E2M Partners LLC

Fees and Compensation

Management Fee

         Fund III and certain Single Investment Clients (as described below) compensate
E2M for its investment advisory and investment management services through the payment
of a management, advisory or similar fee (“Management Fee”). At present, E2M’s other
clients, which are no longer seeking to make new investments, do not pay a Management
Fee to E2M.

         The Management Fee payable to E2M is not refundable. However, each of the
Advisory Agreements relating to clients who pay a Management Fee provide that any
termination by E2M of such Advisory Agreement will be effective only as of the last day of
the most current quarterly period for which E2M has received payment of a Management
Fee. Accordingly, E2M does not have the right to terminate the Advisory Agreement and
retain the Management Fee for a period during which it is not obligated to provide investment
advisory and investment management services.

        In most cases, the Management Fee paid in respect of a Fund or Single Investment
Client is paid by the Fund or Single Investment Client itself using capital contributions made
by investors or other available funds. However, the Management Fee may in some cases be
paid through direct payments by the investors in the Fund or Single Investment Client to
E2M, or by retaining funds that would otherwise be distributed to investors. To the extent the
Management Fee is paid by a Fund or Single Investment Client, the General Partner of the
Fund or Manager of the Single Investment Client has the authority to deduct such fees from
the assets of the Fund or Single Investment Client.

        E2M receives a Management Fee from Fund III on a quarterly basis, in advance, in
respect of each investor in the applicable Fund. The amount of the Management Fee payable
to E2M by each Fund is not negotiable. Such amount, and the calculation thereof, is set by
E2M and the General Partner of the applicable Fund and is set forth in the Partnership
Agreement for such Fund.

        E2M receives Management Fees from E2M Grapevine II, LLC (“E2M Grapevine”)
and E2M Villas at RPW, LLC (“E2M Villas,” and, together with E2M Grapevine, each a Single
Investment Client) on a quarterly basis, in arrears, in respect of each investor in these Single
Investment Clients. The amounts of the Management Fees payable to E2M by these Single
Investment Clients are not negotiable. Such amounts, and the calculations thereof, are set by
E2M and the Manager of the applicable Single Investment Client, and are set forth,
respectively, in the operating agreements for each of these Single Investment Clients.

      The Partnership Agreement for Fund III provides that the Management Fee payable
to E2M will be reduced by:

         •     all Organizational Expenses (as defined below) paid by the Fund in excess of
               a pre-established amount set forth in the Partnership Agreement;
         •     all placement or other fees paid by the Fund to any placement agent in
               connection with the offering of interests in the Fund; and
         •     all investment banking, financial advisory, consulting, management,

               monitoring, director’s or other fees or compensation received by the
               General Partner or its affiliates from a third party in connection with the
               performance of services relating to the Fund’s Investments
               (“Transaction Fees”), excluding any asset management fees, Incentive
               Distributions or other fees or compensation received from third parties who
               coinvest in an Investment (“Coinvestment Compensation”).
Expenses
        The Funds. Certain expenses incurred by E2M or its affiliates in connection with
the business of the Funds are paid by the Funds, as more fully described below.
        Organizational Expenses. In general, each Fund is responsible for paying all legal,
accounting, consulting and other professional fees and expenses and all other out-of-pocket
costs and expenses (including travel expenses) actually incurred in connection with the
formation or organization of the Fund (the “Organizational Expenses”) subject to pre-
established limits set forth in the Partnership Agreements of such Funds.
        Other Expenses. Each Fund is responsible for paying all other costs, expenses and
charges, other than General and Administrative Expenses (as defined below) of the General
Partner, related to the Fund and its investments and assets, generally including each of the
following:
         •     fees and expenses of accountants, attorneys, consultants, custodians,
               engineers, brokers, financial advisors, investment advisers and other
               professional advisors, and out-of-pocket costs and expenses, incurred in
               connection with acquiring, holding, managing or selling or otherwise exiting
               from any Investments;
         •     expenses incurred in connection with meetings of the investors in the Fund;
         •     fees and expenses relating to audits and to the preparation of financial
               statements, tax returns and other regulatory reports of the Fund;
         •     expenses incurred in connection with litigation, arbitration and other
               proceedings;
         •     insurance and indemnification expenses;
         •     taxes, fees or other governmental charges levied against the Fund;
         •     fees and expenses incurred in connection with the collection of amounts due
               to the Fund;
         •     principal, interest, and fees and expenses relating to indebtedness of the Fund;
               and
         •     fees and expenses incurred in connection with the dissolution and liquidation
               of the Fund.
       In addition, Funds I and III are also responsible for reasonable out-of-pocket
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Types of Clients

       At present, the only clients of E2M are the Funds and the Single Investment Clients.
Each Fund is a pooled investment vehicle in the form of one or more limited partnerships
whose investors consist primarily of corporations, insurance companies, trusts, university
endowments, other institutional investors and high-net worth individuals. The Single
Investment Clients are investment vehicles formed to hold specified real estate investments.
        E2M has not established any minimum account size for the Funds or the Single
Investment Clients. The General Partner of each Fund has established a minimum level for
the commitments to be made by investors therein, and the manager of each Single Investment
Client has established a minimum level of commitments to be made by the investors therein.
For example, in the case of Fund III, the minimum capital commitment for investors is $5.0
million, although the General Partner reserved the right in its discretion to accept capital
commitments of a lesser amount.

                Methods of Analysis, Investment Strategies and Risk of Loss

          E2M’s clients seek to achieve equity returns by investing in sound real estate projects
with current cash flow but requiring restructuring. There can be no assurance that the
investment objectives of E2M’s clients will be realized or that their investments will result in
a return of capital or profits.
Methods of Analysis and Investment Strategies
       E2M’s investment philosophy is founded on the following methods of analysis and
investment strategies:
        Develop a thorough understanding of the potential investment and related real estate
market. E2M’s assessment of a potential investment addresses financial analysis, design, cost,
competition, access and location. E2M’s assessment typically also includes a review of
relevant industry, market and operating data, financial statements, off-balance sheet and
contingent liabilities, and environmental, political and regulatory risks. Where appropriate,
E2M may engage third-party consultants, industry experts or other advisors to assist with the
due diligence process. E2M will only pursue the investment if the real estate offers a
significant opportunity for attractive returns. E2M also assesses what could go wrong with the
investment and examines the implications of these scenarios.
        Emphasis on Highly Experienced Operating Sponsors. Utilizing high-quality
operating sponsors to make investments is the foundation of the E2M investment approach.
When sourcing new Investments, E2M seeks to collaborate with seasoned operators, including
many with whom E2M has existing relationships, and who have proven track records and
experience. E2M seeks to structure transactions so that the interests of these experienced
operators are aligned with the Funds and they are provided appropriate incentives for strong
performance.
        Emphasis on Current Cash Flow. When sourcing new Investments, E2M intends
generally to target acquisitions of both multifamily and industrial properties that are well
leased and therefore provide current cash flow, but require capital improvements to unlock the
potential maximum value. By focusing on acquisition discounts and current yield with future
upside value derived from a value add capital improvement program, E2M expects to minimize
the downside to the Investments. E2M intends to utilize moderate leverage with attractive
terms to enhance the current cash flow for each project.

        Target Value Add Opportunities. When sourcing new Investments, E2M intends to
target primarily acquisitions of real estate investment opportunities featuring a need for
additional capital in situations where the current owner is either unwilling or unable to make
the necessary capital investments. E2M will seek to identify these value add opportunities
where the property can be acquired at a discount to replacement cost and capital improvements
can be made to bring the property up to market conditions, with a view towards capital
appreciation and future cash flow. With regard to E2M’s current clients, these acquisitions
have focused primarily on multifamily projects, and E2M expects to continue to focus on
multifamily assets with regard to future clients. However, as a secondary focus, E2M also
anticipates targeting acquisitions of strategically located, functional industrial properties and
select service hotels reflecting these characteristics, as well as the development of private pay
senior living facilities in major markets.

       Use a team approach in investing. The E2M Partners' relationships among themselves,
in most cases, span decades, resulting in a cohesive, functional, and collaborative team. The
extensive experience of the team is utilized to source opportunities and to identify operators,
growth markets and properties in a coordinated effort to provide best in class value-add
investment opportunities.

         Continuously Evaluate Exit Strategies and Opportunities. As part of its ongoing
portfolio management responsibility, E2M continuously evaluates strategies and opportunities
for realizing investment returns. In most cases, to foster efficiency and continuity, one or more
members of E2M’s management team with significant responsibility for the identification and
acquisition of a particular investment will remain responsible for the investment management
of such investment throughout its ownership by the applicable client of E2M. E2M’s expertise
in transaction structuring and capital markets should provide opportunities to identify
appropriate exit strategies that maximize returns. These strategies will include, but not be
limited to, traditional asset sales. In addition, to generate enhanced returns and to reduce
investment risk, E2M may seek to refinance the Investments through borrowings, refinancings
or debt or equity offerings, while allowing the applicable client to retain an ongoing economic
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