Radiant Homes II Booklet 01

CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM

August 15, 2011 1

RADIANT HOMES II, LLC

a Nevada limited liability company

OFFERING

Ten Million Dollars

($10,000,000)

Of

2000 Membership Units

$5,000 per Unit

5 Unit ($25,000) Minimum Individual Investment

SECURITIES DISCLOSURES

The securities offered hereby have not been registered under the Securities Act of 1933, as amended, or the securities laws of any state and are being offered and sold in reliance on exemptions from the registration requirements of the Securities Act and such laws.

Furthermore, the securities offered hereby have not been approved or disapproved by the Securities And Exchange Commission or other regulatory authority of any state, nor have any of the foregoing authorities passed upon the accuracy or adequacy of this document or endorsed the merits of this offering. Any representation to the contrary is a criminal offense.

IMPORTANT CONSIDERATIONS

This memorandum is being furnished to prospective investors to consider an investment in the Fund. Due to its confidential nature, this memorandum may not be reproduced or used for any other purpose. By accepting delivery of this memorandum, each prospective investor agrees that he, she or it will not divulge its contents to any person other than his, her or its attorney, accountant or other representative, if any, and will return it with all accompanying documents to the Manager upon request if the investor does not make an investment in the Fund.

The securities offered hereby will be offered in a transaction not involving a public offering in reliance upon the exemption from registration afforded by section 4(2) of the Securities Act and the regulations promulgated thereunder, and may only be offered and sold to certain qualified investors. Subscribers will be required to represent that they are familiar with and understand the terms of this offering, and that they meet certain suitability requirements.

This memorandum does not constitute an offer or solicitation by or to anyone in any jurisdiction in which such an offer or solicitation would be unlawful. In addition, this memorandum constitutes an offer only if the Offerer is a qualified Offeree under applicable securities laws.

This memorandum contains a summary of the material terms of certain documents. However, the description of the documents summarized herein is incomplete and should not be relied upon by any investor without a complete reading of all of such documents and a full understanding of their contents. All documents relating to an investment in the interests (and


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any additional information in connection with this offering that is available or can be obtained without unreasonable expense) will be made available to the Offeree provided with this memorandum or to his, her or its representatives, if any, upon request. The Manager and its representatives will be available to the Offeree or to such representatives to provide answers to questions concerning this offering. Neither the Fund nor the Manager has authorized, and Offerees should not rely upon: (a) any representations (whether oral or written) other than those set forth in this memorandum and the enclosures hereto or (b) any additional information (whether oral or written) except that contained in documents prepared and delivered to the Offeree by the Fund prior to a monthly transaction date.

Prospective investors should not construe the contents of this memorandum as individual legal, tax or investment advice. Each investor should consult his, her or its own counsel, accountant or business advisers as to legal, tax and related matters concerning this investment.

No offering literature or advertising material will be employed in the offering of the interests, except the information contained in this memorandum, the operating agreement, the subscription materials, any investment summary and adviser profiles, other enclosures, and the cover letter or letters accompanying such documents.

This offering will continue until terminated by the Manager. The Manager in the exercise of its sole discretion, reserves the right to suspend the offering temporarily and to reopen the same without such action being considered a closure or termination of the offering, or the commencement of a new offering. Furthermore, in connection with the offer and sale of the interests, the Manager reserves the right, in its sole discretion, to reject any subscription, in whole or in part, or to allot to any prospective investor a lesser interest than the one subscribed for by such investor.

The information contained in this memorandum is intended to be current as of the date of this memorandum. No representation or warranty is made as to the accuracy or completeness of such information, and nothing in this memorandum is, or will be relied on as, a promise or representation as to the future.

All States

The presence of a legend for any given state reflects only that a legend may be required by that state and should not be construed to mean an offer or sale may be made in any particular state. This Memorandum may be supplemented by additional state legends. If you are uncertain as to whether or not offers or sales may be lawfully made in any given state, you are advised to contact the Manager for a current list of states in which offers or sales may be lawfully made.


August 15, 2011 3

Notice to California Residents

These securities have not been registered under the 1933 act, or qualified under the California Corporation’s code by reason of specific exemptions thereunder relating to the limited availability of the offering. These securities cannot be sold, transferred or otherwise disposed of to any person or entity unless subsequently registered under the 1933 act and qualified under the California Corporation’s code, if such registration and qualification is required.

For Florida Residents Only

When sales are made to five or more persons in Florida, any sale in Florida made pursuant to section 517.061(11) is voidable by the purchaser in such sale either within 3 days after the first tender of consideration is made by such purchaser to the issuer, an agent of the issuer, or an escrow agent or within 3 days after the availability of that privilege is communicated to such purchaser, whichever occurs later.

Special U.S. Tax Disclosure

The taxpayer (and each employee, representative, or other agent of the taxpayer) may disclose to any and all persons, without limitations of any kind, the tax treatment and tax structure of the transactions and all materials of any kind (including opinions or other tax analysis) that are provided to the taxpayer relating to such tax treatment and tax structure.

Speculative Nature of Investment

Investment in the Units is speculative and by investing, each Member assumes the risk of losing the entire investment. The Fund has no operations as of the date of this offering and will be solely dependent upon the Manager. There can be no assurances that the Fund's investment return objectives will be realized, or that significant capital losses will not occur. Accordingly, Investors must be able to bear the loss of their entire investment.

FORWARD-‐LOOKING STATEMENTS

Certain statements in this memorandum constitute '"Forward-‐Looking Statements" within the meaning of section 27A of The Securities Act Of 1933, as amended. And section 21E of The Securities Exchange Act Of 1934, as amended. All statements that address expectations or projections about the future, including statements about investments, market position, expected expenditures and financial results, are forward-‐looking statements. Some of the forward-‐looking statements may be identified by words like "expects," "anticipates," "plans," "intends," "projects," "indicates," and similar expressions. Any statements contained herein that are not statements of historical fact may be deemed to be forward-‐looking statements. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Accordingly, actual results or performance of the Fund may differ significantly, positively or negatively, from forward-‐looking statements made herein. Unanticipated events and circumstances are likely to occur. Factors that might cause such differences include, but are not limited to, those discussed under the heading "Additional Risk Factors," which investors should carefully consider. The Fund will undertake no obligation to update any forward-‐looking statements.


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Contents 1 PRIVATE PLACEMENT DOCUMENTS .......................................................................................... 6 2 WHY MANAGED RENTAL PROPERTIES? ................................................................................... 6 3 SUMMARY OF OFFERING ............................................................................................................... 7

3.01 The Fund .................................................................................................................................................. 7 3.02 Term of the Fund .................................................................................................................................. 7 3.03 Investment Objective and Process ................................................................................................ 7 3.04 Advantages of buying distressed properties ............................................................................ 7 3.05 Distressed Property Investment Risks ....................................................................................... 7 3.06 Advantages of trustee sale purchases ......................................................................................... 8 3.07 Trustee Sale Investment Risks ....................................................................................................... 8 3.08 Eligible Investors .................................................................................................................................. 9 3.09 Closing Date ............................................................................................................................................ 9 3.10 How to Purchase Interests ............................................................................................................... 9 3.11 Net Asset Value .................................................................................................................................... 10 3.12 How to Redeem Interests ............................................................................................................... 10 3.13 Startup Fees and Expenses ............................................................................................................ 11 3.14 Distributions and Taxes .................................................................................................................. 11 3.15 Redemption and Taxes .................................................................................................................... 11 3.16 Business Operations of the Fund ................................................................................................. 11

4 THE MANAGER ................................................................................................................................ 11 4.01 Manager: Larry Roberts .................................................................................................................. 12 4.02 Manager Compensation ................................................................................................................... 12 4.03 Shared Profits and Alignment of Interests .............................................................................. 13 4.04 Manager’s holdings in the Fund ................................................................................................... 13 4.05 Manager’s Purchase of Properties from the Fund ............................................................... 13 4.06 Manager’s Delegation of Powers ................................................................................................. 13

5 INVESTMENT OBJECTIVE AND APPROACH ........................................................................... 13 5.01 Market Environment and Opportunity ..................................................................................... 13 5.02 Philosophy and Strategy ................................................................................................................. 14 5.03 Risk of Diminished Returns ........................................................................................................... 14

(a) Idle money ..................................................................................................................... 14 5.04 Risk of Loss ........................................................................................................................................... 14 5.05 Investment Process ........................................................................................................................... 15

(a) Select Properties for Initial Research ................................................................ 15 (b) Filter Properties with Final Research ................................................................ 15 (c) Bid at Sale ....................................................................................................................... 15 (d) Take Possession after Sale ...................................................................................... 16 (e) Prepare for Rental ...................................................................................................... 16 (f) Hold as Long-‐Term Rental ....................................................................................... 16 (g) Liquidate Properties as Investors Redeem Interests .................................. 16

5.06 Typical Investment Parameters, Costs and Fees .................................................................. 16 5.07 Breakeven Analysis for Typical Investment ........................................................................... 18 5.08 Use of Property and Fund Debt .................................................................................................... 18 5.09 Appreciation and 10-‐Year Internal Rate of Return ............................................................. 19 5.10 Ten-‐Year Projections for a typical property ........................................................................... 20 5.11 Rental Strategies ................................................................................................................................. 20


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(a) Renting to the former owner ................................................................................. 20 (b) Renting to the holdover tenant ............................................................................ 21 (c) Renting to a new tenant ........................................................................................... 21 (d) Pricing strategy ........................................................................................................... 21

5.12 Disposition Tactics and Responsibilities ................................................................................. 21 (a) 3% to 5% Profit Target ............................................................................................ 21 (b) Lower price to Net Asset Value ............................................................................ 22 (c) 45 Days on MLS before redeeming for less than Net Asset Value ......... 22

5.13 Fund to Purchase from Apple Blossom Arbitrage LLC ...................................................... 22 5.14 Investor’s Purchase of Properties from the Fund ................................................................ 22

6 ADDITIONAL RISK FACTORS ...................................................................................................... 22 6.01 Reliance on Management ................................................................................................................ 22 6.02 Diversification Risk ........................................................................................................................... 22 6.03 Leverage Risk ....................................................................................................................................... 23 6.04 Absence of Operating History Risk ............................................................................................. 23 6.05 Limited Transferability .................................................................................................................... 23 6.06 Amendments of Operating Agreement ..................................................................................... 23 6.07 Special Considerations for ERISA Fiduciaries ........................................................................ 23 6.08 Changes in Applicable Law ............................................................................................................ 24 6.09 Effects of Substantial Redemptions ............................................................................................ 24

7 CONFLICTS OF INTEREST ............................................................................................................ 24 7.01 Services of the Manager .................................................................................................................. 24 7.02 Other Sources of Manager Compensation ............................................................................... 24 7.03 Manager Buyout of Fund’s Interest ............................................................................................ 24 7.04 Trading By Affiliated Persons ....................................................................................................... 24 7.05 Other Advisory Accounts ................................................................................................................ 25 7.06 No Independent Counsel ................................................................................................................. 25

8 HOW TO PURCHASE INTERESTS ............................................................................................... 25 8.01 Eligible Investors ................................................................................................................................ 25 8.02 Payment of Purchase Price ............................................................................................................ 26

9 HOW TO REDEEM INTERESTS ................................................................................................... 26 9.01 Redemption Instructions ................................................................................................................ 26 9.02 Involuntary Redemptions ............................................................................................................... 27 9.03 Fiduciary Responsibilities, Exculpation, and Indemnification ....................................... 27

10 TAX ASPECTS ................................................................................................................................ 27 10.01 DISTRIBUTIONS AND TAXES ...................................................................................................... 27 10.02 Federal Tax Aspects ........................................................................................................................ 28 10.03 Partnership Status; Publicly Traded Partnership Status ................................................ 28 10.04 Members, Not Fund, Subject to Tax ......................................................................................... 28 10.05 Passive Activity Income and Loss ............................................................................................. 28 10.06 Liquidation of the Fund ................................................................................................................. 28 10.07 Alternative Minimum Tax ............................................................................................................ 28 10.08 Unrelated Business Taxable Income ....................................................................................... 29 10.09 State and Local Tax Aspects ........................................................................................................ 29 10.10 Foreign Taxes .................................................................................................................................... 29 10.11 ERISA Aspects and Risks .............................................................................................................. 29

11 DEFINITIONS ................................................................................................................................. 29


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1 PRIVATE PLACEMENT DOCUMENTS The package of materials that came with this booklet contains the following:

1. Disclosure Document,

2. Operating Agreement,

3. Investor Questionnaire and

4. Subscription Agreement.

The Disclosure Document explains the Operating Agreement and describes how the Fund will conduct business. The Subscription Agreement is filled out by the investor as an offering to the Fund to accept the subscriber’s cash contribution in exchange for a claim to the assets and profits of the Fund’s operations.

The Operating Agreement addresses items like the company name, Manager and members, the investment plan, typical transactions, expenses, profits and losses, capital contributions, capital distributions and withdrawals, and various procedural and legal notes.

The Disclosure Document does not have the legalese of the Operating Agreement. The intent of a Disclosure Document is to inform completely and make everything as transparent as possible.

The Investor Questionnaire is designed to help the potential investor determine if the type of investment presented is right for them. It establishes the contact information, investor financial status, and other data to help the Manager evaluate the suitability of the potential Subscriber.

The Subscription Agreement is the investor’s petition to the Fund for admission. The Fund Manager may accept Subscribers into the Fund by processing the Subscription Agreement and returning to the Investor a copy of the Subscription Agreement signed by the Manager. It is recommended that these documents and future Fund Performance Reports be kept together for the investor’s records.

2 WHY MANAGED RENTAL PROPERTIES? Rental properties offer the stability of regular cashflow and the potential for appreciation and profit on resale. Investing in rental properties has lower risk than other forms of real estate speculation. With rental properties, unless the investor is forced to liquidate at a poor time at a loss, the question becomes not one of loss but how to achieve the highest rate of return on invested capital.

The anticipated annual cashflow returns to the Fund are between 6% and 8%.

The Las Vegas housing market is expected to decline in resale value for two or three more years, but once the supply and demand problems are resolved, rebound appreciation back to long term trendlines could exceed 80%.

The internal rate of return on a 10-‐year holding period is expected to be between 12% and 15%.


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3 SUMMARY OF OFFERING This Confidential Private Placement Memorandum describes the offering of an unlimited number of membership interests in the Fund, RADIANT HOMES II, LLC. An index of defined terms used herein (which are capitalized) appears at the back of this Memorandum.

3.01 THE FUND

The Fund is RADIANT HOMES II, LLC, a Nevada limited liability company. The Fund was formed to operate as a private investment company that will invest its assets according to a specified investment objective and stated investment policies.

A copy of the Operating Agreement is enclosed with this Memorandum as APPENDIX A: OPERATING AGREEMENT OF RADIANT HOMES II, LLC.

3.02 TERM OF THE FUND

The Fund is established for an indefinite period. The Fund will terminate when all Investors redeem their ownership interests or the Manager declares the Fund closed, liquidates remaining properties, and returns all funds to Investors.

3.03 INVESTMENT OBJECTIVE AND PROCESS

The investment objective of the Fund is maximum current cashflow and capital appreciation. The Fund will buy real estate at trustee sale, improve properties as necessary, hold them indefinitely for rental cashflow, and resell them for profit when an Investor desires liquidation. The Fund is formed to provide investors with the opportunity to purchase interests in properties chosen by the Manager, Lawrence Roberts.

3.04 ADVANTAGES OF BUYING DISTRESSED PROPERTIES

The Fund will be buying properties in a declining market. For 18 to 36 months, it is anticipated that prices will either remain flat or decline modestly. The advantage to buying under these circumstances is that properties meeting Fund objectives will be more plentiful as other investors speculating on appreciation and owner occupants will not be competing to acquire these properties. During the initial period of Fund acquisition, deal quality may improve as lower resale prices make for greater rates of return on invested capital.

Since distressed properties are ostensibly trading below their true value, obtaining these properties while they are distressed and holding them until they are not distressed creates a potential for appreciation in excess of non-‐distressed properties.

3.05 DISTRESSED PROPERTY INVESTMENT RISKS

The risks for buying distressed properties are to both the cashflow during the ownership period, and to the disposition resale value. Prices of distressed properties may fall further and remain depressed for a very long time creating losses at liquidation. Further, it may be difficult to find renters to obtain the income stream in the financial projections. Distressed properties may require greater upkeep than anticipated due to their often-‐dilapidated state.


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3.06 ADVANTAGES OF TRUSTEE SALE PURCHASES

During the next several years, Nevada will turn over a significant percentage of its housing stock through foreclosure auctions (AKA trustee sales). Trustee sale purchases represent the best method for sophisticated investors to acquire real estate because the savings may potentially be quite significant. Typically, properties acquired at Trustee sale are 20% or more under resale value after fees and costs. No matter the end use, the ability to purchase at a lower price offers unique advantages.

3.07 TRUSTEE SALE INVESTMENT RISKS

The only transactions anticipated for the Fund are Trustee Sale purchases and resales, although other types of transactions including short sales and distressed MLS resales are permitted. The purchase of real estate at a Trustee Sale is inherently more speculative, complicated, and risky than purchase by conventional means. The above-‐average risk is due to such considerations as potential title problems, the possibility of unknown liens, unpaid property taxes, delayed holding periods, unknown property condition prior to purchase, potential acts of vandalism, unforeseen governmental intervention, etc. The major risks and limitations are as follows:

• Cash Only: Trustee Sales only allow cash bids. The exclusion of finance buyers creates the discount at auction.

• Evaluation of Resale Comparables: The Manager of the Fund and his representatives research property values in the resale market, but their evaluation may be in error. This error may cause the Manager to overpay for property on behalf of the Fund. In such instances the Fund may lose money.

• Selection: A property fitting a Fund's property parameters and price range may not be scheduled for a Trustee Sale in a reasonable time. The result of scarce opportunity is idle money and a diminished rate of return.

• No Inspection: The Manager of the Fund and his representatives will not be able to view the inside of the property prior to the sale unless the property is actively listed in the Multiple Listing Service, or in the unusual case where the current owner allows access. The property is acquired "as is" which may include undetectable physical damage.

• No Insurance: The Manager of the Fund can't purchase title insurance at the sale and protect against unrecorded mechanic's liens or judgment liens against the owner. This is rare, but it does happen, and the buyer is liable for these claims against the property.

• No Remorse: The Sale is final.

• Unannounced Postponements and Late Cancellations: Most Trustee Sales are postponed at least once, and many are postponed numerous times, sometimes for a period of several weeks or months. If the Sale is postponed, the postponement may not be announced until buyer attends the scheduled sale, unused cashier's checks in hand. Some owners are able to sell or refinance their properties at the last minute, cancelling the Trustee Sale altogether.


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• High Opening Bids: Most or all properties fitting Fund's criteria may be over encumbered, and the published opening bids are often higher than the property's market value. The foreclosing lender has the option of starting the bidding at less than market value, and they may not decide whether or not to do so until the auctioneer begins to call the Sale.

• Competition: There will often be competing bidders at the Sale, and some will bid above the property's market value.

3.08 ELIGIBLE INVESTORS

Interests in the Fund will be offered to "accredited investors" and “sophisticated investors” as that term is defined in Regulation D under Section 4 (2) of the Securities Act.

3.09 CLOSING DATE

The Fund will be closed to all new investment on December 31, 2012 or earlier at the Manager’s discretion.

3.10 HOW TO PURCHASE INTERESTS

The Fund will provide an unlimited number of accredited investors with opportunity to purchase Member Interests.

The Fund will be closed to sophisticated investors once 35 sophisticated investors have purchased Fund shares. The Fund will be closed to all new investment on December 31, 2012 or earlier at the Manager’s discretion.

The minimum initial Capital Contribution of a Member is five units of $5,000 each which equals $25,000. Subsequent units can be purchased for $5,000 each. The Manager may permit any Member to make fractional unit purchases at his discretion. All Interests will be fully paid and non-‐assessable; and no Member will be personally liable for the debts, obligations or liabilities of the Fund in excess of the amounts the Member is obligated to pay as the purchase price for the Member's Interests in the Fund.

Each Interest represents a percentage interest in Fund capital, profits and losses, as described more fully in the Operating Agreement attached as Appendix A: Operating Agreement of Radiant Homes II, LLC. Each Member will receive an acknowledgment of their Interest, but no certificate will be issued to evidence the investment. All membership records of Interests will be maintained by the Fund.

Membership Interests will be subject to ongoing deductions for management fees, advisory fees and other operating expenses of the Fund as described more fully in the Operating Agreement attached as Appendix A: Operating Agreement of Radiant Homes II, LLC.

Payment for purchases of Interests must be delivered either by check (four business days in advance) or wire (two business days in advance) according to instructions provided by the Manager.


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3.11 NET ASSET VALUE

While the Fund is open to new investment (December 31, 2012 at the latest), the Net Asset Value is the total of the Investor’s Contributed Capital. Once the Fund is closed to new investment, The Net Asset Value is determined on a quarterly basis by a broker’s opinion of value.

The Net Asset Value is determined as shown on the table to the left. First, a schedule is generated with properties owned by the Fund. Based on recent comparable sales, the Manager determines comparable values and assigns those values to the appropriate property. The sum of all properties is reduced by 8% to allow for Liquidation costs including a full 6% commission (3% list, 3% buy) and allowing 2% for seller closing costs. The result is the total cash value of the properties owned.

Each property also has its own reserve account where money is set aside for future repair and renovation expenses. This cash-‐on-‐hand is not available for investment in new properties. The remainder of cash-‐on-‐hand is available for Investment.

Net Asset Value is the sum of the following:

• Total Cash Value of Properties,

• Total Maintenance Reserves, and

• Total Cash on hand for investment.

3.12 HOW TO REDEEM INTERESTS

During the Fiscal Year, profits are distributed quarterly, and beginning in 2013, the Net Asset Value of the Fund is reevaluated by a broker’s opinion of value and the Member's Capital Accounts are adjusted.

All petitions for return of Capital Accounts must be in writing to the Manager and acknowledged by same.

In the event a Member petitions to Manager for release of Capital Contribution, the Manager has one year to liquidate sufficient Company holdings to return member's Contributed Capital. In the event sufficient working capital is released prior to the one-‐year period and the Manager deems


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returning the amount of the Capital Account will not disrupt the workings of the Company, the Manager may at his sole discretion return the funds during the one-‐year waiting period.

3.13 STARTUP FEES AND EXPENSES

Interests will be sold primarily by the Fund itself through the recommendation of its Manager, although the Manager and Fund reserve the right to hire a placement agent or other broker or agent to sell Interests in the Fund. There are no sales charges or placement fees. The Fund may, at Manager's discretion, pay any agent or third party who refers investors more than a nominal amount. Payment and fee may be contingent on whether the referral results in a transaction, however the referral fee is not based on the amount of the transaction but a flat fee. The Fund pays its creation, syndication and operating expenses out of the investable assets of the Fund, and payment of such expenses is reflected in the Net Asset Value of the Fund.

The Fund bears the costs of the custody and valuation of its properties, transaction costs, organizational, syndication and startup costs, and administrative, legal and accounting fees. The startup fees and management and operations fees are projected to be approximately $5,000, but it may be higher.

3.14 DISTRIBUTIONS AND TAXES

All profits, if any, are distributed at the end of each quarter. In order to prevent dilution of early investors, no investor will receive any payments on the first quarterly payment after they invest. Since it will take 90 to 150 days for the Manager to invest the contributed capital and get the property rented, this delay is experienced by all Fund investors regardless of the timing of their investment.

After the Fund is closed Net Asset Value of each Member's Capital Account is adjusted on a quarterly basis based on a broker’s opinion of value for each of the Fund’s holdings.

Investors will be required to pay taxes on rental income, and the Fund will not withhold for taxes. Members will receive a copy of the annual financial statement and tax reports on IRS form K-‐1.

3.15 REDEMPTION AND TAXES

All investors will be part of the Fund for at least one year due to restrictions on the timing of redemptions. When funds are redeemed, the Fund will repurchase shares for their Net Asset Value adjusted for actual costs. This redemption will be reported as a capital gain to the investor.

3.16 BUSINESS OPERATIONS OF THE FUND

The Manager is responsible for making all business and investment decisions with respect to the Fund.

4 THE MANAGER The acting Manager of the Fund is Larry Roberts. The Manager has experience in every aspect of the Fund’s operation. However, it may be in the best interest of the Fund to have the Manager supervise the work of others and work as a team to deliver potentially profitable deals to the


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Fund. The Manager will hire outside consultants as necessary to perform Fund functions. The Fund will have no employees.

4.01 MANAGER: LARRY ROBERTS

Credentials:

• Manager of Apple Blossom Arbitrage LLC, a $2,000,000 purchase-‐to-‐sale flipping Fund operating in Las Vegas, NV.

• Project Manager responsible for evaluation, acquisition, development, and disposition of over $100 million in real estate assets.

• Licensed California Real Estate Agent #1868521

• Master of Science in Land Development -‐ Texas A&M University 1994

• Bachelors of Science -‐ University of Wisconsin at Stevens Point 1992

• Primary writer for the Irvine Housing Blog

• Author of The Great Housing Bubble

The Fund is the primary responsibility of Larry Roberts. He has extensive experience with managing large real estate funds devoted to specific projects. Much of his experience has been with homebuilders, so he fully understands the construction and renovation issues associated with single-‐family homes. Since September 2010, Larry Roberts has been managing Apple Blossom Arbitrage LLC, a purchase-‐to-‐sale flipping fund operating in Las Vegas. In the first year of operations, he oversaw the purchase, renovation and sale of more than 30 homes. This experience makes him an expert in Las Vegas real estate.

The contract between Lawrence Roberts and the Fund is the Operating Agreement attached as APPENDIX A: OPERATING AGREEMENT OF RADIANT HOMES II, LLC.

4.02 MANAGER COMPENSATION

The Manager receives compensation through four events:

• 5% of invested capital retained as a Fund ownership position by Monterey Cypress LLC.

• 1% gross commission on property acquisitions.

• 10% of net operating income.

• 3% typical listing commission on sale.

The Manager also has the right to purchase properties from the Fund at-‐cost as an indirect form of compensation.

Manager may take compensation personally, or it may be put to a business entity with which Manager has an interest such as Ideal Home Brokers or Monterey Cypress LLC. Manager will determine whether to take any income personally or funnel it through an entity at his discretion.


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4.03 SHARED PROFITS AND ALIGNMENT OF INTERESTS

The primary compensation for the Manager is from shared profits with the Fund. This creates an alignment of interests whereby the manager is strongly encouraged to maximize the profit on each transaction.

4.04 MANAGER’S HOLDINGS IN THE FUND

In addition to any direct Fund investment, the Manager will obtain a 5% ownership stake in the company as properties are acquired. As each property is acquired, the Manager’s account holdings will be increased by 5% of the total proforma cost of the property. The Manager has no ownership claim to Investor capital until properties are purchased.

The Manager may not redeem his interest in the Fund acquired through acquisition of properties for the first two years of the Fund’s operation. This ongoing ownership interest is the primary reason the Manager has prepared the Fund and offered ownership interest to others.

4.05 MANAGER’S PURCHASE OF PROPERTIES FROM THE FUND

The Manager may purchase any property purchased by the Fund within 90 days of cashing the first rental check from the first tenant to occupy the property. This provides the Manager time to secure financing to purchase the Fund’s interest. The Fund will sell the property for its invested cost with no profit other than rental fees obtained while the Manager is processing the loan financing. The Manager may purchase any property before it’s leased also at the Fund’s cost basis resulting in no profit for the Fund.

4.06 MANAGER’S DELEGATION OF POWERS

Manager has appointed Jacqueline Evans as vice president of operations. She, or some other designee as Manager may appoint, has the power to enter into contracts on the Company’s behalf.

5 INVESTMENT OBJECTIVE AND APPROACH The purpose of this section is to detail the investment activity of the Fund. It will answer many basic questions:

• Why does this opportunity exist? • What are the risks associated with taking this opportunity? • What is the process for identifying opportunities? • How does the Fund participate and profit from the opportunity? • What is the breakeven point and parameters for risk of loss? • How will others participate in this opportunity?

5.01 MARKET ENVIRONMENT AND OPPORTUNITY

The entire nation experienced an unprecedented real estate bubble fueled by loose credit. In Nevada, where Radiant Homes will primarily operate, the ups and downs of the housing bubble have been the most extreme. As a result of the collapse of the bubble, many home owners are in distress, and many will lose their homes to foreclosure, also known as trustee sale, or they will


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sell the house on the MLS in a short sale. Residents who sell either through short sale or foreclosure have damaged credit, and they are unable to qualify to purchase another home for an extended period of time. If they still have a job in the local economy, most will stay on and rent.

These circumstances create a unique situation where the excess supply has pushed prices down significantly relative to the cost of a comparable rental. This Fund seeks to profit from this situation in two ways: first, since the cost of ownership is much lower than market rents, buying and holding these properties offers significant returns from current cashflow, and second, since prices are so low relative to rents and incomes, when the credit scores of local residents improve, the new demand will push prices higher creating the opportunity to profit from appreciation.

5.02 PHILOSOPHY AND STRATEGY

The investment objective of the Fund is profit through buying real estate at trustee sale, improving properties as necessary, renting them out for current cashflow, and reselling them in the open market where buyers can obtain financing after prices rebound back to rental parity levels.

5.03 RISK OF DIMINISHED RETURNS

The risks of this Fund come in two forms. One is a true risk of loss to original capital. The second is a risk the returns will not be as high as the proforma would suggest. This second risk is one of diminished returns.

The risk of diminished returns to the Fund comes from, but is not limited to, several primary sources:

1. Overestimation of resale market comparables that prompted the Fund to overbid for property, and

2. Underestimation of acquisition costs or renovation costs required to bring the property to a rentable or salable standard.

3. Overestimation of market rents. 4. Underestimation of vacancy losses, maintenance, and repairs.

Managing these risks requires good data and sound analysis. The skills and efforts of the Manager to manage risk will determine the success of the Fund.

(a) Idle money Finding deals that matches investment parameters may become difficult, and such deals may not be present in the market for long periods of time. Idle money lowers the rate of return. If it takes two or three months to acquire a property, an investor missed potential rental income during that period. Further, once a property is purchased, it may not be rented for a significant period of time while former occupants are evicted, renovations are completed, and a renter is found.

5.04 RISK OF LOSS

The risk of loss to the Fund comes primarily from market risk at resale. The current state of the market is falling prices. If prices continue to fall and fail to recover, and if the investor wants to


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liquidate their holdings while prices are depressed, the investor may experience loss of original capital.

To avoid risk of original capital, investors must anticipate at least a three to five year holding time while the market drops then recovers.

Since the current cashflow of these properties yields high returns, investors will not be pressured by carrying costs or other investment related needs for liquidation. Only an investor’s personal circumstances my require redemption and subsequent property liquidation while prices are still depressed. For this reason, investors who anticipate needing their funds in the next five years should not invest in this Fund.

5.05 INVESTMENT PROCESS

This section contains a conceptual overview of the Trustee Sale process, which is the primary method of property acquisition for this Fund.

(a) Select Properties for Initial Research The Fund has identified certain market areas where it has expertise in determining resale property values. The Manager will contract with a service to function as the Trustee Sale Buyer. Any possible acquisition targets are further researched to obtain the following information:

• Detailed description of Property • Property tax information (tax rate, Mello Roos status, etc.) • Basic Home Owners Association information, if any • Recent market comparable rentals • Recent market comparable sales • Recent comparable foreclosure sales, if any

(b) Filter Properties with Final Research For those Properties in which Manager has a continued interest, Trustee Sale Buyer will provide the following:

• Photographs – on the morning of the sale each prospective property scheduled for auction is photographed and provided to the Manager.

• Title -‐ all persons currently vested on title, or previously vested at any time as of or since the acquisition of the Property.

• Liens -‐ all Trust Deeds and all other liens currently encumbering Property, and an analysis of their effect or standing, if any, at or following the Sale.

• Property Tax Status -‐ total property taxes owed against the property, if any, including current taxes, delinquent taxes, and penalties.

Prior to the Sale, Manager will (1) review the above information, (2) make a final determination as to whether or not to bid at the Sale, and, if so, (3) determine the maximum bid.

(c) Bid at Sale On the day of the scheduled Sale Trustee Sale Buyer will attend the Sale and bid on Property on Fund's behalf. If there is no bidding competition and opening bid is less than the Buyer's


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determined maximum bid, Broker will bid $.01 more than the opening bid, and the Fund will be the winning bidder. If there is active bidding competition, Trustee Sale Buyer will continue bidding by increasing each higher bid by a predetermined increment, until the Fund has the winning bid or until Manager's maximum bid amount is reached.

If the Fund is the winning bidder, Trustee Sale Buyer will provide payment from a third-‐party escrow company to the Trustee, and Trustee will provide Trustee Sale Buyer with a receipt of transaction.

The Trustee will mail the Trustee's Deed Upon Sale, which transfers title to Fund. This deed must be recorded within 15 calendar days of the Sale for Fund's ownership to be of record on the morning of the date of the sale. At the time of recordation, the Fund will be required to pay the State Transfer Tax, $1.10 per thousand dollars of purchase price.

(d) Take Possession after Sale If Property is occupied, Listing Agent will attempt to negotiate a new rental agreement with the occupants. Former owners are sometimes willing to stay on and pay a premium rent to avoid moving out of their family homes. Former tenants are also sometimes willing to stay on, but many tenants have been given below market rents by former owners who were skimming their rent payments and not paying the lender. In those circumstances, the renter may not be able to afford fair-‐market rents and will need to move out.

If unsuccessful, Listing Agent will attempt to negotiate a voluntary vacancy, whereby the occupant leaves according to a time frame approved by the Manager.

If also unsuccessful, the Manager will attempt to negotiate a Cash-‐For-‐Keys agreement, approved by Manager and at Fund's expense, whereby occupant vacates the property and removes all personal property by a certain date in exchange for a specified sum of money.

If also unsuccessful, Manager will contact a qualified eviction attorney to begin the eviction process also at the Fund’s expense.

(e) Prepare for Rental Manager is responsible for renovation and resale. Manager will approve a budget and scope of work required to bring each property up to a rentable standard.

(f) Hold as Long-‐Term Rental Manager will contract with a local property management company to deal with day-‐to-‐day management issues on the various properties.

(g) Liquidate Properties as Investors Redeem Interests Manager will liquidate properties as investors want to redeem their interests. Due to rent rollovers and lease obligations, investors must allow the Manager one year to obtain fair-‐market value for the properties and return invested capital.

5.06 TYPICAL INVESTMENT PARAMETERS, COSTS AND FEES

A typical transaction involves purchasing a trustee sale property at 22.5% or greater discount to resale value. The actual discount is calculated by subtracting known and estimated costs from the projected resale value.


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The known and estimated costs include the following:

• Maximum bid for acquiring property at Trustee Sale, • trustee sale fees and commissions, • real estate improvements, • back and current property taxes, • carry costs during the pre-‐lease period, • tenant move-‐out costs, • transfer taxes, • market rent, • property taxes, • homeowners insurance, • homeowner’s association fees, • property management fees, • maintenance and replacement

reserves, • vacancy and collection losses, and • other costs.

The following is a report demonstrating the typical costs associated with acquiring, improving and reselling a trustee sale property.

A typical property will have a resale value of approximately $100,000. Liquidation costs include a 6% commission (3% list goes to Manager, and 3% to buyer’s agent) and a 2% allowance for seller’s closing costs. The Liquidation Value is also the Net Asset Value of the property.

Trustee Sale Fees include the service used by the Manager to acquire the property which typically charges 3%, and a 1% acquisition fee charged by the Manager.

The Manager’s compensation includes a fee equal to 5% of the total cost basis in the property. The primary acquisition method for this Fund will be trustee sales. Since these properties are purchased at a 22.5% or more discount to resale price, part of the Managers compensation (5% of total cost basis), is made up for by the savings on acquisitions at auction. The net


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asset value of the Investor’s holdings is equal to the acquisition costs. In other words, savings at auction indirectly pays the Manager’s fee.

Real estate improvements are approximately 5% of the auction costs. Any costs not spent on improvements at the time of purchase will be added to a reserve fund for future maintenance and repairs.

Carrying costs assume three months of expenses for taxes, insurance homeowners association fees, property management and other expenses.

Project management includes the compensation for the project manager who coordinates all activities between the auction and leasing of the property.

The allowances for tenant move-‐out and move-‐in may be avoided if either the property was empty when acquired, or if the existing occupant can be convinced to stay. The Fund will seek to keep existing occupants in place whenever possible.

Transfer taxes and recording fees are required whenever a property is sold.

The operating expenses are broken down into two categories: cash expenses and reserve expenses. Cash expenses are paid out each month or in the case of property taxes each quarter. Property taxes are typically 1%, and homeowners insurance is approximately 0.65% of value. Homeowners associations vary considerably, but typically the Fund will target properties with low fees or no fees. Association fees are typically a drain on cashflow, although they do provide some offset to ongoing maintenance expenses. The Fund will employ a property management service to deal with the day-‐to-‐day operational issues of dealing with multiple properties.

The reserve expenses include allowances for maintenance and for vacancy and collection losses. Since these expenses are variable and unpredictable, each month money is set aside in a reserve account to pay these expenses when they occur.

The gross rent minus cash expenses and minus reserve expenses equals the net operating income of the property. The Manager charges a 10% Fund Administration fee based on the Net Operating Income. This encourages the Manager to maximize Net Operating Income thereby aligning the interests of the Manager with the Investors.

After all expenses, investors can anticipate an 8% return on a typical property resulting in a 6% to 8% return on all money invested after other Fund expenses such as accounting and allowing for idle money.

5.07 BREAKEVEN ANALYSIS FOR TYPICAL INVESTMENT

For a typical investment, liquidation costs plus the cost of the Manager’s ownership share are built into the projections. At the time of property purchase, the Investor’s Fund interests are already at breakeven. This is one of the compelling reasons to acquire properties at Trustee Sale.

5.08 USE OF PROPERTY AND FUND DEBT

No debt will be used. This fund is suitable for self-‐directed retirement accounts as it should incur no unrelated business income tax.


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5.09 APPRECIATION AND 10-‐YEAR INTERNAL RATE OF RETURN

The Las Vegas housing market held steady at rental parity levels prior to the Great Housing Bubble. As is common when financial bubbles burst, the market has overshot to the downside.

When the inventory problems caused by the plethora of foreclosure abates. The opportunity to buy cashflow properties with tremendous capitalization rates will disappear. However, the rebound appreciation may be quite significant. The market is currently 40% below rental parity. The asymmetric nature of drawdowns means that prices need to rebound far more than 40% to reach the prior equilibrium. Las Vegas could easily see double-‐digit appreciation five to ten years from now. If prices rise 80% during the next ten years – which would still leave prices below rental parity – the appreciation returns will be tremendous.

When a 10 year holding period with an 80% increase in prices is factored in, the internal rate of return comes to 13.2% on an all-‐cash basis.


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5.10 TEN-‐YEAR PROJECTIONS FOR A TYPICAL PROPERTY

To estimate the performance of a $10,000,000 fund, take all the above numbers times 100. The rates of return will be the same as for the individual properties except for some reduction for idle money and general fund expenses.

5.11 RENTAL STRATEGIES

Purchasing properties at Trustee Sale creates unique opportunities for the Fund to obtain better than expected results. Many of the properties purchased at auction are already occupied. Funds with a business plan to flip properties will generally evict any occupants in order to resell the property to a new owner-‐occupant. This Fund focused on rental cashflow will seek to keep occupants in place before resorting to eviction or cash-‐for-‐keys to clear the property for a new tenant.

The advantages to keeping a holdover occupant in place are twofold: first, the property has immediate cashflow when the occupant is willing to stay on and pay rent, and second, the renovation budget can be saved as reserves for future maintenance as renovation costs are minimal when an occupied house remains occupied.

(a) Renting to the former owner The former owners are the best possible tenants. First, they will treat the property as their own, after all, it used to be. Former owners will often pay above-‐market rents in order to stay in the property they view as their family home. In the future, if the Fund needs to liquidate due to redemption, the former owners are prime candidates to purchase later.


August 15, 2011 21

(b) Renting to the holdover tenant The next best scenario is to keep a holdover renter in the property. This is not as easy as one might think. In many cases, the tenant is paying below-‐market rent as the former-‐owner often rents the property out for whatever they can and skims the rent. Many of these tenants cannot afford market rents, and many will move out when asked to pay more.

(c) Renting to a new tenant In the event a deal cannot be reached to keep the holdover occupant in place, negotiations ensue to pay cash-‐for-‐keys. If these negotiations fail, the Fund will resort to evictions to clear the property and prepare for a new tenant. Once the previous tenants are out, any necessary renovations are completed to prepare for occupancy. This is the costliest method, so it is the last option chosen.

(d) Pricing strategy When the property is first put on the market, asking rent is $50 over recent comps unless there are many model match comps in a tight range. After two weeks, the rent is lowered to the proforma rate. At two to four week intervals, the rent is lowered by $50 until a renter is found.

5.12 DISPOSITION TACTICS AND RESPONSIBILITIES

When an Investor provides written notice requesting a redemption, the Manager will identify specific properties to be liquidated to free up the capital to satisfy the redemption. The Manager will select those properties with the highest resale value relative to its market rent. In other words, the Manager will sell the properties with the lowest capitalization rates first. This is logical for two reasons; first, investors seeking a redemption were likely primarily motivated by appreciation, and they should be compensated by the properties that gave the greatest change in value relative to rents. Second, the remaining Investors want to obtain the greatest cashflow relative to their investments, so retaining the properties with the greatest capitalization rates best serves their interests. The result of these redemptions over time will likely be that the Fund will end up with the least desirable properties in the Fund’s holdings as owner-‐occupants will bid up the prices of the most desirable properties over time.

Once the properties for liquidation have been identified, the Manager will put a larger number of properties for sale and let the market decide which ones sell first and obtain the best prices. The Manager will base his selections on the Net Asset Value of the properties, but if the actual sales prices and proceeds are lower than the book Net Asset Value, the redemption amount will be adjusted by the downward by the difference.

The Manager cannot guarantee the Fund will not lose money on any transaction. The Manager is duty bound to prevent or minimize Fund losses, but if the Manager deems a sale at a loss is preferable to sustained ownership, the Manager has the unrestricted right to sell for a loss.

(a) 3% to 5% Profit Target The Manager will list the properties for sale at a 3% to 5% markup over Net Asset Value for two to four weeks.


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(b) Lower price to Net Asset Value If the Manager cannot obtain a bid resulting in a 3% to 5% profit to the redeeming investor, the Manager will lower the price to the Net Asset Value for an additional two to four weeks.

(c) 45 Days on MLS before redeeming for less than Net Asset Value To ensure redemptions meet or exceed Net Asset Value, all properties will be advertised on the MLS for at least 45 days prior to selling for a result less than the Net Asset Value. After 45 days, the Manager may reduce price below Net Asset Value at his sole discretion until the properties are sold.

5.13 FUND TO PURCHASE FROM APPLE BLOSSOM ARBITRAGE LLC

This Fund may purchase properties directly from another Fund operated by the Manager, Apple Blossom Arbitrage LLC. Any purchases would be at cost plus a 6% profit to Apple Blossom Arbitrage LLC. Since the fund can purchase directly from auction, it will not likely purchase many properties from Apple Blossom Arbitrage LLC.

5.14 INVESTOR’S PURCHASE OF PROPERTIES FROM THE FUND

Any investor in the Fund may also purchase a property from the Fund at the Manager’s sole discretion. The Fund must obtain a price equal to the net asset value of the property. The manager will charge a 3% commission, but the 3% that would typically be a buyer’s agent commission will be retained as Fund profit to compensate for the lost rent revenue while the capital is redeployed.

6 ADDITIONAL RISK FACTORS Prospective investors should carefully consider the following risk factors among the other risks described in this Memorandum:

6.01 RELIANCE ON MANAGEMENT

The Fund's investment success depends on the skill and the investment management expertise of the Adviser and its personnel responsible for managing the Fund's assets. An investment in the Fund is subject to the risk that the Adviser may not obtain the performance anticipated from the Fund's assets.

All decisions with respect to the Fund's investment objective and policies and the management of the Fund will be made exclusively by the Manager. Investors have no right or power to take part in the management or affairs of the Fund or to participate in the Fund's investment decisions.

The Members also agree to hold the Manager harmless from the consequences of such decisions provided the Manager acts in good faith and is not found to have engaged in gross negligence.

6.02 DIVERSIFICATION RISK

The Operating Agreement does not require diversification of the Fund's investments. Therefore, the Fund may invest its assets in a relatively small number of properties.


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6.03 LEVERAGE RISK

The use of leverage will not be employed to enhance the Fund's returns.

6.04 ABSENCE OF OPERATING HISTORY RISK

The Fund does not have an operating history from which prospective investors may evaluate the likelihood of successful investment performance. The Manager is experienced with operating a similar Fund purchasing these properties with a different financial objective, but the Manager has never operated a Fund devoted to managing rental properties.

6.05 LIMITED TRANSFERABILITY

The Interests have not been registered under the Securities Act of 1933 or applicable state securities laws and, therefore, are subject to restrictions on transfer. In addition, the Operating Agreement contains significant restrictions on the ability of Members to transfer their Interests. In most instances, Interests may not be transferred by a Member without the prior written approval of the Manager.

6.06 AMENDMENTS OF OPERATING AGREEMENT

The Operating Agreement can be amended by the written consent of both the Manager in its capacity as such and the majority in Interest of the Members. The Manager also may, however, without the approval of the Members, modify the Operating Agreement under certain circumstances.

6.07 SPECIAL CONSIDERATIONS FOR ERISA FIDUCIARIES

A fiduciary of an employee benefit plan subject to the U.S. Employee Retirement Income Security Act of 1974, as amended ("ERISA") , should bear in mind at least three important considerations in determining whether the plan should invest in the Fund. First, under ERISA, fiduciaries must discharge their duties solely in the interest of the plan's participants and beneficiaries and in accordance with the so-‐called "prudent man" rule.

Second, ERISA fiduciaries must also satisfy themselves that only the interest in the Fund constitutes a "plan asset," and the underlying investments of the Fund do not. If the underlying assets of the Fund were determined to be "plan assets," (i) the requirement that plan assets must be held in trust may be violated and (ii) Fund transactions could become subject to the "prohibited transaction" rules of ERISA. The issue of whether the underlying assets of an investment fund such as the Fund constitute plan assets is subject to U.S. Department of Labor Regulation Section 2510.3-‐101. The Manager will restrict the number of Interests of the Fund that may be purchased by employee benefit plans and benefit plan investors (within the meaning of U.S. Department of Labor Regulation Section 2510.3-‐101(0 (2)) so as to avoid possible characterization of the Fund's underlying assets as plan assets.

Third, as discussed in greater detail under the heading "TAX ASPECTS AND RISKS" below, it is possible that a portion of the income of the Fund and, therefore, a portion of the income allocated to each Member therein, including ERISA plans and other tax exempt entities, could be unrelated business taxable income subject to federal taxation.


August 15, 2011 24

6.08 CHANGES IN APPLICABLE LAW

The Fund must comply with various legal requirements, including requirements imposed by the U.S. Federal and various state securities laws, tax laws, commodities laws, and pension laws, and the respective regulations thereunder. Should any of those laws or regulations change, the legal requirements to which the Fund and the Members may be subject could differ materially from current requirements.

6.09 EFFECTS OF SUBSTANTIAL REDEMPTIONS

Substantial voluntary redemptions within a limited period of time could require the Fund to liquidate investments sooner than would otherwise be desirable, and this could adversely affect the performance of the Fund. In addition, regardless of the period of time in which redemptions occur, the resulting reduction in the Fund's Net Asset Value, and thus in its equity base, could make it more difficult for the Fund to diversify its holdings and achieve its investment objective. Under certain circumstances, the Manager may suspend or limit redemptions as it deems necessary in its sole discretion.

7 CONFLICTS OF INTEREST Various conflicts of interest may arise in connection with the operations of the Fund and the sale of Interests. These conflicts of interest, which should be carefully considered before an investment decision is made, include, but are not limited to, the following:

7.01 SERVICES OF THE MANAGER

The Operating Agreement provides that the Manager, its affiliates, and their officers, directors, shareholders, employees, limited partners and agents are not expected to devote their full time to the business of the Fund and the performance of their duties, but are required to devote only such time to the affairs of the Fund as will be necessary for the proper performance of its and their duties.

7.02 OTHER SOURCES OF MANAGER COMPENSATION

Since the Manager is receiving some compensation through his brokerage arrangements from the transaction irrespective of profit and loss, the incentive exists to enter unprofitable transactions in order to generate fees.

7.03 MANAGER BUYOUT OF FUND’S INTEREST

Since the Manager has the option of buying any Fund property, the Manager has incentive to cherry pick what he believes to be the best deals and leave the Fund with the worst performing properties obtained.

7.04 TRADING BY AFFILIATED PERSONS

Officers, directors and employees of the Manager may also invest for their personal accounts in the same areas of investment opportunity as those in which the Fund proposes to invest. The personal records of such persons or any other affiliates of the Manager will not be open to inspection by the Members.


August 15, 2011 25

The Manager, or any of its officers, directors or employees, may become aware of, and participate in, business opportunities in which the Fund will not be given an opportunity to participate.

7.05 OTHER ADVISORY ACCOUNTS

The Manager may form and manage a similar yet competing Fund.

7.06 NO INDEPENDENT COUNSEL

No independent legal counsel has been engaged to represent the interests of the Members, and there have been no negotiations between the Manager and any other party in connection with the terms of the Operating Agreement or any other matter affecting remuneration to the Manager, or the finances or operations of the Fund. Counsel for the Fund may have a continuing relationship with the Manager and its affiliates apart from the Fund.

8 HOW TO PURCHASE INTERESTS

8.01 ELIGIBLE INVESTORS

The units are being offered only to “accredited Investors” or “sophisticated investors” pursuant to certain exemptions from the registration of securities afforded issuers of securities under Section 4 (2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder. In order to qualify, investors must represent and warrant that they qualify under either Section 1 or 2.

Section 1.

a. _____I, either individually or with my spouse, have a net worth (i.e., total assets in excess of total liabilities) currently exceeds $1,000,000; or

b. _____ I am a natural person who had an individual income in excess of $200,000, or $300,000 jointly with my spouse, in the last two years and reasonably expect an income in excess of $200,000, if an individual, or $300,000 if jointly with my spouse, in this year.

c. _____ I qualify as a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring units, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the federal Securities Act of 1933.

d. _____ I am an executive officer or director of the Company; or

e. _____ I qualify as an institution that qualifies as an “accredited investor,” which is defined as Any bank as defined in Section 3(a)(2) of the federal Securities Act of 1933, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the federal Securities Act of 1933, whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to Section 15 of the federal Securities Exchange Act of 1934, as amended; any insurance company as defined in Section 2(13) of the federal Securities Act of 1933; any investment company registered under the federal Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; any Small Business Investment Company licensed by the U.S. Small Business Investment Act of 1958, as amended; any employee


August 15, 2011 26

benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, as amended, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-‐directed plan, with investment decisions made solely by persons that are accredited investors or ; Any private business development company as defined in Section 202(a)(22) of the federal Investment Advisers Act of 1940; or Any organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the Units, with total assets in excess of $5,000,000; or

f. _____If I am an entity in which all of the equity owners meet the criteria set forth under either (a), (b), (c), (d), or (e) above.

OR

Section 2.

_____I, either individually or through my Purchaser Representative, am not an accredited investor but have such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of, and protecting my own interest in connection with investing in the Interests. The total investment in the Interest does not exceed 20% of the Investor’s net worth at the time of purchase of the Units (excluding personal residence(s), furnishings, and automobiles).

8.02 PAYMENT OF PURCHASE PRICE

The investor must either:

1. Provide a check to the Manager, Monterey Cypress LLC, at least four business days (five business days for initial purchases) (unless either such requirement is waived in whole or in part by the Manager in its sole discretion) before the Closing Date made payable to the Fund; or

2. Wire Federal Funds by 3:00 P.M. at least two business days (unless such requirement is waived in whole or in part by the Manager in its sole discretion) before the Closing Date.

9 HOW TO REDEEM INTERESTS

9.01 REDEMPTION INSTRUCTIONS

Redemption requests must be provided in writing to the Manager at least one year in advance.

In the event a Member petitions to Manager for release of Capital Contribution, the Manager has one year to liquidate sufficient Company holdings to return member's Contributed Capital. In the event sufficient working capital is released prior to the one-‐year period and the Manager deems returning the amount of the Capital Account will not disrupt the workings of the Company, the Manager may at his sole discretion return the funds during the one-‐year waiting period.

A redemption request must include: (i) a letter of instruction or an assignment specifying the dollar amount to be withdrawn from the Member's capital account, signed by all registered


August 15, 2011 27

owners of the Interests in the exact names in which they are registered; and (ii) any other necessary legal documents, if required, in the case of estates, trusts, guardianships, custodianships, corporations, partnerships, pension and profit sharing plans, and other organizations. Signature guarantees will be required at the discretion of the Manager for redemption requests where proceeds are to be sent to someone other than the registered owners and the registered address, or for Interest transfer requests.

9.02 INVOLUNTARY REDEMPTIONS

Because only a limited number of beneficial owners are allowed, the Manager reserves the right to redeem an investor's capital account when the value of the Interest held by such investor is less than $25,000. Manager may also involuntarily exclude any investor for reasons including the event of their legal incapacity, liquidation or bankruptcy, all as provided in the Operating Agreement.

9.03 FIDUCIARY RESPONSIBILITIES, EXCULPATION, AND INDEMNIFICATION

Investors should be aware that, subject to possible contractual limitations, the Manager is generally accountable to a Fund as a fiduciary and must exercise good faith and integrity in handling Fund affairs. Investors who have questions concerning the duties of the Manager should consult with their counsel.

The Operating Agreement provides that the Manager will not be liable to the Members for the return of any contributions made to the Fund by the Members thereof. In addition, the Manager will not be liable to the Members or the Fund for, and the Fund will, to the maximum extent permitted by applicable law, indemnify the Manager to the extent of its own assets from, any loss or damage incurred by reason of any act or omission undertaken by the Manager on behalf of the Fund in good faith, provided that such conduct does not constitute gross negligence, bad faith, fraud, or willful misconduct. The Manager will not be responsible or liable for any act, omission, debt or obligation of any service provider of the Fund, such as a prime broker or custodian bank. In view of these provisions and the provisions contained in the Operating Agreement for indemnification of the Manager against various liabilities, purchasers of Interests will have a more limited right of action against the Manager than they would have in the absence of such provisions. To the extent that indemnification provisions purport to include indemnification for liabilities arising under the Securities Act, such indemnification, in the opinion of the U.S. Securities and Exchange Commission, is contrary to public policy, and, therefore, unenforceable.

10 TAX ASPECTS

10.01 DISTRIBUTIONS AND TAXES

The Company operates as a growth fund. All profits, if any, are distributed at the end of each quarter. The Net Asset Value of each Member's Capital Account is updated each quarter based on the Fund’s Net Asset Value.


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10.02 FEDERAL TAX ASPECTS

This discussion will outline some of the most significant aspects of U.S. federal income tax law that might affect, or result from, an investment in the Fund.

Prospective Members should note that no rulings have been or are expected to be sought from the United States Internal Revenue Service (the "IRS") with respect to any of the U.S. federal income tax consequences discussed below, and no assurance can be given that the IRS will not take contrary positions.

Because it is impractical in this Memorandum to cover all the U.S. federal income tax consequences of an investment in the Fund, each prospective Member should consult the Member's own tax adviser to satisfy the Member as to the income and other tax consequences of the Member's new investment.

10.03 PARTNERSHIP STATUS; PUBLICLY TRADED PARTNERSHIP STATUS

The Fund will be classified as a partnership for U.S. federal income tax purposes. Whether the Fund will be treated as a partnership under the various state and local partnership laws that may apply to Members depends on the specific laws of each such jurisdiction.

The Fund, as currently structured and intended to be operated, should not be considered a publicly traded partnership ("PTP") under the Code.

10.04 MEMBERS, NOT FUND, SUBJECT TO TAX

The Fund itself will not be liable for any federal income tax. Rather, each Member of the Fund will be required to take into account in computing the Member's federal income tax liability the Member's allocable share of the Fund's income or losses.

10.05 PASSIVE ACTIVITY INCOME AND LOSS

The Code generally disallows the deduction of passive activity losses against non-‐passive activity income by an individual, estate, trust, or personal service corporation or, with modifications, certain closely held corporations. The Fund does not expect to realize passive income or loss. Rather, it is contemplated that the income generated by the Fund will be classified as portfolio income.

10.06 LIQUIDATION OF THE FUND

Upon liquidation gain will be recognized by a Member to the extent that any money distributed exceeds the adjusted tax basis of his Interests.

10.07 ALTERNATIVE MINIMUM TAX

Due to the complexity of the alternative minimum tax ("AMT") calculations, investors should consult with their tax advisers as to whether the purchase, holding or redemption of an Interest might create or increase AMT liability.


August 15, 2011 29

10.08 UNRELATED BUSINESS TAXABLE INCOME

Almost all entities that are exempt from federal income tax under the Code must nevertheless pay tax on their unrelated business taxable income ("UBTI") at the regular income tax rates. UBTI includes dividends, interest, and gains from sales and other dispositions of property only if they are attributable to "debt-‐financed property." To the extent that the Fund or an investment vehicle in which it invests, incurs indebtedness, a portion of the Fund's net income will constitute UBTI. The Fund will incur general obligation debt in connection with its activities; therefore, it is anticipated that unrelated business taxable income will result.

10.09 STATE AND LOCAL TAX ASPECTS

As a result of their ownership of Interests, Members may be subject to state and local taxes. Members may be required to file income tax returns in those states and may be subject to a penalty if no return is filed.

10.10 FOREIGN TAXES

Should any investor who is either a citizen or a resident of a country other than the United States acquire Interests, the tax consequences of his investment under the laws of the country of his citizenship or residency might differ substantially from those described above.

10.11 ERISA ASPECTS AND RISKS

Section 406 of ERISA and Section 4975 of the Code prohibit certain transactions involving the assets of an ERISA Plan [as well as those plans that are not object to ERISA but which are subject to Section 4975 of the Code, such as individual retirement accounts (together with ERISA Plans, "Plans") ] and certain persons (referred to as "parties in interest" or "disqualified persons") having certain relationships to such Plans, unless a statutory or administrative exemption is applicable to the transaction. A party in interest or disqualified person who engages in a prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and the Code.

The foregoing discussion is not intended as a substitute for careful tax planning. Tax matters relating to the Fund and to the transactions described herein are complex and are subject to varying interpretations. Moreover, the effect of existing income tax laws and possible changes in such laws will vary with the particular circumstances of each investor. No opinion as to the tax status of the Fund or the tax consequences of an investment in the Fund has been obtained by the Fund. Accordingly, as previously stated, each prospective Member should consult with and rely on his own advisers with respect to the possible tax consequences (including state and local tax consequences) of an investment in the Fund.

11 DEFINITIONS The following terms, as used in this Memorandum, have the following respective meanings. Capitalized terms defined in the Operating Agreement and not otherwise defined in this Memorandum will have the meanings set forth in the Operating Agreement.


August 15, 2011 30

"Accredited Investor" will have the meaning set forth in Rule 501 of Regulation D, promulgated under the Securities Act.

"Advisers Act" means the Investment Advisers Act of 1940, as amended.

"ERISA" means the U.S. Employee Retirement Income Security Act of 1974, as amended.

"Fund" means the RADIANT HOMES II, LLC, a Nevada limited liability company.

"Investment Company Act" or "1940 Act" means the Investment Company Act of 1940, as amended.

"Manager" means Larry Roberts.

"Members" means the Manager and other Persons admitted to the Fund as investors.

"Offering" means the offer and sale of an unlimited number of membership interests (called "Interests") in the Fund.

"Operating Agreement" means the Operating Agreement, in the form provided as an enclosure with this Memorandum, as the same may be amended, modified or supplemented from time to time.

"Percentage Interest" will have the meaning ascribed to such term in the Operating Agreement.

"Regulations" means regulations promulgated by the Department of Treasury of the United States with respect to the Code.

Securities Act" means the Securities Act of 1933, as amended.

"UBTI" means unrelated business taxable income, as such term is used in the Code.

APPENDIX A:

OPERATING AGREEMENT OF RADIANT HOMES II, LLC

August 15, 2011 A-‐1

THESE MEMBERSHIP UNITS OF RADIANT HOMES II, LLC, A NEVADA LIMITED LIABILITY COMPANY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES LAWS. THE MEMBERSHIP UNITS CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE APPLICABLE FEDERAL AND STATE SECURITIES LAWS, THE LIMITED LIABILITY COMPANY OPERATING AGREEMENT, AND WELL NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS AND AGREEMENTS. THE PURCHASER OF THESE SHARES HAS REPRESENTED THAT HE OR SHE PURCHASED THEM FOR HIS OR HER OWN ACCOUNT OR FOR A TRUST ACCOUNT, IF THE PURCHASER IS A TRUSTEE, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARD RESALE.

OPERATING AGREEMENT

OF

RADIANT HOMES II, LLC

APPENDIX A:


August 15, 2011 A-‐2

THIS OPERATING AGREEMENT is made as of September 1, 2011 of Radiant Homes II, LLC (the "Company"), a Nevada limited liability company ("RADIANT HOMES II, LLC").

The Manager is Larry Roberts. Also a signer for the Fund is vice-‐president, Jacqueline Evans. Larry Roberts may change the operating entity under which of Radiant Homes LLC is operated, but he will always remain the person operating the fund.

The Members, listed on Schedule 1, are admitted as members of the Company.

Background

The Manager formed the Company as a limited liability company.

The Manager filed Articles of Organization (the "Articles of Organization") with the Secretary of State of the State of Nevada on August 15, 2011.

Larry Roberts is hereby authorized to sign the Articles of Organization as Manager of Radiant Homes LLC.

The parties hereby agree as follows:

1 THE COMPANY

1.01 NAME

The name of the Company will be Radiant Homes II, LLC. The business of the company will be conducted in that name or any other the Manager deems necessary or appropriate to comply with any legal or other requirements of the United States of America, the State of Nevada or any other jurisdiction in which operations of the Company are conducted.

1.02 REGISTERED AGENT AND OFFICE

The registered agent for the service of process and the registered office shall be that Person and location reflected in the Articles as filed in the office of the Secretary of State.

The Registered Agent is Eastbiz.com, Inc.

The Manager, may, from time to time, change the registered agent or office through appropriate filings with the Secretary of State. In the event the registered agent ceases to act as such for any reason or the registered office shall change, the Manager shall promptly designate a replacement registered agent or file a notice of change of address as the case may be. If the Managers shall fail to designate a replacement registered agent or change of address of the registered office, any Member may designate a replacement registered agent or file a notice of change of address.

1.03 PRINCIPAL OFFICE

The principal office is:

6069 S. Fort Apache, Suite 100 Las Vegas, NV 89148

The Company may have a principal place of business and other offices as the Manager may designate.

APPENDIX A:


August 15, 2011 A-‐3

1.04 PURPOSE

The investment objective of the Fund is maximum current cashflow and capital appreciation. The Fund will buy real estate at trustee sale, improve properties as necessary, hold them indefinitely for rental cashflow, and resell them for profit when an Investor desires liquidation.

2 TERM The Company will operate until one of the following two conditions is met:

• as long as Investors wish to have capital invested in cashflow properties, and

• as long as the Manager is willing and able to operate the fund.

Members will receive the balance of their accounts at termination of the fund unless they request distribution in writing subject to the limitations of Section 7.

2.01 CLOSING DATE

The Fund will be closed to all new investment on December 31, 2012 or earlier at the Manager’s discretion.

3 MANAGER AND MEMBERS

3.01 MANAGER

The Manager is Larry Roberts who will serve as operations Manager until his resignation or dissolution of the fund.

3.02 MEMBERS

The Manager hereby agrees to the admission of new Members to the Company on the Closing Date. A data list will be maintained by the Manager in order to identify the Members being so admitted by name, address, and Capital Contribution of such Member. A current schedule of Members will be kept at the principal office of the Company. The interests of the Members in the Company are described herein.

3.03 LIABILITY OF MEMBERS

No Member will be liable to creditors of the Company for the repayment, satisfaction and discharge of any debts, liabilities and other obligations of the Company in excess of the amount of such Member's Capital Account at such time.

3.04 ADMISSION OF NEW MEMBERS

This is a closed fund. No new members will be admitted after the closing date.

4 INVESTMENT PLAN AND TYPICAL TRANSACTION

4.01 PHILOSOPHY AND STRATEGY

The investment objective of the Fund is profit through buying real estate at trustee sale, improving properties as necessary, renting them out for current cashflow, and reselling them in

APPENDIX A:


August 15, 2011 A-‐4

the open market where buyers can obtain financing after prices rebound back to rental parity levels.

4.02 RISK OF DIMINISHED RETURNS

The risks of this Fund come in two forms. One is a true risk of loss to original capital. The second is a risk the returns will not be as high as the proforma would suggest. This second risk is one of diminished returns.

The risk of diminished returns to the Fund comes from, but is not limited to, several primary sources:

1. Overestimation of resale market comparables that prompted the Fund to overbid for property, and

2. Underestimation of acquisition costs or renovation costs required to bring the property to a rentable or salable standard.

3. Overestimation of market rents. 4. Underestimation of vacancy losses, and repairs.

Managing these risks requires good data and sound analysis. The skills and efforts of the Manager to manage risk will determine the success of the Fund.

(a) Idle money Finding deals that matches investment parameters may become difficult, and such deals may not be present in the market for long periods of time. Idle money lowers the rate of return. If it takes two or three months to acquire a property, an investor missed potential rental income during that period. Further, once a property is purchased, it may no be rented for a significant period of time while former occupants are evicted, renovations are completed, and a renter is found.

4.03 RISK OF LOSS

The risk of loss to the Fund comes primarily from market risk at resale. The current state of the market is falling prices. If prices continue to fall and fail to recover, and if the investor wants to liquidate their holdings while prices are depressed, the investor may experience loss of original capital.

4.04 SHARED PROFITS AND ALIGNMENT OF INTERESTS

The primary compensation for the Manager is from shared profits with the Fund. This creates an alignment of interests whereby the manager is strongly encouraged to maximize the profit on each transaction.

4.05 TYPICAL INVESTMENT PARAMETERS, COSTS AND FEES

A typical transaction involves purchasing a trustee sale property at 22.5% or greater discount to resale value. The actual discount is calculated by subtracting known and estimated costs from the projected resale value.

The known and estimated costs include the following:

• Maximum bid for acquiring property at Trustee Sale,

APPENDIX A:


August 15, 2011 A-‐5

• trustee sale fees and commissions, • real estate improvements, • back and current property taxes, • carry costs during the pre-‐lease period, • tenant move-‐out costs, • transfer taxes, • market rent, • property taxes, • homeowners insurance, • homeowner’s association fees, • property management fees, • maintenance and replacement

reserves, • vacancy and collection losses, and • other costs.

The following is a report demonstrating the typical costs associated with acquiring, improving and reselling a trustee sale property.

A typical property will have a resale value of approximately $100,000. Liquidation costs include a 6% commission (3% list goes to Manager, and 3% to buyer’s agent) and a 2% allowance for seller’s closing costs. The Liquidation Value is also the Net Asset Value of the property.

Trustee Sale Fees include the service used by the Manager to acquire the property which typically charges 3%, and a 1% acquisition fee charged by the Manager.

The Manager’s compensation includes a fee equal to 5% of the total cost basis in the property. The primary acquisition method for this Fund will be trustee sales. Since these properties are purchased at a 22.5% or more discount to resale price, part of the Managers compensation (5% of total cost basis), is made up for by the savings on acquisitions at auction. The net asset value of the Investor’s holdings is equal to the acquisition costs. In other words, savings at

APPENDIX A:


August 15, 2011 A-‐6

auction indirectly pays the Manager’s fee.

Real estate improvements are approximately 5% of the auction costs. Any costs not spent on improvements at the time of purchase will be added to a reserve fund for future maintenance and repairs.

Carrying costs assume three months of expenses for taxes, insurance homeowners association fees, property management and other expenses.

Project management includes the compensation for the project manager who coordinates all activities between the auction and leasing of the property.

The allowances for tenant move-‐out and move-‐in may be avoided if either the property was empty when acquired, or if the existing occupant can be convinced to stay. The Fund will seek to keep existing occupants in place whenever possible.

Transfer taxes and recording fees are required whenever a property is sold.

The operating expenses are broken down into two categories: cash expenses and reserve expenses. Cash expenses are paid out each month or in the case of property taxes each quarter. Property taxes are typically 1%, and homeowners insurance is approximately 0.65% of value. Homeowners associations vary considerably, but typically the Fund will target properties with low fees or no fees. Association fees are typically a drain on cashflow, although they do provide some offset to ongoing maintenance expenses. The Fund will employ a property management service to deal with the day-‐to-‐day operational issues of dealing with multiple properties.

The reserve expenses include allowances for maintenance and for vacancy and collection losses. Since these expenses are variable and unpredictable, each month money is set aside in a reserve account to pay these expenses when they occur.

The gross rent minus cash expenses and minus reserve expenses equals the net operating income of the property. The Manager charges a 10% Fund Administration fee based on the Net Operating Income. This encourages the Manager to maximize Net Operating Income thereby aligning the interests of the Manager with the Investors.

After all expenses, investors can anticipate an 8% return on a typical property resulting in a 6% to 8% return on all money invested after other Fund expenses such as accounting and allowing for idle money.

4.06 BREAKEVEN ANALYSIS FOR TYPICAL INVESTMENT

For a typical investment, liquidation costs plus the cost of the Manager’s ownership share are built into the projections. At the time of property purchase, the Investor’s Fund interests are already at breakeven. This is one of the compelling reasons to acquire properties at Trustee Sale.

4.07 USE OF PROPERTY AND FUND DEBT

No debt will be used. This fund is suitable for self-‐directed retirement accounts as it should incur no unrelated business income tax.

APPENDIX A:


August 15, 2011 A-‐7

4.08 APPRECIATION AND 10-‐YEAR INTERNAL RATE OF RETURN

The Las Vegas housing market held steady at rental parity levels prior to the Great Housing Bubble. As is common when financial bubbles burst, the market has overshot to the downside.

When the inventory problems caused by the plethora of foreclosure abates. The opportunity to buy cashflow properties with tremendous capitalization rates will disappear. However, the rebound appreciation may be quite significant. The market is currently 40% below rental parity. The asymmetric nature of drawdowns means that prices need to rebound far more than 40% to reach the prior equilibrium. Las Vegas could easily see double-‐digit appreciation five to ten years from now. If prices rise 80% during the next ten years – which would still leave prices below rental parity – the appreciation returns will be tremendous.

When a 10 year holding period with an 80% increase in prices is factored in, the internal rate of return comes to 13.2% on an all-‐cash basis.

APPENDIX A:


August 15, 2011 A-‐8

4.09 TEN-‐YEAR PROJECTIONS FOR A TYPICAL PROPERTY

To estimate the performance of a $10,000,000 fund, take all the above numbers times 100. The rates of return will be the same as for the individual properties except for some reduction for idle money and general fund expenses.

4.10 FUND TO PURCHASE FROM APPLE BLOSSOM ARBITRAGE LLC

This Fund may purchase properties directly from another Fund operated by the Manager, Apple Blossom Arbitrage LLC. Any purchases would be at cost plus a 6% profit to Apple Blossom Arbitrage LLC.

4.11 INVESTOR’S PURCHASE OF PROPERTIES FROM THE FUND

Any investor in the Fund may also purchase a property from the Fund at the Manager’s sole discretion. The Fund must obtain a price equal to the net asset value of the property. The manager will charge a 3% commission, but the 3% that would typically be a buyer’s agent commission will be retained as Fund profit to compensate for the lost rent revenue while the capital is redeployed.

4.12 MANAGER'S RIGHT TO ADJUST FEES AND TERMS

Market conditions are constantly changing, and the fees and terms of a typical transaction may require changes in order to ensure the continuing success of the Company. The Manager reserves the right to adjust compensation to any and all parties to the transaction as he sees fit.

APPENDIX A:


August 15, 2011 A-‐9

4.13 LONG-‐TERM CAPITAL GAINS

It is the goal of the Manager and Company to hold properties for twelve (12) months or more. However, unexpected circumstances may arise and properties may be subject to shorter holding periods.

All profits of the company will be long-‐term capital gains for tax purposes. It is not the intent of this fund to flip properties or any purposes that will require a shorter term holding period.

4.14 RIGHT TO TAKE LOSSES

The Manager at his sole discretion can liquidate any property at a loss to free up working capital to pursue other opportunities. If a property has been held for sale and a buyer willing to purchase at a breakeven or better price cannot be found, the Manager will continue to lower the asking price until the property is sold.

5 MANAGEMENT, EXPENSES, AND FEES The acting Manager of the Fund is Larry Roberts. The Manager has experience in every aspect of the Fund’s operation. However, it may be in the best interest of the Fund to have the Manager supervise the work of others and work as a team to deliver potentially profitable deals to the Fund. The Manager will hire outside consultants as necessary to perform Fund functions. The Fund will have no employees.

5.01 MANAGER: LARRY ROBERTS

Credentials:

• Manager of Apple Blossom Arbitrage LLC, a $2,000,000 purchase-‐to-‐sale flipping Fund operating in Las Vegas, NV.

• Project Manager responsible for evaluation, acquisition, development, and disposition of over $100 million in real estate assets.

• Licensed California Real Estate Agent #1868521

• Master of Science in Land Development -‐ Texas A&M University 1994

• Bachelors of Science -‐ University of Wisconsin at Stevens Point 1992

• Primary writer for the Irvine Housing Blog

• Author of The Great Housing Bubble

The Fund is the primary responsibility of Larry Roberts. He has extensive experience with managing large real estate funds devoted to specific projects. Much of his experience has been with homebuilders, so he fully understands the construction and renovation issues associated with single-‐family homes. Since September 2010, Larry Roberts has been managing Apple Blossom Arbitrage LLC, a purchase-‐to-‐sale flipping fund operating in Las Vegas. In the first year of operations, he oversaw the purchase, renovation and sale of more than 30 homes. This experience makes him an expert in Las Vegas real estate.

APPENDIX A:


August 15, 2011 A-‐10

5.02 MANAGER COMPENSATION

The Manager receives compensation through four events:

• 5% of invested capital retained as a Fund ownership position by Monterey Cypress LLC.

• 1% gross commission on property acquisitions.

• 10% of net operating income.

• 3% typical listing commission on sale.

The Manager also has the right to purchase properties from the Fund at-‐cost as an indirect form of compensation.

Manager may take compensation personally, or it may be put to a business entity with which Manager has an interest such as Ideal Home Brokers or Monterey Cypress LLC. Manager will determine whether to take any income personally or funnel it through an entity at his discretion.

5.03 MANAGER’S HOLDINGS IN THE FUND

In addition to any direct Fund investment, the Manager will obtain a 5% ownership stake in the company as properties are acquired. As each property is acquired, the Manager’s account holdings will be increased by 5% of the total proforma cost of the property. The Manager has no ownership claim to Investor capital until properties are purchased.

The Manager may not redeem his interest in the Fund acquired through acquisition of properties for the first five years of the Fund’s operation. This ongoing ownership interest is the primary reason the Manager has prepared the Fund and offered ownership interest to others.

5.04 MANAGER’S PURCHASE OF PROPERTIES FROM THE FUND

The Manager may purchase any property purchased by the Fund within 90 days of cashing the first rental check from the first tenant to occupy the property. This provides the Manager time to secure financing to purchase the Fund’s interest. The Fund will sell the property for its invested cost with no profit other than rental fees obtained while the Manager is processing the loan financing. The Manager may purchase any property before it’s leased also at the Fund’s cost basis resulting in no profit for the Fund.

5.05 USE OF MANAGER'S BROKERAGE COMPANY AND MANAGER'S INDIRECT COMPENSATION

The manager is part owner and operator of a real estate brokerage company that earns fees through the individual property transactions. The Manager and agents acting on behalf of the Manager or other brokers will receive compensation from Company transactions. The compensation to Manager may be direct or indirect from participation in the transaction. This compensation will be due and paid the Manager and the Manager's agents irrespective of any profits or losses associated with the transaction. It is possible for the Manager to earn compensation on a transaction in which the Company losses money.

APPENDIX A:


August 15, 2011 A-‐11

5.06 MANAGER'S EXCLUSIVE CONTROL

The Company will be managed by the Manager. No Member or the legal representative of any deceased, adjudicated incompetent or adjudicated bankrupt Member has any right to participate in the control of the affairs of the Company or act for or bind the Company.

5.07 MANAGER’S DELEGATION OF POWERS

Manager has appointed Jacqueline Evans as vice president of operations. She, or some other designee as Manager may appoint, has the power to enter into contracts on the Company’s behalf.

5.08 MANAGER'S POWERS

The Manager, at his sole discretion, has the following powers to act on behalf of the Company:

• To purchase, improve, and sell real estate;

• To enter into contracts;

• To incur expense for office space, if necessary;

• To engage and compensate attorneys, independent accountants, brokers, consultants, experts, contractors or such other persons;

• To open, maintain and close bank accounts and draw checks and other orders.

• The Manager need not solicit competitive bids and does not have an obligation to seek the lowest available commission cost in selecting brokers to execute transactions. In selecting brokers, the Manager may or may not negotiate "execution only" commission rates; thus, the Company may be deemed to be paying for other services provided by the broker which are included in the commission rate.

• The Manager may establish such reserves from Company funds as the Manager, in its sole discretion, may deem necessary or advisable for Company operations and for the payment of Company obligations and liabilities, contingent or fixed.

• The Manager may determine the pair Market Value of any or all of the Company's Properties or other assets or property, all of which valuations and determinations will be final and binding on the Company and all Members.

• The Manager may, to the extent permitted by applicable federal and state securities laws, solicit the purchase of and sell membership interests in the Company to potential investors.

• The Manager is empowered to resolve, in his sole discretion, any ambiguity regarding the application of any provision of this Agreement in the manner he deems equitable, practicable, and consistent with this Agreement and applicable law; provided that such resolution will be reasonable and will not discriminate unfairly against any Member.

• The Manager is authorized to take any other action required or permitted, directly or indirectly, by any other provision of this Agreement.

APPENDIX A:


August 15, 2011 A-‐12

The Manager will not use Company funds for purposes other than fulfilling the primary objective of purchasing, improving and selling real estate and related expenses of operating the fund.

The Manager and other business associates with whom the Manager has business relationships will receive compensation from transactions related to the funds primary purpose of buying and selling real estate.

5.09 LIMITATIONS ON MANAGER POWERS

The Manager will not have the authority without the written approval of all of the Members to:

• do any act in contravention of the Articles of Organization or this Agreement;

• do any act which would make it impossible to carry on the ordinary business of the Company, other than to dissolve the Company pursuant to Section 10 hereof;

• confess a material judgment against Company property or assign rights to specific Company property for other than a Company purpose.

5.10 ADDITIONAL MANAGER RIGHTS

In addition to the right and power of the Manager to manage the Company as provided herein, the Manager will have the right, on behalf of the Company, to execute and file any and all reports, schedules, notices and other instruments or documents required to be filed by the Company under any applicable federal or state law, rule or regulation, or deemed, in the judgment of the Manager, to be necessary or appropriate under the circumstances.

Subject to any restrictions imposed by law, each Member agrees to furnish promptly upon request any information concerning such Member and its Affiliates as the Manager reasonably believes necessary or desirable in order to comply with filing requirements arising under applicable laws, rules and regulations; and the Manager is authorized to disclose such information concerning each Member as it determines, in its sole discretion, is required under the circumstances. Each Member agrees that, at the request of the Manager, it will keep current any such information previously furnished and that the Manager may rely on the accuracy and current status of such information in making any filing on behalf of the Company.

5.11 ASSETS

Any asset owned by the Company may be registered in the name of the Company. Any corporation, brokerage firm or transfer agent called upon to transfer any assets to or from the name of the Company will be entitled to rely upon instructions or assignments signed or purporting to be signed by the Manager or its agent without inquiry as to the authority of the person signing or purporting to sign such instructions or assignments or as to the validity of any transfer to or from the name of the Company.

5.12 EXPENSES

The Company will be responsible for, and will pay, all auditing, accounting, tax preparation, legal, interest, and other out-‐of-‐pocket fees, expenses and taxes incurred by or on behalf of the Company including, without limitation, all such out-‐of-‐pocket fees and other expenses incurred by the Manager (or its owners, agents or designees, and including any persons or entities acting for or on behalf of the Manager before the Company's formation) on behalf of the Company.

APPENDIX A:


August 15, 2011 A-‐13

5.13 FORMATION EXPENSES AND FRONT-‐LOAD FEES

The Manager will be entitled to receive out of Company funds reimbursement of all out-‐of-‐pocket and other amounts expended by it on behalf of the Company in connection with (i) the formation of the Company and (ii) the offering and sale of Membership Interests in the Company, including, but not limited to, legal, accounting, printing, qualification, travel and miscellaneous out-‐of-‐pocket and other expenses.

The fund may, at Manager's discretion, pay any agent or third party who refers investors more than a nominal amount. Payment and fee may be contingent on whether the referral results in a transaction, however the referral fee is not based on the amount of the transaction but a flat fee.

5.14 GOOD FAITH, TIME, AND ATTENTION OF THE MANAGER

The Manager and its trustees, officers, directors, consultants and employees will devote such time to the Company and its objectives, purposes and powers as will be reasonably necessary in the opinion of the Manager to achieve the objectives of the Company. The Manager, however, is required to devote to the Company only that amount of time and attention that the Manager in its sole discretion deems reasonably necessary to achieve the Company's objectives.

5.15 OTHER BUSINESS INTERESTS OF THE MANAGER

The Manager may engage in any business activity outside the fund, even if such activity is in competition with the fund. The Manager may participate in any investment or activity for his own account or for another fund, even if such activity is an opportunity that meets the investment parameters of the fund. The manager does not anticipate engaging in such activity, but he reserves the right to do so.

5.16 TERMINATION AND RESIGNATION OF MANAGER

The Manager may not be terminated, but he may resign from such position with 30 days' written notice. In the event of Manager Resignation, the fund will be dissolved and the remaining balance of Member's accounts will be returned. Manager will stay on until the Fund is properly dissolved.

5.17 EXCULPATION

Neither the Manager nor any limited or general partner, agent, beneficial owner, shareholder, trustee, member, consultant, director, officer, employee, consultant or Affiliate of the Manager nor any beneficial owner or direct or indirect limited or general partner, agent, beneficial owner, shareholder, trustee, member, director, officer, employee, consultant or Affiliate of any of the foregoing persons will be liable, responsible or accountable in damages or otherwise to the Company or to any Member for any act or failure to act pursuant to this Agreement or otherwise, except where such act or failure to act constitutes willful misconduct, gross negligence, fraud or bad faith. The Manager and such other persons will be entitled to rely upon the opinion or the advice of counsel, public accountants or other experts experienced in the matter at issue; such an opinion or such advice will afford full protection for the Manager and such other persons with respect to any act or failure to act by the Manager or such other persons in good faith reliance on such an opinion or such advice; and such an act or failure to act will in

APPENDIX A:


August 15, 2011 A-‐14

no event subject the Manager or any such other person to liability to the Company or any other Member.

The Manager will not be personally liable for the return of any Member's Capital Contributions or any additions to any Member's Capital Account or any portion thereof.

Notwithstanding any provision of this Agreement to the contrary, neither the Manager nor any limited or general partner, agent, beneficial owner, shareholder, trustee, member, consultant, director, officer, employee, consultant or Affiliate of the Manager nor any beneficial owner or direct or indirect limited or general partner, agent, beneficial owners, shareholder, trustee, member, director, officer, employee, consultant or Affiliate of any of the foregoing persons will be liable to the Company or any Member for indirect, special, consequential or punitive damages or losses of any kind whatsoever (including but not limited to lost profits), whether or not foreseeable and regardless of whether the claim for loss or damage is made in negligence, for breach of contract or otherwise.

5.18 INDEMNIFICATION

The Company will indemnify, defend and hold harmless the Manager and each Affiliate, trustee, member, officer, director, employee, consultant, direct or indirect beneficial owner, general or limited partner, stockholder or agent of the Manager or any such person to the fullest extent permitted by law, from and against any loss, damage, liability (including, without limitation, tax liabilities, and interest and penalties associated therewith), cost or expense (including attorneys' fees and expenses) arising out of or in connection with any act or failure to act or alleged act or failure to act by an Indemnified Person arising out of, in connection with or in any way related to the Company or the affairs of the Company; except that the Company will not indemnify any Indemnified Person for any loss, damage, liability, cost or expense arising from the willful misconduct, gross negligence, fraud or bad faith of such Indemnified Person, as to which indemnification is barred under applicable laws. Such attorneys' fees and expenses will be paid by the Company as they are incurred upon receipt of an undertaking by or on behalf of the Indemnified Person to repay such amounts if it is ultimately determined by a court or other tribunal that such Indemnified Person is not entitled to indemnification.

6 CAPITAL CONTRIBUTIONS

6.01 INITIAL CAPITAL CONTRIBUTIONS

Each Member has or will pay to the Company the aggregate amount of such Member's Capital Contribution in the form specified in this section. Such contribution will be credited to the Capital Account of each such Member.

The minimum initial Capital Contribution of a Member will be $25,000; except that the Manager may, in its sole discretion, permit any Member to make a smaller initial Capital Contribution upon such terms and conditions, if any, as the Manager may deem appropriate; and further except, that the Manager may increase the minimum initial Capital Contribution for new Members to any amount greater than $25,000 in his sole discretion.

APPENDIX A:


August 15, 2011 A-‐15

6.02 FORM OF CONTRIBUTION

Capital contributed by any Member to the Company will be in the form of check, cashier's check, money order, or wire transfer. Hard currency or securities are not acceptable.

6.03 NO ADDITIONAL CONTRIBUTIONS

Once the fund is closed, no additional contributions will be allowed.

6.04 USE OF CAPITAL

The aggregate of all such contributions, net of expenses, will be available to the Company to carry out the objectives, purposes and powers of the Company.

6.05 NO RIGHT TO SPECIFIC PROPERTY

No Member will have the right to demand to receive specific property, or priority over any other Member.

6.06 NO RETURN OF CAPITAL CONTRIBUTIONS OR INTEREST

No Member is entitled to a return of its Capital Contribution or interest on its Capital Contribution or its Capital Account, except as is specifically provided herein. Each Member will look solely to distributions from the Company as provided for herein.

7 ALLOCATION OF GAINS AND LOSSES

7.01 ACCOUNTS

There will be established for each Member, on the books and records of the Company, a single account (the "Capital Account") , which will initially have a balance of zero and which will be adjusted and maintained as set forth in this 5.17. The Capital Accounts will be adjusted and maintained at all times strictly in accordance with Section 704 of the Code and Treas. Reg. 1.704-‐1(b) (2) (iv) (including, without limitation, Treas. Reg. 1.704-‐1 (b) (2) (iv) (d3, 1.704-‐1 (b) (2) (iv) ( j and 1.704-‐1.704-‐1(b) (2) (iv) (g)). The Manager is expressly authorized to make appropriate amendments to the allocations of items pursuant to this Section 7 if necessary in order to comply with Section 704 of the Code or Treas. Reg. 1.704-‐1(b) (2) (iv).

Each Member's Capital Account will be increased by the amount of the initial contribution by such Member to the Company.

Each Member's Capital Account will be reduced by the amount, if any, of all distributions (or deemed distributions) made to such Member, and the amount, if any, of all Net Losses allocated to such Member's Capital Account.

7.02 ALLOCATION OF NET PROFITS AND NET LOSSES

Except as otherwise provided herein, Net Profits will be distributed and Net Losses will be allocated to the Capital Accounts of the Members as of the close of business on the last day of each quarter in accordance with their respective Percentage Interests for such quarter (except that the Manager may allocate items of deduction or expense which are paid or incurred by a Member to such Member).

APPENDIX A:


August 15, 2011 A-‐16

8 DISTRIBUTIONS AND WITHDRAWAL OF CAPITAL

8.01 MANDATORY YEAR-‐END DISTRIBUTIONS

At the end of each quarter, all Net Profits are distributed to Members based on their pro rata in accordance with their respective Percentage Interests in the Company as defined in their Capital Accounts.

8.02 WITHDRAWAL OF CAPITAL CONTRIBUTIONS

All petitions for return of Capital Accounts must be in writing to the Manager and acknowledged by same.

In the event a Member petitions to Manager for release of Capital Contribution, the manager has one year to liquidate sufficient Company holdings to return member's Contributed Capital. In the event sufficient working capital is released prior to the one-‐year period and the Manager deems returning the amount of the Capital Account will not disrupt the workings of the Company, the Manager may at his sole discretion return the funds during the one-‐year waiting period.

8.03 CONSEQUENCES UPON WITHDRAWAL

Upon any Member's withdrawal of the entire balance of his or its Capital Account: such Withdrawing Member will withdraw from the Company as of the Withdrawal Date; the Manager will amend Schedule 1 to reflect the withdrawal of such Withdrawing Member; and such Withdrawing Member's Percentage Interest will be zero on and after the first day of the first Fiscal Year commencing after such Member's Withdrawal Date.

Upon any Member's withdrawal of less than the entire balance of his or its Capital Account, such Member's Percentage Interest will be reduced to reflect such Member's continuing interest in the Company, and such Member's Capital Account balance will likewise be adjusted. All such adjustments will be done in such a manner and at such time so that on and after the first day of the first Fiscal Year commencing after such Member's partial withdrawal, the Percentage Interests of the Members properly reflect such partial withdrawal.

8.04 WITHDRAWAL COSTS

In connection with any withdrawal or exclusion, all expenses incurred by the Company, including but not limited to accounting, legal and other professional fees and expenses, will be borne by the Member who is excluded or withdrawing. A statement of expenses will be provided with the check returning the Member's Interest in the Company.

9 TRANSFER OF MEMBERSHIP INTERESTS

9.01 RESTRICTIONS ON TRANSFER

No Member, directly or indirectly, may voluntarily or involuntarily sell, transfer, assign, pledge, dispose of, grant a security interest in, mortgage, hypothecate, encumber or permit to suffer any encumbrances on all or any portion of his interest in the Company, whether by operation of law or otherwise, without the prior written consent of the Manager, which the Manager may withhold in its sole discretion.

APPENDIX A:


August 15, 2011 A-‐17

No Member will, without the prior written consent of the Manager, which the Manager may withhold in its sole discretion, Transfer or permit any person holding a direct or beneficial interest in such Member to Transfer such interest if (i) as a result of such Transfer, the number of security holders of the Company for purposes of the Investment Company Act will be increased, (ii) any such Transfer, by itself or combined with other Transfers, would result in a termination of the Company under Section 708 of the Code, or (iii) any such Transfer, by itself or combined with other Transfers, would result in the Company being classified as a "publicly traded partnership" under Section 469(k) of the Code or under Section 7704 of the Code.

Any Transfer made other than in accordance with the terms of this Agreement (a "Void Transfer") will be void, and neither the Company nor the Manager will be required to recognize any equitable or other claims to such interest on the part of the Transferee thereof.

9.02 TRANSFEREE'S AGREEMENT TO BE BOUND

Any Transfer of all or any part of a Member's interest in the Company (with the prior written consent of the Manager) will not be effective until such Transferee executes an appropriate supplement to this Agreement pursuant to which such Transferee agrees to be bound by the terms and provisions of this Agreement as an assignee of the Transferor's interest.

9.03 OPINIONS; EXPENSES; OTHER CONDITIONS

Any Transfer of all or any part of an interest in the Company will not be effective until the Transferor (if the Manager, at its sole discretion, so requests) (i) pays the Company's expenses (including attorney's fees) in connection with such Transfer, and (ii) delivers to the Company an opinion, satisfactory in form and substance to the Manager, from counsel satisfactory to the Manager, to the effect that the transaction will not violate the Securities Act, or any other applicable federal or state securities laws.

The Transferor and the Transferee of the Transferor's interest will, at the request of the Manager, make all filings required to be made by them, respectively, with any governmental agency or other authority in connection with such Transfer, and the Manager is authorized to make such filings on their behalf if not timely made by them.

9.04 TRANSFEREE'S CAPITAL ACCOUNT

Any Transferee will assume the Capital Account balance (and any and all characteristics and attributes associated therewith) and all other rights or responsibilities under this Agreement of the Transferor in the Transferor's capacity as a Member.

10 DURATION AND TERMINATION OF COMPANY

10.01 LIQUIDATING EVENTS

The Company will dissolve and commence winding up and liquidating upon the first to occur of any of the following events (each a "Liquidating Event") :

• the election to dissolve and terminate the Company made in writing by the Manager;

• the receipt by the Manager of the written consent of all of the Members to dissolve the Company;

APPENDIX A:


August 15, 2011 A-‐18

• the time there are no Members; provided further that the personal representative of the last remaining Member or its designee or nominee will not be admitted as a Member; or

• the entry of a decree of judicial dissolution.

10.02 WINDING UP

Upon the occurrence of a Liquidating Event, the Company will liquidate in an orderly manner as promptly as will be practicable under the supervision and control of the Manager. The Manager may on behalf of the Company prosecute and defend suits, whether civil, criminal or administrative, gradually settle and close the Company's business, dispose of and convey the Company's property, discharge or make reasonable provision for the Company's liabilities, and distribute to the Members any remaining assets of the Company.

10.03 DISTRIBUTIONS UPON DISSOLUTION

Upon the occurrence of a Liquidating Event, the Manager will, out of Company assets, make distributions in the following manner and order:

• to pay consulting fees and services required to obtain an accurate accounting of Company funds;

• to establish such reserves as the Manager deems reasonably necessary for any contingent or unforeseen liabilities or obligations of the Company, which reserves may be paid over to escrow agent to be held for disbursement in payment of any such liabilities or obligations for distribution of the; and

• to the Members in accordance with their respective positive Capital Account balances. Such amounts will be paid by the end of the Fiscal Year in which such liquidation occurs (or, if later, within 90 days after the date of such liquidation).

10.04 DISTRIBUTIONS IN CASH

All distributions to a Member by the Company upon dissolution of the Company or otherwise may be made in cash via check drawn on a company account.

11 BOOKS OF ACCOUNT AND REPORTS 11.01 BOOKS OF ACCOUNT

The Company will use the cash method of accounting for federal income tax purposes. All properties held by the Company will be valued at the total cash investment rather than estimated or appraised resale value. Profits or losses are not recognized until final sale.

The Company will keep accurate and complete books of account. The accounts of the Company will be kept in accordance with generally accepted accounting principles (GAAP) in the United States of America. Upon written request, the Manager will make such books of account available for Member inspection at such reasonable times as the Manager may determine.

APPENDIX A:


August 15, 2011 A-‐19

11.02 MEMBER REPORTS

The books of account and records of the Company will be audited as of the end of each Fiscal Year by independent certified public accountants selected by the Manager.

In accordance with tax filing deadlines, the Manager will deliver the appropriate paperwork for Member's federal income tax returns, including a Schedule K1 statement showing the Member's share of taxable income, gain, loss, deductions and credits for the Fiscal Year, and the amount of any distributions made to or for the account of the Member pursuant to this Agreement. Such information will be delivered as soon as possible after the close of the Fiscal Year.

The Company will pay any additional audit or accounting fees incurred by the Manager in preparing the Manager's financial statements occasioned by the Manager's role in the Company.

11.03 FINAL ACCOUNTING

Within ninety (90) days after the date on which the Company is dissolved, an independent certified public accountant selected by the Manager will prepare a statement setting forth the financial position of the Company and stating each Member's Capital Account balance.

11.04 CONCLUSIVENESS OF AUDIT AND ACCOUNTING

The determination by the independent certified public accountants selected by the Manager relating to accounting matters will be final and binding upon all Members.

11.05 TAX ELECTIONS

The Manager will have the power to make, to not make or to revoke any elections now or hereafter required or permitted to be made by the Code (including, without limitation, an election under Section 754 of the Code) or any state or local law.

11.06 TAXABLE YEAR

The taxable year of the Company will be a year ending December 31 except for the first taxable year will begin on the date of formation of the Company.

11.07 PROPRIETARY INFORMATION

The method of operation of the Manager and his investment strategies and selections are confidential and proprietary to the Manager. For the period that this Agreement remains in effect each Member agrees for himself and his successors and assigns (i) always to keep secret and confidential all such information and (ii) never to use, or permit the use of, any such information in any fashion for his personal benefit or the benefit of any third person. The Manager will be entitled to equitable relief in the event of any violation, threatened or actual, by any Member, and each Member agrees that money damages are not an adequate remedy for any such violation.

APPENDIX A:


August 15, 2011 A-‐20

12 MISCELLANEOUS

12.01 WAIVER OF PARTITION

Each Member hereby waives any right of partition or any right to take any other action which otherwise might be available to him for the purpose of severing his relationship with the Company or his interest in assets held by the Company from the interest of the other Members.

12.02 AMENDMENTS; OTHER ACTIONS OF MANAGER

Subject to the Act, this Agreement may be amended by the written consent of both: (a) the Manager, in its capacity as such, and (b) a Majority in Interest of the Members; except that no such amendment will, without the approval of each Member affected thereby, change or alter this Section, change the Capital Account of any Member or his rights of withdrawal with respect thereto (except as required by law), or modify the manner of allocation of profits, losses or distributions to which any Member is entitled.

Notwithstanding the foregoing, the Manager, without the consent of the Members, may amend this Agreement in any respect if the Company is advised at any time by its legal counsel that any of the provisions set forth herein are unlikely to be respected for federal income tax purposes or contrary to common law.

In addition, the Manager, without the consent of the Members, may amend this Agreement to correct any mistakes or ambiguities, in order that it will more accurately reflect the agreement among the Members.

Any amendments made by the Manager will be deemed to have been made pursuant to the Manager's fiduciary obligations to the Company and to the other Members, and no such amendment will give rise to any claim or cause of action against the Manager by any Member.

Notwithstanding anything to the contrary contained herein, the Manager is authorized to take such actions as may be necessary or appropriate, including, without limitation, amending this Agreement, to assure that the Company is not classified as a "Publicly Traded Partnership" under Section 7704 of the Code and the Treasury Regulations promulgated thereunder, or as an "investment company" required to be registered under the Investment Company Act.

12.03 INSURANCE

The Manager may cause the Company to purchase and maintain, at the expense of the Company, insurance on behalf of the Manager or any agent appointed by the Manager against any liability asserted against it or him or incurred by it or him in any such capacity or arising out of its or his status as such, whether or not the Company would have the power to indemnify it or him against such liability.

12.04 BINDING EFFECTS; BENEFITS

This Agreement will be binding upon and inure to the benefit of the parties hereto and their legal representatives, successors and assigns, as applicable.

APPENDIX A:


August 15, 2011 A-‐21

12.05 HEADINGS

The section and other headings of this Agreement are for reference purposes only and will not affect the meaning or interpretation of this Agreement.

12.06 COUNTERPARTS

This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which will be deemed to be an original and all of which together will be deemed to be one and the same agreement. This Agreement will become binding when one or more counterparts hereof, individually or taken together, will bear the signatures of all of the parties reflected hereon as signatories.

12.07 ARBITRATION

Any dispute or controversy arising out of or relating to this Agreement will be determined and settled by arbitration in Nevada in accordance with prevailing Commercial Arbitration Rules of the American Arbitration Association. The award rendered by the arbitrator may be appealed de novo to any court of competent jurisdiction. The expenses of the arbitration, any court proceeding or appeal will be borne equally by the parties to the arbitration, court proceeding or appeal; provided that each party will pay for and bear the costs of its own experts and legal counsel.

12.08 BENEFIT PLANS

The Company will not knowingly engage in any transaction with respect to a Benefit Plan Member which would result in a violation of ERISA by the Company, the Manager or such Benefit Plan Member. The Company and the Manager may rely on any representation made by a Member as to any matter subject to ERISA or 4975 of the Code and will be fully protected in so relying. Any such Member will indemnify and hold harmless the Manager and the Company for any liability or costs whatsoever resulting from such Member's representation.

Department of Labor Regulation 2510.3-‐101 promulgated under ERISA provides that, subject to certain exceptions, a Benefit Plan that acquires an equity interest in an entity that is neither a publicly-‐offered security nor a security issued by a registered investment company will be deemed to have acquired an undivided interest in each of the underlying assets of the entity ("plan assets"), thereby subjecting the person who controls the assets of the entity to fiduciary liability with respect to the Benefit Plan. If the Company's assets become "plan assets," the Manager will take appropriate steps so that the Manager and the Company will comply with all the applicable provisions of ERISA and the Code, or in the alternative, redeem such Member's interest in the Company in the Manager's sole discretion.

12.09 GOVERNING LAW

This Agreement will be governed by and construed both as to validity and enforceability in accordance with the laws of the State of Nevada.

12.10 SEVERABILITY

Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without

APPENDIX A:


August 15, 2011 A-‐22

rendering invalid or unenforceable the remaining terms or provisions of this Agreement. Any provision deemed unenforceable will be construed in such a fashion as to be enforceable to the maximum extent permitted by applicable law.

12.11 MODIFICATION; WAIVER

Except as otherwise contemplated hereby, no amendment or modification of, or waiver of any provision of, this Agreement or any part hereof and no notice or consent required or permitted to be given pursuant to this Agreement will be valid or effective unless in writing and signed by the party or parties sought to be charged; and no waiver of any breach or condition of this Agreement will be deemed to be a waiver of any other subsequent breach or condition, whether of like or different nature.

12.12 INTERPRETATION

No provision of this Agreement is to be interpreted for or against either party because that party or that party's legal representative drafted such provision.

12.13 THIRD PARTY BENEFICIARIES

Notwithstanding anything to the contrary contained herein, no provision of this Agreement is intended to benefit any party other than the parties hereto and will not be enforceable by any other party.

12.14 ENTIRE AGREEMENT

This Agreement constitutes the entire understanding and agreement among the parties, and supersedes all prior and agreements and understandings, inducements or conditions, express or implied, oral or written, except as herein contained.

12.15 INFORMATION REGARDING MEMBERS AND ACCOUNTS

The Manager will provide to any Member information regarding Members or accounts requested by such Member subject to the following:

Information regarding Members and accounts may be inspected upon the reasonable written demand of any Member to the Manager or its duly authorized representative, during regular business hours for any purpose reasonably related to such Member's interest as a Member.

The Manager will establish reasonable standards governing, without limitation, the information and documents to be furnished and the time and the location, if appropriate, of furnishing such information and documents. Costs of providing such information and documents will be borne by the requesting Member. The Company will be entitled to reimbursement for its direct, out-‐of-‐pocket expenses incurred in declining unreasonable requests (in whole or in part) for information or documents.

The Manager may keep confidential from Members for such period of time as it deems reasonable any information that it reasonably believes to be in the nature of trade secrets or other information that the Manager, in good faith, believes would not be in the best interests of the Company to disclose or that could damage the Company or its business or that the Company is required by law or by agreement with a third party to keep confidential.

APPENDIX A:


August 15, 2011 A-‐23

12.16 NOTICES

Any notice or other communication contemplated by any provision of this Agreement will be made by hand delivery, certified mail, or fax.

13 DEFINITIONS 13.01 CAPITALIZED TERMS

Capitalized terms used in this Agreement have the following meanings:

"Act" means the the Beverly-‐Killea Limited Liability Company Act.

"Agreement" means this Agreement of Radiant Homes II, LLC, as amended as herein provided.

"Asset Value" means the Fair Market Value of all of the assets of the Company as of the date on which such determination is made.

"Benefit Plan" means an employee benefit plan covered by ERISA or a plan described in Section 4975(e) (1) of the Code.

"Benefit Plan Member" means a Member that is a Benefit Plan.

"Capital Account" means the capital account of each Member established pursuant to, and maintained in accordance with, 5.17 of this Agreement.

"Capital Contribution" means, with respect to each Member, the amount of cash or the Fair Market Value of property in U.S. dollars that such Member has actually contributed to the capital of the Company.

"Closing Date" is September 17, 2010.

"Code" means the Internal Revenue Code of 1986, as amended.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

"Fair Market Value" means in the case of any Properties, the amount determined as follows:

Properties acquired by the Company will be valued based on the total cash cost invested in the property including all costs, fees, taxes and expenses associated with the acquisition, renovation and disposition of real property. Each Property acquired by the Company will have independent accounting.

Properties will not be valued based on independent appraisal, brokers' opinion of value, or any other estimation of future resale value. Accrual accounting based on estimated future value would create an undue tax burden for members in the first year of operations.

The Manager may use methods of valuing Properties other than those set forth herein if it believes the alternate method is preferable in determining the fair value of such Properties. A description of any alternate method will be furnished to the Members prior to, or in connection with, the first report to Members in which the use of an alternate method has a material effect on the total value of the Properties owned by the Company. All values assigned to Properties by the Manager will be final, binding and conclusive on all of the Members; and

APPENDIX A:


August 15, 2011 A-‐24

The foregoing definition of Fair Market Value is subject in all cases to the authority of the Manager to determine the Fair Market Value of any or all of the Company's Properties or other assets or property.

"Fiscal Year" means the Company's taxable year, which will be the calendar year for the purposes of the Code as adopted by the Manager, including the initial or final period of less than 12 calendar months which is considered a taxable year for purposes of the Code.

"Foreign Member" means any Member that is not a "U.S. person" within the meaning of Section 7701(a) (30) of the Code.

"Investment" means any property acquired by the Company for investment in accordance with the investment plan from 4.

"Investment Company Act" means the Investment Company Act of 1940, as amended.

"Liquidating Event" has the meaning ascribed thereto in 10.

"Majority in Interest of the Members" means, at any time, Members who hold, in the aggregate, more than 50% (by value) of the Percentage Interests of all the Members, or such larger percentage as may be required by law for the specific purpose for which the Members are being polled.

"Management Fee" means the fee payable to the Manager by the Company.

"Manager" means Larry Roberts or any other person hereafter duly appointed or designated as the manager to manage the business of the Company. The Manager will not be a Member of the Company.

"Member" and "Members" have the meanings ascribed thereto in the first paragraph of this Agreement.

"Membership Interests" means the rights and responsibilities of a Member under this Agreement, as defined in Section 4 and elsewhere in this Agreement and includes a Member's percentage interest.

"Net Asset Value" as that term is applied to the Company will be the U.S. dollar amount derived by subtracting (i) the liabilities of the Company from (ii) the Asset Value. "Net Asset Value" as that term is applied to a Member's Capital Account will be the share of the Net Asset Value of the Company allocated to such Capital Account.

"Net Profits" and "Net Losses" means the amounts determined as follows:

The Company does not operate as a growth fund. All profits, if any, are distributed at the end of each year, and in any year when profits are paid and distributed, the Net Asset Value of each Member's Capital Account is unchanged. All losses, if any, are deducted from the Net Asset Value of each Member's Capital Account.

(a) "Net Profits" for any Fiscal Year will be the excess of the Net Asset Value of the Company at the close of business on the last day of the Fiscal Year (presumably December 31) over the Net Asset Value of the Company as of the opening of business on the first day of such Fiscal Year (presumably January 1).

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August 15, 2011 A-‐25

(b) "Net Losses" for any Fiscal Year will be the shortfall of the Net Asset Value of the Company at the close of business on the last day of the Fiscal Year (presumably December 31) over the Net Asset Value of the Company as of the opening of business on the first day of such Fiscal Year (presumably January 1).

The determination of Net Profits and Net Losses will take into account the Management Fee payable (i.e., the Management Fee will reduce Net Profits and increase Net Losses).

The definitions of Net Profits and Net Losses are intended to comply with the provisions of Treas. Reg. 1.704-‐1(b) (2) (iv) (including, without limitation, Treas. Reg. 1.704-‐1(b) (2) (iv) (d), 1.704-‐1 (b) (2) (iv) (f) and 1.704-‐1(b) (2) (iv) (g)) and will be interpreted consistently therewith.

"Percentage Interest" with respect to any Member for any Fiscal Period, means the amount, expressed as a percentage, determined by dividing the opening balance of such Member's Capital Account on the first day of such Fiscal Period by the sum of the opening balances of the Capital Accounts of all the Members on such day, and multiplying the result by 100 (i.e., expressed as a percentage).

"Treasury Regulation" or "Treas. Reg." will mean the treasury regulations promulgated pursuant to the Code, as they may be amended.

"Withdrawing Member" means a Member who is being excluded in whole or in part or who is withdrawing all or any part of his Capital Account.

13.02 ACCOUNTING TERMS, DETERMINATIONS, REFERENCES

All accounting terms used herein and not otherwise defined will have the respective meanings ascribed to them in accordance with generally accepted accounting principles in the United States of America.

All section, article and schedule references are to this Agreement, unless otherwise expressly provided.

14 SIGNATURE IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Effective Date.

RADIANT HOMES II, LLC, a Nevada limited liability company

By: ___________________________________________

Larry Roberts, Manager

INVESTOR QUESTIONNAIRE FOR RADIANT HOMES II, LLC

Q-‐1

RADIANT HOMES II, LLC (A Nevada Limited Liability Company)

CONFIDENTIAL INVESTOR QUESTIONNAIRE

This information on this questionnaire is given by _________________________________________ (“Investor”) in connection with the proposed purchase of a limited liability membership interest (“Unit” or “Units”) in Radiant Homes II, LLC, a Nevada Limited Liability Company (“the “Company”). The following information is needed to ensure that (1) an investment in Company by Investor is suitable in light of Investor’s personal, financial, and tax position, and (2) Investor has such knowledge and experience in financial and business matters that Investor is capable of evaluating the merits and risks of the Investment. If the answer to any questions is not applicable, please so state. All information contained in this Investor Questionnaire will be treated confidentially. However, Investor agrees that the Manager of the Company may present this questionnaire to parties deemed appropriate if called on to establish that the proposed offer and sale of the Units is exempt from registration under the Securities Act of 1933, as amended (the “Act”), or meets the requirements of applicable state securities laws. 1. Contact Information

Mr. Mrs. Ms. Dr. Suffix Sr. Jr.

First Name Middle Name Last Name

Permanent Address Apt/Suite No.

City State ZIP Code Country

Work Phone Home Phone Mobile Phone Email Address

Please check if you have been at your current home address for less than one year.

Mailing Address (if different from above) Apt/Suite No.


Are you: Single Married Domestic Partner Divorced Widowed Number of Dependents: _______


Q-‐2

Co-‐Applicant (If applicable)

Mr. Mrs. Ms. Dr. Suffix Sr. Jr.

First Name Middle Name Last Name

Permanent Address Apt/Suite No.


Work Phone Home Phone Mobile Phone Email Address

Please check if you have been at your current home address for less than one year.

Mailing Address (if different from above) Apt/Suite No.


Are you: Single Married Domestic Partner Divorced Widowed Number of Dependents: _______

2. Employment Status Are you currently:

Employed Self-‐Employed Not Employed Retired Student Other:

Job Title Occupation

Employer Years with this Employer

Business Address Apt/Suite No.



Q-‐3

3. USA Patriot Act Information All applicants please provide the information below.

Date of Birth (mm/dd/yyyy)

Social Security or Taxpayer ID No.

Country of Citizenship

ID No. (Select one): Driver’s License Passport State ID Other Government-‐issued ID

Place/Country of Issuance

Issue Date (mm/yyyy) Expiration Date (mm/yyyy) Country of Tax Residence (if different than country of citizenship)

4. Account Type

______ Individual ______ Individual (by Purchaser’s Representative) ______ Partnership (attach a copy of the Partnership Agreement) ______ Corporation (attach a certified copy of the Corporation’s Articles of Incorporation and a certified copy of the resolutions

authorizing the officer to sign on the Corporation’s behalf) ______ Trust (attach a copy of the Trust Agreement or other authorization) ______ Other: ____________________________________________________________ 5. Purchaser’s Representative

The undersigned acknowledges that (i) the individual named below has acted as his “Purchaser Representative” (as defined in Regulation D Promulgated under Section 4(2) of the Securities Act of 1933, as amended), (ii) in evaluating his/her investment as contemplated hereby, the undersigned has been advised by his/her Purchaser Representative as to the merits and risks of the investment in general and the suitability of the investment for himself/herself in particular, and (iii) such Purchaser Representative has confirmed to the undersigned in writing that there are no past, present, or future material relationships, actual or contemplated, between the Purchaser Representative or its Affiliates and the LLC, the Manager, or an Affiliates of any of them, and no compensation has been received or is to be received from any of them as a result of acting as the undersigned’s Purchaser Representative in connection with this investment.

6. Education and Licenses List any college, business, or professional education, indicating any degrees received and the year in which

received: ________________________________________________________________________ ________________________________________________________________________ Professional licenses or registrations, including bar administrations, accounting certification, real estate

brokerage licenses, and SEC or state broker-‐dealer registrations, if any: _______________________________________________________________________ _______________________________________________________________________


Q-‐4

7. Financial Information:

ANNUAL INCOME1

(from all sources) NET WORTH2

(excluding your residence) LIQUID NET WORTH3 TAX RATE

(highest marginal)

$25,000 and under

$25,001-‐50,000 $50,001-‐100,000

$100,001-‐250,000

$250,001-‐500,000 Over $500,000

$25,000 and under

$25,001-‐50,000 $50,001-‐200,000

$200,001-‐500,000 $500,001-‐1,000,000 $1,000,001-‐3,000,000 Over $3,000,000

$25,000 and under

$25,001-‐50,000 $50,001-‐200,000

$200,001-‐500,000 $500,001-‐1,000,000 $1,000,001-‐3,000,000 Over $3,000,000

0-‐15%

16-‐25% 26-‐30% 31-‐35%

Over 35%

ANNUAL EXPENSES4 (recurring)

SPECIAL EXPENSES5 (future, non-‐recurring)

1 Annual income includes income from sources such as employment, alimony, social security, investment income, etc.

2 Net worth is the value of your assets minus your liabilities. For purposes of this application, assets include stocks, bonds, mutual funds, other securities, bank accounts, and other personal property. Do not include your primary residence among your assets. For liabilities, include any outstanding loans, credit card balances, taxes, etc. Do not include your mortgage.

3 Liquid net worth is your net worth minus assets that cannot be converted quickly and easily into cash, such as real estate, business equity, personal property and automobiles, expected inheritances, assets earmarked for other purposes, and investments or accounts subject to substantial penalties if they were sold or if assets were withdrawn from them.

4 Annual expenses might include mortgage payments, rent, long-‐term debts, utilities, alimony or child support payments, etc.

5 Special expenses might include a home purchase, remodeling a home, a car purchase, education, medical expenses, etc.

$50,000 and under $50,001-‐100,000

$100,001-‐250,000

$250,001-‐500,000 Over $500,000

$50,000 and under $50,001-‐100,000

$100,001-‐250,000 Over $250,000

Timeframe for special expenses:

Within 2 years 3-‐5 years 6-‐10 years

8. Financial Investment Experience Please check the boxes that best describe your investment experience to date.

Investment Years experience Transactions per year (excluding automatic

investments)

Mutual Funds/ Exchange Traded Funds 0 1-‐5 Over 5 0-‐5 6-‐15 Over 15

Individual Stocks 0 1-‐5 Over 5 0-‐5 6-‐15 Over 15

Bonds 0 1-‐5 Over 5 0-‐5 6-‐15 Over 15

Options 0 1-‐5 Over 5 0-‐5 6-‐15 Over 15

Securities Futures 0 1-‐5 Over 5 0-‐5 6-‐15 Over 15

Annuities 0 1-‐5 Over 5 0-‐5 6-‐15 Over 15

Alternative5 0 1-‐5 Over 5 0-‐5 6-‐15 Over 15

Margin 0 1-‐5 Over 5

5 May include structured products, hedge funds, etc.


Q-‐5

9. Do you have any other investments or contingent liabilities that you reasonably anticipate could cause the

need for sudden cash requirements in excess of cash readily available to you? _____________________________________________________________________________ 10. State your investment objective by checking the following where applicable: ________ Income ________ Appreciation ________ Tax Shelter ________ Other: ________________________________________________ 11. Knowledge or solicitation of this investment was made to or received by me in the following manner:

(Check applicable) ________ Personal contact or acquaintance ________ Investment advisor or counselor ________ Affiliation with business or management ________ Other (Please state): ____________________________________ Name: __________________________________________________ Signature: ________________________________________________ Date:______________________________

S-‐1

SUBSCRIPTION AGREEMENT

2000 Membership Units

$5,000 per Unit

Total Subscription Offer -‐ $10,000,000

Minimum Subscription – 5 Units ($25,000)

SUBSCRIPTION

THIS SUBSCRIPTION AGREEMENT (the “Agreement”) is made by and between Radiant Homes II, LLC (the "Company"”), a Nevada limited liability company, and the undersigned prospective purchaser (sometimes hereinafter referred to as the “Investor”) who is subscribing hereby for certain of the Company's Membership Interests ("the Membership Units” or “Units”) pursuant to the Company’s Confidential Private Placement Memorandum, dated _________ (the “Memorandum” ), in accordance with the terms and conditions of this Subscription Agreement, and the Company Operating Agreement attached as Exhibit A (“Operating Agreement”).

The Company is offering a maximum of 200 units ($5,000,000), at $25,000 per unit. The Company may in its sole discretion decide to increase the maximum offering to 280 units ($7,000,000). Fractional unit purchases may be accepted at the discretion of the Company. Units are being offered by the Company through authorized employees of the Company. No commissions shall be paid to units sold by authorized employees of the Company.

1.00 ACCREDITED INVESTOR STATUS

The units are being offered only to Accredited Investors pursuant to certain exemptions from the registration of securities afforded issuers of securities under Section 4 (2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder. I understand that the offering is limited to Accredited Investors, and in order to qualify I represent and warrant that either Section 1 or 2 is applicable to me.

Section 1. a. _____I, either individually or with my spouse, have a net worth (i.e., total assets in excess of total liabilities) currently exceeds $1,000,000; or b. _____ I am a natural person who had an individual income in excess of $200,000, or $300,000 jointly with my spouse, in the last two years and reasonably expect an income in excess of $200,000, if an individual, or $300,000 if jointly with my spouse, in this year.

c. _____ I qualify as a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring units, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the federal Securities Act of 1933. d. _____ I am an executive officer or director of the Company; or

SUBSCRIPTION AGREEMENT OF RADIANT HOMES II, LLC

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e. _____ I qualify as an institution that qualifies as an “accredited investor,” which is defined as Any bank as defined in Section 3(a)(2) of the federal Securities Act of 1933, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the federal Securities Act of 1933, whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to Section 15 of the federal Securities Exchange Act of 1934, as amended; any insurance company as defined in Section 2(13) of the federal Securities Act of 1933; any investment company registered under the federal Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; any Small Business Investment Company licensed by the U.S. Small Business Investment Act of 1958, as amended; any employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, as amended, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-‐directed plan, with investment decisions made solely by persons that are accredited investors or ; Any private business development company as defined in Section 202(a)(22) of the federal Investment Advisers Act of 1940; or Any organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the Units, with total assets in excess of $5,000,000; or

f. _____If I am an entity in which all of the equity owners meet the criteria set forth under either (a), (b), (c), (d), or (e) above. OR

Section 2. _____I, either individually or through my Purchaser Representative, am not an accredited investor but have such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of, and protecting my own interest in connection with investing in the Interests. The total investment in the Interest does not exceed 20% of the Investor’s net worth at the time of purchase of the Units (excluding personal residence(s), furnishings, and automobiles).

In consideration for the acceptance by the Company of this Subscription Agreement, I hereby agree, represent and warrant as follows:

1.01 SUBSCRIPTION AMOUNT & PAYMENT FOR MEMBERSHIP INTEREST

I hereby subscribe for a Membership in the Company in the dollar amount of $___________________.

Simultaneously with the execution and delivery of this Subscription Agreement, I am delivering to the Company the amount set forth above as the price of the Membership Interest for which I have subscribed in the form of a check payable to RADIANT HOMES II, LLC.

I understand that the funds which accompany this Subscription Agreement will be returned promptly (without interest) in the event that my subscription is not accepted by the Company.


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1.02 PAYMENT DELIVERY METHOD

q Hand Delivered Check q Check by Certified Mail

Radiant Homes LLC c/o Lawrence Roberts 5405 Alton Parkway A-‐354 Irvine, CA 92604

q Wire Transfer

Domestic Account Holder: Radiant Homes LLC Account #: 929183747 ABA/Routing #: 322271627 International Account Holder: Radiant Homes LLC Account #: 929183747 Swift Code: CHASUS33

Please do not initiate wire transfer until after receiving confirmation of approval from Manager.

1.03 CONFIDENTIAL MEMORANDUM

I hereby acknowledge receipt of a copy of the Confidential Private Placement Memorandum, dated ________________ (the "Memorandum").

1.04 AGREEMENT NOT TO SELL MEMBERSHIP INTEREST

I hereby agree not to sell, hypothecate or otherwise dispose of my Membership Interest unless I have first obtained the consent of the Company and the Membership Interest is registered under the Securities Act of 1933, as amended (the 'Act') or, in the opinion of counsel for the Company, an exemption from the registration requirements of the Act is available.

1.05 SUBSCRIBER ACKNOWLEDGMENTS

The Investor is aware of and fully understands each of the following:

(a) The Company will rely upon the information set forth in my Investor Questionnaire, attached to this Agreement as Exhibit B, in determining whether I am an Accredited Investor or not accredited, but, sophisticated within the meaning set forth above in Section 2.

(b) An investment in the Company is speculative in nature and involves a high degree of risk I assume a substantial risk of the loss of my entire investment in the Company.


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(c) The units have not been registered for public sale under the federal Securities Act of 1933 or the securities laws of any state, and further understands that the units have not been approved or disapproved by the Securities and Exchange Commission or any other federal or state agency, nor has any such agency passed on the accuracy or adequacy of the Memorandum.

(d) The subscription may be accepted or rejected, in whole or in part, in the sole and absolute discretion of the Company.

(e) The Investor (if an individual) has adequate means of providing for the current needs of the Investor and possible personal contingencies and the Investor has no need for liquidity of the investment in the units made by the Investor.

(f) The Investor is acquiring the Units for the Investor’s own account for investment purposes only and not with a present view to resell or distribute them, in whole or in part. In that connection, the Investor recognizes and understands that the Units being purchased and sold has not been registered under the federal Securities Act of 1933 nor qualified under any state securities law, by reason of the fact that the contemplated transaction constitutes a private offering with the meaning of Section 4(2) of the 1933 Act and Regulation D promulgated thereunder, and is exempt from qualification under state securities laws.

(g) The Company has no current financial or operating history.

(h) There are substantial restrictions on the transferability of the units set forth in the Operating Agreement and no transfer or sale of the units by the Investor will be binding upon or recognized by the Company without full compliance with such restrictions. The units will not be, and investors in the units have no rights to require that the units be, registered under the federal Securities Act of 1933. There is no public market for the units, it is unlikely that any public market for the units will develop, the Investor will not be able to avail the Investor of the provisions of Rule 144 adopted by the Securities and Exchange Commission to dispose of the units, and, unless registered or an exemption from registration is available, the units must be held for an indefinite period of time and the Investor must bear the economic risk of the investment for such period. Accordingly, it may not be possible for the Investor to liquidate the investment of the Investor in the Company.

(i) No federal or state agency has made any finding or determination as to the fairness of the offering of the Membership Interest for public investment, or any recommendation or endorsement of the Membership Interest.

(j) Investor acknowledges that the Company has made available to me at a reasonable time prior to my investment the opportunity to ask questions and to obtain any additional information which the Company possesses or can acquire without unreasonable effort or expense that is necessary to verify the information provided to me in the Memorandum. It is understood that all


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documents, records and books pertaining to this investment have been made available for inspection by me and that the books and records or the Company will be available upon reasonable notice for inspection by investors during reasonable business hours at the Company' s principal place of business.

(k) Any transferee of my Membership Interest may be required by the Company to fulfill the investor suitability standards applied to me.

1.06 REPRESENTATIONS AND WARRANTIES.

I hereby represent and warrant that:

(a) I have accurately completed the Investor Questionnaire concerning my status as an Accredited Investor.

(b) I am acquiring my Membership Interest without having relied upon any offering literature or prospectus other than the Memorandum.

(c) I have carefully read the Memorandum The Company has made available to me all documents that I have requested relating to an investment in the Company, and has provided answers to all of my questions concerning the offering In evaluating the suitability of an investment in the Company, I have not relied upon any representations or other information (whether oral or written) other than as set forth in the Memorandum or as contained in any documents or answers to questions so tarnished to me by the Company. In addition, I have had an opportunity to discuss this investment with representatives of the Company and to ask questions of them. I have sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of this investment.

(d) I recognize that an investment in the Company provides a high degree of risk, and I have taken full cognizance of and understand all of the risk factors related to the purchase of the Membership Interest, including but not limited to those set forth under the captions "Risk Factors" in the Memorandum.

(e) The information provided in the Investor Questionnaire which I have submitted to the Company is true and correct as of the date hereof and I have such knowledge and experience in financial matters that, acting alone, I am capable of evaluating the merits and risks of the investment in the Company and at the present time I could afford a complete loss of my investment.

(f) If this letter is executed by a corporation partnership association joint stock company, trust, unincorporated organization or other entity, (a) such entity was not formed for the specific purpose of acquiring the Membership Interest, (b) such entity is validly existing under the laws of the state or other jurisdiction of its organization, and (c) the consummation of the transactions contemplated hereby is authorized by and will not result in a violation of state law or its charter or other organizing document. The foregoing representations and warranties and information which I have provided to the Company concerning myself and any financial condition are true and accurate as of the date hereof and shall be true and accurate as of the date of notice by the Company of the acceptance of my subscription. I will give written notice of such fact to the Company, specifically which representations, warranties or information are not true and accurate and the reasons thereof.


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1.07 INDEMNIFICATION.

I hereby acknowledge that I understand the meaning and legal consequences of my representations and warranties contained in this Agreement, and I hereby agree to indemnify and hold harmless the Company and its managers agents and employees from and against any and all loss, damage or liabilities ( including attorney’s fees, judgments, fines and amounts paid in settlement, payable as incurred) due to or arising out of a breach of any of my representations or warranties including, without limitation the information in this Subscription Agreement.

1.07 SUBSCRIPTION AGREEMENT BINDING ON HEIRS.

Once submitted to the Company, the Investor’s subscription for units cannot be withdrawn, terminated, or revoked. This Subscription Agreement shall be binding upon my heirs, estate, legal representatives, successors and assigns, but shall not be transferred or assigned by the Investor. This Subscription shall be binding upon the Company only when and to the extent it is accepted by the Company, as evidenced by the signature hereon of a duly authorized officer of the Company.

1.08 EXECUTION AUTHORIZED.

If this Agreement is executed on behalf of a corporation, partnership, trust or other entity, the undersigned has been duly authorized to execute this Agreement and all other instruments in connection with the purchase of the Membership Interest, and the signature of the undersigned is binding upon such corporation, partnership, trust or other entity.

1.09 ARBITRATION.

Any dispute or controversy arising out of this agreement the purchase of an interest in the Company, or the rights or liabilities of the members or the manager of the Company shall be settled by arbitration in Orange County, Nevada.

1.10 ADOPTION OF OPERATING AGREEMENT.

The Undersigned adopts, accepts, and agrees to be bound by all of the terms and provisions of the Operating Agreement and to perform all obligations imposed on a Member with respect to the Membership Units purchased. On acceptance of this Subscription Agreement by the Manager on behalf of the Company, and on filing by the Manager of Articles of Organization establishing the Company, the Undersigned shall become a member of the Company for all purposes.

1.11 POWER OF ATTORNEY

The Investor does hereby irrevocably constitute and appoints the Manager with full power of substitution, the true and lawful attorney-‐in-‐fact for the Investor with respect to the Company, granting unto such attorney-‐in-‐fact full power and authority on behalf of the Investor (a) to sign, execute, swear to, deliver and file the Operating Agreement, the Articles of Organization, and all other instruments (including amendments) that the Manager deems appropriate to form, qualify, or continue the Company as a limited liability company in the state of Nevada and all other jurisdictions in which the Company conducts or plans to conduct business and (b) all instruments that the Manager deems appropriate to reflect any amendment to the Operating Agreement, or modification of the Company, made in accordance with the terms of the Operating Agreement


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and (c) all instruments relating to the admission of any additional or substituted Member and (d) all conveyances and other instruments that the Manager deems appropriate to reflect the dissolution and termination of the Company under the terms of the Operating Agreement.

The foregoing is a special power-‐of-‐attorney coupled with an interest, is irrevocable, and shall survive the death or legal incapacity of the Investor. The Manager, or any person appointed as attorney-‐in-‐fact in substitution for the Manager, may exercise such power-‐of-‐attorney, as attorney-‐in-‐fact, by executing any agreements, certificates, instruments or documents with a single signature as attorney-‐in-‐fact for all Members.

1.12 CHOICE OF LAW

This Subscription Agreement shall be construed in accordance with and governed by the laws of the state of Nevada, except for the manner in which the Undersigned elects to take title to the Membership Units, which shall be construed in accordance with the laws of the state of his or her principal residence.


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IN WITNESS WHEREOF, I have caused this Subscription Agreement to be duly

executed as of the ____________ day of ______________, _______

SIGNATURES FOR VESTING AS AN INDIVIDUAL(S)

SUBSCRIBER ONE (1) SUBSCRIBER TWO (2)

________________________________ ________________________________

Signature Signature

________________________________ ________________________________

Print Name of Subscriber Print Name of Subscriber

________________________________ ________________________________

Social Security or Tax I.D. Number Social Security or Tax I.D. Number

________________________________ ________________________________

Witness Witness

________________________________ _________________________________

Signature of Spouse (see below) Signature of Spouse (see below)

* Signature of spouse required only if subscriber or spouse is currently residing in one of the following states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin.

SIGNATURES FOR VESTING AS AN ENTITY

__________________________________ ________________________________

Name of Entity Tax I.D. Number

__________________________________ ________________________________

Signature of Authorized Person Witness

__________________________________ ________________________________

Printed or Typed Name Title


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MANNER IN WHICH TITLE IS TO BE HELD:

q Community Property (one signature required if interest held in one name, i.e., managing spouse or domestic partner; two signatures required If interest held in both names)

q Individual Property (one signature required)

q Corporation (fill out all documents in the name of the corporation, by the President

or other officer authorized to sign, and include a copy of the Corporation’s Articles

and certified Corporate Resolution authorizing the signature)

q Tenants in common (both or all parties must sign)

q Joint Tenants with right of survivorship and not as tenants in common (both or all

parties must sign)

q General Partnership (fill out all documents in the name of the partnership, by a

partner authorized to sign, and include a copy of the Partnership Agreement)

q Pension or Profit Sharing Plan (fill out all documents in the name of the pension, by the trustee or custodian, and include a copy of the instrument creating the pension and any other documents necessary to show that the investment by the trustee or custodian is authorized; the date of the pension must appear on the Notarial where indicated)

q Trust or Fiduciary Capacity (fill out all documents in the name of the trust, by the trustee, and include a copy of the instrument creating the trust and any other documents necessary to show that the investment by the trustee is authorized)

q Other:

Please specify_____________________________________________


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The Manager has accepted this Subscription as of the date hereof.

RADIANT HOMES, LLC

By: LAWRENCE ROBERTS

Manager

By: _________________________________________

Title: _________________________________________

Date: __________________________________________

A SUBSCRIPTION FOR THE PURCHASE OF MEMBERSHIP INTEREST MAY BE TERMINATED WITHOUT LIABILITY TO THE COMPANY OR ANY OTHER PARTY WITHIN THREE (3) BUSINESS DAYS AFTER THE SUBSCRIBER (1) ENTERS INTO A BINDING CONTRACT OF PURCHASE OR (2) MAKES ANY PAYMENT FOR HIS MEMBERSHIP INTEREST, WHICHEVER IS LATER, PAYMENTS FOR TERMINATED SUBSCRIPTIONS WILL BE REFUNDED, WITHOUT INTEREST.

Documents

Radiant Homes II Booklet 01