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					                                                    Fall Lake Apartments




                                       Fall Lake Apartments
                                            1415 Greens Parkway
                                               Houston, Texas
                                                        124 Units




                                      For more information please call or email:
                                     North Star Real Estate Services, LLC 801-264-6655
                                                  Email: roger@nsres.com

This information is authorized for use only by a limited number of North Star Real Estate Services, LLC and/or Quantum Wealth
Alliance, LLC. Clients who have been qualified and accepted as accredited investors by North Star Real Estate Services, by providing
proof of substantial income ($200,000/yr if single, $300,000/yr if married) over the last two years, or a net worth of
$1,000,000.00, and extensive investment experience. Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the real estate interests in this property information package, or passes upon the
adequacy or accuracy of this document. Any representation to the contrary is a criminal offence.

This material DOES NOT constitute an offer or a solicitation the purchase securities. This document is an informational summary
and is authorized for the use only by accredited investors who are existing clients/relationships of North Star Real Estate Service,
LLC a Utah Limited Liability Company and/ or Quantum Wealth Alliance, LLC. a California Limited Liability Company.


  North Star Real Estate Services
                                                     Fall Lake Apartments

                                                          Contents
Overview
Property Information ....................................................................................... 3
Executive Summary......................................................................................... 4-6
Site Description............................................................................................... 7-8
Description of Improvements ........................................................................... 9-10

Proforma Financials
Projected Returns & Pro-forma Financials.......................................................... 11
Exit Capitalization Rate Matrix .......................................................................... 12
Income Schedule ............................................................................................ 13-14
Proposed Budget............................................................................................. 15

Due Diligence
Inspection Report ........................................................................................... 16-22
Suggested Capital Improvements ..................................................................... 23
Audited Rent Roll ............................................................................................ 24-26
Rent Comparables........................................................................................... 27
Sales Comparables .......................................................................................... 28
Expense Comparison ....................................................................................... 29
Replacement Cost ........................................................................................... 30-31
Tax Information.............................................................................................. 32-33

Pictures
Ariel............................................................................................................... 34
Site Map......................................................................................................... 35
Floor Plans ..................................................................................................... 36-37
Property Photos .............................................................................................. 38-45

Area economic information
Economics ...................................................................................................... 46-50

Seller’s Disclosures
Rent Roll ........................................................................................................ 51-57
Seller Actual Financials .................................................................................... 58-59

North Star Real Estate Services, LLC
About NSRES .................................................................................................. 60
Meet the Team .............................................................................................. 61-62
Consulting Service........................................................................................... 63
Risks Disclaimer .............................................................................................. 64-66

Sample Agreements
Tennant-in-Common Agreement....................................................................... 67-79
North Star Services Agreement......................................................................... 80-89
Operating Agreement ...................................................................................... 90-104
Disclosure and Acknowledgement Agreement.................................................... 105

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                                       Fall Lake Apartments

                                         Overview
                                   Property Information

Project Name:              Fall Lake Apartments
Project Address:           1415 Greens Parkway
City/State/Zip:            Houston, TX 77067
Number of Units:           124         Property Grade: B-
Unit Mix:
                                               # of
                             Bed/Bath SQF
                                               Units
                             2bd/1ba     780    80
                             2bd/2ba     878    44

Total Square Feet: 101,032           Year Built: 1984
Total Acreage: 5.074
Tax ID. Number/Parcel Number: 1151320000011

Assignment Price: $5,250,000
Capitalization Rate: 6.83%
*Year-One-Cash on Cash: 8.48% (Averaged)

Loan Information (proposed loan terms):
Rate: 5.8.%     Term: 5 year      Down: 20%         ADS: $242,191 (I/O)
Balloon payment, fully amortized 4, 2, 0 pre-pay with 3.5% closing costs.

Lender Information:
  Kirk Slemmer
  Trans Lending Corp.
  1120 Lincoln Street #704
  Denver, CO 80203
  Phone: 888-734-9147 x204
  Fax: 303-861-2459

*Financed with the proposed loan terms.




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                                   Fall Lake Apartments

                                  Executive Summary


Fall Lake Apartments is a 124-unit complex that consists of 10 buildings that are
2-story, garden style located in the Greenspoint sub-market of Houston, Texas.
Originally constructed in 1984 the subject improvements are of wood framed con-
struction over a grade level concrete slab foundation. The exterior is a combination
of brick as well as painted particle board siding. All units have stackable washer
dryer connections and basic cable is included as part of the unit rent. The current
owner purchased the property less than one year ago as part of an overall package
of properties that were taken back in receivership by LNR Capital. The majority of
the properties in the LNR portfolio are located in Florida and the current owner
wishes to sell off these Houston holdings and retain holdings solely in Florida, his
home market.


Prior to the current owner’s purchase; this asset was updated and capitalized by LNR
capital (the original lender) at the time of repossession. Repairs include: building ex-
terior and hand rail painting, general building repairs, concrete walkways and pool
deck repairs and general clean up and restoration of landscaping. The property
when taken over from LNR was only 50% occupied and most units were not in rent
ready condition. LNR sold the asset to the current owner in this condition. Over the
course of ownership he has capitalized the property making extensive exterior re-
pairs and improvement to the general grounds. The current Owner has replaced the
signage on the property’s buildings and at the time of inspection had scheduled the
replacement of the monument sign located in front of the property. The current
property management company RMI took over the property in April of 2006 and
since that time has brought the occupancy to 94% as of 12/31/06. As the units have
been made rent ready in recent months they have been updated with re-surfaced
cabinets and counter tops, higher grade carpeting and two-tone paint.




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                                   Fall Lake Apartments

                                  Executive Summary


The Greenspoint area of Houston is in a transitional phase. The area is seeing
explosive growth on Beltway 8 by way of employment centers of all types and
general improvement of the area’s retail centers. Specifically the Greenspoint Mall
located less than 3 miles from this property in undergoing a $32 million renovation.
There are several high rise commercial buildings less than 2 miles from the property
have recently been acquired by HINES REIT who has reportedly pre-leased the office
space to “undisclosed” companies from the energy sector. Less than a mile from the
property is a office park that has been seeing an increase in occupancy and less
than a half-mile from the subject property is a new “tilt-up” warehouse. All of these
events will increase employment in the area giving the property access to many po-
tential employed tenants.


This asset has enormous potential. As the new owner, our suggestion would be to
allow the current management company to continue the trend to reposition this as-
set. This can be accomplished by renewing units at market rent and willingness of
the owner to re-tenant and refurbish the unit as necessary. It is our estimation that
30% of the units must be re-tenanted as the leases expire and the property to run
at about 92-94% occupancy through the first year of ownership. We have negoti-
ated repair credits from the Seller in the amount of $300,000.00 and have budgeted
a $125,000.00 as a pre-funded capital improvement budget. The Seller credit is
designed to complete exterior improvements including 7 new roofs, 2 stair repairs,
and pool repairs in addition to general grounds and building improvements. The
pre-funded capital expenditures of $125,000 and the ongoing yearly cap ex. budget
of $30,000.00 is designed to use for unit interior updating and refurbishing thus the
absence of unit turnover expense in the NSRES budget.




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                                   Fall Lake Apartments

                                  Executive Summary


Looking forward; we anticipate to keep the current management company RMI in
place as they have been performing very well and seem to understand the property’s
dynamics. As the units are re-furbished, grounds and tenant base improved, along
with the growth in the sub-market of the employment base we feel this asset will
attract a higher quality tenant and in year’s two and beyond of ownership the asset
will command a higher rental rate and collection pattern resulting in a higher return
over the course of the ownership as a reward for the continued efforts to complete
the repositioning of this asset. The most important role of the ownership/asset
manager will be to effectively direct and fund the management company’s efforts.
We have scheduled for moderate increase of the rents in the first two years of
ownership to bring all rents to today’s market rent as the units are refurbished. In
year’s three and four it will be our intention to increase rental rates $20 for two
bedroom one bath units and $30 for two bedroom two bath units per year. This is
realistic once units have been updated. As your asset manager North Star Real
Estate Services will oversee these efforts and begin completion of exterior repairs in
the spring of 2007.




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                                  Fall Lake Apartments

                                  Site Description
Legal Description: The site is legally described as 5.074 acres being Reserve K,
Fall Lake Apartments, Greens Crossing, Section 3, City of Houston, Harris County,
Texas. The subject property is basically rectangular in shape and is physically lo-
cated at the southeast corner of Greens Parkway and Fall Lake Drive. At the subject
property, Greens Parkway is a primary internal traffic carrier to Greens Crossing. Fall
Lake Drive is a secondary traffic carrier that deadends at the southwest corner of
the subject property. At the subject property, Greens Crossing has four, concrete
paved traffic lanes and concrete curbs and gutters, as well as a heavily landscaped
esplanade.

Easements or Encroachments: We were not provided with a detailed survey of
the overall subject property. Based upon our physical inspection, there do not
appear to be any adverse easements or encroachments that would significantly
affect the development potential of the subject property from an as vacant stand-
point.

Zoning/Deed Restrictions: The subject site is located within the City of Houston
and is not subject to any zoning restrictions. The site is subject to building codes
and ordinances as enforced by the City. The subject property is located within
Greens Crossing, which is a controlled business park that allows for various commer-
cial, industrial, multi-family and office development. Based upon surrounding devel-
opment trends, it does not appear that these restrictions are detrimental to the
highest and best use of the subject property, either form an as vacant or as
improved standpoint.

Topography and Drainage: The subject property was flat and level and appears
to have appropriate drainage. Greens Bayou is located just to the northwest of the
subject property. According to the recently developed Tropical Storm Allison Recov-
ery Project maps, the subject property is located entirely within the 500 year flood
plain. We are unaware of any historical flooding associated with the subject property
at this time. Since the property is located outside of the 100 year floodplain, it does
not requires flood insurance.

Soil and Sub-Soil Conditions: We were not provided with a soil survey or
analysis and have assumed that the soil and sub-soil conditions are conducive to
both construction and landscaping. This assumption is supported by existing
development on adjoining properties as well as the general consistency of the
subject's soil conditions as compared to adjoining tracts.


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                                      Fall Lake Apartments

                                      Site Description
Environmental: We were not provided with an environmental assessment of the
subject site and the improvements situated thereon. Based upon our physical
inspection of the site, we did not note any obvious signs of environmental hazards,
contaminants, or concerns. For purposes of our analysis, we assume that the site
and improvements are free of any environmental hazards, contaminants, or
concerns.

Public Services: The site is located within the City of Houston and has access to
public water and sanitary sewer service from the City. Additional utilities available to
the site include electricity, gas and telephone service. Police and fire protection are
provided by the City of Houston.

Bordering Properties: Properties surrounding the subject property are described
as follows:

•  North:
Office and Apartment Development

• South:
Vacant Land

• East:
Apartment Development

• West:
Vacant Land




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                                    Fall Lake Apartments

                              Description of Improvements


The subject property is improved with a 2-story, 124-unit garden style apartment
complex known as the Fall Lake Apartments. These units are situated within 10
buildings, with a density of 24.4 units per acre. The complex is located at 1415
Greens Parkway, and was originally constructed in 1984.

The subject improvements are of wood framed construction over a grade level
concrete slab foundation. It is our assumption that the foundation is supported by
grade beams and piers. The exterior is a combination of brick as well as painted
particle board siding. The roof structure includes a pitched composition shingle roof
over plywood decking.

The subject property is individually metered for electricity; however, is only master
metered for water. The current management is not collecting for water reimburse-
ment. The overall elevation of the individual buildings includes relatively simple
elevations in design.

The individual units include carpet flooring throughout the primary living areas, and
vinyl tiles along the entry and within the kitchen and baths. The kitchens typically
include painted linoleum counters with painted particleboard cabinets. Appliances
provided include dishwashers, refrigerators, electric stove/over combo units and
washers and dryers in each unit. Some of the units have icemakers; however, it
appears that the newer refrigerators that have been put in place in the units do not
have icemakers. The sink includes stainless steel and standard chrome water fixture.

The bathrooms include vinyl tile floors with painted cultural marble counters, chrome
faucets and coated metal tubs with 2 X 2 ceramic tile wainscots. Each of the units is
individually metered for electricity, and has an individual water heater and air
conditioning heat exchange/compressor units. There are ceiling fans in the
bedrooms as well as the majority of living rooms, and the units include plastic
blinds. Overall, the units were in average to good condition at the time of our
inspection.




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                                        Fall Lake Apartments

                                  Description of Improvements


In addition to the primary improvements, site improvements include an open surface
concrete paved parking lot and a swimming pool and landscaping. The site does not
include a central irrigation system; therefore, the grass and landscaping throughout
the interior of the complex is in only fair condition. We have accounted for the cost
of installing a sprinkler system for the entire complex. At the present time, the only
sprinkler system is located at the entrance to the property. In addition, there are
wrought iron fences along the perimeter of the property, and secured access gates
along both Fall Lake and Greens Parkway. There is also a central leasing office
located adjacent to the entrance, off of Greens Parkway.


The subject property includes only two floor plans. The following sets forth the unit
mix of the subject property:


                                     # of
    Bed/Bath SQF
                                     Units
   2bd/1ba                780         80
   2bd/2ba                878         44




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                                  Fall Lake Apartments

                      Projected Returns & Pro-forma Financials




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                                             Fall Lake Apartments

                                         Exit Cap Rate Matrix
Real estate is fluid market and given such we need to consider different scenarios for the resale of
the property. Attached is a chart that shows what happens to the value of the property using dif-
ferent exit cap rates. As a reminder when the cap rate goes down the sales price goes up and
conversely when the cap rate goes up the sales price goes down. Therefore the Seller will want to
sell at the lowest possible cap and the buyer wants to buy at the highest possible cap rate. Also,
neighborhood improvements and investment in maintenance issues may help to drive down the
cap rate in the future thus allowing the owner to receive a larger return on equity. All of our cal-
culations in this packet are done conservatively using 7.00% as an exit cap but in all likelihood
with good management and good records the property should trade at a lower cap rate.




                                                                                                    $7,968,253
   $7,900,000

                                                                                           $7,711,213



                                                                                  $7,470,237
   $7,400,000
                                                                         $7,243,866


                                                                $7,030,811

   $6,900,000
                                                       $6,829,931


                                              $6,640,211

                                     $6,460,746
   $6,400,000
                            $6,290,726

                   $6,129,425

          $5,976,190
   $5,900,000
                  8.00% 7.80% 7.60% 7.40% 7.20% 7.00% 6.80% 6.60% 6.40% 6.20% 6.00%




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                                       Fall Lake Apartments

                                      Income Schedule
The following strategy is developed specifically for Fall Lake Apartments in Houston, TX. The table
below represents a detailed report of proposed rental increases broken down by year and unit.




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                                     Fall Lake Apartments

                                  Income Schedule cont.




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                                   Fall Lake Apartments

                         Proposed Budget (Property Manager)




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                                   Fall Lake Apartments

                                   Due Diligence
                                  Inspection Report




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                                  Fall Lake Apartments




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                                  Fall Lake Apartments




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                                       Fall Lake Apartments

                            Suggested Capital Improvements
The property was deemed to be in sound and typical condition at the time of inspection. In order to
achieve a higher tenant satisfaction and retention rate we suggest the following improvements in
the following years.


Year One:
• Roofs repaired / replaced - $225,000.00
  (Buildings 1, 4, 5, 6, 7, 9 and office building)

•   Pool repairs - $35,000.00

•   General building repairs / Unit refurbishing - $40,000.00

Year One Total: $300,000.00


Year Two:
• General building repairs $5,000.00


•   Interior refurbishing $25,000.00

Yearly Two Total: : $30,000.00



Year Three:
• General building repairs $5,000.00


•   Interior refurbishing $25,000.00

Yearly Three Total:: $30,000.00


Year Four:
• General building repairs $5,000.00


•   Interior refurbishing $25,000.00

Yearly Four Total: $30,000.00



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                                  Fall Lake Apartments

                                  Audited Rent Roll




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                                     Fall Lake Apartments

                                  Audited Rent Roll cont.




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                                     Fall Lake Apartments

                                  Audited Rent Roll cont.




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                                                   Fall Lake Apartments

                                               Rent Comparables

                                        Rental Comparison Detail
                                        Property                                 2 Bedroom
               Property
                                         Grade                   Rent                Sq ft               Rent/Sq ft
   Fall Lake Apartments                       A               $625 $665                780 878                0.78
   6200 Gessner Apartments                    B-               $620 $750               845 1208                0.67
   2111 Holly Hall                            A                $915 $1,070             963 1259                0.89
   7100 Almeda                                A                $899 $999                  930                  1.02
   Gables Windmill Landing                    A                $775 $960               914 1084                0.87
   Madison Court                              B                   $695                 946 946                 0.73
   Richmond Square                            A                $825 $955               875 1064                0.92
   Bissonnet Gardens                          B-              $650 $699                985 1050                0.66
   Boardwalk                                  B                $875 $1,245            1223 1684                0.73
   Kingsgate Village                          C                $500 $550               876 1158                0.52
   Le Promenade                               C                $450 $470                  850                  0.54
   Ridgestone                                 C                $540 $560               930 960                 0.58
   Shapstown Gardens                          C                $545 $650               900 1200                0.57
   St. James                                  B                $645 $815               810 1300                0.69
   Park at Fallbrook                          B                $732 $731                 1027                  0.71
   Saddlewood                                 A                   $795                    950                  0.84
   Rockport Apartments                        C                $550 $633                 1053                  0.56
   Barrington Apartments                      B-                  $650                   1000                  0.65
   Sands Point                                C+               $530 $725               804 1296                0.60
   Rubicon                                    B-               $595 $790               804 1315                0.65
   Forum Plaza                                B-                  $699                   1100                  0.64
                                                                             2 Bedroom Averages
                                                                 Rent                    Sq ft            Rent/Sq ft
                                  Grade A Average                $910                    1005                 0.91
                                  Grade B Average                $746                    1083                 0.68
                                  Grade C Average                $559                    1003                 0.56
   Fall Lake Apartments                                          $645                     829                 0.72

   All Calculations for the Comparison Properties where a range of values is given, Rent/Sq. ft. is calculated by lowest
   value Rent / lowest value Sq. ft.
   All calculations for Fall Lake Apartments where a range of values is given, Rent/Sq. ft. is calculated by highest value
   Rent / Sq. ft. in order to err on the conservative side in the comparison.




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                                                                                                                                                                                                                   28
                                           Closed Date Miles                         Property Name                      Address          City, State   Units Year Built # Bldgs # Floors      Price       $/Unit
                                           12/15/2006   4.2                 Sendera Champion Forest           12801 Champion Forest Dr   Houston, TX    198 1969                            $8,118,081   $41,000
                                           12/15/2006   9.9                 Sendera Westway                   10580 Hammerly             Houston, TX    316 1972                           $12,956,130   $41,000
                                           12/11/2006   5.6                 Lighthouse at Willowbrook         12330 N Gessner Rd         Houston, TX    336 2006          14        3      $32,000,000   $95,238
                                           11/2/2006    7.7                 Sherwood Pines                    4211 Sherwood Ln           Houston, TX    152 1972                    2       $4,200,000   $27,632
                                           10/15/2006   6.6                 Oak Tree                          2006 W 43rd St             Houston, TX     80    1962                 2       $2,750,000   $34,375
                                           9/27/2006    7.2                 Indian Springs                    3700 Watonga Blvd          Houston, TX    408 1980                    2      $13,750,000   $33,701
                                           9/18/2006    5.3                 Gables of Inwood                  5600 Hollyview             Houston, TX    165 1980           7        2       $3,000,000   $18,182
                                           9/13/2006    7.5                 Shenandoah Woods                  4250 W 34th St             Houston, TX    232 1976                    2       $6,500,000   $28,017
                                           9/8/2006     6.3                 Reserve at Woodwind Lakes         14555 Philippine St        Houston, TX    328 1999          15        3      $28,000,000   $85,366
                       Sales Comparables




                                           8/24/2006    6.4                 Raveneaux                         14500 Cutten Rd            Houston, TX    382 2000                           $35,620,000   $93,246
Fall Lake Apartments




                                           8/18/2006    6.8                 Pines of Northwest Crossing       7200 Pinemont              Houston, TX    412 1977          36        2      $12,600,000   $30,583
                                           8/1/2006      5                  Sandalwood                        311 Highland Cross Dr      Houston, TX    352 1979                            $7,950,000   $22,585
                                           7/31/2006    8.7                 Timbergrove Manor                 1600 W TC Jester Blvd      Houston, TX     96    1968                 2       $2,738,000   $28,521
                                           7/21/2006    7.1                 First Oaks at Northwest Corners   4222 Lockfield             Houston, TX    144 1978          11        2       $4,200,000   $29,167
                                           6/19/2006    6.2                 Camden Wilshire                   6000 Hollister St          Houston, TX    536 1982          36        2      $20,400,000   $38,060
                                           5/19/2006    1.4                 Canfield Lakes                    13355 N Borough Dr         Houston, TX    454 1984          32                $9,750,000   $21,476
                                           5/17/2006    6.2                 Legacy Park                       10801 Legacy Park Dr       Houston, TX    304 1995          15        3      $21,000,000   $69,079
                                           5/1/2006     8.6                 Village Park                      8701 Hammerly Blvd         Houston, TX    419 1976          27      2, 3     $13,500,000   $32,220
                                           4/25/2006    6.8                 Lafayette Green                   8327 W Tidwell             Houston, TX    240 1979          22        2       $6,600,000   $27,500




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                                           4/4/2006     8.4                 Ravenwood                         7964 Amelia Cir            Houston, TX    236 1968          33        2       $6,500,000   $27,542
                                           3/14/2006    8.8                 Broadstone Westway Park           10500 Clay Rd              Houston, TX    336 2004                           $32,600,000   $97,024
                                           2/20/2006    5.1                 Blenheim                          1007 Cypress Station Dr    Houston, TX    156 2000                           $11,052,307   $70,848
                                           1/31/2006     7                  Parker Square                     10300 Shady Ln             Houston, TX    175 1965          22        2       $6,600,000   $37,714
                                           1/17/2006    8.8                 Spring Gardens & Johanna          1714 Wirt Rd               Houston, TX    117 1965                    2       $2,580,000   $22,051
                                           1/13/2006    6.4                 Cherry Creek                      5801 Hollister St          Houston, TX    274 1979                            $9,042,000   $33,000
                                           1/13/2006    7.6                 Winchester Place                  10910 Gold Point Dr        Houston, TX    256                                 $8,448,000   $33,000
                                           Source: Real Capital Analytics
                                                Fall Lake Apartments

                                            Expense Comparison
  The following table is for informational purposes for the owner to gauge averages of expenses in the MSA compared to the
                       operation of the subject property to ensure the property is within those averages




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                                   Fall Lake Apartments

                                  Replacement Cost




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                                     Fall Lake Apartments

                                  Replacement Cost cont.




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                                  Fall Lake Apartments

                                  Tax Information




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                                  Fall Lake Apartments

                                  Tax Information




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                                  Fall Lake Apartments

                                    Ariel Photo




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                                  Fall Lake Apartments

                                      Site Map




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                                  Fall Lake Apartments

                                    Floor Plans




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                                  Fall Lake Apartments

                                    Floor Plans




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                                  Fall Lake Apartments

                                      Pictures




                Entrance (new sign to be installed)




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                                  Fall Lake Apartments

                                      Pictures




                                    Exterior




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                                      Pictures




                                    Exterior




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                                      Pictures




                                  Pool Area




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                                   Fall Lake Apartments

                                       Pictures




                                  Leasing Office




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                                  Fall Lake Apartments

                                      Pictures




                                    Kitchen




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                                      Pictures




                                  Bathroom




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                                      Pictures




                                  Living Space




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                                     Fall Lake Apartments

                                  Economic Information
Employment

Employment      growth   in    the                                                                   Houston, TX MSA
                                                                                                    Nonfarm Employment
Houston Metro area currently leads                          2,600
all of Texas in both the rate of
growth and in total numbers. The                            2,200


metro should finish this year




                                          (in ,000s)
                                                            1,800
adding over 70,000 compared to
last year, which is an average                              1,400

annual growth rate of about 3%.
This is double the rate of the
                                                            1,000




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Strong employment conditions are                                                            Kansas City, KS/MO MSA

expected to continue over the                               1150
                                                                                 Quarterly Nonfarm Employment w/ 5 year forecast


forecast, during which Houston is
                                                            1050
expected to grow at an average
rate of around 2%, which again is
                                                             950
                                               (in ,000s)




roughly      double   the     rate
                                                             850


expected for the national market.                            750


Growth is expected to be lead by                             650


the     construction   and     the                           550


professional      and     business
                                                                91

                                                                        92

                                                                             93

                                                                                     94

                                                                                           96

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                                                                                                        98

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                                                                                                                     01

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                                                                                                                                  03

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                                                                                                                    1

                                                                                                                          2

                                                                                                                                 3

                                                                                                                                       4

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                                                                                                                                                    2

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                                                            Q

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                                                                                                                                           Q

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                                                                                                                                                               Q

                                                                                                                                                                     Q
services sectors.


                                                                                                        Houston, TX MSA

Unemployment in the metro area is                                                         Houston
                                                                                                       Unemployment Rate
                                                                                                                        Texas                         US
currently at 4.5%, matching the                             9.0%


national rate and 10 basis points                           8.0%


lower than the rate for the state of
                                                            7.0%

                                                            6.0%

Texas.                                                      5.0%

                                                            4.0%

Employment growth going forward                             3.0%


should keep the rate below the
                                                            2.0%

                                                            1.0%
national level and below the level                          0.0%

of the state.
                                                                90

                                                                91

                                                                92

                                                                93

                                                                94

                                                                95

                                                                96

                                                                97

                                                                98

                                                                99

                                                                00

                                                                01

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                                                                06
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North Star Real Estate Services                                                                                                                                               46
                                     Fall Lake Apartments

                                  Economic Information


Growth Drivers

The energy sector in Houston has historically been the driving force behind the
Houston economy; and it still is. The metro economy has become more diverse since
the crash of the eighties when falling energy prices sent the Houston economy into a
nose dive to where it now more closely mirrors the performance of the national
economy. The growth seen in Houston now is very directly related to the price
increases in energy products; particularly oil and gas. Current price levels have
sparked an increase in exploration and development which benefits Houston due to
the number of oil services companies located there. Schlumberger, one of the five
largest oil services companies in the industry announced late last year that they
expect to add 500 people to their payroll annually for the next 2-3 years.

The increased global demand for oil and natural gas and the unsettled conditions in
producing countries should keep energy prices at these relatively higher levels
through the forecast period. While not good news for the rest of the country, this
does bode very well for the Houston economy.




North Star Real Estate Services                                                 47
                                     Fall Lake Apartments

                                  Economic Information


Housing
Multifamily    housing     completion                                                   Houston, TX MSA
levels have decreased over the last                      30,000
                                                                                     Multifamily Completions

two years as the Houston economy’s                       25,000
expected recovery was delayed




                                           No. Permits
                                                         20,000

relative to that of the nation. This is                  15,000

an additional factor in improved                         10,000


occupancy        levels     to     the                    5,000


improvement seen with the influx of
                                                             0




                                                              80

                                                                     82

                                                                     84

                                                                     86

                                                                     88

                                                                                            90

                                                                                            92

                                                                                            94

                                                                                            96

                                                                                                                     98

                                                                                                                     00

                                                                                                                     02

                                                                                                                     04

                                                                                                                                                 06
hurricane refugees.


                                                            19

                                                                   19

                                                                   19

                                                                   19

                                                                   19

                                                                                          19

                                                                                          19

                                                                                          19

                                                                                          19

                                                                                                                   19

                                                                                                                   20

                                                                                                                   20

                                                                                                                   20

                                                                                                                                               20
Permit levels are currently 24% higher for 2006 than they were for 2005, so a higher
number of completions are expected for 2007 in the market. This will keep improve-
ment in occupancy and rent flat in 2007. Thereafter completions should be more in
line with historical levels.



The outlook for multifamily housing                                                       Houston, MSA

in the Houston market shows a
                                                                                     5 year Rents w/ Forecast


much stronger trend due to the                Asking Rent           Effective Rent       Forecasted Asking Rent          Forecasted Effective Rent


favorable         employment and          $850


economic growth expectations. Job
                                          $800

                                          $750
growth and constrained new supply         $700

levels will allow owners to increase      $650


both asking and effective rents,          $600


with increases in effective rents
                                          $550

                                          $500

outpacing increases in asking                              2001    2002    2003       2004    2005     2006       2007       2008     2009     2010


rents, averaging 3.4% per year
over the forecast period.

Rent levels in the Northborough submarket are expected to increase at slightly lower
rates, averaging 3.1% per year for effective rents, as the overall market.




North Star Real Estate Services                                                                                                                       48
                                                              Fall Lake Apartments

                                                    Economic Information


Housing (con’t)

Occupancy levels made a strong positive turn last year improving nearly 660 basis
points from 2004 due for the most part to absorption caused by relocation of those
affected by hurricanes Katrina and Rita. Occupancy has declined slightly this year as
some of the hurricane refugees have vacated units within the metro. Through the
forecast period occupancy is expect to continue to improve as demand will slightly
outpace expected new supply. There is risk through the forecast that energy prices, a
significant driver of the Houston economy will fall from their current, relatively high
levels and that new supply would increase the inventory at a rate greater than an
average 1.15% per year.

                                                        Houston, TX MSA
                                                Occpancy History vs. 16 year Average

                     94.0%

                     92.0%

                     90.0%
         Occupancy




                     88.0%

                     86.0%

                     84.0%

                     82.0%

                     80.0%
                          90

                                 91

                                        92

                                               93

                                                      94

                                                             95

                                                                    96

                                                                           97

                                                                                  98

                                                                                         99

                                                                                                00

                                                                                                       01

                                                                                                              02

                                                                                                                     03

                                                                                                                            04

                                                                                                                                   05

                                                                                                                                          06
                        19

                               19

                                      19

                                             19

                                                    19

                                                           19

                                                                  19

                                                                         19

                                                                                19

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                                                                                              20

                                                                                                     20

                                                                                                            20

                                                                                                                   20

                                                                                                                          20

                                                                                                                                 20

                                                                                                                                        20




The Northborough submarket is currently performing at a level slightly less than the
metro overall. The current occupancy level in the submarket (88.8%) is 120 basis
points lower than the metro average. Going forward the occupancy level should
improve at a rate slightly better than that of the metro.




North Star Real Estate Services                                                                                                                49
                                            Fall Lake Apartments

                                  Economic Information


                                                                            Houston Metro Area
Price per Unit                                                  Price per Unit Annual Comparison by month
                                                                       2004               2005               2006
                                                $68,000
Unit prices jumped last year
responding to renewed investor
                                                $60,000


interest spurred by a positive                  $52,000


rental market outlook in the                    $44,000

Houston metro. The positive                     $36,000

outlook and expected better                     $28,000
fundamental performance should
                                                $20,000
keep upward pressure on prices.                           Jan    Feb   Mar    Apr   May   Jun    Jul   Aug   Sep    Oct   Nov   Dec




Cap Rates

Cap rates in the Houston Metro area showed a moderately increasing trend in the last
6 months of 2006, leveling out in November and December at 6.9%. The increase
appears related to a decrease in transaction volume which has lowered seller price
expectations.

Rates in the market also appear to be responding to upward pressure from rising
lending rates. However lending rates have decreased lately which should moderate
changes in cap rates in the short-term. The positive economic outlook and
consequent positive performance in fundamentals for multifamily housing should
keep cap rates around 200 basis points above long-term lending rates.

                                                Houston Area
                                               Cap Rate Trend
                                  Houston        US Average             10-year Treasury
                  9.5%

                  8.0%

                  6.5%

                  5.0%

                  3.5%

                  2.0%
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North Star Real Estate Services                                                                                                   50
                                    Fall Lake Apartments

                                  Sellers Disclosures
                                    Actual Rent Roll




North Star Real Estate Services                            51
                                        Fall Lake Apartments

                                  Actual Rent Roll—Jan 4, 2006




North Star Real Estate Services                                  52
                                        Fall Lake Apartments

                                  Actual Rent Roll—Jan 4, 2006




North Star Real Estate Services                                  53
                                        Fall Lake Apartments

                                  Actual Rent Roll—Jan 4, 2006




North Star Real Estate Services                                  54
                                        Fall Lake Apartments

                                  Actual Rent Roll—Jan 4, 2006




North Star Real Estate Services                                  55
                                        Fall Lake Apartments

                                  Actual Rent Roll—Jan 4, 2006




North Star Real Estate Services                                  56
                                        Fall Lake Apartments

                                  Actual Rent Roll—Jan 4, 2006




North Star Real Estate Services                                  57
                                      Fall Lake Apartments

                                      Actual Financials
                                  January—September, 2006




North Star Real Estate Services                              58
                                      Fall Lake Apartments

                                     Actual Financials
                                  October—November, 2006




North Star Real Estate Services                              59
                                                  Fall Lake Apartments

                     About North Star Real Estate Services, LLC

         Fulfilling your investment criteria begins with buying the right property,
                             in the right place, at the right time.
When buying a property, you’re buying an investment vehicle. North Star Real Estate Services
simplifies your search for multi-family investment properties. We monitor over 200 MSA’s
nationwide to bring you a selection of properties in markets that are; showing or are poised to
show positive absorption of multi-family housing, where you can take advantage of the dynamics of
supply and demand and where values reflect the fundamental operating performance, where
investment still makes sense.


                   Our Process and Relationships Save You Time and Money
We have built strong relationships with our network of brokers who know our investment
standards and who are committed to bringing us quality properties. Because our brokers know
our level of commitment, in most cases these properties are brought to us on a early look,
preferred basis.
We also have relationships with national lenders who are able to provide debt financing for any
market in the country at some of the best rates and terms you will be able to find anywhere. We
bring the lenders in early on in the transaction process to ensure that the process goes quickly
and smoothly with little or no hassle to you.

      We Have the Expertise to See Past the Advertisement and Proforma Financials
We take the worry and headache out of performing the due diligence. Our team of experienced,
trained real estate professionals will conduct the lease audit, the physical property inspection
walking 100% of the units with a professional inspector and property manager. We will audit the
expenses and give you a real estimate of the property performance. Not only will North Star Real
Estate Services do all the work we GUARENTEE the effective rental income to be accurate on the
date of assignment.


                        Planning for Operation and Exit are Vital to Success
Your team at North Star Real Estate Services will help you formulate a strategy to operate and
exit the property with 70-100% growth in your invested capital. Many think that profits are made
by appreciation alone. NOT TRUE. We at North Star know that 90% of the time an income
property is valued on the operating income that it produces. That’s why we will give you a plan
that you can use as a road map to achieve the net operating income that will support your exit
price.




 Our services are designed to help you achieve your investment goals by simplifying your search process, performing the due
       diligence and underwriting of the asset and helping you plan a strategy for the operation and exit of the asset.



North Star Real Estate Services                                                                                               60
                                  Fall Lake Apartments

                                  Meet The Team

                                  Mr. Bragg is the principal broker for North Star and he
                                  brings a wealth of experience and expertise to North
                                  Star’s clients. He has over 14 years of commercial real
                                  estate experience in brokerage, acquisitions, property
                                  underwriting, development and asset management.

                                  Over the course of his career Mr. Bragg has held sen-
                                  ior management positions with leading real estate bro-
                                  kerage companies participating in brokering, under-
                                  writing and consulting on over $800 million in com-
                                  mercial property acquisitions.

                                  Mr. Bragg is currently a licensed Broker in the State of
                                  Utah and has earned the prestigious CCIM (Certified
         Roger Bragg              Commercial Investment Member) designation from the
                                  CCIM Institute, a professional credential awarded to
                                  those who have completed extensive education and
                                  who have a proven track record of commercial real
                                  estate business.




                                  As Director of Acquisitions, Mr. Tidwell is leading the
                                  objective to find and underwrite quality investment
                                  properties for North Star clients. His real estate
                                  expertise spans more than decade of experience in the
                                  commercial real estate industry as an agent, property
                                  manager, consultant and an investor.

                                  Within the past three years, Mr. Tidwell has been
                                  actively involved in the underwriting process of over
                                  $300 million in multifamily property investment
                                  packages for clients across the country. As a result, he
                                  has established relationships with some of the Nation’s
                                  most influential and successful real estate brokers,
                                  REIT fund managers, and independent investors.

          John Tidwell            Mr. Tidwell received a Bachelor of Science degree in
                                  Mathematics at the University of Utah. He is currently
                                  a licensed agent in Utah and Florida. He is a
                                  recognized professional and expert in the commercial
                                  real estate investment industry having earned the
                                  respected CCIM (Certified Commercial Investment
                                  Member) designation awarded by the CCIM Institute.




North Star Real Estate Services                                                              61
                                    Fall Lake Apartments




                                  Mr. Miller directs North Star’s market research and
                                  development of information services products which
                                  includes investment specific market analysis as well as
                                  strategic market selection. He comes to North Star with
                                  economic and real estate research experience developed
                                  through work as a Senior Economist/Market Analyst for a
                                  Utah-based real estate investment services company
                                  where he developed market cycle based econometric
                                  forecasting models to advise the company’s clients on
                                  apartment market conditions and investment strategy.
                                  He also co-lead new market development efforts and
                                  managed the day-to-to operation of the company’s
        Shayne Miller             research division.

                                  In addition to his work in the real estate industry, Mr.
                                  Miller has held positions as a financial analyst/accountant
                                  for EIMCO Process Equipment Company, a division of
                                  Baker Hughes, Inc., a Fortune 500 company, as a
                                  business consultant, and as a project manager.

                                  Mr. Miller holds a Bachelor of Arts degree in Economics
                                  with a minor in Chemistry from the University of Utah.
                                  He also holds a Masters of Business Administration
                                  degree with emphasis in Finance from Westminster
                                  College.




North Star Real Estate Services                                                                 62
                                                  Fall Lake Apartments

                                               Consulting Service
North Star Real Estate Service’s goal is to minimize owner day-to-day responsibilities in the
property by following up with on-site and off-site personnel, and monitoring market competitive
activity, while allowing the owners to ultimately control their property. This is done through
regular follow-up and reporting

Initial Due Diligence: The due diligence completed in locating and analyzing this property is
included in this package. Prospective owners are encouraged to review this information and may
also conduct some of their own investigation if they choose to do so.
Important: Since on-site property management personnel may be unaware of the sale of this property, please first contact North
Star if you would like to arrange an on-site visit to the property.


Owner Conference Calls: These are held typically each quarter or more often if needed, to
provide an update and recommendations to the owners, and to obtain owner votes on decisions
involving the property.

Management Updates: North Star frequently follows up with on-site and off-site personnel and
forwards a report to the owners on these activities and current occupancy.

Site Visit Reports: Annually or as needed, North Star will perform an audit of site management
and the financial reporting, and report this to the owners, noting any concerns or recommenda-
tions for owner consideration and decision.

Monthly Financial Update: A report on financial results, including operating activity, reserve
balances, and amounts available for distribution to the owners, is made each month. These
include a summary for the project and are also broken down for each owner by their tenants-in-
common interest.

Annual Report for Taxes: Since ownership is tenants-in-common rather than a partnership, tax
reporting to the owners will be in the form of annual report rather than a K-1 which will break
down financial activity and results to each owner by their ownership percentage. If your tenants-
in-common ownership in the tenants-in-common is through a partnership or limited liability
company, this annual report will be provided to that entity, which will then need to prepare a tax
return for the entity and send you a K-1. The annual report is an accumulation of the monthly
reports. Although we strive to provide all the information that you will need to prepare your tax
returns, North Star does not hold itself out to be a tax expert and does not provide tax advice.

Exit Strategy: North Star’s research team monitors the market assessing changes in fundamen-
tals affecting projected returns to advise owners on the timing of the sale. In addition, North Star
monitors other opportunities such as refinancing or condo conversions and advises owners.
Please see more detailed information on these services in the Consulting Agreement included in
this package.




North Star Real Estate Services                                                                                           63
                                        Fall Lake Apartments

                                      Risks Disclaimer

       The value of this property and the corresponding equity of the owner(s) (hereinafter
Owners) of this property will fluctuate based on the value of the property and the income the
property generates. Though the potential risk of investing in multifamily housing is moderate,
the prospective Owner(s) can lose money by investing in this property. The property’s value and
rental income can be affected by many factors, and you should consider the specific risks
presented below before investing in this property.


General Risks Prior to Closing on Real Property:
These may include:
• Returns are subject to change due to new discovery, changes in loan terms, occupancy,
   additional capital investment, owner decisions, and various factors involved in property
   management, and therefore North Star Real Estate Services, LLC and its affiliates do not
   guarantee these returns. These potential changes may also affect the feasibility of acquiring
   this property.
•   Prior to acquisition, several costs are incurred to pay for due diligence on real property. The
    prospective owners agree to utilize their deposits to pay for these costs, though there is no
    guarantee from North Star Real Estate Services, LLC and its affiliates that the property may
    close, or the date it will close. Potential owners with 1031 exchanges should take appropriate
    precautions with their Exchange Accommodator to have appropriate backup alternatives.

General Risks of Owning Real Property:
All Owners will be subject to the risks inherent in owning real property, including:
• Income distributions may not occur for a few months after closing to allow the property’s cash
    flow to be stabilized.
•   Each Owner’s property values or rental and occupancy rates could go down due to general
    economic conditions, a weak market for real estate generally, changing supply and demand for
    certain types of properties, and natural disasters or man-made events.
•   A property may be unable to attract and retain tenants, which means that rental income would
    decline.
•   Each Owner could lose revenue if tenants don’t pay rent, or if the Owners are forced to
    terminate a lease for nonpayment. Any disputes with tenants could also involve costly litigation.
•   A property’s profitability could go down if operating costs, such as property taxes, utilities,
    maintenance and insurance costs, go up in relation to gross rental income, or the property
    needs unanticipated repairs and renovations. A negative cash flow may require additional
    investment from the owners should there be insufficient reserves.




North Star Real Estate Services                                                                   64
                                         Fall Lake Apartments


General Risks of Property Management:
      North Star Real Estate Services, LLC does not manage the property, nor does it consult the
owners on property management activities and performance should be handled.

       The owner is responsible to enter into a management agreement with a property manager
of their choosing and communicate the goals of the owner to manager to execute. Each owner’s
property values, rental income, and operating expenses could vary up or down depending on the
performance and diligence of both on-site and off-site management of the property manager and
the accuracy of their financial accounting.

General Risks of Selling Real Estate:
Among the risks of selling real estate investments are:
• The eventual sale price of this property might differ from its estimated or appraised value,
  leading to losses or reduced profits to owner(s).
•   Because of the nature of real estate, the owner(s) might not be able to sell a property at a
    particular time for its full value, particularly in a poor market. This might make it difficult to
    raise cash quickly and also could lead to Owner losses.
•   Owner(s) may need to provide financing if no cash buyers are available.

Risks of Borrowing:
Among the risks of borrowing money and investing in a property subject to a mortgage are:
• The Owner(s) may not be able to make the loan payments, which could result in a default on
   its loan. The lender then could foreclose on the underlying property and Owners would lose
   the value of its investment in the foreclosed property.
•   If the Owner(s) obtain a mortgage loan that involves a balloon payment, there is a risk that
    the Owner(s) may not be able to make the lump sum principal payment due under the loan at
    the end of the loan term, or otherwise obtain adequate refinancing. The Owner(s) then may
    be forced to sell the property or other properties under unfavorable market conditions or de-
    fault on its mortgage.
•   If the Owners take out variable-rate loans, the Owner’s returns may be volatile when interest
    rates are volatile.

Regulatory Risks:
Government regulation, including zoning laws, property taxes, fiscal, environmental, capital gains
or 1031 exchange treatment could operate or change in a way that hurts the Owner(s) property.
For example, regulations could raise the cost of owning and maintaining properties or make it
harder to sell, rent, finance, or refinance properties due to the increased costs associated with
regulatory compliance.




North Star Real Estate Services                                                                    65
                                        Fall Lake Apartments


Environmental Risks:
The Owner(s) may be liable for damage to the environment caused by hazardous substances
used or found on its properties. Under various environmental regulations, the Owner(s) may also
be liable, as a current or previous property owner or mortgagee, for the cost of removing or
cleaning-up hazardous substances found on a property, even if it didn’t know of and wasn’t
responsible for the hazardous substances. If any hazardous substances are present or the Owner
(s) do not properly clean up any hazardous substances, or if the Owners fail to comply with
regulations requiring it to actively monitor the business activities on its premises, the Owners may
have difficulty selling or renting a property or be liable for monetary penalties. The cost of any
required clean-up and the Owners’ potential liability for environmental damage to a single real
estate investment could exceed the value of Owners’ investment in the property, the property’s
value, or in an extreme case, a significant portion of Owners’ assets.

Uninsurable Losses:
Certain catastrophic losses (e.g., from earthquakes, wars, terrorist acts, nuclear accidents, floods,
or environmental or industrial hazards or accidents) are uninsurable or so expensive to insure
against that it doesn’t make sense to buy insurance for them. If a disaster that we haven’t
insured against occurs, the Owners could lose both the original investment and any future profits
from the property affected. In addition, some leases may permit a tenant to terminate its obliga-
tions in certain situations, regardless of whether those events are fully covered by insurance. In
that case, the Owners would not receive rental income from the property while that tenant’s
space is vacant.

Appraisal Risks:
Real estate appraisals are only estimates of property values based on a professional’s opinion and
may not be accurate predictors of the amount Owner(s) would actually receive if it sold a
property. If an appraisal is too high, each Owner’s value could go down upon reappraisal or if the
property is sold for a lower price than the appraisal. If appraisals are too low, those who redeem
prior to an adjustment to the valuation or a property sale will have received less than the true
value of the Owners’ assets.

General Risks of Mortgage Loans:
Owners will be subject to the risks inherent in making mortgage loans, including:
• A deterioration in the financial condition of tenants, or the bankruptcy or insolvency of a
  major tenant, may adversely affect the income of a property, which could increase the
  likelihood that the owners will default under their obligations.
•   Upon default, Owners may not be able to sell the property for its estimated or appraised
    value. Also, certain liens on the property, such as mechanics or tax liens, may have priority
    over the Owners’ security interest.
•   The Owner(s) may not be able to make a lump sum principal payment due under a mortgage
    loan at the end of the loan term, unless it can refinance the mortgage loan with another
    lender.
•   If interest rates are volatile during the loan period, the Owners’ variable rate mortgage loans
    could have lower yields.



North Star Real Estate Services                                                                   66
                                          Fall Lake Apartments

                              Tennant-in-Common Agreement

This Tenant-in-Common Agreement (this “Agreement”) is entered into and effective as of this _____ day
of __________________, 20___, by and among those Persons listed as Co-Owners set forth below, and
those Persons who later become a party to this Agreement by acquiring an interest in the Property, as
defined herein (collectively, the “Co-Owners”).

                                               Witnesseth:

WHEREAS, the Co-Owners have acquired, or are acquiring undivided interests as tenants in common in
that certain real property located in the City of ___________, State of _____________, which property is
commonly referred to as “______________” and is more particularly described on Exhibit “A” attached
hereto (the “Property”); and

WHEREAS, the Co-Owners desire to enter into this Agreement to provide for the orderly administration of
their rights and responsibilities as to each other and as to others and to provide for the intended further
operation and management of the Property.


NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:

1.     Definitions

        1a.   For all purposes of this Agreement, the capitalized terms set forth below shall have the
following meanings:

        1b.     “Affiliate” shall mean, with respect to any specified Person, any other Person directly or
indirectly controlling or controlled by or under direct or indirect common control with such specified
Person. For purposes of this definition, control, when used with respect to any specified Person, shall
mean the power to direct the management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the terms controlling and
controlled shall have meanings correlative to the foregoing.

       1c.    “Services Agreement” shall mean that certain Services Agreement entered into on or about
the date hereof by and between Co-Owners and North Star Real Estate Services, L.L.C. (“North Star”).

       1d.    “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

        1e.    “Financing Documents” shall mean the documents executed by the Co-Owners or otherwise
encumbering the Property to finance the acquisition or development thereof, or the refinance of said loan
obligations, as the same may be amended, restated, replaced, supplemented, or otherwise modified from
time to time, with such loan financing being accomplished with ________________, as “Lender” and with
the repayment obligations, indebtedness and other obligations, collateral security arrangements and other
performance obligations subject of the Financing Documents being executed in connection with or
immediately hereafter (including a promissory note, the “Note”).




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        1f.     “Interest” shall mean, with respect to a Co-Owner, such Co-Owner's tenant-in-common
interest in the Property, sometimes expressed as a percentage undivided tenant-in-common interest.

        1g.   “Co-Owner(s)” shall mean each Co-Owner and each of their successors in interest pursuant
to Section 4.

       1h.  “Percentage” shall mean, with respect to a particular Co-Owner, the percentage Interest of
such Co-Owner as compared to all of the Interests.

       1i.    “Person” shall mean a natural person, corporation, limited partnership, limited liability
company, general partnership, joint stock company, joint venture, association, company, trust, bank trust
company, land trust, business trust or other organization, whether or not a legal entity, and a government
or agency or political subdivision thereof.

       1j.     “Manager” shall mean that manager of the Property appointed by the Co-Owners, as may
be replaced from time to time, as set forth herein, with the Manager having entered into a management
agreement (“Management Agreement”) acceptable to the Co-Owners.

       1k.     “Section” shall mean a section in this Agreement, unless otherwise modified.

2.     Formation of Tenancy in Common:

         2a.      Purposes: The purposes of this tenancy-in-common are to engage in the following
activities: (i) to manage, lease, mortgage and dispose of the Property; and (ii) to take such other actions
as the Co-Owners deem necessary or advisable to carry out the foregoing. The Co-Owners shall hold the
Property for investment purposes only and not for the active conduct of a trade or business. In particular,
the tenancy-in-common shall only engage in activities which are customary services in connection with the
maintenance and repair of the Property. Neither the tenancy-in-common, nor its agents shall provide any
non-customary services, as such term is contemplated under Code Sections 512 and 856 and Rev. Rule.
75-743.

        2b.     Nature of Co-Tenant Relationship: The Co-Owners shall each hold their respective Interests
in the Property as undivided tenant-in-common fractionalized estates in real property, with all of the
common-law and other legal right, title and interest incident to such an estate. In order to maximize the
benefits and interests associated with such an estate in the Property, the Co-Owners acknowledge and
agree that certain of the rights and interests arising out of such an estate in real property must be subject
of a common agreement amongst all of the holders of such estate interests and that it is in the best
interests of each of the Co-Owners to facilitate the economic and fair ownership, possession, use,
management and operation of the Property by making certain agreements amongst themselves as
tenant-in-common owners. The Co-Owners do not intend by this Agreement to create a partnership, joint
venture, association or a trust for federal income tax or any other purposes among themselves or with the
Manager, but merely to set forth the terms and conditions upon which each of them shall hold their
respective Interests. Except as expressly provided herein, no Co-Owner is authorized to act as agent for,
to act on behalf of, or to do any act that will bind, any other Co-Owner or to incur any obligations with
respect to the Property. Each Co-Owner shall be treated for federal income tax purposes as an owner of
real estate, holding title to its Interest as a tenant-in-common undivided fee-simple owner of the Property.
Each Co-Owner agrees to report its interest in the Property in a manner consistent with the foregoing and
otherwise not to take any action that would be inconsistent with the foregoing.




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3.     Limitation on Certain Activities

       3a.     Notwithstanding any provisions of this Agreement and any provision of law that otherwise
so empowers the Co-Owners, until the Note shall have been paid in full, (x) neither the Manager nor the
Co-Owners shall (i) perform any act in contravention of or constituting an event of default under the
Financing Documents, or (ii) make any loan or advance to any Person if such loan is not permitted by the
Financing Documents, and (y) the Co-Owners shall not (i) own any assets other than their respective
Interests in the Property and cash (or cash equivalents), or(ii) obtain any financing secured by or
encumbering the Property other than the loan(s) unanimously approved by the Co-Owners evidenced by
the Financing Documents.

        3b.     All Co-Owners shall be special purpose entities rather than natural persons, holding no
assets other than their respective Interests in the Property as set forth above. As such, each Co-Owner
shall at all times maintain the following procedures to avoid or minimize any risk of substantive
consolidation of such Co-Owner with the bankruptcy or reorganization of any other Person: (i) maintain
bank accounts separate from those of any other Person; (ii) conduct activities with Affiliates on an arm's
length basis; (iii) observe statutory formalities with respect to the administration of such entity and in the
conduct of the activities of such Co-Owner; (iv) hold the Co-Owner out to the public as a legal entity,
separate and distinct from any of the Co-Owner's Affiliates; and (v) observe all special purpose entity
provisions in the Operating Agreement that governs such Co-Owner.

        3c.    Subchapter K Election: The Co-Owners hereby agree that the joint ownership of the
Property as tenants in common shall be excluded from Subchapter K of the Code and the Co-Owners will
report on their federal and state income tax returns all items of income, deduction, credits and expense
consistent therewith which result from their Interests as provided in Treasury Regulation Section 1.761-2
(b). No Co-Owner shall notify the Commissioner of Internal Revenue that such Co-Owner desires that
Subchapter K of the Code apply to the Co-Owners and each Co-Owner hereby agrees to indemnify,
protect, defend and hold the other Co-Owners free and harmless from all costs, liabilities, tax
consequences and expenses, including, without limitation, attorneys= fees, which may result from any
Co-Owner so notifying the Commissioner in violation of this Agreement or otherwise taking a contrary
position on any tax return.

       3d.   Limitation on Number of Co-Owners: Notwithstanding anything to the contrary contained in
this Agreement, at no time shall the number of Co-Owners exceed the limit set forth in Revenue
Procedure 2002-22. I.R.B. 2002-14, as the same may be modified from time to time.

4.      Transfer of Interests: Except as specifically provided in this Agreement, and subject to
compliance with applicable laws and with the restrictions and requirements of the Financing Documents,
each Co-Owner may sell, transfer, convey, pledge, encumber or hypothecate its Interest or any part
thereof, provided that (a) any transferee shall take such interest subject to this Agreement; and (b) any
transferee shall execute and cause to be recorded an assignment and assumption agreement whereby (i)
the transferor assigns to the transferee all of his right, title and interest in and to this Agreement; and (ii)
the transferee assumes and agrees to perform faithfully and to be bound by all of the terms, covenants,
conditions, provisions and agreements of the Agreement with respect to the Interest to be transferred.
Upon execution and recordation of such assumption agreement, the transferee shall become a party to
this Agreement without further action by the other Co-Owners.




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5.     Distributions

        5a.    Source of Distributions: All distributions to be made by the Manager under this Agreement
shall be from the income and proceeds of the Property after payment of debt service due and payable to
any lender under the Financing Documents and payment of all other expenses relating to the Property,
including, without limitation, fees to the Manager and fees to North Star under the Services Agreement.

        5b.    Distributions in General: The Manager shall distribute all available cash to the Co-Owners
in accordance with their Percentages on a monthly or quarterly basis as provided in the Management
Agreement, after paying or reimbursing itself for any fees or expenses paid by the Manager on behalf of
the Co-Owners, paying fees accrued and payable under the Services Agreement to North Star, and
retaining such additional amounts as are necessary to pay anticipated ordinary current and future
expenses of the Property. Amounts of cash retained pursuant to this paragraph shall be invested in
interest-bearing bank accounts. All amounts distributable to the Co-Owners pursuant to this Agreement
shall be paid by check. Further, under the Services Agreement, it is contemplated and has been agreed
by the Co-Owners that the Manager make the foregoing disbursements to North Star, acting in behalf of
the Co-Owners.

6.     Rights and Obligations of Co-Owners

6.1    Status of Relationship: The Co-Owners intend to hold their interests in the Property as tenants
in common, and this Agreement shall not be interpreted to impose a partnership or joint venture
relationship on the Co-Owners either in law or in equity. Accordingly, no Co-Owner shall have any liability
for the debts or obligations incurred by any other Co-Owner with respect to the Property or otherwise, and
no Co-Owner shall have any authority, other than as specifically provided herein, to act on behalf of any
other Co-Owner or to impose any obligation with respect to the Property.

6.2    Bankruptcy

        6.2a Neither the bankruptcy, death, dissolution, liquidation, termination, incompetency or other
incapacity of any Co-Owner, nor the transfer, by operation of law or otherwise, of any right, title or
interest of the Co-Owners in and to the Property or hereunder shall terminate this Agreement. Any
obligation of the Manager, if any, under the Financing Documents or any other document contemplated
hereby may be performed by the Co-Owners and any such performance shall not be construed as a
revocation of this Agreement.
        6.2b The Co-Owners agree that the following shall constitute an Event of Bankruptcy with
respect to any Co-Owner (and any of his, her, or its successors-in-interest): (i) if a receiver, liquidator or
trustee is appointed for any Co-Owner; (ii) if any Co-Owner is substantively consolidated with the
bankruptcy, reorganization, liquidation or arrangement pursuant to federal bankruptcy law, or similar
federal or state law of any other Person; (iii) if, in connection with a bankruptcy, reorganization,
liquidation or arrangement pursuant to federal bankruptcy law, or similar federal or state law, a court
orders a Partition or sale of the Property or of any Co-Owner's interest; (iv) if any Co-Owner (and any of
its successors-in-interest) becomes insolvent, makes an assignment for the benefit of creditors or admits
in writing its inability to pay its debts generally as they become due; (v) if any petition for bankruptcy,
reorganization, liquidation or arrangement pursuant to federal bankruptcy law, or similar federal or state
law shall be filed by or against, consented to, or acquiesced in by, any Co-Owner; provided, however, if
such appointment, adjudication, petition or proceeding was involuntary and not consented to by such
Co-Owner then, upon the same not being discharged, stayed or dismissed within thirty (30) days thereof.
To avoid the inequity of a forced sale and the potential adverse effect on the investment of the other
Co-Owners, the Co-Owners agree that, as a condition precedent to entering into this Agreement, the
Co-Owner holding the Interest to which such Event of Bankruptcy applies shall follow the buy-sell
procedure set forth in Section 6.2c of this Agreement, set forth below.

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        6.2c Upon the occurrence of an Event of Bankruptcy as defined in Section 6.2b, the Co-Owner
that is the subject of, or which holds the Interest that is the subject of the Event of Bankruptcy
(hereinafter “Seller”) shall first make a written offer (an “Offer to Sell”) to sell its Interest to the other
Co-Owners at a price equal to (a) the Fair Market Value (as defined below) of the Seller's Interest in the
Property minus (b) selling, prepayment or other costs that would apply in the event the Property was sold
on the date of the offer. The other Co-Owners shall have twenty (20) days after delivery of the Offer to
Sell to deliver a written acceptance of such Offer to Seller.

The other Co-Owners shall be entitled to purchase a portion of the selling Co-Owner's Interest in
proportion to the Interest of the purchasing Co-Owner as compared to the Interests of all of the
Co-Owners exclusive of the Interest of the Seller. In the event any Co-Owner elects not to purchase its
share of the selling Co-Owner's Interest, the other Co-Owners shall be entitled to purchase additional
Interests in proportion to the undivided Interest of such purchasing Co-Owner as compared to the
Interests of all Co-Owners desiring to purchase such additional Interests.

Fair Market Value shall mean the fair market value of Seller's Interest in the Property on the date the Offer
to Sell is made as determined in accordance with the following method. If any or all of the other
Co-Owners (each a “Purchaser”) accept the Offer to Sell, as set forth above, Seller and Purchaser shall
commence negotiation of the Fair Market Value within fifteen (15) days after the Offer to Sell is accepted.
If the parties do not agree, after good faith negotiations, within ten (10) days, then each party shall
submit to the other a proposal containing the Fair Market Value the submitting party believes to be correct
(each a “Proposal”). If either party fails to timely submit Proposals, then the Fair Market Value shall be
determined by final and binding arbitration in accordance with the procedures set forth below. The
parties shall meet within seven (7) days after delivery of the last Proposal and make a good faith attempt
to mutually appoint a certified MAI real estate appraiser licensed in the jurisdiction of the Property location
who shall have been active full-time over the previous five (5) years in the appraisal of comparable
properties located in the county or city in which the Property is located to act as the arbitrator.

If the parties are unable to agree upon a single arbitrator, then the parties each shall, within five (5) days
after the meeting, each select an arbitrator that meets the foregoing qualifications. The two (2)
arbitrators so appointed shall, within fifteen (15) days after their appointment, appoint a third arbitrator
meeting the foregoing qualifications. The determination of the arbitrator(s) shall be limited solely to the
issue of whether Seller's or Purchaser's Proposal most closely approximates the Fair Market Value. The
decision of the single arbitrator or of the arbitrator(s) shall be made within thirty (30) days after the
appointment of a single arbitrator or the third arbitrator, as applicable. The arbitrator(s) shall have no
authority, unless the parties to the arbitration otherwise agree, to create an independent structure of Fair
Market Value or prescribe or change any or several of the components or the structure thereof, and the
sole decision to be made shall be which of the parties' Proposals most closely corresponds to the Fair
Market Value of the Property. The decision of the single arbitrator or majority of the three (3) arbitrators
shall be binding upon the parties. If either party fails to appoint an arbitrator within the time period
specified above, the arbitrator appointed by one of them shall reach a decision which shall be binding
upon the parties. The cost of the arbitrators shall be paid equally by Seller and Purchaser. The arbitration
shall be conducted in the county where the Property is located, in accordance with the rules for expedited
disposition of commercial disputes promulgated by the American Arbitration Association, as modified
herein.




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The parties shall have no discovery rights in connection with the arbitration. The decision of the arbitrator
(s) may be submitted to any court of competent jurisdiction by the party designated in the decision.
Such party shall submit to the superior court a form of judgment incorporating the decision of the
arbitrator(s), and such judgment, when signed by a judge of the superior court, shall become final for all
purposes and shall be entered by the clerk of the court on the judgment roll of the court. If one party
refuses to arbitrate an arbitrable dispute and the party demanding arbitration obtains a court order
directing the other party to arbitrate, the party demanding arbitration shall be entitled to all of its
reasonable attorneys' fees and costs in obtaining such order, regardless of which party ultimately prevails
in the matter.

       6.2d The closing of an acquisition pursuant to Section 6.2c above shall be held at a mutually
acceptable date and location not later than thirty (30) days after the date the Fair Market Value is
determined, whether by agreement or by arbitration. At the closing, the following shall occur:

              (i)    Seller shall assign to Purchaser or Purchaser’s designee(s) the Interest of the Seller
       in accordance with the instructions of Purchaser, and shall execute and deliver to the Purchaser all
       documents which may be required to give effect to the disposition and acquisition of such Interest,
       in each case free and clear of all liens, claims and encumbrances, with covenants of general
       warranty; and

               (ii)    Purchaser shall pay to Seller the consideration therefore in cash.

        6.2e Sale of Property by Manager is Binding. Any sale or other conveyance of the Property or
any part thereof by the Manager made at the direction of the Co-Owners, or otherwise, pursuant to the
term of this Agreement shall bind the Co-Owners and be effective to transfer or convey all rights, title and
interest of the Co-Owners in and to the Property.

6.3    Rights of Partition

        6.3a The Co-Owners agree generally that any Co-Owner (and any of its successors-in-interest)
shall have the right at any time to file a complaint or institute any proceeding at law or in equity to have
the Property partitioned corresponding to its Percentage (a “Partition”) in accordance with and to the
extent provided by applicable law. The Co-Owners acknowledge and agree that Partition of the Property
may result in a forced sale by all of the Co-Owners.

         To avoid the inequity of a forced sale and the potential adverse effect on the investment by the
other Co-Owners, the Co-Owners agree that, in connection with a Partition, on or before two (2) business
days after a price for the Property has been bid, set or offered (a “Partition Price”) by any third party (a
“Partition Purchaser”) which the Co-Owner instituting the partition is willing to accept, such Co-Owner
shall send all of the other Co-Owners notice of the Partition Price (the “Partition Notice”), and the other
Co-Owners shall have a right of first refusal to purchase the Property at the Partition Price on or before
thirty (30) days after receipt of the Partition Notice (the “Purchase Period”). In the event that prior to the
expiration of the Purchase Period, more than one Co-Owner elects to purchase the Property, then the
electing Co-Owners shall each purchase an equal interest in the Property unless they agree otherwise. In
the event that no Co-Owner elects to purchase the Property on or before the expiration of the Purchase
Period, then the Property may be sold to a Partition Purchaser at a price equal to or greater than the
Partition Price, and the Co-Owners shall have no further right to purchase the Property pursuant to this
Section 6.3a; provided, however, that if the Co-Owner seeking Partition fails to sell the Property on or
before six (6) months after the date of the Partition Notice, then prior to selling the Property to a Partition
Purchaser, the Co-Owner seeking Partition must, once again, give the other Co-Owners a right of first
refusal to purchase the Property pursuant to this Section 6.3a.

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Notwithstanding the foregoing, in the event that any portion of the Property is subject to the Financing
Documents or otherwise security for a debt, the Co-Owners shall not be entitled to Partition the Property if
such Partition shall violate the terms or conditions of the Financing Documents or other such
indebtedness.

        6.3b The closing of a sale in connection with a right of first refusal exercised pursuant to Section
6.3a above shall be held at a mutually acceptable date and location not later than forty-five (45) days
after the expiration of the Purchase Period. At the closing, the following shall occur:

                (i)     The Co-Owners seeking Partition shall assign to the acquiring Co-Owner(s), or its or
       their designee(s), the Property in accordance with the instructions of the acquiring Co-Owner(s),
       and shall execute and deliver to the acquiring Co-Owner(s) all documents which may be required
       to give effect to the disposition and acquisition of such Interest(s), in each case free and clear of
       all liens, claims and encumbrances, with covenants of general warranty; and

              (ii)    The acquiring Co-Owner(s) shall pay to all of the Co-Owner(s) the consideration
       therefore in cash.

6.4    Actions by Co-Owners

        6.4a Unanimous consent of the Co-Owners shall be required prior to taking the following actions
with respect to the Property: (i) selling or otherwise disposing of all of the Property, (ii) obtaining,
amending or renegotiating any financing secured by or encumbering the Property; (iii) materially altering
or changing the physical condition or legal status of the Property; (iv) engaging in any act or activity with
respect to the Property that would be outside the normal course of holding real estate for passive
investment; (v) contributing additional funds pursuant to Section 6.5; (vi) hiring a replacement Manager
and negotiating, amending and renewing any management agreement with the then-serving Manager;
(vii) amending, supplementing or terminating this Agreement; (viii) prepaying any and all loans pertaining
to the Property in whole or in part; and (ix) amending or supplementing the Services Agreement. All other
decisions required to be taken by the Co-Owners with respect to the Property may be approved by the
Co-Owners who own more than fifty percent (50%) of the total Percentage of the Interests in the
Property.

        6.4b Whenever an action requiring unanimous by the Co-Owners is proposed, the Manager shall
first send to all Co-Owners written notice (the “Decision Notice”) setting forth the particulars of the
decision (the “Decision”). The Decision Notice shall include a ballot on which the Co-Owner may mark its
vote for or against the Decision. Co-Owners shall respond to the Decision Notice by returning the marked
ballot to the Manager within fourteen (14) days of the receipt of the Decision Notice. A Co-Owner not
returning the ballot within the prescribed period shall be deemed to have voted for the Decision. The
Manager shall notify all Co-Owners of the results of the vote (the “Outcome Notice”). If the Decision is
unanimous, the Manager shall be authorized to take action with respect to such Decision. If the Decision
is not unanimous, then the procedure in Section 6.4c hereof shall apply.

        6.4c If less than 75% of the Interests of the Co-Owners approve or consent to the Decision, no
action can be taken with respect to such Decision. If the Decision is not unanimous, but at least 75% of
the Interests of the Co-Owners shall have (or are deemed to have) voted for such Decision (the “Majority
Group”), the Majority Group shall have the right, in its sole discretion, to elect within thirty (30) days of
the Outcome Notice to make an offer (the “Offer”) to purchase all of the Interests of the Co-Owners
voting against such Decision (the “Minority Group”) for a purchase price equal to the Fair Market Value of
the Interest or collective Interests in the Property owned by the Minority Group. The Fair Market Value
shall be determined in a manner consistent with the method set forth in Section 6.2c herein.

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On or before fifteen (15) days after the date of the Offer, the members of the Minority Group shall either
(i) consent to the Decision; (ii) sell their Interests to the Majority Group for the Fair Market Value of the
Interest or collective Interests in the Property owned by the Minority Group; or (iii) if the members of the
Minority Group do not elect either alternative (i) or (ii), they must purchase the Interests of the Majority
Group under substantially the same terms and conditions as offered by the Majority Group, provided that
the amount to be paid by the Minority Group shall be adjusted to reflect the Percentage ownership of the
Majority Group's Interests. If some, but not all, of the Co-Owners who are in the Minority Group elect to
consent to the Decision, those consenting members shall then become members of the Majority Group for
purposes of (ii) and (iii) above. The obligation of the Majority Group or Minority Group to acquire the
other group's Interest, and the allocations of the Interests amongst such group shall be apportioned
between the members of the purchasing group as they unanimously agree. If they do not unanimously
agree, the obligation to acquire the Interests and the allocation thereof shall be apportioned based upon
each member's pro rata share calculated as their current Interest divided by all the Interests of the
purchasing group. In the event a member of the Minority Group fails to respond or act as required by this
Section 6.4c, each member of the Minority Group shall be liable to the other Co-Owners for all
consequential damages and attorneys' fees incurred as a result of such failure.

        6.4d The closing of an acquisition pursuant to Section 6.4c above (the “Closing”) shall be held at
a mutually acceptable date and location (the “Closing Date”) not later than forty-five (45) days after the
date of the Offer. At the Closing, the following shall occur:

               (i)    The selling Co-Owner(s) shall assign to the acquiring Co-Owner(s) or its or their
       designee(s) the Interest(s) of the selling Co-Owner in accordance with the instructions of the
       acquiring Co-Owner(s), and shall execute and deliver to the acquiring Co-Owner(s) all documents
       which may be required to give effect to the disposition and acquisition of such Interest(s), in each
       case free and clear of all liens, claims and encumbrances, with covenants of general warranty; and

               (ii) The acquiring Co-Owner(s) shall pay to the selling Co-Owner(s) the consideration
                    therefore in cash.

       6.4e Notwithstanding the above, for all purposes of Sections 6.4a through 6.4d, a Co-Owner
which is an Affiliate of the Manager shall not vote on, or be counted with respect to (i) any actions to
provide for an audit of the Property operations, (ii) any termination of the Manager in accordance with the
terms hereof, or (iii) any termination of any property management agreement entered into in accordance
with the terms thereof.

      6.4f    Obligation to Contribute Property to Another Co-Owner in the Event of Foreclosure upon
Only Certain Co-Owners: In the event that a lender forecloses on one or more, but not all, of the
Co-Owners, then those Co-Owners who are joined in the foreclosure and lose their respective Interests in
the Property shall have a right to a proportionate share of the Property owned by those Co-Owners who
were not joined in the foreclosure and did not lose their interest in the Property. Any such right, however,
shall be subordinate to the rights of the Lender.




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       6.4g Documents: The Co-Owners each agree to execute all documents required in connection
with a sale or refinancing of the Property and such additional documents as may be required under this
Agreement or may be reasonably required to effect the intent of the Co-Owners with respect to the
Property or any Financing Documents. In the event that any Co-Owner fails to so execute any such
documents and return the documents to the Manager on or before thirty (30) days after such Co-Owner
receives a copy of such documents from the Manager, (a) the Manager is authorized and directed to
execute the same on such Co-Owner's behalf and Co-Owner hereby appoints the Manager as Co-Owner's
attorney-in-fact for such purpose, and (b) the non-executing Co-Owner shall be liable to the other
Co-Owners for all consequential damages and attorneys' fees incurred as a result of such failure.

6.5      Obligation to Fund Deficits: The Manager shall notify Co-Owners if it determines that there are
insufficient funds available to pay the Co-Owners' respective shares of expenses of the Property, including
debt service. The Co-Owners shall decide how to provide such funds, whether by borrowing, contribution
or otherwise. In the event any Co-Owner agrees to contribute additional funds but such Co-Owner fails to
contribute such additional funds (the “Unpaid Funds”) by the date for payment set forth in the Outcome
Notice (as hereinafter defined), the Manager shall advise the contributing Co-Owners (the “Contributing
Co-Owners”) of such failure and the total amount of the Unpaid Funds (the “Failure Notice”), and the
Contributing Co-Owner(s) may elect to contribute, in such proportion as they may determine, the Unpaid
Funds on the non-paying Co-Owner's behalf by giving notice to the Manager of their intention to
contribute the Unpaid Funds on or before ten (10) days after receipt of the Failure Notice. In the event
two or more Co-Owners desire to pay the Unpaid Funds and are unable to agree on the apportionment
thereof, each such Co-Owner shall be entitled to pay the Unpaid Funds in the ratio that his Interest bears
to the total Interests of the Co-Owners desiring to pay the Unpaid Funds.

Immediately after the Manager receives the Unpaid Funds from the Contributing Co-Owner(s), the
Manager shall send each non-paying Co-Owner a notice indicating the amount of the Unpaid Funds that
each Contributing Co-Owner contributed on each non-paying Co-Owner's behalf (the “Reimbursement
Notice”), and immediately after receiving the Reimbursement Notice, and in no event later than thirty (30)
days following receipt of the Reimbursement Notice, the non-paying Co-Owner shall reimburse each
Contributing Co-Owner the amount indicated in the Reimbursement Notice plus interest thereon at the
rate of Eighteen Percent (18.00%) per annum (but not more than the maximum rate allowed by law) from
the date advanced by the Contributing Co-Owner until paid. The Manager acknowledges and agrees that,
upon receipt of written notice from any Contributing Co-Owner(s) of its failure to be reimbursed by a
non-paying Co-Owner pursuant to a Reimbursement Notice, the Manager will use available cash otherwise
distributable to the non-paying Co-Owner to reimburse the Contributing Co-Owner(s) for all funds
advanced with interest thereon, as provided in the Reimbursement Notice. The remedies against a
non-paying Co-Owner provided for herein are in addition to any other remedies that may otherwise be
available, including the right to obtain a lien against the undivided interest in the Property of the
non-paying Co-Owner, to the extent allowed by law.




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7.     Indemnifications

         7a.     Indemnification of Other Co-Owners: Each Co-Owner agrees to indemnify the other
Co-Owners (and the manager and members of the other Co-Owners) from and against any and all
Liabilities, which may be imposed on, incurred by or asserted at any time against the other Co-Owners (or
the manager and members of the other Co-Owners) as a result of (a) the indemnifying Co-Owner's breach
of this Agreement, or (b) any action by the indemnifying Co-Owner which causes a liability under the
Financing Documents, including but not limited to liability of the Co-Owners under the non-recourse
carve-outs in the Financing Documents or under the Co-Owner Indemnity Agreements. In no event shall
this indemnity be relied on or enforceable by third parties other than the other Co-Owners, the manager
and members of the other Co-Owners, and/or their successors and assigns. Without limiting the
foregoing, this indemnity may not be relied on or enforced by a lender or any other third party creditor of
the Property.

        7b.    Right of Contribution: If a Co-Owner is required to pay a lender more than such
Co-Owner's percentage share of the Loan, then such Co-Owner shall have a right of contribution against
all other Co-Owners to recover any excess amounts paid to said lender. Any such amounts due shall be
paid within 30 days of receipt of written notice.

8.      Termination of Agreement: This Agreement shall terminate on December 31, 2036; or upon the
earlier unanimous written election of the Co-Owners, provided all loans obtained by the Co-Owners,
secured by the Property, have been paid in full, unless the Co-Owners elect to extend the term of this
Agreement.

9.     Supplements and Amendments: This Agreement may be supplemented or amended by a
written instrument signed by the Manager and all the Co-Owners, but if in the reasonable opinion of the
Manager any amendment adversely affects any right, duty or liability of, or immunity or indemnity in favor
of, the Manager under this Agreement, the Financing Documents, or any of the documents contemplated
hereby to which they are a party, or would cause or result in any conflict with or breach of or default
under any terms, conditions or provisions of its charter documents or bylaws or any document
contemplated hereby to which they are a party, the Manager may, in its sole discretion, decline to enter
into such amendment.

10.    General Provisions

       10a. Limitations on Rights of Others: Nothing in this Agreement, whether express or implied,
shall give to any Person other than the Co-Owners any legal or equitable right, remedy or claim
hereunder.

        10b. Notices, Etc:       All notices, requests, demands, consents and other communications
(collectively “Notices”) required or contemplated by the provisions hereof shall refer on their face to this
Agreement (although failure to do so shall not make such Notice ineffective), shall, unless otherwise
stated herein, be in writing and shall be (a) personally delivered, (b) sent by reputable overnight courier
service, (c) sent by certified or registered mail. postage prepaid and return     receipt requested, or (d)
transmitted by telephone facsimile with electronic confirmation of receipt, in each case, to the Co-Owners
at the address and/or fax set forth opposite their signatures hereto, or at such other address and
telephone facsimile number as shall be designated, respectively, by the Co-Owners in a written notice to
the other Persons receiving Notices pursuant to this Section.




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Notices given pursuant to this Section shall be deemed received upon the earliest of the following to
occur: (i) upon personal delivery; (ii) on the fifth day following the day sent, if sent by registered or
certified mail; (iii) on the next business day following the day sent, if sent by reputable overnight courier;
and (iv) if transmitted by telephone facsimile, on the day sent if such day is a business day of the
addressee and the telephone facsimile is received by the addressee by 5:00 p.m. local time of the
addressee on such day and otherwise on the first business day of the addressee after the day that the
telephone facsimile is sent.

        10c. Severability: Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

        10d. Separate Counterparts: This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.

        10e. Successors and Assigns: All covenants and agreements contained herein shall be binding
upon and inure to the benefit of the Co-Owners and their successors and assigns, all as herein provided,
and shall, as to each of the Co-Owners and their successors and assigns operate as covenants running
with the land. Any request, notice, direction, consent, waiver or other writing or action by the Co-Owners
shall bind each of their successors and assigns.

        10f.   Usage of Terms: With respect to all terms in this Agreement, the singular includes the
plural and the plural words importing any gender include the other gender; references to writing include
printing, typing, lithography and other means of reproducing words in a visible form; references to
agreements and other contractual instruments include all subsequent amendments thereto or changes
therein entered into in accordance with their respective terms and not prohibited by this Agreement;
references to Persons include their successors and permitted assigns; and the term including means
including without limitation.

       10g. Headings: The headings of the various Articles and Sections herein are for convenience of
reference only and shall not define or limit any of the terms or provisions hereof.

        10h. Governing Law: This Agreement shall be governed by, and construed in accordance with,
the laws of the state in which the Property is located applicable to contracts to be performed entirely
within such state, including all matters of construction, validity and performance.

       10i.    Possession: The Co-Owners intend to lease the Property at all times and no Co-Owner shall
have the right to occupy or use any portion of the Property at any time during the term of this Agreement.




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       10j.     Mutuality; Reciprocity; Runs With the Land: All provisions, conditions, covenants,
restrictions, obligations and agreements contained herein are made for the direct, mutual and reciprocal
benefit of each and every part of the Property, shall be binding upon and shall inure to the benefit of
each of the Co-Owners, and their respective heirs, executors, administrators, successors, assigns,
devisees, representatives, lessees and all other persons acquiring any undivided interest in the Property
or any portion thereof whether by operation of law or any manner whatsoever (collectively “Successors”);
shall create mutual, equitable servitudes and burdens upon the undivided interest in the Property of each
Co-Owner in favor of the Interest of every other Co-Owner; shall create reciprocal rights and obligations
between the respective Co-Owners, their Interests in the Property, and their Successors; and shall, as to
each of the Co-Owners and their Successors operate as covenants running with the land, for the benefit
of the other Co-Owners pursuant to applicable law. It is expressly agreed that each covenant contained
herein (i) is for the benefit of and is a burden upon the undivided Interests of each of the Co-Owners; (ii)
runs with the undivided Interest of each Co-Owner; and (iii) benefits and is binding upon each
Successor owner during its ownership of any undivided Interest, and each owner having any
interest therein derived in any manner through any Co-Owner or Successor. Every person or entity who
now or hereafter owns or acquires any right, title or interest in or to any portion of the Property is and
shall be conclusively deemed to have consented and agreed to every restriction, provision, covenant,
right and limitation contained herein, whether or not such person or entity expressly assumes such
obligations or whether or not any reference to this Agreement is contained in the instrument conveying
such interest in the Property to such person or entity. The Co-Owners agree that, subject to the
restrictions on transfer contained herein, any Successor shall become a party to this Agreement upon
acquisition of an undivided interest in the Property as if such person was a Co-Owner initially executing
this Agreement.

        10k. Attorneys' Fees: If any action or proceeding is instituted between all or any of the parties
to this Agreement (including, but not limited to, the Manager and the Co-Owner(s)) arising from or related
to this Agreement, the party or parties prevailing in such action or arbitration shall be entitled to recover
from the other party or parties all of its or their costs of action or arbitration, including, without limitation,
reasonable attorneys' fees and costs as fixed by the court or arbitrator therein.

        10l.   Waivers: No act of any Co-Owner shall be construed to be a waiver of any provision of this
Agreement, unless such waiver is in writing and signed by the Co-Owner affected. Any Co-Owner may
specifically waive any breach of this Agreement by any other Co-Owner, but no such waiver shall
constitute a continuing waiver of similar or other breaches.




                                           (Signatures on next page)




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 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their re-
                  spective officers as of the day and year first above written.

                                            Co-Owners

____________________________                    Address: _____________________
                                                         _____________________


By:____________________________                 Email: _______________________
    ____________________________                Telephone: ___________________
Its: Authorized Representative                  Facsimile:               _____




____________________________                    Address: _____________________
                                                         _____________________


By:____________________________                 Email: _______________________
    ____________________________                Telephone: ___________________
Its: Authorized Representative                  Facsimile:               _____




____________________________                    Address: _____________________
                                                         _____________________


By:____________________________                 Email: _______________________
    ____________________________                Telephone: ___________________
Its: Authorized Representative                  Facsimile:               _____




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                                          Fall Lake Apartments

                                  NSRES Services Agreement

       This Services Agreement (the “Agreement”), is made and entered into as of the ______ day of
____________, 20___ between North Star Real Estate Services, LLC (“North Star”) and the parties
executing this Agreement as Co-Owners (herein referred to as the “Co-Owners”):


                                              Witnesseth:

WHEREAS, Co-Owners hold or acquiring title as tenants in common to that certain real property located in
the City of _________, State of _________, which property is commonly known as
“__________________” and is more fully described in Exhibit “A” attached hereto and made a part hereof
(hereinafter referred to as the “Property”); and

WHEREAS, North Star has rendered valuable acquisition and consulting services to Co-Owners in locating,
negotiating and placing the Property under contract for acquisition and in securing and negotiating
mortgage financing through _______________ (the “Lender”) to assist in the acquisition of the Property,
as well as securing the services of ____________________ as the Property manager (the “Manager”)
under a management contract to lease and manage the Property on behalf of the Co-Owners, and has
also agreed to render further services to the Co-Owners in connection with their ownership, operation
and future disposition of the Property, to include but not be limited to providing a single point of
communication for the Manager, the Lender and other persons to deal with the Co-Owners with respect to
the Property and the ownership interest of the Co-Owners therein; and

WHEREAS, the Co-Owners have executed that certain Tenancy-in-Common Agreement of even date
herewith (the “Co-Ownership Agreement”) in order to set forth certain understandings and obligations
concerning their joint investment in the Property and have provided to North Star a copy of that executed
document; and

WHEREAS, the parties hereto desire to enter into an agreement describing the services which have been
rendered and are to be rendered by North Star to and for the benefit of the Co-Owners, and setting forth
the basis of the compensation to be paid by the Co-Owners to North Star in consideration of such past
and future services;
NOW, THEREFORE, in consideration of the premises, mutual covenants and agreements contained herein,
it is mutually agreed by and between Co-Owners and North Star as follows:

1.     Services by North Star

1a.    Services Previously Rendered: Each of the Co-Owners hereby acknowledges and agrees that,
       based upon prior verbal and written understandings and agreements between each of them and
       North Star (the “Prior Arrangements”), North Star has rendered valuable advisory and consulting
       services to them in connection with (i) identifying, negotiating for and entering into an acquisition
       contract for the Property; (ii) in securing, negotiating for, and obtaining mortgage financing to
       assist in paying the purchase price necessary for acquisition of the Property and in securing the
       services of the Manager; and (iii) in connection with the foregoing also contracting for or retaining
       the services of third-party providers of various services related to the due diligence process, the
       negotiation process and the documentation and closing of the financing with the Lender (including,
       but not limited to obtaining and retaining legal counsel to assist North Star in its services to the
       Co-Owners). Co-Owners acknowledge and agree that the Prior Arrangements intended and
       contemplated appropriate compensation to North Star for such efforts and services, to include the
       reimbursement of out-of-pocket costs and expenses incurred in the performance of these services
       for the Co-Owners.

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1b.    Additional Services: Co-Owners hereby retain North Star (i) as Co-Owners’ continuing consultant
       and advisor with respect to their ownership, operation, use and ultimate disposition of the
       Property; (ii) as advisor and assistant with respect the proper coordination of the interests and
       duties, rights and benefits of the Co-Owners pursuant to the Co-Ownership Agreement, and (iii) as
       a special representative and designee of the Co-Owners (subject to instruction and direction by the
       Co-Owners) for third-parties needing to deal with the Co-Owners, including, but not necessarily
       limited to the Manager, the Lender and other persons who have business with or about the
       Property, including the following listed services and duties to and for the benefit of the Co-Owners:

       (i)     To monitor and periodically evaluate the performance of the
               Manager as the current property manager with respect to the Property;

       (ii)    In the event that the Manager or any successor Manager shall resign or be terminated, to
               assist Co-Owners in the identification, selection and retention of a replacement Manager for
               the affected portion of the Property in accordance with the terms and provisions of the
               Co-Ownership Agreement;

       (iii)   To act as a liaison and point of contact with the Manager (including any successor
               manager), including the right and authority to receive on behalf of Co-Owners any notices
               under property management agreements, leases or other contracts pertaining to the
               Property, to transmit such notices to the respective Co-Owners, together with any
               recommended response or other course of action, to receive from the respective Manager
               serving from time to time monthly or other disbursements of all income or profits available
               for distribution to the Co-Owners, to retain from the sums so received from Managers the
               compensation then due and payable by Co-Owners to North Star under the terms of this
               Agreement, together with any other sums or reserves which North Star may have been
               authorized to retain or apply with written approval of the Co-Owners, and to disburse all of
               the funds received, net of such compensation, reserves and other amounts, to the
               Co-Owners in accordance with their respective interests, disbursements of such receipted
               funds to be made within a reasonable period of time after receipt, but not less than once
               during each calendar month;

       (iv)    To assist in and facilitate any notices, responses, or other communications among the
               Co-Owners under the provisions of the Co-Ownership Agreement; and

       (v)     To consult with and advise the Co-Owners, as necessary and appropriate, in connection
               with any matters affecting the leasing, managing, operating, maintenance, marketing, sale,
               disposition or with respect to the contemporary value of the Property, In this regard, as
               provided in the Co-Ownership Agreement, the Co-Owners have determined that in light of
               the term of the current financing with the Lender, they will have to, in advance of the
               maturity date of such financing, proceed with either a disposition or refinance of the
               Property and hereby agree that they shall timely proceed to effectuate such disposition or
               refinance and also commit and agree that North Star will continue as consultant and
               advisor to assist in identifying appropriate refinancing, negotiating and putting the
               same in place or, in the alternative, assist with the listing, marketing and ultimate
               disposition of the Property on be half of the Co-Owners.




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                                          Fall Lake Apartments

       (vi)   To provide services related to other third-party professionals or advisors with respect to the
              Property, its ownership, operation, management, leasing, uses, improvement, and possible
              disposition, marketing or sale, including the retention or employment of accountants,
              attorneys, architects, engineers and other persons (if, but only if, approved in writing by
              the Co-Owners) for the rendering of services or advice to or for the benefit of the
              Co-Owners with respect to such actions, activities or matters.

1c.    The authority and duties of North Star under this Agreement shall be administrative in nature only,
       and shall be subject to any limitations that the Co-Owners may reasonably impose from time to
       time, it being the intent of the parties that the Co-Owners shall have and retain control over all
       decisions concerning their investment in the Property, and its leasing and operations, consistent
       with the terms of the Co-Ownership Agreement and any property management agreements in ef-
       fect from time to time. Specifically, notwithstanding the broad statement and scope of the
       authority of North Star as the “Representative” of the Co-Owners under the management
       agreement with the Manager, North Star hereby acknowledges and agrees that it will exercise such
       rights and powers strictly in compliance herewith and pursuant to instruction by the Co-Owners
       under the Co-Ownership Agreement. To facilitate the ability of North Star to act effectively and
       efficiently on behalf of the Co-Owners, each of the Co-Owners will execute and deliver to North
       Star a limited power of attorney that may be used by North Star, upon written instruction or
       direction of each of the Co-Owners, to execute on their behalf certain documents, agreements,
       instruments and contracts incidental to the administration and management of the Property,
       hereby specifically authorizing North Star, in advance, to utilize such power of attorney to execute
       and sign on behalf of each of the undersigned Co-Owners, such incidental papers, documents,
       statements, agreements and filings as shall be needed to fully close and consummate the
       acquisition of the Property and the loan from the Lender.

2.     Compensation for Services

2a.    Basis of Compensation: In consideration of the services by North Star identified and described in
       Section 1 of this Agreement, Co-Owners agree to pay to North Star, and North Star agrees to
       accept, compensation consisting of a Setup Fee together with that portion of the Net Operating
       Income, Refinancing Proceeds and Disposition Proceeds of the Property, in such amounts and as
       such terms are hereinafter defined. The percentage compensation payable to North Star is
       computed with reference to future income but not the profits anticipated from the Properties and
       such compensation is payable regardless of whether a profit is realized from the Property by the
       Co-Owners and, it is, therefore, not the intent of Co-Owners and North Star that North Star be
       considered or become a partner of the Co-Owners for state law, federal tax, or any other purpose.
       The obligations of the Co-Owners as to the compensation for North Star are several obligations
       only and each Co-Owner is liable only for that portion of the said compensation equal to its
       percentage undivided tenant-in-common interest in the Property. In connection with this
       Agreement, Co-Owners have and hereby reaffirm, that North Star shall be their representative for
       the receipt of funds, revenues, payments and amounts derived from or arising out of the Property
       and will be receiving distributions payable to the Co-Owners under the management agreement
       with the Manager. In that regard, Co-Owners hereby consent and agree that, prior to any dis-
       bursement to the Co-Owners, North Star is irrevocably and absolutely authorized hereunder, to
       deduct and retain any amounts payable to North Star hereunder. This same authorization shall
       apply with respect to proceeds of the sale or disposition of the Property or the proceeds of any
       refinancing.

2b.    Setup Fee: Co-Owners shall pay to North Star, at the closing of the purchase of the Property, a
       Setup Fee in the amount of $150,000.00 (as previously represented and agreed.



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2c.    NOI Percentage: Co-Owners shall pay to North Star, no later than 30 days after the end of each
       calendar month the following percentages of net operating income (“NOI”, as that term is herein-
       after more fully defined) for the periods hereinafter identified:

              (i)     From acquisition of the Property, through December 31, _______, _______%.

              (ii)    January 1, _______ through and including December 31, ______, ________%.

              (iii)   January 1, ____ through and including December 31, ______, ________%.

              (iv)    January 1, ____ through and including December 31, ______, ________%.

              (v)     After December 31, ____ so long as this Agreement shall be in place, ______%.

       For purposes of this Agreement “net operating income” or “NOI” shall be determined for each
       calendar month based on all income from operations of the Property (inclusive of any operating
       reserves previously set aside but no longer required and any “loss of rents” insurance recovery),
       net of operating expenses but before payment of debt service (both principal and interest) and
       reasonable reserves set aside for future operating expenses.

2d.    Refinancing Proceeds: Co-Owners shall pay to North Star, at the closing of any such loan, $
       ______________ of the Refinancing Proceeds created, produced, or otherwise available thereby.
       The term “Refinancing Proceeds” shall consist of and include all proceeds from the refinancing of,
       or obtaining of any loans secured by a trust deed, mortgage or similar interest in the Property
       available for distribution, after paying or providing for the payment of all costs incurred in such
       refinancing and all amounts applied or to be applied to the repayment or reduction of the
       indebtedness being refinanced or to reserves or expenditures for repairs, replacement or
       restoration required by the respective lender in connection with the refinancing.

2e.    Disposition Proceeds: Co-Owners shall pay to North Star, at the closing of, or payment for, any
       sale, transfer, assignment, condemnation, destruction of or damage to the Property, $ 500,000.00
       of the Disposition Proceeds created, produced, or otherwise available thereby. The term
       “Disposition Proceeds” shall consist of all proceeds in excess of the Co-Owners’ unrecovered capital
       investment in their interest as a Co-Owners of the Property obtained or produced from the sale,
       transfer, assignment, condemnation, destruction of or damage to the Property available for
       distribution, after paying or providing for the payment of all costs incurred or anticipated in the
       determination and collection thereof, and all amounts applied or to be applied to the repair,
       replacement, or restoration of the Property, to the repayment or reduction of any indebtedness
       secured by the Property, or to any reserves for capital items. The unrecovered Investment of a
       particular Owner shall consist of such Owner’s pro rata share of the Co-Owners’ initial joint
       investment in the Property reduced by any Disposition Proceeds previously received by such
       Owner. Unrecovered Investment of a particular Owner shall consist of such Owner’s pro rata
       share of the Co-Owners’ initial joint investment in the Property reduced by any Disposition
       Proceeds previously received by such Owner.

2f.    Effect of Termination: The termination of this Agreement, while it will relieve North Star of any
       further authority or duties other than as provided in Section 5 herein below, shall not, except as
       provided in Section 2g herein below, affect the compensation payable to North Star under Sections
       2b, 2c and 2d, which compensation is agreed to be vested and, subject to Section 2g below, will
       continue to be payable so long as the Co-Owners continue to own the Property.



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2g.    Co-Owners’ Termination Without Cause: On any termination of this Agreement by Co-Owners
       under Section 4 below without cause, North Star, at its election and in its sole and absolute
       discretion, and in lieu of continuing to receive its compensation in accordance with Section 2f
       immediately above, may require payment within sixty (60) days following termination from the
       Co-Owners wherein: (i) compensation payable to North Star shall be accrued through the effective
       date of such termination; (ii) any unexpended balance in any operating reserve account shall be
       included in NOI in determining such compensation; (iii) any balance in any capital reserve account
       shall be included in Disposition Proceeds in determining such compensation; and (iv) if such
       termination is not in connection with the sale of the Property, then the Fair Value of the Property
       shall be determined, in accordance with Section 2f herein below, and Disposition Proceeds shall be
       determined as though the Property were sold for such Fair Value, less an allowance of 5% thereof
       for customary and reasonably anticipated costs of sale.

2h.    Fair Value: On any termination of this Agreement by Co-Owners without cause where the Fair
       Value of the Property is to be determined, North Star, within ten (10) days after the date of such
       termination, shall deliver to each Co-Owner a notice setting forth (i) the amount which North Star
       in good faith estimates as the Fair Value of the Property (the “Specified Amount”) and (ii) the
       names of no fewer than three (3) appraisers (the “Nominees”) who are licensed as certified
       general real property appraisers (or the equivalent thereof) pursuant to the licensing authority,
       rules and regulations of the governmental jurisdiction where the Property is located (the “Qualified
       Appraisers”). If North Star fails to provide such notice and information within such 10-day period,
       then the Co-Owners may select any appraiser of said qualification and licensure for purposes of
       determining the Fair Value of the Property. If North Star does provide such notice and informa-
       tion, then during the 10-day period following such notice, the Co-Owners may agree to the
       Specified Value or select one of the Nominees to determine the Fair Value by appraisal of the
       Property. If the Co-Owners fail or refuse to select any of the Nominees within such period, then
       the Specified Value shall control for purposes of determining the compensation payable to North
       Star as a result of such termination of this Agreement.

3.     Actions by Co-Owners: When this Agreement requires a decision, approval or action by the
       Co-Owners or instruction by the Co-Owners to North Star, a “Majority of the Co-Owners” shall
       control and all Co-Owners agree to act, conform, and be legally bound by such decision or action.
       A “Majority of the Co-Owners” means the vote of a majority of the holders of more than 50% of
       the undivided interests in the Property. If an undivided interest is owned “jointly,” any joint party
       may vote their interest. If joint Co-Owners of an interest do not agree, their interest will be
       ignored for the purposes of any such vote. Notwithstanding the foregoing, with respect to any
       actions or decisions requiring a super-majority or unanimity by the Co-Owners under the
       Co-Ownership Agreement or elsewhere within this Agreement, North Star will take instructions
       from the Co-Owners only if such super-majority or unanimity requirement is met.

4.     Term of Agreement: Subject to the last sentence hereof, this Agreement shall continue in force
       for one (1) year and thereafter on a year-to-year basis. This Agreement shall automatically renew
       for additional one-year terms on its existing terms and conditions, provided that no notice of
       termination has been given as set forth in the next sentence and provided further that none of the
       parties are in default.   Co-Owners or North Star may, with or without cause, terminate this
       agreement, upon thirty (30) days’ written notice, subject to the continuing obligations of the
       Co-Owners hereunder, including but not limited to Section 2 hereof.




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5.     Procedure at Termination: Upon any termination of this Agreement, the parties hereto shall
       account to each other with respect to all matters outstanding, including revenues collected. Within
       Forty-Five (45) days after any such termination, North Star shall deliver to Co-Owners the financial
       reports and statements required by this Agreement for any period not covered by such reports at
       the time of termination, and shall deliver to Co-Owners the reports and statements required by this
       Agreement, including reports and statements for the operating period to the date when North Star
       shall cease acting in the capacity as Co-Owners’ consultant and representative.

6.     Status of North Star: It is fully understood and agreed that North Star is an independent
       contractor in the performance of the agreements herein undertaken to be performed, and North
       Star shall, subject to the limitations herein, have full power and authority to select the means,
       method and manner of performing the obligations herein assumed, in order to achieve satisfactory
       operation, management, leasing, and maintenance of the Property.

7.     Property condition: Each Co-Owner represents and warrants that it is relying solely on its own
       inspections, investigations and analyses of the Property in entering into this Agreement and
       acquiring an interest in the Property, and Co-Owner is not relying in any way upon any special
       abilities, representations, statements, agreements, warranties, studies, reports, descriptions,
       guidelines or other information or material furnished by North Star or its affiliates or other
       representatives, whether oral or written, express or implied, of any nature whatsoever, regarding
       any such matters and is acquiring an interest in the property in "as-is" condition. Each Co-Owner
       represents and warrants that it is a sophisticated and experienced real estate owner and operator
       and will rely entirely upon its own independent review of the Property. Each Co-Owner fully
       understands and accepts all risks involved in acquiring an interest in the Property, and is fully
       aware of, accepts, is capable of exercising or fulfilling and intends to exercise, or fulfill, as
       applicable, the rights and responsibilities under all of the transaction documents related to the
       acquisition of an interest as Co-Owner of the Property. Each Co-Owner further acknowledges that,
       prior to the date of this Agreement, Co-Owner has had the opportunity to conduct any and all
       physical inspections of the Property as Co-Owner deems necessary, to review and approve each of
       the transaction documents and to conduct such other tests, investigations and review as Co-Owner
       deems necessary. North Star strongly recommends that Co-Owners personally inspect the
       Property.

8.     No Tax Representations: Each Co-Owner understands that North Star has not obtained, and will
       not obtain a ruling from the Internal Revenue Service ("IRS") that the Property will be treated as
       an undivided interest in real estate as opposed to a partnership interest. Each Co-Owner
       understands that the tax consequences of an investment in the Property, especially the treatment
       of the transaction under Internal Revenue Code ("IRC") section 1031 and the related "1031
       exchange" rules, are complex and vary with the facts and circumstances of each individual
       purchaser. Each Co-Owner specifically represents and warrants that (i) the Co-Owner has
       consulted its own tax and other advisor(s) to the extent it deems necessary regarding a purchase
       of a co-ownership interest in the Property and the treatment of the transaction under IRC section
       1031; and (ii) the Co-Owner is not relying on North Star or any of its affiliates for any tax advice
       regarding the treatment of Co-Owner’s transaction under IRC section 1031 or other advice
       regarding advisability of this real estate purchase. Each Co-Owner’s specific circumstances may
       differ, no assurance can be given and no legal opinion will be provided by North Star that the
       purchase or ownership by each Co-Owner of an interest in the Property will qualify as a section
       1031 exchange.




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9.     Own Investigation, No securities Law Implications:               The interests of Co-Owners in the
       Property have not been, and will not be registered as securities under the securities act of 1933
       (the “Act”) or any state securities laws. It is the intention and agreement of the parties that each
       Co-Owner’s interest in the Property be and is, lawfully and legally, an interest and estate in real
       estate, and is not and does not have the necessary elements of a security as defined under any
       federal or state securities laws or under or in the Act. Each Co-Owner specifically waives and
       releases North Star from all claims and remedies available under the act or other relevant state of
       federal securities laws or regulations. All Co-Owners represent and acknowledge that they have
       been furnished with all information requested by them from North Star concerning the Property.
       However, all Co-Owners further understand and acknowledge that all information provided in the
       form of a business plan or otherwise was prepared by way of projection only, and cannot predict
       or guarantee any particular level of profits or financial success for the Property. All estimates and
       projections prepared for or in connection with the Property are subject to substantial risks and
       contingencies covering an extended period of time. No representations or guarantees of any kind
       were or are intended and none should be inferred with respect to the economic return which may
       accrue to the Co-Owners, or with respect to the success or viability of the Property as a whole. All
       Co-Owners hereby agree that they have or will make their undivided tenant-in-common
       co-ownership interest and estate in the Property with full knowledge and acceptance of the risk of
       making such investment, and without relying on any statements or representations of the
       Property’s profitability or chance of success. The use of funds to acquire the tenant-in-common
       co-ownership interest and estate in the Property entails risks which have been carefully considered
       and accepted by each Co-Owner, including, but not limited to all of the risks associated with real
       estate ownership generally and income or rental property specifically, including the incidents of
       undivided percentage real property title ownership (as modified or otherwise impacted by the
       Co-Ownership Agreement). Each Co-Owner is financially capable of sustaining a loss of their entire
       investment in the Property.

10.    General Terms and Conditions:

10a.   Indemnification – Reimbursement and Payment of Out-of-Pocket Costs and Expenses: The
       Co-Owners hereby agree to indemnify and hold North Star harmless from and against any and all
       liabilities, obligations or other claims that may arise, including, but not limited to, reasonable
       attorneys’ fees and court costs, as a result of a breach of this Agreement by the Co-Owners, or any
       of them. In this regard, in connection with the closing of the acquisition of the Property and the
       mortgage financing of such acquisition with the Lender, Co-Owners agree, severally in proportion
       to their respective percentage undivided tenant-in-common interests, pay or, as applicable,
       reimburse all charges of third parties incurred by North Star (directly or indirectly on behalf of the
       Co-Owners) in the performance of its services as provided hereinabove (to include the legal
       services related to the structuring of the Co-Ownership arrangements, the process of applying for,
       obtaining the commitment for Lender’s financing, the closing of the same and the finalization and
       closing of the acquisition of the Property). All such costs will be paid/reimbursed by Co-Owners in
       connection with and as part of the closing of the acquisition and Lender’s financing.




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10b.   Warranties:   The parties warrant and represent that they have had an opportunity to consult
       consulted, legal counsel prior to the execution of this Agreement and execute this Agreement with
       full knowledge of its meaning and effect.

       The parties further agree that no representations, warranties, agreements or covenants have been
       made with regard to this Agreement other than those set forth herein; and that in entering into
       this Agreement, no party is relying upon any representation, warranty, agreement or covenant not
       set forth herein. Each of the persons executing this Agreement represents and warrants to the
       other that it has the authority to enter into this Agreement on behalf of the parties they represent.
       The representations, warranties, covenants, agreements and indemnities set forth in this
       Agreement shall remain in full force and effect after the execution and delivery of this Agreement
       and the delivery of all instruments and documents to be delivered pursuant hereto.

10c.   Captions: Captions in this Agreement are for convenience only and are not intended to affect any
       provisions of this Agreement.

10d.   Waiver: No claim arising out of a breach of this Agreement can be discharged in full, or in part, by
       a waiver or renunciation of the claim or right, unless the waiver or renunciation is supported by
       consideration and is in writing signed by the aggrieved party. Moreover, the failure of a party to
       this Agreement to exercise any right or remedy provided by the agreement or by law shall not be a
       waiver of any obligation or right of the parties, or of any similar default, nor shall it constitute a
       modification of this Agreement.

10e.   Amendment: No modification, waiver, amendment, discharge or change of this Agreement shall
       be valid unless the same is in writing and signed by the party to be charged.

10f.   Remedies: The parties may take any action in law or equity required to enforce their rights under
       this Agreement, including but not limited to suits for damages and/or specific performance. In the
       event that North Star seeks injunctive relief based upon the breach of the Co-Owners or any of
       them hereunder, it is specifically agreed that no bond shall be required.

10g.   Severability:   If any provision in this Agreement is held by a court or tribunal of competent
       jurisdiction to be invalid, void or unenforceable for whatever reason, the remaining provisions not
       so declared shall nevertheless continue in full force and effect without being impaired in any
       manner whatsoever, and the illegal or unenforceable provision shall be modified so as to conform
       to the original intent of this Agreement to the greatest extent legally permissible.

10h.   Legal Fees: Should any party default in or be in breach of any of the covenants, agreements,
       representations or warranties herein contained, the non-defaulting party or the non-breaching
       party (in the event litigation is commenced with respect to said default or breach, the prevailing
       party) shall be entitled to all costs and expenses, including reasonable attorneys’ fees, whether
       litigation has been commenced or not, which may arise or accrue from enforcing any of the terms
       of this Agreement, terminating this Agreement, or pursuing any remedy provided hereunder or by
       applicable law.

10i.   Successions: Subject to any and all restrictive provisions hereinabove set forth, this Agreement
       shall bind and inure to the benefit of and be enforceable by the parties hereto, their respective
       heirs, administrators, executors, successors and assigns.




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10j.   Third Parties:   Except as is otherwise provided for herein, each of the parties understands,
       acknowledges and agrees that no rights or interests whatsoever are given by this Agreement to a
       party not a party of this Agreement.

10k.   Governing Law, Exclusive Jurisdiction and Venue: Irrespective of its place of execution or
       performance, this Agreement shall be construed and enforced in accordance with the laws of the
       State of Utah. The parties hereto stipulate and agree that exclusive jurisdiction and venue for any
       dispute related hereto shall be with the state and/or federal courts located in Salt Lake County,
       Utah.

10l.   Execution: This Agreement may be executed in counterparts each of which shall be deemed to be
       an original but all of which together shall constitute one and the same instrument. Further, this
       Agreement may be executed and the signatures transmitted by email, facsimile transmission or
       their equivalents, all of which shall be deemed to be an original hereof for all purposes.


10m.   Time; Drafting Presumptions: For purposes of this Agreement, time is of the essence. Each of the
       parties understands, acknowledges and agrees that each of the parties hereto has contributed to
       the drafting of this Agreement, and no provision hereof shall be construed against any party hereto
       as being the draftsman thereof. This Agreement shall therefore be construed without regard to
       any presumption or other rule requiring construction against the party causing the Agreement to
       be drafted. If any words or phrases in this Agreement shall have been stricken out or otherwise
       eliminated, whether or not any other words or phrases have been added, this Agreement shall be
       construed as if the words or phrases so stricken out or otherwise eliminated were never included in
       this Agreement and no implication or inference shall be drawn from the fact that said words or
       phrases were so stricken out or otherwise eliminated.

10n.   Number and Gender: All terms and words used in this Agreement, regardless of the number or
       gender in which they are used, shall be deemed to include any other number or any other gender
       as the context may require.

10o.   Notices: Any notices or other communications required or permitted by this Agreement shall be in
       writing and delivered personally or by messenger or a nationally recognized overnight courier
       service, or alternatively, shall be sent by United States certified mail, return receipt requested. The
       effective date (the “date of delivery”) of any notice shall be the date of delivery of the notice by
       personal delivery, or if mailed or sent by messenger or courier service, shall be on the third day
       after delivering such notice to the messenger service, courier service or the deposit in the United
       States Mail with postage prepaid thereon (using certified mail with return receipt requested). Each
       party hereby designates
       the address for such party as set forth next to the party’s signature on the signature page of this
       Agreement as its notice address, but any party may change its notice address upon not less than
       ten (10) days notice to the other parties.




                                        (Signatures on next page.)




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                                          Fall Lake Apartments


 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their re-
                  spective officers as of the day and year first above written.

                                              North Star

North Star Real Estate Services, L.L.C.    Address: 4001 S. 700 E., Suite 500
                                                     Salt Lake City, Utah 84107

By:____________________________                   Email: roger@nsres.com
     Roger Bragg                                  Telephone: 801-264-6655
Its: Manager                                      Facsimile: 801-401-7398

                                              Co-Owners

         __________________________               Address: ___________________
                                                           ___________________

By:____________________________                   Email: _____________________
    ____________________________                  Telephone: _________________
Its: Authorized Representative                    Facsimile:               ___



         __________________________               Address: ___________________
                                                           ___________________

By:____________________________                   Email: _____________________
    ____________________________                  Telephone: _________________
Its: Authorized Representative                    Facsimile:               ___



         __________________________               Address: ___________________
                                                           ___________________

By:____________________________                   Email: _____________________
    ____________________________                  Telephone: _________________
Its: Authorized Representative                    Facsimile:               ___




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                                         Operating Agreement

                                             Of:
                      ___________________________________________
                             a Delaware limited liability company

        THIS OPERATING AGREEMENT (this “Agreement”) of ____________________, a Delaware
limited liability company (the “Company”), dated effective as of __________, 20___, is by ___________,
as the initial member of the Company (the “Initial Member”). Capitalized terms used in this Agreement
shall have the meanings ascribed thereto in Schedule 1 or in this Agreement.

                                                ARTICLE 1

                          ORGANIZATION, AND LENDER REQUIREMENTS

       1.1     Organization. The Company was created by the execution and filing of the Certificate
under the Act. The Members hereby organize the Company and agree to conduct the Company’s business
and affairs consistent with this Agreement, the Act and the Certificate. The Members shall from time to
time contribute such Property to the Company as is agreed upon by the Company and the Members.
__________________, who is hereby designated as an “authorized person” within the meaning of the Act,
has executed and caused to be filed the Certificate of Formation of the Company with the Secretary of
State of the State of Delaware. Upon the filing of the Certificate of Formation with the Secretary of State
of the State of Delaware, the powers of such person as an “authorized person” (if not also a Member of
the Company) ceased, and the Member or Members thereupon each became the designated “authorized
person” and shall continue as the designated “authorized person” within the meaning of the Act. Any
Member or employee of NorthStar Real Estate Services, LLC, a Utah limited liability company (“NorthStar”)
may execute, deliver and file any other certificates (and any amendments and/or restatements thereof)
necessary for the Company to qualify to do business in ________________ and in any other jurisdiction in
which the Company may wish to conduct business.

        1.2   Powers and Purposes. The Company shall have all powers provided for in the Act. The
sole purpose of this Company shall be the ownership, operation, management and maintenance of the
Real Property and this Company shall be restricted and/or required, and hereby covenants and agrees, as
follows:

       (a) Not to engage in any business or activity other than the ownership, operation and maintenance
           of the Real Property, and activities ancillary thereto;

       (b) Not to acquire or own any material assets other than (i) the Real Property, and (ii) such
           incidental personal property as may be necessary or appropriate for the operation of the Real
           Property;

       (c) Not to incur any debt other than (i) the indebtedness held by the “Holders” (as defined below)
           secured by the Real Property (“Mortgage Indebtedness”), and (ii) liabilities incurred by this
           Company in the ordinary course of business relating to the ownership and operation of the Real
           Property;

       (d) Not to merge into or consolidate with any person or entity or dissolve, terminate or liquidate in
           whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change
           its legal structure, while the Mortgage Indebtedness is outstanding without in each case the
           consent of any and all holders of the Mortgage Indebtedness (“Holders”);



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       (e)      To preserve its existence as an entity duly organized and validly existing under the laws of
                Delaware and, without the prior written consent of the Holders, not to amend, modify,
terminate or fail to comply with the provisions of the “Organizational Documents” (as defined below) of
this Company, as the same may be further amended or supplemented, if such amendment, modification,
termination or failure to comply would materially adversely affect the ability of this Company to perform
its obligations hereunder, under the note or under the other loan documents (collectively “Loan
Documents”) which relate to and/or evidence the Mortgage Indebtedness. This Company further
covenants and agrees that it will not change its name, identity, the state under which it is registered and/
or organized or its principal place of business (if different than the state of organization) without Holders’
express written consent which shall not be unreasonably withheld. For purposes of this provision, the
“Organizational Documents” of this Company shall mean all documents evidencing and/or relating to the
formation of this limited liability company and the continued existence and good standing of this limited
liability company;

       (f)     Not own any subsidiary or make any investment in, any person or entity without the con
               sent of the Holders.

        1.3     No Personal Liability. The Company is a Delaware limited liability company and not a
sole proprietorship, or a general or limited partnership. Except as otherwise expressly required by the Act,
no Member shall have personal liability for any debts, obligations or liabilities of the Company solely as a
result of being a Member.

        1.4     Separate Identity. This Company shall be further restricted and/or required, and further
covenants and agrees, as follows: (a) to maintain books and records separate from any other person or
entity; (b) to maintain its accounts separate from any other person or entity; (c) not to commingle assets
with those of any other entity; (d) to conduct its own business in its own name; (e) to maintain financial
statements separate from any other person or entity; (f) to pay its own liabilities out of its own funds; (g)
to observe all limited liability company formalities; (h) to maintain an arm’s-length relationship with its
Members and any affiliates; (i) to pay the salaries of its own employees and maintain a sufficient number
of employees in light of its contemplated business operations; (j) not to guarantee or become obligated
for the debts of any other entity or hold out its credit as being available to satisfy the obligations of
others; (k) not to acquire obligations or securities of its Members; (l) to allocate fairly and reasonably any
overhead for shared office space; (m) to use separate stationery, invoices, and checks; (n) not to pledge
its assets for the benefit of any other entity or make any loans or advances to any entity; (o) to hold itself
out as a separate entity; (p) to correct any known misunderstanding regarding its separate identity; and
(q) to maintain adequate capital in light of its contemplated business operations.

         1.5    Continuation. To the maximum extent permitted by law, upon the occurrence of any
event which will terminate this Company (as may be provided in the Organizational Documents of this
Company), a vote of the majority of the remaining Members shall be sufficient to continue the life of this
Company. In the event a majority vote to continue the life of this Company is not obtained, no asset of
this Company that is collateral or that secures the Mortgage Indebtedness may be sold, transferred,
conveyed, liquidated or otherwise disposed of (except as permitted under the Loan Documents) without
the consent of the Holders. The Holders may continue to exercise all of their rights under the Loan
Documents and shall be entitled to retain the collateral until the Mortgage Indebtedness has been paid in
full or otherwise discharged.




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                                                ARTICLE 2

                                              MANAGEMENT

        2.1     Management by Members. The business and affairs of the Company shall be managed
by the Members as provided in this Agreement and the Act. The Members will each devote to the
Company such time and attention as in the judgment of the Members is reasonably necessary to manage
and operate the affairs of the Company in good faith and in a manner the Members reasonably believe to
be in the best interests of the Company, with the care an ordinarily prudent Person in a like position would
exercise under similar circumstances.

       2.2     Compensation and Reimbursement. Except as may otherwise be expressly authorized
by a Majority of the Members, the Members will not receive any management fee or other compensation
or reimbursement from the Company for the management of the Company.

        2.3     Indemnification. Subject to this Section 2.3, the Company shall indemnify to the fullest
extent permitted by the Delaware Limited Liability Company Act any person or entity who was or is a party
or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative by reason of the fact that he, she or it is or was a
Member, Officer or Manager of the Company. Such indemnity shall cover claims arising from any
Member’s actions or inactions taken or omitted in furtherance of the business or affairs of the Company,
but shall not eliminate or limit a Member’s liability for willful misconduct and gross negligence.

        2.4    Ministerial Acts by Members as Agents. The signature of any Member as authorized
by a Majority of the Members shall be sufficient to acquire and convey title to any Company Property or to
execute any promissory note, security agreement, trust deed, mortgage or other instrument of hypotheca-
tion, or any other agreement, contract or document binding on the Company, and a copy of this
Agreement and any authorizing resolution or consent under Section 3.4 may be shown to the appropriate
parties in order to confirm the same.

        2.5     Authority of Members to Act. Except as authority may be delegated from time to time
as set forth in a written consent, all actions of the Company shall require approval of the Members. The
Members may from time to time by resolution appoint officers of the Company and/or its divisions and
define their duties, which duties may be modified from time to time by further resolution of the Members.
The Initial Member hereby creates and establishes the office of “Authorized Representative” of the
Company, and hereby appoints ____________ to serve in such office.             Among other duties of the
Authorized Representative, which may be defined or modified from time to time by the Members, the
Authorized Representative shall have the authority (subject to Section 1.2 of this Agreement) to enter into
and perform, on behalf of the Company the Mortgage Indebtedness and all Loan Documents and other
documents, agreements, certificates, or financing statements contemplated thereby or related thereto,
together with all co-ownership agreements, service agreements, assignments, or other similar documents,
agreements, certificates or instruments related to the Company’s ownership, operation, management and
maintenance of the Real Property (including all amendments thereto), all without any further act, vote or
approval of any Member or other Person notwithstanding any other provision of this Agreement, the Act or
applicable law, rule or regulation. The foregoing authorization shall not be deemed a restriction on the
powers of the Members to enter into other agreements on behalf of the Company. The Members hereby
consent to the Company appointing another person or entity to take actions and execute documents on
behalf of the Company by means of a Power of Attorney or other similar instrument evidencing such
appointment, so long as the instrument is executed by or on behalf of the Company with the approval of
the Members, which approval may be evidenced by the signature of the Members on the instrument itself.




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The Members hereby specifically consent to an appointment of NorthStar, or an entity controlled by Norh
Star, to act on behalf of the Company by an instrument evidencing that intention signed by the Members
or the Authorized Representative on behalf of the Company. Each Member further consents to any other
Member appointing an attorney-in-fact to act on behalf of such other Member in such other Member's
capacity as Member of the Company.

                                                 ARTICLE 3.

                              VOTING RIGHTS; MEETINGS OF MEMBERS

       3.1    Voting Rights. Except as otherwise provided in Section 7.2 following certain Transfers,
each Member entitled to vote may exercise by vote or consent that number of votes equal to his, her or its
Percentage Interest multiplied by 100.

       3.2     Approval of Members. With respect to any action or transaction that requires the
approval of the Members under the Act or this Agreement, the Members shall first use their reasonable
best efforts to reach consensus approval of such action or transaction, but such action or transaction
(other than actions and transactions described in Section 3.3) ultimately may be authorized upon the
affirmative vote of a Majority of the Members unless the Act or this Agreement expressly imposes a higher
standard for approval by the Members, in which case the specified approval of the Members shall be
required for such action or transaction.

        3.3      Matters Requiring Unanimous Approval. Notwithstanding anything in this Agreement
to the contrary, the unanimous consent of all of the Members of the Company shall be required to: (a)
file, or consent to the filing of, a bankruptcy or insolvency petition or otherwise institute insolvency
proceedings; (b) dissolve, liquidate, consolidate, merge, or sell all or substantially all of the assets of this
limited liability company; (c) engage in any other business activity; or (d) amend the Organizational
Documents of this Company.

      3.4     Meetings and Written Consents of Members.                    The following rules shall govern
meetings and action by written consent of the Members:

       (a) Any Member may call a meeting of the Members upon at least 15 days’ prior notice to all
           Members stating the time, place and, briefly, the purpose of the meeting. The place specified
           in any such notice shall be any place designated by the Members as the location for meetings
           of the Members or, if no such designation has been made, the principal executive office of the
           Company. The attendance of a Member at a meeting shall constitute a waiver of objection to
           lack of notice or defective notice of the meeting, unless the Member objects at the beginning of
           the meeting to holding the meeting or transacting business at the meeting.

       (b) There shall be no quorum requirement for any meeting of Members but any action that
           requires a vote of Members shall be approved at a meeting only upon receiving the requisite
           vote of the Members (or proxy holders) present. Action not within the purposes described in a
           meeting notice may nonetheless be taken at the meeting provided that such action is approved
           at the meeting by the requisite vote of the Members (or proxy holders) present.

       (c) A waiver of notice by a Member, given either before or after a meeting, shall be equivalent to
           the giving of notice of the meeting to such Member

       (d) Any Member that has an interest in the outcome of a matter submitted to the Members for a
           vote may vote and have such vote counted upon such matter.




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       (e) A Member may by a written proxy signed by the Member or by a duly authorized attorney
           in-fact authorize any Person to act for such Member with respect to any matter in which the
           Member is entitled to participate, whether the same be waiving notice of any meeting, voting,
           participating at a meeting or executing any written consent. Any such proxy shall be filed with
           the Company before or at the time of the meeting. No proxy shall be valid after the expiration
           of 12 months from the date thereof unless otherwise provided in the proxy. The appearance of
           a Member in Person at a meeting shall void any outstanding proxy for so long as such Member
           is in attendance.

       (f) The record date for purposes of determining the Members entitled to notice of, or to vote at, a
           meeting shall be the Business Day prior to the date on which notice of the meeting is mailed or
           otherwise delivered. The record date for determining Members entitled to take action without
           a meeting shall be the date the first Member (or proxy holder) signs the written consent.

       (g) Members may participate in or conduct meetings through telephonic or other means of
           communication by which all Members participating may simultaneously communicate with each
           other. Participation in a meeting by any such means shall constitute presence in Person at
           such meeting.

       (h) Members may take any action without a meeting by a written consent describing the action
          taken and signed by such Members (or proxy holders) then entitled to vote as are sufficient to
          approve such action. Any such consent shall be delivered to the Company for inclusion in the
          Company records. Action by written consent shall be effective when the necessary Members
          (or proxy holders) have signed the consent, unless the consent specifies a different effective
          date.

                                              ARTICLE 4.


                                      CONFLICTS OF INTEREST

       4.1     Duty of Loyalty. Subject to the provisions contained in Section 1.2, each Member may
engage in other business activities and may pursue business opportunities competitive with the business
and operations of the Company without presenting any such opportunity to the Company or the other
Members, and the Company and each Member hereby waives any right or claim to participate therein.
Notwithstanding the foregoing, however, unless otherwise expressly approved or ratified by a Majority of
the Members, each Member shall account to the Company and hold as trustee for the Company any
benefit or any profits derived by such Member from any transaction connected with the formation,
conduct or winding up of the Company or from any use of Company Property by such Member, including,
without limitation, any information developed for the Company or any opportunity offered to the
Company.

        4.2     Loans and Other Transactions with Company. Subject to the provisions contained in
Section 1.2, the Company may borrow money or transact other business with a Member with the approval
of a Majority of the Members. The rights and obligations of a Member that lends money to or transacts
business with the Company shall be the same as those of a Person that is not a Member, subject to other
applicable law. No transaction with the Company shall be voidable solely because a Member has a direct
or indirect interest in the transaction if the transaction is expressly permitted by this Agreement or is
approved or ratified as provided in this Agreement or in the Act.




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                                                   ARTICLE 5.

                       CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS

        5.1    Initial Capital Contributions. The Members will make the contributions to the Company
set forth for each Member on Schedule 2. No Member will be required to contribute any additional
amount to the Company or loan funds to the Company without the agreement of all Members. The value
of the initial contributions by the Members, the initial Capital Accounts of the Members, and the
percentage interests of the Members are as set forth in Schedule 2. Unless otherwise agreed by all the
Members, subsequent contributions or distributions shall not result in a change in a Member’s Percentage
Interest.

        5.2     Capital Accounts. A separate capital account (“Capital Account”) shall be maintained for
each Member in accordance with the capital accounting rules of Section 704(b) of the Internal Revenue
Code of 1986, as amended (the “Code”) and the income tax regulations thereunder (the “Regulations”)
including particularly Reg. § 1.704-1(b)(2)(iv).

        5.3    Withdrawals. No Member shall have the right to withdraw any part of its Capital Account
or receive any distribution of capital except upon the agreement of all Members.

     5.4      No Interest on Capital.       No interest shall be paid on any capital contributed to the
Company.

                                               ARTICLE 6.

                                            DISTRIBUTIONS

        6.1    Net Cash Flow. Unless a Majority of the Members agree otherwise, all net cash flow of
the Company in excess of cash needs and reserves shall be distributed by the Company at least annually.
Net cash flow shall be distributed to the Members in accordance with their Percentage Interests. Net cash
flow shall mean (i) all cash received by the Company from Company operations for a fiscal period,
including, without limitation, income from invested reserves, but not including capital contributions by the
Members; minus (ii) all cash disbursed in such period in the ordinary course of the business of the
Company, including, without limitation, (a) all operating expenses of the Company, (b) debt service on
debt obligations of the Company, and (c) reserves established during such period by the Members.
Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not be
required to make a distribution to the Member on account of its interest in the Company if such
distribution would violate the Act or any other applicable law.

       6.2    Tax Allocations. Net profits and losses of the Company, and each item of Company
income, gain, loss, deduction or credit (including items required to be separately stated pursuant to
Section 703(a)(1) of the Code) shall be allocated between the Members in accordance with their
Percentage Interests.

       6.3     Minimum Gain. To the extent that the Company has “nonrecourse deductions,” as
determined pursuant to Section 1.704-1(b)(iv) of the Regulations, such nonrecourse deductions, to the
maximum extent permitted by such Regulations, shall be allocated among the Members in accordance
with their Percentage Interests.




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                                          Fall Lake Apartments

                                               ARTICLE 7.

                                      TRANSFER OF INTERESTS

       7.1    Membership Agreement. No Transfer of an Interest (other than to a party to this
Agreement) shall be permitted, and no purported Transfer shall be effective (i) unless approved by the
unanimous consent of the Members and (ii) until the transferee has executed a Supplemental Signature
Page in substantially the form of Exhibit A hereto agreeing to be bound by all terms and conditions of this
Agreement and is admitted to the Company as a Member of the Company. All parties agree that upon
execution and acceptance of such an agreement, the transferee shall be admitted to the Company as a
Member of the Company and shall have the rights and obligations of a Member under this Agreement, all
without any further action by any Person.

        7.2     Effect of Purported Transfer. Any purported Transfer in violation of Section 7.1 shall, to
the fullest extent permitted by law, be null and void. Thus, the Member making the purported Transfer
will retain the right to vote and the right to receive distributions. Additionally, if applicable, a Member
making the purported Transfer shall continue to report the portion of income or loss allocated by the
Company to the Member in accordance with the provisions of the Code then in effect.

                                               ARTICLE 8.

                                  DISSOLUTION AND WINDING UP

        8.1    Dissolution Events. The Company shall dissolve and commence winding up and
liquidating upon the first to occur of any of the following (each, a “Dissolution Event”):

       (a) The sale of all or substantially all of the Company Property other than in the ordinary course of
           business as determined by a Majority of the Members;

       (b) The vote of the Majority of the Members to dissolve, wind up and liquidate the Company;

       (c) The termination of the legal existence of the last remaining Member of the Company or the
           occurrence of any other event which terminates the continued membership of the last
           remaining Member of the Company in the Company unless the Company is continued without
           dissolution in a manner permitted by this Agreement or the Act; or

       (d) The entry of a decree of judicial dissolution under Section 18-802 of the Act

         Notwithstanding anything in the Act to the contrary, to the maximum extent permitted by law, the
Dissolution Events are the exclusive events that may cause the Company to dissolve. The bankruptcy,
death, dissolution, liquidation, termination or adjudication of incompetency of a Member shall not, in and
of itself, cause the termination or dissolution of the Company and the business of the Company shall
continue. Upon any such occurrence, the trustee, receiver, executor, administrator, committee, guardian
or conservator of such Member shall have all the rights of such Member for the purpose of settling or
managing its estate or property, subject to satisfying conditions precedent to the admission of such
assignee as a substitute Member. The transfer by such trustee, receiver, executor, administrator,
committee, guardian or conservator of any interest in the Company shall be subject to all of the restric-
tions hereunder to which such transfer would have been subject if such transfer had been made by such
bankrupt, deceased, dissolved, liquidated, terminated or incompetent Member. Each Member waives any
right it may have to agree in writing to dissolve the Company upon the Bankruptcy of any Member (or all
the Members) or the occurrence of an event that causes any Member to cease to be a Member of the
Company.



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                                           Fall Lake Apartments

       Upon the occurrence of any event that causes the last remaining Member of the Company to cease
to be a Member of the Company or that causes a Member to cease to be a Member of the Company
(other than upon an assignment by the Member of all of its limited liability company interest in the
Company and the admission of the transferee pursuant to Article 7), to the fullest extent permitted by law,
the personal representative of such Member is hereby authorized to, and shall, within 90 days after the
occurrence of the event that terminated the continued membership of such Member in the Company,
agree in writing (i) to continue the Company and (ii) to the admission of the personal representative or its
nominee or designee, as the case may be, as a substitute Member of the Company, effective as of the
occurrence of the event that terminated the continued membership of the last remaining Member of the
Company or the Member in the Company.

        8.2     Winding Up. Upon the occurrence of a Dissolution Event, the Company shall continue
solely for the purposes of winding up its affairs in an orderly manner, satisfying the claims of its creditors
and Members and liquidating or distributing its assets to the extent necessary therefor. No Member shall
take any action that is inconsistent with, or not necessary to or appropriate for, the orderly winding up of
the Company’s business and affairs. A Majority of the Members shall oversee the winding up and
dissolution of the Company, provide a full accounting of the Company’s liabilities and Property, cause the
Company Property to be distributed in kind or to be liquidated as promptly as is consistent with obtaining
the fair value thereof, and shall cause any net proceeds therefrom and any remaining Property to be
applied and distributed in the following order:

       (a) First, to the satisfaction (whether by payment or the making of reasonable provision for
           payment thereof) of all of the Company’s debts and liabilities to creditors other than Members;

       (b) Second, to the satisfaction (whether by payment or the making of reasonable provision for
           payment thereof) of all of the Company’s debts and liabilities to Members, including, without
           limitation, any loan to the Company by a Member;

       (c) Third, to the Members in accordance with positive Capital Account balances after giving effect
           to all contributions, distributions and allocations for all periods.

       A Member that performs more than deminimis services in completing the winding up and
       termination of the Company pursuant to this Article 8 shall be entitled to receive reasonable
       compensation for the services performed.

        8.3    Establishment of Trust or Reserves. Upon approval of a Majority of the Members, a
pro rata portion of the distributions that would otherwise be made pursuant to this Article 8 may be:

       (a) Distributed to a trust established for the benefit of the Members for the purposes of liquidating
           Company assets, collecting amounts owed to the Company and paying any contingent,
           conditional or unmatured liabilities or obligations of the Company. The assets of any such trust
           shall be distributed to the Members from time to time, upon approval of a Majority of the
           Members in the same proportions as the amount distributed to such trust by the Company
           would otherwise have been distributed to the Members pursuant to Section 8.2; or

       (b) Withheld to provide a reasonable reserve for Company liabilities (contingent or otherwise) and
           to reflect the unrealized portion of any installment obligations owed to the Company; provided
           that such withheld amounts shall be distributed to the Members as soon as practicable.




North Star Real Estate Services                                                                            97
                                           Fall Lake Apartments

                                               ARTICLE 9.

                               BOOKS, RECORDS AND ACCOUNTINGS

       9.1     Books and Records. The Company shall maintain records and accounts of all operations
and expenditures of the Company. At a minimum the Company shall keep at its principal place of
business the following records:

       (a) A current list of the full name and last known business, residence or mailing address of each
           Member, both past and present;

       (b) A copy of the Certificate, together with executed copies of any powers of attorney pursuant to
           which any amendment has been executed;

       (c) Copies of the Company’s federal, state and local income tax returns and reports, if any, for the
           three most recent years;

       (d) Copies of this Agreement and all amendments hereto, copies of any writings permitted or
           required under the Act, and copies of any financial statements of the Company for the three
           most recent years;

       (e) Minutes of every meeting of the Members and any consents obtained from Members for actions
           taken without a meeting; and

       (f) To the extent not contained in this Agreement, a statement that describes (i) the amount of
           cash and a description and statement of the agreed value of other Property or consideration
           contributed by each Member or that each Member has agreed to contribute in the future, (ii)
           the times at which or events on the occurrence of which any additional contributions agreed to
           be made by each Member, if any, are to be made and (iii) if agreed upon, the time at which or
           the events upon which the Company is to be dissolved and its affairs wound up

        9.2     Reports. Within 90 days after the end of each fiscal year of the Company, the Company
shall furnish to each Member an annual report consisting of at least the following to the extent applicable:

       (a) A copy of the Company’s federal income tax return for that fiscal year;

       (b) Profit and loss statements;

       (c) A balance sheet showing the Company’s financial position as of the end of that fiscal year; and

       (d) Any additional information that the Members may require for the preparation of their individual
           federal and state income tax returns.

       In addition, if the Company indemnifies or advances expenses to a Member in connection with a
       proceeding by or in the right of the Company, the Company shall report the indemnification or ad
       vance in writing to the Members.

       9.3     Rights of Members; Inspection. Each Member, shall have the right to receive the
reports and information required to be provided by the Act, the Certificate or this Agreement. Upon
reasonable request, each Member, and any authorized representative of any Member, shall have the right,
during ordinary business hours, to inspect and copy, at the requesting Member’s expense, the books and
records that the Company is required to maintain and keep by the Act, the Certificate or this Agreement.



North Star Real Estate Services                                                                          98
                                            Fall Lake Apartments

                                                ARTICLE 10.

                                      ADOPTION AND AMENDMENT

        This Agreement and the Certificate may be amended, restated or modified from time to time by a
Majority of the Members then entitled to vote, consent to or otherwise decide any matter submitted to the
Members, as determined pursuant to this Agreement; provided that any amendment that would change
Sections 2.1 or 3.3, change a required voting percentage for approval of any matter or a Member’s voting
rights, or alter the interest of one or more Members in profits, losses, similar items or any Company
distribution shall require the affirmative vote of all Members then entitled to vote. No Member shall have
any vested rights in this Agreement that may not be modified from time to time through an amendment to
this Agreement .

                                                ARTICLE 11.

                                             MISCELLANEOUS

       11.1 Application of Delaware Law. This Agreement, and the application or interpretation
hereof, shall be governed exclusively by its terms and by the laws of State of Delaware, and specifically
the Act, without regard to choice of law rules.

        11.2 Construction. Whenever required by the context in this Agreement, the singular number
shall include the plural and vice versa, and any gender shall include the masculine, feminine and neuter
genders.

       11.3 Counterparts; Facsimiles. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which shall constitute one and the same instrument.
Facsimile signatures of the parties on this Agreement or any amendment of this Agreement shall be
deemed original signatures, and each Member or other party shall forward the original signed version of
such document promptly following facsimile transmission

        11.4 Execution of Additional Instruments. Each Member hereby agrees to execute such
other and further statements of interest and holdings, designations, powers of attorney and other
instruments necessary to effectuate the purposes of this Agreement or comply with any laws, rules or
regulations applicable to the Company.

        11.5 Headings. The headings in this Agreement are inserted for convenience only and are in
no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any
provision hereof.

       11.6 Heirs, Successors and Assigns. Each and all of the covenants, terms, provisions and
agreements contained in this Agreement shall be binding upon and inure to the benefit of the parties and,
to the extent permitted by this Agreement, their respective heirs, legal representatives and permitted
successors and assigns.

        11.7 Notices and Consents, etc. Any notice, demand or communication required or permitted
to be given by any provision of this Agreement shall be in writing and shall be deemed to have been
sufficiently given or served for all purposes if delivered Personally to the party or to an executive officer of
the party to which the same is directed or, if sent by registered or certified mail, postage and charges
prepaid, addressed to the Member’s address, as shown in the records of the Company.




North Star Real Estate Services                                                                              99
                                           Fall Lake Apartments

        11.8 Severability. If any provision of this Agreement or the application thereof to any Person
or circumstance shall be invalid, illegal or unenforceable to any extent, the remainder of this Agreement
and the application thereof shall not be affected and shall be enforceable to the fullest extent permitted by
law.

        11.9 Waivers. The failure of any party to seek redress for violation of or to insist upon the
strict performance of any covenant or condition of this Agreement shall not prevent a subsequent act,
which would have originally constituted a violation, from having the effect of an original violation.

        11.10 Entire Agreement. The Certificate, this Agreement and any other document to be
furnished pursuant to the provisions hereof embody the entire agreement and understanding of the
parties as to the subject matter contained herein. There are no restrictions, promises, representations,
warranties, covenants or undertakings other than those expressly set forth or referred to in such
documents. This Agreement and such documents supersede all prior agreements and understandings
with respect to the subject matter hereof.



IN WITNESS WHEREOF, the undersigned has executed this Agreement effective as of the date first set
forth above.


                                             INITIAL MEMBER:


                                             By: _______________________________




North Star Real Estate Services                                                                          100
                                       Fall Lake Apartments

                                         EXHIBIT A
                    to Operating Agreement of ________________________

                                  Supplemental Signature Page


This Supplemental Signature Page to the Operating Agreement dated as of ____________________,
20___, of _________________________, a Delaware limited liability company (the “Company”), by
the Members of the Company (as amended from time to time, the “Agreement”), is executed, delivered
and accepted as of the date set forth below.
The undersigned agrees to be bound by the terms of the Agreement and to be admitted to the Company
as a Member of the Company.
Dated: _______________, __________.

                                         MEMBER:

                                         __________________________________



Accepted by:

___________________________,
a Delaware limited liability company

_____________________________________

By:    _______________________________

Its:   _______________________________




North Star Real Estate Services                                                                  101
                                             Fall Lake Apartments

                                            SCHEDULE 1
                           to Operating Agreement of _________________

                                                DEFINITIONS

The following terms used in the foregoing Agreement shall have the following meanings (unless otherwise
expressly provided therein):
“Act” shall mean the Delaware Limited Liability Company Act.
“Agreement” shall mean this Operating Agreement of the Company, as amended from time to time.
         “Bankruptcy” means, with respect to any Person, if such Person (i) makes an assignment for the
benefit of creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudged a bankrupt or insolvent, or
has entered against it an order for relief, in any bankruptcy or insolvency proceedings, (iv) files a petition
or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation or
similar relief under any statute, law or regulation, (v) files an answer or other pleading admitting or failing
to contest the material allegations of a petition filed against it in any proceeding of this nature, (vi) seeks,
consents to or acquiesces in the appointment of a trustee, receiver or liquidator of the Person or of all or
any substantial part of its properties, or (vii) if 120 days after the commencement of any proceeding
against the Person seeking reorganization, arrangement, composition, readjustment, liquidation or similar
relief under any statute, law or regulation, if the proceeding has not been dismissed, or if within 90 days
after the appointment without such Person's consent or acquiescence of a trustee, receiver or liquidator of
such Person or of all or any substantial part of its properties, the appointment is not vacated or stayed, or
within 90 days after the expiration of any such stay, the appointment is not vacated. The foregoing
definition of “Bankruptcy” is intended to replace and shall supersede and replace the definition of
“Bankruptcy” set forth in Sections 18-101(1) and 18-304 of the Act.

•   “Business Day” shall mean any day other than Saturday, Sunday or any legal holiday on which banks
    in Wilmington, Delaware are closed.
•   “Certificate” shall mean the Certificate of Formation of the Company as filed with the Secretary of
    State of the State of Delaware on _________________, as amended or restated from time to time.
•   “Company” shall mean the Delaware limited liability company governed by this Agreement.“Company
•   Property” shall mean any Property owned by the Company.
•   “Dissolution Event” shall mean any of the events described in Section 8 as causing a dissolution of
    the Company.
•   “Entity” shall mean any general partnership, limited partnership, limited liability company,
    corporation, joint venture, trust, business trust, cooperative or other association or any foreign trust or
    foreign business organization.
•   “Initial Member” shall have the meaning set forth in the first paragraph of this Agreement.
•   “Interests” shall mean a Member’s equity interests in the Company together with the attending
    rights thereto.
•   “Majority of the Members” shall mean, at any time, the Member or Members (including any proxy
    holder acting on behalf of a Member) holding more than 50 percent of the votes held by Members
    then entitled to vote, consent to or otherwise decide any matter submitted to the Members.




North Star Real Estate Services                                                                               102
                                           Fall Lake Apartments

•   “Member” or “Members” shall mean the Initial Member of the Company, and includes any Person
    admitted as an additional Member of the Company or a substitute Member of the Company pursuant
    to the provisions of this Agreement, each in its capacity as a Member of the Company, for so long as
    such Person is a Member of the Company.
•   “Percentage Interest” shall mean the percentage interest for each Member set forth in Schedule 2
    unless and until adjusted by agreement of all of the Members then entitled to vote or, in respect of
    any Member, reduced or increased by reason of any Transfer permitted under this Agreement.
•   “Person” shall mean any natural person or Entity, and the heirs, executors, administrators, legal
    representatives, successors and assigns of each such Person where the context so permits.
•   “Property” shall mean any property, real or Personal, tangible or intangible, including cash and any
    legal or equitable interest in such property, but excluding services and promises to perform services in
    the future.
•   “Real Property” shall mean the residential apartment complex located in the City of ____________,
    State of _________ and known as ____________________.
•   “Transfer” shall mean with respect to any interest in the Company, as a noun, any voluntary or
    involuntary assignment, sale or other transfer or disposition of such interest (which shall include,
    without limitation and notwithstanding any provision of the Act otherwise to the contrary, a pledge, or
    the granting of a security interest, lien or other encumbrance in or against, any interest in the
    Company) and, as a verb, voluntarily or involuntarily to assign, sell or otherwise transfer or dispose of
    such interest.




North Star Real Estate Services                                                                          103
                                             Fall Lake Apartments

                                            SCHEDULE 2
                           to Operating Agreement of _________________

                                          CONTRIBUTIONS, ETC.



                                  Initial Capital   Initial Capital   Initial Percent-   Initial Num-
          Initial Member
                                   Contribution        Account         age Interest      ber of Votes
                                  As set forth on   As set forth on
                                  the Company’s     the Company’s
         _____________             books and re-     books and re-
                                                                           100%              100
                                       cords             cords




North Star Real Estate Services                                                                         104
                                                  Fall Lake Apartments

                      Disclosure Acknowledgement and Receipt
The undersigned _______________________________________________ hereby acknowledges their receipt and
understanding of the information contained therein, including the property description, ownership structure, risk fac-
tors, pro forma operating results with the related assumptions and other operating data. The undersigned further
acknowledge an understanding of the risks involved in participating in real estate ownership and that the under-
signed are accredited investors. The undersigned acknowledges that returns are subject to change due to loan
terms, new discovery, occupancy, additional capital investment, owner decisions, and various factors involved in
property management. Income distributions to the owners are made as approved by the owners. North Star Real
Estate Services, LLC and/or its affiliates do not guarantee these returns or the amount and timing of income distribu-
tions to the owners, and further do not guarantee that the property will close nor the specific date it will close. After
reading the accompanying property package, the undersigned wish to purchase ownership in the property listed be-
low with a payment as follows:

              Property:                  Fall Lake Apartments              City, State:          Houston, TX
               Source             Required Deposit                  Purchase                      Deposit

                 Cash           100% of cash purchase

            1031 Exchange        20% of 1031 exchange

                   Total


The undersigned agree that North Star Real Estate Services, LLC may utilize deposits to cover necessary earnest
money costs or due diligence expenses related to this property. Deposits received shall be paid as part of the pur-
chase price upon final closing. It is further understood and agreed that said deposit is irrevocable and may not be
withdrawn or returned to the buyer prior to the completion of the purchase without penalty. It is therefore agreed
that the sum of 20% of our allocated ownership share will be retained by North Star Real Estate Services, LLC as
liquidated and stipulated damages. North Star Real Estate Services, LLC, upon receipt of the deposit, will return a
copy of this form as a receipt to confirm the undersigned’s deposit and commitment for the above designated prop-
erty. It is agreed that other documents, including a contract for purchase, a tenancy in common agreement, and a
consulting agreement signed by all parties will be necessary to complete the transaction. These documents assure
that the undersigned and all owners will have ultimate control and responsibility in the operation and profitability of
the project at all times.
Deposit Instructions: Please read, sign and return to North Star Real Estate Services, LLC with your deposit to
the address below (or mail or fax separately if funds are wired). If your deposit is to be funded from a 1031 ex-
change and you wish the money to come from your 1031 accommodator, please contact North Star at 801-264-6655
for instructions for sending the money to the closing attorney rather than to North Star Real Estate Services.eposit
by Wire:

                  Deposit by Check:                                         Deposit by Wire:
                     Please mail to                   Please notify Shayne Miller in advance 801-264-6655
           North Star Real Estate Services, LLC                            Wiring instructions:
                   Attn: Shayne Miller                                          Chase Bank
               4001 South 700 East #500                                  Salt Lake City, UT 84111
               Salt Lake City, Utah 84107                                   ABA #: 124001545
                  Office: 801-264-6655                                      Acct #: 697479806
                   Fax: 801-401-7398


By: __________________ Date: _______________ By: _________________ Date: _______________

North Star Real Estate Services, LLC hereby acknowledges receipt of the funds described above:

By: ___________________________ Date: _____________

North Star Real Estate Services                                                                                      105

				
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