Letter from Chepe and Allison Morales

Undated (April 3, 2001)

Dear fellow Zacatitos property owners,

As I am sure you are aware, we are quite pleased with the progress and success of our property. We have changed our focus slightly and plan to convert our current location to a retreat and holistic spa. Under this scenario it would not be appropriate to maintain the restaurant and business operations there.

We have recently acquired the parcel adjacent to the main road and will be moving our business and liquor license to that location. Some property owners have expressed disapproval, and information I have received indicates that a homeowner's association is in the process of creation. As landowners, we would expect to be part of the creation of any new guidelines or bylaws. Imposing restrictive covenants of lands by those persons with only a leasehold position could cause undue hardship on those who are the ultimate owners of the Property and may even be in violatgion of the Least Agreements in place. Plans from the original plat map indicate a mix of commercial and residential lands. As we all know this is only conceptual and that these land uses were only suggested by the developer. We would not recognize any new guidelines intended to minimize our efforts.

Any use of lands by Mexican nationals is not subject to suggested zoning by anyone other than the Mexican government. Based on this, we expect to not have any opposition from the subdivision regarding our future development. Further I am certain that everyone in our subdivision is aware that licenses and permits are required for foreign persons to donduct business in Mexico including operating lodging and rental properties. Many of the individuals in the association are not in compliance of these requirements and we have historically allowed this to occur since we are all neighbors and it is best to exist peacefully. I know that nobody wants any resistance or intervention from Federal regulators, therefore I expect that we will be allowed to make our renovations and additions without resistance.

If anyone is interested in reviewing our planned expansion, please feel free (to) contact us personally at our residence and we can discuss more fully, our plans for our new addition.

Sincerely,

(signed:)

Allison Cooper Morales
Jose Luis Morales


Chepe and Allison Morales