LGlrry Galbraith, PresidentCarl T. Curtis, First Vice PresidentWilliam G. Ohme, Second Vice PresidentLouise Hutchison, SecretaryMildred Bovee, Treasurer

Report No.12September 3. 1982

TO KEEP YOU INFORMEDSALE OF HAWTHORNE NOT FINALIZED AT CLOSING

Colonial Penn is taking the position that McDay is in breach of their contract for failingto close the purchase of Hawthorne on Monday August 30, 1982. McDay, however, has filed across-claim against Colonial Penn in the pending litigation, asserting that Colonial Pennbreached their contract with respect to their representation that the December 11, 1972NRTA/AARP--Colonial Penn Agreement terminated August 1, 1982.

We will keep you informed of further developments.

Our lawyers are monitoring this action closely between Colonial Penn and McDay, while=~cont-iFluing~t0~-Gt-bvel-y-pu~s~ou;r -l-i-tiga~i&'R. ~ga~:i".nst."".,bo;t41d.efendants. ~

INFORMATION ON RECENT LITIGATION

At a hearing before Judge Ernest C. Aulls, Jr. on August 26 and 27, 1982, with four witnessesand arguments by a battery of nine attorneys, the following Motions were ruled on:MOTION FOR PRELIMINARY INJUNCTION was filed by the Hawthorne Residents Association, Inc. on-l1y 8, 1982. This filing was mainly for a ruling which would maintain the status quo of~wthorne services and lifestyle, and to avoid being placed under the threat of immediateloss of essential services and facilities if the closing is consumated. The hearing lasteda full day. The Judge ruled in favor of the Hawthorne Residents Association, Inc. What thismeans is that Judge Aulls entered an order requiring the owner of Hawthorne to continueproviding the services and facilities as listed in the order, and that we have enjoyed forso many years, pending the final outcome of the litigation.BOND SET FOR PRELIMINARY INJUNCTION. The Preliminary Injunction Law requires parties filingan injunction to post a bond to pay damages if the injunction has been erroneously issued.This will be determined at the time of the Class Action trial. The bond required of usis not ·a performance bond, or a bond to cover operating or other losses. Colonial Penn triedto have the bond set high to cover operating losses. The fact that Colonial Penn says theyare losing money on the operation of Hawthorne has nothing to do with the bond for injunctiverelief. McDay agreed wi't'h Colonial Penns arguments and said they would have losses too.The Judge set the bond at $32,000 and ruled that it could be paid in installments. If weare ultimately successful in our litigation to establish once and for all that we areentitled to the services listed in the Judges order, the amount of the bond will be refundedto us at the conclusion of the litigation.MOTION FOR SUMMARY JUDGEMENT was filed by McDay August 4, 1982. This filing was for aruling by the Court on the validity of Counts IV and V in our lawsuit which deals withrecent Florida legislation which could give the owner of a mobil park authority to changefrom rental to condo operation or evict in a specified time. McDay and Colonial Penn attorneyscited many cases trying to prove their points, but none of the cases indicated physicalchange. Our attorneys presented cases which indicated a definite physical change of useL, made when the law was used---such as a mobil home development changed to a parking lotor a road put through a mobil home park. Our attorneys argued that in no conceivable wayis a change from rental to condo operation a change of use under the law. The Judge ruledto deny the Motion on Counts IV and V, but this will come up again for review and a decisionon the merits of the case at the full trial.

the consent of the Court to extend the closing of the sale from August 30, 1982 to somefuture date. McDays attorneys claimed they were aware of the December 11, 1972 NRTA/AARP--Colonial Penn contract at the time of signing the sales-purchase agreement, but that theyh:.ldbeen assured the agreement would tenninate August 1, 1982. They also said they werel~ aware of the emphasis placed on the advertising of services in the sales literaturefrom 1972 up to the present. The Judge ruled to deny the Motion for Injunctive Relief toextend the date of the sale.

WE GO TO TRIAL ON OUR LAWSUIT IN NOVEMBER

Wednesday November 17, Thursday November 18 and Friday November 19 have been set for thetrial in the Circuit Court of Lake County Florida on our lawsuit to ascertain the validityof our leases. This action is being taken through a Complaint for Declaratory Judgementand Other Relief, Case No. 82-896-CAOl, filed by the Hawthorne Residents Association, Inc.May 28, 1982. We will keep you advised on events leading up to this trial through theseReports, TV Channel 4 announcements and the TV drum.

(continued on other side)

TOWN MEETING AUGUST 31,1982

(continued from other side)

Attorney Walter McLin, a member of the legal team representing us in our litigation, reportedto more than 1200 Hawthorne residents on the hearings in the Circuit Court of Lake Countylast week before Judge Ernest C. Aulls, Jr. Governor LeRoy Collins and Attorney Everett Boydwere on other assignments and not able to attend. Attorney Perry Odom who is recuperatingat home after hospitalization is recovering very nicely and expect ~o be back in action nolater than next week.

Harry Galbraith, President of the Hawthorne Residents Association, Inc. opened the meeting.Carl T. Curtis, First Vice President, discussed the implications of the litigation on thelives of Hawthorne residents. He srated that the results .of the.hearings in the CircuitCourt have been encouraging, and that the "light at the end of the tunnel" looks favorablefor complete success.Curtis told the residents that litigation is costly and that to continue would requireadditional funds. In a question period ofter his comments, residents agreed to the need forcomplete unity and the need to continue financing our efforts. A motion to assess each home$200 to support our legal efforts was enthusiastically passed. Arrangements were made tomake collections in the clubhouse, and letters will be mailed to those vacationing or not inresidence.

SCHEDULE FOR ASSESSMENT COLLECTIONSAssessments will be collected in the clubhouse on the following days at the times scheduled:

Wednesday September 1, 1982Thursday September 2, 1982Friday September 3, 1982

9:30 to 11:30 AM and 1:00 to 4:00 PM9:30 to 11:30 AM and 1:00 to 4:00 PM9:30 to 11:30 AM and 1:00 to 4:00 PM

Monday September 6, 1982Tuesday September 7, 1982Wednesday September 8, 1982Thursday September 9, 1982Friday Sept.ember 10, 1982

(No collections--Labor Day)9 :30 to 11 :30 AM9:30 to 11:30 AM9 :30 toll :30 AM9:30 to 11:30 AM

SPEC IAL NOTICE TO HAWTHORNE HOME OWNERSWHO ARE ON VACATION OR HAVE HOUSES FOR SALE

UNTIL THIS LITIGATION HAS BEEN SUCCESSFULLY CULMINATED, THE FUTURE OFHAWTHORNE SERVICES, PROGRAMS AND LIFESTYLE ARE BEING QUESTIONED. INADDITION TO THAT, THE SALE OF FlOMES HAS BEEN SERIOUSLY HANDICAPPEDBECAUSE THE COLONIAL PENN SALES OFFICE HAS BEEN CLOSED AND THERE IS

WHO ARE AWAY ON "VACATION", AND HAWTHORNITES WHO HAVE MOVED ANDHAVE HOMES FOR SALE (OR ANY FINANCIAL INSTITUTION HANDLING AN ESTATEOF A DECEASED FORMER RESIDENT), TO SEND A CHECK FOR THE ASSESSMENTTO THE TREASURER---MRS. MILDRED BOVEE, 135 ASPEN CIRCLE, LEESBURG, FL32748. IT WILL HELP SPEED THE LITIGATION AND GET THINGS BACK TONORMAL. "VACATIONEERS" WILL BE RELIEVED OF THE SUSPENSE OF UNCERTAINTYSOONER, AND THOSE LOOKING FOR A PLACE IN THE SUN TO RETIRE WILL AGAINFEEL SECURE IN BUYING A HOME AT HAWTHORNE.