PRIVATE PLACEMENT MEMORANDUM

of
TIC TOC
a California Limited Liability Company
Address:________
Tel: _________
E-Mail: ________________
Website: yourtictoc.com
$___________
Limited Liability Company Membership Interests
Date___________

OFFERING OFFERING PREFERRED PRICE PER MINIMUM MINIMUM MAXIMUM MINIMUM

SERIES STATUS RETURN UNIT PURCHASE PURCHASE OFFERING OFFERING
(25, 50 or (25, 50 or RAISED RAISED3
100 UNITS)1 100 UNITS)1
1-A AVAILABLE 8.50% $1,000 $25,000 25,000 $25,000,000 $25,000,000
Membership
1-B AVAILABLE 10.00% $1,000 $50,000 25,000 $25,000,000 $25,000,000
Membership
1-C AVAILABLE 12.00% $1,000 $100,000 28,000 $28,000,000 $28,000,000
Membership
1-D AVAILABLE 10.00% $1,000 $100,000 20,000 $20,000,000 $20,000,00
Membership
+
25% of
A.N.P. 5
1-M FUNDED/ NONE $1,000 $2,000,000 2,000 $2,000,000 $20,000,00
Manager Manager Only

1. Membership Interests will be offered and sold directly by the Manager or through one or more broker-dealers and
finders at the sole cost of the Manager or, as more fully set forth herein, proceeds generated from the sale of Series 1-D
Membership Interests (see herein "Plan of Distribution"). There is no firm commitment to purchase or sell any of the
Membership Interests.
2. The minimum purchase is $25,000 for 1-A; $50,000 for 1-B; $100,000 for 1-C and 1-D, however, the Manager reserves
the right, in its sole discretion, to accept subscriptions in a lesser amount or require a higher amount. Investors will be
admitted to the LLC on a first-in first-out basis when their subscription funds are required by the LLC to acquire assets or
to create appropriate reserves or to pay LLC expenses.
3. Series 1-M (Manager) is required to fund $2 million of 1-M Membership Interests. The offering will continue until (i)
the Maximum Offering Amount of $100,000,000 is sold, (ii) the Offering Period expires, or the offering is withdrawn by
the LLC.
4. The LLC reserves the right to adjust the Membership Interest value for new Series 1-D purchases after April 1, 2016
to reflect the intrinsic value of the LLC’s underlying assets as determined by the Manager and its Credit
Committee.
Contenido
PRIVATE PLACEMENT MEMORANDUM..............................................................................................1
MEMBERSHIP INTERESTS...............................................................................................................3
CERTAIN NOTICES...........................................................................................................................4
For Residents of All States:.........................................................................................................5
Certain State Notices..................................................................................................................7
Forward Looking Statements.....................................................................................................9
Additional Questions..................................................................................................................9
SUMMARY OF THE OFFERING..........................................................................................................10
The LLC.........................................................................................................................................10
Membership Interests..................................................................................................................10
Term of the LLC............................................................................................................................14
Suitability Standards.....................................................................................................................14
Capitalization................................................................................................................................14
Selling Commissions.....................................................................................................................14
Credit Committee.........................................................................................................................14
Cash Distributions........................................................................................................................14
Reinvestment Election.................................................................................................................16
Member Withdrawal....................................................................................................................16
(1-A, 1-B, & 1-C Only)...................................................................................................................16
Member Withdrawal....................................................................................................................17
(1-D Only).....................................................................................................................................17
No Liquidity..................................................................................................................................17
Reports to Members....................................................................................................................17
THE STRATEGY OF THE LLC...............................................................................................................18
TERMS OF THE OFFERING................................................................................................................20
INVESTOR SUITABILITY.....................................................................................................................21
Contribution of Real Property......................................................................................................22
Admission of Investors: Maximum Offering.................................................................................22
Subscription Agreements: Admission to the LLC..........................................................................22
Election to Receive Cash Distributions or Reinvest......................................................................23
PLAN OF DISTRIBUTION....................................................................................................................24
USE OF PROCEEDS............................................................................................................................24
COMPENSATION TO MANAGER AND AFFILIATES.............................................................................25
FIDUCIARY RESPONSIBILITY OF THE MANAGER...............................................................................26
RISK FACTORS...................................................................................................................................27
RISKS RELATED TO PURCHASING AND SELLING REAL PROPERTY.................................................27
The LLC is subject to risks associated with the acquisition and ownership of real properties..27
Real Estate Business Standards and Policies................................................................................27
Financial Reporting.......................................................................................................................28
Holding Period of Acquired Property...........................................................................................28
Purchase of Acquired Property from Third Parties.......................................................................28
Purchase of Acquired Property from Affiliates.............................................................................28
Diversification..............................................................................................................................29
Joint Ventures..............................................................................................................................29
Uninsured losses could adversely affect the LLC’s asset value of the affected property..............29
Liability for environmental matters could adversely affect the LLC’s financial condition.............29
Liability for title defects could adversely affect the LLC’s financial condition...............................30
The illiquidity of real estate investments could adversely affect the LLC’s financial condition....30
RISKS RELATED TO MORTGAGE LENDING....................................................................................30
There will be no assurance of returns to the Members of the LLC...........................................30
The LLC will be subject to general risks associated with real property lending........................30
Lack of Diversification..............................................................................................................32
Loan Defaults and Foreclosures...............................................................................................32
The LLC will be subject to risks associated with volatile interest rates.....................................33
The LLC faces substantial competition, and if it fails to compete effectively, its operating
results will suffer......................................................................................................................34
The LLC will be subject to the risk of uninsured losses.............................................................34
The LLC may be subject to the risks associated with disposing of real property......................34
The LLC may be subject to the risks associated with environmental contamination...............35
The LLC is subject to the risks relating to compliance with applicable law...............................36
The LLC is subject to the risks of litigation................................................................................37
The LLC may be affected by changes in legal, regulatory and legislative environments in which
it operates................................................................................................................................37
The LLC is subject to the risks related to the accuracy and completeness of information about
customers, properties and counterparties...............................................................................37
BUSINESS RISKS............................................................................................................................38
 The LLC’s financial objectives may not be achieved.................................................................38
There are risks associated with reliance on forward-looking statements................................38
The LLC has limited prior operating history..............................................................................38
The LLC faces the risks associated with the future acquisition of unspecified investments.....39
The LLC will be subject to the risks of relying on the Manager and certain key personnel......39
There are risks associated with indemnification of the Manager and its principals.................39
There are risks related to the failing of Members to make capital contributions....................40
The LLC is subject to operational risks......................................................................................40
Distributions will be subject to prior payment of expenses and reserves................................40
The Membership Interests are restricted securities, which limits their transferability............40
The LLC may be adversely affected if it does not perfect an exemption from registration under
federal and state securities laws..............................................................................................41
The Manager is not registered as an investment adviser and the LLC is not registered as an
investment company................................................................................................................41
Neither the LLC nor the Manager has retained separate legal representation for the
Members..................................................................................................................................42
There are tax risks associated with the LLC..............................................................................42
Risk of Using Leverage..............................................................................................................42
Reliance on the Manager.........................................................................................................42
Competition.............................................................................................................................43
Reliance on Officers of Manager..............................................................................................43
Manager Not Required to Devote Full-Time to the Business of the LLC...................................43
Competition with Clients and Affiliates of the Manager..........................................................43
Investment Delays....................................................................................................................43
Uninsured Losses......................................................................................................................43
Lack of Regulation....................................................................................................................44
ERISA Risks...............................................................................................................................44
Risk of Default by Manager on Loans from LLC........................................................................44
Risk of Less than the Preferred Return to Series 1-A, Series 1-B, Series 1-C, and Series 1-D
Membership Interests..............................................................................................................44
CONFLICTS OF INTEREST..................................................................................................................45
Other LLCs & LLCs or Businesses..................................................................................................45
Lack of Independent Legal Representation..................................................................................45
Valuation of Series 1-D Equity Interest Upon Redemption..........................................................45
COMPANY HISTORY..........................................................................................................................46
THE MANAGER AND AFFILIATES.......................................................................................................46
LEGAL PROCEEDINGS.......................................................................................................................49
SUMMARY OF LLC OPERATING AGREEMENT...................................................................................49
Rights and Liabilities of Members................................................................................................49
Capital Contributions....................................................................................................................50
Rights, Powers and Duties of Manager........................................................................................50
Profits and Losses.........................................................................................................................50
Distributions.................................................................................................................................51
Compensation to Manager and Affiliates.....................................................................................51
Adjustment of Membership Interest Holdings.............................................................................51
Meetings......................................................................................................................................51
Accounting and Reports...............................................................................................................51
Withdrawal, Redemption Policy, and Other Events of Dissociation.............................................51
Restrictions on Transfer...............................................................................................................53
Manager's Interest.......................................................................................................................53
Term of LLC..................................................................................................................................53
Winding-Up..................................................................................................................................54
INCOME TAX CONSIDERATIONS.......................................................................................................54
Federal Income Tax Aspects.........................................................................................................54
Federal Income Tax Matters.........................................................................................................54
No IRS Ruling or Opinion of Legal Counsel...................................................................................55
LLC Tax Status...............................................................................................................................55
Debt vs. Equity.............................................................................................................................56
Federal Taxation of Limited Liability Companies and Members...................................................56
Taxation of Undistributed LLC Income (Individual Investors).......................................................56
Distributions of Income................................................................................................................57
LLC Allocations.............................................................................................................................57
Limitations on Deduction of Losses..............................................................................................58
Adjusted Basis..........................................................................................................................58
At-Risk Rules.............................................................................................................................58
Passive Loss Rules.....................................................................................................................59
Profit Objective of the LLC............................................................................................................59
 Property Held Primarily for Sale: Potential Dealer Status............................................................60
Unrelated Business Taxable Income.............................................................................................60
Sale of Member Interest in the LLC..............................................................................................61
Liquidation of the LLC...................................................................................................................61
Alternative Minimum Tax.............................................................................................................62
LLC Election to Step Up the Basis of its Assets when Members Sell Their Membership Interest in
the LLC..........................................................................................................................................62
LLC Audits: The Tax Treatment of LLC Items and Penalties..........................................................62
Tax Returns..................................................................................................................................64
Tax Year........................................................................................................................................64
Method of Accounting.................................................................................................................64
Tax Shelter Registration...............................................................................................................64
Tax Law Subject to Change...........................................................................................................64
State and Local Taxes...................................................................................................................64
ERISA CONSIDERATIONS...................................................................................................................65
General.........................................................................................................................................65
Prudent Man Standard.................................................................................................................65
Prohibited Transactions...............................................................................................................65
Annual Valuation..........................................................................................................................65
ADDITIONAL INFORMATION AND UNDERTAKINGS..........................................................................66
TIC TOC (the “LLC”) is organized as a California limited liability company. The
manager of the LLC is HAMMOND WESTBURY, a California corporation (the
“Manager”). The primary objective of the LLC is to attempt to generate steady cash
returns through real property investments, while seeking to achieve capital
appreciation as a secondary objective. To that end, the LLC intends to acquire real
estate and real estate loans. The LLC intends to acquire individual and pools of
undervalued residential and commercial real estate with the intent to either
reposition and seek to sell them for profit or retain the assets for potential cash flow
and/or appreciation. The LLC may acquire individual and pools of performing, sub-
performing, and non-performing mortgage loans secured by residential and
commercial real estate. The LLC will also make loans secured by residential
property, commercial property, multi-unit property, and loans
secured by other mortgage loans. The focus of the LLC may change as market
conditions warrant.

The objective of the LLC is to seek to generate cash yields and potential capital
appreciation from holding and operating real estate assets.

Investors will have the choice of investing in four types of Membership Interests
(hereinafter also referred to as “Interests” or “Units”). Purchasers of Membership
Interests will become Members of the LLC. The salient features of the Membership
Interests are summarized below. Please review the entirety of this Memorandum
for
further details.

MEMBERSHIP INTERESTS

(Collectively, the “Membership Interests”)

a) 1-D Membership Interests have priority over the 1-M Manager Interest (formerly
called the 1-D Membership Interest) owned by the Manager both in terms of
liquidation and the 10% preferred return. In addition, the holders of 1-D
Membership Interests (as a class of 20,000 units) will receive 25% of the gain
realized by the LLC upon the sale of assets along with 25% of annual Adjusted Net
Profits. Specifically, each unit of Series 1-D will receive 1/20,000 TH of 25% of the
gain and annual Adjusted Net Profits. The Manager, through its 1-M Membership
Interests, will receive the other 75% of the gain and annual Adjusted Net Profits.
The LLC reserves the right to adjust the unit value for new Series 1-D purchases
after April 1, 2016 to reflect changes in the value of the LLC’s underlying assets as
determined by the Manager and its Credit Committee.
b) 1-C Membership Interests have priority over the 1-D Membership Interests and
the 1-M Manager Interest owned by the Manager both in terms of liquidation and
income.
c) 1-B Membership Interests have priority over the 1-C Membership Interests, the
1-D Membership Interests, and the 1-M Manager Interest owned by the Manager
both in terms of liquidation and income.
d) 1-A Membership Interests have priority over the 1-B Membership Interests, the
1-C Membership Interests, the 1-D Membership Interests, and the 1-M Manager
Interest owned by the Manager both in terms of liquidation and income. Investors
in 1-A Membership Interests, 1-B Membership Interests, 1-C Membership
Interests, and 1-D Membership Interests (“Investors”) will become Members in the
LLC, and will have the option, exercisable upon subscription for Membership
Interests, to receive any potential monthly distributions from the LLC’s eligible
capital paid directly to them, or to allow all or a portion of their proportionate share
of any potential LLC distributions to be retained and reinvested. In all other
respects, however, an investment in the LLC is not liquid and is subject to
substantial restrictions on withdrawal. (See herein “Withdrawal, Redemption Policy,
and Other Events of Dissociation”).

It is anticipated that any income received by 1-A, 1-B, and 1-C Members will be
taxable as ordinary income. It is anticipated that any income received, or profits
allocated by the LLC to 1-D and 1-M Members will be treated as either ordinary
income or capital gains. This offering involves tax and other risks. (See herein
"Investment Risks," "Business Risks," and "Income Tax Considerations and ERISA
Considerations"). Please refer to the Table of Contents.

THIS OFFERING INVOLVES SIGNIFICANT RISKS THAT ARE DESCRIBED IN

DETAIL IN THIS MEMORANDUM. INVESTORS SHOULD NOT INVEST ANY
FUNDS IN THIS OFFERING UNLESS THEY CAN AFFORD TO LOSE THEIR
ENTIRE INVESTMENT. THE INVESTMENTS MADE BY THE LLC ARE NOT
GUARANTEED BY ANY GOVERNMENT AGENCY, ENTITY OR OTHER
INSTRUMENTALITY.

CERTAIN NOTICES

No person has been authorized to provide any information or make any

representations regarding the LLC except as contained in this Private Placement
Memorandum. Statements in this Memorandum are made as of the date hereof
unless stated otherwise. Neither the delivery of this Memorandum at any time, nor
any sale hereunder, shall under any circumstances create an implication that the
information contained herein is correct as of any time after the date hereof.

This Memorandum is being furnished to selected accredited investors, as defined

in the Securities Act, on a confidential basis and, by accepting the Memorandum,
the recipient agrees to keep confidential the information contained herein. The
information contained in the Memorandum may not be provided to persons who
are not directly involved in an investor’s decision regarding the investment offered
hereby. This Memorandum may not be reproduced or redistributed.

Investment in the LLC is suitable only for sophisticated investors for whom such
investment does not constitute a complete investment program and who fully
understand and are willing to assume the substantial risks involved in the LLC’s
specialized investment program. See “Risk Factors.” Prospective investors should
not construe the contents of this Memorandum or any supplemental or related
literature as legal, business or tax advice. Each investor should consult their own
advisors concerning this investment before investing in the LLC.
The sale, transfer or disposition of the Membership Interests offered hereby will be
subject to significant contractual restrictions. In addition, an organized market for
the Membership Interests is not expected to develop at any time. Investors should
be aware that they would be required to bear the financial risks of this investment
for an indefinite period.

No action has been or will be taken in any jurisdiction outside the United States of
America that would permit an offering of the Membership Interests, or possession
or distribution of offering material in connection with the issuance of the Interests,
in any country or jurisdiction where action for that purpose is required. It is the
responsibility of any investor wishing to purchase Membership Interests to satisfy
itself as to full observance of the laws of any relevant territory outside the United
States of America in connection with any such purchase, including obtaining any
required governmental or other consents or observing any other applicable
formalities.

PAST RESULTS OF THE MANAGER MAY NOT BE INDICATIVE OF FUTURE

PERFORMANCE. NO ASSURANCE CAN BE MADE THAT PROFITS WILL BE
ACHIEVED OR THAT SUBSTANTIAL LOSSES WILL NOT BE INCURRED.

For Residents of All States:

IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR

OWN EXAMINATION OF THE ENTITY CREATING THE MEMBERSHIP UNITS
AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THE MEMBERSHIP UNITS 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.

THESE MEMBERSHIP UNITS ARE SUBJECT TO RESTRICTIONS ON

TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE
AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF
THIS INVESTMENT FOR AN INDEFINITE PERIOD.

THIS OFFERING INVOLVES SIGNIFICANT RISKS, DESCRIBED IN DETAIL

HEREIN. FEES WILL BE PAID TO THE MANAGER AND ITS AFFILIATES, WHO
ARE SUBJECT TO CERTAIN CONFLICTS OF INTEREST. (SEE HEREIN "RISKS
FACTORS") PROSPECTIVE PURCHASERS OF MEMBERSHIP UNITS SHOULD
READ THIS MEMORANDUM IN ITS ENTIRETY.
THERE IS NO PUBLIC MARKET FOR MEMBERSHIP UNITS AND NONE IS
EXPECTED TO DEVELOP IN THE FUTURE. SUMS INVESTED IN THE LIMITED
LIABILITY COMPANY ARE ALSO SUBJECT TO SUBSTANTIAL RESTRICTIONS
ON WITHDRAWAL AND TRANSFER (SEE HEREIN “WITHDRAWAL,
REDEMPTION POLICY, AND OTHER EVENTS OF DISSOCIATION”), AND THE
MEMBERSHIP UNITS OFFERED HEREBY SHOULD BE PURCHASED ONLY BY
INVESTORS WHO HAVE NO NEED FOR LIQUIDITY IN THEIR INVESTMENT.

PROSPECTIVE PURCHASERS SHOULD NOT REGARD THE CONTENTS OF

THIS MEMORANDUM OR ANY OTHER COMMUNICATION FROM THE LIMITED
LIABILITY COMPANY AS A SUBSTITUTE FOR CAREFUL AND INDEPENDENT
TAX AND FINANCIAL PLANNING. EACH POTENTIAL INVESTOR IS
ENCOURAGED TO CONSULT WITH HIS, HER, OR ITS OWN INDEPENDENT
LEGAL COUNSEL, ACCOUNTANT AND OTHER PROFESSIONALS WITH
RESPECT TO THE LEGAL AND TAX ASPECTS OF THIS INVESTMENT AND
WITH SPECIFIC REFERENCE TO HIS, HER, OR ITS OWN TAX SITUATION,
PRIOR TO SUBSCRIBING FOR MEMBERSHIP UNITS IN THE LLC.

THE PURCHASE OF LIMITED LIABILITY COMPANY MEMBERSHIP UNITS BY

AN INDIVIDUAL RETIREMENT ACCOUNT ("IRA"), KEOGH PLAN OR OTHER
QUALIFIED RETIREMENT PLAN INVOLVES SPECIAL TAX RISKS AND OTHER
CONSIDERATIONS THAT SHOULD BE CAREFULLY CONSIDERED. INCOME
EARNED BY QUALIFIED PLANS AS A RESULT OF AN INVESTMENT IN THE
LIMITED LIABILITY COMPANY MAY BE SUBJECT TO FEDERAL INCOME
TAXES, EVEN THOUGH SUCH PLANS ARE OTHERWISE TAX EXEMPT. (SEE
HEREIN "INCOME TAX CONSIDERATIONS AND ERISA CONSIDERATIONS")

THE MEMBERSHIP UNITS ARE OFFERED SUBJECT TO PRIOR SALE,

ACCEPTANCE OF AN OFFER TO PURCHASE, AND TO WITHDRAWAL OR
CANCELLATION OF THE OFFERING WITHOUT NOTICE. THE MANAGER
RESERVES THE RIGHT TO REJECT ANY SUBSCRIPTIONS IN WHOLE OR IN
PART.

THE MANAGER WILL MAKE AVAILABLE TO ANY PROSPECTIVE INVESTOR

AND HIS, HER, OR ITS ADVISORS THE OPPORTUNITY TO ASK QUESTIONS
AND RECEIVE ANSWERS CONCERNING THE TERMS AND CONDITIONS OF
THE OFFERING, THE LIMITED LIABILITY COMPANY OR ANY OTHER
RELEVANT MATTERS, AND TO OBTAIN ANY ADDITIONAL INFORMATION TO
THE EXTENT THE MANAGER POSSESSES SUCH INFORMATION.

THE INFORMATION CONTAINED IN THIS MEMORANDUM HAS BEEN

SUPPLIED BY THE MANAGER. THIS MEMORANDUM CONTAINS
SUMMARIES, BELIEVED BY THE MANAGER TO BE ACCURATE, OF CERTAIN
AGREEMENTS AND OTHER DOCUMENTS, BUT ALL SUCH SUMMARIES ARE
QUALIFIED IN THEIR ENTIRETY BY REFERENCES TO SUCH AGREEMENTS
AND OTHER DOCUMENTS. COPIES OF DOCUMENTS REFERRED TO IN THIS
MEMORANDUM, BUT NOT INCLUDED HEREIN AS AN EXHIBIT, WILL BE
MADE AVAILABLE TO QUALIFIED PROSPECTIVE INVESTORS UPON
REQUEST.

Certain State Notices

FOR RESIDENTS OF FLORIDA:

THE SECURITIES BEING OFFERED HAVE NOT BEEN REGISTERED WITH
THE FLORIDA DIVISION OF SECURITIES AND INVESTOR PROTECTION. THE
FLORIDA ACT PROVIDES THAT SALES MADE TO FIVE OR MORE PERSONS
IN THIS STATE MAY BE VOIDABLE BY THE PURCHASER IN SUCH SALE
EITHER 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 THIS PRIVILEGE IS COMMUNICATED TO THE
PURCHASER, WHICHEVER OCCURS LATER.

FOR RESIDENTS OF CALIFORNIA:

THE SALE OF THE MEMBERSHIP INTERESTS WHICH ARE THE SUBJECT OF
THIS SUBSCRIPTION AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND
THE ISSUANCE OF SUCH MEMBERSHIP INTERESTS OR THE PAYMENT OR
RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO
SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF MEMBERSHIP
INTERESTS IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100,
25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS
OF ALL PARTIES TO THIS SUBSCRIPTION AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS
THE
SALE IS SO EXEMPT.

FOR RESIDENTS OF PENNSYLVANIA:

EACH PERSON WHO ACCEPTS AN OFFER TO PURCHASE THE SECURITIES
OFFERED HEREBY HAS A RIGHT TO WITHDRAW HIS ACCEPTANCE
PURSUANT TO SECTION 207(L.C.) OF THE PENNSYLVANIA SECURITIES ACT
OF 1972 (70 P.S. 1-207(M)). SUCH PERSON MAY ELECT, 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 BINDING CONTRACT TO
PURCHASE, WITHIN TWO BUSINESS DAYS AFTER HE MAKES THE INITIAL
PAYMENT FOR THE SECURITIES), TO WITHDRAW FROM HIS PURCHASE
AGREEMENT AND RECEIVE A FULL REPAYMENT OF ALL MONIES PAID.
SUCH A WITHDRAWAL WILL BE WITHOUT ANY FURTHER LIABILITY TO ANY
PERSON TO ACCOMPLISH THIS WITHDRAWAL, A LETTER SHOULD BE SENT
TO THE FUND, INDICATING THE INTENTION TO WITHDRAW SUCH LETTER
SHOULD BE SENT AND POSTMARKED PRIOR TO THE END OF THE
AFOREMENTIONED
SECOND BUSINESS DAY.

FOR RESIDENTS OF NEW JERSEY:

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE BUREAU OF SECURITIES OF THE STATE OF NEW JERSEY NOR HAS
THE BUREAU PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING.
THE FILING OF THE WRITTEN OFFERING DOES NOT CONSTITUTE
APPROVAL OF THE ISSUE OR SALE THEREOF BY THE BUREAU OF
SECURITIES. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
PURCHASERS WHO HAVE NOT RECEIVED A COPY OF THIS MEMORANDUM
AT LEAST 48 HOURS PRIOR TO PAYMENT, RECEIPT OF CONFIRMATION OR
RECEIPT OF SECURITY, WHICH EVER OCCURS FIRST, SHALL HAVE THE
RIGHT TO RESCIND THE PURCHASE WITHIN 48 HOURS AFTER RECEIVING
THE MEMORANDUM. NO BROKER-DEALER, SALESMAN OR ANY OTHER
PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED EXPRESSLY IN THE
MEMORANDUM.

FOR RESIDENTS OF NORTH DAKOTA:

THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SECURITIES
COMMISSIONER OF THE STATE OF NORTH DAKOTA NOR HAS THE
COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

FOR RESIDENTS OF VERMONT:

EACH VERMONT PURCHASER WHO ACCEPTS AN OFFER TO PURCHASE
THESE SECURITIES DIRECTLY FROM THE ISSUER OR AN AFFILIATE OF
THE ISSUER SHALL HAVE THE RIGHT TO WITHDRAW SUCH ACCEPTANCE
WITHOUT INCURRING ANY LIABILITY TO THE ISSUER OR ANY OTHER
PERSON WITHIN THREE CALENDAR DAYS OF THE FIRST TENDER OF
CONSIDERATION TO THE ISSUER, AN AFFILIATE OF THE ISSUER, OR AN
ESCROW AGENT.

FOR RESIDENTS OF NEW YORK:

THIS CONFIDENTIAL OFFERING MEMORANDUM HAS NOT BEEN REVIEWED
BY THE STATE OF NEW YORK, THE NEW YORK STATE DEPARTMENT OF
LAW OR THE ATTORNEY GENERAL OF THE STATE OF NEW YORK PRIOR
TO ITS ISSUANCE AND USE NOR HAS ANY OF THE FOREGOING PASSED
ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

Forward Looking Statements

This Memorandum contains “forward-looking statements” within the meaning of the

Private Securities Litigation Reform Act of 1995. Such statements include, but are
not limited to, statements about the benefits of investing in the LLC, future financial
and operating results, the LLC’s plans, objectives, expectations and intentions with
respect to future operations; and other statements identified by words such as
“anticipate,” “believe,” “plan,” “expect,” “intend,” “will,” “should,” “may,” or words of
similar meaning. Such forward-looking statements are based on the current beliefs
and expectations of the LLC and are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of which are
difficult to predict and beyond the LLC’s control. Actual results may differ materially
from the results anticipated in these forward-looking statements.

You should understand that the following factors and assumptions, among others,
could affect the LLC’s future results and could cause actual results to differ
materially from those expressed in such forward-looking statements:

o general economic and business conditions,

o changes in foreign, political, social and economic conditions,
o regulatory initiatives and compliance with governmental regulations, and
o other matters, many of which are beyond the Manager’s control.

Other factors and assumptions not identified above, including those described
under “Risk Factors” below, were also involved in the derivation of these forward-
looking statements, and the failure of such assumptions to be realized as well as
other factors may cause actual results to differ materially from those projected.
Most of these factors are difficult to predict accurately, and many are beyond the
LLC’s control.

This Memorandum has been furnished on a confidential basis for use only by the
person to whom it has been provided. Any reproduction or distribution of this
Memorandum, in whole or in part or the divulgence of any of its contents, to any
person other than the person to whom this Memorandum is delivered, without the
prior written consent of the LLC, is prohibited. This Memorandum supersedes any
other offering materials previously made available to prospective investors. In
considering whether to invest, prospective investors should not rely on any
documents previously received.
Additional Questions

The sole purpose of this Memorandum is to assist prospective investors in deciding

whether to proceed with an investment in the LLC. No one has been authorized to
give any information or to make any representation with respect to the LLC that is
not contained in this Memorandum. Prospective Investors should not rely on any
information not contained in this Memorandum. Prospective Investors should not
construe the contents of this Memorandum as legal, tax, investment or other
advice. Each prospective Investor should conduct its own inquiry into the LLC, this
Offering and any related matters. Before making an investment, each prospective
investor has an opportunity to direct all questions to:

TIC TOC
a California Limited Liability Company
Address:________
Tel: _________
E-Mail: ________________
Website: yourtictoc.com

SUMMARY OF THE OFFERING

The following information is only a brief summary of, and is qualified in its entirety
by, the detailed information appearing elsewhere in this Memorandum. This
Memorandum, together with the exhibits attached including, but not limited to, the
Sixth Amended Limited Liability Company Operating Agreement of the LLC (the
“Operating Agreement”), a copy of which is attached hereto as Exhibit A, should be
read in their entirety before any investment decision is made. If there is a conflict
between the terms contained in this Memorandum and the Operating Agreement,
the Memorandum shall prevail.

The LLC

TIC TOC, LLC (the “LLC”) is a California limited liability company formed for the
purpose of acquiring real estate and real estate loans. The LLC intends to acquire
individual and pools of undervalued residential and commercial real estate with the
intent to either reposition and seek to sell them for profit or retain the assets for
potential cash flow and/or appreciation. The LLC may acquire individual and pools
of performing, sub-performing, and non-performing mortgage loans secured by
residential and commercial real estate. The LLC intends to also make loans
secured by residential property, commercial property, multi-unit property, and loans
secured by other mortgage loans.
The focus of the LLC may change as market conditions warrant.
Membership Interests

The LLC will have five series of members (the “Membership Interests” and the
holder thereof a “Member”) who will hold units of Membership Interest in the LLC.
The initial issue price of each unit is $1,000 but the value of a 1-A, 1-B, 1-C and 1-
D Members’ interest in the LLC will be determined by the value of the Member’s
capital account. It is the intent of the LLC that capital accounts of Series 1-A, 1-B,
and 1-C Members are impacted solely by Adjusted Net Profits for monthly
distributions, calculation of capital accounts, and in determining taxable income.
For income tax purposes, the
LLC will treat all payments of the preferred returns to the Class 1-A, Class 1-B and
Class 1-C Interests as “guaranteed payments” for the use of such Members’
capital, as described in Section 707(c) of the Internal Revenue Code of 1986, as
amended (the “Code”); and, as such, all such payments shall be treated as
ordinary income to such Members. It is the intent of the LLC that capital accounts
of Series 1-D and 1-M Members are subject to Adjusted Net Profits for monthly
distributions and calculation of capital accounts, but GAAP will be utilized in
determining taxable income.

The unit price of Class 1-D Equity Interest is $1,000 but may increase after April 1,
2016 based upon a review of the intrinsic value of the LLC’s underlying assets by
the Manager and its Credit Committee. Capital accounts may go up as Adjusted
Net Profits and any gain is allocated to the capital account and decreased by
distributions to Members, any losses or gains, and the loss reserves. The Manager
will use reasonable discretion in manually adjusting capital accounts by reason of
anticipated loss reserves and other events.

All allocations of Net Profits 1-D and 1-M Membership Interests shall comply with
Generally Accepted Accounting Principles (“GAAP”). However, the calculation of
profits solely for determining cash distributions to Members (such as the Preferred
Returns) (the “Adjusted Net Profits”) shall be computed by GAAP Net Profits plus
any positive difference between GAAP depreciation on all assets and any
mortgage
lender required stabilized Capital Improvement Reserves (a per housing unit
monthly reserve for replacement of capital improvements) on stabilized assets. In
other words, because the LLC anticipates that its real estate assets will be worth
more than the cost of those assets minus the depreciation required by GAAP
accounting, the LLC anticipates giving its Members a cash return more
commensurate with the real value of its underlying real property assets. For
income tax purposes, the distribution of Adjusted Net Profits may be treated as a
return of capital to the 1-D and 1-M Members to the extent the distributions exceed
GAAP Net Profits.

Prior to October of 2015, the Manager invested in the LLC by way of a $2MM
purchase of Class 1-D Membership Interests. Those interests are renamed the
Class 1-M Membership Interests. The Class 1-D Interests, now the 1-M
Membership Interests were entitled to 100% of profits after payment of the
preferred returns to the senior classes, 1-A, 1-B, and 1-C. With the October 2015
revision of the Operating Agreement and this Memorandum, a new class of
interests is created, the Class 1-D. The new Class 1-D Interests will carry a 10%
preferred return but also are entitled (as a class of 20,000) to 25% of the LLC’s
gain realized when it sells assets, along with 25% of Adjusted Net Profits, after
payment of all Preferred Returns to the senior classes. Specifically, each unit of
Series 1-D will receive 1/20,000th of 25% of gains and excess Adjusted Net Profits.
The Manager, as holder of the 1-M Interests shall be entitled to the remainder. For
income tax purposes, any
income received, or profits allocated by the LLC to 1-D and 1-M Members shall be
treated as either ordinary income or capital gains.

Membership Interest Series 1-M (formerly 1-D) have been purchased by the
Manager. Series 1-A, Series 1-B, Series 1-C, and Series 1-D (sometimes called
Series 1-A Membership Interest, Series 1-B Membership Interest, Series 1-C
Membership Interest, or Series 1-D Membership Interest) are available for sale.
Series 1-A will have priority over Series 1-B, Series 1-B will have priority over
Series 1-C, Series 1-C will have priority over Series 1-D, and Series 1-D will have
priority over Series 1-M in terms of liquidation, withdrawal and Adjusted Net Profit
distributions. Series 1-B will have priority over Series 1-C and Series 1-D in terms
of liquidation, withdrawal and Adjusted Net Profit distributions. Series 1-C will have
priority over Series 1-D in terms of liquidation, withdrawal and Adjusted Net Profit
distributions. Series 1-D will have priority over Series 1-M in terms of liquidation,
withdrawal, and payment of the Preferred Return. Series 1-D to the extent such
Series 1-D Membership Interests are outstanding (as to 25% as a class of 20,000
units) after distribution of 10% Preferred Return, is on par with Series 1-M (75%) as
to the distribution of any gains realized upon the sale of real property assets and
excess Adjusted Net Profits.

Membership Interest Series 1-M (formerly 1-D) have been purchased by the
Manager. Series 1-A, Series 1-B, Series 1-C, and Series 1-D (sometimes called
Series 1-A Membership Interest, Series 1-B Membership Interest, Series 1-C
Membership Interest, or Series 1-D Membership Interest) are available for sale.
Series 1-A will have priority over Series 1-B, Series 1-B will have priority over
Series 1-C, Series 1-C will have priority over Series 1-D, and Series 1-D will have
priority over Series 1-M in terms of liquidation, withdrawal and Adjusted Net Profit
distributions. Series 1-B will have priority over Series 1-C and Series 1-D in terms
of liquidation, withdrawal and Adjusted Net Profit distributions. Series 1-C will have
priority over Series 1-D in terms of liquidation, withdrawal and Adjusted Net Profit
distributions. Series 1-D will have priority over Series 1-M in terms of liquidation,
withdrawal, and payment of the Preferred Return. Series 1-D to the extent such
Series 1-D Membership Interests are outstanding (as to 25% as a class of 20,000
units) after distribution of 10% Preferred Return, is on par with Series 1-M (75%) as
to the distribution of any gains realized upon the sale of real property assets and
excess Adjusted Net Profits.
Specifically, in the event of liquidation of the LLC, the capital accounts of Series 1-
A must be paid back to the holders thereof in full prior to the distribution of the
capital accounts of Series 1-B, Series 1-C, Series 1-D, and Series 1-M (Manager
Capital) along with accrued unpaid interest. Thereafter, in the event of liquidation of
the LLC, the capital accounts of Series 1-B must be paid back to the holders
thereof in full prior to the distribution of the capital accounts of Series 1-C, 1-D, and
Series 1-M (Manager Capital) along with accrued unpaid interest. Thereafter, in the
event of liquidation of the LLC, the capital accounts of Series 1-C must be paid
back to the holders thereof in full prior to the distribution of the capital accounts of
Series 1-D and Series 1-M (Manager Capital) along with accrued unpaid interest.
Thereafter, in the event of liquidation of the LLC, the capital account of Series 1-D
must be paid back to the holders thereof in full prior to the distribution of the capital
account of Series 1-M (Manager Capital).

In the case of withdrawal prior to liquidation, Series 1-A has priority over all other
Series; Series 1-B has priority over Series 1-C, 1-D and Series 1-M, and Series 1-
C has priority over Series 1-D and 1-M; Series 1-D has priority over Series 1-M. By
“priority” it is meant that the senior series withdrawal request must be paid in full
prior to payment to a junior series.

After payment of the expenses of the LLC and an allocation to the Loss Reserve,
all Adjusted Net Profits, if any, will be distributed to Series 1-A until the holders
thereof have received their applicable preferred return of 8.5% per annum then to
Series 1-B until the holders thereof have received their applicable preferred return
of 10% per annum, then to holders of Series 1-C until they have received their
applicable preferred return of 12% per annum, then to holders of Series 1-D until
they have received their applicable preferred return of 10% per annum, and the
balance of the
Adjusted Net Profits, if any, will be distributed 25% to the holders of Series 1-D and
75% to the Manager as owner of Series 1-M Interests. Specifically, each unit of
Series 1-D will receive 1/20,000th of 25% of the gains and Adjusted Net Profits.
This is only likely to occur upon the sale of assets. (The 8.5% per annum preferred
return to Series 1-A, the 10% per annum preferred return to Series 1-B, the 12%
per annum preferred return to Series 1-C, and the 10% per annum preferred return
to Series 1-D are collectively referred to as the “Preferred Return”). The LLC will
treat the Preferred Return with respect to Series 1-A Units, Series 1-B Units, and
Series 1-C
Units as a “guaranteed payment” under Section 707(c) of the Code, which will be
taxed to the Members receiving the Preferred Return as ordinary income, while any
income received or Adjusted Net Profits allocated by the LLC to 1-D and 1-M
Members shall be treated as either ordinary income or capital gains.

At the inception of the offering the Manager purchased $1,000,000 of Series 1-M
Interests. The Manager purchased an additional $1,000,000 of Series 1M in
December 2013. Series 1-M Interests are subordinate to all other Interests of the
LLC as to withdrawal, cash distribution and liquidation preference. If the Manager’s
capital account is depleted, the Manager is not required to contribute additional
capital.

The Manager
Camarillo, CA 93010
Tel: _______
E-Mail: ________________
Website:______________

Term of the LLC

Until December 31, 2023 (with provisions for extension at discretion of the
Manager or majority vote of the Members), unless sooner terminated. (See herein
"Summary of LLC Operating Agreement – Term of LLC")

Suitability Standards
Membership Interests are offered exclusively, to certain individuals, Keogh plans,
IRAs and other qualified investors who are accredited investors as defined under
the Rules of the Securities & Exchange Commission. (See herein "Investor
Suitability"). If the LLC elects to be governed by Rule 506(c) of the Securities and
Exchange Commission, new investors will be required to verify they are accredited.

Capitalization
Maximum of $25,000,000 (25,000 units) of Series 1-A Membership Interests.
Maximum of $25,000,000 (25,000 units) of Series 1-B Membership Interests.
Maximum of $28,000,000 (28,000 units) of Series 1C Membership Interests.
Maximum of $20,000,000 (2,000 units) of Series 1-D Membership Interests.
Minimum of $2,000,000 (2,000 units) of Series 1-M Manager Only Interests.

The Manager reserves the right to increase the size of the offering at any time.

Selling Commissions
While the LLC or its Manager may engage a broker-dealer, no portion of the gross
proceeds from 1-A, 1-B, or 1-C Interests of this offering will be used for the
purpose of paying selling commissions and fees incurred in the sale of
Membership Interests. Proceeds from the sale of Series 1-D Interests may be
used to pay selling commissions and fees incurred in the sale of Membership
Interests through the services of a Broker-Dealer or Registered Investment
Advisor, which may charge a service fee or commission of up to ten percent (10%).

Credit Committee
The Credit Committee will approve the acquisition and divesture of all investments
and the monthly evaluation of assets owned by the LLC. The Credit Committee
consists of the Chief Finance Officer, President, and the Chief Investment Officer.
A quorum requires a minimum of two Credit Committee members.

Cash Distributions
Each month, after payment of credit facilities, and other expenses of the LLC, the
Manager will distribute, to the extent of Adjusted Net Profits, the preferred returns
to the Series 1-A Members up to their Preferred Return of 8.5%, then to the Series
1-B Members up to their Preferred Return of 10%, then to the Series 1-C Members
up to their Preferred Return of 12%, and then to the Series 1-D Members up to
their Preferred Return of 10%.
Excess Adjusted Net Profits after payment of all accrued but unpaid Preferred
Return, if any, will first restore the capital accounts of Series 1-A Members, if
required, then restore the capital accounts of Series 1-B Members. Excess
Adjusted Net Profits after payment of all accrued but unpaid Preferred Return, if
any, will thereafter restore the capital accounts of Series 1-C Members, if required,
then restore the capital accounts of Series 1-D Members, if required, then restore
1-M (Manager’s Interest), if required. Any remaining Adjusted Net Profits will be
allocated 25% to the Series 1-D Members (as a class of 20,000 units) and 75% to
the Series 1-M Member. Specifically, each unit of Series 1-D will receive
1/20,000th of 25% of the gain. In other words, it is the intent of the LLC that capital
accounts of Series 1-A, 1-B, and 1-C Members are impacted solely by Adjusted
Net Profits for monthly distributions, calculation of capital accounts, and in
determining taxable income, while the capital accounts of Series 1-D and 1-M
Members are subject to Adjusted Net Profits for monthly distributions and
calculation of capital accounts, but GAAP will be utilized in determining taxable
income.

Because distributions ignore most of GAAP required depreciation, the actual GAAP
Net Profits, if any, of the LLC may be less than the Preferred Return that is
distributed. To the extent the payment of the Preferred Return is not out of accrued
Adjusted Net Profits, payment first shall be taken from the Manager’s 1-M capital
account, then from the Series 1-D Members’ capital accounts, and then from the
Series 1-C Members’ capital accounts. The Manager contributed $2 million in
capital to the LLC in the form of Series 1M Manager Interests (formerly 1-D
Interests). The Manager’s capital is subordinate to the right of Members to receive
their Preferred Return distributions for Series 1-A Membership, Series 1-B
Membership, Series 1-C Membership, and Series 1-D Membership. If distributions
to Members out of the Manager’s Series 1-M, the Members Series 1-D, and the
Members Series 1-C, exceed the sums contributed, it is unlikely the LLC will be
able to make Preferred Return distributions to the Series 1-A, Series 1-B, Series 1-
C, and Series 1-D Membership Interests until such profits are earned and exceed
the amount necessary to make the distributions or the Manager contributes
additional capital for the purpose of supporting distributions to Members. If both fail
to occur, Members could receive a lower rate of return or a loss of principal. The
Manager is under no legal obligation to contribute additional capital.
The Manager shall inform existing Members at least quarterly (and new Members
before they purchase) as to the size of the Manager’s capital account. The
Manager shall make distributions to Members solely out of Adjusted Net Profits
accrued by the LLC, the Manager’s 1-M capital account, the Series 1-D Members’
capital accounts, or the Series 1-C Members’ capital accounts.

By the end of the LLC's fiscal year and after completion of its annual audit, the
Manager will make every effort to have distributed to each Member the amount
allocated to that Member on the Schedule K-1 that he, she, or it receives for
income tax reporting. With respect to the Preferred Return received by Series 1-A,
Series 1-B and Series 1-C Members, the LLC will not report any income to such
Members in excess of the Preferred Return received, however, the Preferred
Return will be treated as a “guaranteed payment” for income tax purposes. In
addition, the Series 1-D Member may be allocated on his, her, or its Schedule K-1
an amount of residual income that may differ somewhat from the actual cash
distributions made during the
fiscal year covered by the Schedule K-1 due to, among other things, calculation of
the LLC’s taxable income, loss reserves, contributions out of the Manager’s capital
account and factors unique to the tax accounting of LLCs, such as the treatment of
investment expense.

Reinvestment Election
Members must elect to (i) receive cash distributions from the LLC or (ii) allow the
distributions to be reinvested by increasing the value of Membership Interests held
by a Member, or (iii) a combination of (i) or (ii) above. An election to reinvest all or
a portion of the monthly distributions, if any, is revocable at any time, upon a
written request to revoke such election. Such election shall become effective on
the first (1st) day of the month following receipt of the election but in no event
sooner than 15 days after receipt of notice. If no election is made, then the monthly
distribution, if any, will be a cash distribution. If a Member elects to reinvest his,
her or its distributions, the Member will nevertheless be subjected to income tax
liability as if such Member actually received such distribution and then contributed
the cash back to the LLC.

Member Withdrawal
(1-A, 1-B, & 1-C Only)
Series 1-A, Series 1-B, and Series 1-C Members may withdraw as a Member of
the LLC and may receive a return of capital provided that the following conditions
have been met: (a) the Member has been a Member of the LLC for a period of at
least six (6) months; and (b) the Member provides the LLC with a written request
for a return of capital at least thirty (30) days prior to such withdrawal. The LLC will
use its best efforts (not guaranty) to honor requests for a return of capital subject
to, among other things, the LLC’s then existing cash flow, financial condition, and
prospective investment opportunities. Each request for a return of capital will be
limited to twenty-five percent (25%) of such Member’s capital account balance
such that it will take four (4) quarters for a Member to withdraw his, her, or its total
investment in the LLC; provided, however, that the maximum aggregate amount of
capital that the LLC will return to the Members each year is limited to twenty
percent (20%) of the total outstanding capital of the LLC.
Series 1-A has withdrawal priority over all other Series, Series 1-B over Series 1-C
and 1-D and Series 1-C over 1-D. “Priority” means that the senior series withdrawal
request must be paid in full prior to payment to the junior series. No holder of a
Series 1-M Membership Interest (Manager) may withdraw while there are pending
and unpaid withdrawal requests by holders of Series 1-A, Series 1-B, Series 1-C,
or Series 1-D or the amount withdrawn would reduce what remained in the
Manager’s capital account to less than $2MM. The Manager may, in its absolute
discretion, accelerate Series 1-A, Series 1-B, Series 1-C and Series 1-D
withdrawal payments but it has no legal or fiduciary duty to do so. Otherwise
withdrawal requests will be
considered on a pro-rata basis. Notwithstanding the foregoing, the Manager may,
in its sole discretion, waive such withdrawal requirements if a Member is
experiencing undue hardship.

Member Withdrawal
(1-D Only)
Series 1-D Members may withdraw as a Member of the LLC and may receive a
return of capital provided that the following conditions have been met: (a) the
Member has been a Member of the LLC for a period of at least three (3) years; and
(b) the Member provides the LLC with a written request for a return of capital at
least thirty (30) days prior to such withdrawal.

The LLC will use its best efforts (not guaranty) to honor requests for a return of
capital subject to, among other things, the LLC’s then existing cash flow, financial
condition, and prospective investment opportunities. Upon the member’s written
request for the return of capital, the repurchase price of the Member’s 1-D Interests
in the LLC shall be the Member’s then capital account balance subject to
adjustment for: (1) the quick sale liquidation value of the LLC’s assets, (2) the then
estimated quick sale value of the LLC’s assets and (3) general economic
conditions. The Manager shall first use best efforts to obtain a buyer through the
services of a Broker-Dealer or Registered Investment Advisor, which may charge a
service fee of up to ten percent (10%). Notwithstanding the foregoing, the Manager
may, in its sole discretion, offer to repurchase the Member’s Membership interests
at a mutually agreed upon value or otherwise waive such withdrawal requirements
if a Member is experiencing undue hardship. In lieu of accepting the purchase price
determined by the Manager, a Member may offer his or her Membership Interests
to another Member for sale. (See
“Operating Agreement – Withdrawal, Redemption Policy, and Other Events of
Dissociation” and “Restrictions on Transfer.”)
No Liquidity
There is no public market for Membership Interests and none is expected to
develop. Additionally, there are substantial restrictions on transferability of
Membership Interests. (See herein "Investment Risks-Limited Transferability of
Membership Interests ") Investors should not purchase Membership Interests
unless they reasonably intend to hold them for substantially the full term of the
Offering.

Reports to Members
Audited financial statement reports concerning the LLC’s business affairs will be
provided to Members no later than 120 days after the end of the fiscal year. As
soon as is practicable, each Member will receive a copy of the LLC’s annual
income tax return.

At least quarterly, the LLC will issue a report and spreadsheet as to the portfolio of
real estate and other assets that it then holds. In addition, the Manager will issue a
five year pro forma of its Core real estate portfolio on a quarterly basis.

THE STRATEGY OF THE LLC

The Architecture of LLC. The LLC has been formed by TIC TOC, Manager of the LLC, to
provide investors with a real estate investment vehicle that seeks to deliver steady
cash flow returns. Investors in the LLC will be admitted as Members of the LLC and
will receive Units of Membership Interests in the LLC. The LLC was designed to
deny the Manager any share of the Adjusted Net Profits of the LLC unless and until
it achieves the Preferred Return for Series 1-A, the Preferred Return for Series 1-
B, the Preferred Return for Series 1-C and the Preferred Return for Series 1-D.
This structure is intended to motivate the Manager to focus on the bottom line.

Tiered Risk Structure. The Manager believes that the LLC is unique among real estate
funds by its equity choices. Holders of Series 1-A, Series 1-B, and Series 1-C have
a higher preferred return but no secured lien or promise of payment. Series 1-D
has a Preferred Return and 25% Adjusted Net Profit participation (as a class of
20,000 units) in annual excess Adjusted Net Profits along with a 25% Adjusted Net
Profit participation upon the liquidation of the real estate in the LLC’s portfolio.
Junior to all of the forgoing is an investment by the Manager of $2,000,000 in
Series 1-M that will serve as a cushion to Investors in 1-A, 1-B, 1-C, and 1-D
Membership Interests. The Manager may never voluntarily reduce its Series 1-M
investment below $2 million. If the Manager’s initial capital contribution of capital is
reduced below $2 million, the Manager has no obligation to replenish it except out
of the Allocation of Adjusted Net Profits, if earned.
No Load. The Manager is seeking to capitalize the LLC with up to $100 million of
capital commitments, which amount may be exceeded in the discretion of the
Manager. The LLC was designed with no “front end load,” meaning other than cash
reserves, and operating expenses, 100% of invested capital will be deployed in
real estate or real estate secured acquisitions. However, money raised by the LLC
by sales of Series 1-D interests may be used to pay brokerage commissions and
operating expenses of the LLC.

Low Overhead. The LLC was also designed to keep expenses at a minimum. Other
than the Asset Management Fee, the Construction Management Fee, expense of
accounting, audit, tax return preparation and LLC taxes, the Manager will bear all
other overhead expenses such as rent and personnel costs. The LLC must pay
any expenses related to its portfolio of real property and mortgages (including but
not limited to real estate sales commissions upon the sale of real property).

Opportunity. The Manager believes that the recession that began in late 2007 has
resulted in a level of residential and multifamily foreclosures last seen during the
Great Depression. Banks have been flooded with foreclosed properties they must
liquidate. Many of the properties have deferred maintenance. An entire industry
has
prospered in acquiring foreclosed residential and commercial real estate,
cosmetically improving them, repositioning them, and immediately reselling (so-
called, “flipping”) them or holding them for cash flow and appreciation.

The Manager believes that the banks will continue to foreclose on residential and
commercial real estate at higher than historical rates and will continue to resell the
foreclosed real estate they hold in inventory. As a result, the Manager believes the
business of acquiring and financing undervalued assets is likely to continue for
some period. These and other very human situations should create the need for
investors such as the LLC.

Holding Title. When the LLC acquires real estate, it will hold record title to the
property. It is anticipated that most of the properties will be multi-family properties
(apartments), but the LLC may consider other types of properties that it deems
capable of producing favorable cash flow. In some cases, involving a joint venture,
the LLC may record a first position deed of trust instead of holding title. In some
cases, the LLC will seek to acquire performing, sub-performing or non-performing
mortgages on an individual or bulk basis with a view toward either foreclosing on
the mortgages to contribute to the LLC’s inventory or modifying the loan on terms
acceptable to the LLC, with the anticipation that this will provide the borrower time
to rehabilitate the property or their credit so the borrower can refinance and repay
the LLC at what the LLC seeks to be a profit above the purchase price paid for the
mortgage.

Competition. Private individuals and investment pools are engaged in similar business
as competitors.
Leverage to Lower Cost of Funds. The LLC may seek to secure a line of credit to
lower its cost of funds, generate leverage and improve the profitability of the LLC,
but there is no guarantee it will be successful in doing so. If a credit line is
obtained, the LLC will secure the line with a collateral assignment of mortgages
and/or real estate it owns. The LLC may utilize structured financing or
securitization to lower the cost of funds. To that end, in April of 2014 the LLC
obtained a $10MM line of credit secured by all of its assets. In April 0f 2015, the
LLC increased the credit limit to $15MM. The loan has an interest rate of 9.5% and
is due in full in April 2017. As of September 25, 2015, the LLC owed $10MM on
the credit facility.

Rental Portfolio.
The LLC intends to acquire undervalued properties and reposition
them. The Manager has a team in place to locate and rehabilitate properties. It is
expected in some cases the properties will be sold within a few months with the
intent of achieving a quick gain. If the property is attractive as a long-term
investment and the rents are sufficient to generate a yield to the LLC, the property
may be retained for income and possible capital appreciation and a mortgage may
be obtained on it to lower the cost of funds to the LLC. With real estate prices at
what the Manager believes to be historical lows, this gives the LLC the potential of
an upside should properties appreciate. In the meantime, with expected rents, the
LLC is “being paid” to hold the asset.

Credit Committee. The Credit Committee will consist of the Chief Financial Officer, the
President, and the Chief Investment Officer. The Credit Committee will approve the
acquisition and disposition of all assets acquired or sold by the LLC. The Credit
Committee will prepare a rolling five-year pro forma value of all assets owned by
the
LLC and update its quarterly.

Borrowers. The LLC will employ criteria to ensure the borrower and property meets
the LLC’s lending criteria. Many borrowers will be non-prime, meaning they would
not qualify for financing from a conventional lending source such as a bank. The
LLC’s emphasis will be on the current and pro forma loan-to-value of the property,
primarily, and cash flow, secondarily. Much less emphasis will be placed on the
creditworthiness, liquidity and income of the borrower. Initially, most loans will be
secured by first deeds of trust or mortgages, but that may change as market
conditions change.

Experienced Loan Servicing. Some of the loans the LLC will make have a period of
prepaid interest and therefore it may not be necessary to collect payments
(“servicing” a loan) for some time. When payments are being collected, the LLC
intends to employ a professional loan servicer as its servicer, which may be an
Affiliate of the Manager. The fees of the servicer will be paid by the Manager.
TERMS OF THE OFFERING
This offering is made to a limited number of accredited investors to purchase
Membership Interests of the LLC. The minimum subscription from each Investor is
$25,000 for 1-A, $50,000 for 1-B, $100,000 for 1-C, and $100,000 for 1D, however,
the Manager reserves the right, in its sole discretion, to accept subscriptions in a
lesser amount or require a higher amount.

The Offering will continue until (a) the Maximum Offering Amount is raised, or (b)
the Offering is withdrawn by the LLC. A capital account will be established for each
Member on the books and records of the LLC. Each Member will share in
distributions of the LLC’s Adjusted Net Profits allocated to Members based upon
such Member’s capital account balance compared to the capital account balances
of other Members.

INVESTOR SUITABILITY
To purchase Membership Interests, an Investor must meet certain eligibility and
suitability standards, some of which are set forth below, and must execute a
Subscription Agreement and Power of Attorney ("Subscription Agreement") in the
form attached as Exhibit B. By executing the Subscription Agreement, an Investor
makes certain representations and warranties upon which the Manager will rely in
accepting subscriptions.

Read and complete the Subscription Agreement carefully.

After it commences operations, the composition of the LLC’s current asset

portfolios will be attached as Exhibit “C” to this Memorandum. It will be updated
periodically. Attached as Exhibit “B” is a copy of the LLC’s most recent financial
statement. It too will be updated periodically. Investors are encouraged to review
these documents before investing. If you receive a copy of this Memorandum and
Exhibit C is older than 60 days, insist upon an updated report before investing.
The Membership Interests are being offered to sophisticated individuals who
qualify as “accredited investors” within the meaning of Regulation D under the
Securities Act. An “accredited investor” is defined in Rule 501 of Regulation D of
the Securities Act as:

1. A bank, insurance company, registered investment company, business

development company, or small business investment company;
2. an employee benefit plan, within the meaning of the Employee Retirement
Income Security Act, if a bank, insurance company, or registered
investment adviser makes the investment decisions, or if the plan has total
assets in excess of $5 million;
 3. a charitable organization, corporation, or LLC with assets exceeding $5
million;
4. a director, executive officer, or Manager of the company selling the
securities;
5. a business in which all the equity owners are accredited investors;
6. a natural person who has individual net worth, or joint net worth with the
person’s spouse, that exceeds $1 million at the time of the purchase (not
including home equity);
7. a natural person with income exceeding $200,000 in each of the two most
recent years or joint income with a spouse exceeding $300,000 for those
years and a reasonable expectation of the same income level in the current
year; or
8. a trust with assets more than $5 million, not formed to acquire the securities
offered whose purchases a sophisticated person makes.

See the Subscription Agreement for details on how the LLC will verify your
accredited investor status.

Contribution of Real Property.

The LLC reserves the right to receive real property and mortgage loans as a capital
contribution to the LLC. The Manager will appraise the real estate and determine
its fair value for contribution purposes. Loans will generally be valued at the same
price the LLC would acquire them from an independent third party.

Admission of Investors: Maximum Offering

The maximum gross proceeds of this offering will be One Hundred Million Dollars
($100,000,000) (“Maximum Offering Amount”) or 100,000 Interests that will
comprise, subject to adjustments as described elsewhere in this Memorandum, the
total capitalization of the LLC. This offering may, however, be terminated at the
option of the Manager at any time before the Maximum Offering Amount is
received. The Manager may increase the Maximum Offering Amount at any time.

Subscription Agreements: Admission to the LLC

Subscription Agreements from prospective Investors will be accepted or rejected

by the Manager within thirty (30) days after their receipt. The Manager reserves
the right to reject any subscription tendered for any reason, or to accept it in part
only. Investors will be admitted into the LLC when their subscription funds are
required by the LLC to acquire real estate or to create appropriate reserves or to
pay LLC expenses. (See herein "Use of Proceeds").

Investors will only be admitted to the LLC as of the first business day of the month
after their subscription is accepted. For the short month prior to admission,
investors will be paid interest on their investment at the monthly distribution rate
then being paid to Members and such investors will receive an IRS Form 1099 for
the partial months’ interest payment. All funds will be deposited into the LLC bank
account.

If the LLC has received more Subscription Agreements than exceed its properties
to be acquired, it may retain the Subscription Agreements and execute them only
when the funds are needed. Investors may withdraw a Subscription Agreement at
any time before the Manager has accepted it.

By executing the Subscription Agreement, an Investor agrees to purchase the

value of Membership Interests shown thereon. Accordingly, executing the
Subscription Agreement does not in itself make a person an owner of the
Membership Interests for which he, she or it has subscribed. Membership Interests
will be issued when the sums representing the purchase of the same are
transferred into the LLC. After the Minimum Offering Amount is received, the
Manager anticipates that the delay between delivery of a Subscription Agreement
and admission to the LLC will be less than thirty (30) days, though there can be no
assurance that such delay will not be more than thirty (30) days. After execution by
the Manager, Subscription Agreements are non-cancelable and subscription funds
are non-refundable for any reason, except with the consent of the Manager. After
having subscribed for the minimum amount of Membership Interests, a purchaser
may at any time, and from time to time subscribe to purchase additional
Membership Interests in the LLC so long as the offering remains open. Each
purchaser is liable for the payment of the full purchase price of all Membership
Interests for which he or she has subscribed. Re-verification of accredited
investors’ status may be required.

Election to Receive Cash Distributions or Reinvest

Upon subscription for Membership Interests, holders of Membership Interests must

elect to either (i) receive cash distributions, if any, from the LLC in the amount of
that Member's share of cash available for distribution, (ii) allow the distributions, if
any, to be reinvested by purchasing additional Membership Interests, or (iii) split
their investment into two accounts with one account receiving monthly cash
distributions, if any, and the other reinvesting distributions, if any, in Membership
Interests. Splitting an investment will require the use of two account numbers for
bookkeeping purposes. An election to reinvest all or a portion of the monthly
distributions is revocable at any time, upon a written request to revoke such
election. Cash distributions reinvested by Members who make such an election will
be used by the LLC to acquire real estate or for other proper LLC purposes. The
effect on reinvesting the distributions of some Members will be to increase their
capital accounts, entitling them to a proportionate increase in their relative share of
future earnings or losses of the LLC. In addition, since the LLC will adjust the
Membership
Interests held by each Member to correspond to their capital accounts, those
Members who elect to reinvest their share of distributions will have their
Membership Interests increased in proportion to their capital accounts, thereby
increasing their voting power relative to Members who receive monthly distributions
of cash. However, a Member who elects to reinvest such Member’s share of cash
available for distribution will be treated, for income tax purposes, as having
received the cash and then contributed such cash back to the LLC as an additional
capital contribution.
Restrictions on Transfer As a condition to this Offering of Membership Interests,
restrictions have been placed upon the ability of Investors to resell or otherwise
dispose of any Membership Interests purchased, including but not limited to, the
following:

1. No member may resell or otherwise transfer any Membership Interests

without the satisfaction of certain conditions designed to comply with
applicable tax and securities laws, including (without limitation) the
requirement that certain legal opinions be provided to the Manager with
respect to such matters. The transferee must meet the same Investor
qualifications as the Members admitted during the Offering Period. (See
herein "Summary of LLC Operating Agreement - Restrictions on Transfer")
2. The Membership Interests have not been registered with the U.S. Securities
and Exchange Commission under the Securities Act of 1933, as amended
(the "Act"), in reliance upon the exemptions provided for under Regulation
D, Rule 506. Membership Interests may not be sold or otherwise transferred
without registration under the Act or pursuant to an exemption therefrom.

A legend will be placed upon all instruments evidencing ownership of Membership

Interests in the LLC stating that the Membership Interests have not been registered
under the Act and set forth the foregoing limitations on resale. Notations regarding
these limitations shall be made in the appropriate records of the LLC with respect
to all Membership Interests offered hereby. The foregoing steps will also be taken
in connection with the issuance of any new instruments for any Membership
Interests that are presented for transfer, to the extent the Manager deems
appropriate, and specifically in connection with instruments presented for transfer
during the nine-month period described in subparagraph (3) above.

The LLC will charge a transfer fee of One Hundred Dollars ($100) per transfer of
ownership to a third party. If a Member transfers Membership Interests to more
than one person, except transferees who will hold title together, the transfer to
each person will be considered a separate transfer.

PLAN OF DISTRIBUTION
The units of Membership Interests will be offered and sold by the LLC, with respect
to which no commissions or fees will be paid to the Manager. The LLC intends to
engage a broker-dealer to distribute the Membership Interests. In addition, the
Manager may retain the services of other third parties to locate prospective
Investors, who may receive LLC paid finder fees on a case-by-case basis.

USE OF PROCEEDS
In general, it is anticipated that the proceeds from the sale of Membership Interests
will be used to acquire real estate and performing, sub-performing and non-
performing real estate mortgages and to invest in joint ventures with other entities
engaged in the same endeavor. Proceeds from the sale of Series 1-D units may
be used to pay broker-dealer commissions and costs. In addition, the amended
operating agreement gives the Manager the right to borrow up to $2MM from the
LLC to pay personnel costs and other operating expenses.

A summary of the LLC’s asset portfolios and performance is attached as Exhibit

“C” and will be updated from time to time.

COMPENSATION TO MANAGER AND AFFILIATES

The following discussion summarizes the forms of compensation to be received by
the Manager, in its capacity as Manager. All of the amounts described below will
be received regardless of the success or profitability of the LLC. None of the
following compensation was determined through arm's-length negotiations.

Form and Recipient of Estimated Amount or Method of

Compensation Compensation
Commissions to Manager, Affiliate or Third The Manager does not anticipate that the LLC
Party in Connection with the Dispositions of will pay the Manager real estate listing or sales
Properties commissions. However, the LLC may pay
commissions to third parties in connection with
the disposition of properties (“Property
Commissions”). Such commissions will be
reasonable and competitive within the industry
and will be approximately 5% of the principal
amount for commercial properties and
residential properties. The Manager anticipates
earning commissions in limited circumstances.
Commissions to employees of Manager in Certain employees of the Manager are
Connection with Sales of Interests to Investors registered representatives of the Managing
Broker-Dealer and may receive commissions in
connection with the sale of Interests to
Investors for whom such employees are the
registered representatives.
 Asset Management Fee The Manager will be entitled to an Asset
Management Fee equal to 1.5% of all real
estate under management (payable in monthly
installments). The Asset Management Fee
does not apply to loans owned by the LLC.
Loan Servicing Fee Collected by the LLC and The Manager or an affiliate will act as loan
retained by the Manager or Paid Directly to servicer of the LLC for a fee of 1% per annum
Manager (payable in monthly payments) of the loans
serviced. The Manager may retain a sub-
servicer.
Allocation of Adjusted Net Profits 25% to After payment of all Preferred Returns, the
Series 1-D Interests and 75% to Manager as Manager, as holder of Series 1-M Interests,
owner of 1-M Interests shall be entitled to 75% of the Adjusted Net
Profits of the LLC, and the holders of the
Series 1-D Interests (as a class of 20,000)
shall be entitled to 25% of the Adjusted Net
Profits of the LLC.
Property Management Fees If the Manager or one of its affiliates elects to
serve as the property manager of the LLC’s
portfolio of real estate, it may be paid a fee that
is reasonable and customary.
Definition of Manager’s Fees The Asset Management Fee, Property
Management Fees, and Allocation of Adjusted
Net Profits are collectively referred to herein as
the “Manager’s Fees.”
Loan to Manager The Manager shall be entitled to borrow from
the LLC up to $2MM for working capital and
personnel expense. The Manager must repay
any borrowing from any distributions it receives
of Adjusted Net Profits.

FIDUCIARY RESPONSIBILITY OF THE MANAGER

The Manager is accountable to a LLC as a fiduciary, which means that the
Manager is required to exercise good faith and integrity with respect to LLC affairs
and sound business judgment. This is a rapidly developing and changing area of
the law, and Members should consult with their own counsel in this regard. The
fiduciary duty of
the Manager is in addition to the other duties and obligations of, and limitations on,
the Manager set forth in the Operating Agreement.

The LLC Operating Agreement attached as Exhibit A provides that the LLC shall
indemnify the Manager for any liability or loss (including attorneys' fees, which shall
be paid as incurred) suffered by it, and shall hold the Manager harmless for any
loss or liability suffered by the LLC, so long as the Manager determined, in good
faith, that the course of conduct which caused the loss or liability was in the best
interest of the LLC, and such loss or liability did not result from the gross
negligence, fraud or criminal act of the Manager. Any such indemnification shall
only be recoverable out of the assets of the LLC and not from Members.

It is the position of the U.S. Securities and Exchange Commission that

indemnification for liabilities arising from, or out of, a violation of federal securities
law is void as contrary to public policy. The California Department of Corporations
takes the same position with respect to liabilities arising from any violation of the
securities laws of this state. However, indemnification will be available for
settlements and related expenses of lawsuits alleging securities law violations if a
court approves the settlement and indemnification, and also for expenses incurred
in successfully defending such lawsuits if a court approves such indemnification.

Members may have a more limited right of action than they would have absent
these provisions in the Operating Agreement. A successful indemnification of the
Manager could deplete the assets of the LLC. Members who believe that a breach
of the Manager's fiduciary duty has occurred should consult with their own counsel.

RISK FACTORS
Although the LLC will attempt to honor requests for the withdrawal of eligible
Membership Interests (even though there is no obligation for the LLC to do so)
(See herein “Withdrawal, Redemption Policy, and Other Events of Dissociation”),
any investment in the Membership Interests involves a significant degree of risk
and is suitable only for Investors who have NO NEED FOR LIQUIDITY in their
investments. When analyzing this offering, prospective Investors should carefully
consider each of the following risks and should also carefully consider the matters
discussed herein under the captions "Compensation to Manager and Affiliates,"
"Conflicts of Interest," and "Income Tax Considerations and ERISA
Considerations."

RISKS RELATED TO PURCHASING AND SELLING REAL PROPERTY

The principals of the Manager have extensive experience in purchasing and selling
residential and commercial real estate. The LLC anticipates it will engage in
business as a buyer and seller of real estate, including 1-4 family residential
property, multi-family residential property, and commercial property (“Acquired
Property”), for seeking to generate both rental income and appreciation from the
Acquired Property. The LLC may also engage in joint venture arrangements with
companies and individuals engaged in the rehabilitation and resale of real
properties.
The LLC is subject to risks associated with the acquisition and ownership of real properties.

The economic performance and value of the LLC’s Acquired Properties will be
subject to all risks incident to the acquisition and ownership of real estate. Real
estate values are affected by numerous factors, including, among others:
 Federal, state and local laws and regulations (such as environmental, rent
stabilization and zoning laws) and potential liabilities under such laws;
 changes in federal, state or local tax laws;
 fluctuations in maintenance and operations costs;
 changes in the supply of and demand for a specific property or type of
property;
 changes in local, national or international economic conditions, such as
interest rates, the availability of long- term mortgage funds and employment
conditions;
 the ability of the property-owning entity to provide for adequate maintenance
and insurance of its properties; and
 deterioration of and other changes in the area in which a property is located
or in the market for space in which it is located.

Real Estate Business Standards and Policies

Any Acquired Property purchased by the LLC may be subject to a loan directly
secured by a security instrument encumbering such Acquired Property. Acquired
Property will be purchased by the LLC pursuant to a strict set of guidelines
designed to set standards for the quality of property acquired by the LLC. Such
standards are summarized in the paragraphs that follow.

Financial Reporting
The LLC will maintain separate financial records with respect to each Acquired
Property, including a statement of net income, a balance sheet and a determination
of fair market value as set by the Manager. The Manager will provide an updated
determination of the fair market value of an Acquired Property from time to time,
but no less often than once per year. With respect to Acquired Property, “fair
market value” means the appraised value of the Acquired Property as determined
by an independent written appraisal, Broker’s Opinion, or the Manager at the time
the LLC purchases the property (or the time the Manager updates its determination
of fair market value, as applicable), which is “current” at the time the LLC
purchases the property (or the time the Manager updates its determination of fair
market value, as
applicable). An appraisal will be considered to be “current” if the Manager has
inspected the Acquired Property and made a reasonable determination that the
value of the Acquired Property has not declined since the date of the appraisal.
Fair market value does not consider the historical price of the property or any
amounts spent to remodel or improve the property prior to its purchase by the LLC.
The Credit Committee will prepare a rolling five-year pro forma value of all assets
owned by the LLC and update it quarterly.
Holding Period of Acquired Property
The LLC anticipates holding a given Acquired Property for no longer than ten (10)
years, although the LLC may sell Acquired Property sooner or later depending
upon market conditions and demand for real estate like the Acquired Property. In
many cases, Acquired Property will not be held but will be immediately resold.

Purchase of Acquired Property from Third Parties

Acquired Property will be purchased from third parties, such as auctions, financial
institutions or private individuals. The price at which existing real property changes
hands is normally a function of then existing rental income, potential rental income,
overall property condition, vacancy rates, changes in the general economic market
conditions that will affect the value of the Acquired Property, zoning restrictions,
neighborhood values and other factors that might affect the market value of each
property.

Purchase of Acquired Property from Affiliates

Acquired Property may be purchased from an affiliate at a purchase price equal to
the fair market value of such property as determined by the Manager. Such
Acquired Property must meet the standards for quality of the LLC as set forth
herein. Before selling Acquired Property to the LLC, the Manager will have
remodeled or improved such property and such property will have little or no
deferred maintenance.
Diversification
Generally, Acquired Property will be between Five Hundred Thousand Dollars
($500,000) and Twenty Million Dollars ($20,000,000). After the LLC raises Twenty
Million Dollars ($20,000,000), no single Acquired Property will exceed twenty
percent (20%) of the LLC’s capital unless determined by the Manager to be in the
best interest of the LLC. However, the LLC is not presently and is unlikely to be
adequately diversified which makes it subject to localized risks.

Joint Ventures
The LLC may engage in joint ventures with companies and individuals involved in
the rehabilitation and resale of real estate or the acquisition of performing, sub-
performing, and non-performing mortgages, or the financing, structure financing, or
securitization of mortgage loans. Typically, the LLC will hold title to the real estate
or a deed of trust on the real estate and share in any gain, if any, on the resale of
the property. The LLC may participate in a joint venture by funding the acquisition
of real estate and securing its investment with a first deed of trust. There is the risk
of non- performance by joint ventures of the LLC, resulting in losses.

Uninsured losses could adversely affect the LLC’s asset value of the affected property.
The LLC intends to obtain comprehensive liability and casualty insurance of the
type that is customarily obtained for the kind of real estate in which the LLC
acquires an interest. There will be occasions, however, when the LLC will be
exposed to loss in connection with damage to or a hazard on an Acquired
Property. For example, the LLC may not procure insurance coverage for Acquired
Properties that will be immediately resold. Further, there may be lapses or gaps in
coverage on other Acquired Properties from time-to-time.

In addition, there may be certain types of losses (such as losses arising from
earthquakes, hurricanes, floods or acts of war or terrorism) that are not generally
insured because they are either uninsurable or not economically insurable. Should
an uninsured loss or a loss more than insured limits occur with respect to a
property, the LLC could suffer a loss of the capital invested and any profits that
might be anticipated from that property. The LLC may also be obligated to repay
any indebtedness or other obligations related to the property. In addition, inflation,
changes in building or zoning codes and ordinances, environmental
considerations, and other factors may make it infeasible to use insurance proceeds
to replace a Portfolio Asset if it is damaged or destroyed.

Liability for environmental matters could adversely affect the LLC’s financial condition.
Prior to its acquisition of an Acquired Property, the LLC will not have an opportunity
to conduct an environmental study of the site and further will not have an
opportunity to require the previous owner to undertake remediation or indemnify
the LLC against any future obligations arising out of any contamination at the site.
No assurances can be given that no prior owner created any material
environmental condition not known to the LLC, that no environmental liabilities may
have developed, or that future uses, or conditions will not result in the imposition of
environmental liability. The cost of defending against claims of liability or
remediating contaminated property and the cost of complying with environmental
laws (including changes in environmental laws) could materially adversely affect
the LLC’s financial condition.

Liability for title defects could adversely affect the LLC’s financial condition.
In acquiring an Acquired Property, the LLC intends to purchase title insurance as a
protective measure. The title insurer will therefore bear the risk of liens and/or
liabilities associated with that property, such as tax or construction debts or liens
and title defects. Such obligations and/or liabilities may be unpredictable and may
not be within the LLC’s control. The cost and or delays caused by curing any title
defects or other liabilities and obligations associated with the Acquired Properties
could materially adversely affect the LLC’s financial performance.

The illiquidity of real estate investments could adversely affect the LLC’s financial condition.
Real estate investments tend to be illiquid. Consequently, the ability of the LLC to
sell the LLC’s Acquired Properties to generate revenue in response to changing
economic, financial and investment conditions is limited. In addition, some
significant expenditures, such as real estate taxes, and operating and maintenance
costs, generally are not reduced in circumstances resulting in a reduction in
income from the investment. Factors or events that impede the ability of the LLC to
respond to adverse changes in the performance of its investments, including the
disposition of
properties, could have an adverse effect on the LLC’s financial condition and
operating results.

RISKS RELATED TO MORTGAGE LENDING

There will be no assurance of returns to the Members of the LLC.

All real estate lending investments, including investments in debt secured by real
property, are speculative in nature and the possibility of partial or total loss of
capital will exist. There is no assurance that the LLC will be successful in producing
any profits or even in returning any capital to any investor. Investors should not
subscribe to or invest in the LLC unless they can readily bear the consequences of
such loss.

The LLC will be subject to general risks associated with real property lending.
The LLC’s profitability depends on the ability of our borrowers to repay their loans.
Most of the LLC’s borrowers are not prime borrowers qualified to secure bank
financing. Some borrowers will be new entities with no history of operations or
profitability. The ability of a borrower to repay may also be affected by local,
regional, and national real estate market and economic conditions beyond the
control of the LLC. Delinquencies and defaults are sensitive to local and national
business and economic conditions. Favorable real estate and economic conditions
may not necessarily enhance a borrower’s ability to repay due to circumstances
specific to a borrower and are beyond the LLC’s control.
There are also special risks associated with particular sectors of real estate
property in which the LLC may acquire mortgages:

 Fix and Flip Properties: Properties recently acquired in foreclosure are

usually acquired and financed with little opportunity to fully inspect the
property. Frequently, the properties have deferred maintenance. There may
be delays in evicting occupants, claims by the foreclosed property owner
that could delay resale, unknown property defects and numerous laws now
on the books, and new ones have been regularly issued, that make it more
difficult to foreclose and evict. In addition, there is no assurance the
inventory of homes will be sufficient to sustain the fix and flip market as it
exists today. There is also the risk that lenders may take it upon themselves
to improve and directly resell their foreclosed inventory.
 Multifamily Properties: The value and successful operation of a multifamily
property may be affected by a number of factors such as the location of the
property, the ability of the property manager, the presence of competing
properties, adverse local economic conditions, oversupply and rent control
laws or other laws affecting such properties. All of these factors may
adversely affect a borrower’s ability to pay.
 Retail Properties: Retail properties are affected by the overall health of the
economy and a borrower’s ability to pay a loan on retail property may be
adversely affected by, among other things, the growth of alternative forms of
retailing, bankruptcy, departure or cessation of operations of a tenant, a shift
 in consumer demand due to demographic changes, changes in spending
patterns and lease terminations.
 Office Properties: Office properties and a borrower’s ability to pay a loan on
an office property are affected by the overall health of the economy and
other factors such as a downturn in the business operated by their tenant,
obsolescence and non-competitiveness.
 Industrial Properties: Industrial properties are affected by the health of the
economy and the particular industry of the borrower. A borrower’s ability to
pay a loan on an industrial property may be adversely affected by, among
other things, competition within the industry, growth of competing industries,
bankruptcy and government regulation with respect to the industry.
 Distressed Performing, Sub-Performing, and Non-Performing Residential
and Commercial Loans: A borrower’s ability to repay a loan secured by non-
performing loans will be affected by liquidity (or lack thereof) in the real
estate market in general and the other real estate risk factors described
herein. In addition, the underlying loan collateral may not generate sufficient
interest income to sustain the loan from the LLC secured by those loans,
requiring the borrower to continue to feed capital into the loan acquisition to
make payments. As mentioned above, many borrowers will not be prime
quality borrowers of the type a bank would finance.
 Construction: Loans for ground-up construction are subject to these risks:
builder performance, cost overruns, unforeseen site condition,
environmental and social obstacles, defective construction, availability and
cost of construction materials, subcontractor default, difficult to get take-out
financing and delay in resale. If the LLC takes back a partially finished
construction project, it will have to advance funds to finish construction at a
cost that will be higher than if the owner had contracted for the same work.

Lack of Diversification

The LLC intends to fund new loans on all property types, generally
commercial/industrial/residential, located in the United States. As a result, the
LLC’s investments will not have the geographic diversification present in some
other types of investment programs and such lack of diversification will increase
the LLC’s exposure to adverse local real estate, economic and market conditions
and other risk factors, including natural disasters and acts of terrorism. Therefore,
the LLC lacks diversification.

Loan Defaults and Foreclosures

The LLC is in the business of owing mortgages secured in whole or in part, directly
and indirectly, by real estate and therefore bears the risks of defaults by borrowers.
Many LLC loans will be interest-only loans providing for monthly interest payments
with a large "balloon" payment of principal due at the end of the term. Many
borrowers are unable to repay such balloon payments out of their own funds and
are compelled to refinance. Fluctuations in interest rates and the unavailability of
mortgage funds could adversely affect the ability of borrowers to refinance their
loans at maturity.

The LLC will rely primarily on the property securing the loans to protect its
investment. It will, to a lesser extent rely upon the creditworthiness of a borrower.
There are a number of factors that could adversely affect the value of such real
property security, including, among other things, the following:

(1) The Manager will determine the fair market value of the real property used
to secure loans acquired by the LLC; provided, however, that the Manager
may obtain an appraisal or BPO if it deems such necessary as determined
in its sole discretion. If the LLC obtains an appraisal or BPO, no assurance
can be given that such appraisals or BPOs will, in any or all cases, be
accurate. Moreover, since an appraisal or BPO is based upon the value of
real property at a given point in time, subsequent events could adversely
affect the value of real property used to secure a loan. Such subsequent
events may include general or local economic conditions, neighborhood
values, interest rates, new construction and other factors.
(2) If the borrower defaults, the LLC may have no feasible alternative to
repossessing the property at a foreclosure sale. If the LLC cannot quickly
sell such property, and the property does not produce any significant
income, the cost of owning and maintaining the property will directly affect
the LLC's profitability.
(3) Subsequent changes in applicable laws and regulations may have the effect
of severely limiting the permitted uses of the property, thereby drastically
reducing its value.
(4) Due to certain provisions of California law applicable to real property
secured loans, generally if the real property security proves insufficient to
repay amounts owing to the LLC, it is unlikely that the LLC would have any
right to recover any deficiency from the borrower.
(5) In some cases the LLC's loans will be secured (either as primary or
secondary collateral) by junior deeds of trust, which are subject to greater
risk than first deeds of trust. In the event of foreclosure, the debt secured by
the senior deed of trust must be satisfied before any proceeds from the sale
of the property can be applied toward the debt owed to the LLC that are in
junior positions. Furthermore, to protect its junior security interest, the LLC
may be required to make substantial cash outlays for such items as loan
payments to the senior lienholder to prevent their foreclosure; property
taxes; all insurance and repairs. The LLC may not have adequate cash
reserves on hand at all times to protect its security for a particular loan, in
which event the LLC could suffer a loss of its investment in that loan.
(6) The recovery of sums advanced by the LLC in making loans and protecting
its security may also be delayed or impaired by the operation of the federal
bankruptcy laws or by irregularities in the manner in which the loan was
made. Any borrower has the ability to delay a foreclosure sale for a period
 ranging from several months to several years simply by filing a petition in
bankruptcy, which automatically stays any actions to enforce the terms of
the loan. It can be assumed that such delays and the costs associated
therewith may reduce the LLC's profitability.

Since the LLC will be relying on its property security to protect its investment than
the creditworthiness of its borrowers, the LLC is likely to experience a borrower
default rate higher than would be experienced if its loan portfolio was more heavily
focused on borrower creditworthiness. Because of the LLC's underwriting criteria,
the LLC may acquire loans to borrowers who would not qualify for secured loans
from institutional lenders (i.e., banks and savings and loan associations).

The LLC will be subject to risks associated with volatile interest rates.
The level and volatility of short-term and long-term interest rates significantly affect
the lending industry. For example, a decline in interest rates may require the LLC
to offer loans at lower interest rates or may hinder the LLC’s ability to close loans
at the targeted interest rates. A rise in interest rates could affect the LLC’s cost of
drawing on a line of credit to bridge finance amounts that the LLC has called or
expects to call as capital contributions with no guarantee that there will be an
offsetting increase in interest rates charged on such loans. Increased interest rates
may also harm a borrower’s ability to refinance a loan at maturity. A rise in interest
rates may also cause the LLC to achieve lower returns or carry more risk than
alternative investments. Accordingly, volatility in interest rates could harm the
LLC’s ability to achieve its profitability objectives or cause the LLC to achieve less
favorable results than other investments. Moreover, interest rates are influenced by
many factors that are beyond the LLC’s control and are difficult to predict.

The LLC faces substantial competition, and if it fails to compete effectively, its operating results will
suffer.
The business of real estate lending and investing in real estate within the LLC
market area is highly competitive, and the LLC may be competing with many other
lenders, investors and developers. There are several funds and many experienced
individuals in this area who specialize in equity-based financing. Many of these
other investors have greater financial resources than the LLC and more experience
in making the types of loans and investments that the LLC intends to make. The
LLC may not be able to compete successfully against existing or new competitors.
If the LLC does not respond adequately to competitive challenges, its business and
results of operations would be harmed.

The LLC will be subject to the risk of uninsured losses.

Although the LLC intends to require borrowers to maintain customary insurance
coverage for the properties serving as collateral, such as comprehensive
insurance, including title, liability, fire and extended coverage, there are certain
types of losses (generally of a catastrophic nature, such as wars, terrorism,
earthquakes and floods) that are either uninsurable or not economically insurable.
Should any such uninsured risk occur or cause the destruction or damage of any
property, or should a hazard insured against occur where the loss is in excess of
insurance limits or should the insurance company be unable to pay the claim, both
invested capital and potential profits could be lost. Without limiting the foregoing,
the existence of an uninsured loss on a property could adversely affect a
borrower’s ability to repay a loan, especially if the borrower was relying on income
generated with respect to such property that suffered the loss to repay principal
and interest on such loan. In addition, the existence of an uninsured loss on a
property could adversely affect the value of such property, thereby reducing the
LLC’s recovery in the case of a default on such loan.

The LLC may be subject to the risks associated with disposing of real property.
If a borrower defaults on a loan held by the LLC, the LLC may seek to foreclose
upon the real property serving as collateral for such loan. In such event, the LLC
generally will seek to sell or otherwise dispose of such property. The marketability
and profitability of any property may be adversely affected by local, regional, and
national
economic conditions beyond the control of the Manager. Favorable changes may
not necessarily enhance the marketability or profitability of a property. Even under
the most favorable marketing conditions, there is no guarantee that a property can
be sold by the LLC, or if sold, that such sale will be made upon a price and terms
favorable to the LLC, including at a price sufficient to cover all of a borrower’s
obligations to the LLC under the defaulted loan.

No assurance can be given that there will be a ready market for the sale of any real
property acquired by the LLC pursuant to a foreclosure. The sales prices of such
properties will depend on a variety of factors, including the value of a particular
property in relation to similar properties in the market area, the property’s history
and condition, the availability of tax benefits associated with such properties, the
then projected economic and demographic trends for the immediate area in which
the properties are located, the availability of purchasers and the availability and
terms of
credit and financing for a purchaser of a property. The LLC may provide financing
in connection with the sale of any property and therefore receive as partial
payment a purchase money obligation of the purchaser, thereby decreasing the
cash immediately available for distribution to the Members and subjecting the
Members to the risk of default on the purchaser’s debt obligation and certain
potential adverse tax consequences.

Due to certain provisions of state laws applicable to certain types of real estate
loans, including anti-deficiency provisions under California law, the LLC may have
no ability to recover any deficiency should the property prove insufficient to repay a
loan. The LLC’s ability to foreclose and dispose of a property may be delayed or
impaired by the operation of the federal bankruptcy laws, which may delay
disposition of a property for a period ranging from several months to several years.
The length of such a delay and the costs associated therewith may have an
adverse impact on the LLC’s profitability.

When the LLC acquires any property by foreclosure or otherwise, the LLC is
exposed to the risks of liability incidental to property ownership. Owners of property
may be subject to taxation with respect to the property, liability for injury to persons
and property occurring on the property or in connection with the activity conducted
thereon, liability related to environmental contamination, and liability for non-
compliance with governmental regulations.

The LLC may be subject to the risks associated with environmental contamination.
Under current federal and state law, the owner of property contaminated with toxic
or hazardous substances (including a lender that has acquired title through
foreclosure) may be liable for all costs associated with any remedial action
necessary to bring the property into compliance with applicable environmental laws
and regulations.

There can be no assurance that the LLC would not incur full recourse liability for
the entire cost of any contamination removal and cleanup, or that the cost of such
removal and cleanup would not exceed the value of the property. In addition, the
LLC could incur liability to tenants and other users of the affected property, or
users of neighboring property, including liability for consequential damages. The
LLC would also be exposed to risk of lost revenues during any cleanup and the risk
of lower lease rates or decreased occupancy if the existence of such substances or
sources on the property become known. If the LLC fails to remove the substances
or sources and clean up the property, it is possible that federal, state or local
environmental agencies could perform such removal and cleanup and impose and
subsequently foreclose liens on the property for the cost thereof. The LLC may find
it difficult or impossible to sell the property prior to or following any such cleanup.
The LLC could also be liable to the purchaser of such property if the LLC knew or
had reason to know that such substances or sources existed. In such a case, the
LLC could also be subject to the costs described above. The owner may also incur
liability to users of the property or users of neighboring property for bodily injury
arising from exposure to such substances. If the LLC is required to incur such
costs or satisfy such liabilities, this could have a material adverse effect on the
LLC’s profitability. Additionally, if a borrower is required to incur such costs or
satisfy such liabilities, this could result in the borrower’s inability or unwillingness to
repay its loan from the LLC.

Even if a mortgage lender does not foreclose on a contaminated site, the mere
existence of hazardous substances on a property may depress the market value of
the property such that the loan is no longer adequately secured.

A lender’s best protection against environmental risks is to thoroughly inspect and

investigate the property before making or investing in a loan. However,
environmental inspections and investigations are very expensive, and often are not
financially feasible in connection with loans of the size and type to be made by the
LLC. As a result, toxic contamination reports or other environmental site
assessments will generally not be obtained by the LLC in connection with its loans,
unless the Manager believes that such reports are necessary to evaluate known or
suspected environmental risks. The Manager intends to take certain precautions to
avoid environmental problems, such as requiring environmental reports to be
obtained or not making or investing in loans secured by properties known or
suspected to have environmental problems. However, there is no guarantee that
the Manager will be successful in identifying the need to obtain environmental
reports. There is also no guarantee that the Manager will be successful in
identifying the existence or extent of any such environmental problems, even in
cases when certain environmental reports are obtained.

The LLC is subject to the risks relating to compliance with applicable law.
Although the Manager will seek for it and the LLC to comply with all federal, state
and local lending regulations, there is no assurance that the Manager or the LLC
will always be compliant or that there will not be allegations of non-compliance
even if the Manager and the LLC were fully compliant. Any violation of applicable
law could result in, among other things, damages, fines, penalties, litigation costs,
investigation costs and even restrictions on the ability of the LLC’s ability to
conduct business.

The LLC is subject to the risks of litigation.

The Manager will act in good faith and use reasonable judgment in acquiring and
managing the loans for the LLC. However, as a lender, the LLC is exposed to the
risk of litigation by a borrower for any allegations by the borrower (warranted or
otherwise) regarding the terms of the loans or the actions or representations of the
Manager or the LLC in making, managing or foreclosing on the loans. It is
impossible for the Manager to foresee what allegations may be brought by a
specific borrower, and the Manager will seek to avoid litigation, if, in the Manager’s
judgment, the circumstances warrant an alternative resolution. If an allegation is
brought or litigation is commenced against the LLC, the LLC will incur legal fees
and costs to respond to the allegations and to defend any resulting litigation. If the
LLC is required to incur such fees and costs, this could have an adverse effect on
the LLC’s profitability.

The LLC may be affected by changes in legal, regulatory and legislative environments in which it
operates.
The LLC is subject to lending regulations at the federal, state and local levels, and
proposals for further regulation of the lending services industry are continually
being introduced. The LLC is also subject to many other federal, state and local
laws and regulations that affect the LLC’s business, including those regarding
taxation. Congress and state legislatures, as well as federal and state regulatory
agencies and local governments, review such laws, regulations and policies and
periodically propose changes or issue guidance that could affect the LLC in
substantial and unpredictable ways. Such changes could, for example, limit the
types and value of lending services and products the LLC can offer, alter its
liability, and increase its cost to offer such services and products or hinder its ability
to fund loans quickly enough to serve its intended client base. It is possible that
one or more legislative proposals may be adopted or regulatory changes may be
implemented that would have an adverse effect on the LLC’s business.

The LLC is subject to the risks related to the accuracy and completeness of information about
customers, properties and counterparties.
In deciding whether to extend credit or enter into other transactions with customers
and counterparties, the LLC may rely on information furnished to it by or on behalf
of customers and counterparties, including financial statements and other financial
information. The LLC also may rely on representations of customers and
counterparties as to the accuracy and completeness of that information and, with
respect to financial statements, on reports of independent auditors. While the LLC
intends to conduct due diligence regarding the value of properties and the
information provided by customers and counterparties, it may rely on or be unable
to identify inaccurate or fraudulent information.

The LLC’s financial condition and results of operations could be negatively

impacted to the extent it relies on or fails to identify customer, property or
counterparty information that is not complete or accurate.
BUSINESS RISKS

The LLC’s financial objectives may not be achieved.

The projections contained in any reports previously, contemporaneously or
subsequently sent to prospective investor are based on numerous assumptions
that are subject to uncertainty and over which the LLC will have no control. There
is no assurance that assumed or projected returns will be achieved or maintained
or that the assumed level of expenses will not be exceeded. Reduced revenue,
increased expenses or a combination of both will decrease the Adjusted Net Profit
on which the forecasted amounts of cash distributions are based.

In addition, facts, forecasts and other statistics in this Memorandum have been
derived from various sources generally believed to be reliable. However, the LLC
cannot guarantee the quality or reliability of such source materials. They have not
been prepared or independently verified by the LLC and, therefore, the LLC makes
no representations as to the accuracy of such facts, forecasts and statistics. Due to
possibly flawed or ineffective collection methods or discrepancies between
published information and market practice and other problems, any statistics in this
Memorandum may be inaccurate and should not be unduly relied upon.

There are risks associated with reliance on forward-looking statements.

The forward-looking statements included in this Memorandum are not historical
facts, but rather are based on current expectations, estimates and projection about
the LLC’s industry, the LLC’s beliefs and the LLC’s assumptions. Words such as
“anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks” and “estimates,” and
variations of these words and similar expressions, are intended to identify forward-
looking statements. These statements are not guarantees of future performance
and are subject to risks, assumptions, uncertainties and other factors, some of
which are beyond the LLC’s control and difficult to predict, and could cause actual
results to differ materially from those expressed or forecasted in the forward-
looking statements and projections. The LLC disclaims any obligation to update
any such factors or to announce the result of any revisions to any of the forward-
looking statements and projections.

Each prospective investor should therefore consult with such prospective investor’s
own advisers to evaluate the forward-looking statements and the associated
assumptions and make such prospective investor’s own independent determination
of the feasibility of the forward-looking statements and such assumptions.

The LLC has limited prior operating history.

The current LLC is a recently formed limited liability company with limited prior
operating history. While past history is no guarantee of future performance, the
current LLC has been very successful in acquiring profitable investments since its
inception on February 1, 2013. Identifying and making profitable investments is
difficult and involves a high degree of risk, competition and uncertainty, and the
availability of such investments is subject to general market conditions. In addition,
please consider the comments about Forward Looking Statements.

The LLC’s business must be considered in light of the risks, expenses and
problems frequently encountered by entities with limited operating history. There is
no assurance that the LLC will be able to attain profitability. The LLC’s profitability
is dependent upon many factors beyond its control. Because the LLC has little
operating history, there is only a limited basis upon which to evaluate the LLC’s
prospects for achieving its intended business objectives.

The LLC faces the risks associated with the future acquisition of unspecified investments.
Members will not have an opportunity to evaluate the specific merits or risks of any
prospective investment. As a result, Members will be dependent on the judgment
of the Manager in connection with the investment and management of the
proceeds of this offering, including the selection of the properties to be funded.
There can be no
assurance that determinations ultimately made by the Manager will permit the LLC
to achieve its business objectives. The number of investments that the LLC makes,
and diversification of its investments may be dependent on the amount of proceeds
raised herein and will be reduced if less than the maximum amount of the offering
is raised. The LLC’s success will depend on its ability to identify suitable
investments, to negotiate and arrange the closing of appropriate transactions, to
successfully manage, acquire, rehab and resell properties or service real estate
loans.

The LLC will be subject to the risks of relying on the Manager and certain key personnel.
The LLC’s ability to achieve its business objectives successfully will be largely
dependent upon the efforts of the LLC’s management team. Exclusively the
Manager will make all decisions with respect to the management of the LLC as well
as the selection of the real estate investments. Members will not have the
opportunity to evaluate the investments that the LLC will fund and must rely on the
ability of the Manager and its management team with respect to such investments.
Accordingly, no person should purchase Membership Interests in the LLC unless
he or she is willing to entrust all aspects of the management of the LLC to the
Manager. Although the principals of the Manager have been active in various
aspects of the real estate industry for many years, there can be no assurance that
the Manager will be able to operate the LLC profitably or achieve the objectives of
the LLC. The LLC has not entered into any employment agreements or other
understandings with the members of the management team or obtained any “key
man” life insurance on their lives. The loss of the services of any principal could
have a material adverse effect on the LLC’s ability to achieve successfully its
business objectives. In addition, the Manager and its principals will only devote
such time as they determine, in their sole and absolute discretion is reasonably
necessary to carry out the business and affairs of the LLC.

There are risks associated with indemnification of the Manager and its principals.
The Manager and its principals (“Covered Persons”) will be indemnified by the LLC
from any and all claims of the third parties directly arising out of its management of
the LLC, except for claims arising out of the fraud, gross negligence, bad faith or
willful misconduct of a Covered Persons. The Covered Persons will have no liability
to the LLC for a mistake or error in judgment or for any act or mission believed to
be within its scope of authority unless such mistake, error of judgment or act or
omission was made, performed or omitted by the Covered Persons fraudulently or
in bad faith or constituted gross negligence. As a result, the right of any Member to
bring an action against the Covered Persons may be severely limited.

There are risks related to the failing of Members to make capital contributions.
Because the success of the LLC and its ability to make investments is largely
dependent upon the Members fulfilling their capital commitments, the
consequences of any Member failing to contribute these amounts when called for
could be severe. In addition, the failure of any Member to make a capital
contribution will result in exposure to liability for that Member and may result in the
implementation of various remedies set forth in the LLC Agreement.
The LLC is subject to operational risks.
Although the LLC intends to employ reasonable diligence in conducting its
business and supervising its employees and agents, no amount of diligence can
eliminate many types of operational risk, including the risk of fraud by employees,
agents or outsiders, misinterpretation or misapplication of rules, regulations or
other requirements, unauthorized transactions by employees or agents or
operational errors, including clerical or record-keeping errors or those resulting
from faulty or disabled computer or telecommunication systems. Certain errors
may be repeated or compounded before they are discovered and successfully
corrected. The LLC is exposed to the risk that external parties on whom the LLC
relies will be unable to fulfill their contractual obligation to the LLC (or will be
subject to the same risk of fraud or operational errors by their respective
employees and agents as the LLC is).

Distributions will be subject to prior payment of expenses and reserves.

Distributions will only be paid to the extent that the LLC has sufficient cash flow to
make such payments. The Manager anticipates that there will be significant cash
flow available during the investment term, but there is no guarantee that the LLC
will be able to generate such cash flows. In addition, there will not be any cash flow
available for distribution until the LLC has made all payments required under any
debt obligation and all other payments required to be made for LLC expenses, and
other payables, and the Manager has established a reserve for liabilities. Even if
distributions are made, they may not be sufficient to satisfy a Member’s tax
obligations with respect to the LLC.

The Membership Interests are restricted securities, which limits their transferability.
The Membership Interests being sold in the offering are restricted securities under
the Securities Act of 1933, as amended (the “Securities Act”), for which no public
or private market presently exists. Transfers of the Membership Interests are
subject to restrictions of federal and state securities laws and to the restrictions set
forth in the Operating Agreement. Because of such restrictions on transfer, it may
be difficult or impossible to transfer the Membership Interests to any transferees.
Accordingly, an investment in the Membership Interests should be made only if you
can assume the risks of an illiquid investment.

The LLC may be adversely affected if it does not perfect an exemption from registration under federal
and state securities laws.
The LLC intends to offer Membership Interests without registration under any
securities laws in reliance on an exemption for “transactions by an issuer not
involving any public offering.” While the Manager believes reliance on such
exemption is justified, there can be no assurance that factors such as the manner
in which offers, and sales are made, concurrent offerings by other companies, the
scope of disclosure provided, failures to make notices, filings or changes in
applicable laws, regulations or interpretations will not cause the LLC to fail to
qualify for such exemptions under U.S. federal or one or more states’ securities
laws. Failure to so qualify could result in the rescission of sales of Membership
Interests at prices higher than the current value of those Membership Interests,
potentially materially and adversely affecting the LLC’s performance and business.
Further, even non-meritorious claims that offers and sales of Membership Interests
were not made in compliance with applicable securities laws could materially and
adversely affect the Manager’s ability to conduct the LLC’s business.

The Manager is not registered as an investment adviser and the LLC is not registered as an
investment company.
The Manager believes the nature of the LLC will not subject it to, and the Manager
intends for the LLC to rely on exemptions from, the registration requirements of the
Investment Company Act of 1940, as amended (the “Investment Company Act”).
There is no assurance that the Manager’s belief in this regard is or will continue to
be correct or that such exemptions will remain available. The Manager is not
registered as an investment adviser under the Investment Advisers Act of 1940, as
amended (the “Advisers Act”), and accordingly is not subject to any of the
recordkeeping or business practice provisions of the Advisers Act, although the
Advisers Act antifraud provisions are applicable. The performance of the LLC’s
investment portfolio could be materially adversely affected if the LLC or the
Manager were to become subject to the Investment Company Act or the Advisers
Act because of the various burdens of compliance therewith. Neither the LLC nor
its counsel can assure investors that, under certain conditions, changing
circumstances or changes in the law, the LLC may not become subject to such
regulation.

Neither the LLC nor the Manager has retained separate legal representation for the Members.
Attorneys represent the Manager in connection with the organization and operation
of the Manager and the LLC. Those attorneys do not represent the Members,
either individually or collectively, nor is it anticipated that the LLC will engage
separate counsel to represent the LLC or any of the Members with respect to these
matters. The Manager’s attorneys do not expect to furnish any Member with any
legal opinion and they have not opined upon the adequacy of this Memorandum or
the fairness of the disclosure herein. Prospective investors must consult with their
own counsel with regard to all of these matters.

There are tax risks associated with the LLC.

Prospective investors in the LLC are subject to complex and potentially adverse tax
consequences as a result of investing in the LLC. Investors, directly or indirectly
through the LLC, may be subject to significant foreign taxation as well as U.S.
federal, state and local taxation as a result of their investments in the LLC,
including, with respect to tax-exempt organizations, the tax on unrelated business
taxable income imposed under Section 511 of the Code. In addition, certain
investors may be allocated a portion of taxable income of the LLC without regard to
actual cash distributions. Accordingly, such investors’ tax liability could exceed the
cash distributions to them in any tax year. Furthermore, tax laws and regulations
applicable to an investment in the LLC and to the management of the LLC are
subject to change, and any such change may have a material adverse effect on the
investors and the LLC. Prospective investors should consult their own tax advisers
with reference to their specific tax situations, including any applicable federal,
state, local, and foreign taxes. There is a number of additional tax risks associated
with an investment in the LLC.

Risk of Using Leverage

The LLC will use borrowed funds to acquire suitable property. As of September
25, 2015 the LLC owed $10MM secured by all of its assets. The loan is due in
April 2017. The Manager does not intend to use borrowed funds to acquire
performing, sub-performing, and non-performing real estate loans or undervalued
real estate from outside lenders in excess of four times the net worth of the LLC at
the time the funds are borrowed. If prevailing interest rates rise, the LLC's cost of
money could exceed the income earned from that money, thus reducing the LLC's
profitability or causing losses. If the LLC is unable to repay any loan, the lender
could foreclose on the collateral the LLC has pledged to them, resulting in the loss
of some or all of the assets that were pledged.

Reliance on the Manager

The Manager will make virtually all decisions with respect to the management of
the LLC, including the determination as to what properties to acquire for a flip or
hold strategy and what performing, sub-performing, and non-performing mortgages
to acquire, and the Members will not have a voice in the management decisions of
the LLC and can exercise only a limited amount of control over the Manager. The
Manager gives no assurance that the LLC will operate at a profit. The LLC is
dependent to a substantial degree on the Manager's continued services. In the
event
of the withdrawal, dissolution or bankruptcy of the Manager, the business and
operations of the LLC may be adversely affected.

Competition
Because of the nature of the LLC's business, the LLC's profitability will depend to a
large degree upon the future availability of suitable properties. The LLC will
compete with institutional investors and others engaged in the flip or buy and hold
business, many of whom have greater financial resources and experience than the
LLC.

Reliance on Officers of Manager

The Manager is a corporation which consists of a few key officers whose inability to
manage the corporation, whether because of death, illness, incapacity or
otherwise, could adversely affect the management of the Manager, and
consequently, the performance of the LLC.
Manager Not Required to Devote Full-Time to the Business of the LLC
The Manager is not required to devote its full time to the LLC's affairs, but only
such time as the affairs of the LLC may reasonably require.

Competition with Clients and Affiliates of the Manager

The Manager may also sponsor the formation of other investment groups like the
LLC to invest in real estate and/or mortgages. When considering each real estate
investment, therefore, the Manager will have to decide which client or fund it will
choose to purchase real estate investments or mortgages. This will compel the
Manager to make decisions that may at times favor persons other than the LLC.
The Operating Agreement exonerates the Manager from liability for investment
opportunities given to other persons.

Investment Delays
There may be a delay between the time Membership Interests are sold and the
time purchasers of Membership Interests are admitted to the LLC and begin to
participate in the investment yield being realized by the LLC. Once the Minimum
Offering Amount is achieved, funds will be transferred to the LLC as required to
fund real estate and mortgage acquisitions, create appropriate reserves, or pay
LLC expenses. (See herein "Use of Proceeds")

Uninsured Losses
The Manager will require title (except for properties acquired at auction), fire, and
casualty insurance on the properties acquired by the LLC. However, there are
certain types of losses (generally of a catastrophic nature) which are either
uninsurable or not economically insurable, such as losses due to war, floods,
earthquakes, mold, or mudslide and some title claims. Should any such disaster
occur, the LLC could suffer a loss. The Manager is not required to have performed
any environmental reports such as Phase I or Phase II or conduct any mold
inspections, or other similar
studies, investigations, or due diligence prior to purchasing real estate.

Lack of Regulation
The management and investment practices of the LLC are not supervised, or
regulated by any federal or state authority.

ERISA Risks
Investment in the LLC involves certain tax risks of general application to all
Investors, and certain other risks herein specifically applicable to Keogh accounts,
Individual Retirement Accounts and other tax-exempt Investors. (See "Income Tax
Considerations and ERISA Considerations").
Risk of Default by Manager on Loans from LLC.
The Manager has the right to borrow up to $2MM from the LLC to pay personnel
costs and other overhead. There is no collateral for this loan. The Manager is
obliged to repay this loan from its share of any profit from the sale of the LLC’s real
property assets. If the sale of assets is not sufficiently profitably, the Manager may
be unable to repay the loan, meaning the LLC would bear the loss of this money.
The Manager’s net worth is very limited and other than payment from future profits
from the sale of LLC assets, there is no other way the Manager could repay this
loan.

Risk of Less than the Preferred Return to Series 1-A, Series 1-B, Series 1-C, and Series 1-D
Membership Interests
The LLC is obligated (but does not guaranty) to pay a 8.5% per annum Preferred
Return to Series 1-A Members, a 10% per annum Preferred Return to Series 1-B
Members, a 12% per annum Preferred Return to Series 1-C Members, and a 10%
per annum Preferred Return to Series 1-D Members out of its Adjusted Net Profits.
There are four potential sources of any distribution: Adjusted Net Profits generated
by the LLC, subsidies by the Manager out of its 1-M capital account, subsidies by
Series 1-D Members’ capital account, and subsidies by Series 1-C Members’
capital
account. There are no guarantees the LLC will be able to generate sufficient
Adjusted Net Profits sufficient to pay the Preferred Returns. The actual return may
be less. If it is less, the Members will be relying upon the Managers and the
investors’ funded 1-M, 1-D, and 1-C limited capital to subsidize the Preferred
Return to Members. The Manager has contributed $2 million to fund the 1-M
Interests which funds may be used to subsidize the Preferred Return. However,
the Manager has no obligation to replenish except out of the Allocation of 75% of
Adjusted Net Profits due the owner of the 1-M Interests, if earned. There is no
guaranty this amount will be sufficient to support the Preferred Returns and
consequently, there are substantial risks that Members could receive a lesser
distribution.

CONFLICTS OF INTEREST
The following is a list of some of the important areas in which the interests of the
Manager will conflict with those of the LLC. The Members must rely on the general
fiduciary standards which apply to a Manager of a LLC to prevent unfairness by the
Manager and/or its affiliates in a transaction with the LLC. (See herein "Fiduciary
Responsibility of the Manager").

Other LLCs & LLCs or Businesses

The Manager or its Affiliates may also acquire real estate to flip, or hold for cash
flow and appreciation other than those that will be offered to the LLC. There
accordingly exists a conflict of interest on the part of the Manager between its
affiliate and the LLC, based on the availability for acquisition by the affiliate of non-
LLC properties. The Manager manages the LLC. The Manager will also determine
which properties are appropriate for acquisition by the LLC, or by such other
sources, after consideration of factors deemed relevant by the Manager, including
the type of property, location of property, current financial capacity, and disposition
strategy.

The Manager and its affiliates may engage, for their own account, or for the
account of others, in other business ventures similar to that of the LLC or
otherwise, and neither the LLC nor any Member shall be entitled to any interest
therein.

The LLC will not have independent management and it will rely on the Manager
and its affiliates for the operation of the LLC. The Manager will devote only so
much time to the business of the LLC as is reasonably required. The Manager will
have conflicts of interest in allocating management time, services and functions
between various existing companies, the LLC, and any future Companies which it
may organize as well as other business ventures in which it may be involved. The
Manager believes it has sufficient staff to be fully capable of discharging its
responsibilities to all such entities.

Lack of Independent Legal Representation

The LLC has not been represented by independent legal counsel to date. The use
of the Manager’s counsel in the preparation of this Memorandum and the
organization of the LLC may result in a lack of independent review.

Valuation of Series 1-D Equity Interest Upon Redemption

The Operating Agreement gives the Manager sole and absolute discretion to adjust
the purchase price of a Member’s investment in the LLC if a Member’s
Membership Interests are repurchased by the LLC. Since the Manager holds the
residual interest in profits of the LLC, any decrease in the purchase price benefits
the Manager at the expense of the Member whose interests are being
repurchased.

COMPANY HISTORY
The LLC was organized in California in January 2013 and conducts its business in
Ventura County, California. A copy of the LLC’s most recent financial statements is
attached hereto as Exhibit D.

THE MANAGER AND AFFILIATES

The Manager of the LLC is a California corporation. The Manager will manage and
direct the affairs of the LLC. The Manager has the following officers:

JAMES W. BACKNER, President and Chief Operations Officer.

Mr. Backner is a hands-on entrepreneur and considers himself a well-disciplined
leader with over twenty years of experience in the real estate industry with a
specialization in real estate loans, acquiring undervalued real estate,
repairing/repositioning undervalued real estate, and real estate sales. Prior to
joining Strategic Diversified Management Inc., Mr. Backner was the President and
Managing Member of an entity which sought to acquire undervalued real estate at
substantial discounts with the strategy of either (a) fixing up and reselling for a
profit, or (b) holding long term for cash flow and appreciation.

Mr. Backner has extensive experience in the real estate loan business from 1992
through 2008 as both a top producing loan officer and business owner.

Mr. Backner graduated from California State University, Northridge in 1988 with a
Bachelor of Science in Business Administration with a concentration in Finance.

BRIAN ALONGE, Chief Financial Officer

Brian Alonge is an accomplished financial leader with over 20 years of experience
in the hospitality and commercial real estate industry. Throughout his career, his
primary focus has been on the timely and accurate reporting of financial
statements in accordance with GAAP as well as debt and equity raises and highly
structured financing, involving every level of the capital stack. AS CFO of Strategic
Holdings, Mr. Alonge is responsible for all tax and accounting matters of the
company as well as leading the company’s growth by utilizing his experience and
connections in the private equity and capital markets world.

Prior to joining Strategic Holdings, Mr. Alonge was a principal and Chief Financial
Officer at Lighthouse Lodging Group, where during the economic downturn in
2009, raised $36mm of private equity to acquire and subsequently renovate the
Marriott Napa Valley hotel, which was quickly repositioned and sold two years later
for $72 million.
Before starting Lighthouse Lodging Group, Brian served as CFO at Windsor
Capital Group (WCG), a privately held hotel and commercial real estate company.
At WCG, during his 14-year tenure, Mr. Alonge oversaw an 18-member accounting
team and managed the financial and tax matters for the company’s 38 hotels, 4
commercial office buildings and numerous other properties, corporations and
partnerships, which generated annual revenues in excess of $350 million. At
Windsor, Mr. Alonge participated in single asset and portfolio refinancing and
restructuring projects totaling over $1 billion in gross proceeds which over a five
year period, saved the company tens of millions of dollars in annual interest
expense.

Mr. Alonge graduated from California State University of Northridge in 1989 with a
Bachelor of Science degree in Finance and earned his Master of Business
Administration degree in 1995.

DERRICK GRÜNER, EVP & General Counsel

Derrick B. Grüner, Esq. is Executive Vice President & General Counsel, and a 24-
year veteran of the real estate finance industry. Prior to joining the Strategic
Holdings team, he was General Counsel & Chief Legal Officer at Genesis Capital,
Counsel at Anchor Loans, and before that partner at a large A-V rated east coast
law firm. In over a decade practicing law, he has focused on banking, finance, and
real estate with broad transactional knowledge as well as a substantial litigation
practice. Mr. Grüner is a recognized leader in the field, is frequently asked to
moderate and present at industry conferences throughout the United States, and is
published, quoted, and featured in a variety of publications and trade journals.

Mr. Grüner is a member of the Leadership Los Angeles Class of 2014. In Miami, he
was a Greater Miami Chamber Board Member, Chair of the Chamber’s influential
International Consular Corps Committee, and a member of the Leadership Miami
Class of 2009. He is also a 2005 Alumni of highly selective Leadership
Jacksonville. He is a member of the Florida Bar, is admitted to the United States
District Court, Middle District of Florida, and admitted to practice in California as
Registered In-House Counsel.

He also has nearly a decade of real estate finance experience prior to the practice
of law, and as a result commands an in-depth understanding of the real estate and
banking industries. Mr. Grüner began his career in mortgage banking with a
primary emphasis on business development, underwriting, and secondary markets.
As a mortgage banker, Mr. Grüner was active in a variety of trade groups, including
service as a Chair of the Georgia Association of Mortgage Brokers PAC, a
participant on the Legislative Committee of the National Association of Mortgage
Brokers, and a member of the Mortgage Bankers Association of Florida.

Mr. Grüner enjoys his free time mountain biking, skiing, and watching and
especially attending college football games.
BARRY LEVENSON, Chief Investor Relations Officer
Barry Levenson is a visionary leader and strategist with deep expertise in financial
services and a demonstrated ability to achieve high-growth objectives. He is a
proven builder of successful companies with over twenty-five years of hands-on
experience in fast-growth organizations.

As a founding officer of Countrywide Bank (a division of publicly traded

Countrywide Financial, later acquired by Bank of America), Levenson helped
establish the startup bank as the fastest organically growing depository in the
history of U.S. banking, achieving a rank of the eleventh largest national bank in
the United States; utilizing a low- overhead platform to deliver superior value to
customers and shareholders; and responsible for a third of Countrywide Financials'
pretax income.

Among other things, he was responsible for scaling deposit production from zero to
over $10 billion annually with an overall annualized efficiency of 4 basis points;
while amassing a 750,000-customer deposit and loan portfolio.

As a Managing Director at PennyMac, Levenson significantly reduced

delinquencies and increased customer acquisition through effective promotion of
HAMP, HARP, Refi Plus, FHA Streamline, and other products. He also created and
launched an initiative to sell mortgage notes generating revenues of $10 million per
month.

Mr. Levenson has been a Chief Officer of several companies including:

Move.com/Realtor.com Knowledge Adventure; Academy123 (acquired by
Discovery Communications); Enfish Technologies (acquired by Franklin- Covey);
and Stern Marketing Group (acquired by NewGround), where he launched
Telebank and Ameritrade.

Early in his career, Levenson was Brand Manager at The Clorox Company and a
Senior Consultant at Deloitte Consulting.

Mr. Levenson is a board member of the Ziman Center for Real Estate at UCLA,
has been a board member of BAI (Bank Administration Institute), Haas Business
School at UC Berkeley, and the National Literacy Network; a featured speaker at
BAI, ABA, and UW Graduate School of Banking; and interviewed by CNN,
Bloomberg, USA Today, Fund Marketing Alert, Advertising News, US Banker and
others. He earned an MBA from the Anderson Graduate School of Management,
UCLA in Finance, Marketing, and Entrepreneurship and a BS from the Haas
Business School at UC Berkeley, in Finance and Real Estate. While at UC
Berkeley, he co-founded the Cal Berkeley Federal Credit Union.
JACKIE TROJANOWSKY, Chief Investment Officer
Jackie Trojanowsky has over 25 years of lending experience, including 17 years in
commercial mortgage-backed securities (CMBS). Her CMBS experience has
included sourcing, underwriting, special servicing, and asset management. Ms.
Trojanowsky utilizes her CMBS experience in underwriting prospective acquisitions
of multi- family residential properties and other income producing commercial
properties. Prior to joining Strategic Holdings, Ms. Trojanowsky originated CMBS
loans for GE Capital Real Estate for nine years, underwrote loans for an investor of
subinvestment grade CMBS and underwrote new CMBS loans for a service
provider. She also successfully managed almost a billion dollars of CMBS
repurchase litigation while employed at a special servicer, which prevailed in jury
trials in U.S. federal courts. Ms. Trojanowsky is a graduate of The University of
Texas at Austin, and holds a Bachelor of Business Administration with double
majors in finance and marketing.

LEGAL PROCEEDINGS
Neither the LLC, the Manager nor any of the officers or directors of the Manager
are now or have within the past five years been involved as a defendant to any
material litigation or arbitration with the exception of periodic eviction cases, or
baseless claims from former owners of real estate that was acquired at trustee
sale.

SUMMARY OF LLC OPERATING AGREEMENT

The following is a summary of the LLC Operating Agreement, and is qualified in its
entirety by the terms of the Operating Agreement itself. Potential Investors are
urged to read the entire LLC Operating Agreement, a copy of which is attached
hereto as Exhibit A.

Rights and Liabilities of Members

The rights, duties and powers of Members are governed by the LLC’s Operating
Agreement and the California Limited Liability Company Act, and the discussion
herein of such rights, duties and powers is qualified in its entirety by reference to
such Agreement and Act.

Investors who become Members in the LLC in the manner set forth herein will not
be responsible for the obligations of the LLC. They may be liable to repay capital
returned to them plus interest if necessary to discharge liabilities existing at the
time of such return. Any cash distributed to Members may constitute, wholly or in
part, return of capital.

Members will have no control over the management of the LLC, except that
Members holding a majority of the issued and outstanding Membership Interests
may, without the concurrence of the Manager, take the following actions:

(a) terminate the LLC (including merger or reorganization with one or more
other LLCs);
(b) approve or disapprove a transaction involving a conflict of interest between
the Manager and the LLC; or
(c) approve or disapprove the sale of all or substantially all the assets of the
LLC.

Members representing ten percent (10%) of the LLC Interests may call a meeting
of the LLC. The Operating Agreement only permits removal of the Manager by the
Members if: (i) the Manager commits an act of willful misconduct which materially
adversely damages the LLC and (ii) holders of not less than sixty-six and two-thirds
(66&2/3%) of the Membership Interests vote in favor of such removal. If the
Manager is removed, its compensation shall continue for a period of not less than
12 months and the Manager is fully reimbursed for all out of pocket costs including
any unreimbursed formation costs.

Capital Contributions
Interests in the LLC will be sold in Units of Membership Interests. Other than the
purchase of Series 1-M Manager Interest, the Manager is not required to contribute
any funds to the LLC but may do so. With respect to any Membership Interests
other than Series 1-M it may purchase; the Manager will have the same rights as
any other Member.

Rights, Powers and Duties of Manager

Subject to the right of the Members to vote on specific matters, the Manager will
have complete charge of the business of the LLC. The Manager is not required to
devote full time to LLC affairs but only such time as is required for the conduct of
LLC business. The Manager has the power and authority to act for and bind the
LLC. The Manager is granted the special power of attorney of each Member for the
purpose of executing any document which the Members have agreed to execute
and deliver.

Profits and Losses

The LLC's Profit or Loss for a Taxable Year, including the Taxable Year in which
the LLC is dissolved, will be allocated among the Series 1-D Members and the
Manager in proportion to their interests in the LLC.
Distributions
The LLC will make all distributions as described in the “Summary of the Offering –
Distributions.”

Compensation to Manager and Affiliates

The LLC will compensate the Manager and its affiliates as described in the
“Compensation to Manager and Affiliates.”

Adjustment of Membership Interest Holdings

Allocations of Adjusted Net Profit, gain and loss in the LLC may be made in
proportion to the Members' Interests of Membership Interest within each Series.
Voting rights are based on the number of Membership Interests each Member
owns. Once the Minimum Offering Amount has been achieved by the LLC, the
Manager, at its discretion, may set the unit value of membership interest value for
additional Membership Interests.

Meetings
The Manager, or Members representing ten percent (10%) of the LLC Interests,
may call a meeting of the LLC on at least ten (10) days, but not more than sixty
(60) days, written notice. Unless the notice otherwise specifies, all meetings will be
held at 2:00 p.m. at the office of the Manager of the LLC. Members may vote in
person or by proxy at the LLC meeting. Most of the outstanding LLC Interests will
constitute a quorum at LLC meetings.

Accounting and Reports

The Manager will cause to be prepared and furnished to the Members an annual
report of the LLC's operation, which will be prepared by an independent accounting
firm. Within ninety (90) days after the close of the year covered by the report, a
copy or condensed version will be furnished to the Members. The Members shall
also be furnished such detailed information as is reasonably necessary to enable
them to complete their own tax returns within ninety (90) days after the end of the
year.

The Manager presently intends to maintain the LLC's books and records on the
accrual basis for bookkeeping and accounting purposes, and intends to use the
accrual basis method of reporting income and losses for federal and state income
tax purposes. The Manager reserves the right to change such methods of
accounting, upon written notice to Members. Any Members may inspect the books
and records of the LLC at all reasonable times.

Withdrawal, Redemption Policy, and Other Events of Dissociation

A Member may resign as such at any time subject to certain conditions. A Member
will also cease to be a Member upon, (i) such Members' expulsion from the LLC; or
(ii) when Member no longer owns any Membership Interests (any, an event of
"Dissociation").
Upon the occurrence of an event of Dissociation: (i) the Member's right to
participate in the LLC's governance, receive information concerning the LLC's
affairs and inspect the LLC's books and records will terminate; and (ii) unless the
Dissociation resulted from the Transfer of the Member's Membership Interests, the
Member will be entitled to receive the Distributions to which the Member would
have been entitled as of the effective date of the Dissociation had the Dissociation
not occurred. The Member will remain liable for any obligation to the LLC that
existed prior to the effective date of the Dissociation, including any costs or
damages resulting from the Member's breach of this Agreement. Under most
circumstances, the Member will have no right to any return of his or her capital
prior to the termination of the LLC unless the Manager elects to return capital to a
Member.

Members in Series 1-A Membership Interests, Series 1-B Membership Interests,

and Series 1-C Membership Interests may withdraw as a Member of the LLC and
may receive a return of capital provided that the following conditions have been
met: (a) the Member has been a Member of the LLC for a period of at least six (6)
months; and (b) the Member provides the LLC with a written request for a return of
capital at least thirty (30) days prior to such withdrawal. The LLC will use its best
efforts to honor requests for a return of capital subject to, among other things, the
LLC’s then existing cash flow, financial condition, and prospective acquisitions.
Each request for a return of capital will be limited to twenty-five percent (25%) of
such Member’s capital account balance such that it will take four (4) quarters for a
Member to withdraw his, her, or its total investment in the LLC; provided, however,
that the maximum aggregate amount of capital that the LLC will return to the
Members each year is limited to twenty percent (20%) of the total outstanding
capital of the LLC. Withdrawal requests will be considered on a pro rata basis
except that Series 1-A Membership Interests requests will have priority (meaning
pending withdrawal requests must first be satisfied) over all other series, Series 1-
B Membership Interests will have priority over Series 1-C, 1-D, and 1-M
Membership Interests, Series 1-C Membership Interests will have priority over
Series 1-D and 1-M, and Series 1-D will have priority over Series 1-M.
Notwithstanding the foregoing, the Manager may, in its sole discretion, waive such
withdrawal requirements if a Member is experiencing undue hardship.

Members in Series 1-D Membership Interests may withdraw as a Member of the

LLC and may receive a return of capital provided that the following conditions have
been met: (a) the Member has been a Member of the LLC for a period of at least
three (3) years; and (b) the Member provides the LLC with a written request for a
return of capital at least thirty (30) days prior to such withdrawal. The LLC will use
its best efforts (not guaranty) to honor requests for a return of capital subject to,
among other things, the LLC’s then existing cash flow, financial condition, and
prospective investment opportunities. Upon the member’s written request for the
return of capital, the Manager shall first use best efforts to obtain a buyer through
the services of a Broker-Dealer or Registered Investment Advisor, which may
charge a service fee or commission of up to ten percent (10%). Notwithstanding
the foregoing, the Manager may, in its sole discretion, elect to repurchase the
Member’s Membership interests at par value or otherwise waive such withdrawal
requirements if a Member is experiencing undue hardship.

Restrictions on Transfer
The Operating Agreement places substantial limitations upon transferability of LLC
Interests. No Membership Interest may be transferred if, in the judgment of the
Manager, a transfer would jeopardize the availability of exemptions from the
registration requirements of federal securities laws, jeopardize the tax status of the
LLC as a LLC or, cause a termination of the LLC for federal income tax purposes.

A transferee may not become a substitute Member without the consent of the
Manager. Such consent may not unreasonably be withheld if the Transfer and the
Transferee comply with all the provisions of the Operating Agreement and
applicable law. A transferee who does not become a substitute Member has no
right to vote in matters brought to a vote of the Members, or to receive any
information regarding the LLC or to inspect the LLC books, but is entitled only to
the share of income or return of capital to which the transferor would be entitled.
The Manager may require an opinion of counsel prior to any transfer to be provided
at the Member’s expense.

Manager's Interest
The Manager may withdraw from the LLC at any time upon reasonable written
notice to all Members, in which event the Manager would not be entitled to any
termination or severance payment from the LLC, except for the return of its capital
account balance, if any. Upon withdrawal or removal, the Manager shall retain its
Series 1-M Membership Interest. The Manager may also sell and transfer any
Membership Interests it may own for such price as it shall determine, in its sole
discretion, and neither the LLC nor the Members will have any interest in the
proceeds of such sale. However, a successor Manager may only be elected by the
Members. However, in no event will the Manager voluntarily reduce its capital
account below $2 million.

Term of LLC
The term of the LLC will continue until December 31, 2023, with a provision for two
extensions of five years each at the sole discretion of the Manager and further
extensions provided by majority vote of the Members, unless dissolved sooner.
The LLC will dissolve and terminate sooner under any of the following
circumstances:

(1) the vote of the Members to dissolve;

(2) the sale of all or substantially all of the LLC's assets;

(3) any event that makes the LLC ineligible to conduct its activities as a limited
liability company under the Act; or
(4) otherwise by operation of law.

See Sections 2.3 (Term) and 7 (Dissolution) of the Operating Agreement.

Winding-Up
The LLC will not cease to exist immediately upon the occurrence of an event of
dissolution, but will continue until its affairs have been wound up. Upon dissolution
of the LLC, the Manager will wind up the LLC’s affairs by liquidating the LLC's
assets as promptly as is consistent with obtaining the fair market value thereof by
sale to third parties. All funds received by the LLC shall be applied to satisfy or
provide for LLC debts and the balance shall be distributed to Members in
accordance with the terms of the Operating Agreement.

Upon dissolution and termination of the LLC, a winding-up period is provided for
liquidating the LLC's assets and distributing cash to Members. Members who sell
their Membership Interests prior to any such liquidation will not be exposed to this
risk. (See “Summary of Offering – Liquidation Distributions.)

INCOME TAX CONSIDERATIONS

Federal Income Tax Aspects

The following discussion generally summarizes the material federal income tax
consequences of an investment in the LLC based upon the existing provisions of
the Code, and applicable Treasury regulations thereunder, current administrative
rulings and procedures and applicable judicial decisions. However, it is not
intended to be a complete description of all tax consequences to the prospective
Members with respect to their investment in the LLC. No assurance can be given
that the Internal Revenue Service (the "IRS") will agree with the interpretation of
the current federal income tax laws and regulations summarized below. In addition,
the LLC or the Members may be subject to state and local taxes in jurisdictions in
which the LLC may be deemed to be doing business.

ACCORDINGLY, ALL PROSPECTIVE MEMBERS SHOULD SATISFY

THEMSELVES REGARDING THE POTENTIAL FEDERAL AND STATE TAX
CONSEQUENCES OF PARTICIPATION IN THE LLC AND ARE URGED TO
CONSULT WITH THEIR OWN TAX ADVISORS, ATTORNEYS OR
ACCOUNTANTS IN CONNECTION WITH ANY INTEREST IN THE LLC. EACH
PROSPECTIVE INVESTOR/MEMBER SHOULD SEEK, AND RELY UPON, THE
ADVICE OF THEIR OWN TAX ADVISORS IN EVALUATING THE SUITABILITY
OF AN INVESTMENT IN THE LLC IN LIGHT OF THEIR PARTICULAR
INVESTMENT AND TAX SITUATION.
Federal Income Tax Matters
The federal income tax consequences of an investment in Membership Interests
are complex and their impact may vary depending on each Member's particular tax
situation. Potential Members should consider the following federal income tax risks,
among others:
(a) The LLC may be classified as an association, taxable as a corporation, which
would deprive Members of the tax benefit of operating in a limited liability company
form (taxable as a LLC);

(b) A holder of a Series 1-A, Series 1-B or Series 1-C Membership Interests may
be treated, for income tax purposes, as owning a debt instrument rather than
equity in the LLC;

(c) A Member's share of LLC taxable income may, in any period exceed his, her or
its share of cash distribution from the LLC;

(d) The allocation of the LLC's income, gain, loss, deduction and credit may lack
substantial economic effect and may be reallocated among the Members in a
manner different from that set forth in the Operating Agreement;

(e) The federal income tax returns of the LLC might be subject to audit, in which
event any adjustments to be made in the LLC's income, gains, losses, deductions,
or credits would be made in a unified audit with regard to which Members would
have little, if any, control; and,

(f) Adverse changes in the federal income tax laws might occur, which could affect
the LLC retroactively as well as prospectively.

EACH PROSPECTIVE MEMBER IS URGED TO SEEK CONSULTATION WITH

SPECIFIC REFERENCE TO INDIVIDUAL TAX SITUATIONS AND POTENTIAL
CHANGES IN THE APPLICABLE LAW.

No IRS Ruling or Opinion of Legal Counsel

The LLC will not request a ruling from the IRS with respect to any tax issues
concerning the LLC, including, but not limited to, whether the LLC will be classified
as a "LLC" for federal income tax purposes, or any issues concerning an
investment in the LLC. Furthermore, the LLC will not obtain an opinion of counsel
with respect to any of the tax issues concerning the LLC or an investment in the
LLC.

LLC Tax Status

The Members will be entitled to deduct their distributive shares of any LLC tax
deductions, and to include in income their distributive shares of any LLC income or
gains, only if the LLC is classified as a "LLC" rather than a "corporation" for federal
income tax purposes. If it is recognized as a "LLC" for tax purposes, the LLC will
not be subject to federal income tax on any of its taxable income, and all LLC
income, gains, losses, deductions and credits will pass through to the Members
and will be taxable only once to the Members themselves. On the other hand, if the
LLC were to be classified as an "association" taxable as a corporation, the LLC
would be subject to federal income tax on its taxable income at the tax rates
applicable to corporations, and the Members would not be allowed to claim any
LLC tax credits or deduct any LLC operating losses on their individual returns.
Consequently, classification of the LLC as a LLC for federal income tax purposes
will enable the Members to secure the anticipated tax benefits of their investment
in the LLC.

Debt vs. Equity

Because the holders of Series 1-A, Series 1-B and Series 1-C Membership
Interests are only entitled to receive their Preferred Return and, on liquidation of
the Company or upon withdrawal, their capital contributions back, and do not share
in any appreciation or growth in the value of the LLC assets, and because the LLC
has a fixed term (which may be extended), it is possible that such Membership
Interests would be treated, for income tax purposes, as debt instruments instead of
equity in the LLC. In such case, the Preferred Return received by such Members
would be characterized as interest. Even if such Membership Interests are treated
as equity, the IRS may treat the Preferred Return as interest for all tax purposes.

Federal Taxation of Limited Liability Companies and Members

A limited liability company is treated as a LLC for tax purposes, unless, as
discussed above, it is classified as an "association" taxable as a corporation. For
purposes of this discussion, it is assumed the LLC will be classified as a LLC for
federal income tax purposes. As such, the LLC incurs no federal income tax
liability. Instead, all Members are required to report on their own federal income tax
returns their distributive share of the LLC's income, gains, losses, deductions and
credits for the taxable year of the LLC ending with or within each Member's taxable
year, without regard to any LLC distributions, including any guaranteed payments
made to the Members (as the Preferred Return).

Taxation of Undistributed LLC Income (Individual Investors)

Under the laws pertaining to federal income taxation of LLCs, no federal income
tax is paid by the LLC as an entity. Generally, each individual member reports on
his or her federal income tax return his or her distributive share of LLC income,
gains, losses, deductions and credits, whether or not any actual distribution is
made to such member during a taxable year. Generally, each individual member
may deduct his or her distributive share of LLC losses, if any, to the extent of the
tax basis of his or her Membership Interests at the end of the LLC year in which the
losses occurred. The characterization of an item of profit or loss will usually be the
same for the member as it was for the LLC. Since individual members will be
required to include LLC income in their personal income without regard to whether
there are distributions of LLC income, members may become liable for federal and
state income taxes on LLC income even though they have received no cash
distributions from the LLC with which to pay such taxes. However, with respect to
the Series 1-A, Series 1-B and Series 1-C, it is not anticipated that the LLC will
allocated any item of profit or loss of the LLC to such Members, but will report the
Preferred Return as a guaranteed payment described under Section 707(c) of the
Code much like interest on a debt instrument.

Distributions of Income
Each Member will be required to reduce the tax basis of his, her or its Membership
Interests by the amount of all cash distributions. Other than the Preferred Return,
distributions generally will not be taxable to Members as ordinary income or capital
gain until there is no remaining tax basis in the Member’s Membership Interest,
and, thereafter, will be taxable as gain from the sale or exchange of the
Membership Interests (which may be taxed as ordinary income tax rates, in part,
under the provisions of Section 751 of the Code).

LLC Allocations
A Member's distributive share of LLC income, gains, deductions, losses and credits
for federal income tax purposes (if any) is generally determined in accordance with
provisions of the Operating Agreement. However, the IRS may reallocate such
items if an allocation in the Operating Agreement does not have "substantial
economic effect" and is in accordance with the Member's respective "economic
interest" in the LLC.

The IRS has issued regulations to determine whether an allocation has "substantial
economic effect," or if it is in accordance with the Member's respective "economic
interest" in the LLC. In general, an allocation of income, gain, loss or deduction, or
an item thereof, to a Member has economic effect if, and only if:

(1) the allocation is properly reflected in that Member's capital account and
such capital account is maintained in accordance with the regulations;
(2) liquidation proceeds are to be distributed in accordance with the Member's
positive capital account balances; and
(3) either:
(a) any Member with a deficit in its capital account following the distribution
of liquidation proceeds must restore the amount of such deficit to the LLC
by the later of either the end of the taxable year of the liquidation or ninety
(90) days after the liquidation, or

(b) the Operating Agreement must contain "qualified income offset" and
“minimum gain charge back" provisions applicable to the Members.

The Operating Agreement does not require Members to restore deficit balances in
their capital accounts. However, the Operating Agreement does contain provisions
that are believed to meet the requirements for "qualified income offset" and
"minimum gain charge back" provisions. (See herein Section 4.2 of the Operating
Agreement.)

In order for the economic effect of an allocation to be considered substantial, the

U.S. Department of Treasury regulations require that the allocations must have a
reasonable possibility of substantially affecting the dollar amounts to be received
by the Members, independent of tax consequences. In applying the substantiality
test, tax consequences that result from the interaction of the allocation with such
Members tax attributes that are unrelated to the LLC must be taken into account.

Limitations on Deduction of Losses

Adjusted Basis: The adjusted basis of a Member’s interest in the LLC is equal to the
amount of cash or the adjusted basis of any property which that Member
contributes to the LLC, increased by that Member’s share of LLC liabilities, if any,

(1) decreased (but not below zero) by distributions to the Member from the LLC
(including constructive cash distributions resulting from a decrease in LLC
liabilities),
(2) decreased by the Member’s allocable share for the taxable year and prior
taxable years, of the LLC's losses, and
(3) increased by that Member's allocable share for the taxable year and prior
taxable years of the LLC's income.

Under certain circumstances, Members may include a portion of certain LLC

liabilities in their basis. In general, LLC recourse liabilities are shared by the
Members in the same manner as they share LLC losses, and LLC non-recourse
liabilities are shared by the Members in the same manner as they share LLC
profits. A LLC liability is a recourse liability to the extent that one or more Members
bear the economic risk of loss for such liability. A LLC liability is a nonrecourse
liability to the extent that no Member bears the economic risk of loss for such
liability. It is not known at this time if the LLC will incur any recourse liabilities or
any non-recourse liabilities.

If a Member's allocable share of a LLC loss for any LLC taxable year exceeds the
Member's adjusted basis in his/her interest in the LLC at the end of that taxable
year, such excess may not be deducted at that time but may be carried over and
deducted in any later year in and to the extent that, the Member's adjusted basis in
his/her interest in the LLC at the end of the later taxable year exceeds zero.

It is anticipated that, in general, the LLC will not allocate LLC gain or loss to the
Series 1-A, Series 1-B or Series 1-C Membership Interests. Holders of such
Interests will be treated as receiving a “guaranteed payment” for the use of their
capital pursuant to Section 707(c) of the Code. Thus, it is not anticipated that the
capital account of any such Member will change from year to year. However, the
Series 1-D Members may be allocated a share of the LLC’s income, gain,
deduction or loss for the year, in the same manner as the Manager.

At-Risk Rules: In addition to the adjusted basis limitation, a Member's ability to deduct
Company losses is further limited by the at-risk rules. These rules, which only
apply to individuals and certain closely held corporations, allow a Member to
deduct losses from an at-risk activity only to the extent of the Member's amount at-
risk with respect to such activity at the close of the taxable year. Each Member will
be considered at-risk with respect to that Member's initial cash capital contribution
to the LLC. A Member generally is not considered to be at-risk for LLC liabilities
with respect to which the Member has no personal liability.

A Member will only be considered at-risk for LLC indebtedness to the extent that
the Member is personally liable for repayment of such indebtedness or the Member
pledged certain property as security for the repayment of such indebtedness. Also,
in case of certain real property holding activities, a Member will be considered at-
risk for qualified non-recourse financing as defined in the Code. Each Member's
initial amount at-risk for their interest in the LLC will be limited to such Member's
initial cash capital contribution to the LLC. If a Member borrows the money to fund
a capital contribution to the LLC, the Member should consult his or her own tax
advisor regarding the possible tax consequences of such borrowing under the at-
risk rules.

It is not anticipated that the holders of Series 1-A, Series 1-B or Series 1-C
Membership Interests will be allocated any losses of the LLC, unless and until the
capital accounts of the Manager and the holder of Series 1-D Membership
Interests (as increased by their share of “partnership minimum gain” and “partner
nonrecourse debt minimum gain,” as such terms are defined in Treasury
Regulations Section 1.704-2) have been reduced to zero.

Passive Loss Rules: In addition to the adjusted basis limitation and at-risk rules, the
ability of a Member that is an individual or a closely held corporation to deduct a
share of LLC losses is further limited by the passive loss rules. These rules provide
that passive activity losses can only be deducted against passive activity income
and cannot be deducted against income from other sources. A passive activity is
any activity which involves the conduct of any trade or business and in which the
taxpayer does not materially participate. Depending on their individual situations,
Members may or may not be considered to materially participate in the
management of the LLC, and the income and losses from the LLC may or may not
be treated as income or loss from a passive activity. Since the impact of the
passive loss rules will vary from Member to Member, all Members should consult
their own tax advisor regarding this matter.
Profit Objective of the LLC
Deductions will be disallowed if they result from activities not entered into for profit
to the extent that such deductions exceed an amount equal to the greater of:

(1) the gross income derived from the activity; or

(2) deductions (such as interest and taxes) that are allowable in any event. The
applicable Treasury regulations indicate a transaction will be considered as
entered into for profit where there is an expectation of profit in the future, either of a
recurring type or from the disposition of property. In addition, the Code provides,
among other things, an activity is presumed to be engaged for profit if the gross
income from such activity for three of the five (5) taxable years ending with the
taxable year in question exceeds the deductions attributable to such activity. It is
anticipated that the LLC will satisfy this test.

Property Held Primarily for Sale: Potential Dealer Status

The LLC has been organized to invest in real property to be flipped or held for up
to 10 years. However, if the LLC were at any time deemed for federal tax purposes
to be holding real estate primarily for sale to customers in the ordinary course of
business (a "dealer"), any gain or loss realized upon the disposition of such real
property would be taxable as ordinary gain or loss rather than as capital gain or
loss. The federal income tax rates for ordinary income are currently higher than
those for capital gains. In addition, income from sales of assets to customers in the
ordinary course of business would also constitute unrelated business taxable
income to any Investors which are tax-exempt entities. Under existing law, whether
or not real property is held primarily for sale to customers in the ordinary course of
business must be determined from all the relevant facts and circumstances.
Likewise, it is possible the LLC will be treated as a “dealer” in real estate by reason
of the frequency of its trades, even if some of the properties have been held longer
than the legally minimum for long term capital gain treatment.

Unrelated Business Taxable Income

DUE TO THE COMPLEX NATURE OF ERISA, EACH PROSPECTIVE INVESTOR
IS URGED TO CONSULT HIS OR HER OWN TAX ADVISOR OR PENSION
CONSULTANT TO DETERMINE THE APPLICATION OF ERISA TO HIS OR HER
PROSPECTIVE INVESTMENT.

The following summary constitutes only a general discussion of certain aspects of

unrelated business taxable income as it applies to Qualified Plans and other tax-
exempt entities. A detailed analysis of ERISA considerations of an investment in
the LLC is beyond the scope of this discussion.

Membership Interests may be offered and sold to certain tax-exempt entities (if
such as qualified pension or profit sharing plans or other tax exempt entities
qualified under ERISA) that otherwise meet the Investor suitability standards
described elsewhere in this Memorandum. See herein "Investor Suitability
Standards") Such tax-exempt entities generally do not pay federal income taxes on
their income unless they are engaged in a business which generates "unrelated
business taxable income," as that term is defined by Section 512 of the Code.
Under the Code, tax exempt purchasers of Membership Interests may be deemed
to be engaged in an unrelated trade or business by reason of activities of the LLC
to generate interest or rental income or gain from the sale of real estate or real
estate mortgages.

Interest income (which will constitute the primary source of income with respect to
1-A, 1-B, and 1-C Membership Interests) generally does not constitute an item of
unrelated business taxable income, except to the extent it is derived from debt
financed property. Rents from real property and gains from the sale or exchange of
property are also generally excluded from unrelated business taxable income,
unless the property is held primarily for sale to customers. If the real property is
subject to a mortgage, then such rental income and gains from sales will be
excluded from the calculation of unrelated business taxable income only if the LLC
complies with the requirements of Section 514(c)(9) of the Code. The LLC does not
anticipate that its operating agreement will comply with Section 514(c)(9) of the
Code; thus, to the extent a tax-exempt organization is allocated rental income or
gains from the sale of real estate, such income or gain would be characterized as
unrelated business taxable income.

The trustee of any trust that purchases Membership Interests in the LLC should
consult with his or her tax advisors regarding the requirements for exemption from
federal income taxation and the consequences of failing to meet such
requirements, in addition to carefully considering his or her fiduciary responsibilities
with respect to such matters as investment diversification and the prudence of
investments.

Sale of Member Interest in the LLC

Because the LLC may report income on the accrual basis and not distribute all
earnings to Members because of cash flow considerations, the sale by Members of
their Interests in the LLC generally may result in a capital gain (or loss). This is
because any gain attributable to a Member's share of the LLC's unrealized
receivable or inventory items (so called “hot assets” under the rules of Section 751
of the Code) may be reflected in the value of a Membership Interest. Any deemed
distributions under Section 751 of the Code as a result of events such as these will
be taxed as ordinary income. In the event of a sale or transfer of an interest in the
LLC by a Member, the distributive share of LLC income, gain, loss, deduction or
credit for the entire interest would be allocated between the transferor and the
transferee.

In the unlikely event that fifty percent (50%) or more of the total number of
Membership Interests in the capital and profits of the LLC are sold or exchanged
within any consecutive twelve (12) month period, the LLC would be considered
terminated for federal income tax purposes. A termination of the LLC for federal
income tax purposes would cause the LLC's taxable year to end with respect to all
Members. The LLC is empowered, by the Operating Agreement, to prohibit any
transfer of interest in the LLC that would cause such termination.

Liquidation of the LLC

Upon liquidation of the LLC, any gain or loss recognized by reason of a distribution
to the Members will be considered as gain or loss from the sale exchange of a
capital asset, except to the extent of unrealized receivable and substantially
appreciated inventory items under Section 751 of the Code. Members will
recognize gain on the distribution only to the extent any money received, including
a reduction in a Member's share of LLC liabilities for which no Member is
personally liable, exceeds the Member's adjusted basis of its interest in the LLC.
Generally, the basis to a Member of any property distributed in-kind is its adjusted
basis for its Membership Interest, less any money received in the distribution.
Alternative Minimum Tax
Individual Members may be subject to the alternative minimum tax, which
increases a Member's tax liability to the extent the Member's "Alternative Minimum
Tax" exceeds his or her regular income tax (less certain credits) for the year. The
amount of alternative minimum tax liability (if any) for a Member will depend on
such Member's income, gain, deduction, loss, credit and tax preference from
sources other than the LLC and the interaction of these items with such Member's
share of LLC income, gain, loss, deduction, credit and tax preference in
determining a Members alternative minimum taxable income. The passive loss
limitation rules discussed above will apply to income, gain, deductions, loss and
credits from LLC sources in the same manner as in determining its/his/her regular
taxable income.

BECAUSE OF THE COMPLEXITY OF THE COMPUTATION OF THE

ALTERNATIVE MINIMUM TAX, PROSPECTIVE MEMBERS ARE URGED TO
CONSULT THEIR PERSONAL TAX ADVISORS WITH REGARD TO THE
IMPACT OF THE ALTERNATIVE MINIMUM TAX ON THEIR TAX SITUATIONS.

LLC Election to Step Up the Basis of its Assets when Members Sell Their Membership
Interest in the LLC
When Members sell or exchange Membership Interests, the Transferee Members
may have an adjusted basis in the Membership Interests equal to their cost. The
LLC does not automatically adjust the tax basis of its property to reflect the change
in the Transferee Member's adjusted basis for his/her Interest. However, the LLC
may elect, in its sole discretion, upon a sale or exchange of a Member's
Membership Interests in the LLC, to adjust the tax basis of LLC property only for
purposes of determining the Transferee Member's share of depreciation and gain
or loss from the LLC. The general effect of such an election is that the Transferee
Members are treated, for purposes of depreciation and gain or loss, as though they
had acquired direct Interest in the LLC assets, and therefore a new cost basis for
such assets. Any such election, once made, cannot be revoked without the
consent of the IRS. If the LLC chooses not to make the aforementioned election, a
Transferee Member may be at a disadvantage in selling their Interest in the LLC
since the Transferee ordinarily would obtain no current tax benefit for the excess, if
any, of the cost of such Interest over the Transferee's share of the LLC's adjusted
basis in its assets. However, with respect to a Transferee Member acquiring an
interest in a Series 1-A, Series 1-B or Series 1-C Membership Interest, it is not
anticipated that any such special adjustment will take place since such Members
do not participate in the growth or appreciation of the assets of the LLC.

LLC Audits: The Tax Treatment of LLC Items and Penalties

The tax treatment of all LLC items of income, expense, gain or loss will be
determined at the Company level in a consolidated proceeding rather than in
separate proceedings with the Members. A determination by the IRS in
proceedings at the Company level is referred to as a final administrative
adjustment ("FAA"). When an FAA is made, the IRS must initially send notice to a
"Tax Matters Partner." The Company believes that in the context of a limited
liability company, the IRS will recognize the Manager as the appropriate person to
serve in that capacity. The Operating Agreement designates the Manager as Tax
Matters Partner but gives the Manager the authority to designate another person.
The IRS also has such authority. Generally, notice to the Members must be mailed
within sixty (60) days after the mailing of notice to the Tax Matters Partner. Every
Member is entitled to participate in the IRS administrative proceedings at the LLC
level. If a settlement is reached with one or more Members, it is binding on them.
All other Members shall be entitled to settle on the same terms if they so request. A
Member will not be bound by the Tax Matters Partner's settlement agreement if the
Member files a statement, within a period to be prescribed by the Secretary of the
Treasury, stating that the Tax Matters Partner does not have the authority to enter
into a settlement with the IRS on his or her behalf. In general, no person other than
the Tax Matters Partner may bind any Member with respect to a settlement
agreement with the IRS. Also, the LLC and its Members may choose to litigate an
assessment of tax made under the IRS FAA procedures.

While the IRS will ordinarily be required to initiate proceedings against the LLC and
not against an Individual Member, such requirement is waived with respect to any
Member whose treatment of an item on his or her individual return is inconsistent
with the treatment of that item on the LLC's tax return, unless the Member files a
statement with the IRS identifying the inconsistency. In the absence of such a
disclosure, the IRS may, without sending the Member a deficiency notice, assess
and collect the additional tax necessary to make the Members treatment of the
item consistent with the LLC's treatment of the item.

If a deficiency is determined as the result of an audit, each Member will be liable

for payment of his or her share of the deficiency, plus compound interest at the
then applicable interest rate. Interest on tax deficiencies is generally nondeductible.

If a deficiency is determined as the result of an audit, Members may be subject to

the "Accuracy related penalty" on all or a portion of the deficiency. The amount of
the accuracy related penalty is twenty percent (20%) of any underpayment
attributable, among other things, to:

(1) negligence or intentional disregard of rules or regulations,

(2) a substantial underpayment of tax, or

(3) a substantial valuation overstatement.

This penalty does not apply if the Member can show there was reasonable cause
for the underpayment and the Member acted in good faith with respect to the
underpayment. In the case of a deficiency attributable to a substantial
underpayment, the penalty also does not apply to the extent the Member had
"substantial authority" for the position taken on the tax return or the facts relevant
to that position were adequately disclosed on the Members return or in a statement
attached to the return.

Tax Returns
The LLC intends to retain a certified public accounting firm to prepare and review
the LLC's annual federal information tax return, including Schedule K-1, which the
LLC will issue to all Members, and other tax returns the LLC may be required to
file. The Schedule K-1 will provide the Members with the information regarding the
LLC that the Members will need to prepare and file their own tax returns.

Tax Year
The LLC intends to adopt a December 31st year-end for federal income tax
reporting purposes.

Method of Accounting
The LLC will report its income for federal income tax reporting purposes using the
accrual method of accounting. Under the accrual method, income is reportable in
the year when earned, whether or not it has actually or constructively been
received, and expenses are deductible in the year in which all events have
occurred that determine the fact of the LLC's liability, the amount of the liability is
determinable with reasonable accuracy and "economic performance" (as defined in
the Code) has occurred.

Tax Shelter Registration

The Manager has determined the LLC is not a tax shelter under the applicable tax
shelter registration rules. Accordingly, the Manager will not register the LLC with
the IRS as a tax shelter.
Tax Law Subject to Change
Frequent and substantial changes have been made and will likely continue to be
made, to the federal income tax laws. The changes made to the tax laws by
legislation are pervasive and, in many cases have yet to be interpreted by the IRS
or the courts.

State and Local Taxes

A detailed analysis of the state and local tax consequences of an investment in the
LLC is beyond the scope of this discussion. Prospective Members are advised to
consult their own tax counsel regarding these consequences and the preparation
of any state or local tax returns that a Member may be required to file.

ERISA CONSIDERATIONS

General
The Employee Retirement Income Security Act of 1974 ("ERISA") contains strict
fiduciary responsibility rules governing the actions of "fiduciaries" of employee
benefit plans. It is anticipated that some Members will be corporate pension or
profit sharing plans, or other employee benefit plans that are subject to ERISA. In
any such case, the person making the investment decision concerning the
purchase of Membership Interests will be a "fiduciary" of such plan and will be
required to conform to ERISA's fiduciary responsibility rules.

DUE TO THE COMPLEX NATURE OF ERISA, EACH PROSPECTIVE INVESTOR

IS URGED TO CONSULT HIS OR HER OWN TAX ADVISOR OR PENSION
CONSULTANT TO DETERMINE THE APPLICATION OF ERISA TO HIS OR HER
PROSPECTIVE INVESTMENT.

Prudent Man Standard

Persons making investment decisions for employee benefit plans (i.e., "fiduciaries")
must discharge their duties with the care, skill and prudence which a prudent man
familiar with such matters would exercise in like circumstances. In evaluating
whether the purchase of Membership Interests is a prudent investment under this
rule, fiduciaries should consider all the risk factors set forth above. Fiduciaries
should also carefully consider the possibility and consequences of unrelated
business taxable income (see herein "Tax Considerations"), as well as the
percentage of plan assets which will be invested in the LLC insofar as the
diversification requirements of ERISA are concerned. An investment in the LLC is
non-liquid, and fiduciaries must not rely on an ability to convert an investment in
the LLC into cash in order to meet liabilities to plan participants who may be
entitled to distributions.

FAILURE TO CONFORM TO THE PRUDENT MAN STANDARD MAY EXPOSE A

FIDUCIARY TO PERSONAL LIABILITY FOR ANY RESULTING LOSSES

Prohibited Transactions
The Manager shall not accept subscriptions for Membership Interests from ERISA,
IRA or other retirement plan Investors unless, immediately after any such
Membership Interests are sold, the aggregate of ERISA, IRA, and other retirement
plan Investors will hold less than twenty-five percent (25%) of the total outstanding
equity Interests in the LLC (measured by capital accounts).

Annual Valuation
Fiduciaries of plans subject to ERISA are required to determine annually the fair
market value of the assets of such plans as of the close of any such plan's fiscal
year. Although the Manager will provide annually upon the written request of a
Member an estimate of the value of the Membership Interests based upon, among
other things, outstanding real estate investments, it may not be possible to value
the Membership Interests adequately from year to year, because there will be no
market for them.

ADDITIONAL INFORMATION AND UNDERTAKINGS

The Manager undertakes to make available to each offeree every opportunity to
obtain any additional information from the LLC or the Manager necessary to verify
the accuracy of the information contained in this Memorandum, to the extent that it
possesses such information or can acquire it without unreasonable effort or
expense. This additional information includes, without limitation, all the
organizational documents of the LLC, recent financial statements for the Manager
and all other documents or instruments relating to the operation and business of
the LLC and material to this offering and the transactions contemplated and
described in this Memorandum.

END.