact).

If it is discovered that for any reason such zones are deviating from their natural, native condition immediate measures should be enacted to return such zones to such native condition.

There will be no use or visitation to the National Park through the lots. The National Park shall be only accessed through its public entrances and public visitors’ sites.

The communal areas shall remain as natural as possible. No unnecessary cutting of trees or harming of the native vegetation is allowed.

In the communal areas mostly natural walkways may be had and small patios or recreation areas consisting of small clearings among the trees may be made.

Lot owners shall strive to exercise patience, tolerance, easygoingness, warmness, joy and respect for one another and in general .