Second Position Equity loan FundedTownhomes Homes LLC and9126 Townhomes Investment LLCc/o Mr. Charles Lee and Mr. K.C.XXXX Allen AveAltadena, CA 91107ATTN: Mr. T.A. and Mr. J. P.RE: Loan No. 121205 ($1,010,000)Townhomes Townhomes9110 9126 Townhomes AvenueDowney, CA 90240Dear T. and J.,The following are the general terms of our (“Boyd Groups” ) proposed equity loan.Please return this letter with your signature and the service fee of $7,500 to our office no laterthan March 12, 2013 or our proposal will be withdrawn.Thank you.Loan No. 121205Loan Amount $1,010,000Purpose of Loan To fund the Equity Requirement of construction lender(First Choice Bank) to close construction loan and commence construction of the 17unitTownhome PUD development; including land payment ($700,000) andpayoff of past due property taxes ($200,000) bill. Secured Property 9110 9126 TownhomesAvenue, Downey, CA 90240Property Description Three parcels (comprising approximately 40,472square feet) to be subdivided into 17 separate parcels prior to or concurrent with loan closing;or, during course of construction subject to tentative map andcondition approved by BCG. Project Description Complete any site work (not yet completedprior to loan closing); then commence construction ofseventeen townhome PUD development, each unit two – story, totaling approximately 32,880SF (GBA), twocar garage each unit, plus 6 guest parking spaces incommon area of PUD development. Construction to be single phase. Townhomes Homes LLCand 9126 Townhomes Investment LLC Loan No. 121205March 6, 2013Page 2Property Owner (current) Townhomes Homes LLC and 9126 Townhomes InvestmentLLC Applicant T.A., and J. P. Borrower Limited Liability Company, Special Purpose,Bankruptcy Remote
Guarantor(s) Townhomes Homes LLC, 9126 Townhomes Investment LLC,T.A, and J. P Project Manager T.A. and J. P.Sales Agent (listing) UNKArchitect W. A, Inc. Civil Engineer Faramand Consulting EngineerStructural Engineer MidCities Engineering General Contractor W. A. Construction, Inc. LienPosition (BCG) Subordinated (2nd) Deed of TrustTerm Twelve (12) months Option(s) To Extend Two 3month options provided that constructionis substantially completed and provided Borrower paysBCG $12,625 extension fee no later than fifteen (15) days prior to Maturity Date.Interest Rate 9.75%Amortization N/AMinimum Interest $123,094 (15 months)Property Value $2,900,000 (land “as is”); demolition and most of thesite work conducted during 2008 – 2009.Projected Sales Revenue $420,000 Average Sales Price / House x 17$7,140,000 Gross Sales Revenues (“aggregate sales”) (428,400) Selling Costs @ 6%$6,711,600 Adjusted Gross RevenuesConstruction Loan $3,100,000 First Choice Bank (18 mo. Term; fixedinterest at 6.5%; 1 pt. fee to the lender) Townhomes Homes LLC and 9126 TownhomesInvestment LLCLoan No. 121205March 6, 2013Page 3Profit (estimated) $3,611,400 Prior to BCG Loan (900,000) Return of BCG Loan (232,050) Deferred Fee BCG from House Sales$2,479,350 Net Proceeds (profit)Total Budget/ Project Costs TBD (budget to be revised and provided to BCG perconference 2/4/13)Current Indebtedness (to be retired) $2,900,000 (lender has agreed to DPO of $1,200,000)Loan to Value(s) 43.4% First Choice Bank57.6% BCG LoanLoan To Cost 100% (not including the approximate $1,700,000invested by Applicant prior to loan closing)Impounds For Tax & Insurance Included in Construction Loan budgetReserve Account $110,000 (funds to be deposited and escrowed atWells Fargo Bank and to be used to cover BCG loanclosing costs including broker points, one half monthlyinterest cost, BCG finance fee, outside legal costs,doc. prep., any required travel costs prior to or after
loan closing, outside inspectors, etc.).Each month ½ of the payment due BCG will be paidfrom this account; the other half will be paid directlyfrom the Borrower.Any funds remaining in this Escrow Account to bereturned to Borrower upon final loan reconveyanceand full payoff.Appraisal (or review) Contracted directly between BCG and appraiser.Cost to be paid in advance by Applicant. BCG maybe able to use the appraisal hired by FCB.Preliminary A & E Review Contracted directly between BCG and consultant.Cost to be paid in advance by Applicant. (included inService Fee)Architectural Review Contracted directly between BCG and architect. Costto be paid in advance by Applicant.Loan Fee (BCG) $75,000Brokers PointsCharles Lee) Two (2) points ($20,200)Document Preparation $5,500Townhomes Homes LLC and 9126 Townhomes Investment LLCLoan No. 121205March 6, 2013Page 4Legal Fee (add’l) If applicableDeferred Fee 3.25% of the sales price of each house ($196,380)(Deferred fee may be secured by a second deed oftrust)Applicant Cash Required N/AApplicant’s Capitalization $1,700,000 (approximately)(amount borrower invested in project prior to loanclosing)Holdback Reserve (Funded intoTrust A/C controlled by BCG)See Above.Partial Release Provision 95% of available proceeds but not less than $84,170per unit (available proceeds equals gross sales priceminus sales commission, closing cost, and firstmortgage release price, but before mechanicliens/construction related costs)Special Provision(s) Borrower to provide lender with monthly progressreport no later than the 10th day of the following month.All work described in the improvements budget must
be completed to satisfaction of lender no later than 12months after loan closing. Borrower to be a specialpurpose entity, single asset, bankruptcy remote.Service Fee A Service Fee of $7,500 will be earned and payable toBCG upon Applicant’s delivery of this signed letter toBCG. Boyd Groups’ acceptance of this ServiceFee does not create or imply any agreement orcommitment by Boyd Groups or any of its affiliates toissue a commitment or commitment letter. This ServiceFee is to compensate BCG for its due diligenceactivities. On the closing date an amount equal to theService Fee will be credited towards the payment ofloan points and/or other fees owed to Boyd Groupsby Applicant. Otherwise this service fee is notrefundable.Site Inspections Applicant will reimburse BCG for any out of pocketcosts related to Site Inspections.Refundable Deposit(s) An additional deposit of up to 2% of the loan amountwill be required upon issuance of the loan commitmentbut will be refunded to Applicant if BCG does notclose and fund the loan on terms described in the loancommitment or on other terms that are otherwiseacceptable to the Applicant. Townhomes Homes LLC and 9126 Townhomes Investment LLCLoan No. 121205March 6, 2013Page 5Legal Fee Deposit Legal fee deposit may be required upon issuance ofcommitment (non refundable against actual attorneyinvoice) based upon anticipated legal fees, if any,associated with loan closing.Boyd Groups reserves the right to change the terms and the structure of this loan proposalprior to our commitment if we receive information that affects our underwriting of thesponsorship and/or the real estate. We look forward to doing business with you, assisting youand closing this transaction. We promise to give you our full attention and we ask that you giveus the same. Thank you. http://www.theboydcapitalgroups.info/Cordially,T.NT.N.