1
EXHIBIT 99.2
AMENDED AND RESTATED
IMPLEMENTATION AGREEMENT
2
TABLE OF CONTENTS
PAGE
----
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1. ▇▇▇▇▇▇▇ Good Faith Deposit . . . . . . . . . . . . . . . . . . . . 2
2. Court Approval . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. Withdrawal of Syntek as General Partner . . . . . . . . . . . . . 3
4. Resolution of Net Exit Fee Owed to Syntek and Other Dispute. . . . 4
5. Financing Terms of Net Partnership Payment to Syntek . . . . . . . 5
6. Consensus Successor General Partner . . . . . . . . . . . . . . . 7
A. Purchase Price of General Partnership Interests . . . . . . . 7
B. Payment Terms for General Partnership Interest . . . . . . . . 7
C. Redemption of ▇▇▇▇▇▇▇ General Partnership Interest . . . . . . 8
D. Term of NRGP . . . . . . . . . . . . . . . . . . . . . . . . . 9
E. Fee Compensation . . . . . . . . . . . . . . . . . . . . . . . 10
i. Asset Management Fee. . . . . . . . . . . . . . . . . . 10
ii. Property Disposition Fees . . . . . . . . . . . . . . . 10
iii. Offset for Advance Payments to NRG . . . . . . . . . . . 11
F. Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
G. Services to the Partnership . . . . . . . . . . . . . . . . . 12
▇. ▇▇▇▇▇▇ of NRGP . . . . . . . . . . . . . . . . . . . . . . . . 12
7. Partnership Agreement Amendments . . . . . . . . . . . . . . . . . 12
8. Proxy Statement/Consent Solicitation . . . . . . . . . . . . . . . 12
9. Role of ▇▇. ▇▇▇▇▇▇▇ . . . . . . . . . . . . . . . . . . . . . . . 13
10. Special Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . 14
11. Indemnification of the Committee . . . . . . . . . . . . . . . . . 14
12. Mutual Releases . . . . . . . . . . . . . . . . . . . . . . . . . 14
13. Acceptance and Acknowledgment by NRGP . . . . . . . . . . . . . . 14
14. Binding Agreement; Supervising Judge's Powers . . . . . . . . . . 14
15. Compounding of Interest . . . . . . . . . . . . . . . . . . . . . 15
16. Additional Agreements . . . . . . . . . . . . . . . . . . . . . . 15
17. Representations and Warranties . . . . . . . . . . . . . . . . . . 15
18. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3
PAGE
----
19. Press Release . . . . . . . . . . . . . . . . . . . . . . . . . .16
20. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . .16
21. "All-or-None" Deal . . . . . . . . . . . . . . . . . . . . . . . .16
22. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . .17
A. Governing Law . . . . . . . . . . . . . . . . . . . . . . . .17
B. Successors and Assigns . . . . . . . . . . . . . . . . . . . .17
C. Entire Agreement; No Oral Agreements . . . . . . . . . . . . .17
D. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . .17
i. Syntek . . . . . . . . . . . . . . . . . . . . . . . . .18
ii Partnership . . . . . . . . . . . . . . . . . . . . . .18
iii. Committee . . . . . . . . . . . . . . . . . . . . . . .18
iv. ▇▇. ▇▇▇▇▇▇▇, or NRGP . . . . . . . . . . . . . . . . . .18
E. Automatic Termination . . . . . . . . . . . . . . . . . . . .19
F Cooperation . . . . . . . . . . . . . . . . . . . . . . . . .19
G. Interpretation . . . . . . . . . . . . . . . . . . . . . . . .19
H. Delays or Omissions . . . . . . . . . . . . . . . . . . . . .19
I. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . .19
J. Severability . . . . . . . . . . . . . . . . . . . . . . . . .19
K. Ambiguities . . . . . . . . . . . . . . . . . . . . . . . . .20
EXHIBITS
Exhibit A Schedule of Secured Properties
Exhibit B Example of Paragraph 6.C.iii
Exhibit C Form of Press Release
4
AMENDED AND RESTATED
IMPLEMENTATION AGREEMENT
This Amended and Restated Implementation Agreement ("Agreement"),
dated as of February 20, 1996, is made by and among, Syntek Asset Management,
L.P. ("Syntek"), the general partner of National Realty, L.P. (the
"Partnership"), the Partnership, the National Realty, L.P. Oversight Committee
(the "Committee"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇. ▇▇▇▇▇▇▇"), and NRGP, Inc. ("NRGP"),
and shall be effective on the parties on the terms set forth herein. This
Agreement is intended to amend and restate the Implementation Agreement, dated
as of January 27, 1995 (the "Implementation Agreement"), as amended by the
First Amendment to the Implementation Agreement, dated as of February 27, 1995
("First Amendment").
RECITALS
A. Pursuant to a Settlement Agreement, dated as of May 9, 1990,
the plaintiffs, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, et. al., and defendants, the Partnership,
National Operating, L.P., Syntek, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, and Shearson ▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc., successor-in-interest to
defendant ▇.▇. ▇▇▇▇▇▇ & Company, Inc., agreed to settle a class action
litigation matter, filed in the Superior Court of the State of California in
and for the County of San Mateo, No. 322135, captioned as ▇▇▇▇▇▇▇, et. al. v.
Southmark Corporation, et. al.
B. In furtherance of the procedures set forth in Sections 6.3 and
6.4 of the Settlement Agreement, with the intent to clarify any ambiguities in
the Settlement Agreement, Syntek and the Committee desire to proceed with the
election of a successor general partner to Syntek, as general partner of the
Partnership, on the terms and conditions set forth in this Agreement. The
Partnership agrees to be bound by the terms and conditions set forth herein.
C. Syntek and the Committee have agreed that if Syntek nominates
NRGP on the terms and conditions set forth in this Agreement, the Committee
will not (i) propose a candidate to run against NRGP and (ii) will stipulate
that NRGP is not an Affiliate (as defined in the Settlement Agreement) of
Syntek and Messrs. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ and their affiliates.
D. ▇▇. ▇▇▇▇▇▇▇, on behalf of himself and NRGP, has agreed to
stand for election as the successor general partner on the terms and conditions
set forth herein.
E. On June 30, 1995, in compliance with paragraph 3 of the
Implementation Agreement, Syntek and the Committee jointly moved the court for
tentative approval of the Implementation Agreement and approval of the notice
to be sent to class members.
5
On July 19, 1995, the Supervising Judge notified the Committee that he had
certain concerns he wanted addressed prior to providing his tentative approval.
In addition, the parties desired to modify certain other provisions. The
provisions set forth herein set forth both (i) the parties' response to the
Supervising Judge's concerns and (ii) amendments to the terms of the
Implementation Agreement and First Amendment deemed mutually beneficial by the
parties.
F. Syntek and the Committee have agreed to submit this Agreement
to the Supervising Judge, the Honorable ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, for the approval of the
court on the terms and conditions set forth in paragraph 2 of this Agreement.
G. Syntek, the Committee, the Partnership and ▇▇. ▇▇▇▇▇▇▇, on
behalf of himself and NRGP, now desire to set forth their intentions and
agreements with respect to the terms and conditions relating to having NRGP
stand for election as the successor general partner to Syntek.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and obligations contained herein and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Syntek, the Committee,
the Partnership and ▇▇. ▇▇▇▇▇▇▇, on behalf of himself and NRGP, hereto agree as
follows:
AGREEMENT
1. ▇▇▇▇▇▇▇ Good Faith Deposit. The parties acknowledge that ▇▇.
▇▇▇▇▇▇▇, on behalf of himself and NRGP, delivered $100,000 in readily available
funds (the "Good Faith Deposit") to Commonwealth Land Title Company (the
"Escrow Agent"). The parties acknowledge that Syntek, the Committee and ▇▇.
▇▇▇▇▇▇▇ delivered a tri-party instruction letter, dated May 17, 1995
("Tri-Party Instruction Letter"), to the Escrow Agent with respect to the Good
Faith Deposit. The parties agree that the Escrow Agent shall pay the Good
Faith Deposit, plus any interest thereon, to the Partnership if NRGP fails to
stand for election as successor general partner for any reason other than the
following:
A. The termination of this Agreement by (i) the
Supervising Judge or (ii) any party to this Agreement, other than ▇▇. ▇▇▇▇▇▇▇,
or NRGP;
B. The death of ▇▇. ▇▇▇▇▇▇▇; and
C. The incapacity of ▇▇. ▇▇▇▇▇▇▇ to perform the duties of
the controlling person of NRGP.
The parties agree that ▇▇. ▇▇▇▇▇▇▇ shall be entitled to
receive the Good Faith Deposit, plus any interest thereon, upon the earlier of
(i) the events set forth in paragraphs 1.A, B and C above or (ii) final
tabulation of the votes of the limited partners
-2-
6
of the Partnership related to the proposed election of NRGP as successor
general partner (the "Vote Tabulation"). The parties acknowledge that the
Escrow Agent shall be required to make this payment after the Vote Tabulation
regardless if NRGP is, or is not, elected as the successor general partner.
The parties acknowledge that, pursuant to the Tri-Party
Instruction Letter, ▇▇. ▇▇▇▇▇▇▇, Syntek, the Committee and the Partnership
shall submit any dispute related to the payment of the Good Faith Deposit to
the Supervising Judge and shall be bound by the Supervising Judge's order. The
parties acknowledge that, pursuant to the Tri-Party Instruction Letter, the
Escrow Agent shall be entitled to rely on (i) the Supervising Judge's order
with respect to payment of the Good Faith Deposit or (ii) instructions signed
by Syntek, the Committee and ▇▇. ▇▇▇▇▇▇▇. The parties acknowledge that,
pursuant to the Tri-Party Instruction Letter, the Partnership shall indemnify
the Escrow Agent.
2. Court Approval. Promptly after execution of this Agreement by
all of the parties, Syntek and the Committee jointly shall move the court for
tentative approval of this Agreement and approval of the notice to be sent to
class members. Syntek shall cause the Partnership to transmit the notice to
class members at the time and in the manner directed by the court. Thereafter,
following receipt of any comments or objections from class members, Syntek and
the Committee shall submit to the court all comments and objections received
and shall serve the other parties hereto, and a final hearing on the approval
of this Agreement shall be scheduled as the court directs. If the court
desires that the parties to the Agreement follow any other procedures not set
forth herein, the parties agree to use their best efforts to follow such
procedures upon notification from the court. Each party's obligation to
proceed with the terms and conditions set forth in this Agreement is subject to
the court issuing an appropriate court order approving this Agreement, the
implementation of the terms set forth herein, and finding that (i) the election
of NRGP upon the terms set forth herein are all in the best interest of the
class members, (ii) it would be proper and appropriate for NRGP to execute a
document acknowledging that the Partnership entered into the indemnification
agreement and releases, which are the subject of paragraph 13 of this
Agreement, and (iii) this Agreement and the terms contemplated herein are not
inconsistent with the Settlement Agreement. Paragraph 14 herein shall govern
after the court's tentative approval of this Agreement as set forth in this
paragraph 2.
3. Withdrawal of Syntek as General Partner. The Settlement
Agreement provides that Syntek's resignation shall take effect upon NRGP (or
any other successor general partner) being duly elected and taking office.
Syntek's withdrawal, as general partner of the Partnership, shall comply with
Section 17.2 of the First Amended and Restated Agreement of Limited
Partnership, dated as of January 29, 1987, as amended on May 14, 1990
("Partnership Agreement"), except for the 180-day notice period, which shall be
shortened pursuant to (i) a valid amendment to the Partnership Agreement, or
(ii) a valid waiver of this provision, by the limited partners of the
Partnership. In
-3-
7
addition to the requirement set forth in Section 17.2.3 of the Partnership
Agreement that a majority of the outstanding Units vote for NRGP as the
successor general partner, the following votes shall be obtained:
A. A majority of the outstanding Units shall approve
Syntek's Exit Fee calculation (as defined in paragraph 4.C.ii below); and
B. Unitholders representing a majority of the Units held
by persons who are not affiliates of Syntek, or Syntek's affiliates
("Non-Affiliated Unitholders") who vote, must vote for NRGP as the successor
general partner, in order for NRGP to be elected as successor general partner
of the Partnership. As set forth in Section 17.2.3 of the Partnership
Agreement, if elected, NRGP shall be admitted as a general partner immediately
prior to the withdrawal of Syntek as general partner. If the required vote is
not obtained, the provisions set forth in paragraph 21 herein shall apply.
Syntek shall cause its affiliates, including the ART Group, to vote in favor of
any vote required by this Agreement.
4. Resolution of Net Exit Fee Owed to Syntek and Other Disputes.
A. In the Implementation Agreement, the parties had
reserved to the Supervising Judge the determination of (i) the Exit Fee (as
defined below) and (ii) certain amounts owed, if any, by Syntek and its
affiliates to the Partnership related to two matters (the "Two Disputes").
B. Syntek and the Committee, after months of negotiation,
reached an agreement on the Exit Fee and the Two Disputes, for the purposes of
this Agreement only, and without constituting a waiver or abandonment of any
position that Syntek or the Committee might otherwise assert if NRGP is not
elected on the terms set forth in this Agreement.
C. Subject to the provisions set forth in paragraph 21
herein, the Committee approves of the following:
i. The Partnership shall pay Syntek the amount of
$12,471,500 pursuant to the terms of the promissory note described below in
paragraph 5 ("Net Partnership Payment to Syntek");
ii. The Net Partnership Payment to Syntek
represents the "fair market value" of the "interest" of Syntek, calculated by
Syntek, pursuant to Section 17.10 of the Partnership Agreement, as clarified by
Section 6.5 of the Settlement Agreement (the "Exit Fee") minus the principal
and interest due on Syntek's note given to the Partnership as partial
consideration for its 1% general partnership interest in the Partnership. The
Net Partnership Payment to Syntek also includes resolution of the Two Disputes
by the Committee's withdrawal, with prejudice, of the Two Disputes.
-4-
8
D. Subject to the provisions set forth in paragraph 21
herein, Syntek agrees that the payment of the Net Partnership Payment to Syntek
on the terms set forth herein shall fully satisfy the Partnership's obligation
to Syntek related to the Exit Fee and that Syntek shall have no further claim
against the Partnership related to the Exit Fee, other than as expressly set
forth in the promissory note from the Partnership to Syntek (as set forth in
paragraph 5 below).
E. The Partnership Agreement shall be amended to preclude
any Exit Fees being paid to NRGP, or any other successor general partner, other
than (i) the redemption of the general partner's interest on the terms set
forth in paragraph 6.C herein and (ii) the payment of any accrued but unpaid
compensation owed to the general partner for the services set forth in
paragraph 6.E herein, each as set forth in the Amended and Restated Partnership
Agreement referred to in paragraph 7 herein.
5. Financing Terms of Net Partnership Payment to Syntek. After
NRGP is admitted as a general partner of the Partnership and simultaneously
with Syntek's withdrawal as general partner of the Partnership, the Partnership
shall deliver to Syntek the Partnership's promissory note in the amount of
$12,471,500 with the following terms (the "Partnership Note to Syntek"):
A. Scheduled principal payments (in cash) in the
following amounts on the following due dates:
Due Date Principal Payment
-------- -----------------
60 calendar days from the date $ 3,741,450
NRGP is admitted as a general (30% of Note)
partner of the Partnership
The first anniversary of the date $ 1,870,725
NRGP is admitted as a general (15% of Note)
partner of the Partnership
The second anniversary of the date $ 1,870,725
NRGP is admitted as a general (15% of Note)
partner of the Partnership
The third anniversary of the date $ 4,988,600
NRGP is admitted as a general (40% of Note)
partner of the Partnership
Total principal payments $12,471,500
===========
B. Notwithstanding the schedule of principal payments
set forth above, if the Partnership obtains cash from any of the following
activities:
-5-
9
i. Sales of Partnership properties ("Property
Sales Proceeds"),
ii. Refinancing proceeds ("Refinancing
Proceeds"), or
iii. The release of cash or short-term investments
supporting any letter of credit in connection with the REMIC financing for
Garden Capital, L.P., a second-tier subsidiary partnership of the Partnership
("REMIC Letter of Credit Proceeds"), then,
Syntek shall be entitled to receive a mandatory prepayment of principal equal
to 2/3 of the cash proceeds obtained by the Partnership from Property Sales
Proceeds, Refinancing Proceeds and REMIC Letter of Credit Proceeds net of
expenses, fees and required reserves (collectively referred to herein as
"Available Cash"). Each such payment is referred to herein as a "Mandatory
Principal Prepayment." Each Mandatory Principal Prepayment made to Syntek
shall reduce the amount owed by the Partnership on the next scheduled
principal payment. Notwithstanding anything else herein, if the general
partner determines in good faith (and certifies such to Syntek) that amounts
obtained from the activities set forth above are needed by the Partnership so
as not to hinder the Partnership's ability to meet its current and projected
financial obligations, then such amounts shall not constitute "Available Cash."
C. Monthly interest payments on the outstanding
principal balance, payable in arrears, beginning on the first day of each month
following the date NRGP is admitted as a general partner of the Partnership,
and continuing each month thereafter until the principal amount has been paid
in full, at the rate of 8-1/2% per annum.
D. The failure by the Partnership to make a scheduled
principal or interest payment under paragraph 5.A or 5.C above shall not
constitute an event of default under the note if the general partner of the
Partnership determines in good faith (and certifies such to Syntek) that such
payment would hinder the Partnership's ability to meet its current and
projected financial obligations. The Partnership shall be required to make any
postponed principal or interest payments within 15 days from the general
partner's determination in good faith that such payment or payments would not
hinder the Partnership's ability to meet its current and projected financial
obligations ("Delayed Payment Obligation"). The Partnership's failure to make
a Delayed Payment Obligation shall be an event of default under the note.
E. The note shall be without recourse to the
Partnership.
F. The note shall be secured by liens, subordinate to
any existing liens, on the properties set forth on Exhibit A to this Agreement
(the "Secured Properties"). As of December 31, 1995, the combined equity in
the Secured Properties was equal to approximately 100% of the face amount of
the note. Upon an event of default under the note, Syntek shall be entitled to
accelerate the principal due on the note and foreclose on the Secured
Properties. As set forth above in paragraph 5.D, the note shall be without
recourse to the Partnership and the Partnership shall not be liable for any
deficiency
-6-
10
after Syntek's foreclosure action on the Secured Properties. The documents
securing Syntek's interest in the Secured Properties shall contain a provision
requiring Syntek to release its security interest in a Secured Property if the
general partner determines in good faith and certifies to Syntek that such
property should be sold or refinanced so as not to hinder the Partnership's
ability to meet its current and projected financial obligations. Upon such
determination and certification by the general partner, Syntek shall be
required to release its security interest, whether or not the proceeds from
such sale or refinancing would constitute Available Cash. In addition, upon
Syntek's release of its security interest in a Secured Property, Syntek shall
not be entitled to receive any substitute collateral in exchange for the
released property. Finally, the documents securing Syntek's interest in the
Secured Properties shall, to the extent feasible, provide for the partial
release of the Secured Properties as the outstanding principal balance on the
note is reduced.
6. Consensus Successor General Partner. The successor general
partner shall be NRGP, Inc., a recently organized California corporation
controlled by ▇▇. ▇▇▇▇▇▇▇. Syntek shall nominate NRGP as the successor general
partner of the Partnership. NRGP must have a net worth sufficient for special
tax counsel to render the tax opinion referred to in paragraph 10 below. The
Committee hereby stipulates that NRGP is not an "Affiliate" (as defined in the
Settlement Agreement) of Syntek, Messrs. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ and their
affiliates. Syntek and all of its affiliates, including the ART Group, shall
vote all of their limited partnership Units of the Partnership for the election
of NRGP as the successor general partner. The terms related to NRGP becoming
the successor general partner are set forth below.
A. Purchase Price of General Partnership Interests.
NRGP shall purchase a 1% general partnership interest in the Partnership and a
1% general partnership interest in the operating partnership (National
Operating, L.P.) for an aggregate 1.99% combined direct and indirect interest
in the Partnership and operating partnership. The purchase price for the 1.99%
interest shall be equal to (i) the Market Capitalization (defined below)
multiplied by (ii) 2.03% (the "NRGP Purchase Price").
"Market Capitalization" shall mean (i) $10.00(1) multiplied by
(ii) the number of Units outstanding as of the date NRGP is elected successor
general partner of the Partnership.
B. Payment Terms for General Partnership Interest. NRGP
shall pay for the 1.99% interest with a combination of (i) cash and (ii) a
promissory note ("NRGP Note"). The mix of cash and the NRGP Note shall be
satisfactory to special tax counsel and shall be based upon amounts, in the
judgment of tax counsel, necessary for special tax counsel to render the tax
opinion referred to in paragraph 10 below. The NRGP Note shall bear interest
at the rate of 8-1/2% per year. A portion of any cash
__________________________________
(1) ALL PER UNIT PRICES AND NUMBER OF OUTSTANDING UNITS HAVE BEEN ADJUSTED
TO REFLECT THE 3 FOR 1 FORWARD SPLIT OF THE UNITS PROVIDED TO THE PARTNERSHIP'S
UNITHOLDERS OF RECORD ON JANUARY 2, 1996.
-7-
11
distributions to NRGP, or any successor general partner, shall be applied (as
set forth in the rest of this paragraph) to reduce the outstanding balance on
the NRGP Note, or any similar successor general partner note, as applicable.
NRGP, or any successor general partner, shall make payments on the NRGP Note,
or any similar successor general partner note, equal to the following formula:
C x %F x 2/3
Where,
C = The amount of cash to be distributed on a per Unit equivalent basis; and
%F = The original percentage of the NRGP Note (or successor general partner
note) financed in relation to NRGP Purchase Price (or successor general partner
purchase price).
For example: If NRGP originally financed 90% of NRGP Purchase Price, NRGP
shall repay the NRGP Note out of cash distributions in an amount equal to 90%
multiplied by 2/3, or 60% of the cash distribution that NRGP would have been
entitled to receive, if the entire distribution was made in cash. Accordingly,
if a cash distribution to NRGP would have been $100, NRGP shall pay $60 towards
repayment of the NRGP Note, and shall be entitled to $40 in cash.
C. Redemption of ▇▇▇▇▇▇▇ General Partnership Interest.
Upon the termination of NRGP as the general partner of the Partnership, the
Partnership shall redeem NRGP's 1.99% general partnership interest based on the
following calculations:
i. The Market Capitalization (which shall be
based on the average closing prices of the Units for the 20 trading days
occurring prior to the public announcement of the termination of NRGP as
general partner) shall be calculated (the "New Market Capitalization"). Then,
the New Market Capitalization shall be multiplied by 2.03%.
ii. If the amount determined in subparagraph i
above is equal to or less than NRGP Purchase Price multiplied by two, that
amount shall be the redemption price for NRGP's general partnership interest.
iii. If the amount determined in subparagraph i
above is greater than NRGP Purchase Price multiplied by two, the amount of the
redemption price for NRGP general partnership interest shall be the sum of the
following (an example is set forth as Exhibit B to this Agreement):
a. NRGP Purchase Price multiplied by
1.33; and
b. The New Market Capitalization
multiplied by 0.67%.
-8-
12
iv. If the redemption price is greater than the
NRGP Purchase Price plus accrued and unpaid interest, the Partnership shall pay
NRGP the net difference (the "Net Redemption Amount") as follows:
a. One-third of the Net Redemption
Amount, in cash, on the day of the termination of the NRGP general partnership
interest;
b. Two-thirds of the Net Redemption
Amount, in the form of a promissory note, with interest at the rate of 8-1/2%
per year. This note shall be payable in two installments. The first
installment shall be due 12 months from the date of the note and shall be equal
to 50% of the principal amount of the note plus accrued interest. The second
and last installment shall be due 24 months from the date of the note and shall
be equal to the balance of the principal amount plus accrued interest.
Provided the Partnership has sufficient equity in assets available for
encumbrance (including unencumbered assets, or subordinate positions in
encumbered assets), the promissory note shall be secured with an initial loan
to value ratio of 70%. Upon payment of the first installment, collateral shall
be released so that the loan to value ratio shall be 70% at that time.
D. Term of NRGP.
i. Syntek and its affiliates, including but not
limited to the ART Group, shall not under any circumstances vote their Units in
any manner in an action related to the removal of NRGP as general partner for
36 months from the date NRGP takes office, unless such removal is for cause.
Syntek also covenants for a period of 36 months from NRGP taking office, that
it shall not become the successor general partner to NRGP or any successor
partner to NRGP, if NRGP is removed without cause within 36 months from taking
office, if any of Syntek's or the ART Group's transferees (other than Rule
144(e) transferees) vote for such removal. NRGP, as successor general partner,
shall have all legal and equitable rights to enforce the provisions set forth
herein.
The following provisions of the Partnership Agreement
shall be incorporated into the Amended and Restated Partnership Agreement:
a. Section 16.3A, requiring Unitholders
holding 50% of the total outstanding Units to vote for the removal of the
general partner;
b. Section 17.1, requiring a successor
general partner to be elected prior to the removal of the general partner; and
c. Section 16.3.3, requiring
Unitholders holding 66-2/3% of the total outstanding Units to vote for the
successor general partner.
-9-
13
ii. The limited partners, including Syntek and
its affiliates, may remove NRGP, without cause, in accordance with the terms of
the Amended and Restated Partnership Agreement at any time after the first 36
months.
iii. If Syntek and its affiliates vote with the
limited partners to remove NRGP without cause, and such removal is successful,
during the period of time beginning on the first day of the 37th month after
NRGP becomes the general partner, and ending on the last day of the 48th month
after NRGP becomes the general partner, Syntek shall pay, or shall cause its
affiliates to pay, $750,000 in cash to the Partnership (the "Removal Fee").
The Partnership shall make a special distribution to all of the Unitholders in
an amount equal to the Removal Fee.
E. Fee Compensation. NRGP or, at NRGP's election, any
affiliate of NRGP shall be entitled to receive the following fees:
i. Asset Management Fee.
a. An asset management fee equal to
$20,000 per month, paid monthly in advance (the "Base Asset Management Fee");
and
b. An additional annual asset
management fee equal to the amount, if any, by which (i) the aggregate of 1/36
of 1% of the Market Capitalization calculated monthly and added together for
each calendar month in a calendar year exceeds the Base Asset Management Fee
for such year (the "Incentive Asset Management Fee").
c. The Base Asset Management Fee and
Incentive Asset Management Fee shall be calculated from January 1, 1996,
regardless of the date NRGP becomes successor general partner.
ii. Property Disposition Fees.
a. A disposition fee equal to 0.5% of
the gross sales price of the asset; and
b. An incentive disposition fee equal
to 10% of the amount, if any, by which the gross sales price of any property or
asset sold by the Partnership exceeds 110% of the "adjusted cost" of such
property or asset. The "adjusted cost" would be modified to reflect property
values at December 31, 1995, with value calculated using the Partnership's
"Reevaluation Equity." "Reevaluation Equity" shall mean the difference between
the 1995 appraised value of the Partnership's real estate, adjusted to reflect
the Partnership's estimate of disposition costs, and the face amount of
mortgage notes payable and accrued interest, if any, encumbering such real
estate.
-10-
14
c. Both of the Property Disposition
Fees shall be paid annually, based on sales made for that year.
d. Both Property Disposition Fees shall
be calculated from January 1, 1996, regardless of the date NRGP becomes
successor general partner.
iii. Offset for Advance Payments to NRGP.
If NRGP becomes successor general partner,
the fees owed to NRGP pursuant to paragraphs 6.E.i and ii herein shall be
offset by the $10,000 per month payments made to NRGP pursuant to paragraph 9
herein from the period from and after January 1, 1996.
F. Options.(2) Effective as of the date of taking
office, the Partnership shall grant options to purchase a total of 120,000
Units to NRGP, ▇▇. ▇▇▇▇▇▇▇ or to an affiliate of ▇▇. ▇▇▇▇▇▇▇ or NRGP in such
percentages or number of Units as NRGP determines in its sole discretion. The
exercise price for the options will be as follows:
60,000 Units @ $13.33 per Unit
60,000 Units @ $15.00 per Unit
The options shall be fully vested on the date of issuance and
shall be exercisable 6 months from the date of issuance. Any unexercised
options will expire 4 years from the date of issuance (subject to the
provisions set forth below):
i. If NRGP is removed for cause during the first
12 months, all unexercised options shall be forfeited;
ii. If NRGP is removed for cause after the first
12 months and before the last day of the 24th month, the optionholder shall be
entitled to exercise up to 50% of the unexercised options within 30 days from
the removal date; and
iii. If NRGP is removed for cause after the 24th
month, the optionholder shall be entitled to exercise up to 100% of the
unexercised options within 30 days from the removal date.
The options shall be subject to customary
anti-dilution protection. In addition, the exercise price will be reduced,
dollar for dollar, on a per Unit basis, for all distributions made by the
Partnership during the terms of the options in excess of 85% of the
Partnership's "Funds Available for Distribution" (as such term shall be defined
in the Option Agreement or Amended and Restated Partnership Agreement).
__________________________________
(2) See fn. 1.
-11-
15
G. Services to the Partnership.
i. NRGP shall agree that the parties currently
performing asset management (Basic Capital Management, Inc.), property
management (Carmel Realty Services, Ltd., and its subcontractors) and brokerage
(Carmel Realty, Inc.) services shall continue to perform such services for the
Partnership unless NRGP determines that another party can perform such services
at least as well and upon more advantageous terms to the Partnership. NRGP
shall be entitled to discontinue such services and to cancel these contracts
upon 75 days notice after making this determination.
ii. NRGP and/or any parties controlled by NRGP or
members of ▇▇. ▇▇▇▇▇▇▇'▇ family shall not directly or indirectly receive any
compensation from the Partnership in excess of the compensation provided
herein.
▇. ▇▇▇▇▇▇ of NRGP. Except as otherwise restricted
herein, NRGP shall have all powers and responsibilities concerning the
management and control of the Partnership that are currently set forth in
Section 15 of the Partnership Agreement.
7. Partnership Agreement Amendments. The Partnership Agreement
will be amended and restated to (i) be updated and (ii) implement the
provisions set forth herein (the "Amended and Restated Partnership Agreement").
The amendments to the Partnership Agreement shall be approved by Syntek, as
general partner, as appropriate. In addition, Syntek and its affiliates,
including the ART Group, shall vote their Units in favor of any of the
amendments which require the vote of the Unitholders. Finally, whether or not
required by the Partnership Agreement, or by law, a majority of the Units held
by the Non-Affiliated Unitholders who vote, must vote in favor of the
amendments. If the required vote is not obtained, the provisions set forth in
paragraph 21 shall apply. All of the compensation provisions for the general
partner of the Partnership in the Amended and Restated Partnership Agreement
shall be conformed to the compensation provided to NRGP as set forth herein.
8. Proxy Statement/Consent Solicitation. Syntek shall
prepare, or shall cause the Partnership to prepare, a Proxy Statement/Consent
Solicitation pursuant to the requirements of the Securities and Exchange
Commission ("SEC") and all applicable state laws. The Partnership shall pay
for all of the costs related thereto. The Committee, NRGP and their attorneys
and agents shall be entitled to review and comment upon all documents to be
submitted to the SEC or any other regulatory agencies. However, the Proxy
Statement/Consent Solicitation shall specify that the Committee and NRGP each:
i. Makes no representation regarding the
information set forth in the Proxy Statement/Consent Solicitation (other than
as set forth in subparagraph ii below);
-12-
16
ii. Has not participated in the preparation of the
Proxy Statement/Consent Solicitation (other than supplying information to
Syntek, in writing, specifically for use in the Proxy Statement/Consent
Solicitation); and
iii. Assumes no legal responsibility for the
information contained in the Proxy Statement/Consent Solicitation.
The Committee and NRGP shall not have any prior approval
rights regarding Syntek's decision to file any documents with the SEC or any
other regulatory agency. However, the Committee shall be entitled to petition
the Supervising Judge to prevent Syntek from making any filing with the SEC, or
other applicable regulatory agency. The Supervising Judge shall be required to
order Syntek not to make such filing if the Supervising Judge finds that (i)
the Committee's objections are material to the solicitation of the Unitholders
or (ii) the Committee has not had adequate time to review the documents to be
filed. Syntek shall be entitled to represent in the Proxy Statement/Consent
Solicitation that the Committee has approved NRGP as the successor general
partner. The Committee shall be entitled to request that Syntek include
statements attributable to the Committee in the Proxy Statement/Consent
Solicitation. Syntek shall be entitled to refuse to include such statements in
the Proxy Statement/Consent Solicitation, unless the Supervising Judge, after
petition by the Committee, orders such statements to be included. Syntek shall
use its best efforts to solicit the Unitholders to vote for NRGP and for the
amendments to the Partnership Agreement.
The Partnership shall pay all costs associated with any proxy
solicitations. Syntek shall use its best efforts to cause the SEC and any
other applicable regulatory agency to approve the Proxy Statement/Consent
Solicitation. The Committee, NRGP and their agents and attorneys shall have no
right to be present at any meetings with the SEC or any other regulatory
agencies.
9. Role of ▇▇. ▇▇▇▇▇▇▇. ▇▇. ▇▇▇▇▇▇▇ shall be the point person
responsible for causing the parties to (i) enter into the additional agreements
contemplated by this Agreement, as set forth in paragraph 16; and (ii) conduct
the proxy solicitation contemplated herein. ▇▇. ▇▇▇▇▇▇▇ shall not personally
conduct the proxy solicitation. Commencing with execution of the
Implementation Agreement, the Partnership shall pay the reasonable fees and
expenses of counsel retained by ▇▇. ▇▇▇▇▇▇▇ to assist him in this process and
for his due diligence, not to exceed a cap of $125,000, unless the excess is
approved by the Supervising Judge. In addition, commencing with execution of
the Implementation Agreement, the Partnership shall pay ▇▇. ▇▇▇▇▇▇▇ his
reasonable out-of-pocket expenses related to this process and for his due
diligence, not to exceed a cap of $50,000. NRGP began receiving payments in
the amount of $10,000 per month (from the Partnership) beginning on May 1,
1995, and shall be entitled to continue to receive $10,000 per month (from the
Partnership) until the Vote Tabulation. See
-13-
17
paragraph 6.E.iii for the Partnership's right to offset a portion of these
payments against other fees owed to NRGP. In all situations, the Partnership
shall pay the reasonable fees and costs of special tax counsel, as set forth
below in paragraph 10.
10. Special Tax Counsel. NRGP, as the proposed successor general
partner, shall select special tax counsel to the Partnership who is reasonably
acceptable to Syntek and the Committee. The Partnership shall pay all of the
reasonable fees and costs of such special tax counsel. The special tax counsel
shall render an opinion to the Partnership to the effect that the election of
NRGP and any of the actions taken by the Partnership's limited partners will
not change the Partnership's tax status. If this opinion cannot be obtained,
the provisions set forth in paragraph 21 of this Agreement shall apply.
11. Indemnification of the Committee. The Partnership shall enter
into separate, but identical, indemnification agreements with each member of
the Committee ("Indemnification Agreements"). The Indemnification Agreements
shall be drafted to be as favorable as possible to the members of the Committee
and shall indemnify the members of the Committee, the Committee's agents and
attorneys. The Indemnification Agreements shall contain terms similar, but not
limited to those contained in Section 21 of the Partnership Agreement,
including, but not limited to, the fullest indemnity possible and the
advancement of expenses.
12. Mutual Releases. Pursuant to separate but identical releases,
Syntek, the ART Group, the Partnership, ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇ shall
release the members of the Committee from any claims known or unknown. The
Committee shall release Syntek, any other defendants, who also release the
Committee, and any persons constituting the ART Group, who also release the
Committee, from any claims known or unknown that the Committee, in its capacity
as a Committee, may have against such persons pursuant to the Committee's
powers as set forth in the Settlement Agreement.
13. Acceptance and Acknowledgment by NRGP. The Supervising
Judge's order shall cover this paragraph 13 and NRGP shall, as a condition to
becoming the successor general partner of the Partnership, execute a document
acknowledging the Partnership entering into the Indemnification Agreements and
the releases and shall agree not to challenge the validity of such agreements.
14. Binding Agreement; Supervising Judge's Powers. The parties
intend for this Agreement to be binding upon the parties upon the terms and
conditions set forth herein. The parties hereby agree to be bound by the
Supervising Judge's order with respect to any dispute that arises in the
parties' interpretation of this Agreement. The parties agree that the
Supervising Judge can compel performance with this Agreement and the agreements
contemplated hereby, in the absence of any mutual agreement by the parties.
-14-
18
15. Compounding of Interest. All references to interest payments
in this Agreement, and the documents contemplated hereby, shall mean that such
interest shall compound annually, unless a specific contrary provision has been
set forth herein.
16. Additional Agreements. The following documents (and all other
necessary documents) shall be prepared:
A. The Proxy Statement/Consent Solicitation;
B. The Amended and Restated Partnership Agreement;
C. The Option Agreement;
D. The NRGP Note;
E. The Committee Indemnification Agreements;
F. The Mutual Releases;
G. NRGP acknowledgment document required by paragraph 13
herein;
H. An agreement between the Partnership, Syntek and the
ART Group, pursuant to which Syntek and the ART Group shall covenant to cause
any transferee, other than a transferee in a sale pursuant to Rule 144(e) of
the Securities Act of 1933, as amended, to agree not to vote for Syntek, or
Syntek's affiliates as the successor general partner to NRGP upon the removal
of NRGP without cause within 36 months from taking office (the "Voting
Restriction Agreement"). The Voting Restriction Agreement shall also cover the
matters set forth in paragraph 6.D herein.
I. Customary and usual legal opinions.
J. The necessary court papers and notices, including but
not limited to the approvals contemplated by paragraph 2.
K. The Partnership's Note to Syntek and related
documents to provide for Syntek's security interest in the Secured Properties.
17. Representations and Warranties. Each party to this Agreement
represents and warrants that:
A. The execution, delivery and performance of this
Agreement have been duly executed and delivered by such party and constitute
the legal and valid binding obligation of such party, legally enforceable
against such party in accordance
-15-
19
with the terms of this Agreement, except that such enforcement may be subject
to (a) bankruptcy, insolvency, reorganization or other similar laws now or
hereafter in effect affecting the enforcement of creditor's rights generally,
and (b) the equitable powers of the court, which has jurisdiction over the
underlying litigation. However, the Committee brings to the other parties'
attention that the Committee's powers derive exclusively from the Settlement
Agreement and the Committee's Bylaws;
B. No other proceedings on such party's part are
necessary to authorize this Agreement and the documents and transactions
contemplated hereby;
C. Each party has all requisite corporate or partnership
power and authority to execute and deliver this Agreement and the documents
contemplated herein and to carry out and perform its obligations under the
terms of this Agreement and the agreements contemplated hereby. However, the
Committee brings to the other parties' attention that the Committee's powers
derive exclusively from the Settlement Agreement and its Bylaws.
18. Definitions. All terms not defined herein shall have the
meaning set forth in the Partnership Agreement, except that the ART Group shall
mean (i) Syntek, (ii) Syntek Asset Management, Inc., a Texas corporation, (iii)
American Realty Trust, Inc., a Georgia corporation, (iv) Messrs. ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇, and (v) any other person or persons listed on the Schedule 13D
filings made by American Realty Trust, Inc., related to ownership in the
Partnership. The term "removal for cause" shall be reasonably defined by the
parties.
19. Press Release. Within 2 business days from the execution of
this Agreement, the Partnership shall issue a press release in the form
attached hereto as Exhibit C.
20. Authorization. The signatories of this Agreement represent
and warrant that their respective execution, delivery and performance of this
Agreement has been duly authorized.
21. "All-or-None" Deal. The agreements made by any party to this
Agreement shall only be binding upon such party if NRGP is elected as successor
general partner. If NRGP is not elected as successor general partner, the
Settlement Agreement, prior to the execution of this Agreement, shall be in
full force and effect and the Committee and the Supervising Judge shall be
entitled to exercise any powers the Committee or the Supervising Judge has
under such Settlement Agreement. By way of illustration, the following would
occur if NRGP is not elected as successor general partner:
A. This Agreement would terminate;
-16-
20
B. Syntek's status as general partner shall be restored
to Syntek's status immediately prior to signing this Agreement;
C. Syntek's and the Committee's resolution of the Net
Exit Fee owed to Syntek and the Two Disputes referred to in paragraph 4 (and
the financing terms related thereto in paragraph 5) would be voided;
D. The Partnership Agreement would not be amended; and
E. The parties could assert any rights they have under
the Settlement Agreement.
22. Miscellaneous.
A. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of California applicable
to contracts between California residents entered into and to be performed
entirely within the State of California, without regard to principles of
conflict of laws, provided, however, the internal governance of the Amended and
Restated Partnership Agreement and other Partnership documents shall be
governed by the laws of Delaware.
B. Successors and Assigns. Except as expressly set
forth herein, no part of this Agreement or any rights, duties or obligations
described herein shall be assigned or delegated without the express written
consent of the parties hereto. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors and assigns of the parties hereto.
C. Entire Agreement; No Oral Agreements. This
Agreement, including the documents referred to herein, constitutes the full and
entire understanding and agreement among the parties with regard to the
subjects hereof and supersedes all prior agreements and understandings, both
written and oral. Each party expressly acknowledges that there are no
agreements, oral or written, between the parties other than in this Agreement.
EACH PARTY EXPRESSLY WAIVES THE RIGHT TO ASSERT THE EXISTENCE OF ANY ORAL
AGREEMENTS WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREIN.
D. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or mailed by registered or certified mail or commercial overnight courier
(e.g., Federal Express, etc.), return receipt or confirmation of delivery
requested, or by facsimile transmission with voice confirmation of receipt, to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
-17-
21
i. Syntek:
c/o Syntek Asset Management, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Basic Capital Management, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice President
and General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
ii. Partnership:
c/o Syntek (listed above)
iii. Committee:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chair
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇, Holland & ▇▇▇▇▇
A Professional Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
iv. ▇▇. ▇▇▇▇▇▇▇, or NRGP:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
WHE Associates, Inc.
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
[for Federal Express: ▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇]
Facsimile: (310) 276-973
-18-
22
with a copy to:
Resch, Polster, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E. Automatic Termination. Except as set forth in the
next sentence, this Agreement shall automatically terminate upon the occurrence
of all of the following events: (i) admission of NRGP as successor general
partner, (ii) Syntek's withdrawal as general partner and (iii) the execution
and delivery of all of the documents and agreements required by this Agreement.
However, paragraphs 4.D and 6.D (except for the second subparagraph of
paragraph 6.D.i) of this Agreement shall survive indefinitely.
F. Cooperation. All parties agree to execute and
deliver such other documents, certificates, agreements and other writings and
to take such other actions as may be necessary or desirable in order to
expeditiously consummate or implement the transactions contemplated by this
Agreement.
G. Interpretation. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
H. Delays or Omissions. No delay or omission to
exercise any right, power or remedy accruing to any party to this Agreement,
upon any breach or default of another party under this Agreement, shall impair
any such right, power or remedy of such party nor shall it be construed to be a
waiver of any such breach or default, or any acquiescence therein. Any waiver,
permit, consent or approval of any kind or character on the part of any party
of any breach or default under this Agreement, or any waiver on the part of any
party of any provisions or conditions of this Agreement, must be in writing and
shall be effective only to the extent specifically set forth in such writing.
All remedies, either under this Agreement, or by law or otherwise afforded to
any party, shall be cumulative and not alternative (except as expressly set
forth).
I. Counterparts. This Agreement may be executed in
counterparts, each of which shall be enforceable against the party actually
executing such counterpart, and all of which together shall constitute one
instrument.
J. Severability. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
-19-
23
K. Ambiguities. The provisions of this Agreement shall
be interpreted without regard to the drafting source and as if all parties
drafted this Agreement in a reasonable manner to effect the purposes of the
parties.
Syntek, the Partnership, the Committee and ▇▇. ▇▇▇▇▇▇▇, on behalf of
himself and NRGP, indicate their agreement to be bound by the terms of this
Agreement by the signatures of their authorized representatives below.
NATIONAL REALTY, L.P., a Delaware THE NATIONAL REALTY, L.P.
limited partnership OVERSIGHT COMMITTEE
By Syntek Asset Management, L.P., a
Delaware limited partnership, as By /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
general partner -------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Committee Member
By Syntek Asset Management, Inc., a
Texas corporation, as managing
general partner By /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
By /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Committee Member
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
President
/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
SYNTEK ASSET MANAGEMENT, L.P., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, on behalf of
a Delaware limited partnership himself
By Syntek Asset Management, Inc., a NRGP, INC., a California
Texas corporation, as managing corporation
general partner
By /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Its President
----------------------------- ------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
President
-20-
24
EXHIBIT A
Schedule of Secured Properties
Property Location
-------- --------
Covered Bridge Apartments Gainesville, Florida
Four Seasons Apartments Denver, Colorado
Harbor Plaza Aurora, Colorado
Mallard Lake Apartments Greensboro, North Carolina
25
EXHIBIT B
Example of Paragraph 6.C.iii
Assume the following:
1. NRGP Purchase Price was $1,218,000 (calculated below); and
Assume: Market Capitalization
$60,000,000 (6,000,000 Units @ $10)
then, NRGP Purchase Price
$60,000,000 X 2.03% = $1,218,000
==========
2. a. The New Market Capitalization is $200,000,000.
b. The New Market Capitalization is $60,000,000.
Then,
A. For $200,000,000 New Market Capitalization:
New Market Capitalization X 2.03% = $4,060,000
NRGP Purchase Price = $1,218,000
Redemption Price = $4,060,000 unless
$4,060,000 is greater than ($1,218,000 X 2)
Since $4,060,000 is greater than $2,436,000, do the following:
1. Multiply NRGP Purchase Price ($1,218,000)
by 1.33 = $1,619,940
2. Multiply the New Market Capitalization
by 0.67% ($200,000,000 X 0.67%) = $1,340,000
----------
3. Total $2,959,940
==========
B. For $60,000,000 New Market Capitalization:
New Market Capitalization X 2.03% = $1,218,000
NRGP Purchase Price = $1,218,000
Redemption Price = $1,218,000 unless
$1,218,000 is greater than ($1,218,000 X 2)
Therefore, Purchase Price = $1,218,000
==========
26
EXHIBIT C
Form of Press Release
FOR IMMEDIATE RELEASE
NATIONAL REALTY, L.P. ANNOUNCES
RESOLUTION OF CERTAIN MATTERS RELATED
TO THE ▇▇▇▇▇▇▇ SETTLEMENT AGREEMENT
DALLAS, February 22, 1996 -- National Realty, L.P. (ASE: NLP) ("National
Realty") today announced that the agreement which provides for the nomination
of a successor general partner of National Realty has been amended in certain
respects to resolve certain disputed matters. The amended agreement is subject
to approval of the Supervising Judge who was appointed in connection with the
previously-reported 1990 settlement of a class action entitled ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, et al. v. Southmark Corporation, et al. (the "▇▇▇▇▇▇▇ Settlement").
The ▇▇▇▇▇▇▇ Settlement had established a five-year plan which, among other
things, required the appointment and operation of an Oversight Committee and,
under certain circumstances, would require the replacement of Syntek Asset
Management, L.P. ("SAMLP") as the general partner of National Realty.
On January 27, 1995, National Realty, SAMLP, the Oversight Committee and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ executed an Implementation Agreement which provided for the
nomination of an entity controlled by ▇▇. ▇▇▇▇▇▇▇ to be the successor general
partner and for the resolution of all related matters under the ▇▇▇▇▇▇▇
Settlement. On February 20, 1996, the parties to the Implementation Agreement
executed an Amended and Restated Implementation Agreement.
Provided that the successor general partner is elected pursuant to the terms of
the Amended and Restated Implementation Agreement, SAMLP shall receive
$12,471,500 from the Partnership. This amount represents a compromise
settlement of the net amounts owed by National Realty to SAMLP upon SAMLP's
withdrawal as general partner and any amounts which SAMLP and its affiliates
may owe to National Realty. This amount shall be paid to SAMLP pursuant to
National Realty's promissory note with the terms set forth in paragraph 5 of
the Amended and Restated Implementation Agreement.
27
The Amended and Restated Implementation Agreement shall be submitted to the
Supervising Judge for tentative approval and approval of the notice to be sent
to the original class members. Upon final approval by the Supervising Judge,
the proposal to elect the successor general partner will be submitted to the
unitholders of National Realty for a vote. In addition, the unitholders will
vote upon amendments to the National Realty partnership agreement which relate
to the proposed compensation of the successor general partner and other related
matters.
Upon approval by the unitholders, SAMLP shall withdraw as general partner and
the successor general partner shall take office. If the required approvals are
obtained, National Realty anticipates that the successor general partner will
be elected and take office no later than July 31, 1996.
The Amended and Restated Implementation Agreement provides that SAMLP, and its
affiliates owning units in National Realty, shall not vote to remove the
successor general partner, except for removal with cause, for a period of 36
months from the date the successor
general partner takes office.
Upon the election and taking office of the successor general partner, the
▇▇▇▇▇▇▇ Settlement plan and the Oversight Committee shall be terminated. If
the successor general partner is not elected, the existing ▇▇▇▇▇▇▇ Settlement
shall remain in full force and effect and all of the provisions of the Amended
and Restated Implementation Agreement shall be voided, including the compromise
settlement referred to above of amounts owed by SAMLP and the Partnership to
each other.
National Realty is a national real estate investment partnership engaged in the
acquisition, financing, operation and sale of real estate and related assets.
[Quotes from SAMLP or chair of Committee, in either case, subject to the
reasonable approval of the other party.]
# # #
For more information, please contact:
Investor Relations (▇▇▇) ▇▇▇-▇▇▇▇
-2-