CAMARON AT WOODCREST, LLC a Florida Limited Liability Company OFFERING MEMORANDUM. 28 Membership Units - $100,000 Per Unit

Transcription

1 CAMARON AT WOODCREST, LLC a Florida Limited Liability Company OFFERING MEMORANDUM 28 Membership Units - $100,000 Per Unit

2 CAMARON AT WOODCREST, LLC a Florida Limited Liability Company OFFERING MEMORANDUM 28 Membership Units - $100,000 Per Unit CAMARON AT WOODCREST, LLC, is a Florida limited liability company (the "Company"), which has been formed to acquire, renovate and operate a 222-unit residential apartment complex in Tallahassee, Florida (the Property ). The Company's offices are located at State Road 7, Suite 300, Boca Raton, FL 33498, telephone number (561) The Company is raising a total of $2,800,000 (the "Offering Amount") pursuant to this offering (the Offering ) for the purpose of purchasing the Property, performing approximately $515,000 of renovations to the Property, paying closing and Offering costs, and establishing initial reserves. Until closing of the Company s purchase of the Property, the proceeds of this Offering will be held in trust by the Company s attorneys, Levinson & Lichtman, LLP. If subscriptions for the 28 Membership Units are not received by May 15, 2009, or July 31, 2009 if extended by the Company, this Offering will terminate and all subscription amounts will be returned to the Unit holders. The Manager of the Company is LN Development Group, LLC, a Florida limited liability company (the Manager ), which is owned by Jonathan J. Lichtman and Robert A. Nass (the Principals ). The Principals will be purchasing one Unit in the Offering for $100,000. The Manager and/or its Principals may, but are not required to, purchase additional Units in order to complete the Offering. The Units are being offered only to Accredited Investors, as that term is defined in SEC Regulation D, and should be purchased only by persons who can afford the risk of loss of their entire investment. There is no public market for the Units, and no market is expected to develop. The Units may be transferred only with the consent of the Manager. The Units are being offered through the Principals of the Manager, who will receive no commission in connection with their selling efforts. However, the Company reserves the right to sell Units through licensed broker dealers, to whom the Company may pay commissions of up to 5%, and to pay finders fees for introductions to potential investors. THE UNITS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFERING MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE UNITS ARE A SPECULATIVE, NONLIQUID INVESTMENT INVOLVING SIGNIFICANT RISKS. SEE "RISKS OF INVESTMENT". This Offering Memorandum is dated April 9,

3 INVESTMENT IN THE COMPANY INVOLVES A HIGH DEGREE OF RISK. INVESTMENT IS NOT RECOMMENDED FOR ANY INVESTOR WHO DOES NOT HAVE A SUBSTANTIAL NET WORTH AND WHO CANNOT AFFORD A TOTAL LOSS OF THE INVESTMENT. PROSPECTIVE INVESTORS NOT WILLING AND ABLE TO RISK COMPLETE LOSS OF INVESTED CAPITAL SHOULD NOT CONSIDER INVESTING IN THIS OFFERING. THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OFFERED SELLING LITERATURE. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED HEREUNDER ARE EXEMPT FROM REGISTRATION. THE SECURITIES OFFERED AND SOLD HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, NOR HAVE THEY BEEN REGISTERED WITH ANY STATE SECURITIES AGENCY. THE OFFER AND SALE OF SECURITIES HEREUNDER IS MADE IN RELIANCE ON THE EXEMPTIONS FROM REGISTRATION PROVIDED BY SECTIONS 3(b) AND 4(2) OF THE SECURITIES ACT AND RULES 505 AND 506 OF REGULATION D PROMULGATED THEREUNDER, AND FROM THE REGISTRATION PROVISIONS OF STATES IN WHICH THE SECURITIES MAY BE OFFERED OR SOLD. THESE SECURITIES MAY BE OFFERED ONLY IN THOSE STATES IN WHICH THE SECURITIES ARE REGISTERED OR EXEMPT FROM REGISTRATION UNDER APPROPRIATE STATE SECURITIES LAWS. IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. 3

4 THERE IS NO PUBLIC MARKET FOR THE UNITS AND IT IS NOT INTENDED THAT ONE WILL DEVELOP. THERE CAN BE NO ASSURANCE THAT INVESTORS WILL BE ABLE TO LIQUIDATE THEIR INVESTMENT IN THE EVENT OF EMERGENCY OR FOR ANY OTHER REASON. BECAUSE THE UNITS HAVE NOT BEEN REGISTERED WITH FEDERAL OR STATE SECURITIES AGENCIES, THE UNITS MAY NOT BE RESOLD WITHOUT REGISTRATION AND QUALIFICATION UNLESS AN APPROPRIATE EXEMPTION IS AVAILABLE. THE TRANSFERABILITY OF THE UNITS IS FURTHER RESTRICTED BY THE OPERATING AGREEMENT OF THE COMPANY. THE COMPANY IS UNDER NO OBLIGATION TO REGISTER THE SECURITIES UNDER THE ACT OR TO COMPLY WITH ANY EXEMPTION UNDER THE SECURITIES ACT OF INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. EXCEPT AS OTHERWISE INDICATED, THIS MEMORANDUM SPEAKS AS OF ITS DATE OF ISSUE. NEITHER THE DELIVERY OF THIS MEMORANDUM NOR ANY SALE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. HOWEVER, IF MATERIAL CHANGES DO OCCUR, THIS MEMORANDUM WILL BE AMENDED OR SUPPLEMENTED ACCORDINGLY. NO REPRESENTATIONS OR WARRANTIES OF ANY KIND ARE INTENDED OR SHOULD BE INFERRED WITH RESPECT TO THE PROJECTED INVESTMENT RETURN WHICH MAY ACCRUE TO INVESTORS IN THE COMPANY. EACH PROSPECTIVE INVESTOR MUST BE AWARE THAT THIS OFFERING MEMORANDUM AND THE ATTACHED EXHIBITS CONTAIN ESTIMATES AND PROJECTIONS WHICH HAVE BEEN PREPARED ON THE BASIS OF ASSUMPTIONS DESCRIBED THEREIN. ACTUAL INVESTMENT RETURNS MAY VARY CONSIDERABLY BASED UPON THE ACCURACY OF THE ASSUMPTIONS MADE. THE CONTENTS OF THIS MEMORANDUM ARE NOT LEGAL, INVESTMENT OR TAX ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT HIS ATTORNEYS, ACCOUNTANTS OR OTHER ADVISORS AS TO THE LEGAL, TAX, ECONOMIC AND RELATED ASPECTS OF THE CONTENTS DESCRIBED HEREIN AND AS TO ITS SUITABILITY FOR SUCH INVESTOR. EACH INVESTOR IS RESPONSIBLE FOR THE FEES OF HIS PERSONAL COUNSEL, ACCOUNTANTS AND OTHER ADVISORS. NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS MEMORANDUM, AND, IF GIVEN, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON. HOWEVER, NOTHING HEREIN SHALL LIMIT THE OPPORTUNITY OF ANY PROSPECTIVE INVESTOR OR HIS REPRESENTATIVE, ACCOUNTANT OR ATTORNEY TO ASK QUESTIONS OF AND RECEIVE ANSWERS FROM THE MANAGER CONCERNING THE TERMS AND CONDITIONS OF THIS OFFERING OR TO OBTAIN ADDITIONAL INFORMATION OR TO VERIFY THE ACCURACY OF ANY OF THE INFORMATION CONTAINED IN THIS MEMORANDUM OR IN ANY DOCUMENT REFERRED TO HEREIN. 4

5 THIS OFFERING MEMORANDUM DOES NOT CONSTITUTE AN OFFERING OR SOLICITATION OF AN OFFER IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED. THE INFORMATION CONTAINED IN THIS OFFERING MEMORANDUM IS FURNISHED ON A CONFIDENTIAL BASIS ONLY FOR USE BY THE INVESTOR AND BY HIS OR HER REPRESENTATIVES. BY ACCEPTANCE OF THIS OFFERING MEMORANDUM, EACH INVESTOR AND HIS REPRESENTATIVES AGREE THAT HE (1) WILL NOT TRANSMIT, REPRODUCE, OR MAKE AVAILABLE TO ANY OTHER PERSON THIS OFFERING MEMORANDUM OR ANY EXHIBITS AND OTHER DOCUMENTS SUPPLIED IN CONNECTION THEREWITH; AND (2) WILL RETURN ALL SUCH DOCUMENTS TO THE MANAGER IN THE EVENT THE SECURITIES OFFERED HEREBY ARE NOT PURCHASED BY HIM. THE COMPANY WILL: (1) MAKE AVAILABLE TO EVERY OFFEREE AND HIS OR HER ADVISORS, PRIOR TO SALE, ANY REASONABLY AVAILABLE INFORMATION REQUESTED BY THEM REGARDING THE COMPANY. (2) GIVE EACH PROSPECTIVE INVESTOR THE OPPORTUNITY TO ASK QUESTIONS OF AND RECEIVE ANSWERS FROM THE COMPANY CONCERNING ALL TERMS AND CONDITIONS OF THIS OFFERING. (3) OBTAIN FOR EACH PROSPECTIVE INVESTOR AND HIS OR HER ADVISORS ANY ADDITIONAL INFORMATION NECESSARY TO VERIFY THE ACCURACY OF ANY AND ALL INFORMATION MADE AVAILABLE. FOR FLORIDA RESIDENTS: THE UNITS REFERRED TO HEREIN WILL BE SOLD TO, AND ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION OF THE FLORIDA SECURITIES ACT. THE UNITS HAVE NOT BEEN REGISTERED UNDER SAID ACT IN THE STATE OF FLORIDA. IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE ISSUER, OR AN ESCROW AGENT OR WITHIN THREE DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER. 5

6 FOR NEW YORK RESIDENTS: THIS PRIVATE PLACEMENT MEMORANDUM HAS NOT BEEN REVIEWED BY THE ATTORNEY GENERAL PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. FOR PENNSYLVANIA RESIDENTS: EACH PENNSYLVANIA RESIDENT WHO SUBSCRIBES FOR THE SECURITIES BEING OFFERED HEREBY, AGREES NOT TO SELL THESE SECURITIES FOR A PERIOD OF TWELVE MONTHS AFTER THE DATE OF PURCHASE. UNDER PROVISION OF THE PENNSYLVANIA SECURITY ACT OF 1972, EACH PENNSYLVANIA RESIDENT SHALL HAVE THE RIGHT TO WITHDRAW HIS ACCEPTANCE WITHOUT INCURRING ANY LIABILITY TO THE SELLER, UNDERWRITER (IF ANY) OR ANY OTHER PERSON, WITHIN TWO BUSINESS DAYS FROM THE DATE OF RECEIPT BY THE ISSUER OF HIS WRITTEN BINDING CONTRACT OF PURCHASE OR IN THE CASE OF A TRANSACTION IN WHICH THERE IS NO WRITTEN BINDING CONTRACT OF PURCHASE, WITHIN TWO BUSINESS DAYS AFTER HE MAKES THE INITIAL PAYMENT FOR THE SECURITIES BEING OFFERED. 6

7 TABLE OF CONTENTS Page WHO SHOULD INVEST... 8 SUMMARY OF THE OFFERING RISKS OF INVESTMENT USE OF PROCEEDS DESCRIPTION OF THE PROPERTY ACQUISITION AND PLAN OF DEVELOPMENT FINANCIAL FORECAST MANAGEMENT PRIOR PERFORMANCE OF MANAGER AND AFFILIATES..39 COMPENSATION, FEES, AND INTERESTS OF THE MANAGER AND AFFILIATES CONFLICTS OF INTERESTS FIDUCIARY RESPONSIBILITY OF THE MANAGER ALLOCATIONS AND DISTRIBUTIONS SUMMARY OF OPERATING AGREEMENT RESTRICTIONS ON TRANSFER PLAN OF DISTRIBUTION LEGAL PROCEEDINGS ACCESS TO INFORMATION HOW TO SUBSCRIBE 52 EXHIBITS A. Financial Forecast and Assumptions B. Operating Agreement C. Property Management Agreement D. Inspection Report and Renovation Estimate E. Rent Roll as of March 31, 2009 F. Investor Questionnaire and Subscription Agreement Any document referenced in this Offering Memorandum but not provided as an Exhibit to this Offering Memorandum, will be provided by the Manager upon request at no charge. Requests for such documentation should be directed to Jonathan J. Lichtman at (561) This Offering Memorandum and other materials related to the Property can be found at the Manager s website at Contact Jonathan J. Lichtman at the above number or Robert A. Nass at (904) for the user name and password to access this information. 7

8 WHO SHOULD INVEST An investment in the Units carries significant risk and is suitable only for investors who have substantial financial resources in relation to their investment and who understand the risk factors of this investment. In addition, investment in the Units is suitable only for an Investor who does not need liquidity in his investment and is willing to accept substantial restrictions on the transfer of Units. Except as noted below, Units will be sold to an Investor only if the Manager reasonably believes that such Investor is an "accredited investor" within the meaning of Regulation D under the Securities Act of 1933 (the "Act"). An Investor may qualify as an "accredited investor" under Regulation D by meeting at least one of the following criteria (or any other criteria established by Regulation D): (a) The Investor is an individual with a net worth (or net worth with spouse) in excess of $1,000,000 (including home, home furnishings and automobiles); (b) The Investor is an individual with gross income in excess of $200,000 (or joint income with that person's spouse in excess of $300,000) in each of the past two years and who reasonably expects income in excess of $200,000 (or joint income with that person's spouse in excess of $300,000) in the current year; (c) The Investor is an entity (partnership, corporation, incorporated association, or trust) in which all of the equity owners qualify individually under subparagraph (a) or (b). An entity may qualify under this subparagraph even if newly formed for the purpose of investing in the Company; or (d) The Investor is a trust, other than an employee benefit trust, with total assets in excess of $5,000,000, not formed for the specific purpose of investing in the Company, whose purchase is directed by a person with such knowledge or experience in financial business matters that he is capable of evaluating the merits and risks of the investment. In addition, Units may be sold to no more than 35 Investors who do not satisfy the above criteria to qualify as "accredited investors." Any such sale shall be made in compliance with the limitations imposed by Regulation D. Any prospective Investor or his purchaser representative who is not an "accredited investor" must have such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the investments in the Company. In addition to the matters referred to above, each prospective investor will be required to represent that: (a) his overall commitment to investments which are not readily marketable is not disproportionate to his net worth and his investment in the securities will not cause 8

9 such overall commitment to become excessive; (b) he has adequate net worth and means of providing for his current needs and personal contingencies to sustain a complete loss of his investment in the Company and has no need for liquidity in his investment in the Units; (c) he has a net worth (exclusive of homes, home furnishings and automobiles) of at least five times his investment in the Offering; or (ii) the investor has a net worth (exclusive of homes, home furnishings and automobiles) of at least three times his investment in the Offering and the annual adjusted gross income of the investor is equal to or greater than his investment in the Offering; (d) he has carefully evaluated the risks of investing in the Company; (e) he has substantial experience in making investment decisions of this type or is relying on his own tax advisor or other designated purchaser representative in making this investment decision; (f) the objectives of the Company are compatible with his investment goals; (g) his purchase of the Units is for the purpose of investment and not with a view to resale or distribution thereof, and he understands that (i) neither the Company nor the Manager is required to register the Units under the Act or to take any steps to perfect any exemption therefrom for any resale of the Units pursuant to Rule 144 under the Act or otherwise, and (ii) transfer of Units cannot be effected without the consent of the Manager, which it may withhold in its sole and absolute discretion. Each purchaser will be required to execute an Investor Questionnaire and Subscription Agreement as set forth in Exhibit "F" which contains representations and warranties by which the prospective investor affirms, among other things, that he meets the standards set forth above. The Manager may, in its discretion, require an investor to provide additional information as a basis for satisfying itself that the prospective investor meets the suitability standards set forth above. The foregoing standards are minimum suitability requirements for purchasers, and satisfaction of these standards does not necessarily mean that the securities are a suitable investment for a prospective purchaser. The Manager reserves the right to reject any subscription in its entirety, or to allocate to any subscriber fewer Units than he has offered to purchase if, in its sole discretion, the Manager believes the prospective investor does not meet the applicable suitability requirements. In such event, the Manager will return to the subscriber his subscription funds and, in the event of a partial rejection, such person may be obligated to furnish the Company with a new subscription check in the appropriate amounts. 9

10 SUMMARY OF THE OFFERING The following is a summary of certain provisions of this Offering Memorandum. This summary is intended for reference only, and should not be relied upon as a complete description of the Offering. The sections of this Offering Memorandum following the summary and all Exhibits hereto describe in further detail all aspects of the Offering which are deemed to be material to investors. The entire Offering Memorandum and all Exhibits hereto should be read and understood by all investors. 1. The Company. Camaron at Woodcrest, LLC, is a Florida limited liability company (the "Company"), which has been formed to acquire, renovate and operate a 222-unit residential apartment complex located in Tallahassee, Florida (the Property ). The operation of the Company is governed by its Operating Agreement. See Summary of Operating Agreement. The Company's offices are located at State Road 7, Suite 300, Boca Raton, FL 33498, telephone number (561) Manager. The Manager is LN Development Group, LLC, a Florida limited liability company (the Manager ) The Manager is owned and controlled by Jonathan J. Lichtman and Robert A. Nass (the Principals ). See "Management." The Principals will be purchasing one Unit in the Offering for $100, Management of the Property. The Company will enter into a Property Management Agreement with LN Property Management, LLC (the Property Manager ), which is also owned by the Principals. The Company will pay to the Property Manager a management fee equal to 6% of the Gross Rental Income generated by the Property. See Management and Compensation, Fees and Interests of the Manager and Affiliates. 4. The Property. Camaron at Woodcrest is a 222 unit garden-style apartment community located in Tallahassee, Florida. The Property was constructed in 1971 and is comprised of 32 two story buildings distributed over almost 15 acres. The buildings are constructed of concrete block with brick veneer in an array of exterior styles. Residents at Camaron at Woodcrest enjoy an excellent amenity package including a designer decorated clubhouse, three swimming pools with sundecks, clubhouse, playground and a dog park. Individual units have fully appointed electric kitchens, private patios or balconies, washer/dryer hookups and fire places in select units. See "Description of the Property." 5. Renovations. The Seller of the Property has done approximately $900,000 of repairs to the Property to ready it for sale. In addition, the Company plans to perform approximately $515,000 of renovations in order to restore the Property to its prior desirability as a rental location. The Company will receive a $215,000 credit from the Seller which will be used to defray part of the cost of the planned renovations. Planned renovations include roof replacements, exterior painting, extensive landscaping, substantial 10

11 interior unit upgrades and other improvements to the Property. See "Description of the Property - Planned Capital Improvements." 6. Purchase Terms. The Company will purchase the Property for an all inclusive purchase price of $9,300,000. This translates into a purchase price of approximately $41,892 per apartment unit, or approximately $39.30 per square foot of rentable space. In addition, the Company will receive a $215,000 credit to defray part of the cost of planned renovations. Prior to foreclosure by Compass Bank, the Property was secured by a first mortgage in the amount of $15,500,000, which would indicate a much higher historical valuation. See Description of Property and "Acquisition and Financing." 7. The Offering. The Company is offering 28 Units of ownership interests (the "Units"). Each Unit represents a $100,000 Capital Contribution to the Company (the Capital Contribution ). The Unit holders will be entitled to an 8% annual Preferred Return on their Capital Contributions, the return of their Capital Contributions, and their pro-rata share of 60% of all Company distributions thereafter. See "Allocations and Distributions." If subscriptions for all 28 of the Units are not received by May 15, 2009, or July 31, 2009, if extended by the Manager, the Offering will be terminated and all subscription amounts will be returned to investors. The Principals will be purchasing one Unit in the Offering for $100,000, and the Manager or the Principals may, but are not required to, purchase additional Units in order to complete the Offering. 8. Financing. As part payment of the purchase price, the Company will deliver to Compass Bank a promissory note in the amount of $7,440,000 (the Note ), which is 80% of the purchase price. The promissory note will be secured by a first mortgage on the Property and will be guaranteed by the Principals of the Manager. During the first two years, the Note will require monthly payments of interest only at 4% per annum. After two years, the Note will bear interest at the Prime Rate and will require monthly payments of principal and interest based on a 25 year amortization. The Note will be payable in full after five years and may be prepaid at any time without penalty. At closing, the Company will place $50,000 in escrow with Compass Bank as an interest reserve. See Acquisition of the Property and Risks of Investment - Risks Associated with the Operation of the Project - Five Year Loan. 9. Refinancing. The Manager anticipates that, based on the renovations to be done by the Company and proper management of the Property, the rental revenues from the Property will be sufficient to refinance the Property after three years. The Company s plan is to refinance the Property for an amount sufficient to pay off the Note, return to the Members their Capital Contributions, and replace 22 roofs at the Property at an estimated cost of $412,000. There are no refinancing commitments in place at this time. See Risks of Investment Risks Associated with Operation of the Property Five Year Loan. 10. Sale of the Property. The Manager anticipates that the Property will be sold at the end of the sixth year of ownership. The sales price is projected to be between $71,186 and $79,400 per unit, which is based on a 7.25% to 6.5% capitalization rate. Based on these projections, Unit holders would receive an internal rate of return between %, at a 11

12 $71,186 per unit sales price, and 27.44%, at a $79,400 per unit sales price. See Financial Projections and Assumptions attached hereto as Exhibit A. An alternative exit strategy would be to convert the Property into condominiums if market conditions are favorable at that time. Such a conversion and sale as condominiums could greatly increase the sales proceeds from the Property and the Unit holders ultimate return on investment. Any decision to convert the Property into condominiums would require approval from Unit holders owning a majority of the Units. 11. Use of Proceeds. The Company is raising a total of $2,800,000 in this Offering. These Offering proceeds will be used to purchase and renovate the Property, pay all expenses relating to the loan, the purchase of the Property, the formation of the Company and the Offering, and establish initial reserves. In order to reduce the amount of equity required for the purchase and renovation, the Principals have agreed to defer $336,000 of fees, which will be earned at the time of closing, until the Unit holders have received an 8% Preferred Return plus the return of their Capital Contributions. See "Use of Proceeds" and "Description of the Property - Planned Capital Improvements." 12. Distributions to the Unit holders. Cash flow from operations and the sale of the Property will first be paid to the Unit holders to give them an 8% annual cumulative return on their Unrecovered Capital Contributions (the Preferred Return ). Additional cash flow, including any proceeds from a refinancing of the Property, will be distributed to the Unit holders, pro-rata, until they have been repaid all of their Capital Contributions. The Principals will then be paid their $336,000 of deferred fees. Thereafter, cash flow will be distributed 60% to the Unit holders, pro-rata, and 40% to the Manager. See "Allocations and Distributions" and "Summary of Operating Agreement." 13. Restriction on Transferability of Units. There is presently no public market for the Units of the Company. Moreover, there are substantial restrictions on the resale or transferability of these Units. See "Risks of Investment - Risks Associated with the Units" and "Restrictions on Transfer." 14. Risk Factors. Investments in companies with little or no operating history such as the Company are subject to a number of risks including, but not limited to, lack of financial strength, lack of operating history and specifically, the risks inherent in investing in real estate. Prospective investors should carefully consider the risk factors relating to the purchase of Units. See "Risks of Investment." 15. Investor Suitability Requirements. The Company will not sell Units to any prospective investor unless he represents, among other things, that he has sufficient net worth to afford the investment, adequate means of providing for his current needs and possible personal contingencies, and no need for liquidity with respect to his investment. In addition, he must represent that he, together with his professional advisor, has such business and financial experience that he is capable of evaluating the merits and risks of the investment. See "Who Should Invest." 12

13 RISKS OF INVESTMENT The purchase of Units involves a number of significant risks of investment. Prospective investors should consider, among other things, the following matters: RISKS ASSOCIATED WITH THE OPERATION OF THE PROPERTY Operational Risks and Changes in Economic Conditions: During the time the Company owns the Property, the Property will be subject to the risks generally incident to the ownership of rental real property, including fluctuations in occupancy rates and operating expenses; adverse changes in general or local economic conditions which may adversely affect rental income; increases in real estate tax rates; increase in insurance rates or the possible unavailability of casualty insurance; adverse changes in interest rates and availability of permanent mortgage funds which may render the sale or financing of real property difficult or unattractive; adverse governmental rules and policies (including environmental restrictions, real estate zoning laws and land use regulations); changes in competitive conditions; tenant defaults; and other factors which are beyond the control of the Company. There may also be shortages or increased costs of electricity, natural gas, or water, or allocations by suppliers or regulatory bodies having jurisdiction over the Property, which costs and effects upon the Property are impossible for the Manager to predict. See "Description of the Property." Risk of Leverage: Since the Company will incur mortgage indebtedness in order to acquire the Property, there is a risk of leverage. Risk of leverage includes possible foreclosure if the debt is not paid according to its terms. Also, payment of debt will reduce the amount available for distributions to Members. See "Acquisition and Financing." 13

14 Five Year Loan: As part of the purchase price for the Property, the Company will execute a promissory note in the amount of $7,440,000 in favor of Compass Bank, and will secure payment of that note with a first mortgage on the Property. The promissory note will be payable in full five years after its issuance. The Company plans to refinance the Property before the five year note term expires, and to use the proceeds of refinancing to repay the Unit holders Capital Contributions. There is no guarantee that the Property can be refinanced within the five year note term. If the Company is unable to refinance the Property within the five year note term, the Company may need to sell the Property at what could be an inopportune time, or face the possibility of foreclosure. If the Company is able to refinance the Property, there is no guarantee that the refinancing proceeds will be sufficient to repay the Unit holders Capital Contributions. The Unit holders capital contributions would then be returned over a longer period of time from operating profits. See "Acquisition and Financing." Environmental Issues: The value of the Property could be adversely affected by legislative and administrative action at the local, state and national levels in the area of environmental controls, including, but not limited to, possibly increasing restrictive zoning regulations and related plan use controls. The Company has not had an environmental assessment performed on the Property, but has received and reviewed a Phase I Environmental Site Assessment Report dated April 18, 2008, performed by Phase Engineering, Inc., and prepared for the current owner of the Property. The Phase I Environmental Report found no evidence of environmental hazards at the Property. Uninsured Losses: The Manager will arrange for the Property to be covered by comprehensive insurance, including public liability and property damage and fire and extended coverage insurance, which are customarily obtained for similar properties. However, there are certain types of losses (generally of a catastrophic nature such as earthquakes, floods and wars) that are either uninsurable or not economically insurable. Should such an uninsured casualty cause damage or destruction to the Property, the Company could lose both its invested capital and anticipated profits in the Property. In addition, the cost of many forms of insurance coverage has escalated rapidly in recent months in addition to a decrease in the availability of coverage. This is especially true with Florida due to hurricane activity. There can be no assurance that the Company will be able to maintain adequate, economically reasonable coverage. 14

15 No Diversity: The Company will not be diversified in its investments, since the net proceeds from this Offering will be invested in a single property. The Company will not have the benefit of either diversity of geographic location of its investments or diversity derived from investing in various types of properties or enterprises to protect Company capital in the event of a major change in the value of real property in the area. Possible Failure to Achieve Forecasted Benefits: Financial Forecast and Assumptions are set forth in Exhibit "A" attached hereto and are included in this Offering Memorandum for illustrative purposes only. The actual results of operations may vary substantially from the financial forecasts and assumptions due to the risks inherent in the development and operation of a business, including, but not limited to, the Risk Factors set forth herein. Each prospective investor should carefully review the assumptions upon which the forecasts are based. Such assumptions are based upon facts and events over which the Company and the Manager will have little or no control, including, but not limited to, certain interpretations of federal income tax laws and unforeseen increases in operating expenses which are not offset by increased revenues. There is no assurance that actual events correspond with the assumptions made. See "Financial Forecast and Assumptions." Financial Risks: It is projected that the total operating expenses for the Property will allow for the accumulation of a reserve from which distributions to Members can be made and a reserve balance can accumulate. If operating expenses should be higher than projected, or if total rental income should fail to meet projections due to vacancies or other reasons, then the total cash reserve from which distributions can be made will be impacted. Furthermore, if extraordinary expenses necessary for the preservation and maintenance of the Property are incurred, such expenditures will also adversely impact the cash reserve from which distributions will be made. If expenses of the Property exceed the rental in any year or years, the Company will incur operating deficits which will adversely impact any reserve balance and which could require additional borrowing by the Company. Loss on Dissolution and Termination: Upon dissolution of the Company, the proceeds realized from sale of the Property will be distributed to the Members, but only after the satisfaction of claims of creditors, both secured and unsecured. Accordingly, the ability of a Member to recover all or any portion of his or her investment will depend on the amount of available funds following satisfaction of such claims. There can be no assurance that adequate funds will be available to return the Capital Contribution of any Member. 15

16 Manager Newly Formed: RISKS ASSOCIATED WITH MANAGEMENT While the Principals of the Manager have experience in the acquisition, renovation, management and sale of rental real estate, LN Development Group, LLC, the Manager, has only recently been formed and has limited capital resources and operating history. See Management. Reliance on Management: Except for limited voting rights with respect to certain major operational matters, Unit holders have no right to participate in decisions relating to the conduct and the operation of the Company business. The Unit holders must rely solely upon the ability of the Manager and its Affiliates. See "Management." Competition with Other Ventures of the Manager: The Manager or its Affiliates may sponsor other investment programs involving the acquisition, ownership, rental and sale of real property. These activities may be in competition with the activities of the Company, and may generate conflicting demands upon the time and efforts of the Manager and its Affiliates. There may be, in addition, conflicts of interests on the part of the Manager between the Company and the other investment programs at such time as the Company attempts to rent or sell real property, to employ property managers, and under other circumstances. See "Conflicts of Interest." No Registration: RISKS ASSOCIATED WITH THE UNITS Units may only be acquired for investment purposes, and not with a view to distribution or resale. The Units will not be registered under the Securities Act of 1933, as amended, by reason of exemptions under the provisions of Sections 3(b) and 4(2) of the Act, and Rules 505 or 506 Regulation D, which exemptions depend in part upon the investment intent of the investors in the Company. In addition, federal and state securities law and the Operating Agreement provide substantial limitations on the transfer or assignment of the Units. If, as a result of some change in circumstances not presently contemplated, a Member wishes to transfer all or part of his Units, it is probable that no market for the Units will exist due to market conditions or the general liquidity of the Units. 16

17 Rescission: The Manager is relying on certain exemptions from federal and state securities laws in making this Offering without registration. If for any reason, the Offering is ruled not to qualify under those exemptions, it could become necessary for the Company to rescind the Offering. If rescission were to be required, both the capital and assets of the Manager and the Company could be adversely affected, jeopardizing the ability of the Company to operate successfully. Further, the time and capital of the Manager, and ultimately those of the Company and Members, could be adversely affected by the Manager's need to defend an action by enforcement authorities of the Securities and Exchange Commission or the securities agency of a particular state even if the Manager is ultimately exonerated. Limited Transferability of Units: There is presently no public market for the Units to be issued pursuant to this Offering. The Units will be restricted securities and cannot be resold, transferred, pledged, or otherwise disposed of without prior registration under the Act or by reason of an exemption from such registration requirements. The Units can be transferred only in accordance with the provisions of the Operating Agreement, which imposes substantial restrictions on transferability. A public market is unlikely to develop in the future. The Company is under no obligation to create a public market for the Units, and does not intend to do so. No commitment exists by anyone to purchase all or any part of the Units issued. Unit holders may thus be required to retain their Units for an indefinite period. Consequently, the Members may not be able to liquidate their investment in the event of emergency or for any other reason. Relation of Offering Price to Intrinsic Value: The selling price of the Units offered hereby was determined by the capital needs of the Company. There is no relationship to commonly-used criteria of value such as "book value" or earnings per Unit. The Company has no issued or outstanding Units at the present time. Risk of Premature Termination: The withdrawal, dissolution or resignation of the Manager will dissolve the Company, unless within 90 days thereafter Members holding a majority of the Units elect to continue the Company s business and select a successor Manager or Managers, as provided in the Operating Agreement. Failure to so act could result in termination of the Company and a sale of the Property at an economically inappropriate time. 17

18 USE OF PROCEEDS The following schedule of Sources and Uses of Funds summarizes the sources and uses of the Company s funds, including the proceeds of this Offering. For a detailed schedule of the sources and uses of funds, as well as the uses of the other funds estimated to be available to the Company, including cash flow from operations, see the Statement of Forecast Sources and Uses of Cash as set forth in the Financial Forecast and Assumptions attached hereto as Exhibit "A." Sources of Funds: Capital Contributions from sale of Units $ 2,800,000 First Mortgage Loan 1 7,440,000 Renovation Credit 2 215,000 Total Sources of Funds: $10,455,000 Uses of Funds: Property Purchase Price $ 9,300,000 Capital Improvements 2 515,000 Closing Costs 3 195,000 Syndication Costs 4 150,000 Organizational Costs 5 5,000 Broker Commissions and Finders Fees 6 80,000 Real Estate Commissions 7 0 Prepaid Insurance and Utilities 25,000 Interest Reserve 50,000 Working Capital Reserves 135,000 Total Uses of Funds: $10,455, $7,440,000 of the purchase price for the Property will be paid by delivery of a promissory note secured by a first mortgage on the Property. See "Acquisition and Financing." The Renovation Credit will be placed in escrow with Compass Bank at closing and will be released to the Company when the Company has completed $285,000 of its planned $515,000 of renovations at the Property. For a description of the planned Property renovations, see "Description of the Property -- Planned Capital Improvements." 18

19 Closing costs related to the purchase of the Property include costs for filing fees, documentary stamp and intangible taxes on the note and mortgage and legal fees. These costs will be capitalized as depreciable costs of the Property. Syndication costs represents a $300,000 syndication fee to be paid to the Principals for their efforts in finding and negotiating the purchase of the Property and obtaining the first mortgage on the Property. Payment of $150,000 of the syndication fee will be deferred until the Unit holders have received the return of their Capital Contributions, plus an 8% Preferred Return on their investment. Organizational costs include professional fees incurred for the organization of the Company and the preparation of the Operating Agreement. These costs will be capitalized as organization costs and amortized over 60 months. The Units are being offered through the Principals of the Manager, who will receive no commission in connection with their selling efforts. However, the Company reserves the right to sell Units through licensed broker dealers, to whom the Company may pay commissions of up to 5%, and to pay finders fees for introductions to potential investors. Total commissions and finders fees are estimated to be approximately $80, A real estate commission equal to 2% of the purchase price, or $186,000, will be paid by the Company to Affiliates of the Principals. Payment of this commission will be deferred until the Unit holders have received the return of their Capital Contributions, plus an 8% Preferred Return on their investment. Until closing of the acquisition of the Property, all proceeds of this Offering will be received and held in an escrow account for the benefit of the investors to be used only for the purposes set forth in this Offering Memorandum. DESCRIPTION OF THE PROPERTY The following material is based on information obtained from the Seller of the Property, which is an Affiliate of Compass Bank. The Manager has made inquiries through independent sources and has completed a personal inspection of the Property in order to verify the Seller's representations. Nevertheless, the Manager can in no way warrant the accuracy or completeness of any information contained herein. Further, no prediction can be made as to economic trends or other trends in the general economy of the Tallahassee, Florida area. 19

20 1. The Property. Camaron at Woodcrest is a 222 unit garden-style apartment community located in Tallahassee, Florida. Tallahassee is Florida s state capitol as well as the home of a total of seven institutions for higher learning, including three major colleges and universities. As a result, the city functions as Florida s center for both government and education. These two areas make up far and away the largest sources of employment for the city s residents. The combined student enrollment exceeds 60,000 and the overall metro population is approaching 350,000. Tallahassee benefits from a stable economy and an unemployment rate well below the national average. Its residents enjoy pleasant living conditions with a cost of living index consistently close to the nation s average. The city has become a regional center for technological advancements and has adopted the nickname Silicon Valley South. Like much of the Northern portion of Florida, Tallahassee experiences an economic boost from flourishing tourism, especially in the warmer months from March to September. Ranked second on Epodunk s 2007 list of best college towns and Top Ten on Kiplinger s Personal Finance Magazine s list of best college towns for grownups, Tallahassee has evolved into an ideal place to go to school, pursue a career and raise a family. Camaron at Woodcrest enjoys a prime north Tallahassee location close to various employment, entertainment and dining opportunities. The Property is located just across the street from the Tallahassee Mall, one of the region s largest malls and home to over 100 specialty shops, various big box retailers, fifteen restaurants and the area s largest theatre complex. Also situated in close proximity to Camaron at Woodcrest is the Tallahassee Memorial Healthcare Facility, a major source of employment for the Property s tenants. The hospital is home to 500 doctors and a total of 770 patient beds, making it the eighth largest hospital in the State of Florida. Camaron at Woodcrest is also located near the Florida State Capital complex and within a ten minute drive of each of Tallahassee s three major institutions for higher education: Florida State University, Florida A&M University and Tallahassee Community College. Camaron at Woodcrest was constructed in 1971 and is comprised of 32 two story buildings distributed over almost 15 acres. The buildings are concrete block construction, with a brick veneer, in an array of exterior styles. Residents at Camaron enjoy an excellent amenity package including a designer decorated clubhouse, three swimming pools with sundecks, clubhouse, playground and a dog park. Camaron at Woodcrest provides a favorable unit mix of 48 one bedroom units, 108 two bedroom units, and 32 three bedroom units, as well as 34 two and three bedroom townhouses distributed among twelve distinct floor plans. Units range in size from 760 to 1,456 square feet, with an average unit size of 1,066 square feet. All apartments include fully appointed electric kitchens, washer/dryer hookups and private patios or balconies. Select units contain fireplaces. 20

21 Due to its favorable location, unit mix and amenity package, Camaron at Woodcrest has historically enjoyed high occupancy levels and solid performance. However, in late 2006, the previous owner refinanced the Property in order to pursue a condominium conversion strategy. Due to the disappearance of the condominium market, this strategy was never executed and, with the new debt structure in the amount of $15,500,000, there was not sufficient cash flow to cover the debt service. Compass Bank, as the first mortgage holder, filed for foreclosure in July 2007, and recently took title to the Property in the name of an Affiliate, Camaron ADMG Partners, LLC (the Seller ), which is selling the Property to the Company. From the time the foreclosure action was filed until the Seller took title, the Property was not properly managed and no efforts were made to lease units as they were vacated. Consequently, as of August 2008, the Property was approximately 50% vacant, and various units were in disrepair. The Manager believes that Camaron at Woodcrest offers an opportunity to purchase a fundamentally sound asset in a good location, and to significantly improve the Property s value through renovations and proper marketing and management. 2. Statistical Summary Purchase price of property $9,300,000 Number of Apartment Units 222 Net Rentable Square Footage 235,052 Average Square Feet per Unit 1,066 Purchase Price Per Unit $41,892 Purchase Price Per Rentable Square Foot $39.30 Number of Acres Number of Buildings 32 Unit Amenities Common Amenities Fully appointed electric kitchens Private patios or balconies Washer/dryer hookups Fire places in select units Three Pools with Sundecks Clubhouse Dog Park Playground 21

22 3. Environmental Issues. The Company has received and reviewed a Phase I Environmental Site Assessment Report dated April 18, 2008, performed by Phase Engineering, Inc., and prepared for the current owner of the Property. The Phase I Environmental Report found no evidence of environmental hazards at the Property. See "Risks of Investment -- Environmental Issues." 4. Rental Units. The following is a summary of the Property's rental units: # of Street Approx. Total Street Units Style Rent/Mo. Sq. Ft. Rent/Mo bdrm/1 bath $ SF $31, bdrm/1 bath $ SF $40, bdrm/2 bath $749 1,108 SF $39, bdrm/2 bath $889 1,319 SF $28, bdrm/1.5 bath townhouse $839 1,264 SF $13, bdrm/2.5 bath townhouse $979 1,456 SF $17, Monthly Gross Potential Rental Income $170,338 Annual Gross Potential Rental Income $2,044,056 A copy of the rent roll for the Property as of March 31, 2009, is attached hereto as Exhibit "E". The Manager intends to continue the current policy of giving a free rental unit to the property manager, using two units as models and giving other employees a 20% discount on rental units. These policies are reflected in the Financial Forecast and Assumptions attached hereto as Exhibit "A". 5. Tenant Description. The tenant population is a mixed resident composition of generally moderate to upper income wage earners with a mix of blue and white collar jobs. The tenant population is composed of approximately 45% families, 30% couples without children, 15% singles, 5% seniors, and 5% graduate students. The Property does not accept undergraduate students as tenants. Tenants are employed by a variety of local industries and businesses including the Florida government, businesses located at the Tallahassee Mall, the Tallahassee Memorial Healthcare Facility and neighboring universities including Florida State University, Florida A&M University and Tallahassee Community College. A significant portion of tenants own their own businesses. Each new tenant signs twelve month lease after their rental application has been reviewed. A security deposit is collected with the first month's rent. 22

23 6. Comparable Apartment Buildings. The following survey of comparable apartment buildings has been conducted by Marcus & Millichap, the transactional broker for the sale of the Property. The Manager has not independently verified such information. Name/ Avg. Avg. Approx. Age Rent/Unit Rent/S.F. Occupancy Comp 1. Rolling Hills $790 $.75 89% Built 1973 Comp 2. Meridian Place Apartments $769 $.73 94% Built 1970 Comp 3. Londontown Apartments $795 $.71 97% Built 1972 AVERAGE FOR $785 $ % COMPARABLES CAMARON AT $826 $.74 50% WOODCREST Built 1971 Based on the above comparison, the average rent per unit of the Property is consistent with rents charged by other properties in the immediate area. Based on its independent inspection of the surrounding area, the Manager believes that Camaron at Woodcrest is a substantially better property than the above comparable properties with larger units, and that after completing the planned improvements it will be possible to raise the occupancy to the 92% to 95% range. The Manager also believes that after the initial renovations are done to the Property, it may be possible to raise rents. See "Description of the Property -- Planned Capital Improvements." 23

24 7. Prior Improvements to the Property. The Seller of the Property has already made, or will complete prior to closing, extensive repairs to the Property in order to prepare the Property for sale. The Seller has represented the total amount of these repairs to be approximately $900,000, mostly to refurbish and renovate the interior of the apartment units. These repairs and renovations include: Bathroom Fixtures Electrical, HVAC and Plumbing Kitchen Appliances and Fixtures Painting Carpets, Drapes and Furnishings Remodeled Leasing Office Pruned all Trees on Property Renovations/Remodeling on Down Units Seal Coat and Re-stripe Parking Lot Improved Entrance Signage and Landscaping Repaired Some Draining Issues In addition, the Seller will give to the Company at closing a $215,000 credit for further repairs and renovations. The credit will be placed in escrow with Compass Bank at closing and will be released to the Company when the Company has completed $285,000 of its planned $515,000 of renovations at the Property. 8. Inspection of Apartment Units/Development Plan. The Principals of the Manager have inspected all units at the Property. In addition to the approximately $900,000 of renovations already done, or to be done before closing, by the Seller, and in addition to the $215,000 of renovations to be paid for from a credit to be received from the Seller at closing, the Company plans to spend approximately $300,000 from the offering proceeds to further improve the Property. The renovations to be done are described in "Description of the Property -- Planned Capital Improvements" and in the Inspection Report and Renovation Estimate attached hereto as Exhibit D. During the first year of ownership, the Manager will make the physical improvements to the Property and enter into an aggressive plan to rent vacant units. The Manager believes that after the renovations are completed, the Property will have substantially more attractive units than other rental properties in the area, and that with aggressive marketing the Company can reach its goal of 92% to 95% occupancy within a reasonably short period of time. The Company s occupancy objective is consistent with other rental apartment properties in the area. Once the Property s occupancy rate is brought to the 92% to 95% level, the Company plans to refinance the Property. The Company plans to use a portion of the refinancing proceeds to replace an additional 22 roofs at the Property at an estimated cost of $412,

25 9. Planned Capital Improvements. The Manager estimates that the Property will require the following capital improvements in order to achieve its objective of a 92% to 95% occupancy rate: Interior Upgrades $ 223,900 Turn to Rent Units 71,400 Exterior Concrete Repairs 15,000 Railing Repairs 22,000 Replace Vinyl Shutters 18,900 Roof Replacements 54,020 Lighting Sconces Exterior 17,780 Landscaping 58,000 Erosion and Drainage Repair 8,000 Car Wash Station 6,000 Painting and Pressure Cleaning Exterior 12,000 Pool Furniture 8,000 Total Rehabilitation Cost $ 515,000 Pursuant to the above schedule, the Company will replace 4 roofs in the first year of operation. An additional 22 roofs are scheduled to be replaced upon refinancing of the Property. These improvements are further explained in the Inspection Report and Renovation Estimate prepared by Landmasters, Inc., an Affiliate of the Manager, which is attached hereto as Exhibit D. 25

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30 Tallahassee Mall SUBJECT PROPERTY Tallahassee Memorial Healthcare Tallahassee Community College Florida State University Capital Complex Doak Campbell Stadium Governors Square Mall Florida A&M University

31 STUDIO A 1BR & 1BA SF STUDIO B 1BR & 1BA SF 30

32 GRENWICH A 2BR & 1BA SF GRENWICH B 2BR & 1BA SF 31

33 EDISON A 2BR & 2BA 1102 SF EDISON B 2BR & 2BA 1102 SF 32

34 RIVERDALE 2BR & 2BA 1119 SF GARDEN 2BR & 2BA 1105 SF 33

35 WOODLAWN A 3BR & 2BA 1315 SF WOODLAWN B 3BR & 2BA 1325 SF 34

36 ASHLAR 2BR & 1.5BA TOWNHOUSE 1264 SF HUDSON 3BR & 2.5BA TOWNHOUSE 1456 SF 35

37 ACQUISITION AND PLAN OF DEVELOPMENT The Company has entered into a Purchase and Sale Agreement dated January 2, 2009, as amended, with Camaron ADMG Partners, LLC (the Seller ) which is an Affiliate of Compass Bank and holds title to the Property. Pursuant to the Purchase and Sale Agreement, the Company will purchase the Property, including all personal and intangible property used therewith, for an all inclusive purchase price of $9,300,000, or $41,892 per apartment unit. In addition, The Company will receive a $215,000 credit from the Seller to defray part of the cost of the planned renovations. Prior to foreclosure by Compass Bank, the Property was secured by a first mortgage in the amount of $15,500,000, which would indicate a much higher historical valuation. As part payment of the purchase price, the Company will deliver to Compass Bank a promissory note in the amount of $7,440,000 (the Note ), which is 80% of the purchase price. The promissory note will be secured by a first mortgage on the Property and will be guaranteed by the principals of the Manager. During the first two years, the Note will require monthly payments of interest only at 4% per annum. After two years, the Note will bear interest at the Prime Rate and will require monthly payments of principal and interest based on a 25 year amortization. The Note will be payable in full after five years and may be prepaid at any time without penalty. See Risks of Investment -- Risks Associated with the Operation of the Project Five Year Loan. The Manager anticipates that, based on the renovations to be done by the Company and proper management of the Property, the rental revenues from the Property will be sufficient to refinance the Property after three years. The Company s plan is to refinance the Property for an amount sufficient to pay off the Note, return to the Members their Capital Contributions, and replace 22 roofs at the Property at an estimated cost of $412,000. See Risks of Investment -- Risks Associated with the Operation of the Project Five Year Loan. The Manager anticipates that the Property will be sold at the end of the sixth year of ownership. The sales price is projected to be between $71,186 and $79,400 per unit, which is based on a 7.25% to 6.5% capitalization rate. Based on these projections, Unit holders would receive an internal rate of return between 24.55%, at a $71,186 per unit sales price, and 27.44%, at a $79,400 per unit sales price. See Financial Projections and Assumptions attached hereto as Exhibit A. An alternative exit strategy would be to convert the Property into a condominium and sell the condominium units if market conditions are favorable at that time. Such a conversion and sale as condominiums could greatly increase the sales proceeds from the Property and the Unit holders ultimate return on investment. Any decision to convert the Property into a condominium would require approval from Unit holders owning a majority of the Units. 36

38 FINANCIAL FORECAST Presented in Exhibit "A" to this Offering Memorandum is a Financial Forecast and Assumptions for the Company s operations, including information as to the expected benefits per Unit. The entire Offering Memorandum describes in detail numerous aspects of the transaction which are not included in this Financial Forecast, but which are material to prospective investors. Therefore, the Offering Memorandum and the accompanying Exhibits should be read in their entirety by prospective investors. The Financial Forecast is qualified in its entirety by reference to the entire Offering Memorandum and, in particular, to the sections entitled "Risks of Investment" and "Description of the Property." ANY FORECAST PRESENTED IN EXHIBIT "A" OR ELSEWHERE IN THIS OFFERING MEMORANDUM ARE ONLY THE MANAGER S BEST ESTIMATION OF THE FUTURE OF THE COMPANY, AS PREPARED IN GOOD FAITH BY THE MANAGER, AND AS SUCH, SHOULD NOT BE RELIED UPON TO INDICATE THE ACTUAL RESULTS WHICH WILL BE ATTAINED. THESE ARE ONLY ESTIMATES AND NO ASSURANCE CAN BE GIVEN THAT ANY OF THE ASSUMPTIONS UPON WHICH THE FORECAST IS BASED WILL IN FACT OCCUR OR BE EXPERIENCED. THE ACHIEVEMENT OF ANY FINANCIAL FORECAST MAY BE AFFECTED BY FLUCTUATING ECONOMIC CONDITIONS AND IS DEPENDENT UPON THE OCCURRENCE OF FUTURE EVENTS WHICH CANNOT BE ASSURED. THEREFORE, ACTUAL RESULTS ACHIEVED WILL VARY FROM THE FORECAST AND THE VARIATIONS MAY BE MATERIAL. ALL AMOUNTS ARE ESTIMATES ONLY AND NO REPRESENTATION IS MADE OR SHOULD BE INFERRED WITH RESPECT TO THE ACCURACY OR COMPLETENESS OF THE FORECAST, THE UNDERLYING ASSUMPTIONS OR THE OTHER ECONOMIC MATTERS REFERRED TO HEREIN. 37

39 MANAGEMENT LN Development Group, LLC, is the Manager of the Company. The Manager was recently formed specifically for this purpose. The principals of the Manager are Jonathan J. Lichtman and Robert A. Nass (the "Principals"). The Manager will be responsible for overseeing all aspects of the Company and the Property including its subsequent sale. In performing these management functions, the Manager will draw upon the expertise of the Principals. The Company will enter into a Property Management Agreement with LN Property Management, LLC, which is also owned and controlled by the Principals (the "Property Manager"). See Property Management Agreement attached hereto as Exhibit C. Under the Property Management Agreement, the Property Manager will receive a management fee from the Company, payable monthly, equal to six percent (6%) of the gross income generated by the Property. All costs of managing the Property will be paid from this fee, except for on-site or supervisory personnel, the cost of maintaining an on-site office, the cost of reports to the Partners, the accounting fees for preparation of all tax returns, travel to the Property and any other costs not customarily paid out of management fees by management companies in Tallahassee, Florida. The Property Management Agreement provides for termination by either party without penalty upon 60 days written notice. Since both the day to day management and the overall decisions regarding the Company and the Property will be made by the Manager and its Affiliates, the success of the Property will be dependent on the Principals. See "Risks of Investment -- Risks Associated with Management." Presented below is a description of the business activities principal occupations and relevant affiliations of each of the Principals. Further information about the Principals and their prior real estate activities can be found at Jonathan J. Lichtman, age 57, is a partner with the Boca Raton and Miami Beach law firm of Levinson & Lichtman, LLP. A substantial portion of his legal practice involves the structuring of corporate and partnership transactions including real estate syndications. Mr. Lichtman obtained his J.D. Degree, cum laude, from Syracuse University College of Law and his LL.M. Degree in Taxation from the University of Miami School of Law. He is a member of the New York and Florida Bars and is also a Certified Public Accountant. Beginning in 1993, Mr. Lichtman and his long time partner, Robert Nass, began to purchase distressed apartment complexes in Florida. Many of these properties were sold as private placements to investors. Mr. Lichtman has also acted as a general partner and owner of numerous real estate partnerships in New York and Florida. Mr. Lichtman and Mr. Nass recently formed LN Development Group, LLC to purchase and develop apartment 38

40 complexes and other real estate in the Southeastern United States. See Prior Performance of the Manager and Affiliates. Robert A. Nass, age 57, started acquiring single and multi-family units in 1973 in Berks and Lancaster Counties, Pennsylvania. By 1979, he had acquired 36 rental properties with the majority being single family dwellings. From 1983 to 1985, Mr. Nass was a commercial builder in Pennsylvania. During this period he was involved in the construction of custom homes throughout both counties. From 1985 to 1988, Mr. Nass expanded into the development, construction and management of commercial and residential real estate. During this period he developed and constructed over two dozen residential and commercial properties valued at over $4 million. These properties ranged in price from $150,000 to over $600,000 and surround a picturesque golf community in Pennsylvania known as Galen Hall. Beginning in 1988, Mr. Nass began to explore the real estate market in the Southeast. During this period he purchased many properties, both individually and with long time partner and attorney Jonathan Lichtman. Mr. Nass found that his experience in the construction industry lent itself well to purchasing apartment communities, including communities owned by lenders. In most cases, these properties were in need of renovation or complete rehabilitation. Many had low occupancy rates and severe mechanical issues, and each required a definitive plan of action ranging from simple cosmetic repair to complete renovation. Every site was improved through strong management and diligent attention to detail. A number of the properties were sold to investors through private placements controlled by Mr. Nass and Mr. Lichtman. Recently, Mr. Nass and Mr. Lichtman formed LN Development Group, LLC to purchase and develop apartment complexes and other real estate in the Southeastern United States. PRIOR PERFORMANCE OF THE MANAGER AND AFFILIATES APARTMENT COMPLEXES Mountain View Apartments, Galen Hall, Pennsylvania, was built by Robert Nass beginning in The property consists of 11 buildings with 65 units on 40 wooded acres overlooking the historic Galen Hall Country Club. Mountain View is currently 98% occupied and is valued in excess of $5.5 million. San Marco Villas, Jacksonville, Florida, is a 106 unit Apartment Complex located on 4.7 wooded acres. The Property consists of 16 buildings with 58 one bedroom and 48 two bedroom apartments. Facilities include a swimming pool and laundry room. Purchased by Robert Nass in June of 1991 for $1.14 million, San Marco Villas is currently 96% occupied and is valued in excess of $8.4 million. Over $2 million in renovations have been made to the Property. 39

41 River Oaks Apartments, Jacksonville, Florida, is a 288 unit Apartment Complex located on 22 Acres. The Property consists of 25 buildings with 56 efficiencies, 80 one bedroom, 124 two bedroom, and 28 three bedroom apartments. Facilities include two swimming pools, a recreation room, and laundry room. Purchased by Robert Nass in May of 1992 for $3.3 million, River Oaks is currently 97% occupied and is valued in excess of $21 million. Over $4.5 million in renovations have been made to the Property. Courtyards at San Jose, Jacksonville, Florida, is a 90 unit Apartment Complex located on 4.5 acres. The property consists of 54 one bedroom, 29 two bedroom, and 7 three bedroom apartments. Facilities include a swimming pool, clubhouse, BBQ, fitness center and nature walk with gazebo. Purchased by Robert Nass in October of2007for $2,150,000, San Jose is currently 95% occupied. Over $4.1 million in renovations were made to the Property in 2008 and it is currently a Class-A apartment complex. Twin Lakes Apartments, Maitland, Florida, is a 247 unit Apartment Complex located on 16 acres. The Property consists of 23 buildings with 5 efficiencies, 108 one bedroom, 86 two bedroom and 48 three bedroom apartments. Facilities include a swimming pool, recreation room and laundry room. Twin Lakes was purchased in April, 1993, for $4.1 million by a limited partnership controlled and partially owned by Jonathan Lichtman and Robert Nass. It was sold in 2005 for $13.6 million. Over $2 million of renovations were made to the Property. Willow Wood Apartments, Lakeland, Florida, is a 120 unit Apartment Complex located on 7.11 acres. The Property consists of 19 buildings with 28 one bedroom and 92 two bedroom apartments. Facilities include a swimming pool, tennis courts, racquetball courts and a laundry room. Willow Wood was purchased in June, 1993, for $1.25 million by Jonathan Lichtman and Robert Nass. It was sold in 2003 for $3 million. Over $500,000 of renovations were made to the Property. Mallards Landing Townhomes and Villas, Ltd., Jacksonville, Florida, is a 200 unit Apartment Complex located on 11 acres. The Property consists of 31 buildings with 36 one bedroom, 138 two bedroom and 26 three bedroom apartments. Facilities include two swimming pools, tennis court, shuffleboard courts, a laundry room and spring-fed pond. Mallards Landing was purchased in February, 1995, for $2.1 million by a limited partnership controlled and partially owned by Jonathan Lichtman and Robert Nass. It was sold in 2003 for $4.6 million. Over $900,000 of renovations were made to the Property. Handley Apartments, Ltd, Lakeland, Florida, consists of 52 apartment units and was purchased in June, 1995, for $540,000 by a limited partnership controlled and partially owned by Jonathan Lichtman and Robert Nass. It was sold in 2005 for $1,200,000. Over $100,000 of renovations were made to the Property. The Palms Apartments, West Palm Beach, Florida, is a 200 unit Apartment Complex located on 12 acres. The Property consists of 23 buildings with 120 one bedroom and 80 two bedroom apartments. The Palms was purchased in 1995 for $2.4 million by a limited partnership controlled and partially owned by Jonathan Lichtman and Robert Nass. It was sold in 2001 for $5.7 million. Over $1 million of renovations were made to the Property. 40

42 Oakcreek Apartments, Jacksonville, Florida, is a 212 unit Apartment Complex located on 13 acres. The Property consists of 23 buildings with 92 one bedroom and 120 two bedroom apartments. Oakcreek was purchased in 1996 for $2.4 million by Jonathan Lichtman and Robert Nass. It was sold in 2003 for $4.7 million. Over $800,000 of renovations were made to the Property. OTHER PROPERTIES Halifax Professional Building, Daytona, Florida, is a commercial office building located on 5 acres. The Property consists of a 6 floor, 15,600 square foot office building, parking spaces and an adjacent 2.5 acre parcel zoned for commercial construction. Halifax is located on International Speedway Boulevard approximately one mile west of the Intercoastal Waterway and is within a short distance of the Halifax Medical Center, Daytona International Speedway, two universities and the Daytona International Airport. Halifax was purchased by Jonathan Lichtman and Robert Nass in February, 2006, for $1.35 million. Since then, over $400,000 of renovations have been made to the Property, and it is currently 75% occupied. Future plans for the property may include selling the units as commercial condominiums and developing a 26,000 square foot medical office condo building on the adjacent land. DeLand Industrial Park, DeLand, Florida, is a 25 acre Industrial Park zoned and permitted for the construction of 450,000 square feet of light industrial buildings. Located adjacent to the DeLand Airport and near Route I-4, the Property was purchased in February, 2006, for $2.3 million by Jonathan Lichtman and Robert Nass. It contains a 12,000 square foot office and warehouse building. The Property s current value is estimated to be $6.5 million based on a sales price of $5/s.f. for the entitled land. Future plans include the construction of light industrial buildings for rent or sale as industrial condos Lexington Avenue, DeLand, Florida, is an 18,000 square foot light industrial warehouse located adjacent to the DeLand Airport. The Property is situated in two buildings and was purchased in October, 2006, for $1,033,000 by a limited liability company which is controlled and 70% owned by Jonathan Lichtman and Robert Nass. The Property is currently being rented and is 83% occupied. Future plans include selling the units as commercial condominiums. The Skyline Lodge and Restaurant, Highlands, North Carolina, is a historic lodge designed in the Frank Lloyd Wright tradition. Constructed in 1928 of hand cut granite and California redwood, the property is located on 50 acres in the Blue Ridge Mountains at 4,100 feet above sea level. The Property is bordered on the East by the Big Creek and the West by the Nantahala National Forest. The Skyline Lodge is a 51 unit resort hotel with a 100 seat gourmet restaurant and a 90 seat bar/lounge. Amenities include a health spa, swimming pool, gazebo with jacuzzi, two tennis courts, trails, waterfall and a private lake with a dam. It was purchased by Jonathan Lichtman and Robert Nass in November, 1993, for $1.1 million and is currently valued in excess of $5.1 million. Over $2.3 million of renovations have been made to the Property. 41

43 Laurel Falls at Skyline, Highlands, North Carolina, is a planned luxury residential community with 30 one and two acre building lots. The land surrounds the historic Skyline Lodge and home owners may use the hotel facilities. To date, 17 homes have been constructed on this land with an aggregate sales price of $14.7 million. The remaining undeveloped lots are valued in excess of $2.5 million. MONY Towers, Syracuse, New York, is a 735,000 square foot commercial office building. Mr. Lichtman was a general partner of its owner. MONY Towers was sold for $65 million in Northway Plaza, Glens Falls, New York, is a 280,000 square foot shopping mall. Mr. Lichtman is currently a general partner of its owner. International Speedway Building Shopping Center, Daytona, Florida, is a 5 acre parcel of land with 950 feet of frontage on Highway 92 just west of the Daytona International Speedway. The Property was purchased in 2004 by Robert Nass. ISB is ideal for a retail strip mall and is being held for future development. Mustang Point Aerodrome, DeLand, Florida, is a planned development located on 13 acres at the DeLand Airport to construct and sell 30 corporate airplane condo hangers (from 2,500 to 10,000 square feet). Ten hangers have been sold at an aggregate price of $3.1 million, an additional three are being leased and the remaining 17 hangers are in various phases of development. Jet Park Daytona, Daytona, Florida, is a planned development to construct, lease and sell 240,000 square feet of large corporate airplane hangers (from 7,200 to 15,000 square feet) and an additional 200,000 square feet of large box air carrier maintenance facilities. A partnership controlled and partially owned by Robert Nass acquired a 30 year ground lease on 19 acres located at the intersection of Runways 34 and 25 on the east end of the Daytona International Airport. This includes $1.3 million worth of existing ramps and infra structure improvements. 42

44 COMPENSATION, FEES AND INTERESTS OF THE MANAGER AND AFFILIATES The Manager and its Affiliates will receive from the Company the fees described below. These fees will be paid regardless of the profitability of the Company. The fees were established by the Manager and are not based on arm's-length negotiations. (a) Property Management Fee. The Company will enter into a Property Management Agreement with the Property Manager, which is an Affiliate of the Manager. The Property Manager will be primarily responsible for the management of the Property and will receive a management fee from the Company equal to six percent (6%) of the Gross Rental Income from the Property, payable monthly. The Property Manager may subcontract any of its management functions, but will remain responsible for providing all services to be provided pursuant to the Management Agreement, and will pay all fees and costs of any subcontractor from its Management Fees. See the Property Management Agreement attached hereto as Exhibit C. (b) Construction Fee. The Company will contract with Landmasters, Inc., an Affiliate of the Manager, to perform renovation and construction work on the Property. All such work will be performed by Landmasters, Inc., on a cost plus 20% basis. See Inspection Report and Renovation Estimate attached hereto as Exhibit D. (c) Real Estate Sales Commissions. The Company will pay to Affiliates of the Manager a sales commission equal to two percent (2%) of the purchase price of the Property. Payment of this commission will be deferred until the Unit holders have received the return of their Capital Contributions, plus an 8% Preferred Return on their investment. Upon sale of the Property, Affiliates of the Manager will be entitled to a sales commission equal to five percent (5%) of the sales price less any sales commissions paid by the Company to any non-affiliated broker. In no event will the real estate commission paid to the Affiliates of the Manager exceed two percent (2%) of the sales price of the Property. (d) Syndication Fee. The Company will pay to the Principals a $300,000 syndication fee for their efforts in locating and negotiating the purchase of the Property and obtaining and guarantying the first mortgage on the Property. $150,000 of this fee will be paid at closing, and $150,000 will be deferred until the Unit holders have received the return of their Capital Contributions, plus an 8% Preferred Return on their investment. (e) Membership Interest. The Manager will receive forty percent (40%) of the profits, losses and cash distributions of the Company after repayment to the Unit holders of their Capital Contributions and the Preferred Return. (f) Professional Fees. Certain legal services required by the Company will be performed by Levinson & Lichtman, LLP, a law firm in which Jonathan J. Lichtman, Esq. is 43

45 a partner. Fees charged to the Company by Levinson & Lichtman will be comparable to those charged by other professionals performing similar services in the area. CONFLICTS OF INTERESTS The Company is subject to various conflicts of interests arising out of its relationship to the Manager and its Affiliates. These conflicts include, but are not limited to, the following: Future Programs: The Manager and/or its Affiliates expect to sponsor additional real estate investment entities. Various investor programs formed in the future by the Manager or its Affiliates may engage in business that is competitive with the Company, and the Manager or its Affiliates may from time to time invest, for their own account, in properties similar to the Property. Neither the Company nor any Member shall be entitled to any interest in any of these investments as a result of their ownership of Units in the Company. Competition for Management Time: The Company does not have independent management, and it will rely on the Manager and its Affiliates for the operation of the Company. The Manager and its Affiliates will devote only so much of their time to the business of the Company as, in their judgment, is reasonably required. The Company will compete with other properties and business activities of the Manager and its Affiliates for management services. The Manager and its Affiliates will have conflicts of interests in allocating management time, services and functions among various existing properties, and any future investor programs that they may organize as well as other business ventures in which they are involved. The Manager believes that it and its Affiliates have sufficient staff and resources to be fully capable of discharging their responsibilities to all such properties and programs. Management Fees: The Manager and its Affiliates are receiving fees for services rendered to the Company, as well as certain capital interests in the Company's profit and losses. These fees and interests create actual and potential conflicts of interest between the Manager and its Affiliates and the Company and its Members. An inherent conflict of interest exists in Affiliates of the Manager receiving a management fee because they may not engage the service of a superior property manager who is now or may in the future be available. The Manager must however, at all times comply with their fiduciary obligations to the Company. Lack of Separate Representation: The Company and the Manager are not represented by separate counsel or accountants. The attorneys, accountants and other experts who perform services for the Company may, and do from time to time, perform services for the Manager and its Affiliates. It is anticipated that such dual representation will continue in the future. In addition, situations may arise in which the Manager may be requested to act on behalf of the Company in administrative or judicial proceedings involving the Internal 44

46 Revenue Service or other authorities. The positions taken by the Manager may have differing effects on the Company and the Non-Managing Members. Any decision made by the Manager in such instances will be made in good faith and will be consistent with its fiduciary duties to the Company and the Non-Managing Members. FIDUCIARY RESPONSIBILITY OF THE MANAGER The Manager is accountable to the Company as a fiduciary and, consequently, must exercise good faith and integrity with respect to Company affairs. This is in addition to the duties and obligations of the Manager set forth in the Operating Agreement. However, the Operating Agreement provides that the Manager and its Affiliates will not liable to the Company for any act performed by any of them, or for any failure to act, except for acts of willful misconduct, and that the Manager and its Affiliates under certain circumstances will be entitled to indemnification for certain losses from the Company and its assets, but not from the Members. As a result of the above limitations of liability, purchasers of Units have a more limited right of action than they would have absent the limitations in the Operating Agreement. To the extent the above indemnification provisions purport to include indemnification for liabilities arising under the Securities Act of 1933, the Company has been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is contrary to public policy and therefore unenforceable. If a claim is made for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by the Manager or any of its Affiliates in the successful defense of any action, suit or proceeding) the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. The Manager must, on request, give to any Member or his or her legal representative true and full information on all Company affairs, and each Member or his or her legal representative may inspect and copy the Company's books and records at any time during normal business hours. ALLOCATIONS AND DISTRIBUTIONS Allocations of income and losses, and distributions of cash, will be made according to the priorities summarized below. These allocation and distribution priorities are fully described 45

47 in Articles V and VI of the Company s Operating Agreement, which is attached to this Offering Memorandum as Exhibit B. Prospective investors are encouraged to read the full description of allocation and distribution priorities in the Operating Agreement. Distributions of Net Cash Flow and Capital Items: The Company s Net Cash Flow, which is the amount of cash distributable from operations, and Capital Items, which is the net proceeds from a sale or refinancing of the Property, will be distributed according to the following priorities: - First, to pay the Unit holders an 8% cumulative annual return on their Unrecovered Capital Contributions (the "Preferred Return"); - Second, to repay the Capital Contributions of the Unit holders; - Third, to pay to the Principals and their Affiliates the deferred portion of their commission from purchase of the Property and syndication fees. - Any remaining Net Cash Flow and Capital Items will be distributed 60% to the Unit holders, pro-rata, and 40% to the Manager. Payments of the Preferred Return will be made on a quarterly basis and are expected to begin on September 30, Other distributions of Net Cash Flow will be made at least annually, unless the Manager determines that distributions can be made more frequently. The Manager may retain reserve funds in the Company to meet working capital needs of the Company. Distribution Upon Liquidation of the Company: Liquidating distributions shall be made in accordance with the positive Capital Account balances of the Partners, as determined after taking into account all Capital Account adjustments for the taxable year in which the liquidation occurs. Allocations of Net Profits and Net Losses: Operating and Non-Operating Net Profits of the Company will be allocated according to the following priorities: - First, to the Unit holders in an amount equal to the Preferred Return paid; - Second, to Members having a negative balance in their capital accounts, pro-rata until all negative balances are eliminated; - Third, to Members, pro-rata, until their Capital Accounts equal their Unrecovered Capital Contributions; 46

48 - Any remaining Operating and Non-Operating Net Profits will then be allocated 60% to the Unit holders, pro-rata, and 40% to the Manager. Operating and Non-Operating Net Losses of the Company will be allocated first to those Members with positive capital account balances until those balances are zero, and then will be allocated 60% to the Unit holders, pro-rata, and 40% to the Manager. Notwithstanding these allocations, however, in no event may Net Losses be allocated to any Non-Managing Member if the allocation would cause that Member s Capital Account balance to become negative by an amount greater than that Member's share of the Company s Minimum Gain, if any. There is a special Minimum Gain chargeback provision in order to comply with Treasury Regulations concerning Company allocations. In addition, the Operating Agreement contains certain provisions which require an allocation of income and gain to those Members who unexpectedly receive certain adjustments to their Capital Accounts which create negative Capital Account balances. SUMMARY OF OPERATING AGREEMENT The rights and obligations of the Members of the Company will be governed by the Company s Operating Agreement, which is attached as Exhibit "B" to this Offering Memorandum. Prospective investors should study the Operating Agreement carefully before submitting their Investor Questionnaire and Subscription Agreement, which is attached to this Offering Memorandum as Exhibit "F." The following statements and other statements in this Offering Memorandum concerning the Operating Agreement and related matters are merely a summary, do not purport to be complete, and in no way modify or amend the Operating Agreement. The Company: The Company is a limited liability company formed under the Florida Limited Liability Company Act. The Company's principal purpose is to acquire, own, renovate and operate the Property as a residential apartment complex and ultimately sell it at a gain. The Company's principal place of business is located at State Road 7, Suite 300, Boca Raton, FL The Manager: The sole Manager of the Company is LN Development Group, LLC, a Florida limited liability company. The Principals of the Manager are Jonathan J. Lichtman and Robert A. Nass. The Manager has complete authority in the management of the Company's affairs, and is required to act in what it believes to be the best interest of the Company. The Manager may be replaced by the Members only for willful misconduct upon the vote of the holders of 75% of the Units. 47

49 Capitalization of the Company: Each Unit holder will contribute to the Company $100,000 per Unit. The Principals will be purchasing one Unit in the Offering for $100,000. No Member is required to make any additional Capital Contributions. Additional Capital Contributions may be accepted from persons willing to make such contributions, and additional Members may be admitted to the Company, only upon terms agreed to by the Manager and at least 50% of the Unit holders. If necessary for the operation of the Company, the Manager or its Affiliates may, but are not required to, make loans to the Company. Any such loans will bear interest at the Prime Rate plus 2%, and will be repaid before any distributions are made. No Liability to Unit holders: No Non-Managing Member will be liable for any debts, obligations or liabilities of the Company. A Member s Capital Contribution is subject to the risks of the Company's business. Unit holders are not permitted to take any part in the management or control of the Company s business, and they may not be assessed for additional Capital Contributions. Distributions: Distributions will be made first to pay an 8% annual Preferred Return to the Unit holders, then to repay all Capital Contributions, pro-rata. The Principals will then be paid their $336,000 of deferred fees. Subsequent distributions will be made 60% to the Unit holders and 40% to the Manager. See Allocations and Distributions above. Allocations of Net Profits and Net Losses: Net Profits of the Company will first be allocated to the Unit holders in the amount of their Preferred Return, and then to any Member having a negative balance in his capital account. Allocations of Net Profits will then be made to increase Unit holders Capital Accounts to the amount of their Unrecovered Capital Contributions. Additional Net Profits will be allocated 60% to the Unit holders and 40% to the Manager. See Allocations and Distributions above. Term and Dissolution: The Company will continue in existence until the earlier of: (a) the sale or other disposition and the conversion to cash of all or substantially all of the Company's assets, unless the Manager and the holders of at least 50% of the Units agree to continue the Company; (b) the determination by the Manager and the holders of at least 50% of the Units to dissolve the Company; or (c) such earlier time as may be provided by applicable law. Members may not automatically withdraw from the Company prior to dissolution, and may assign their Units (subject to certain restrictions) to others only with the prior written consent of the Manager, which may be withheld in the Manager s sole discretion. 48

50 Pursuant to the Operating Agreement, each Member will waive his right to seek a court decree to dissolve and liquidate the Company. As a result, the Members will be bound by the terms of the Operating Agreement as to the time and manner of dissolution and liquidation of the Company. Voting Rights of Unit holders: The Unit holders have the right to take the following actions without need for the consent of the Manager: (a) The Unit holders may remove the Manager for willful misconduct by vote of the holders of at least 75% of the Units; and (b) If the Manager ceases to be the Manager of the Company, the Unit holders may elect a successor Manager to continue the Company by vote of the holders of at least 50% of the Units. Any action by the Unit holders may be taken without a meeting if written consents to the action are signed by Members entitled to vote on the action and who hold the number of Units required to authorize the action. Indemnification of the Manager: The Manager and its managers, officers, employees and Affiliates, whether or not then serving in that capacity, will be indemnified by the Company, but not by the Unit holders, against any liability or loss, as a result of any claim or legal proceeding relating to the activities of the Company, except if the Manager or its managers, officers, employees or Affiliates are liable for willful misconduct. Expenses incurred in defending a civil or criminal action may be paid by the Company in advance of the final disposition of such action if: (i) the action relates to the performance of duties or services of such person on behalf of the Company; (ii) the legal action is initiated by a third party who is not a Non-Managing Member; and (iii) the Company receives an undertaking by or on behalf of the person indemnified to repay such amount to the Company unless it is ultimately determined that such person is entitled to be indemnified by the Company. Indemnification includes the payment of reasonable attorneys' fees and other expenses incurred in settling or defending any claims. The indemnity survives the removal or withdrawal of the Manager. Indemnification is not available for any claim alleging a violation of federal or state securities laws unless (i) there has been a successful adjudication on the merits of each count involving alleged securities law violations as to the particular indemnitee; or (ii) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to the particular indemnitee; or (iii) a court of competent jurisdiction approves a settlement of the claims against a particular indemnitee. Records and Reports: The books of the Company will be kept on a calendar year basis using the accrual method of accounting. The Manager will keep at the principal place of business of the Company adequate books of account of the Company, and each Member and his or her authorized representatives will have at all times, during reasonable business hours, free access to inspect and copy such books of account. 49

51 Within 75 days after the end of each year, the Manager will deliver an unaudited Balance Sheet of the Company as of the last day of the preceding fiscal year, together with unaudited Statements of Income, Owners Equity and Changes in Financial Condition. The Manager will within such period of time also furnish a report of the activities of the Company and a report on distributions to the Members. The Manager will also furnish to all Members within 75 days after the end of the year other information regarding the Company to aid them in preparation of their tax returns. RESTRICTIONS ON TRANSFER General: The Units have not been registered under the Securities Act of 1933 or any state securities laws in reliance upon certain exemptions from registration under those laws. The availability of such exemptions is dependent in part upon the investment intent of prospective investors and, accordingly, each purchaser of Units, by execution of the Investor Questionnaire and Subscription Agreement attached as Exhibit "F" hereto must represent that he is purchasing the Units for his own account, for investment, and without any view toward resale or other subsequent disposition thereof. Limitations on Other Transfers: Except for transfers to a Member's spouse, adult child or an entity controlled by a Member or his spouse, and except upon death or by operation of law, Units are not transferable without the prior written consent of the Manager, which consent may be withheld in the sole discretion of the Manager. No consent to a proposed transfer will be granted if the transfer would not comply with federal and state securities laws, if the proposed transfer would cause a deemed termination under the Code, or for any other reason in the discretion of the Manager. If a proposed transfer is consented to by the Manager, the transferee may become a substitute Member only if the transferee agrees in writing to be bound by all of the terms of the Operating Agreement. If a Member dies, becomes legally incompetent or, if not an individual, ceases to exist for any reason, the Company will not dissolve and the legal representative of that Member will have the rights of that Member as necessary to settle or manage that Member's estate or affairs. Such a representative will also have the same power as that Member to transfer his Units as if the representative were a substituted Member. Any transfer will be effective on the first day of the month following approval and acceptance by the Manager. 50

52 Purchasers of Units should be aware that there is no public market for the Units and none is expected to develop. PLAN OF DISTRIBUTION This Offering will terminate if all 28 Units are not sold by May 15, 2009, unless extended until July 31, 2009 at the election of the Manager. The Manager and/or its Principals may, but are not required to, purchase Units in order to complete the Offering. The minimum subscription is one Unit ($100,000). However, the Manager reserves the right to sell onehalf Units to a limited number of investors. The Manager is required to make diligent inquiries of all prospective purchasers in order to ascertain whether a purchase of Units is suitable for such persons and whether such persons satisfy the suitability standards of the Company. By tendering payment for the Units and by satisfactorily filling out, executing and submitting the Subscription Agreement, Investor Questionnaire and (if applicable) the Purchaser Representative Questionnaire, an investor represents that he, she, or it satisfies the applicable suitability standards and makes certain other representations and warranties set forth therein. See "Who Should Invest." LEGAL PROCEEDINGS Neither the Company nor the Manager is a party to any litigation and, to the best knowledge of those parties, none is threatened. ACCESS TO INFORMATION The Manager will make available to each investor at any reasonable time prior to his purchase of Units the opportunity to ask questions and receive answers concerning the terms and conditions of the Offering and to obtain any additional information which the Manager possesses or can acquire without unreasonable effort or expense that is necessary to verify the accuracy of information furnished in this Offering Memorandum. Any such requests for information should be directed to Jonathan J. Lichtman at (561) or to Robert A. Nass at (904) This Offering Memorandum and other materials related to the Property can be found at the Manager s website at Contact Jonathan J. Lichtman or Robert A. Nass for the user name and password to access this information. 51

53 HOW TO SUBSCRIBE In order to purchase Units, each investor will need to: - Complete and sign the Investor Questionnaire and Subscription Agreement attached as Exhibit F - Return the signed Investor Questionnaire and Subscription Agreement to: Levinson & Lichtman, LLP 1451 Ocean Drive, Suite 205 Miami Beach, FL Attn: Anthony DiGiore, Esq. for receipt no later than April 30, Include with the signed Investor Questionnaire and Subscription Agreement the entire purchase price for the Units being purchased - Checks should be made payable to Levinson & Lichtman, LLP Trust Account, with reference to Camaron at Woodcrest - Wire transfers should be made to: Regions Bank, N.A Ponce De Leon Miami, FL ABA # For Credit to: Levinson & Lichtman, L.L.P. IOTA Trust Account Account # Further questions can be answered by calling Jonathan J. Lichtman at (561) Each subscription will be accepted or rejected by the Manager within five (5) days after receipt of the subscribers' check or money order. Subscription funds will be promptly returned to the subscribers with net interest earned thereon if for any reason the Offering is withdrawn. 52

54 CAMARON AT WOODCREST, LLC A FLORIDA LIMITED LIABILITY COMPANY FINANCIAL FORECAST AND ASSUMPTIONS EXHIBIT A

55 CAMARON AT WOODCREST SUMMARY OF INVESTMENT (Schedule 1) CASH REQUIREMENTS: Purchase Cost 9,300,000 Closing Costs 430,000 Renovation Costs 515,000 Renovation Credit From Compass Bank (215,000) Operating Deficit/(Income) (655,469) Interest Reserve 50,000 Pre-paid Insurance & Utilities 25,000 Working Capital Reserve 200,000 Cash Requirement 9,649,531 INVESTOR CAPITAL: Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Stabilization Beginning Investor Capital 2,800, Preferred Distribution (8%) 224, , , , Return of Capital 143, , ,030 2,172,167 Investor Distributions (60%) , , ,339 Distribution from Sale (60%) ,477,108 Annual Distributions 367, , ,606 2,905, ,254 2,663,447 Total Distributions 6,977,855 6,977,855 Internal Rate of Return over 6 years 24.55% (Sale of Property at an 7.25% Capitalization Rate (See Schedule 4)

56 CAMARON AT WOODCREST 5 YEAR OPERATING BUDGET (Schedule 2) Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Stabilization Gross Potential Rent 1,558,363 2,036,080 2,109,379 2,185,317 2,263,988 2,345,491 Vacancies (162,886) (126,563) (131,119) (113,199) (117,275) Gross Rents 1,558,363 1,873,194 1,982,816 2,054,198 2,150,789 2,228,217 Less: Concessions (4%) (89,266) (74,928) (79,313) (82,168) (86,032) (89,129) Deliquencies (2%) (50,595) (37,464) (39,656) (41,084) (43,016) (44,564) Employee Units (8,988) (9,312) (9,647) (9,994) (10,354) Net Rent 1,418,501 1,751,814 1,854,536 1,921,299 2,011,747 2,084,170 Utility Reimbursement 102, , , , , ,793 Other Income 38,010 45,814 47,417 49,077 50,795 52,573 Total Operating Income 1,559,495 1,921,757 2,028,612 2,099,653 2,194,530 2,271,536 Expenses: Repairs/Maintenance 118, , , , , ,325 Wages 192, , , , , ,324 Utilities: Cable 36,000 36,000 36,000 36,000 36,000 36,000 Electric 32,406 32,406 33,540 34,714 35,929 37,187 Water/Sewer 95, , , , , ,671 Garbage 20,406 20,406 21,120 21,859 22,624 23,416 General / Administrative 42,905 42,905 44,407 45,961 47,570 49,234 Advertising 19,500 19,500 20,183 20,889 21,620 22,377 Professional Fees 12,000 12,000 12,420 12,855 13,305 13,770 Property Management Fee 93, , , , , ,292 Real Estate Taxes 153, , , , , ,221 Insurance 88,000 88,000 91,080 94,268 97, ,982 Total Expenses 904, ,232 1,017,726 1,052,089 1,088,935 1,125,800 NOI Before Replacement Reserve 655, ,524 1,010,886 1,047,564 1,105,594 1,145,736 Replacement Reserve - 55,500 55,500 55,500 55,500 55,500 NOI After Replacement Reserve 655, , , ,064 1,050,094 1,090,236 Debt Service 297, , , , , ,670 Net Cash Flow 357, , , , , ,565 Stabilized Assumptions: Vacancy Rate Year 2 Year 3-4 Year 5-6 Vacancy Rate 8.00% 6.00% 5.00% Inflation Rate 3.50% Rental Growth 3.60% Concessions 4.00% after vacancies Deliquencies 2.00% after vacancies Management Fee 6.00% after vacancies Loan Interest Rate 4.00% Refinance Loan (Year 4) 10,836,874 (75% of Value Based on an 7.25% Capitalization Rate - End of Year 4) Repairs and Maintenance 700 per unit Capital Reserves 200,000 Units 222 Replacement Reserve per Unit 250

57 CAMARON AT WOODCREST BUDGETED SOURCES & USES OF CASH (Schedule 3) SOURCES OF FUNDS: Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Stabilization Cash Reserve - Prior Year 200, , , , ,000 Cashflow from Operations Net Operating Income 655, ,524 1,010,886 1,047,564 1,105,594 1,145,736 Debt Service Interest (297,600) (297,600) (662,780) (779,670) (779,670) (779,670) Cashflow from Syndication Renovation Credit 215,000 Capital Contributions 2,800,000 Purchase Mortgage/Refinance 7,440,000 10,836,874 Total Sources of Funds 10,812, , ,106 11,304, , ,065 USES OF FUNDS: Property Acquisition Purchase Price 9,300,000 Closing Costs 430, ,737 Renovation Costs 515,000 Debt Repayment 7,142,400 Roof Replacement (22 Roofs) 412,000 Replacement Reserve - 55,500 55,500 55,500 55,500 55,500 Cash Reserve 200, , , , , ,000 Total Uses of Funds 10,445, , ,500 8,026, , ,500 Funds Available for Distribution 367, , ,606 3,278, , ,565 INVESTOR CAPITAL: Beginning Investor Capital 2,800,000 2,656,131 2,282,197 2,172, Preferred Distribution (8%) 224, , , , Return of Capital 143, , ,030 2,172,167 Ending Investor Capital 2,656,131 2,282,197 2,172, Cash Available , , ,565 Investor Distributions after Return of Capital (60%) , , ,339 Annual Investor Distributions Prior to Sale 367, , ,606 2,905, , ,339

58 DISTRIBUTIONS FROM SALE: CAMARON AT WOODCREST PROJECTED SALE AND CASH DISTRIBUTIONS (Schedule 4) Net Operating Income 1,145,736 1,145,736 1,145,736 Capitalization Rate 8.00% 7.25% 6.50% Projected Sales Price 14,321,696 15,803,250 17,626,702 Sales Price per Unit 64,512 71,186 79,400 Sales Commissions (5%) (716,085) (790,163) (881,335) Closing Costs (2%) (286,434) (316,065) (352,534) Selling Expenses (10,000) (10,000) (10,000) Post Closing Costs (10,000) (10,000) (10,000) Net Sales Price 13,299,177 14,677,023 16,372,833 Deferred Costs (336,000) (336,000) (336,000) Cash Reserves 200, , ,000 Mortgage Payoff (10,412,510) (10,412,510) (10,412,510) Distributable Cash From Sale 2,750,667 4,128,513 5,824,323 Distribution to Investors (60%) 1,650,400 2,477,108 3,494,594 INTERNAL RATE OF RETURN: Investors' Cashflow: Inception (2,800,000) (2,800,000) (2,800,000) Year 1 (Schedule 3) 367, , ,869 Year 2 (Schedule 3) 586, , ,424 Year 3 (Schedule 3) 292, , ,606 Year 4 (Schedule 3) 2,905,254 2,905,254 2,905,254 Year 5 (Schedule 3) 162, , ,254 Year 6 (Schedule 3 and 4) 1,836,739 2,663,447 3,680,933 Internal Rate of Return: 21.83% 24.55% 27.44%

59 CAMARON AT WOODCREST CASH REQUIREMENTS BUDGET 12 MONTHS STABILIZATION Month Purchase Total Purchase Cost 9,300,000 9,300,000 Closing Costs 430, ,000 - Renovation Costs - 69,916 89,921 86,647 73,247 72,247 58,742 16,700 15,200 17,690 14, ,000 Operating Deficit/(Income) - (23,389) (27,217) (30,353) (35,317) (45,300) (56,874) (64,387) (66,881) (72,131) (75,321) (77,873) (80,425) (655,469) Renovation Credit - (215,000) (215,000) Interest Reserve - 12,500 12,500 12,500 12, ,000 Pre-paid Insurance & Utilities - 25, ,000 Working Capital Reserve 200, ,000 Monthly Cash Requirement 9,930,000 (130,973) 75,204 68,794 50,430 26,947 1,868 (47,687) (51,681) (54,441) (60,631) (77,873) (80,425) 9,649,531 Cumulative Cash Requirement 9,930,000 9,799,027 9,874,231 9,943,025 9,993,454 10,020,402 10,022,270 9,974,583 9,922,901 9,868,460 9,807,829 9,729,956 9,649,531 Assumptions: Deferred Closing Costs: Interest Rate 4% Bank Financing 7,440,000 Real Estate Closing Costs 186,000 Preferred Return Rate 8% Syndication Costs 150,000 Invested Capital 2,800,000 Total Deferred Closing Costs: 336,000 Closing Costs: Real Estate Closing Costs 125,000 Financing / Corporate 75,000 Syndication Costs 150,000 Commissions 80,000 Total Up Front Closing Costs: 430,000

60 CAMARON AT WOODCREST RENOVATION BUDGET 12 MONTH STABILIZATION Unit Renovations: Turn to Rent Units Total Unit Renovations Month Total Renovation Expenses: Interior Upgrades 37,316 37,316 37,317 37,317 37,317 37, ,900 Turn to Rent Units 23,800 23,800 23, ,400 Exterior Concrete Repairs ,000 3,000 3,000 3,000 3, ,000 Railing Repairs ,400 4,400 4,400 4,400 4, ,000 Replace Vinyl Shutters - - 4,725 4,725 4,725 4, ,900 Roof Replacements - 13,505 13,505 13,505 13, ,020 Lighting Sconces Exterior ,890 8, ,780 Landscaping 5,800 5,800 5,800 5,800 5,800 5,800 5,800 5,800 5,800 5, ,000 Errosion and Drainage Repair ,000 2,000 2,000 2, ,000 Car Wash Station , ,000 Painting and Pressure Cleaning Exterior 3,000 1,500 1,500 1,500 1,500 1,500 1, ,000 Pool Furniture - 8, ,000 - Rehab Budget by Month 69,916 89,921 86,647 73,247 72,247 58,742 16,700 15,200 17,690 14, ,000 Renovation Credit From Compass Bank: (215,000) Total Renovation Budget From Investor Capital: 300,000 Assumptions: Cost Interior Upgrades 223,900 4,390 per unit 51 units Turn to Rent Units 71,400 4,760 per unit 15 units Exterior Concrete Repairs 15,000 Railing Repairs 22,000 Replace Vinyl Shutters 18,900 Roof Replacements 54,020 Lighting Sconces Exterior 17,780 Landscaping 58,000 Errosion and Drainage Repair 8,000 Car Wash Station 6,000 Painting and Pressure Cleaning Exterior 12,000 Pool Furniture 8,000 Total Rehabilitation Cost 515,000

61 CAMARON AT WOODCREST OPERATING BUDGET 12 MONTH STABILIZATION Units Rented Avg Rent/Unit Month Total Gross Rent 96, , , , , , , , , , , ,527 1,558,363 Less: Concessions (7,734) (7,734) (8,471) (8,778) (7,182) (8,057) (8,425) (8,609) (5,862) (6,016) (6,138) (6,261) (89,266) Deliquencies (5,801) (6,077) (6,353) (4,389) (4,788) (5,371) (2,808) (2,870) (2,931) (3,008) (3,069) (3,131) (50,595) Net Rent 83,143 87,471 91,062 96, , , , , , , , ,135 1,418,501 Utility Reimbursement 6,389 6,693 6,997 7,251 7,910 8,874 9,279 9,482 9,685 9,938 10,141 10, ,984 Other Income 2,358 2,470 2,583 2,676 2,920 3,275 3,425 3,500 3,575 3,668 3,743 3,818 38,010 Total Operating Income 91,890 96, , , , , , , , , , ,297 1,559,495 Expenses: Repairs/Maintenance 7,350 7,700 8,050 8,342 9,100 10,208 10,675 10,908 11,142 11,433 11,667 11, ,475 Payroll 16,000 16,000 16,000 16,000 16,000 16,000 16,000 16,000 16,000 16,000 16,000 16, ,000 Utilities: Cable 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000 Electric 2,701 2,701 2,701 2,701 2,701 2,701 2,701 2,701 2,701 2,701 2,701 2,701 32,406 Water/Sewer 5,906 6,187 6,468 6,703 7,312 8,203 8,578 8,765 8,953 9,187 9,375 9,562 95,198 Garbage 1,701 1,701 1,701 1,701 1,701 1,701 1,701 1,701 1,701 1,701 1,701 1,701 20,406 General/Administrative 3,575 3,575 3,575 3,575 3,575 3,575 3,575 3,575 3,575 3,575 3,575 3,575 42,905 Advertising 1,625 1,625 1,625 1,625 1,625 1,625 1,625 1,625 1,625 1,625 1,625 1,625 19,500 Professional Fees 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 Property Management Fee 5,513 5,798 6,039 6,389 7,113 7,980 8,513 8,699 9,061 9,298 9,488 9,678 93,570 Real Estate Taxes 12,797 12,797 12,797 12,797 12,797 12,797 12,797 12,797 12,797 12,797 12,797 12, ,566 Insurance 7,333 7,333 7,333 7,333 7,333 7,333 7,333 7,333 7,333 7,333 7,333 7,333 88,000 Total Operating Expenses 68,501 69,417 70,289 71,165 73,257 76,123 77,498 78,105 78,887 79,651 80,261 80, ,026 Net Operating Income/(Deficit) 23,389 27,217 30,353 35,317 45,300 56,874 64,387 66,881 72,131 75,321 77,873 80, ,469 First Year Assumptions: Rent Roll - Year 1: Other Income 19 monthly per rented unit Unit Type # of Units Rent Monthly Rent Maintenance 700 annually per rented unit 1BR/1BA ,632 Utility Reimb. 51 monthly per rented unit 2BR/1BA ,264 Property Mgmt 6.00% 2BR/2BA ,948 Concessions Months 1-4 Months 5-8 Months BR/2BA ,448 Concessions 8.00% 6.00% 4.00% 2BR/1.5BA TH ,424 Delinquency Months 1-4 Months 5-8 Months BR/2.5BA TH ,622 Delinquency 6.00% 4.00% 2.00% TOTALS / AVERAGES ,338

62 CAMARON AT WOODCREST, LLC. (A Florida Limited Liability Company) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND FORECAST ASSUMPTIONS CAMARON AT WOODCREST, LLC. (the "Company") is a limited liability Company formed under the laws of the State of Florida for the purpose of acquiring a 222 unit apartment complex in Tallahassee, Florida (the "Property"). This forecast is based on the assumption that a minimum of $2,800,000 units of membership interest (the "Units") will be sold. This forecast presents, to the best of the Managers knowledge and belief, a summary of the Company's expected results of operations and sources and uses of cash for the forecasted periods, presented using the same accounting period as will be used for Federal income tax purposes. Such basis is not in conformity with generally accepted accounting principles and, as such, this forecast does not present expected results of operations in accordance with such principles. The assumptions disclosed herein are those the Manager believes are significant to this forecast. Accordingly, this forecast reflects the Manager's estimate of future conditions based on information available as of the date of this forecast. Actual events and conditions will almost certainly differ from those assumed in this forecast and, to the extent they do vary, these differences may cause material variations in the results projected. THE FORECAST DOES NOT ADDRESS THE TAX EFFECTS OF OWNERSHIP OF UNITS BY THE MEMBERS. EACH PROSPECTIVE INVESTOR SHOULD CONSULT WITH HIS PERSONAL TAX ADVISOR WITH REGARD TO THE IMPACT OF RECENT FEDERAL INCOME TAX LEGISLATION AND THE ADVISABILITY OF INVESTMENT IN THE COMPANY. NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis and period of accounting This forecast is prepared on the cash basis of accounting which the Manager intends to use for Federal income tax purposes. The forecast is based on six fiscal years beginning on the date of purchase.

63 Property and Depreciation Depreciation on the Property is assumed to be as follows: Assets Method Life Buildings Straight-line 27.5 years Improvements Straight-line 27.5 years Organization Start-up and Syndication Costs Certain costs incurred to organize and start-up the Company's business will be capitalized and amortized using the straight-line method over a sixty-month period beginning with the month the Company begins operation. The costs associated with the syndication of the Company will be capitalized and not amortized. Allocations NOTE 2 - MEMBER CONTRIBUTIONS AND ALLOCATIONS The Operating Agreement for the Company (the "Operating Agreement") provides for total capital contributions by the Members of $2,800,000. The Members' contributions will be payable upon subscription. All items of Company income, gain, loss, deduction and credit will be allocated among the Members in accordance with their relative capital contributions. Distributions of Cash Flow Cash flow from operations and the sale of the property shall first be paid to the Members to give them an 8% annual cumulative return on their Unrecovered Capital Contributions (the "Preferred Return"). Cash flow will then be distributed to repay all Capital Contribution of the Members. Cash flow will then be used to pay the Principals $336,000 of fees which were deferred from closing in order to reduce the amount of equity required for the purchase and renovation. Thereafter, cash flow will be distributed 60% to the Members and 40% to the Manager. The Preferred Return will be distributed quarterly and any additional cash flow is projected to be distributed at least once a year. To the extent available, the Company will maintain at least a $200,000 cash reserve which is assumed distributed upon sale of the Property and liquidation of the Company.

64 Income Tax NOTE 3 - SIGNIFICANT FORECAST ASSUMPTIONS The forecast does not address the tax effects of ownership of Units by the Members. Each Member should consult his professional tax advisor regarding the tax effects of investing in the Company. Purchase of Property The Property will be purchased for $9,300,000. A portion of this amount will be assigned to the cost of the land and will not be depreciated. Financing The Company has received a loan commitment (the Commitment ) dated January 5, 2009, from Compass Bank (the Lender ) pursuant to which Lender will loan $7,440,000 to the Company (the Loan ). Compass Bank is affiliated with the Seller of the Property. The Loan proceeds, together with the proceeds of this Offering, will be used to purchase and renovate the Property and to pay all expenses related to the Loan, the purchase of the Property, the formation of the Company and this Offering. The promissory note will be secured by a first mortgage on the Property and will be guaranteed by the Principals of the Manager. During the first two years, the Loan will require monthly payments of interest only at 4% per annum. After two years, the Loan will bear interest at the Prime Rate and will require monthly payments of principal and interest based on a 25 year amortization. The Loan will be payable in full after five years and may be prepaid at any time without penalty. The forecast includes the following expenses relating to obtaining the Loan which will be capitalized and amortized over the term of the Loan: Documentary Stamp Tax $ 26,040 Intangible Tax 14,880 Title Insurance and Endorsements 1,750 Miscellaneous Filing Costs 2,330 Total: $ 45,000 The Manager anticipates that, based on the renovations to be done by the Company and proper management of the Property, the rental revenues from the Property will be sufficient to refinance the Property after three years. The Company s plan is to refinance the Property for an amount sufficient to pay off the Loan, and to return to the Members their Capital Contributions. Once this occurs, a portion of the refinancing proceeds will be used to replace an additional 22 roofs at the Property at an estimated cost of $412,000.

65 Up Front Closing Costs This forecast assumes the following costs associated with the purchase and financing of the Property: Loan Closing Costs $ 45,000 Purchase Closing Costs 150,000 Organizational Costs 5,000 Syndication Fees 150,000 Sales Commissions/Finders Fees 80,000 Total: $430,000 Deferred Closing Costs This forecast assumes the following costs associated with the purchase and financing of the Property which were deferred from closing in order to reduce the amount of equity required for the purchase and renovation. These fees will be paid to the Manager once the Members have been paid their 8% Preferred Return and repaid their Capital Contributions: Real Estate Fees $186,000 Syndication Fees 150,000 Total: $336,000 Rental Income and Occupancy Gross potential rental income is computed as follows: # of Street Approx. Total Street Units Style Rent/Mo. Sq. Ft. Rent/Mo bdrm/1 bath $ SF $31, bdrm/1 bath $ SF $40, bdrm/2 bath $749 1,108 SF $39, bdrm/2 bath $889 1,319 SF $28, bdrm/1.5 bath townhouse $839 1,264 SF $13, bdrm/2.5 bath townhouse $979 1,456 SF $17, Monthly Gross Potential Rental Income $170,338 Annual Gross Potential Rental Income $2,044,056

66 Average rent per unit is expected to increase at the following rates: Year 1 (Stabilization) Year 2 Year 3 Year 4 Year 5 Year 6 3.6% 3.6% 3.6% 3.6% 3.6% 3.6% The Manager projects that rents will gradually increase in years 1 through 6 in response to substantial improvements made to the Property, aggressive marketing, increased demand, market stabilization, improvement of the local economy and inflationary forces. Improvements to the Property It is estimated that $515,000 of improvements will be made to the Property as set forth below and that all renovations will be completed during the first year of ownership. Interior Upgrades $223,900 Turn to Rent Units 71,400 Exterior Concrete Repairs 15,000 Railing Repairs 22,000 Replace Vinyl Shutters 18,900 Roof Replacements (4) 54,020 Lighting Sconces Exterior 17,780 Landscaping 58,000 Erosion and Drainage Repair 8,000 Car Wash Station 6,000 Painting and Pressure Cleaning Exterior 12,000 Pool Furniture 8,000 Total Rehabilitation Costs $515,000 *See 12 Month Renovation Budget Included in the above, the Seller will give to the Company at closing a $215,000 credit for further repairs and renovations. The credit will be placed in escrow with Compass Bank at closing and will be released to the Company when the Company has completed $285,000 of its planned $515,000 of renovations at the Property. The Manager will replace four roofs on the Property from the initial renovation funds. An additional 22 roofs are scheduled to be replaced for a total cost of $412,000 from proceeds of the refinancing of the Property.

67 Occupancy Percentage The Property has 96 vacancies giving it a 56.8% occupancy percentage. During the first year of ownership, the Manager will make the physical improvements to the Property and enter into an aggressive plan to rent vacant units. The Manager believes that after the renovations are completed, the Property will have substantially more attractive units than other rental properties in the area, and that with aggressive marketing the Company can reach its goal of 92% occupancy within the first year of ownership. The Manager anticipates that this percentage will increase as follows due to improvement made to the Property: Year 1 (Stabilization) Year 2 Year 3 Year 4 Year 5 Year 6 Various* 92% 94% 94% 95% 95% * See 12 Month Operating Budget and 5 Year Budget. Sale of the Property For purposes of this forecast, distributable cash from sale of the Property is increased by the cash reserve of $200,000 and decreased by the following: Sales Commissions, estimated to be 5% of the sales price; Closing Costs, estimated to be 2% of the sales price; Other selling expenses, estimated to be $10,000; and Administration Costs, estimated to be $10,000. Sale of the Property is projected to occur on December 31, 2015, and is computed using 8.0%, 7.25% and 6.5% capitalization rates based on the Company's projected net operating income at that date. Rent Concessions & Delinquencies Upon stabilization of the property, concessions and delinquencies are anticipated to be at a rate of 4% and 2%, respectively, after vacancies are taken into account. Other Income The Property is projected to generate additional income from various sources each year. These include: forfeited deposits, washer & dryer rentals, application fees, administration and transaction fees. Other sources of income will be generated from reimbursements from tenants of water, sewer, and cable.

68 Employee Units The Manager intends to continue the current policy of giving a free rental unit to the property manager and giving other employees a 20% discount on rental units. Operating Expenses Operating expenses are estimated to be $4,424 per unit starting in Year 2 and are expected to increase at the following rates: Year 1 (Stabilization) Year 2 Year 3 Year 4 Year 5 Year 6 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% Management Fee The Company will enter into an agreement to pay a property management fee equal to 6% of the Company's Gross Rental Income to management companies owned by the principals of the Manager. Interest Income This forecast assumes the Company will receive no interest income on the annual cash reserve or other cash deposits. However, it is likely the Company will receive interest income from cash deposits.

69 CAMARON AT WOODCREST, LLC A FLORIDA LIMITED LIABILITY COMPANY OPERATING AGREEMENT EXHIBIT B

70 OPERATING AGREEMENT OF CAMARON AT WOODCREST, LLC This OPERATING AGREEMENT of CAMARON AT WOODCREST, LLC, (the Operating Agreement ) is made and entered into effective for all purposes as of, 2009, by LN DEVELOPMENT GROUP, LLC (the Manager ) and each of the persons executing this Agreement as a Member (collectively, the Members ). The Members are entering into this Operating Agreement to set forth the terms and conditions governing the business and affairs of the Company and to set forth the rights and obligations of the Members. Therefore, in consideration of the mutual promises, covenants and conditions set forth herein, the Members have agreed as follows: ARTICLE I DEFINED TERMS The following terms used in this Operating Agreement with their initial letters capitalized, unless the context requires otherwise or unless otherwise expressly provided in this Operating Agreement, have the meanings specified in this Article. The singular includes the plural and vice versa, as the context requires. Act means the Florida Limited Liability Company Act, as it may be amended from time to time. Additional Member means any Person or Entity admitted as a Member pursuant to this Operating Agreement. Affiliate means any individual, company, corporation, limited liability company, trust, or other entity or association, directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with a Member. The term control, as used in the immediately preceding sentence, means, with respect to a corporation the right to exercise, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the controlled corporation, and, with respect to any individual, company, trust, other entity or association, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled entity. Articles means the Articles of Organization of the Company filed with the Florida Department of State, as amended from time to time. Capital Account means the individual accounts established and maintained pursuant to this Operating Agreement. 1

71 Capital Contributions means the total value of cash and agreed fair market value of property contributed and agreed to be contributed to the Company by each Member, as set forth in Exhibit A, attached hereto, as the same may be amended from time to time. "Capital Items" means: (i) the net cash funds or proceeds (including lump sum prepayments by buyers) resulting from the financing, refinancing, sale, exchange, condemnation, eminent domain taking, casualty, or other disposition of all or a portion of the Property, after deduction of all expenses incurred in connection therewith, including fees paid to the Manager or its Affiliates; and (ii) all net cash proceeds, including interest and principal payments subsequently received on any installment payments on promissory notes and/or installment contracts held by the Company in connection with the sale of all or a portion of the Property after payment of any underlying indebtedness related to such Property, less such amounts for reserves as the Manager deems reasonably necessary. Any such reserves shall be Capital Items upon subsequent distribution. Code means the Internal Revenue Code of 1986, as amended. All references herein to sections of the Code include any corresponding provision or provisions of succeeding law. Company means CAMARON AT WOODCREST, LLC, a Florida limited liability company. "Gross Rental Income" means all rental and other income from the Property collected by the Company in a given period. Loan means a first mortgage loan from Compass Bank in the amount of $7,440,000. The Loan will be evidenced by a promissory note, will be secured by a first mortgage on the Property, and will be guaranteed by the Principals. During the first two years of its term, the Loan will require monthly payments of interest only at 4% per annum. After two years, the Loan will bear interest at the prime rate and will require monthly payments of principal and interest based on a 25 year amortization. The Loan will be payable in full after five years and may be prepaid at any time without penalty. Manager means LN Development Group, LLC, a Florida limited liability company, and any other person or entity elected as a Manager pursuant to this Operating Agreement. Any Manager, acting alone and without the joinder of any other Manager, may exercise all authority and powers granted to the Manager in this Operating Agreement. Member means a Person or Entity who has been admitted as a Member of the Company in accordance with the terms and provisions of the Act and this Operating Agreement and has a Percentage Interest in the Company with the rights, obligations, preferences and limitations specified under this Operating Agreement. Reference to a Member shall be to any of the Members. 2

72 Net Cash Flow means all cash received by the Company other than Capital Items, less all cash disbursements made by the Company in the current year other than distributions made to Members in their capacity as Members, after deducting such reserves as the Manager may reasonably deem necessary, and after repaying any loans made to the Company by the Manager or any Member. Any such reserves deducted shall be Net Cash Flow upon subsequent distribution. Offering Memorandum means the Offering Memorandum of the Company to raise the Offering Amount pursuant to a private placement of Percentage Interests in the Company. Operating Agreement means this Operating Agreement, as originally executed and as amended from time to time, and the terms hereof, hereby, and hereunder, when used with reference to this operating Agreement, refer to this operating Agreement as a whole, unless the context otherwise requires. Operating Net Profits and Losses means the amount of net profits or net losses, as the case may be, for any taxable year of the Company as determined using the tax accounting principles used by the Company, other than those gains or losses defined as Non-Operating Net Profits and Losses. Percentage Interest of a Member means the percentage determined by dividing a Member s Capital Contribution to the Company by the total Capital Contribution of all Members. Person means an individual natural person and his or her legal representative, heirs and successors. Preferred Return shall mean the cumulative annual return to the Members of eight percent (8%) of their Unrecovered Capital Contributions. Prime Rate shall mean the prime rate published in the Money Rates or equivalent section of The Wall Street Journal, provided that if a prime rate range is published by The Wall Street Journal, then the highest rate of that range will be used, or if The Wall Street Journal ceases publishing a prime rate or a prime rate range, then the Manager will select a prime rate, a prime rate range or another substitute interest rate index that is based upon comparable information. Principal Office means the office of the Company as shown in the Articles, or such other address as may be established by the Manager. Principals means Jonathan J. Lichtman and Robert A. Nass, who own the Manager and the Property Manager. 3

73 Property means the apartment complex located in Tallahassee, Florida, as described in the Offering Memorandum, including all real, personal, tangible and intangible property acquired by the Company in connection with the Property. Property Manager means LN Property Management, LLC, a Florida limited liability company, which is an affiliate of the Manager. Securities Act means the Securities Act of 1933, as amended. Substitute Member means any Person or Entity who or which is admitted into Membership pursuant to Section Treasury Regulations means the income tax regulations (filed, temporary and, as applicable, proposed, promulgated under the Code) References to specific sections of the Treasury Regulations shall be to such sections as amended, supplemented or superseded by Treasury Regulations currently in effect. Transfer shall mean to sell, assign, transfer, give, donate, pledge, hypothecate, deposit, alienate, bequeath, devise or otherwise dispose of or encumber to any Person other than the Company. Unrecovered Capital Contributions means the Capital Contributions made by the Members, reduced by distributions made to the Members by the Company, other than distributions of the Preferred Return. ARTICLE II FORMATION 2.01 Organization. The Company has been organized as a Florida limited liability company pursuant to the Act Name. The name of the Company is CAMARON AT WOODCREST, LLC, and such name shall be used at all times in connection with the conduct of the Company s business Company Purpose. The Company's principal purpose is to acquire, own, renovate and operate the Property as a residential apartment complex and ultimately sell it at a gain. The objectives of the Company are to: (i) preserve and protect the Members' Unrecovered Capital Contributions; (ii) provide a current return on investment from operating cash flow; and (iii) realize capital gain on the sale of the Property. The Company may engage in any and all general business activities related to and incidental to the preceding purposes and objectives. HOWEVER, THERE CAN BE NO ASSURANCE THAT ANY OF THE INTENDED OBJECTIVES OF THE COMPANY WILL ACTUALLY BE ATTAINED. Because of the exclusive purposes of the Company, no Member shall have any obligation to make available to the other Members any other real estate or other business opportunities. Each Member and the Manager may engage in whatever business activities they choose, whether or not they are competitive 4

74 with the Company, without any obligation to offer any interest in such activities to the Company or any Member Operating Agreement, Effect of Inconsistencies with Act. The Members agree to the terms and conditions of this Operating Agreement, as they may from time to time be amended, supplemented or restated according to its terms. The Members intend that this Operating Agreement shall be the sole source of the relationship among the parties, and, except to the extent a provision of this Operating Agreement expressly incorporates federal income tax rules by reference to sections of the Code or Treasury Regulations or is expressly prohibited or ineffective under the Act, this Operating Agreement shall govern, even when inconsistent with, or different than, the provisions of the Act or any other law. To the extent any provision of this Operating Agreement is prohibited or ineffective under the Act, this Operating Agreement shall be considered amended to the smallest degree possible in order to make such provision effective under the Act. If the Act is subsequently amended or interpreted in such a way as to validate a provision of this Operating Agreement that was formerly invalid, such provision shall be considered to be valid from the effective date of such interpretation or amendment. Each Member shall be entitled to rely on the provisions of this Operating Agreement, and no Member shall be liable to the Company or to any other Member for any action or refusal to act taken in good faith reliance on this Operating Agreement. In the event of a conflict between the provisions of this Operating Agreement and the provisions of the Articles, as amended from time to time, then the provisions of the Articles shall control Term. The Company shall have perpetual existence until it is dissolved and its affairs wound up in accordance with this Operating Agreement and the Act Registered Agent and Office. The Company s initial registered agent for service of process and initial registered office in the State of Florida shall be Jonathan J. Lichtman, P.A., State Road 7, Suite 300, Boca Raton, FL Principal Place of Business. The Company s initial principal place of business shall be located at State Road 7, Suite 300, Boca Raton, FL The Manager may change the location of the Company s principal place of business from time to time. The Manager shall make any filing and take any other action required by applicable law in connection with the change and shall give notice to all other Members of the new location of the Company s principal place of business promptly after the change becomes effective. The Manager may establish and maintain additional places of business for the Company Foreign Qualifications. The Company shall qualify to do business as a foreign limited liability company in each jurisdiction in which the nature of the business requires such qualification. 5

75 ARTICLE III MEMBERS AND PERCENTAGE INTERESTS 3.01 Contributions of the Members. The Members shall make Capital Contributions to the Company in the total amount of $2,800,000. The Capital Contribution of each Member, and that Member s Percentage Interest, is set forth on Schedule A attached hereto Additional Capital Contributions. Additional Capital Contributions not included on Schedule A may be in such amounts and may be in any type of property as may be agreed to by the Manager and by Members owning more than fifty percent (50%) of the Percentage Interests of the Company. No Member is required to make any Capital Contribution to the Company, other than the Capital Contributions shown on Schedule A without the Member s prior express consent Loans by Manager and/or Affiliate. If the Members Capital Contributions, third party loans to the Company, and the revenues of the Company are insufficient to satisfy the capital requirements of the Company, or if bridge funds are needed by the Company on an interim basis, the Manager or an Affiliate of the Manager may make loans ( Manager Loans ) to the Company in such amount as determined by the Manager. The Manager shall not be required to make a Manager Loan. Any Manager Loans shall bear interest at the Prime Rate plus two percentage points, shall compound annually, shall be fully recourse to the Company and its assets, but non-recourse as to each Member and such Member s assets, shall be repayable in whole or in part without penalty, and shall be evidenced by a promissory note on behalf of the Company, which promissory note shall contain such terms and conditions as are commercially reasonably. Any Manager Loans must be repaid in full out of the Net Cash Flow or Capital Items of the Company before any distribution of such items may be made to any Member. All payments received with respect to a Manager Loan shall be applied first against accrued and unpaid interest and then against the outstanding principal balance. No Member shall be obligated to contribute or advance money to the Company for the purpose of repaying any Manager Loan, and no Member shall have any personal liability for the repayment of any Manager Loan Capital and Capital Accounts. (a) The Capital Contribution of each Member is set forth on Schedule A. No interest shall be paid on any Capital Contribution except pursuant to this Operating Agreement. (b) A separate Capital Account shall be maintained by the Company for each Member in accordance with Section 704(b) of the Code and Section (b)(2)(iv) of the Treasury Regulations promulgated thereunder. Without limiting the foregoing, each Member's Capital Account shall be (i) credited with any Capital Contributions of such Member; (ii) credited or charged, as appropriate, with the amount of the Company s profits or losses allocated to such Member; and (iii) charged with the amount of any money and the fair market value of any property (net of liabilities secured 6

76 by such property that such Member is considered to assume or take subject to under Code Section 752) distributed to such Member. (c) Prior to the dissolution and liquidation of the Company, no Member shall be entitled to demand a withdrawal from its Capital Account, except as provided in this Agreement Admission of Additional Members. Subject to any provisions of the Articles and this Operating Agreement (i) the Manager may admit to the Company Additional Member(s) to participate in the profits, losses, distributions and ownership of the assets of the Company on such terms as are determined by the Manager and approved by Members owning more than fifty percent (50%) of the Percentage Interests of the Company, and (ii) any Additional Members will be allocated gain, loss, income or expense by the method provided in this Operating Agreement (and if no method is specified, then as may be permitted by Section 706(d) of the Code) Limitation on Liability. No Member shall be liable under a judgment, decree or order of the court, or in any other manner, for a debt, obligation or liability of the Company, except as provided by law. No Member shall be required to loan any funds or make additional Capital Contributions to the Company. Except as may be expressly provided otherwise herein, no Member shall be required to make any contribution to the Company by reason of any negative balance in its Capital Account, nor does any negative balance in a Member's Capital Account create any liability on the part of the Member to any third party No Individual Authority. No Member shall have any authority to act for, or to undertake or assume, any obligation, debt, duty or responsibility on behalf of, any other Member or the Company No Member Responsible for Other Member's Obligations. If a Member (or a Member's shareholders, members, members, owners, or Affiliates) incurs any indebtedness or obligation prior to the date hereof that relates to or otherwise affects the Company, neither the Company nor any other Member shall have any liability or responsibility with respect to such indebtedness or obligation unless such indebtedness or obligation shall be assumed by the Company pursuant to this Operating Agreement or in a written instrument. Furthermore, neither the Company nor any Member shall be responsible or liable for any indebtedness or obligation that is hereafter incurred by any other Member (or a Member's shareholders, members, members, owners, or Affiliates), unless assumed by the Company in a written instrument No Right to Withdraw as Member. No Member shall have the right to withdraw as a Member of the Company. 7

77 ARTICLE IV - MANAGEMENT AND CONTROL OF BUSINESS 4.01 Appointment, Rights and Powers of the Manager. LN Development Group, LLC is hereby designated as the Manager of the Company. The Manager shall have full and complete charge of all affairs of the Company, and the management and control of the Company's business shall rest exclusively with the Manager, subject to the terms and conditions of this Agreement. The Manager shall not be required to devote all of its time or business efforts to the affairs of the Company but shall devote so much time and attention to the Company as is reasonably necessary and advisable to manage the affairs of the Company to the Company's best advantage. Except as otherwise provided herein, all business decisions of the Company shall be made by the Manager without the consent of the Members, including, but not limited to, decisions: (a) to acquire the Property, hold, renovate, operate and dispose of the Property, any interest therein, or any appurtenances thereto, as well as any personal or mixed property connected therewith, including the purchase, lease, development, improvement, maintenance, exchange, trade, or sale of the Property, at such price, rental, or amount and upon such terms and for such consideration, including cash, securities, other property and the loaning of purchase money (to be secured by a purchase money mortgage in connection with the sale of a Property), as the Manager shall determine, in its sole discretion, to be in the best interests of the Company. Any deed, mortgage, contract of land sale, or other commitment purporting to convey or encumber the interest of the Company in all or in any portion of real or personal property at any time held in its name shall be signed by the Manager alone, and no other signature shall be required; (b) to do any and all acts necessary to operate and manage the Property as a residential apartment complex; (c) to borrow money required for the Company's business (including the Loan), to secure the repayment of such borrowing by mortgage, deed of trust or other security device upon the Property or any other asset of the Company, and to prepay in whole or in part, refund, refinance, increase, modify, consolidate or extend the maturity of any indebtedness created by such borrowing, all at such time and on such terms and conditions as the Manager, in its sole discretion, shall approve; (d) to enter into and supervise performance of contracts for construction of improvements to the Property, including but not limited to, the hiring of architects and contractors; (e) to acquire and enter into any contract of insurance which the Manager deems necessary or appropriate for the protection of the Company and the Manager for the conservation of Company assets or for any purpose convenient or beneficial to the Company; 8

78 (e) to determine, in its sole discretion, whether or not to apply any insurance proceeds attributable to any property to the restoration of such property or to distribute the same; (f) this Agreement; to prepare, or cause to be prepared books and reports required by (g) notwithstanding anything herein to the contrary, to amend this Operating Agreement without the consent of any of the Members as follows: (i) to reflect the addition or substitution of Members and the reduction of the Capital Accounts upon the return of Unrecovered Capital Contributions to Members; (ii) to add to the representations, duties or obligations of the Manager or its Affiliates or surrender any right or power granted to the Manager or Affiliates herein, for the benefit of the Members; (iii) to cure any ambiguity and correct or supplement any provision herein which may be inconsistent with any other provision herein, or to add any other provisions with respect to matters or questions arising under this Operating Agreement which will not be inconsistent with the provisions of this Operating Agreement; (iv) to make whatever changes the Manager shall deem necessary or proper so that the Property will not be considered assets of a plan or will be exempt from the plan asset rules of the Employment Retirement Income Security Act of 1974, as amended; (v) to amend this Agreement upon advice of counsel or accountants that the provisions contained therein are unlikely to be given effect for federal income tax purpose, to the minimum extent necessary; and (vi) to delete or add any provision from or to this Operating Agreement requested to be so deleted or added by a state regulatory agency, the deletion or addition of which provision is deemed by such regulatory agency to be for the benefit or protection of the Members; (h) to require in any or all Company contracts that the Manager and its Affiliates shall not have any personal liability thereon and that the person or entity contracting with the Company is to look solely to the Company assets for satisfaction, and to require the satisfaction of contracts on which the Manager and its Affiliates have personal liability prior to contracts on which they have no such personal liability; (i) to execute, acknowledge, and deliver any and all instruments, on behalf of the Company or otherwise, which it shall deem necessary or appropriate to effectuate the rights, authority and power of the Manager, and to take all such action in connection therewith as it shall in its discretion deem necessary or appropriate; (j) to prepare, file, and publish any and all instruments or documents necessary to enable the Company to transact business or otherwise to exist, operate and be recognized as a limited liability company in jurisdictions outside Florida; (k) to open accounts with financial institutions and deposit and maintain funds therein the name of the Company and to sign Company checks in the name of the Company; 9

79 (l) to cause the Company to maintain reserve accounts for such purposes as the Manager deems advisable and in such amounts as the Manager deems reasonable; (m) to make all strategic and other decisions relating to any litigation involving the Property, and to negotiate with adverse parties, settle, or pursue to final judgment any such litigation on such terms and conditions as the Manager deems appropriate; (o) to purchase Percentage Interests in its own name and for its own account, and to permit its Affiliates and employees to do the same, provided that such right shall not create any preference in rights or benefits in favor of such persons; (p) to employ on behalf of the Company such persons, firms or corporations, including the Property Manager, as it shall deem advisable for the operation and management of the Company and the Property, including accountants, lawyers, contractors, architects, engineers, consultants, insurance brokers, real estate brokers, loan brokers, agents, on-site managers, leasing agents, maintenance and other personnel, and other persons (including the Manager and its Affiliates and employees thereof) to perform such services for the Company as the Manager may designate, on such terms and for such compensation as it determines, provided such terms are reasonable and provided further that such services are reasonably necessary and customary; and (q) to act as the sole tax matters member as that term is used in Subchapter C of Chapter 63 of Subtitle F of the Code General Limitations. (a) Limitations on Use of Company Funds. The Manager shall have a fiduciary responsibility for the safekeeping and use of all funds of the Company, whether or not in the Manager's immediate possession or control. The Manager shall not employ or permit another to employ such funds or assets in any manner except for the exclusive benefit of the Company and shall not commingle or permit the commingling of the Company's funds with those of any other person. (b) General Restrictions on the Powers of the Manager. The Manager shall not cause the Company to: (i) operate the Company in such a manner as to have the Company classified as an "investment company" for purposes of the Investment Company Act of 1940; (ii) cause the Company to enter into any agreements with the Manager or its Affiliates which shall not be subject to termination without penalty by either party upon not more than 60 days written notice; (iii) invest in securities of other issuers for investment or for the purpose of exercising control unless it acquires all of such securities in order to facilitate the acquisition of real property; or (iv) underwrite securities of other issuers. Unless the prior consent of Members holding a majority of the Percentage Interests is obtained, the Manager shall be prohibited from: 10

80 (i) altering the primary purposes of the Company as set forth in Section 2.03 including converting the Property into condominiums; 4.01(h); (ii) (iii) (iii) amending this Agreement, except as provided in Section appointing a new Manager or Managers; dissolving the Company; (v) executing or delivering any assignment for the benefit of the creditors of the Company; or (ivi) releasing, assigning, or transferring a Company claim, security, commodity, or any other assets of the Company without full and adequate consideration. (c) Loans by the Company. The Company shall not make any loan to the Manager or its Affiliates Indemnification. Except in the case of willful misconduct, the Manager and its managers, officers, employees and Affiliates acting on its behalf and performing functions or services otherwise commonly performed by the Manager within the scope of the Manager's authority shall not be liable, responsible, or accountable in damages or otherwise to the Company (in any action, including a Company derivative suit) or to any of the Members for the doing of any act or the failure to do any act, the effect of which may cause or result in loss or damage to the Company. The Manager and its managers, officers, employees and Affiliates, whether or not then serving in that capacity, shall be individually entitled to be indemnified by the Company from the assets of the Company, or as an expense of the Company, but not from the Members, against any liability or loss, as a result of any claim or legal proceeding (whether or not the same proceeds to judgment, is settled, or otherwise brought to a conclusion) relating to the performance or nonperformance of any act concerning the activities of the Company, except in the case where the Manager or its employees and Affiliates are liable for willful misconduct. Expenses incurred in defending a civil or criminal action, suit, or proceeding may be paid by the Company in advance of the final disposition of such action, suit or proceeding as authorized by the Company in the specific action if: (i) the action relates to the performance of duties or services of such person on behalf of the Company; (ii) the legal action is initiated by a third party who is not a Member; and (iii) the Company receives an undertaking by or on behalf of the person indemnified to repay such amount to the Company unless it is ultimately determined that such person is entitled to be indemnified by the Company as authorized herein. The indemnification authorized by this paragraph shall include the payment of reasonable attorneys' fees and other expenses (not limited to taxable costs) incurred in settling or defending any 11

81 claims, threatened action, or finally adjudicated legal proceedings. This indemnity shall survive the removal of the Manager by the Members or the withdrawal of the Manager. Notwithstanding the foregoing, neither the Manager, nor any manager, officer, employee or any of its Affiliates or the Company, shall be indemnified from any liability, loss, or damage incurred by them in connection with any claim or settlement involving allegations that the Securities Act of 1933 or state securities laws were violated by the Manager or by any such other person or entity unless (i) there has been a successful adjudication on the merits of each count involving alleged securities law violations as to the particular indemnitee; or (ii) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to the particular indemnitee; or (iii) a court of competent jurisdiction approves a settlement of the claims against a particular indemnitee. In any claim for indemnification for alleged federal or state securities law violations, the party seeking indemnification shall place before the court the position of the Securities and Exchange Commission regarding indemnification for violations of securities law. The Company shall not incur the cost of that portion of any insurance, other than public liability insurance, which insures any Party against any liability the indemnification of which is prohibited hereunder Powers and Duties of the Members. The Members shall not participate in the control of the business affairs of the Company, transact any business on behalf of the Company, or have any power or authority to bind or obligate the Company. The holders of a simple majority of the Percentage Interests, with or without the concurrence of the Manager, may vote to (i) elect a successor Manager and to continue the Company in the event the Manager ceases to be the Manager of the Company; and (ii) approve other matters as provided for in this Agreement. The holders of at least seventy-five percent (75%) of the Percentage Interests, with or without the concurrence of the Manager, may vote to remove the Manager for willful misconduct. The Members shall not have any right to vote on or approve (a) transactions in which the Manager has an actual or potential conflict of interest including any management agreement between the Company and the Property Manager; (b) the management, operation, sale, exchange, financing, refinancing or other disposition of the Property; or (c) any other matter not specifically provided for in this Agreement Company Expenses. Reimbursement to the Manager or its Affiliates shall be made for the actual cost to the Manager or its Affiliates of goods and materials used for or by the Company. The Manager shall not be reimbursed for the cost of the portion of any insurance which insures any party against any liability, the indemnification of which is prohibited by this Agreement. The Manager may receive reimbursement for services provided by its staff or its Affiliates, including controlling persons, necessary or appropriate to the prudent operation of the Company, such as legal, accounting, transfer agent, and other services that could be performed directly for the Company by independent parties. The amounts charged to the Company for such services will not exceed the lesser of (i) the actual cost to the Manager or Affiliates, or (ii) the amount the Company would be required to pay to independent parties for comparable 12

82 administrative services in the same or comparable geographic locations. Subject to the foregoing, the Company shall pay all expenses of the Company (which expenses shall be billed directly to the Company) which may include, but are not limited to: (a) all costs of personnel employed full-time or part-time by the Company and involved in the business of the Company, including persons who may also be officers or employees of the Manager or its Affiliates (other than controlling persons); (b) all costs of borrowed money, taxes and assessments on the Property acquired by the Company, and other taxes applicable to the Company; (c) legal, audit, accounting, brokerage, and other fees; (d) fees and expenses paid to independent contractors, mortgage bankers, brokers and servicers, leasing agents, consultants, on-site managers, real estate brokers, insurance brokers, and other agents; (e) all costs of operating the Property as a residential rental apartment complex including, but not limited to, employees, taxes, insurance, utilities, repairs, maintenance, advertising, contract services, professional fees, office expenses and management fees; (f) expenses in connection with the purchase, disposition, replacement, alteration, repair, remodeling, refurbishment, leasing, refinancing and operation of the Property (including the costs and expenses of foreclosures, insurance premiums, real estate brokerage, and leasing commissions, and of maintenance of the Property); the Company; (g) the cost of insurance as required in connection with the business of (h) expenses of organizing, revising, amending, converting, modifying, or terminating the Company; (i) expenses in connection with distributions made by the Company to, and communications, bookkeeping and clerical work necessary in maintaining relations with, Members; (j) expenses in connection with preparing and mailing reports required to be furnished to Members for investor, tax reporting, or other purposes, or which reports the Manager deems the furnishing thereof to Members to be in the best interests of the Company; (k) costs of any accounting, statistical, or bookkeeping equipment necessary for the maintenance of the books and records of the Company; 13

83 (l) the cost of preparation and dissemination of the informational material and documentation relating to potential sale, refinancing, conversion to condominiums (if approved by the Members as set forth herein) or other disposition of the Property; (m) out-of-pocket expenses incurred by the Manager in serving as a tax matters member, including expenses necessary to oppose any controversy with any taxing authority, including, but not limited to, attorneys' and accountants' expenses; (n) costs incurred in connection with any litigation in which the Company is involved, as well as in connection with any examination, investigation, or other proceedings conducted by any regulatory agency with respect to the Company, including legal and accounting fees incurred in connection therewith; (o) costs of preparing federal and state income tax and property tax returns for the Company; (p) supervision and expenses of professionals employed by the Company in connection with any of the foregoing, including, without limitation, attorneys, accountants and appraisers; (q) costs of preparing periodic reports and other communications to the Members to the extent performed by unaffiliated persons or entities; and (r) reasonable expenses incurred by the Manager and/or its Affiliates in performing services in any of the categories enumerated above, including travel to areas to locate, purchase, manage and sell the Property Election, Resignations and Vacancies of Manager. (a) The Manager of the Company shall be LN Development Group, LLC. The Manager shall serve and continue in such office for the term of the Company or unless and until removed by operation of law, by order or decree of any court of competent jurisdiction, or upon the resignation of the Manager. The Manager may not be removed by the Members except pursuant to Section (b) The Manager may resign at any time by giving written notice to the Members of the Company. The resignation of the Manager shall take effect upon receipt of notice thereof or at such later date specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. The resignation of a Manager who is also a Member shall not affect the Manager s rights as a Member and shall not constitute a withdrawal of a Member. (c) Upon the death, disability or resignation of any Manager, that person shall no longer be a Manager of the Company. Any vacancy occurring for any 14

84 reason in the number of Managers of the Company may be filled by the affirmative vote of Members owning more than fifty percent (50%) of the Percentage Interests in the Company. (d) If a Manager who is also a Member ceases to be a Manager of the Company for any reason, the Manager shall continue to be entitled to its share of distributions and allocations of net profits and losses of the Company allocable to it as a Member pursuant to this Agreement as before the event, and shall have all the other rights of a Member No Exclusive Duty to Company. The Manager shall not be required to manage the Company as its sole and exclusive function and it may have other business interests and engage in activities in addition to those relating to the Company, whether or not such venture may be considered competitive with, or a business opportunity that would be beneficial to, the Company. Neither the Company nor any Members shall have any right, by virtue of this Operating Agreement, to share or participate in such other investments or activities of a Manager or to the income or proceeds derived therefrom Liability for Certain Acts. The Manager shall perform its duties as Manager in good faith, in a manner it reasonably believes to be in the best interests of the Company, and with such care as an ordinarily prudent person in a like position would use under similar circumstances. The Manager shall not be liable to the Company or to any Member for any loss or damage sustained by the Company or any Member, unless the loss or damage shall have been the result of willful misconduct by the Manager Compensation of Manager and its Affiliates. (a) Property Management Fee. The Company will enter into a management agreement with the Property Manager, which is an Affiliate of the Manager. The Property Manager will be primarily responsible for the management of the Property and will receive a management fee from the Company equal to six percent (6%) of the Gross Rental Income on the Property, payable monthly. The Property Manager may subcontract any of its management functions, but shall remain responsible for the provision of all services to be provided pursuant to the management agreement, and will pay all fees and costs of any subcontractor from the management fee. (b) Construction Fee. The Company will contract with Landmasters, Inc., an Affiliate of the Manager, to act as general contractor to perform or subcontract renovation and construction work on the Property. All such work will be performed by Landmasters, Inc., on a cost plus twenty percent (20%) basis. (c) Real Estate Sales Commission. Upon the acquisition of the Property, the Manager or its Affiliates will be entitled to a sales commission equal to two percent (2%) of the sales price, or $186,000. Payment of this commission will be 15

85 deferred until the Members have received the return of their Capital Contributions, plus the Preferred Return. Upon sale of the Property, the Manager or its Affiliates will be entitled to a sales commission equal to five percent (5%) of the sales price less any sales commissions paid by the Company to any non-affiliated broker. The real estate commission paid to the Manager or its Affiliates shall not exceed two percent (2%) of the sales price on any transaction. (d) Syndication Fee. Upon closing of the Company s acquisition of the Property, the Principals will be entitled to a $300,000 syndication fee for their efforts in locating and negotiating the purchase of the Property and obtaining and guarantying the first mortgage on the Property. Of this amount, $150,000 will be paid at the time of closing, and $150,000 will be deferred until the Members have received the return of their Capital Contributions, plus the Preferred Return. (e) Professional Fees. Legal services required by the Company will be supplied by Levinson & Lichtman, LLP, a law firm in which Jonathan J. Lichtman, Esq., one of the Principals, is a partner. Fees charged to the Company by Levinson & Lichtman will be comparable to those charged by other professionals performing similar services in the area. ARTICLE V - DISTRIBUTIONS 5.01 Net Cash Flow and Capital items other than upon Dissolution and Liquidation. Net Cash Flow and Capital items, other than upon dissolution and liquidation, shall be distributed as follows: (a) First, to the Members in proportion to their Percentage Interests, an amount equal to any unpaid Preferred Return; (b) Then, to the Members in proportion to their Unrecovered Capital Contributions until such balances equal zero; and (c) Then, to the Principals or the Manager and its Affiliates, as the case may be, until the deferred portion of their real estate commissions and syndication fee have been paid; and (d) Then, sixty percent (60%) to the Members, pro-rata according to their Percentage Interests, and forty percent (40%) to the Manager Distributions in the Event of Dissolution and Liquidation. (a) Upon liquidation of the Company, liquidating distributions shall be made in accordance with Section 5.02(b) after taking into account all Capital Account adjustments for the Company taxable year during which such liquidation occurs, by the end of such taxable year (or, if later, within 90 days after the date of such liquidation). Distributions pursuant to the preceding sentence may be distributed to a trust 16

86 established for the benefit of the Members for the purposes of liquidating Company assets, collecting amounts owed to the Company and paying any contingent or unforeseen liabilities or obligations of the Company or of the Manager arising out of or in connection with the Company. The assets of any such trust shall be distributed to the Members from time to time, in the reasonable discretion of the Manager, in the same proportions as the amount distributed to such trustee by the Company would otherwise have been distributed to the Members pursuant to this Agreement. (b) Following the adjustment required by paragraph 5.02(a), the affairs of the Company shall be forthwith wound-up and the proceeds from the liquidation of the Property shall be distributed in the following priority: (i) First, to pay or provide and reserve for all debts (known and contingent) of the Company including any funds loaned or advanced to the Company by any of the Members; Preferred Return; (ii) Then, to the Members, pro-rata, to the extent of any unpaid (iii) Capital Contributions; Then, to each Member in accordance with his Unrecovered (iv) Then, to the Principals or the Manager and its Affiliates, as the case may be, until the deferred portion of their real estate commissions and syndication fee have been paid; and (v) Then, sixty percent (60%) to the Members, pro-rata according to their Percentage Interests, and forty percent (40%) to the Manager. (c) Notwithstanding anything contained in this Agreement to the contrary, upon liquidation of the Company (or any Member s Percentage Interest in the Company), liquidating distributions are required in all cases to be made in accordance with the positive Capital Account balances of the Members, as determined after taking into account all Capital Account adjustments for the Company taxable year during which such liquidation occurs (other than those made pursuant to this paragraph) by the end of such taxable year (or, if later, within 90 days after the date of such liquidation) in strict compliance with Section (b)(2)(ii)(b)(2) of the Treasury Regulations Liquidation and Taxable Year Defined. For purposes of this Agreement, a liquidation of a Member s Percentage interest in the Company occurs upon the earlier of the date upon which there is a liquidation of the Company, or the date upon which there is a liquidation of the Member s Percentage interest in the Company under Section (d) of the Treasury Regulations. For purposes of this Agreement, the liquidation of the Company occurs upon the earlier of the date upon which the Company is terminated under Section 708(b)(l) of the Code, or the date upon which the Company ceases to be a going concern (even though it may continue in existence for the purpose 17

87 of winding up its affairs, paying its debts and distributing any remaining balance to the Members). For purposes of Sections 4.02 and 4.03, the taxable year of the Company shall be as determined for federal income tax purposes, but without regard to Section 706(c)(2)(A) of the Code Distribution of Assets in Kind. If any assets of the Company are distributed in kind, such assets shall be distributed to the Members entitled thereto as tenants-in-common in the same proportions in which such Members would have been entitled to cash distribution if there had been a sale of such assets by the Company and the proceeds therefrom distributed to the Members Demand for Distribution. No Member shall be entitled to demand and receive a distribution of Company property in return for its capital contributions to the Company, except as specifically provided in this Agreement. ARTICLE VI - NET PROFITS AND LOSSES 6.01 Operating and Non-Operating Net Profits. The Operating and Non- Operating Net Profits of the Company shall be determined as of the end of each fiscal year, or as of the date of the termination of the Company, as the case may be. Items of Operating and Non-Operating Net Profits shall be allocated as follows: (a) First, Operating and Non-Operating Net Profits will be allocated to the Members in an amount equal to the amount of the Preferred Return distributed, to the extent Net Profits were not previously distributed against such amounts. (b) Then, to the Members having negative balances in their Capital Accounts, if any, in proportion to their negative Capital Account balances to the extent necessary to bring all such balances to zero; (c) Then, to the Members to the extent necessary to increase their Capital Accounts, collectively, to an amount equal to their then Unrecovered Capital Contributions. (d) Then, sixty percent (60%) to the Members, pro rata, and forty percent (40%) to the Manager Operating and Non-Operating Losses. All Operating and Non-Operating Losses of the Company shall be determined at the end of each fiscal year, or as of the date of termination of the Company, as the case may be. Items of Operating and Non- Operating Losses shall be allocated as follows: (a) First, to the Members pro rata in accordance with their respective positive Capital Account balances until all such balances equal zero; and 18

88 (b) Then, sixty percent (60%) the Members, pro rata, and forty percent (40%) to the Manager General Provisions. Whenever a proportionate part of Company net profit or loss is credited or charged to a Member's Capital Account, every item of income, gain, loss, deduction or credit entering into the computation of such net profit or loss, or applicable to the period during which such net profit or loss is realized, shall be considered credited or charged, as the case may be, to such account in the same proportion. Upon admission of a new or substitute Member, Operating Net Profits and Losses for any fiscal year (or portion thereof, as the case may be) shall be determined by an interim closing of the Company's books and records, as if the fiscal year had closed on the day prior to the date of Transfer or admission, as the case may be, and the Member who has been admitted shall be allocated net profits and losses with respect to the period commencing with the day of Transfer or admission Qualified Income Offset. Notwithstanding anything to the contrary herein other than the provisions of this Article 5 set forth below, in the event a Member unexpectedly receives any adjustments, allocations or distributions described in Treasury Regulation Section (b)(2)(ii)(d)(4), (5) or (6), items of Company income or gain (consisting of a pro rata portion of each item of company income, including gross income, and gain for such year) shall be specifically allocated to the Member in an amount and manner sufficient to eliminate the deficit in the Capital Account of such Member as quickly as possible, all as specified in Treasury Regulation Sect (b)(2)(ii)(d) Minimum Gain Chargeback. Notwithstanding anything to the contrary herein other than the provisions of this Article 5 set forth below, in the event there is a net decrease in Company minimum gain (as defined in Treasury Regulation Section (b)(2)) during a taxable year, all Members shall be allocated, before any other allocation is made of Company items for such year, items of income and gain for such year (and, if necessary, subsequent years) in the manner and to the extent required by Treasury Regulation Section (f)(1) Savings Provisions. Notwithstanding anything to the contrary herein, if the allocation of any item of income, gain, loss, deduction, expenditure, or credit under this Agreement does not have substantial economic effect under Treasury Regulation Section (b)(2) and is not in accordance with the Members' interests in the Company within the meaning of Treasury Regulation Section (b)(3), then such item shall be reallocated in such manner as (i) to either have substantial economic effect or to be in accordance with the Members' interest in the Company and (ii) to result as nearly as possible (consistent with clause (i)) in the respective balances of the Capital Accounts that would have resulted if such item had instead been allocated hereunder without regard to this Section Compensation for Overriding Allocations. If any amount is allocated pursuant to Sections 6.04, 6.05 or 6.06, then, notwithstanding anything to the contrary 19

89 in this Article VI (other than Sections 6.04, 6.05 or 6.06), items of income, gain, loss, deduction or expenditure shall thereafter be allocated in such manner and to such extent as may be necessary so that, after such allocation, the respective balances in the Capital Accounts will equal the balances that would have been obtained if the amount allocated pursuant to Sections 6.04, 6.05 or 6.06 (whichever is applicable) and this Section 6.07 had instead been allocated without regard to such Sections Contributed Property. (a) In accordance with Section 704(c) and the Treasury Regulations thereunder, income, gain, loss, and deduction with respect to any property contributed to the capital of the Company shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its fair market value at the time of contribution. (b) If any Company property has been revalued on the books of the Company and the capital accounts of the Members under Treasury Regulation Section (b)(2)(iv)(f), subsequent allocations of income, gain, loss, and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for Federal income tax purposes and its fair market value in the same manner as under Code Section 704(c) and the Treasury Regulations thereunder. (c) Any elections or other decisions relating to allocations under this Section shall be made by the Manager in any manner that reasonably reflects the purpose and intention of this Agreement Tax Allocations; Income Tax Elections. (a) For federal, state and local income tax purposes, the income, gains, losses and deductions of the Company shall, for each taxable period, be allocated among the Members in accordance with their respective ownership interests and among the Limited Members in accordance with the number of Percentage interests owned; provided, that (i) any adjustments made pursuant to Section 743 or 734 of the Code shall be taken into account and (ii) items of income, gain, loss and deduction with respect to Company Property reflected in the Members' Capital Accounts and on the books of the Company at a value that differs from the Company's adjusted tax basis in such property shall be allocated, solely for tax purposes, among the Members so as to take account of that difference in value in accordance with Code Section 704(c) and Treasury Regulations Sections (b)(2)(iv)(f) and (b)(4)(i). (b) Upon the written request of any Member, the Manager, in its sole discretion, may file an election provided for in Section 754 of the Code. All costs and expenses incurred by the Company in connection with the making of such an election shall be borne by the Member requesting the same or, if more than one Member has 20

90 made such request, by each requesting Member in the proportion which his capital commitment bears to the capital commitments of all Members making such request Consent to Allocations. The Members are aware of the income tax consequences of the allocations made by this Article VI and hereby agree to be bound by the provisions of this Article VI in reporting their shares of Company income and loss for income tax purposes. ARTICLE VII - ACCOUNTING AND RECORDS 7.01 Records and Accounting. The books and records of the Company shall be kept, and the financial position and the results of its operations recorded, in accordance with the accounting methods elected to be followed by the Company for federal and state income tax purposes. The books and records of the Company shall reflect all Company transactions and shall be appropriate and adequate for the Company's business. The fiscal year of the Company for financial reporting and for federal income tax purposes is the calendar year Access to Accounting Records. All books and records of the Company shall be maintained at any office of the Company or at the Company's principal place of business. Upon reasonable written request, each Member shall have the right, at any time during ordinary business hours, as reasonably determined by the Manager, to inspect and copy, at the requesting Member s expense, the Company documents required to be maintained under Section of the Act, and such other documents which the Manager, in its reasonable discretion, deems appropriate Annual and Tax Information. The Manager shall use its best efforts to cause the Company to deliver to each Member, within seventy five (75) days after the end of each fiscal year, all information necessary for the preparation of such Member's federal income tax return including a copy of the Company s unaudited Balance Sheet as of the end of such taxable year, together with unaudited Statements of Income, Members Equity and Changes in Financial Condition Tax Returns. The Company shall prepare or cause to be prepared and shall file on or before the due date (or any extension thereof) any Federal, State or local tax returns required to be filed by the Company Accounting Decisions. All decisions regarding accounting matters, except as otherwise specifically set forth herein, shall be made by the Manager. The Manager may rely on the advice of the Company's accountants as to whether such decisions are in accordance with accounting methods followed for federal and state income tax purposes Income Tax Elections. The Manager shall make all elections on behalf of the Company for federal and state income tax purposes, including, but not limited to, the following: 21

91 (a) To the extent permitted by applicable law and regulations, elect to use an accelerated depreciation method on any depreciable percentage interest of the assets of the Company; and (b) In case of a transfer of all or part of the Percentage interest of any Member, the Company may elect, pursuant to Sections 734, 743 and 754 of the Code, as amended (or corresponding provisions of future law) to adjust the basis of the assets of the Company Intention to be Taxed as a Partnership. Except as is otherwise required by law, the Company intends to be treated, for state and federal income tax purposes, as a partnership under the Code. This Operating Agreement and all other documents relating to the operation of the Company shall be construed, whenever possible, to include such intentions and the Members shall take such reasonable steps as may be necessary to achieve these results Bank Accounts. The Manager shall open and maintain on behalf of the Company a bank account or accounts with depositories as it shall determine, in which all monies received by or on behalf of the Company shall be deposited. All withdrawals from the accounts shall be made upon the signature of the person or persons as the Manager may from time to time designate. ARTICLE VIII TRANSFER OF PERCENTAGE INTERESTS 8.01 Transferability of Percentage Interests. A Member s Percentage Interest is not transferable, except upon death, by operation of law or pursuant to this Article, without the prior written consent of the Manager, which consent may be withheld in the sole discretion of the Manager. The Manager may consent to transfers provided that (a) the prospective transferee provides the Manager with information, documents and opinions as the Manager may deem necessary or appropriate to determine compliance with applicable securities laws, and such other information as the Manager may request; and (b) the transfer would not cause the Partnership to terminate under Section 708 of the Code. The assignor and assignee shall pay all reasonable expenses of any assignment, including, without limitation, any filing, recording, publishing, accounting or legal fees. No assignment shall be valid or effective unless in compliance with the conditions contained herein Distributions and Allocations in Respect to Transferred Interests. If any Percentage Interest is sold, assigned, or transferred during any accounting period in compliance with the provisions of this Article, Operating Net Profits and Net Losses, each item thereof, and all other items attributable to such Percentage Interest for such period shall be divided and allocated between the transferor and the transferee by taking into account their varying interests during the period in accordance with Code Section 706(d), using any conventions permitted by law and selected by the Manager. All distributions on or before the date of such transfer shall be made to the transferor, and all distributions thereafter shall be made to the transferee. Solely for purposes of 22

92 making such allocations and distributions, the Company shall recognize such transfer not later than the end of the calendar month during which it is given notice of such transfer, provided that if the Company does not receive a notice stating the date such Percentage Interest was transferred and such other information as the Manager may reasonably require within 30 days after the end of the accounting period during which the transfer occurs, then all of such items shall be allocated, and all distributions shall be made, to the person who, according to the books and records of the Company, on the last day of the accounting period during which the transfer occurs, was the owner of the Percentage Interest. Neither the Company nor the Manager shall incur any liability for making allocations and distributions in accordance with the provisions of this Article, whether or not the Manager or the Company has knowledge of any transfer of ownership of any Percentage Interest Substituted Members. Except as provided in Section 8.06, no assignee of the whole or any portion of a Percentage Interest shall have the right to become a substituted Member in place of his or her assignor, unless: (a) the assignor designates such intention in the instrument of assignment; (b) the written consent of the Manager to such substitution is obtained, which consent may be withheld in the Manager's absolute discretion; (c) the assignment instrument is in form and substance satisfactory to the Manager; (d) the assignor and assignee named therein execute and acknowledge such other instrument or instruments as the Manager may deem necessary or desirable to effect such admission, including, but not limited to, a power of attorney with provisions more fully described in this Agreement; and (e) the assignee accepts, adopts, and approves in writing all of the terms and provisions of this Agreement, as it may be amended Withdrawal of a Member. No Member shall be entitled to withdraw or retire from the Company, and no Member shall have any right to require the Company to pay him or her the cash value of his or her interest Death of a Member. The death of a Member shall not terminate the Company. Upon the death of a Member, the then-personal representative of the deceased Member shall have all the rights of the Member in the Company to the extent of the deceased Member's Percentage Interest therein, subject to the terms and conditions of this Agreement; and the estate of the deceased Member shall be liable for all his or her liabilities as a Member, as well as the execution of all documents required to effect, subject to the terms of Section 7.03, the appropriate substitution of the decedent's estate or beneficiary as a Member hereunder Permitted Transfers. Notwithstanding anything contained in this Article to the contrary, any Member shall be entitled to assign his Percentage Interest, subject to the terms and conditions of this Agreement, to his spouse, adult child or to an entity which he or his spouse controls. Any such assignee may apply for admission to the Company as a Member and shall be admitted as such provided that the Manager, in its sole discretion, concurs that such admission will not cause a violation of any federal or state securities laws or cause the termination of the Company under Section 708 of the 23

93 Code. Any such assignee shall, as a condition of being admitted to the Company as a Member, file such forms and execute such other documents as may be required by the Manager. ARTICLE IX - DISSOLUTION AND LIQUIDATION 9.01 Dissolution of the Company. The Company shall be dissolved, its assets disposed of and its affairs wound up on the first to occur of the following: (a) the sale or other disposition of all or substantially all of the assets of the Company, unless the Manager and Members owning, in the aggregate, more than fifty percent (50%) of the Percentage Interests in the Company, consent to the election by the Company under Section 1033 of the Code, regarding involuntary conversions; (b) the determination by the Manager and by Members owning, in the aggregate, more than fifty percent (50%) of the Percentage Interests in the Company that the Company should be dissolved; (c) at such earlier time as may be provided by applicable law Winding Up. Upon the dissolution of the Company, the Manager (or if there is no Manager then remaining, a person designated by Members owning, in the aggregate, more than fifty percent (50%) of the Percentage Interests in the Company) shall; (a) (b) cause the cancellation of the Articles of Organization; liquidate the Company s assets; and (c) apply and distribute the proceeds of such liquidation in accordance with Article V of this Agreement Avoidance of Undue Loss. Notwithstanding the provisions of this Article, if, on dissolution of the Company, the Manager determines that an immediate sale of part or all of the Company s assets would cause undue loss to the Members, the Manager may, in order to avoid such losses, either: (a) defer the liquidation of, and withhold from distribution for a reasonable time, any assets of the Company except those necessary to satisfy debts and liabilities of the Company; or (b) distribute to the Members, in lieu of cash, undivided interests in any Company asset as tenants in common and liquidate only such assets as are necessary to in order to pay the debts and liabilities of the Company.

94 9.04 Waiver of Right to Decree of Dissolution. The Members hereby agree that irreparable damage would be done to the goodwill and reputation of the Company if any Member should bring an action in court to dissolve the Company or seek the partition of its assets. Care has been taken in this Agreement to provide what the parties feel is a fair and just payment in liquidation of the interest of all Members. Accordingly, each party hereby waives and renounces his or her right to such a court decree of dissolution of the Company or partition of the Company's assets or to seek the appointment by the court of a liquidator for the Company Deficit Capital Account. Upon liquidation, if any Member has a deficit balance in such Member s Capital Account (after giving effect to all contributions, distributions and allocations for all Fiscal Years, including the Fiscal Year in which such liquidation occurs), such Member shall have no obligation to make any contribution to the capital of the Company with respect to such deficit, and such deficit shall not be considered a debt owed to the Company or to any other Person for any purpose whatsoever. Each Member shall look solely to the assets of the Company for the return of that Member s Capital Contribution. ARTICLE X - POWER OF ATTORNEY Power of Attorney. Each Member, by executing a Subscription Agreement for his Percentage Interest, has irrevocably constituted and appointed the Manager and its successors the true and lawful attorneys-in-fact of, and in the name, place, and stead of, such Member, to act in his or its name and on his or its behalf with respect to the execution, acknowledgment, swearing to and filing of the following documents, subject to all of the provisions of this Agreement. (a) the Articles of Organization, and any amendments thereto, to be filed in the appropriate public offices in the State and in such form as shall be necessary under the laws of the State to give effect to the provisions of this Agreement and to preserve the character of the Company as a limited liability company. This power includes, but is not limited to, the power and authority to admit additional Members to the Company. (b) any instrument which the Manager deems to be in the best interests of the Company to file and which is not inconsistent with this Agreement; and (c) This Operating Agreement and any documents which may be required to effect any amendment to this Operating Agreement or any continuation, dissolution, or termination of the Company which is in accordance with the terms hereof Characteristics of Power of Attorney. The power of attorney hereby granted by each Member to the Manager: (a) is a special power of attorney coupled with an interest, which is irrevocable and shall survive the death or incapacity of the Member;

95 (b) may be exercised by the Manager either by signing as attorney-infact for each Member, or, after listing all of the Members executing any instrument, by the signature of the Manager acting as attorney-in-fact for all of them; and (c) shall survive the delivery of an assignment by a Member of the whole or any portion of his Percentage Interest; except that where the assignee thereof has been approved by the Manager for admission to the Company as a Substitute Member, this power of attorney given by the assignor shall survive the delivery of such assignment for the sole purpose of enabling the Manager to execute, acknowledge, swear to, and file any instrument necessary to effect such substitution Limitations of Power of Attorney. No document or amendment executed by the Manager pursuant to this Article, in the absence of the prior consent of all of the Members, shall: (a) reduce the obligations of the Manager; (b) affect the rights or restrictions regarding the assignability of Percentage Interests; (c) amend this Article; or (d) reduce the rights or interests or enlarge the obligations of the Members. The Manager shall promptly notify the Members of any documents or amendments executed pursuant to this Article. ARTICLE XI - MISCELLANEOUS Complete Agreement. This Operating Agreement and the Articles constitute the complete and exclusive statement of agreement among the Members with respect to the subject matter described. No representation, statement, or condition or warranty not contained in this Operating Agreement or the Articles is binding on the Members or has any force or effect whatsoever Governing Law. This Operating Agreement and the rights of the parties hereunder shall be construed in accordance with the laws of the State of Florida. Venue for any action shall be in Palm Beach County, Florida.

96 10.03 Arbitration. Any dispute or controversy arising under, out of, in connection with, or in relation to this Agreement and any amendments thereof, or the breach thereof, or in connection with the dissolution of the Company, shall be determined and settled by arbitration to be held in Palm Beach County, Florida, in accordance with the rules then applicable of the American Arbitration Association. Any award rendered therein shall be final and binding on the Company and all of the Members, and judgment may be entered thereon in any court of competent jurisdiction. A maximum of three arbitrators shall be appointed. The Manager shall appoint one arbitrator and the Member(s) involved in the dispute shall appoint one arbitrator. Each of these arbitrators shall appoint the third. If any party fails to appoint an arbitrator, the President or Chairman of the American Arbitration Association shall appoint such arbitrator or arbitrators. After designation of the arbitrators, the arbitration hearing shall be set within ninety (90) days. A decision of the arbitrators shall be rendered within thirty (30) days after close of the hearing. Prior to the hearing date, the parties shall have all rights of pretrial discovery afforded to parties in civil cases under the Florida Code of Civil Procedure. All costs and expenses of the arbitration proceeding, including the reasonable attorneys' fees and costs of the successful party related thereto, will be paid by the party who the arbitrators rule against in such proceeding Binding Effect. Subject to the provisions of this Operating Agreement relating to transferability, this Operating Agreement is binding on and inures to the benefit of the Members, and their respective successors and assigns Terms. Common nouns and pronouns refer to the singular and plural, identity of the person or persons, firm or corporation as the context requires. Any reference to the Code or other statutes or laws will include all amendments, modifications, or replacements of the specific sections and provisions concerned Headings. All headings herein are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Operating Agreement Severability. If any provision of this Operating Agreement is held to be illegal, invalid, or unenforceable under the present or future laws effective during the term of this Operating Agreement, such provision is fully severable; this Operating Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part of this Operating Agreement; the remaining provisions of this Operating Agreement will remain in full force and effect and will not be affected by the illegal, invalid, or unenforceable provision; and there will be added automatically as a part of this Operating Agreement a provision as similar in terms to such illegal, invalid, or unenforceable provision as may be possible and be legal, valid and enforceable Multiple Counterparts. This Operating Agreement may be executed in several counterparts, each of which is deemed an original but all of which constitute one

97 and the same instrument. However, in making proof only one copy signed by the party to be charged is required Additional Documents and Acts. Each Member agrees to execute and deliver additional documents and instruments and to perform all additional acts reasonably necessary or appropriate to effectuate, carry out and perform all of the terms, provisions, and conditions of this Operating Agreement and the transactions contemplated hereby No Third Party Beneficiary. This Operating Agreement is made solely and specifically among and for the benefit of the Members and their respective successors and assigns subject to the express provisions hereof relating to successors and assigns, and no other person has or will have any rights, interest, or claims hereunder or be entitled to any benefits under or on account of this Operating Agreement as a third party beneficiary or otherwise. None of the provisions of this Operating Agreement shall be for the benefit of or enforceable by any creditors of the Company References to this Operating Agreement. Numbered or lettered articles, sections and subsections in this Operating Agreement refer to articles, sections and sub-sections of this Operating Agreement unless otherwise expressly stated Notices. Any notice, demand, or communication required or permitted to be given by any provision of this Operating Agreement shall be in writing and shall be deemed to have been sufficiently given or served for all purposes if delivered personally or by express mail or courier service (with receipt acknowledged) to the party or to an executive officer of the party to whom the same is directed, if telecopied (with receipt acknowledged) to the party or an executive officer of the party to whom the same is directed or, if sent by registered or certified mail, postage and charges prepaid, addressed to the Member s and/or Company s address, as appropriate. Except as otherwise provided herein any such notice shall be deemed to be given three (3) business days after the date on which the same was deposited in the Percentage interested States mail, addressed and sent as aforesaid, if sent by mail or upon confirmation of receipt if delivered by telecopier, personal delivery or courier service. Notice from counsel for a Member shall be deemed notice from such Member. All notices shall be given to Members at the addresses specified in Schedule A. Any Member or the Company, may, at any time, designate any other address in substitution of the foregoing address to which such notice will be given by giving written notice to the other Members and the Company not less than ten (10) days prior to the date of delivery of the notice Title to Company Property. Legal title to all property of the Company shall be held and conveyed in the name of the Company Reliance on Authority of Person Signing Operating Agreement. If a Member is not a natural person, neither the Company nor any Member will (i) be required to determine the authority of the individual signing this Operating Agreement to

98 make any commitment or undertaking on behalf of such Entity or to determine any fact or circumstance bearing on the existence of the authority of such individual, or (ii) be required to see to the application or distribution of proceeds paid or credited to individuals signing this Operating Agreement on behalf of such Entity Rights and Remedies of Members. All rights and remedies of Members hereunder, at law or in equity, are cumulative, and each Member shall have the right to specifically enforce the terms and provisions of this Operating Agreement against the other Review with Counsel. The Members acknowledge that they have each been advised to and have had an opportunity to review this Operating Agreement with their independent attorney and to consult with their attorney concerning the terms of this Operating Agreement and the tax consequences thereof. [signature page follows]

99 IN WITNESS WHEREOF, the undersigned have executed this Operating Agreement, to be effective as of the date the Articles of Organization of the Company are accepted for filing by the Department of State. MANAGER: LN DEVELOPMENT GROUP, LLC By: Jonathan J. Lichtman, Manager MEMBERS: By: LN DEVELOPMENT GROUP, LLC, as Attorney-in-Fact By: Jonathan J. Lichtman, Manager

100 CAMARON AT WOODCREST LLC SCHEDULE A TO OPERATING AGREEMENT Member/ Capital Percentage Address Contribution Interest Jonathan J. Lichtman $ 50, % State Road 7, Suite 300 Boca Raton, FL Robert A. Nass $ 50, % 905 Biscayne Blvd., Suite 2 Deland, FL $ % $ % $ % $ % Total $2,800, %

101 CAMARON AT WOODCREST, LLC A FLORIDA LIMITED LIABILITY COMPANY PROPERTY MANAGEMENT AGREEMENT EXHIBIT C

102 PROPERTY MANAGEMENT AGREEMENT Camaron at Woodcrest This Property Management Agreement (the "Agreement"), is made and entered into effective for all purposes as of, 2009, by and between LN PROPERTY MANAGEMENT, LLC, a Florida limited liability company (the "Manager") and CAMARON AT WOODCREST LLC, a Florida limited liability company ("Owner"). Recitals WHEREAS, Owner has purchased a 222 unit residential apartment complex known as Camaron at Woodcrest located in Tallahassee, Florida (the "Property"); WHEREAS, Manager is in the business of management, operation and maintenance of properties such as the Property; and WHEREAS, Owner and Manager desire to provide herein for the management, operation and maintenance of the Property. Agreement NOW, THEREFORE, in consideration of the mutual promises hereinafter contained, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, covenant and agree with each other as follows: 1. Appointment of Manager. Subject to the terms and conditions hereof, Owner hereby engages and retains Manager to perform, on Owner's behalf, all services required or desirable for the operation, leasing and management of the Property for the period of time and upon the terms and conditions hereinafter set forth. Manager agrees to devote its good faith efforts in performing its duties hereunder in a diligent manner. 2. Independent Contractor. Manager is retained by Owner only for the purposes and to the extent set forth in this Agreement, and Manager's relationship to Owner shall be that of an independent contractor. Manager shall be free to use such portion of its time, energy and skill as it does not expend hereunder, in such manner as it sees fit. 3. Duties of Manager. Manager shall provide all of the outside management services relating to the Property including, but not limited to, the following: (a) Leasing all units as further described in Sections 5 and 10 herein; (b) Collection of all rents and other income as further described in Section 4 herein; 1

103 (c) Maintaining the financial and operating books and records of the Property, and the payment of all expenses relating to the Property, as further described in Section 11 herein; (d) Maintaining the Owner's bank accounts relating to the Property as further described in Section 8 herein; (e) Overseeing the proper maintenance and repairs to the Property and supervising any subcontractors regarding such maintenance and repairs, as further described in Section 6 herein; (f) Supervising all employees of the Owner and overseeing the running of the Property's leasing office, as further described in Section 10 herein; (g) To the extent such coverage is available, and at Manager s option, provide group health insurance coverage for certain employees of Owner under Manager s group health insurance policy as described in Section 12 herein; (h) (i) Property; Prepare all reports, budgets and statements described in Section 9 herein; Advise with respect to the procurement of additional financing for the (j) Cause all insurance required to be maintained by the Owner to be kept in full force and effect; and (k) Perform other normal business functions related to the operation of the Property in accordance with and as limited by this Agreement. 4. Collections. During the term of this Agreement, Manager is hereby authorized to use reasonable efforts to collect for the account of Owner all rentals, laundry fees, collection charges, late fees, utility reimbursements and other income and charges accruing to Owner from the Property whether as additional rent or otherwise, payable by tenants under their respective leases and other agreements, and by other parties under license, service, operating and other agreements. Manager shall, at Owner's expense, utilize such collection procedures as set forth by Owner, from time to time in order to collect any such rents or other charges. Any judicial proceedings to collect rents shall be brought in Owner's name. 5. Performance of Leases. Manager shall use reasonable efforts on behalf of Owner to enforce the various tenants' (i) performance of all requirements under their respective leases and (ii) observance of all rules and regulations of the Property, by all reasonable means. Manager shall have the right, on behalf of Owner, to impose such reasonable rules and regulations upon tenants as it deems advisable to ensure the performance of its responsibilities hereunder. 2

104 6. Maintenance, Repairs and Alterations. Manager shall arrange for the ordinary maintenance and repair of the buildings and improvements comprising the Property in order to keep the same in a safe, sound, attractive and rentable condition, and to do all acts or things and to hire and supervise such employees or independent contractors and enter into agreements as may be necessary or desirable to accomplish such purpose. 7. Indemnification and Insurance. Excluding willful misconduct, fraud or embezzlement on the part of Manager or its officers, agents, employees or Affiliates, Owner shall indemnify and save Manager, its officers, agents, employees and Affiliates harmless from and against any and all liability, claims, demands, expenses, fees, fines, suits, losses, and causes of action alleged, asserted or prosecuted by any tenants of the Property or other third parties arising out of this Agreement or Owner's or Manager's performance hereof, including without limitation, reasonable attorney's fees, court costs and litigation expenses related thereto. Manager hereby indemnifies and saves Owner, its officers, partners, agents, employees and Affiliates harmless from and against any and all liability, claims, demands, expenses, fees, fines, suits, losses, and causes of action alleged, asserted or prosecuted by any tenants of the Property or third parties arising out of Manager's or its officers' agents' employees' or Affiliates willful misconduct, fraud or embezzlement, including without limitation, reasonable attorneys' fees, court costs and litigation expenses related thereto. Owner shall at all times during the term of this Agreement maintain, at Owner's expense: (i) comprehensive general public liability insurance for the Property, under a combined single-limit policy providing protection with limits of not less than One Million Dollars ($1,000,000.00), which policy shall include coverage with respect to any vehicle utilized in maintaining and patrolling the Property, coverage with respect to the indemnity by Owner contained herein; and (ii) fire and extended coverage insurance in the amount at least equal to the full insurable value of the Property, insuring against loss or damage from causes or events which from time to time are included as covering risks under standard insurance industry practices within the classifications of fire and extended coverage. All of such policies shall include Manager and its Affiliates as an additional named insured for the duration of this Agreement at no cost to Manager. Owner shall furnish Manager with certificates evidencing such coverage promptly after the execution hereof. Such policy or policies, and certificates evidencing the same, shall contain a provision that written notice of cancellation of, reduction of coverage under, or any material change in, said policy or policies shall be delivered by the insurer to Manager at least thirty (30) days prior to the effective date thereof. Manager will, to the extent requested by Owner, assist Owner in procuring such insurance coverage. Manager and/or its Affiliates shall at all times during the term of the Agreement, maintain Workers' Compensation insurance in statutory amounts covering all employees of Manager and/or its Affiliates, and shall upon request evidence such coverage to Owner. 3

105 8. Bank Accounts. All monies collected or received by Manager with respect to the Property shall promptly be deposited into a bank account or accounts in a bank satisfactory to Owner in the name of Owner, which account shall be used solely for funds of the Property. Deposits and withdrawals may be used solely for funds of the Property. Deposits and withdrawals may be made on such account by Manager only for purposes authorized under this Agreement. Manager shall distribute to Owner all funds not needed pursuant to this Agreement as requested by Owner, but in no event less frequently than once a month. All of Manager's personnel who handle or are responsible for the handling of Owner's funds, upon request of Owner, and at Owner's expense, shall be bonded in favor of Owner by a fidelity bond in such form and amount and issued by such surety as shall be acceptable to Owner. 9. Reports, Budgets and Statements. Throughout the term of this Agreement, Manager shall furnish Owner with the following statements concerning the operation of the Property: (a) basis; and (b) A monthly operating statement showing revenue and expenses on a cash A monthly current rent roll. Items (a) and (b) above shall be submitted monthly to Owners by the 15th day of each month for the immediate preceding month. Owner and Manager shall use their best effort to arrive at an approved budget before the commencement of the year to which the plan relates. All of the books, accounts, and records pertaining to the Property shall be the property of the Owner, shall be kept and maintained by Manager at its principal office, except those maintained in Owner's office and shall be kept in accordance with this agreement. Owner, or its duly authorized agent, shall have the right to examine such books, accounts, and records at any time during normal business hours. Upon any termination of this Agreement, Manager shall promptly deliver to Owner all such books, accounts, and records. 10. Leasing, Marketing, Merchandising and Promotion. (a) Manager shall use its best efforts to keep the Property fully leased, to procure tenants and to lease space in the Property to tenants. Owner hereby grants Manager the exclusive right during the term of this Agreement to procure tenants for the Property. Owner and Manager shall work together to develop a "standard" form of lease which shall be utilized for new leases; and Manager shall thereafter utilize said form, without material variations, unless Owner shall consent to modification thereof. Notwithstanding the above paragraph, if Manager provides Owner with minimum leasing standards which are acceptable to Owner, Owner will accept leases presented by Manager which meet such standards and are otherwise satisfactory to Owner. 4

106 Manager is hereby authorized to modify, extend, renew, amend, terminate or resolve any dispute which arises under any lease or agreement relating to the Property subject to the general guidelines in the leasing plan. (b) Manager agrees to perform all of the duties of Owner for the operation, maintenance and day-to-day management of the Property under each lease so that such leases shall remain in full force and effect and so as to avoid any claim of default against Owner. (c) Manager shall supervise all leasing agents and office personnel who shall be employees of Owner and shall oversee all activities of the rental office. 11. Payment of Expenses. Manager shall keep the operating books and records of the Owner pertaining to the Property, and shall collect all income generated by the Property and pay all expenses including mortgage and real estate tax payments. With respect to real estate taxes, Manager shall consult and work with any real estate tax service or attorney retained by Owner in regard to the lowering or monitoring of said taxes, and Manager shall advise Owner promptly with respect to the status of said taxes, both prior to the expiration of any relevant appeal period and again prior to the payment date. 12. Group Health Insurance. To the extent such coverage is available, Manager may, as requested by Owner, offer to certain employees of Owner coverage under Manager s group health insurance plan. All costs of providing such coverage shall be reimbursed to Manager by Owner or Owner s covered employees. Owner hereby agrees to indemnify Manager for any liability incurred by Manager for providing the health care coverage for Owner s employees. Manager shall have no liability to Owner or Owner s employees if any employee is not eligible for coverage under Manager s group health insurance plan or, if eligible, ceases to be eligible under the plan or for any change in coverage under the plan. 13. Manager's Fee. As its fee for all of the management work and services to be performed by it hereunder, Manager shall receive a management fee (the "Management Fee") equal to six percent (6%) of the Property's Gross Rental Income for the prior month payable by the 5th day of each current month. Gross Rental Income shall mean the total of all gross rents and other income such as laundry income, collection fees, late charges, utility reimbursements and miscellaneous fees, but shall exclude interest income on Owner's bank or other deposits. 14. Owner's Additional Expenses Reimbursements. In addition to the Management Fee, Owner shall pay those costs and expenses of operating the Property authorized by Owner which are customarily paid by an owner of a similar project located in Tallahassee, Florida, including, but not limited to, the following: (a) Employees of Manager located at the Property, including a pro-rated amount for Manager s regional supervisor and other employees working for the 5

107 Property, shall be charged to the Owner, which charge shall include the wages paid plus the cost of fringe benefits and a reasonable fee for overhead and supervision. Manager shall submit to Owner for Owner's prior written approval all employment or service contracts pertaining to the Property where such contracts are with persons or entities affiliated with Manager. (b) Owner's share of the cost of all of the Property's advertising and promotional expenses. (c) All fees and payments (not otherwise paid directly by Owner) made to third parties, including, but not limited to, legal fees, consultant fees and brokerage fees. (d) Annual travel allowance, not to exceed $3, (e) All costs of providing group health care coverage to Owner s Employees. (f) Other expenses of the Property paid by Manager which are customarily paid by an owner of a similar project in Tallahassee, Florida. 15. Term. The initial term of this Agreement shall be for a period of one (1) year, commencing upon the effective date hereof (the Initial Term ). The Initial Term shall be renewed automatically for additional one (1) year terms (each such term being a "Renewal Term") unless either party gives the other party written notice of cancellation at least sixty (60) days prior to the expiration of the initial or applicable Renewal Term. 16. Default. If at any time during the Initial Term or any Renewal Term hereof: (a) Manager fails to pay to Owner, within five (5) days after demand, the excess of any monies received by Manager from tenants of the Property for the account of Owner over amounts which Manager is reasonably required to retain pursuant to the terms of this Agreement, or (b) Either party, either willfully or through gross negligence of itself or its officers, agents or employees, defaults in the performance of any of its obligations under this Agreement and does not cure such default within thirty (30) days after written notice thereof from the non-defaulting party of, if the curing thereof reasonably requires more than thirty (30) days, does not commence such action as is required to cure the same within said thirty (30) day period and prosecute the same to completion with due diligence, then the non-defaulting party may terminate this Agreement by providing the defaulting party with ten (10) days written notice of its intent to so terminate. 6

108 17. Termination. Provided this Agreement has not theretofore been terminated, upon sixty (60) days' prior written notice, any party hereto may cancel this Agreement effective at the end of said (60) day period. If this agreement is terminated, for any reason, Manager shall pay over to Owner on or before the date of termination, all monies held by it for the account of Owner, and shall deliver to Owner all books, accounts and records relating to its management of the Property and all inventory of supplies, materials and equipment in Manager's possession or control. 18. Assignment and Delegation. Neither party shall have the right, power or authority to assign or transfer this Agreement without the prior written consent of the other party, and any purported assignment or transfer without such consent shall be null and void and of no force or effect. Manager may delegate its duties hereunder to RAN Management, Inc., a corporation owned and controlled by Robert A. Nass, and/or Boca Management Corporation, a corporation owned and controlled by Jonathan J. Lichtman (collectively, the Affiliates ), but no such delegation shall relieve Manager of its obligations hereunder. 19. Notices. Any notice, communication, request, reply or advice hereunder (a "Notice") must be in writing and may be given by registered or certified mail, with return receipt requested, or by hand delivery to an officer of such party, or by facsimile transmission. Notice deposited in the mail as set forth above shall be effective three business days after it is so deposited. Notice given in any other manner shall be effective when received by the party to whom it is given. For purposes of Notice, the addresses of the parties shall be as follows: Manager: Owner: LN Property Management LLC 905 Biscayne Blvd., Suite 2 Deland, FL Camaron at Woodcrest LLC State Road 7, Suite 300 Boca Raton, FL or to such other person and/or address as shall be specified by either party in a notice given to the other pursuant to the provisions of this paragraph. 20. Interpretation. This Agreement shall be construed under and in accordance with the laws of the State of Florida. This Agreement sets forth the entire agreement between the parties and no amendment or alteration hereof or change hereto shall be binding unless same shall be in writing and signed by both of the parties hereto. Venue for any action hereunder shall lie in Palm Beach County, Florida. 7

109 21. Severability. If any term or provision of this Agreement, or the application thereof to any person or circumstance, shall to any extent be held invalid or unenforceable by a court of competent jurisdiction, such invalidity shall not affect other provisions of this Agreement or the applications thereof which can be given effect without the invalid provision or application, and to this end the parties herein agree that the provisions of this Agreement are and shall be severable. 22. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the permitted successors and assigns of the respective parties and any person claiming by, through or under any of the respective parties or their respective permitted successors or assigns. 23. Other Instruments and Documents. The parties shall execute any and all instruments and documents as may be reasonably necessary and proper and do any and all acts necessary in order to carry out the purposes of this Agreement. 24. Waiver; Remedies Cumulative. No consent or waiver, express or implied, by any party to this Agreement, to or of any breach or default by any party in the performance by another party of its obligations hereunder, shall be deemed or construed to be a consent to or waiver of any other breach or default in the performance by such other party of the same, or any other obligation of such party hereunder. Failure on the part of any party to complain of any act or failure to act of another party to this Agreement, or to declare such other party in default, irrespective of how long such failure continues shall not constitute a waiver by such party of its rights hereunder. All rights, privileges and remedies afforded to the Owner and the Manager by this Agreement shall be cumulative and not exclusive, and the exercise of any such right, remedy or privilege shall not be deemed to be a waiver of any other right, remedy or privilege provided for herein or available at law or equity. 25. No Partnership or Joint Venture. Nothing contained in this Agreement shall be construed to make Owner and Manager partners or joint venturers or to render either of said parties liable for the debts or obligations of the other, except as expressly provided in this Agreement. 26. Execution and Delivery. This Agreement may be executed in multiple counterparts, all of which shall be considered one agreement, and may be delivered by facsimile signature, and any such signature shall be of the same force and effect as an original signature. [signature page follows] 8

110 IN WITNESS WHEREOF, the parties hereto have executed this Property Management Agreement as of the date set forth above. CAMARON AT WOODCREST LLC By: LN Development Group, LLC Manager By: Jonathan J. Lichtman, Manager LN PROPERTY MANAGEMENT, LLC By: Robert A. Nass, Manager 9

111 CAMARON AT WOODCREST, LLC A FLORIDA LIMITED LIABILITY COMPANY INSPECTION REPORT AND RENOVATION ESTIMATE EXHIBIT D

112 March 26, 2009 Jonathan J. Lichtman, Esq. LN Development Group, LLC State Road 7, Suite 300 Boca Raton, FL Re: Revised Renovation Analysis - Camaron at Woodcrest Apartments. Dear John, I have completed the attached revised Renovation Analysis of Camaron at Woodcrest Apartments. I have included a detailed Due Diligence Inspection Report derived from my recent personal inspection of all occupied and vacant units at the property, with a few exceptions. Upon my re-inspection of the property I found that the Seller has completed most of the units that were on our to-do list. This changes my initial renovation budget. We Also have negotiated an additional $215,000 renovation credit from the bank. We now need a total of $515,00 to complete the necessary upgrades to the Property, which includes the renovation credit. In addition, I inspected all exterior grounds and buildings. All estimates contained in the Renovation Analysis are reasonable and comparable with the renovation costs charged by other local contractors in the Talahassee area. LandMasters, Inc., (Florida General Contractor License No: CGC ) would act as the General Contractor for the project and would secure all necessary permits and complete the work in a professional manner. I estimate that the time frame to complete all work would be under nine months at this time. I anticipate having the 15 turn units completed within the first three months (5 units monthly) which coincide with our absorption estimate to rent up the property to a 92% occupancy within the first year of ownership. Simultaneously LandMasters, Inc. would award bids for roofs, exterior painting, stairs and decking, landscaping/sprinklers, pool, repairs, signage, washstation, and dog park. We would focus on turns first. Please adjust your projections accordingly. SS/Robert A. Nass