Summit Real Estate Management is a professional property management and investment company.

UNDERSTANDING BETWEEN PIONEER RIDGE & GREENBRIER PARTNERSHIPS AND SUMMIT REAL ESTATE MANAGEMENT, INC.

Over the past five and a half months, many questions have been raised by the owners of Pioneer Ridge Apartments and Greenbrier Apartments concerning Summit Real Estate Management Inc.'s handling of the Properties. The following is a list of the issues raised, and Summit's agreement with the facts as presented.

CONVERSION OF FUNDS FROM PIONEER RIDGE: Beginning March 1, 2000, moneys belonging to the owners of Pioneer Ridge Apartments were transferred to Summit and commingled with Summit's funds. These conversions were not authorized by nor disclosed to the Owners. Intermittent transfers continued until 12/26/03, and the last of the principal was not returned until 8/17/04. Most of the funds were transferred via Pioneer Ridge account # 860-12100. Prior to April 2003 this account was designated as A/ft - Other, and after that date as a Money Market account. There never was such an account in any financial institution. This was nothing more than an accounting entry to record and conceal the funds being shifted from Pioneer Ridge to Summit. On several occasions there were also direct transfers of funds to entities owned in part by or managed by Summit. The total of all of the unauthorized transfers from Pioneer Ridge is $566,300. The dates and amounts of all of the transfers and repayments are listed in exhibit A. No fees or interest have been paid on these borrowings.
CONVERSION OF FUNDS FROM GREENBRIER: Beginning March 24, 2000, moneys belonging to the owners of Greenbrier Apartments were transferred to Summit and commingled with Summit's funds. These conversions were not authorized by, nor disclosed to, the Partners. Intermittent transfers continued until 12/26/03, and the last of the principal was not returned until 8/17/04. Most of the funds were transferred via Greenbrier account # 289-12100. Prior to April 2003 this account was designated as A/R - Other, and after that date as a Money Market account. There never was such an account in any financial institution. This was nothing more than an accounting entry to record and conceal the funds being shifted from Greenbrier to Summit. The total of all of the unauthorized transfers from Greenbrier is $126,800- The dates and amounts of all of the transfers and repayments are listed in exhibit B. No fees or interest have been paid on these borrowings.
TENANT SECURITY DEPOSITS: Summit admits to the transfer of Tenant Security Deposit Assets from both Pioneer Ridge and Greenbrier to Summit, where they were commingled with Summit's funds. Conversion of these funds to Summit occurred in January of 2000, and the funds have remained with Summit to this date. Total funds transferred to Summit from Pioneer Ridge equals $43,160 and from Greenbrier $45,174. These transfers, like those involving the "12100 Accounts", were unauthorized and were not disclosed to the Partners. I admit that when I told the Accountant at Ford Black & Co. in March of 2004, and two of the Partners in December of 2004 that these funds were in a non-interest bearing commingled account with other like funds, I was being untruthful. No fees or interest have been paid by Summit for the use of these funds.
LOANS MADE TO THE PROJECTS BY SUMMIT: Summit has made the claim on many occasions, both verbally and in writing, to at least four of the Partners, that while Summit did improperly use money belonging to Pioneer Ridge and Greenbrier, that Summit also "advanced funds to those properties and have carried reimbursable expenses when the property did not have funds to pay such things as payroll, benefit costs, petty cash etc.". I admit that is not true. At no time have I advanced Summit's money for the use of either of the projects.
REFINANCE FEE — PIONEER RIDGE: Summit acknowledges that Summit paid itself a fee of $16,250 for assistance in obtaining refinancing for Pioneer Ridge. Summit acknowledges that the owners of Pioneer Ridge did not request this service of Summit and that there was never a negotiation of fees. Summit acknowledges that if its efforts in assisting in the obtaining of refinancing for Pioneer Ridge was outside of ordinary management responsibility, and would generate a fee of this magnitude, that the partnership had a right to select its own agent and negotiate the fee. Summit has agreed to return this fee.
REFINANCE FEE — GREENBRIER: Without a request from the owners, Summit has begun to "shop" a refinance package for Greenbrier. Summit declares that it will neither seek nor accept a fee for this non-requested service.
ACCOUNTING EXPENSES INCURRED BY PARTNERS: Summit acknowledges that it's unusual accounting procedures and unauthorized transfers of funds to Summit from Pioneer Ridge and Greenbrier has necessitated the retention of professional accounting assistance to uncover the facts. Summit agrees to make restitution for these expenses.
OTHER FAILURES TO DEAL WITH OWNERS HONESTLY AND IN GOOD FAITH: Summit declares that there have been no other instances of improper use of the money generated at either Pioneer Ridge or Greenbrier and managed by Summit. Summit maintains that all other handling and reporting of the finances at these two projects have been done by ordinarily accepted accounting practices, and that all other monies belonging to the partners have been turned over to the partners or used for appropriate needs of the properties. Summit agrees to provide to Dr. Bernards the already requested and promised documents as follows:
Summit also declares that any moneys belonging to Pioneer Ridge or Greenbrier at the time of the change of Management have been turned over to the new Management Team, with the exception of the Tenant Deposit Reserve Assets discussed in paragraph 4 above.
Summit understands that the settlement proposal the Partners have made today is based upon the assumption that the above statements agreed to by Summit are indeed true, to the best of Mike McKenna's knowledge. If time proves one or more of these statements to be seriously false, the partnership has the right to void the agreement made with Summit on May 1, 2005 and pursue other avenues for recovery.
Signed this 1 day of May 2005.

Mike McKenna