Estate of Lea K. Hillgren, Deceased, Mark Hillgren, Executor - Page 14

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          properties that were contributed to the partnership at its                  
          formation included the three Orange County properties and the               
          University property that were already the subject of the BLA and            
          that were used to fund the amended trust.  In addition, the other           
          three properties that were contributed were the Crescent Bay,               
          Railroad, and Manzanita properties in California that also                  
          previously were used to fund the amended trust.  After the                  
          initial contributions were made, no additional property was                 
          transferred to the partnership.                                             
               Decedent did not deed or transfer title to the seven LKHP              
          properties to the partnership.  The partnership agreement                   
          provided that title to any property that was contributed by a               
          limited partner, and was deemed to be owned by the partnership,             
          would remain in the name of the limited partner for the benefit             
          of the partnership.  The leases that encumbered the LKHP                    
          properties were not formally assigned to LKHP prior to decedent’s           
          death.  The leases remained in the name of decedent, or in the              
          name of Sea Shell, after LKHP was formed.  The title remained in            
          the name of decedent or Sea Shell in order to hide the change of            
          ownership from the general public and from the tenants of the               
          properties.  Under the partnership agreement, Hillgren could                
          conduct partnership business without disclosing the existence of            
          the partnership.  The partnership was designed generally to be              

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Last modified: May 25, 2011