<PAGE>
Exhibit 99.3
ROBERT W. MILLS, ESQ. (#062154)
ELIZABETH G. LEAVY, ESQ. (#050979)
THE MILLS LAW FIRM
300 Drake's Landing Road, Suite 155
Greenbrae, CA 94904
Telephone: (415) 464-4770
ANDREW D. FRIEDMAN, ESQ.
WECHSLER HARWOOD HALEBIAN
& FEFFER LLP
488 Madison Avenue, 8th Floor
New York, NY 10022
Telephone: (212) 935-7400
Lead Counsel for Plaintiffs
LIONEL Z. GLANCY, ESQ. (#134180) LOIS THOMPSON, ESQ. (#93245)
LAW OFFICES OF LIONEL Z. GLANCY PROSKAUER ROSE LLP
1801 Avenue of the Stars, Suite 308 2049 Century Park East, Suite 3200
Los Angeles, CA 9006 Los Angeles, California 90067-3200
Telephone: (310) 201-9150 Telephone: (310) 557-2900
Liaison Counsel for Plaintiffs Attorneys for Defendants
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES
<TABLE>
<CAPTION>
<S> <C>
MARK ERWIN, TRUSTEE, MARK ERWIN ) Case No.: BC 080254
SALES, INC. DEFINED BENEFIT PLAN; )
LEONARD DRESCHER, TRUSTEE OF )
DRESCHER FAMILY TRUST ACCOUNT; )
individually, and J/B INVESTMENT )
PARTNERS; STEVEN, J. KLINE; RUSH and )
NANCY STUDINSKI; SAUL SILVERMAN; )
and RAY THOMPSON, individually and on ) STIPULATION OF SETTLEMENT
behalf of all others similarly situated, ) OF CONSOLIDATED CLASS AND
) DERIVATIVE ACTION
Plaintiffs, )
)
v. )
</TABLE>
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STIPULATION OF SETTLEMENT OF CONSOLIDATED CLASS AND DERIVATIVE ACTION
<PAGE>
RESOURCES HIGH EQUITY, INC.; )
RESOURCES CAPITAL CORP.; and )
PRESIDIO CAPITAL CORPORATION, )
)
Defendants. )
The parties to this stipulation (the "Parties"), by their
undersigned attorneys, this __ day of ___________, 1998, hereby enter into this
Stipulation of Settlement of Consolidated Class and Derivative Action (this
"Stipulation"), providing for a full and final settlement of the above captioned
consolidated class and derivative action (the "Action") filed in the Superior
Court of the State of California for the County of Los Angeles (the "Court"), on
the following terms and subject to the conditions set forth below and subject to
the approval of the Court.
RECITALS
Capitalized terms not otherwise defined shall have the
meanings set forth in Article I of this Stipulation.
WHEREAS
A. In May 1993, certain limited partners in the three Partnerships (as
defined in Section I.15 hereof) commenced the Action on behalf of a putative
class of all investors in the Partnerships against the General Partners (as
defined in Section 1.11 hereof) of the three Partnerships and certain related
persons and entities asserting various claims arising from their investment in,
and alleged mismanagement of, the Partnerships.
B. On November 30, 1995, the original plaintiffs and the intervening
Class Plaintiffs (as defined in Section 1.4 hereof) filed a consolidated class
and derivative action complaint ("Consolidated Complaint") alleging various
state law class and derivative claims, including
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<PAGE>
claims for breach of fiduciary duty; breach of contract; unfair and fraudulent
business practices under California Bus. & Prof. Code Section 17200; negligence;
dissolution, accounting, receivership and removal of general partner; fraud; and
negligent misrepresentation.
C. In early 1996, the Parties submitted a proposed settlement to the
Court (the "Proposed Settlement"), which, inter alia, contemplated a
reorganization of the three Partnerships into a single real estate investment
trust ("REIT").
D. In early 1997, the Court declined to grant final approval of the
Proposed Settlement.
E. On or about July 1, 1997, the Plaintiffs (as defined in Section 1.4)
filed the Amended Complaint (as defined in Section 1.2), which asserts many of
the same claims against the Defendants, (as defined in Section 1.7 hereof) as
the earlier Consolidated Complaint but in more detail and eliminates some
previously asserted claims. The Defendants challenged the Amended Complaint on
legal grounds and filed demurrers and a motion to strike. In October 1997, the
Court granted in part and denied in part the Defendants' demurrer and motion.
Thereafter, the Defendants answered the Amended Complaint, generally denying the
allegations of that pleading and asserting numerous affirmative defenses.
F. On February 11, 1998, the Court certified three separate plaintiff
classes, consisting of the current owners of record of limited partnership
interests in the respective Partnerships, exclusive of the General Partners, the
other defendants, and entities related to them ("the Classes"). The Court order
granting certification specifically provides that, if any ownership interest is
transferred by an owner of record of a limited partnership interest, the Class
shall include only the then-existing current owner of record, as successor.
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STIPULATION OF SETTLEMENT OF CONSOLIDATED CLASS AND DERIVATIVE ACTION
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Further, the Court specifically designated the following Class
Plaintiffs as representatives of the following Classes:
1. On behalf of the class of owners of interests in Integrated
Resources High Equity Partners, Series 85, A California
Limited Partnership ("HEP 85"): J/B Investment Partners,
Steven J. Kline and Saul Silverman;
2. On behalf of the class of owners of interests in High Equity
Partners L.P.- Series 86 ("HEP 86"): J/B Investment Partners,
Steven J. Kline, Rush Studinski and Nancy Studinski;'
3. On behalf of the class of owners of interests in High Equity
Partners L.P. - Series 88 ("HEP 88"): J/B Investment Partners,
Steven J. Kline and Ray Thompson.
Throughout this Stipulation, the three certified classes are referred
to collectively as the "Class" or "Settlement Class."
The Court also appointed the law firms of Wechsler Harwood Halebian &
Feffer LLP and The Mills Firm as co-lead counsel for the Class, and designated
the Law Offices of Lionel Z. Glancy as liaison counsel for the Class.
Notice of the Court's class certification order and of the current
status of the Action was sent to all members of the Class by first class mail on
or about September 14, 1998.
G. The Defendants categorically deny the allegations in the Amended
Complaint, deny any fault, wrongdoing or liability relating in any way to the
offering and sale of the Units and the operation and management of the
Partnerships, deny that they acted improperly in any way and deny any liability
of any kind to the Plaintiffs, the Partnerships or any member of the Settlement
Class (as defined in Section 1.25). In the absence of this Stipulation, the
Defendants would vigorously assert and pursue their defenses as a complete bar
to recovery in the Action.
H. The Parties consider it desirable that the Action be settled on the
terms and conditions set forth in this Stipulation.
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<PAGE>
I. Based on their investigation of the facts and the applicable law,
the Plaintiffs and Class Counsel (as defined in Section 1.3) have concluded that
the proposed settlement of the Action on the terms and conditions set forth in
this Stipulation is fair, reasonable and adequate and is in the best interests
of the Settlement Class and the Partnerships, having taken into account the
risks and difficulties involved in attempting to establish a right of recovery
on behalf of the Settlement Class and the Partnerships against the Defendants,
the expense and time necessary to continue the litigation through trial and the
appeals that might follow and the uncertainty inherent in any complex
litigation, such as the Action.
J. The proposed Settlement contemplated by this Stipulation is the
product of extensive good faith and arm's-length negotiation between Class
Counsel and counsel for the Defendants.
NOW THEREFORE, in consideration of the foregoing Recitals and the
agreements, covenants, representations and warranties set forth herein, it is
stipulated and agreed by the Parties hereto, subject to the approval of the
Court, that the Action be settled and compromised upon the following terms and
conditions:
ARTICLE I
DEFINITIONS
As used in this Stipulation, the following capitalized terms shall have
the meanings respectively assigned to them below.
Section 1.1 "Action" shall mean the consolidated class and
derivative-action entitled Mark Erwin, Trustee, Mark Erwin Defined Benefit Plan,
et al., individually and on behalf of all others similarly situated v. Resources
High Equity, Inc., et al., Case No. BC080254, filed in the Superior Court of the
State of California for the County of Los Angeles.
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<PAGE>
Section 1.2 "Amended Complaint" shall mean the amended consolidated
class and derivative action complaint filed on or about July 1, 1997. Section
1.3 "Class Counsel" shall mean collectively, the following counsel for
the Class Plaintiffs and the Settlement Class in the Action: The Mills Law Firm,
Wechsler Harwood Halebian & Feffer LLP and Law Offices of Lionel Z. Glancy.
Section 1.4 "Class Plaintiffs" or "Plaintiffs" shall mean J/B
Investment Partners, Steven J. Kline, Rush and Nancy Studinski, Saul Silverman
and Ray Thompson. Section
1.5 "Consent Solicitation Statement" shall have the meaning ascribed to
such term in Section 4.3(a) hereof.
Section 1.6 "Court" shall mean the Superior Court of the State of
California for the County of Los Angeles.
Section 1.7 "Defendant/Defendants" shall mean the following parties
named as defendants in the Amended Complaint: Resources High Equity, Inc.,
Resources Capital Corp. and Presidio Capital Corporation, either singularly or
collectively.
Section 1.8 "Fee Amount" shall have the meaning ascribed to such term
in Section 7.1 hereof.
Section 1.9 "Fee Give Back Amount" shall have the meaning ascribed to
such term in Section 2.3 hereof.
Section 1.10 "Final Judgment and Order" shall mean the final judgment
entered by the Court as provided in Section 4.5 hereof, substantially in the
form of Exhibit A hereto, finally approving the Settlement contemplated by this
Stipulation.
Section 1.11 "General Partners" shall mean, collectively, the current
general partners of each Partnership.
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Section 1.12 "Gross Asset Value" shall have the meaning ascribed to
such term in Section 2.2 hereof.
Section 1.13 "Named Plaintiffs" shall mean Mark Erwin, Trustee, Mark
Erwin Sales, Inc. Defined Benefit Plan; Leonard Drescher, Trustee of Drescher
Family Trust Account; and the Class Plaintiffs.
Section 1.14 "Notice" shall mean the Notice of Proposed Settlement of
Class and Derivative Action, Hearing on Proposed Settlement, and Right to Appear
at Hearing to be approved by the Court as set forth in Section 4.1 hereof,
substantially in the form of Exhibit B hereto.
Section 1.15 "Partnership/Partnerships" shall mean Integrated Resources
High Equity Partners, Series 85, A California Limited Partnership ("HEP 85"),
High Equity Partners L.P. - Series 86 ("HEP 86") and High Equity Partners L.P. -
Series 88 ("HEP 88"), either singularly or collectively.
Section 1.16 "Partnership Agreements" shall mean, collectively, the
amended agreement of limited partnership of each of the Partnerships, as
amended, the provisions of which currently govern the rights and obligations of
their respective partners.
Section 1.17 "Partnership Agreement Amendments" means the proposed
amendments to the respective Partnership Agreements described in Section 2.2
hereof, in substantially the form of Exhibit C hereto.
Section 1.18 "Partnership Asset Management Fee" means the fee payable
to the General Partners of the respective Partnerships under paragraph 9.4.1 of
the Partnership Agreement of HEP 85, paragraph 9.4 of the Partnership Agreement
of HEP 86 and paragraph 9.4 of the Partnership Agreement of HEP 88.
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STIPULATION OF SETTLEMENT OF CONSOLIDATED CLASS AND DERIVATIVE ACTION
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Section 1.19 "Preliminary Order" shall mean the order of the Court
described in Section 4.1 hereof, substantially in the form of Exhibit D hereto.
Section 1.20 "REIT" shall mean a real estate investment trust as
defined in Sections 856 through 860 of the Internal Revenue Code of 1986.
Section 1.21 "Released Claims" shall have the meaning ascribed to such
term in Section 3.1 hereof.
Section 1.22 "Released Persons" shall have the meaning ascribed to such
term in Section 3.1 hereof.
Section 1.23 "SEC" shall mean the United States Securities and Exchange
Commission.
Section 1.24 "Settlement" shall mean the settlement of the Action
pursuant to the terms of this Stipulation.
Section 1.25 "Settlement Class or Class" shall have the meaning
ascribed to such term in Paragraph F of the Recitals hereto.
Section 1.26 "Settlement Effective Date" shall mean the first date on
which the Final Judgment and Order entered by the Court, as described in Section
4.5 hereof, (a) becomes a final order, i.e., upon the later of either of the
following: (i) if an appeal or review is not sought by any person from such
Final Judgment and Order, the 61st day, provided that it is a business day, and,
if it is not, then the next succeeding business day, after entry of such Final
Judgment and Order (or, if the date for taking an appeal or seeking review shall
be extended, the date of expiration of the extension, if any appeal or review is
not sought); or (ii) if an appeal or review is sought from such Final Judgment
and Order, the day after such Final Judgment and Order is affirmed or the appeal
or review is dismissed or denied and such Final Judgment and Order is no longer
subject to further judicial review; and (b) each of the conditions set forth in
Article V hereof shall have
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STIPULATION OF SETTLEMENT OF CONSOLIDATED CLASS AND DERIVATIVE ACTION
<PAGE>
been either satisfied or waived and a Statement of Settlement Consummation
shall have been filed with the Court pursuant to Section 4.6 hereof.
Section 1.27 "Settlement Hearing" shall mean the hearing held at the
time and place designated by the Court to consider final approval of the
Settlement, as provided in Section 4.4 hereof.
Section 1.28 "Tender Offer" shall have the meaning ascribed to such
term in Section 2.4 hereof.
Section 1.29 "Unit" shall mean a unit of limited partnership interest
in any of the Partnerships.
Section 1.30 "Unknown Claims" shall have the meaning ascribed to such
term in Section 3.1 hereof.
ARTICLE II
CONSIDERATION TO THE SETTLEMENT CLASS AND PARTNERSHIP
FOR SETTLEMENT
Subject to the fulfillment of each of the conditions specified in
Section 5.1 hereof, in full and final disposition, settlement, discharge,
release and satisfaction of any and all Released Claims, the Defendants agree to
provide the consideration set forth in Sections 2.1 through 2.4 below.
Section 2.1 REIT. Promptly following the Settlement Effective Date, the
General Partners of each Partnership shall use their best efforts to reorganize
that Partnership into a separate REIT or other entity whose shares will be
listed on a national securities exchange or on the NASDAQ National Market
System. Each such reorganization shall be subject to compliance
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STIPULATION OF SETTLEMENT OF CONSOLIDATED CLASS AND DERIVATIVE ACTION
<PAGE>
with all applicable laws and regulations and the approval by holders of a
majority of the outstanding Units in the respective Partnership.
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STIPULATION OF SETTLEMENT OF CONSOLIDATED CLASS AND DERIVATIVE ACTION
<PAGE>
Section 2.2 Modification of Partnership Asset Management Fee. Upon the
approval of limited partners holding a majority of the outstanding Units in each
Partnership, which the General Partners shall solicit pursuant to a Consent
Solicitation Statement following a Settlement Hearing at which the Court
approves the Settlement, and subject to the conditions hereinafter set forth,
the Partnership Agreement of each Partnership shall be amended pursuant to the
Partnership Agreement Amendments to provide that (a) the Partnership Asset
Management Fee shall be modified to be an amount per annum equal to 1.25% of the
Gross Asset Value of the respective Partnership as of the last day of the period
in respect of which the Partnership Asset Management Fee is payable (which
amount shall be prorated for any partial year), and (b) that for calendar year
1999 the Partnership Asset Management Fee payable in respect of all three
Partnerships shall, in the aggregate, be an amount that is at least $900,000
less than the aggregate amount that would have been payable for calendar year
1999 in the absence of the Partnership Agreement Amendments. In that connection,
and for the avoidance of doubt, it is understood and agreed that, except to the
extent set forth in Section 2.3 hereof, all other fees and reimbursements
provided for in the Partnership Agreements shall continue in effect in
accordance with the respective Partnership Agreements. It is further understood
that any term herein relating to the provisions of any Partnership Agreement or
the Charters and Bylaws of any successor entity may be amended pursuant to the
procedures, terms and conditions for amending such agreement as set forth in the
Partnership Agreements or the Charters and Bylaws of any successor entity of any
of the Partnerships. As set forth in Exhibit C hereto, the term "Gross Asset
Value" of a Partnership on a particular date shall mean the gross asset value of
all assets owned by the Partnership on that date, as determined by an appraisal
of such assets by an independent appraiser of national reputation selected by
the General Partners.
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STIPULATION OF SETTLEMENT OF CONSOLIDATED CLASS AND DERIVATIVE ACTION
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Section 2.3 Fee Give Back Amount. Upon the approval of limited partners
holding a majority of the outstanding Units in each Partnership, which shall be
solicited pursuant to a Consent Solicitation Statement following a Settlement
Hearing at which the Court approves the Settlement, and subject to the
conditions hereinafter set forth, (a) Section 9.2 of the Partnership Agreement
of HEP 85 and Section 9.1 of the Partnership Agreements of each of HEP 86 and
HEP 88 shall be amended pursuant to the Partnership Agreement Amendments to
provide that (i) if a Partnership is liquidated prior to December 31, 2008, the
total amount of the liability and obligation of the General Partners thereof and
their affiliates (the "Fee Give Back Amount") shall equal $3,912,950, in the
case of HEP 85, $2,861,277, in the case of HEP 86, and $1,475,773, in the case
of HEP 88, reduced by 10% of the respective amount for each full calendar year
after 1998, and prorated for any calendar year in which such liquidation occurs
other than on December 31 of that year, and (ii) if a Partnership is liquidated
on or after December 31, 2008, the respective General Partners and their
affiliates shall have no liability or obligation to pay any amount thereunder,
and (b) Presidio Capital Corp. shall enter into an agreement in substantially
the form of Exhibit E hereto, which provides that (x) Presidio Capital Corp.
shall guarantee the General Partners' obligations under this Section 2.3, (y)
until such obligations are fulfilled, Presidio Capital Corp. shall not permit
its net worth (without including as a liability in the calculation of net worth
indebtedness that is subordinate to the debt hereunder) to be less than the
aggregate Fee Give Back Amount from time to time and (z) Presidio Capital Corp.
may, at its option from time to time, substitute one or more third parties to
fulfill its obligations under clauses (x) and (y), as long as such third party
or parties, together with Presidio Capital Corp., in the aggregate, satisfy the
obligations under clause (y). Further, Presidio Capital Corp. shall remain fully
liable on its guarantee to the extent any substituted third
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party fails or refuses to fulfill its obligations. For purposes of this Section
2.3, the term "liquidation" means a sale of all or substantially all the
properties owned by a Partnership for cash or property that is distributed to
its partners, but does not include any transaction contemplated by Section 2.1
hereof and, in addition, does not include any transaction following any
transaction contemplated by Section 2.1 hereof, whether by the successor to a
Partnership contemplated by Section 2.1 hereof or otherwise. For the avoidance
of doubt, it is hereby understood and agreed that, following approval and
consummation of a transaction contemplated by Section 2.1 hereof, the respective
General Partners and their affiliates shall have no liability or obligation to
pay the Fee Give Back Amount. If a transaction contemplated by Section 2.1
hereof occurs or if a Partnership is otherwise restructured, the Defendants
agree that neither they, nor any of their affiliates or successors, shall
propose or implement, in connection therewith, a fee compensation arrangement
for the surviving entity that results in fees for the management of assets owned
by such surviving entity that are greater than the Partnership Asset Management
Fees that would be paid under the formula set forth in Section 2.2 hereof.
Section 2.4 Tender Offers. Within 90 days after the Settlement
Effective Date, the General Partners of each Partnership shall make, or cause to
be made, a tender offer to all owners, of Units of that Partnership (other than
affiliates of the General Partners) to purchase not fewer than 26,936 Units of
HEP 85 for not less than $114.60 per Unit, net to the seller in cash; not fewer
than 39,596 Units of HEP 86 for not less than $103.05 per Unit, net to the
seller in cash; and not fewer than 25,034 Units of HEP 88 for not less than
$113.15 per Unit, net to the seller in cash, in the case of HEP 88. Such tender
offers shall be made in compliance with the rules and regulations of the SEC,
including those relating to proration.
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Section 2.5 Full and Complete Consideration to the Settlement Class.
The consideration provided to the members of the Settlement Class and the
Partnerships pursuant to Sections 2.1 through 2.4 hereof is in full and complete
settlement of the Action and all Released Claims as between the members of the
Settlement Class, on the one hand, and each of the other parties to the Action,
on the other hand, and is consideration for the release of each of the Released
Persons. However, in the event this Stipulation is terminated pursuant to
Article V hereof, or for any other reason, the Defendants shall not be obligated
to proceed with the transactions contemplated by Section 2.1 through and
including 2.4.
ARTICLE III
DISCHARGE OF CLAIMS
Section 3.1 Release of Claims
(a) Upon the Settlement Effective Date, each and all members of the
Settlement Class, on behalf of themselves, their heirs, estates, executors,
administrators, successors and assigns, and any person(s) they represent, and
all holders of Units, their successors and assigns, on behalf of the
Partnerships, hereby release all present and former defendants in the Action,
including, for all such persons, their present and former directors, officers,
partners, associate general partners and the members thereof, principals,
employees, attorneys, agents, insurers, reinsurers, parents, subsidiaries,
affiliates, divisions and predecessor or successor partnerships or corporations,
and their respective heirs, executors, administrators, personal representatives,
successors and assigns (collectively, the "Released Persons"), from, and hereby
agree not to assert in any action or proceeding, any and all manner of actions,
claims, causes of action, allegations or rights whatsoever (including Unknown
Claims), whether class or individual in nature, whether in law or in equity,
whether based on federal or state law, including, without limiting the
generality of
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<PAGE>
the foregoing, any and all suits, claims, demands, debts, liabilities,
obligations, promises or controversies the members of the Settlement Class or
holders of Units, their successors and assigns, on behalf of the Partnerships,
or any of them, ever had, now have or may hereafter have, including Unknown
Claims, against any or all of the foregoing persons or entities by reason of,
based upon or arising out of or in connection with, directly or indirectly, the
Partnerships, the operations of the Partnerships, the issuance, offer for
purchase or sale, purchase, sale or other disposition or acquisition, or any
other transfer of, any Units in any of the Partnerships, during the period from
January 1, 1983 through the Settlement Effective Date, or any act, occurrence,
omission or transaction involving any of the Units during such period; and any
of the facts, circumstances, representations, statements, reports, disclosures,
transactions, events, occurrences, acts, omissions, or failures to act, of
whatever kind or character whatsoever, irrespective of the state of mind of the
actor performing or omitting to perform the same, that are or at any time could
have been, alleged, referred to, alluded to or reflected in the Action, either
as an individual, class or derivative claim, as well as all allegations in the
Action (each and all of such claims are hereafter collectively referred to as
the "Released Claims"). The Released Claims shall not include any claim for any
alleged misstatement of, or omission to disclose, material facts in connection
with the solicitation of consents to effect any of the Transactions contemplated
in this Stipulation, including the Partnership Agreement Amendments and Proposed
REIT transactions.
(b) It is the intention of the Parties to this Stipulation that, upon
the Settlement Effective Date, each and all of the members of the Settlement
Class and all holders of Units, including their successors and assigns, on
behalf of the Partnerships shall be deemed to, and by operation of the Final
Judgment and Order shall, have expressly and voluntarily waived and
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STIPULATION OF SETTLEMENT OF CONSOLIDATED CLASS AND DERIVATIVE ACTION
<PAGE>
relinquished, to the fullest extent permitted by law, the provisions, rights,
and benefits of Section 1542 of the California Civil Code, which provides:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST
HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
Each member of the Settlement Class and all holders of Units, their successors
and assigns on behalf of the Partnerships similarly shall be deemed to, and upon
effectiveness and by operation of the Final Judgment and Order shall, have
waived any and all provisions, rights and benefits conferred by any law of any
state or territory of the United States or any foreign country or any principle
of common law, which is similar, comparable or equivalent to Section 1542 of the
California Civil Code. The members of the Settlement Class and all holders of
Units, their successors and assigns on behalf of the Partnerships shall assume
the full risk of discovery or more complete understanding of any facts, events,
laws or things whatsoever which, if presently known or correctly and fully
understood, would have affected the release of the Released Persons and the
Released Claims or any member of the Settlement Class's agreement to such
release. Each member of the Settlement Class and all holders of Units, their
successors and assigns on behalf of the Partnerships may hereafter discover
facts in addition to or different from those which such member now knows or
believes to be true with respect to the subject matter of the Released Claims,
but it is the intention of the parties hereto to, and each Settlement Class
member and all holders of Units, their successors and assigns on behalf of the
Partnerships upon the Settlement Effective Date shall be deemed to, and by
operation of this Stipulation and the Final Judgment and Order shall, have
fully, finally and forever settled and released any and all Released Claims
respecting the Released Persons, known or unknown, suspected or unsuspected,
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STIPULATION OF SETTLEMENT OF CONSOLIDATED CLASS AND DERIVATIVE ACTION
<PAGE>
contingent or non-contingent, which now exist, may hereafter exist, or
heretofore have existed, and without regard to the subsequent discovery or
existence of such different or additional facts to the fullest extent permitted
by law. All of this Section 3.1(b) is the definition of "Unknown Claims."
(c) Upon the Settlement Effective Date, each and all Defendants on
behalf of themselves, their officers, directors, employees, successors and
assigns hereby release all Named Class Plaintiffs in the Action, including, for
all such persons, their directors, officers, partners, associate general
partners, principals, employees, attorneys, and their respective heirs,
executors, administrators, personal representatives, successors and assigns
(collectively, the "Named Class Plaintiff Released Persons"), from, and hereby
agree not to assert in any action or proceeding, any and all manner of actions,
claims, causes of action, allegations or rights whatsoever (including Unknown
Claims), whether class or individual in nature, whether in law or in equity,
whether based on federal or state law, including, without limiting the
generality of the foregoing, any and all suits, claims, demands, debts,
liabilities, obligations, promises or controversies Defendants, or any of them,
ever had, now have or may hereafter have, including Unknown Claims, against any
or all of the foregoing persons or entities by reason of, based upon or arising
out of or in connection with, directly or indirectly, the Partnerships, the
operations of the Partnerships, the issuance, offer for purchase or sale,
purchase, sale or other disposition or acquisition, or any other transfer of,
any Units in any of the Partnerships, during the period from January 1, 1983
through the Settlement Effective Date, or any act, occurrence, omission or
transaction involving any of the Units during such period; and any of the facts,
circumstances, representations, statements, reports, disclosures, transactions,
events, occurrences, acts, omissions, or failures to act, of whatever kind or
character whatsoever, irrespective of the state of
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<PAGE>
mind of the actor performing or omitting to perform the same, that are or at any
time could have been, alleged, referred to, alluded to or reflected in the
Action, either as an individual, class or derivative claim, as well as all
allegations in the Action (each and all of such claims are hereafter
collectively referred to as the "Released Claims").
(d) It is the intention of the parties to this Stipulation that, upon
the Settlement Effective Date, each and all of the Defendants, including their
successors and assigns, shall be deemed to, and by operation of the Final
Judgment and Order shall, have expressly and voluntarily waived and
relinquished, to the fullest extent permitted by law, the provisions, rights,
and benefits of Section 1542 of the California Civil Code, which provides:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST
HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
Each Defendant similarly shall be deemed to, and upon effectiveness and by
operation of the Final Judgment and Order shall, have waived any and all
provisions, rights and benefits conferred by any law of any state or territory
of the United States or any foreign country or any principle of common law,
which is similar, comparable or equivalent to Section 1542 of the California
Civil Code. The Defendants shall assume the full risk of discovery or more
complete understanding of any facts, events, laws or things whatsoever which, if
presently known or correctly and fully understood, would have affected the
release of the Named Class Plaintiff Released Persons and the Released Claims or
any Defendants agreement to such release. Each Defendant may hereafter discover
facts in addition to or different from those which such member now knows or
believes to be true with respect to the subject matter of the Released Claims,
but it is the intention of the parties hereto to, and each Defendant shall be
deemed to, and by operation
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STIPULATION OF SETTLEMENT OF CONSOLIDATED CLASS AND DERIVATIVE ACTION
<PAGE>
of this Stipulation and the Final Judgment and Order shall, have fully, finally
and forever settled and released any and all Released Claims respecting the
Named Class Plaintiff Released Persons, known or unknown suspected or
unsuspected, contingent or non-contingent, which now exist, may hereafter exist,
or heretofore have existed, and without regard to the subsequent discovery or
existence of such different or additional facts to the fullest extent permitted
by law. All of this Section 3.1(b) is the definition of "Unknown Claims."
ARTICLE IV
IMPLEMENTATION
Section 4.1 Preliminary Approval of Stipulation. Forthwith after the
execution of this Stipulation, counsel for the Parties hereto shall jointly
submit this Stipulation to the Court and shall jointly request entry of the
Preliminary Order, substantially in the form of Exhibit D hereto, requesting
approval for the mailing to the Settlement Class of a Notice of Proposed
Settlement of Class and Derivative Action and Hearing on Proposed Settlement in
substantially the form of Exhibit B hereto.
Section 4.2 Notice to Settlement Class. Promptly upon entry of the
Preliminary Order, and as provided for therein, Class Counsel shall direct the
General Partners to send copies of the Notice by first-class mail, postage
prepaid, to the Settlement Class members at their last known addresses as
appearing in the records maintained by the Partnerships. Reasonable costs of
printing the Notice and mailing the Notice to the Settlement Class shall be paid
by the Defendants. Subsequent to mailing the Notice to the Settlement Class,
Counsel for Defendants shall file an affidavit of mailing with the Court stating
that the Notice was duly served upon all Settlement Class members in accordance
with the Preliminary Order.
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<PAGE>
Section 4.3 Consent Solicitation Statement.
(a) All the limited partners in the Partnerships (regardless of whether
they are members of the Class or have requested exclusion from the Class) shall
be provided with a description of the proposed Partnership Agreement Amendments
(the "Consent Solicitation Statement") sufficient to satisfy all applicable
state and federal securities law requirements, and previously filed with the
SEC.
(b) In conjunction with the Consent Solicitation Statement, consent
cards shall be sent to all the limited partners in the Partnerships by means of
which they will either grant or withhold such consents and approvals to the
Partnership Agreement Amendments as are required by the Partnership Agreement
and applicable laws and regulations.
(c) The Consent Solicitation Statement and consent cards referred to in
paragraphs (a) and (b) of this Section 4.3 shall be sent to all the limited
partners in the Partnerships at the earliest feasible time.
Section 4.4 Settlement Hearing. Pursuant to Superior Court, Los Angeles
County Rules 15.41 et seq., the Settlement Hearing shall be held 45 days, or
such other period as the Court directs, after the sending of Notice to each of
the members of the Settlement Class as provided in Section 4.2 hereof. In
connection with the Settlement Hearing, the Parties hereto shall file with the
Court all such papers as their counsel believe to be necessary. At the
Settlement Hearing, the Court shall be asked to consider the fairness of the
terms and conditions of the Settlement and all the transactions contemplated by
this Stipulation, including, without limitation, the Partnership Agreement
Amendments. The Court also shall be asked to consider an application by Class
Plaintiffs for an award of attorneys' fees and reimbursement of expenses.
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STIPULATION OF SETTLEMENT OF CONSOLIDATED CLASS AND DERIVATIVE ACTION
<PAGE>
Section 4.5 Entry of Final Judgment and Order. At or prior to the
Settlement Hearing, counsel for the Parties to this Stipulation shall jointly
submit to the Court a proposed Final Judgment and Order, in substantially the
form of Exhibit A hereto, providing as follows:
(a) Approving this Stipulation and finding, after considering, inter
alia, that persons who have requested exclusion retain their individual rights
of action, if any, against the Defendants, that the Settlement and terms and
conditions of this Stipulation are fair, reasonable and adequate and that the
Settlement is in the best interests of the Settlement Class and the
Partnerships, and directing consummation of the Settlement in accordance with
the terms and conditions of this Stipulation;
(b) Dismissing the Amended Complaint and each and every cause of action
and claim set forth therein on the merits as to all Defendants and with
prejudice to the Class Plaintiffs and the Settlement Class; extinguishing all
claims, rights, demands and causes of action (including Unknown Claims) that
might have been asserted therein by the Named Plaintiffs on behalf of themselves
or the Settlement Class or by holders of Units on behalf of the Partnerships;
and discharging the Defendants, and all Released Persons therefrom;
(c) Permanently barring the Class Plaintiffs and the Settlement Class
members from asserting against the Released Persons, and releasing the Released
Persons from, the Released Claims;
(d) Containing a provision for the Final Judgment and Order to be
vacated upon notice to the Court of the nonfulfillment or impossibility of
fulfillment of any of the conditions set forth in Article V hereof, or the
failure to fulfill all of said conditions within 9 months after the date of this
Stipulation, all as provided in Section 5.2 hereof; and
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STIPULATION OF SETTLEMENT OF CONSOLIDATED CLASS AND DERIVATIVE ACTION
<PAGE>
(e) Reserving jurisdiction in the Court over all matters relating to
the administration and consummation of this Stipulation and the Settlement
provided for herein.
If, at or after the Settlement Hearing, the Court finally approves this
Stipulation and the Settlement contemplated hereby, and the Settlement has not
been terminated for failure to satisfy any of the conditions set forth in
Article V hereof, then counsel for the Parties hereto shall request entry by the
Court of such proposed Final Judgment and Order.
Section 4.6 Consummation of Settlement. Substantially simultaneously
with the Settlement Effective Date or as promptly thereafter as practicable, the
Parties hereto shall file with the court a Statement of Settlement Consummation
substantially in the form of Exhibit F hereto, stating that the conditions
precedent to the consummation of the Settlement as set forth in Section 5.1
hereof have either been satisfied or waived. Upon the filing of said Statement,
the Parties shall fully consummate the Settlement in accordance with the terms
of this Stipulation and the Final Order and Judgment, including the payment of
the amounts of attorneys' fees and reimbursable expenses approved by the Court.
ARTICLE V
CONDITIONS
Section 5.1 Defendants' Conditions. The consummation of the Settlement shall be
contingent on and subject to the fulfillment of each of the following
conditions:
(a) The Preliminary Order shall have been entered by the Court in
substantially the form of Exhibit D hereto.
(b) The Settlement Class shall not have been materially modified by the
Court.
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<PAGE>
(c) The Final Judgment and Order shall have been entered by the Court
in substantially the form of Exhibit A hereto, and shall have become a final
order within the meaning of Section 1.26 hereof.
(d) The approval of the Partnership Agreement Amendments by limited
partners of each Partnership (including limited partners who are, or are
affiliated with, the General Partners) holding a majority of the outstanding
Units in that Partnership.
(e) Receipt of all necessary consents, waivers, approvals,
authorizations and orders required to be obtained and the making of all filings
required to be made for the authorization, execution and delivery of the
Partnership Agreement Amendments and the consummation and effectiveness thereof.
(f) Absence of any material adverse change in the overall business or
prospects of any Partnership, or in the value of the properties of any
Partnership, taken as a whole, or in the tax or other regulatory provisions
applicable to any Partnership.
(g) Absence of any statute, rule, order or regulation enacted or issued
by the United States or any state, or by a court, that prohibits the Partnership
Agreement Amendments.
If any of the foregoing conditions have not been met, the General
Partners may, by notice to the Court, terminate the Settlement without any
liability or obligation for so doing. All or any of the foregoing conditions may
be waived by the General Partners.
Section 5.2 Termination. In the event that (a) at any time after the
date hereof, any condition set forth in Section 5.1 fails to be fulfilled or
become impossible of fulfillment, or (b) within 9 months after the date of this
Stipulation, all of such conditions are neither fulfilled nor waived (as the
case may be), the General Partners, on behalf of the Defendants, may terminate
this Stipulation without prejudice. It is understood and agreed that (i) the
General Partners, on
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STIPULATION OF SETTLEMENT OF CONSOLIDATED CLASS AND DERIVATIVE ACTION
<PAGE>
behalf of the Defendants, may exercise the foregoing right to terminate this
Stipulation at any time, for failure of fulfillment of one or more of the
conditions set forth in Section 5.1 or impossibility of fulfillment of one or
more of such conditions, whether or not the foregoing 9-month period has
elapsed, and (ii) either the Class Plaintiffs or the Defendants may terminate
this Stipulation in the event that all such conditions are not fulfilled or
waived within such 9-month period. Upon notice by the General Partners, on
behalf of the Defendants, to the Court and the other parties hereto of the
nonfulfillment of any of said conditions, the failure to fulfill all of said
conditions within 9 months after the date of this Stipulation, or the
impossibility of the fulfillment of any of said conditions, or upon notice by
either the Class Plaintiffs or the Defendants of their election to terminate
this Stipulation without prejudice pursuant to Section 5.2 hereof, the Court
shall vacate the Final Judgment and Order (if it has been entered), which shall
thereafter be of no further force and effect, whereupon,
(a) all parties to this Action and to this Stipulation shall stand. in
the same position without prejudice, as if this Stipulation had not been made
and submitted to the Court for its consideration and approval;
(b) neither this Stipulation, nor the Preliminary Order, nor the Final
Judgment and Order, nor any documents or oral representations relating to any of
the foregoing, shall be relied upon as evidence relating to the merits or legal
sufficiency of the allegations in this Action or the Amended Complaint; and
(c) no right, claim, obligation, liability, or defense of any person
shall arise from or be affected by the negotiation or execution of this
Stipulation.
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STIPULATION OF SETTLEMENT OF CONSOLIDATED CLASS AND DERIVATIVE ACTION
<PAGE>
In the event that this Stipulation is terminated and the Final Judgment
and Order is vacated, this Stipulation shall be of no further force and effect,
except for the provisions of Sections 7.2 and 8.1 and Article IX hereof.
ARTICLE VI
COVENANTS
Section 6.1 Entry of Order and Reasonable Efforts. All of the Parties
hereto and their Counsel shall use their best good faith efforts to obtain the
entry of the Final Judgment and Order. The Parties hereto, and their respective
counsel, agree to use their best good faith efforts to effectuate all of the
transactions contemplated hereby and to fulfill the conditions set forth in
Article V hereof.
Section 6.2 No Representations. The Class Plaintiffs acknowledge, for
themselves and for the Settlement Class, that they have not relied upon any
representations, warranties, guarantees, promises, statements or estimates,
whether written or oral, express or implied, by any of the Defendants, any
affiliate, broker, agent, employee, accountant, attorney-in-fact or at-law or
other person representing or purporting to represent any such Defendant,
including, without limitation, any representations, warranties, guarantees,
promises, statements or estimates regarding the value of the Partnerships, their
properties, interests therein or the Units, except for historical financial
information concerning the assets of the Partnerships provided by the General
Partners or on behalf of the Partnerships (which the General Partners believe is
accurate, to the best of their knowledge, information and belief. None of the
parties hereto warrants the accuracy of the information contained in the records
of the Partnerships.
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<PAGE>
ARTICLE VII
ATTORNEYS' FEES AND EXPENSES
Section 7.1 Attorneys' Fees and Expenses.
(a) The procedure for, and the allowance or disallowance by the Court
of, any applications for an award of reasonable attorneys' fees and
reimbursement of expenses shall not constitute a material part of this
Stipulation and is to be considered by the Court separately from the Court's
consideration of the fairness, reasonableness and adequacy of the Settlement,
and any order or proceeding relating to any such application or procedure shall
not operate to terminate or cancel this Stipulation or affect the finality of
the Final Judgment and Order approving this Stipulation and the Settlement.
(b) Defendants agree to pay an amount equal to thirty-five percent
(35%) of the aggregate amount of the award of attorneys' fees and the
reimbursement of expenses to Class Counsel that are approved by the Court. The
Plaintiffs and Class Counsel agree to limit the aggregate amount sought by their
application(s) for an award of attorneys' fees and reimbursement of expenses so
as to request an amount up to, but not in excess of, $2.5 million in the
aggregate, thus requiring the Defendants to separately pay an amount up to, but
not in excess of $875,000 in the aggregate as the payment pursuant to their
agreement to pay a 35% portion of the aggregate amount of the award of
attorneys' fees and reimbursement of expenses to Class Counsel that is approved
by the Court. The Defendants will agree not to oppose any such applications(s)
by Plaintiffs and/or Class Counsel that are so limited pursuant to this
provision. The remaining sixty-five percent (65%) of the aggregate amount of the
award of attorneys' fees and reimbursement of expenses to Class Counsel that is
approved by the Court will be paid by
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STIPULATION OF SETTLEMENT OF CONSOLIDATED CLASS AND DERIVATIVE ACTION
<PAGE>
the Partnerships in the following percentages: 21.667% by each of HEP 85, HEP
86, and HEP 88, respectively.
Section 7.2 General. If the Settlement is not consummated as provided
in Section 4.6 hereof, none of the Defendants shall have any responsibility or
liability for the payment of any award of fees and/or reimbursement of expenses
to Class Counsel. Except as provided in Section 7.1 hereof, each Party hereto
shall bear any and all legal fees incurred in connection with this Stipulation.
ARTICLE VIII
FURTHER SUITS, ETC.
Section 8.1 Stipulation Not Admission. Neither this Stipulation, any
exhibit or document referenced herein, nor any action taken to effectuate or
further this Stipulation or the Settlement set forth herein is, may be construed
as, or may be used as an admission by or against any Party of any fault,
wrongdoing or liability whatsoever, or as a waiver or limitation of any defenses
otherwise available to any of the Parties. Entering into or carrying out this
Stipulation, the exhibits hereto, and any negotiations or proceedings related
thereto shall not in any event be construed as, or deemed to be evidence of, an
admission or concession by any of the Parties, or to be a waiver of any
applicable defense, and shall not be offered or received in evidence in any
action or proceeding against any Party hereto in any court, administrative
agency or other tribunal for any purpose whatsoever other than to enforce or
effectuate the provisions of this Stipulation or the provisions of any of the
exhibits to this Stipulation. The Parties hereto specifically reserve all
rights, claims, demands, defenses; actions or causes of action they presently
have, or claim to have, against any of the others and nothing contained herein
shall be
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STIPULATION OF SETTLEMENT OF CONSOLIDATED CLASS AND DERIVATIVE ACTION
<PAGE>
deemed to affect the same, until the Settlement Effective Date, at which time
the releases described in Article III hereof shall become effective.
Section 8.2 Further Suits. The members of the Settlement Class, and all
the persons engaged by them to assist in the prosecution of the Action,
including experts, accountants and agents, to the extent permitted by law, shall
not provide advice, counsel, assistance, documentation, analyses or work product
to any Settlement Class member who requests exclusion from the Settlement Class
or any other person in connection with the investigation or the prosecution of
any claims arising out of, based upon or otherwise related to the Released
Claims and matters that were or could have been alleged in the Action.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Captions. The definitions and recitals set forth above are
essential elements of this Stipulation. The captions contained in this
Stipulation are inserted only as a matter of convenience and in no way define,
limit, extend or describe the scope of this Stipulation or the intent of its
provisions.
Section 9.2 Entire Agreement. This Stipulation sets forth the entire
agreement of the Parties in respect to the Settlement and supersedes all prior
oral or written agreements, arrangements, understandings, inducements, promises,
and warranties, not embodied or incorporated herein, relating to the subject
matter of this Stipulation. Prior discussions and negotiations are superseded
by, and merged into, this Stipulation.
Section 9.3 Counterparts. This Stipulation may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
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STIPULATION OF SETTLEMENT OF CONSOLIDATED CLASS AND DERIVATIVE ACTION
<PAGE>
Section 9.4 Modification. The provisions of this Stipulation (including
any time periods specified herein) may be modified by written agreement of
counsel for all the Parties with the consent of the Court and without further
notice to the Settlement Class, unless the Court requires such notice. The terms
and provisions of this Stipulation may not be changed, waived, modified or
varied in any manner, unless in writing duly signed by counsel for all Parties.
Section 9.5 Waiver. The failure of any Party hereto to enforce at any
time any provision of this Stipulation shall not be construed as a waiver of
such provision, or be construed in any way to effect the validity of this
Stipulation or any part hereof or the right of any Party thereafter to enforce
each and every such provision. No waiver of any breach of this Stipulation shall
be held to constitute a waiver of any other breach.
Section 9.6 Successors. This Stipulation shall be binding upon and
inure to the benefit of the Parties hereto and their successors and assigns. No
Party hereto may assign its rights or obligations hereunder without the prior
written consent of all the other Parties hereto.
Section 9.7 Third Parties. Nothing in this Stipulation, whether express
or implied, is intended to confer any rights or remedies under or by reason of
this Stipulation on any persons other than the Parties hereto and their
respective successors and assigns, nor is anything in this Stipulation intended
to relieve or discharge the obligations or liabilities of any third parties to
any party to this Stipulation, nor shall any provision give any third parties
any right of subrogation or action over or against any party to this
Stipulation.
Section 9.8 Notices. Any and all notices, requests, consents,
directives or communications by any Party intended for any other Party shall be
in writing, shall be given personally or by postage prepaid certified or
registered mail, return receipt requested, and shall
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STIPULATION OF SETTLEMENT OF CONSOLIDATED CLASS AND DERIVATIVE ACTION
<PAGE>
be deemed delivered on the earlier of (a) the date received and (b) the date
four business days after the date of deposit in a United States Postal
Depository, and shall be addressed as follows:
(a) If to the Defendants:
Proskauer Rose LLP
2049 Century Park East, Suite 3200
Los Angeles, California 90067-3200
Attn: Lois Thompson, Esq.,
and
Proskauer Rose LLP
1585 Broadway
New York, New York 10036-8299
Attn: Edward W. Kerson, Esq.
and
NorthStar Presidio Management Company LLC
411 West Putnam Avenue
Greenwich, Connecticut 06830
Attn: Allan B. Rothschild, Esq.
(b) If to the Named Plaintiffs:
The Mills Law Firm
300 Drake's Landing Road, Suite 155
Greenbrae, California 94904
Attn: Robert W. Mills, Esq.
and
Wechsler Harwood Halebian & Feffer LLP
488 Madison Avenue, 8th Floor
New York, New York 10022
Attn: Andrew D. Friedman, Esq.
and
Law Offices of Lionel Z. Glancy
1801 Avenue of the Stars, Suite 308
Los Angeles, California 90067
Attn: Lionel Z. Glancy, Esq.
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STIPULATION OF SETTLEMENT OF CONSOLIDATED CLASS AND DERIVATIVE ACTION
<PAGE>
Any Party may, from time to time, change the address to which such written
notice, requests, consents, directives or communications are to be mailed, by
giving the other Parties ten (10) days' prior written notice of the changed
address in the mariner herein above provided.
Section 9.9 Governing Law. This Stipulation and the attached exhibits
shall be governed by and construed and enforced in accordance with the law of
the State of California, without reference to principles of choice or conflicts
of laws. This Stipulation (including, without limitation, its execution and
consummation) shall be enforced solely in the Court. The Defendants, the Named
Plaintiffs, the Class Plaintiffs, and the Settlement Class hereby waive any
objection they may now or hereafter have to the venue or forum of any such
enforcement proceedings, and irrevocably consent to and acknowledge jurisdiction
and service of any and all process of the Court in any such proceedings.
Section 9.10 Collaborative Effort. The undersigned agree that no single
Party shall be deemed to have drafted this Stipulation or any portion thereof.
This Stipulation is the product of the collaborative effort of the undersigned
counsel.
IN WITNESS WHEREOF, the parties hereto, by their counsel, have executed
this Stipulation as of the day and year first above written.
THE MILLS LAW FIRM
By: _________________________
Attorneys for Class Plaintiffs
Rush and Nancy Studinski,
Saul Silverman and Ray Thompson
and Co-Lead Counsel for the Class
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STIPULATION OF SETTLEMENT OF CONSOLIDATED CLASS AND DERIVATIVE ACTION
<PAGE>
WECHSLER HARWOOD HALEBIAN & FEFFER
LLP
By: _________________________
Attorneys for Class Plaintiffs
J/B Investment Partners and
Steven J. Kline
and Co-Lead Counsel for the Class
LAW OFFICES OF LIONEL Z. GLANCY
By: _________________________
Liaison Counsel for the Class
PROSKAUER ROSE LLP
By: _________________________
Attorneys for Defendants
32
STIPULATION OF SETTLEMENT OF CONSOLIDATED CLASS AND DERIVATIVE ACTION
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ROBERT W. MILLS, ESQ. (#062154) EXHIBIT A
ELIZABETH G. LEAVY, ESQ. (#050979)
THE MILLS LAW FIRM
300 Drake's Landing Road, Suite 155
Greenbrae, CA 94904
Telephone: (415) 464-4770
ANDREW D. FRIEDMAN, ESQ.
WECHSLER HARWOOD HALEBIAN
& FEFFER LLP
488 Madison Avenue, 8th Floor
New York, NY 10022
Telephone: (212) 935-7400
Lead Counsel for Plaintiffs
LIONEL Z. GLANCY, ESQ. (#134180) LOIS THOMPSON, ESQ. (#93245)
LAW OFFICES OF LIONEL Z. GLANCY PROSKAUER ROSE LLP
1801 Avenue of the Stars, Suite 308 2049 Century Park East, Suite 3200
Los Angeles, CA 9006 Los Angeles, California 90067-3200
Telephone: (310) 201-9150 Telephone: (310) 557-2900
Liaison Counsel for Plaintiffs Attorneys for Defendants
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES
MARK ERWIN, TRUSTEE, MARK ERWIN ) CASE NO.: BC 080254
SALES, INC. DEFINED BENEFIT PLAN; )
LEONARD DRESCHER, TRUSTEE OF ) [PROPOSED] FINAL JUDGMENT
DRESCHER FAMILY TRUST ACCOUNT; ) AND ORDER OF DISMISSAL
individually, and J/B INVESTMENT ) WITH PREJUDICE
PARTNERS, STEVEN J. KLINE, RUSH and )
NANCY STUDINSKI, SAUL SILVERMAN, and )
RAY THOMPSON, individually and on )
behalf of all others similarly situated, ) DATE: __________, 1999
) TIME:
) DEPT.: 59
Plaintiffs, )
v. )
</TABLE>
<PAGE>
RESOURCES HIGH EQUITY, INC.; )
RESOURCES CAPITAL CORP.; INTEGRATED )
RESOURCES EQUITY CORPORATION, and )
PRESIDIO CAPITAL CORPORATION, )
)
Defendants. )
------------------------------------------------------------------
This matter having come before this court on the application of the
parties to the Stipulation of Settlement of Consolidated Class and Derivative
Action dated ____________, 1998 (the "Settlement Stipulation"), for approval of
the Settlement of the above-captioned class action (the "Action"), and this
Court having considered the Settlement Stipulation, the terms of which are
expressly incorporated herein by reference, all other submissions and motions
filed, and arguments made by counsel in connection therewith, and the pleadings,
files and records and proceedings in this Action, and a hearing having been held
before this court on ___________, 1999, after due notice by mail to all limited
partners (whether or not they requested exclusion when the classes, hereinafter
referred to for convenience as the Settlement Class, were notified of class
certification in or about September 1998), at which hearing all limited partners
(whether or not they requested exclusion from the Settlement Class) were given
an opportunity to be heard, and at which time this Court approved the Settlement
Stipulation and all the transactions contemplated thereby, as fair, reasonable,
adequate and in the best interests of the Settlement Class and the Partnerships,
and this Court otherwise being fully advised and informed, this court finds as
follows:
A. Class Counsel in the Action have represented in the Settlement
Stipulation that they have sufficiently investigated the facts and researched
the applicable law regarding the claims of the Named Plaintiffs, the Class
Plaintiffs, and all other members of the Settlement Class, as well as the
potential defenses that have been or may be asserted thereto.
2
<PAGE>
B. After good faith, arm's-length negotiations, the Named Plaintiffs,
the Class Plaintiffs, and the Defendants, through their respective counsel
executed and filed the Settlement Stipulation. The Settlement Stipulation sets
forth the terms and conditions for the settlement of the Action, subject to (i)
approval by this Court, (ii) the satisfaction or waiver of certain conditions
set forth in Section 5.1 of the Settlement Stipulation, and (iii) the entry and
finality of this Final Judgment and Order of Dismissal with Prejudice (the
"Order").
C. On ___________, 1998, in its Order Re: Notice of Proposed Settlement
to the Class, and Hearing on the Proposed Settlement, this Court approved the
form of Notice of Proposed Settlement of Class and Derivative Action, Hearing on
the Proposed Settlement and Right to Appear at the Hearing (the "Notice") to be
sent to all limited partners (whether or not they requested exclusion from the
Settlement Class) and ordered that such notice be mailed in accordance with that
order. Pursuant to and in accordance with such order, Class Counsel caused the
Notice to be mailed.
D. The Notice provided to the Settlement Class members is the best
possible notice practicable under the circumstances. Such notice constituted
valid, due and sufficient notice to all Settlement Class members.
E. The parties jointly have applied to this Court for approval of the
terms of the Settlement Stipulation and for the entry of this Order. Pursuant to
the Notice, and upon notice to all limited partners (regardless of whether or
not they requested exclusion from the Settlement Class), a hearing was held
before this Court on __________, 1999, to consider whether the Settlement
Stipulation and the transactions contemplated thereby, should be approved as
fair, reasonable, adequate, and in the best interests of the Settlement Class.
THIS COURT, THEREFORE, GOOD CAUSE APPEARING, HEREBY ORDERS, ADJUDGES
AND DECREES THAT:
3
<PAGE>
1. The terms used in this Order shall have the same meanings as defined
in the Settlement Stipulation, except as otherwise may be specified herein.
2. This Court has jurisdiction over the subject matter of this Action
and over all of the parties, including all members of the Settlement Class.
3. After considering that persons who requested exclusion from the
Settlement Class, after notice of class certification was caused to be mailed to
all members of the three classes now defined as the Settlement Class on or about
September 14, 1998, retain their individual rights of action, if any, against
the Defendants, this Court hereby approves in its entirety the Settlement
Stipulation and the transactions contemplated thereby, based on finding that the
Settlement Stipulation and the transactions contemplated thereby are fair,
reasonable and adequate to all limited partners and that the Settlement is in
the best interests of the Settlement Class and the Partnerships, and this Court
therefore directs the parties to comply with the terms of the Settlement
Stipulation and the transactions contemplated thereby.
4. This Court hereby dismisses the Action, the Amended Complaint and
each and every cause of action and claim set forth therein on the merits as to
all present and former Defendants and with prejudice to the Settlement Class.
The Court further extinguishes all claims, rights, demands and causes of action
(including Unknown Claims) that might have been asserted therein by the Named
Plaintiffs and Class Plaintiffs on behalf of themselves or the Settlement Class
or the Partnerships, from which the Defendants and all Released Persons are
hereby discharged.
5. The Named Plaintiffs, the Class Plaintiffs and all other members of
the Settlement Class and each of them, are fully and forever permanently barred
and enjoined from instituting, asserting or prosecuting, either directly or
indirectly, any and all direct Released Claims against any and all of the
Released Persons, as those terms are defined in the Settlement Stipulation. All
4
<PAGE>
limited partners, whether or not members of the Settlement Class, and each of
them, are fully and permanently barred and enjoined from instituting, asserting
or prosecuting, either directly or indirectly, any and all derivative Released
Claims against any and all Released Persons, as those terms are defined in the
Settlement Stipulation.
6. The Release of Claims set forth in Section 3.1 of the Settlement
Stipulation is hereby rendered and declared fully effective and enforceable, and
each and all of the Released Persons are hereby fully and forever released and
discharged with respect to any and all of the Released Claims.
7. Neither the Settlement Stipulation, nor any exhibit or document
referenced therein, nor the Settlement contained therein, nor this Order, nor
any action taken to effectuate or further the Settlement Stipulation, the
Settlement set forth therein or this Order: (a) is, or may be construed or used
as, an admission by or against any Defendant, or any other person or entity of
the validity of any Released Claims or any other claims and allegations that are
or could have been asserted in the Action, or of any wrongdoing by any Defendant
or Released Person; (b) is or shall be deemed to be or shall be used as any
admission of any fault, wrongdoing, liability or omission whatsoever, whether or
not in any statement, release or written document or report issued, filed or
made, nor as a waiver or limitation of any defenses otherwise available to any
Defendant or Released Person; (c) shall be offered or used in a manner
inconsistent with section 8.1 of the Settlement Stipulation.
8. Each and all of the parties to the Settlement Stipulation are
ordered and affirmatively enjoined to comply with all of the terms and
provisions of this Order and the Settlement Stipulation, and to undertake all
acts and perform all obligations imposed under this Order and the Settlement
Stipulation as reasonably necessary to effectuate all the terms contained herein
or therein.
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<PAGE>
9. Without affecting the finality of this Order in any way as to the
Defendants, this Court hereby retains continuing jurisdiction over the Action,
the Named Plaintiffs, the Class Plaintiffs, all members of the Settlement Class,
all the Defendants and over any and all matters relating to the administration
and consummation of the Settlement Stipulation and the transactions contemplated
thereby.
10. In the event that this Order does not become final or the
settlement otherwise does not become effective in accordance with the terms of
the Settlement Stipulation, because of the nonfulfillment or impossibility of
fulfillment of any of the conditions set forth in Article V of the Settlement
Stipulation, or the failure to fulfill all of the said conditions within 9
months after the date of the Settlement Stipulation, as provided in Section 5.2
thereof, this Order, except for Paragraph 7, shall be rendered null and void and
shall be vacated nunc pro tunc, the Settlement reflected in the Settlement
Stipulation shall be terminated pursuant to its terms, and the parties to the
Settlement Stipulation shall be deemed to have reverted to their respective
status and position in the Action as of the date immediately prior to the
execution of the Settlement Stipulation, all as provided in Section 5.2 of the
Settlement Stipulation.
11. Persons who duly and timely requested exclusion from the Settlement
Class in October 1998 may now pursue only their own individual remedies, if any,
as against any of the Defendants, and not any class actions. All other members
of the Settlement Class shall be bound by all the applicable terms and
provisions of this Order and of the Settlement Stipulation.
Dated:____________________
___________________________
Commissioner Bruce Mitchell
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<PAGE>
EXHIBIT B
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES
<TABLE>
<CAPTION>
<S> <C>
MARK ERWIN, TRUSTEE, MARK ERWIN ) CASE NO.: BC 080254
SALES, INC. DEFINED BENEFIT PLAN; )
LEONARD DRESCHER, TRUSTEE OF )
DRESCHER FAMILY TRUST ACCOUNT; )
individually, and J/B INVESTMENT ) NOTICE OF PROPOSED SETTLEMENT OF CLASS AND
PARTNERS, STEVEN, J. KLINE, RUSH and ) DERIVATIVE ACTION, HEARING ON THE PROPOSED
NANCY STUDINSKI, SAUL SILVERMAN, ) SETTLEMENT, AND RIGHT TO APPEAR AT THE HEARING
and RAY THOMPSON, individually and on )
behalf of all others similarly situated, )
)
Plaintiffs, )
)
v. )
)
RESOURCES HIGH EQUITY, INC.; RESOURCES CAPITAL CORP.; INTEGRATED )
RESOURCES EQUITY CORPORATION; and PRESIDIO CAPITAL CORPORATION,
Defendants. )
and )
)
HIGH EQUITY PARTNERS L.P. - SERIES 85, HIGH EQUITY PARTNERS L.P. )
- SERIES 86, and HIGH EQUITY PARTNERS L.P. - SERIES 88,
)
Nominal Defendants )
------------------------------------------------------------------
</TABLE>
TO: ALL PERSONS AND ENTITIES WHO CURRENTLY OWN LIMITED PARTNERSHIP
INTERESTS ("UNITS") IN ANY OF THE FOLLOWING THREE LIMITED PARTNERSHIPS (WHICH
ARE COLLECTIVELY REFERRED TO HEREIN AS THE "PARTNERSHIPS"):
o INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85, A
CALIFORNIA LIMITED PARTNERSHIP ("HEP 85")
o HIGH EQUITY PARTNERS L.P. - SERIES 86 ("HEP 86")
o HIGH EQUITY PARTNERS L.P. - SERIES 88 ("HEP 88").
NOTICE OF THE FOLLOWING IS HEREBY GIVEN PURSUANT TO AN ORDER OF THE
SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF LOS ANGELES (THE
"COURT") DATED DECEMBER _, 1998:
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<PAGE>
THAT A HEARING (THE "SETTLEMENT HEARING") WILL BE HELD BEFORE
THE HONORABLE BRUCE MITCHELL, OR SUCH OTHER JUDGE AS SHALL BE
DESIGNATED BY THE COURT, IN DEPARTMENT 59 LOCATED AT 111 NORTH HILL
STREET, LOS ANGELES, CALIFORNIA 90012, ON ________, 1999, AT _____
A.M., TO DETERMINE WHETHER THE PROPOSED SETTLEMENT OF THE ACTION (THE
"SETTLEMENT"), THE TERMS OF WHICH ARE SET FORTH IN THE STIPULATION OF
SETTLEMENT DATED DECEMBER _____, 1998 (THE "SETTLEMENT STIPULATION" OR
"STIPULATION OF SETTLEMENT") AND ARE DESCRIBED BELOW, IS FAIR,
REASONABLE AND ADEQUATE AND SHOULD BE APPROVED AND TO RULE UPON THE
APPLICATION OF COUNSEL FOR THE PLAINTIFFS AND THE SETTLEMENT CLASS FOR
THE PAYMENT OF ATTORNEYS' FEES AND REIMBURSEMENT OF EXPENSES.
PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. THIS SETTLEMENT
NOTICE MAY AFFECT YOUR RIGHTS. IF YOU ARE A MEMBER OF ONE OF THE THREE CLASSES
PREVIOUSLY CERTIFIED BY THE COURT (JOINTLY REFERRED TO HEREIN AS THE "SETTLEMENT
CLASS"), HAVE NOT PREVIOUSLY SOUGHT TO BE EXCLUDED FROM THE CLASS AND THIS
SETTLEMENT BECOMES EFFECTIVE, YOU WILL BE PROVIDED WITH CERTAIN RIGHTS AND
BENEFITS (DESCRIBED BELOW) IN EXCHANGE FOR THE RELINQUISHMENT OF CERTAIN CLAIMS
(DESCRIBED BELOW), INCLUDING THE WAIVER OF YOUR RIGHTS TO A TRIAL ON ALL SUCH
CLAIMS.
THIS NOTICE RELATES TO A PROPOSED SETTLEMENT OF THE ACTION AND THE
RELEASE OF THE CLAIMS OF MEMBERS OF THE SETTLEMENT CLASS AGAINST DEFENDANTS IN
THE ACTION AND CERTAIN RELATED PARTIES (DEFINED BELOW).
THIS NOTICE IS NOT A SOLICITATION OF CONSENTS OF LIMITED PARTNERS TO
THE PARTNERSHIP AMENDMENTS DESCRIBED HEREIN. SUCH SOLICITATION WILL ONLY BE MADE
IF THE PROPOSED SETTLEMENT IS APPROVED AND ONLY PURSUANT TO A CONSENT
SOLICITATION STATEMENT TO BE MAILED TO LIMITED PARTNERS FOLLOWING SUCH APPROVAL.
----------------------------
NOTICE OF PROPOSAL TO SETTLE THE CAPTIONED
CLASS AND DERIVATIVE ACTION AND CLASS MEMBERS'
RIGHTS WITH RESPECT TO THE SETTLEMENT PROPOSAL
I.
SUMMARY OF THE SETTLEMENT PROPOSAL
The Settlement consists of the following major components:
1. The General Partners have agreed, subject to appropriate
Partnership Agreement amendments, to:
(A) A modification in the Partnership Asset
Management Fees payable to them pursuant to each of the three
Partnership Agreements which will lead to a reduction equal to
at least $900,000 for the three Partnerships in the aggregate
in 1999; and
2
<PAGE>
(B) A procedure for giving up a total of up to
$8,250,000 in fees with respect to the three Partnerships in
the aggregate if the Partnerships are not restructured as set
forth below and assuming liquidation of the Partnership(s)
before December 31, 2008. Further, defendant Presidio Capital
Corp. has agreed to guarantee this obligation of the General
Partners.
2. The General Partners have agreed to make or cause to be made
tender offers in the aggregate amount of $10,000,000 to
purchase up to a specified number of Units in each Partnership
so as to provide some limited partners who seek immediate
liquidity the opportunity to sell their Units subject to the
terms and provisions of the tender offer documents. The tender
offers will provide for the purchase of up to 26,936 Units of
HEP 85 at $114.60 per Unit; 39,546 Units of HEP 86 at $103.05
per Unit; and 25,034 Units of HEP 88 at $113.15 per Unit.
3. The General Partners have agreed to use their best efforts to
reorganize each of the three limited Partnerships into
separately traded REITs or other entity whose shares will be
listed on a national securities exchange or on the NASDAQ
National Market System.
In exchange for these undertakings and commitments, the Action will be
dismissed with prejudice, thereby binding all members of the Settlement Class,
individually, and, all Unitholders, including members of the Settlement Class
purporting to act on behalf of the Partnerships, will be barred from asserting
any Released Claims (including Unknown Claims) as defined in the Settlement
Stipulation.
The following provides further description of the proposed settlement
of the action. However, it is only a summary and reference is made to the text
of the Stipulation of Settlement on file with the Court for a full statement of
its provisions.
1. MODIFICATION OF PARTNERSHIP ASSET MANAGEMENT FEE
Upon the approval of limited partners holding a majority of the
outstanding Units in each Partnership, the Partnership Agreement of each
Partnership shall be amended to provide that the Partnership Asset Management
Fee shall be modified to be an amount per annum equal to 1.25% of the Gross
Asset Value of the respective Partnership as of the last day of the period in
respect of which the Partnership Asset Management Fee is payable. The parties
have agreed that the Partnership Asset Management Fee payable for calendar year
1999 in respect of all three Partnerships shall, in the aggregate, be $900,000
less than the aggregate amount that would have been payable for calendar year
1999 in the absence of the Partnership Agreement Amendments. All other fees and
reimbursements provided for in the Partnership Agreements will continue in
effect in accordance with the respective Partnership Agreements.
2. FEE GIVE-BACK AMOUNT
The General Partners have agreed to give up certain fees, potentially
totaling $8,250,000 in the aggregate, to the three Partnerships if the
Partnerships are not restructured into REITs or other entities whose shares will
be listed on a national securities exchange or on the NASDAQ National Market
System, and assuming liquidation before December 31, 2008. Upon the approval of
limited partners holding a majority of the outstanding Units in each
Partnership, Section 9.2 of the Partnership Agreement of HEP 85 and Section 9.1
of the Partnership Agreement of each of HEP 86 and HEP 88 shall be amended to
provide that if the Partnership is liquidated before December 31, 2008, the
total amount of the liability and obligation of the General Partners and their
affiliates shall equal $3,933,291 in the case of HEP 85, $2,832,927 in the case
of HEP 86, and $1,483,782 in the case of HEP 88, reduced by 10% of the
respective amount for each full calendar year after 1998, and prorated for any
calendar year in which such
3
<PAGE>
liquidation occurs other than on December 31 of the year. Further, if a
Partnership is liquidated on or after December 31, 2008, the respective General
Partners and their affiliates shall have no liability or obligation to pay any
amount as a fee give-back. In addition, defendant Presidio Capital Corp. will
guarantee the General Partners' obligations to pay the fee give-back amount and
will maintain a net worth at least equal to any existing Fee Give-Back Amount.
3. TENDER OFFER TO CLASS MEMBERS
Within ninety days of the final approval of the Settlement, the General
Partners will make or cause to be made a tender offer in the total amount of
$10,000,000, in the aggregate, for Units in the three Partnerships. Pursuant to
a formula agreed to by the Parties and based on appraisals prepared by Cushman &
Wakefield, offers will be made to purchase not fewer than 29,936 Units for
$114.60 per Unit in the case of HEP 85, 39,596 Units for $103.05 per Unit in the
case of HEP 86, and 25,034 Units for $113.15 per Unit in the case of HEP 88, net
to the seller in cash.
4. REORGANIZATION OF PARTNERSHIPS
Promptly following the settlement effective date, the General Partners
of each Partnership shall use their best efforts to reorganize that Partnership
into a separate REIT or other entity whose shares will be listed on a national
securities exchange or on the NASDAQ National Market System. The General
Partners will not seek to exchange their expectation of future fees from a
Partnership for additional equity in a REIT.
5. RELEASE OF CLAIMS
Upon the settlement effective date, each and all members of the
Settlement Class on behalf of themselves, their heirs, estates, executors,
administrators, successors and assigns and any persons they represent, and all
Unitholders, including successors and assigns, on behalf of the Partnerships,
shall release all present and former defendants in the action, including, the
General Partners, their present and former directors, officers, partners,
employees, attorneys and agents, from all claims, including Unknown Claims,
based upon or arising out of or in connection with, directly or indirectly, the
Partnerships, the operations of the Partnerships, the issuance, offer for
purchase or sale, purchase, sale or other disposition or acquisition or any
other transfer of any Units in any of the Partnerships during the period from
January 1, 1983 through the Settlement Effective Date.
II.
RECOMMENDATION OF SETTLEMENT
Plaintiffs and Class Counsel have conducted an investigation of the
facts and of the applicable law. Based on such investigation, Plaintiffs and
Class Counsel have concluded that the proposed Settlement of the Action on the
terms and conditions set forth in the Settlement Stipulation is fair,
reasonable, and adequate and is in the best interest of the Settlement Class,
having taken into account the risks and difficulties involved in attempting to
establish a right of recovery on behalf of the Settlement Class against the
Defendants, the expense and length of time necessary to continue the litigation
through trial and the appeals that would inevitably follow, and the uncertainty
inherent in any complex litigation, and that the proposed Settlement should be
approved. The proposed Settlement of the Action is the product of extensive,
good faith, and arm's-length negotiation between Class Counsel and counsel for
the Defendants.
4
<PAGE>
III.
BACKGROUND INFORMATION AND DESCRIPTION OF
EVENTS LEADING TO THE PROPOSED SETTLEMENT
OF THE ACTION DESCRIBED IN THIS NOTICE
A. THE ORIGINAL ACTION
In May 1993, plaintiffs Mark Erwin, Trustee, Mark Erwin Sales, Inc.
Defined Benefit Plan, and Leonard Drescher, Trustee of Drescher Family Trust
Account (the "Original Plaintiffs"), limited partners in the Partnerships,
commenced a class action in the Superior Court of the State of California for
the County of Los Angeles. In April 1994, an amended complaint was filed on
behalf of all persons who owned Units in each of the Partnerships. That amended
complaint asserted claims against the General Partners of the Partnerships and
certain related persons and entities for, among other things, common law fraud,
negligent misrepresentation, and breaches of fiduciary duty in connection with
the original marketing and sale of Units and the subsequent operation of the
Partnerships. The Original Plaintiffs sought, among other things, the recovery
of compensatory and punitive damages, as well as an award of attorneys' fees,
and costs.
B. THE PRIOR SETTLEMENT PROPOSAL
On July 12, 1995, the Original Plaintiffs and certain defendants
entered into an agreement to settle the Action upon terms set forth in a
stipulation of settlement that was captioned as the Second Amended Stipulation
of Settlement dated July 12, 1995 (the "Original Settlement Proposal" or "Prior
Settlement Proposal").
By Order dated July 19, 1995, the Court preliminarily approved the
Original Settlement Proposal as within the range of reasonableness, such that
notice thereof could be given to all persons owning Units of Partnerships as of
June 30, 1995 (the "Prior Settlement Class"). Thereafter, on or about July 31,
1995, a Notice of Class Action Determination, Settlement and Hearing on Proposed
Settlement (the "Prior Notice") was mailed to all members of the Prior
Settlement Class. The Prior Notice, among other things, summarized the proposed
terms of the Original Settlement Proposal and the rights of the members of the
Prior Settlement Class to object to or exclude themselves from participation in
the Original Settlement Proposal. Pursuant to the Prior Notice, a hearing on the
fairness of the Original Settlement Proposal was scheduled for September 14,
1995.
The Prior Settlement Proposal contemplated a reorganization of the
Partnerships pursuant to which real estate investment trust(s) ("REIT") would be
formed. As consideration for the General Partners' agreement to relinquish their
five percent (5%) equity interests in the Partnerships and their entitlement to
receive fees and expense reimbursements from such Partnerships through the
remainder of the lives of such Partnerships, the General Partners were to be
allocated a percentage of the Shares of the REIT(s) based upon the value of
their 5% equity interest and the estimated then-present value of the income
expected to be received by the General Partners from the Partnerships.
On August 23, 1995 and September 11, 1995, respectively, plaintiffs J/B
Investment Partners and Steven J. Kline and plaintiffs Rush and Nancy Studinski,
Saul Silverman and Ray Thompson ("Class Plaintiffs"), limited partners in the
three Partnerships, filed motions for leave to intervene in the Action and,
thereafter, they submitted objections to the approval of the Original Settlement
Proposal.
On September 12, 1995, the parties to the Prior Settlement Proposal
entered into an amendment thereto pursuant to which the allocation of Shares to
the General Partners was reduced.
5
<PAGE>
On September 14, 1995, the Original Plaintiffs and the Class Plaintiffs
filed a Consolidated Class and Derivative Action Complaint ("Consolidated
Complaint") alleging various state law class and derivative claims, including
claims for breach of fiduciary duties; breach of contract; unfair and fraudulent
business practices under California Bus. & Prof. Code ss. 17200; negligence;
dissolution; accounting; receivership; removal of general partner; fraud; and
negligent misrepresentation. During late 1995 and January 1996, Class Plaintiffs
entered into negotiations with Defendants that resulted in a revised proposed
settlement on terms that were significantly more favorable to the Settlement
Class. However, the Court declined to grant final approval of the revised
proposed settlement.
C. THE PROGRESS OF THE LITIGATION AFTER THE CLASS PLAINTIFFS
INTERVENED
Thereafter, on or about July 1, 1997, the Class Plaintiffs filed an
Amended and Consolidated Class and Derivative Action Complaint (the "Amended
Complaint"). The Amended Complaint generally alleges the same claims as the
earlier Consolidated Complaint but in more detail, and eliminates some
previously asserted claims. The General Partners of the three Partnerships
challenged the Amended Complaint on legal grounds and filed demurrers and a
motion to strike. In October 1997, the Court granted in part and denied in part
the General Partners' motions. Thereafter, the General Partners answered the
Amended Complaint, generally denying the allegations of that pleading and
asserting numerous affirmative defenses. On February 11, 1998, the Court
certified three separate plaintiff classes consisting of the current owners of
record of limited partnership interests in the respective Partnerships (but
expressly excluding all defendants or entities related to such defendants). The
Court order granting certification specifically provided that, if any ownership
interest was transferred by an owner of record of `a limited partnership
interest, the class would include only the then-existing current owner of
record, as successor. The Court also appointed class counsel consisting of the
law firms of Wechsler Harwood Halebian & Feffer LLP and The Mills Firm, and
designated the Law Offices of Lionel Z. Glancy as liaison counsel. Notice of
class certification was served on or about September 14, 1998.
In September 1998, the parties commenced extensive negotiations
concerning possible resolution of the Action. Following such arms'-length
negotiations, counsel for the parties reached an agreement in principle and
executed a Memorandum of Understanding setting forth, in summary fashion, the
terms of their agreement, as summarized above. During the following months the
parties negotiated a more formal Stipulation of Settlement.
IV.
DENIAL OF LIABILITY
Defendants categorically deny the allegations in the Amended Complaint,
deny any fault, wrongdoing or liability relating in any way to the offering and
sale of the Units and the operation of the Partnerships, deny that they acted
improperly in any way and deny any liability of any kind to Plaintiffs or any
member of the Settlement Class.
The Court has not made any findings that Defendants engaged in any
wrongdoing or wrongful conduct, nor has the Court expressed any opinion as to
the merits of any party's claims or defenses. The giving of this Notice is not
meant to imply that there has been any wrongdoing or that any recovery (in any
amount) could be obtained from Defendants if the Action were not settled but was
resolved by trial on the merits. Defendants have entered into the Settlement
Stipulation solely because the proposed Settlement will eliminate the burden,
expense and risk of further litigation. The Settlement may be consummated only
if the Court approves in its entirety the Settlement Stipulation and the
transactions contemplated thereby, and finds that the Settlement Stipulation and
the transactions contemplated thereby are fair, reasonable and adequate to all
limited partners, and that the Settlement is in the best interest of the
Settlement Class.
6
<PAGE>
V.
CONDITIONS TO THE SETTLEMENT
The Settlement is subject to certain conditions, which, if not
fulfilled or waived by Defendants, entitle Defendants to terminate the
Settlement Stipulation. For example, if limited partners holding a majority of
outstanding Units in a Partnership fail to approve the contemplated Partnership
Agreement Amendments, Defendants will have the right to terminate the Settlement
Stipulation.
* * *
The preceding description of the Settlement is a summary only.
Reference should be made to the full text of the Settlement Stipulation for a
complete statement of its provisions. The Settlement Stipulation in on file with
the Clerk, Department 59, Superior Court of the State of California for the
County of Los Angeles 111 North Hill Street, Los Angeles, California 90012 and
is available for inspection at that address during normal business hours each
business day.
VI.
RELEASE OF CLAIMS AND TERMINATION OF THE LITIGATION
If the Settlement is approved by the Court, the Action, the Amended
Complaint and each and every claim set forth therein, and all claims that might
have been asserted therein, will be dismissed on the merits and with prejudice
pursuant to a final judgment which will be entered by the Court in the Action.
Moreover, the named plaintiffs, and all Settlement Class members - - other than
those Settlement Class members who previously requested exclusion after receipt
of the Notice of Class Certification on or about September 14, 1998 - - shall be
fully and forever barred and enjoined from instituting or prosecuting, either
directly or indirectly, any and all individual or class claims, allegations,
actions, causes of action or rights, whether known or unknown, against any of
the Released Persons, as that term is defined in the Settlement Stipulation. In
addition, each Settlement Class member who did not request exclusion from the
Class shall be deemed to have expressly waived and relinquished, to the fullest
extent permitted by law, the provisions, rights and benefits of Section 1542 of
the California Civil Code, which provides, "A general release does not extend to
claims which the creditor does not know or suspect to exist in his favor at the
time of executing the release, which if known by him must have materially
affected his settlement with the debtor," as well any and all provisions, rights
and benefits conferred by any law of any state or territory of the United States
or any foreign country or any principle of common law that is similar,
comparable or equivalent to Section 1542 of the California Civil Code. Class
members cannot be excluded from that portion of the Action and Settlement that
involves derivative claims. Accordingly, upon final approval of the Settlement
and entry of judgment thereon, all Unitholders, as well as all Unitholder
successors and assigns, shall be bound by the settlement of the derivative
claims regardless of whether any such persons timely and validly requested
exclusion from the Settlement Class.
VII.
AWARD OF ATTORNEYS' FEES AND COSTS
Class Counsel intend to apply to the Court for an aggregate award of
attorneys' fees and the reimbursement of out-of-pocket expenses incurred by
plaintiffs in an amount not to exceed $2,500,000 in the aggregate. The General
Partners have agreed to pay 35% of any fee and cost award made by the Court up
to 35 % of $2,500,000. It is anticipated that the balance of any fee or cost
award will be divided among the Partnerships one-third, one-third, one-third.
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VIII.
THE SETTLEMENT HEARING
All limited partners are hereby notified that a hearing will be held
before the California Superior Court in Courtroom ___ in the Courthouse, located
at 111 North Hill Street, Los Angeles, California on _______________, 1999, at
_________ a.m., to determine whether: (i) the Stipulation is fair, reasonable
and in the best interest of the Settlement Class and the Partnerships and should
be approved by the Court, (ii) an Order and Final Judgment as contemplated by
the Settlement Stipulation should be entered dismissing the Action and (iii) the
application of Class Counsel in the Action for attorneys' fees and expenses in
connection with the Action should be granted.
The Court has reserved the right to adjourn the Settlement Hearing from
time to time by oral announcement at such hearing or at any adjournment thereof,
without further notice of any kind. The Court has also reserved the right to
approve the Settlement with or without modification, to enter an Order and Final
Judgment and to order the payment of attorneys' fees and expenses without notice
of any kind.
IX.
RIGHT TO APPEAR
If you are a record owner of Units of any or all of the Partnerships
(regardless of whether you requested to be excluded when you received Notice of
Class Certification in September 1998), you may appear personally or by counsel
and be heard at the Hearing and may object to, or express your views regarding,
the Settlement and the proposed application for attorneys' fees and
disbursements. No Settlement Class member (or limited partners who requested to
be excluded from the Class) will be heard or entitled in any way to contest
approval of the Settlement or any application for attorneys' fees and
disbursements unless, on or before _______, 1999, such person: (a) files with
the Court (i) written notice of that person's intention to appear at the
Settlement Hearing, at which the Court will hear objections by any limited
partner to the Settlement and/or the application of Class Counsel for attorneys'
fees and expenses, together with (ii) any other papers to be considered at the
Settlement Hearing, setting forth such objections or supporting such objections
(such papers must refer to Mark Erwin, et al. v. Resources High Equity, Inc., et
al, Case No BC 080254, and include a statement of the reasons why such person
believes the Court should find that the Settlement is not fair, reasonable and
adequate or in the best interest of the Class and/or the Partnerships and/or
opposes Class Counsel's application for attorneys' fees and expenses), and (b)
serves copies of the foregoing papers upon counsel for the parties to the
Settlement at the addresses given below:
Class Counsel: ANDREW D. FRIEDMAN, ESQ.
WECHSLER HARWOOD HALEBIAN & FEFFER LLP
805 Third Avenue, 7th Floor
New York, NY 10022
(212) 935-7400
and
ROBERT W. MILLS, ESQ.
THE MILLS FIRM
300 Drake's Landing, Suite #155
Greenbrae, California 94909
(415) 464-4770
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Counsel for
Defendants: LOIS D. THOMPSON, ESQ.
PROSKAUER ROSE LLP 2049 Century Park East, Suite 3200
Los Angeles, CA 90067 (310) 284-5614
IN ORDER TO BE VALID, ALL OBJECTIONS MUST BE RECEIVED BY COUNSEL LISTED ABOVE ON
OR BEFORE _________, 1999.
Any limited partner who does not make his or her objection in the
manner provided will be deemed to have waived all objections and opposition to
the fairness, reasonableness and adequacy of the proposed Settlement and Class
Counsel's application for attorneys' fees and expenses.
EXAMINATION OF PAPERS
This Notice is a summary and does not describe all the details of the
Settlement Stipulation. For a more detailed statement of the matters involved in
this Action and discussed in this Notice, you should refer to the Stipulation
and the pleadings and other papers filed with the Court in the Action, all of
which may be inspected at the Office of the Clerk, Department 59, Superior Court
of the State of California for the County of Los Angeles, 111 North Hill Street,
Los Angeles, CA 90012, during the regular business hours of each business day.
IF YOU HAVE ANY QUESTIONS CONCERNING THIS NOTICE OR IF THIS NOTICE
REACHED YOU AT AN ADDRESS OTHER THAN THE PRINTED ADDRESS OR IF YOUR ADDRESS HAS
CHANGED, PLEASE WRITE TO THE CO-LEAD COUNSEL FOR PLAINTIFFS AND THE SETTLEMENT
CLASS THAT ARE IDENTIFIED ABOVE. PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S
OFFICE FOR INFORMATION.
Dated: December __, 1998
BY ORDER OF THE SUPERIOR COURT
OF THE STATE OF CALIFORNIA FOR
THE COUNTY OF LOS ANGELES
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EXHIBIT C-1
AMENDMENT TO
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
INTEGRATED RESOURCES HIGH EQUITY PARTNERS,
SERIES 85, A CALIFORNIA LIMITED PARTNERSHIP
The amended and restated agreement of limited partnership (the
"Agreement") of Integrated Resources High Equity Partners, Series 85, A
California Limited Partnership is hereby amended as follows:
1. Paragraph 9.4.1 of the Agreement is amended in its entirety to
read as follows:
9.4.1. Partnership Management Fee. As compensation for
services rendered in managing the affairs of the Partnership, the
Managing General Partner shall be entitled to receive the Partnership
Management Fee, which shall be an amount per annum equal to 1.25% of
the Gross Asset Value of the Partnership as of the last day of the
period in respect of which the Partnership Management Fee is payable
(which amount shall be prorated for any partial year) (it being
understood that, notwithstanding anything to the contrary in this
Paragraph 9.4.1, the Partnership Management Fee payable for calendar
year 1999 shall be $426,867 less than an amount equal to 1.05% of
Invested Assets). The Partnership Management Fee shall be paid
quarterly. For purposes of this Paragraph 9.4.1 the term "Gross Asset
Value" on a particular date means the gross asset value of all assets
owned by the Partnership on that date, as determined by the most recent
appraisal of such assets by an independent appraiser of national
reputation selected by the General Partners.
2. Paragraph 9.2 of the Agreement is amended in its entirety to
read as follows:
9.2. Limitation on Compensation. If the Partnership is
liquidated prior to December 31, 2008, the General Partners shall, at
the time of the liquidation, and in lieu and satisfaction of all other
obligations the General Partners and their affiliates might then or
thereafter have under or by reason of Paragraph 9 hereof, pay the
Partnership an amount (the "Fee Give Back Amount") equal to $3,912,950
(the "Original Fee Give Back Amount"), reduced by 10% of the Original
Fee Give Back Amount for each full calendar year after 1998, and
prorated for any calendar year in which such liquidation occurs other
than on December 31 of that year. If the Partnership is liquidated on
or after December 31, 2008, neither the General Partners nor their
affiliates shall have any liability or obligation to pay any Fee Give
Back Amount. For purposes of this Paragraph 9.2, the term "liquidation"
means a sale of all or substantially all the property owned by the
Partnership for cash or property that is distributed to the Partners,
but does not include any transaction in which the
<PAGE>
Partnership is reorganized into a separate, publicly traded real estate
investment trust or other entity whose shares are listed on a national
securities exchange or on the NASDAQ National Market System (a
"Reorganization") and, in addition, does not include any transaction
following a Reorganization, whether by the successor to the Partnership
in the Reorganization or otherwise. For the avoidance of double it is
hereby understood and agreed that, following a Reorganization, the
General Partners and their affiliates shall have no liability or
obligation to pay any Fee Give Back Amount.
3. Except as otherwise provided above, the Agreement shall remain
in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
_____________, 1999.
GENERAL PARTNERS:
RESOURCES HIGH EQUITY, INC.
By:_____________________________
RESOURCES CAPITAL CORP.
By:_____________________________
PRESIDIO AGP CORP.
By:_____________________________
2
<PAGE>
EXHIBIT C-2
AMENDMENT TO
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
HIGH EQUITY PARTNERS L.P. -- SERIES 86
The amended and restated agreement of limited partnership (the
"Agreement" of High Equity Partners L.P. -- Series 86, a Delaware limited
partnership, is hereby amended as follows:
1. Paragraph 9.4 of the Agreement is amended in its entirety to
read as follows:
9.4. Partnership Asset Management Fee. As compensation for
services rendered in managing the affairs of the Partnership, the
Administrative General Partner shall be entitled to receive the
Partnership Asset Management Fee, which shall be an amount per annum
equal to 1.25% of the Gross Asset Value of the Partnership as of the
last day of the period in respect of which the Partnership Asset
Management Fee is payable (which amount shall be prorated for any
partial year) (it being understood that notwithstanding anything to the
contrary in this Paragraph 9.4, the Partnership Asset Management Fee
payable for calendar year 1999 shall be $312,139 less than an amount
equal to 1.05% of Invested Assets). The Partnership Asset Management
Fee shall be paid quarterly. For purposes of this Paragraph 9.4, the
term "Gross Asset Value" on a particular date means the gross asset
value of all assets owned by the Partnership on that date, as
determined by an appraisal of such assets by an independent appraiser
of national reputation selected by the General Partners.
2. Paragraph 9.1 of the Agreement is amended by adding a new
Paragraph 9.1.4 to read as follows:
9.1.4. If the Partnership is liquidated prior to December 31,
2008, the General Partners shall, at the time of the liquidation, and
in lieu and satisfaction of all other obligations the General Partners
and their affiliates might then or thereafter have under or by reason
of Paragraph 9 hereof, pay the Partnership an amount (the "Fee Give
Back Amount") equal to $2,861,277 (the "Original Fee Give Back
Amount"), reduced by 10% of the Original Fee Give Back Amount for each
full calendar year after 1998, and prorated for any calendar year in
which such liquidation occurs other than on December 31 of that year.
If the Partnership' is liquidated on or after December 31, 2008,
neither the General Partners nor their affiliates shall have any
liability or obligation to pay any Fee Give Back Amount.
For purposes of this Paragraph 9.1.4, the term "liquidation"
means a sale of all or substantially all the property owned by the
Partnership for cash or property that is distributed to the Partners,
but does not include any transaction in which the
<PAGE>
Partnership is reorganized into a separate, publicly traded real estate
investment trust or other entity whose shares are listed on a national
securities exchange or on the NASDAQ National Market System (a
"Reorganization") and, in addition, does not include any transaction
following a Reorganization, whether by the successor to the Partnership
in the Reorganization or otherwise. For the avoidance of doubt, it is
hereby understood and agreed that following a Reorganization, the
General Partners and their affiliates shall have no liability or
obligation to pay any Fee Give Back Amount.
3. Except as otherwise provided above, the Agreement shall remain
in full force and effect
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
________, 1999.
GENERAL PARTNERS:
RESOURCES HIGH EQUITY, INC.
By:_________________________
RESOURCES CAPITAL CORP.
By:_________________________
PRESIDIO AGP CORP.
By:_________________________
2
<PAGE>
EXHIBIT C-3
AMENDMENT TO
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
HIGH EQUITY PARTNERS L.P. -- SERIES 88
The amended and restated agreement of limited partnership (the
"Agreement") of High Equity Partners L.P. -- Series 88, a Delaware limited
partnership, is hereby amended as follows:
1. Paragraph 9.4 of the Agreement is amended in its entirety to
read as follows:
9.4. Partnership Asset Management Fee. As compensation for
services rendered in managing the affairs of the Partnership, the
Managing General Partner shall be entitled to receive the Partnership
Asset Management Fee, which shall be an amount per annum equal to 1.25%
of the Gross Asset Value of the Partnership as of the last day of the
period in respect of which the Partnership Asset Management Fee is
payable (which amount shall be prorated for any partial year) (it being
understood that, notwithstanding anything to the contrary in this
Paragraph 9.4, the Partnership Asset Management Fee payable for
calendar year 1999 shall be $160,993 less than an amount equal to 1.05%
of Invested Assets). The Partnership Asset Management Fee shall be paid
quarterly. For purposes of this Paragraph 9.4, the term "Gross Asset
Value" on a particular date means the' gross asset value of all assets
owned by the Partnership on that date, as determined by the most recent
appraisal of such assets by an independent appraiser of national
reputation selected by the General Partners.
2. Paragraph 9.1 of the Agreement is amended by adding a new
Paragraph 9.1.3 to read as follows:
9.1.3. If the Partnership is liquidated prior to December 31,
2008, the General Partners shall, at the time of the liquidation, and
in lieu and satisfaction of all other obligations the General Partners
and their affiliates might then or thereafter have under or by reason
of Paragraph 9 hereof, pay the Partnership an amount (the "Fee Give
Back Amount") equal to $1,475,773 (the "Original Fee Give Back
Amount"), reduced by 10% of the Original Fee Give Back Amount for each
full calendar year after 1998, and prorated for any calendar year in
which such liquidation occurs other than on December 31 of that year.
If the Partnership is liquidated on or after December 31, 2008, neither
the General Partners nor their affiliates shall have any liability or
obligation to pay any Fee. Give Back Amount.
<PAGE>
For purposes of this Paragraph 9.1.3, the term "liquidation" means a
sale of all or substantially all the property owned by the Partnership
for cash or property that is distributed to the Partners, but does not
include any transaction in which the Partnership is reorganized into a
separate, publicly traded real estate investment trust or other entity
whose shares are listed on a national securities exchange or on the
NASDAQ National Market System (a "Reorganization") and, in addition,
does not include any transaction following a Reorganization, whether by
the successor to the Partnership in the Reorganization or otherwise.
For the avoidance of doubt, it is hereby understood and agreed that,
following a Reorganization, the General Partners and their affiliates
shall have no liability or obligation to pay any Fee Give Back Amount.
3. Except as otherwise provided above, the Agreement shall remain
in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
___________, 1999.
GENERAL PARTNERS:
RESOURCES HIGH EQUITY, INC.
By:_________________________
RESOURCES CAPITAL CORP.
By:_________________________
PRESIDIO AGP CORP.
By:_________________________
2
<PAGE>
EXHIBIT D
<TABLE>
<CAPTION>
<S> <C>
ROBERT W. MILLS, ESQ. (#062154)
ELIZABETH G. LEAVY, ESQ. (#050979)
THE MILLS LAW FIRM
300 Drake's Landing Road, Suite 155
Greenbrae, CA 94904
Telephone: (415) 464-4770
ANDREW D. FRIEDMAN, ESQ.
WECHSLER HARWOOD HALEBIAN
& FEFFER LLP
488 Madison Avenue, 8th Floor
New York, NY 10022
Telephone: (212) 935-7400
Lead Counsel for Plaintiffs
LIONEL Z. GLANCY, ESQ. (#134180) LOIS THOMPSON, ESQ. (#93245)
LAW OFFICES OF LIONEL Z. GLANCY PROSKAUER ROSE LLP
1801 Avenue of the Stars, Suite 308 2049 Century Park East, Suite 3200
Los Angeles, CA 90067 Los Angeles, California 90067-3200
Telephone: (310) 201-9150 Telephone: (310) 557-2900
Liaison Counsel for Plaintiffs Attorneys for Defendants
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES
MARK ERWIN, TRUSTEE, MARK ERWIN ) CASE NO.: BC 080254
SALES, INC. DEFINED BENEFIT PLAN; )
LEONARD DRESCHER, TRUSTEE OF ) [PROPOSED] ORDER RE: NOTICE
DRESCHER FAMILY TRUST ACCOUNT; ) OF PROPOSED SETTLEMENT TO
individually, and J/B INVESTMENT ) THE CLASS, AND HEARING ON THE
PARTNERS; STEVEN, J. KLINE, RUSH and ) PROPOSED SETTLEMENT; STAY
NANCY STUDINSKI, SAUL SILVERMAN, ) OF RUNNING OF FIVE-YEAR RULE
and RAY THOMPSON, individually and on )
behalf of all others similarly situated, ) DATE: ____________, 1998
) TIME:
) DEPT.: 59
Plaintiffs, )
v. )
</TABLE>
<PAGE>
RESOURCES HIGH EQUITY, INC.; )
RESOURCES CAPITAL CORP., INTEGRATED )
RESOURCES EQUITY CORPORATION and )
PRESIDIO CAPITAL CORPORATION, )
)
Defendants. )
---------------------------------------------------------------
The Court having reviewed the Stipulation of Settlement of
Consolidated Class and Derivative Action dated ___________, 1998, together with
the exhibits attached thereto (the "Settlement Stipulation"), entered into
between the plaintiffs and the defendants, and the parties having stipulated to
the terms of this Order,
IT IS HEREBY ORDERED:
1. The proposed Settlement is preliminarily approved as within
the range of reasonableness, such that notice thereof should be given to the
members of the Settlement Class. The Notice of Proposed Settlement of Class and
Derivative Action, Hearing on the Proposed Settlement, and Right to Appear at
the Hearing ("Notice") in the form attached hereto an Exhibit A satisfies the
requirements of law and Superior Court, Los Angeles County Rule 15.18(f), and is
hereby approved.
2. Class Counsel shall cause the Notice to be mailed by
first-class mail, postage prepaid, within 10 days after the entry of this Order,
to all members of the Settlement Class at their last known addresses as
appearing in the records maintained by Integrated Resources High Equity
Partners, Series 85, A California Limited Partnership, High Equity Partners L.P.
- - Series 86 and High Equity Partners L.P. - - Series 88. Within 15 days after
the entry of this Order, Class Counsel shall file an affidavit of mailing with
the Court stating that the Notice was duly served upon all Settlement Class
members in accordance with this order.
2
<PAGE>
3. The Court finds that the mailing of the Notice as set forth
in this Order constitutes the best notice practicable under the circumstances,
and shall constitute due and sufficient notice for all purposes to all persons
entitled to receive such notice.
4. Declarations and memoranda of points and authorities in
support of the Settlement shall be filed on or before _______ __, 1999. Class
Counsel's application for attorneys' fees and reimbursement of expenses shall be
filed on or before _________ ___, 1999.
5. Objections, if any, by any limited partner to the proposed
Settlement or to the application for attorneys' fees and reimbursement of
expenses, shall be served in accordance with the requirements set forth in the
Notice.
6. The Court will hold a hearing on _______ __, 1999, at __
o'clock __.m., in Department 59, Superior Court of the State of California for
the County of Los Angeles, 111 North Hill Street, Los Angeles, CA 90012, as set
forth in the Notice, to determine the fairness reasonableness and adequacy of
the Settlement and whether the Settlement should be approved and the Action
dismissed, and to consider Class Counsel's application for attorneys' fees and
reimbursement of expenses. The hearing may be continued, without further notice.
7. The Court enters this order only for purposes of the
Settlement Stipulation. If, for any reason, the Settlement Stipulation is
terminated, or the Settlement Effective Date (as defined in the Settlement
Stipulation) does not occur, this Order shall automatically be vacated. During
the pendency of this Order, the running of time under the five-year rule
governing when actions shall be tried shall be stayed.
3
<PAGE>
8. The Court may, upon joint motion of the parties, or on its
own motion for good cause, extend any of the deadlines or dates set forth in
this order without further notice to members of the Settlement Class.
SO ORDERED:
DATED: _____________, 1998
___________________________
Commissioner Bruce Mitchell
4
<PAGE>
EXHIBIT E
GUARANTEE
DATED , 1999
The undersigned, for good and valuable consideration, receipt of which
is hereby acknowledged, agrees as follows:
1. The undersigned hereby unconditionally and irrevocably guarantees
payment when due of all Fee Give Back Liabilities (as defined below) of the
General Partners (as defined below). For purposes of this Guarantee, the term
(a) "Fee Give Back Liabilities" means all liabilities and obligations of the
General Partners to pay the Fed Give Back Amount (as defined in Paragraphs 9.2,
9.1.4 and 9.1.3 of the amended and restated agreement of limited partnership, as
amended (collectively, the "Partnership Agreements"), or as amended in the
future, of Integrated Resources High Equity Partners, Series 85, A California
Limited Partnership, High. Equity Partners L.P. - Series 86 and High Equity
Partners L.P. - Series 88, respectively, and (b). "General Partners" has the
meaning given it in the respective Partnership Agreements.
2. The undersigned hereby agrees that it will not permit its Net Worth
(as defined below) at any time to be less than the aggregate amount of the Fee
Give Back Liabilities at that time. Notwithstanding the foregoing, however, the
undersigned may, at its option from time to time, substitute one or more
Substitute Guarantors (as defined below) to fulfill the undersigned's
obligations under section 1 and the first sentence of this section 2, as long as
the Net Worth of each Substitute Guarantor at any time it is a Substitute
Guarantor is not less than the aggregate amount of the Fee Give Back Liabilities
that Substitute Guarantor is then guaranteeing as a Substitute Guarantor.
However, Presidio Capital Corp. shall remain fully liable on this Guarantee to
the extent any substitute Guarantor fails or refuses to fulfill its obligations
under this Guarantee. For purposes of this Guarantee, the term (a) "Net Worth"
of a person or entity means, at a particular date, all amounts that would, in
conformity with generally accepted accounting principles in the United States of
America in effect at that time, be included in that person's or entity's net
worth or equity on that person's or entity's balance sheet at that date (without
including as a liability in the calculation of net worth indebtedness that is
subordinate to the Fee Give Back Liabilities), and (b) "Substitute Guarantor"
means any person or entity that executes and delivers a guarantee in the form of
section 1.
<PAGE>
3. This Guarantee shall be governed by and construed in accordance with
the law of the State of California applicable to agreements made and to be
performed wholly within the state of California.
PRESIDIO CAPITAL CORP.
By:_______________________
<PAGE>
3
EXHIBIT F
<TABLE>
<CAPTION>
<S> <C>
ROBERT W. MILLS, ESQ. (#062154)
ELIZABETH G. LEAVY, ESQ. (#050979)
THE MILLS LAW FIRM
300 Drake's Landing Road, Suite 155
Greenbrae, CA 94904
Telephone: (415) 464-4770
ANDREW D. FRIEDMAN, ESQ.
WECHSLER HARWOOD HALEBIAN
& FEFFER LLP
488 Madison Avenue, 8th Floor
New York, NY 10022
Telephone: (212) 935-7400
Lead Counsel for Plaintiffs
LIONEL Z. GLANCY, ESQ. (#134180) LOIS THOMPSON, ESQ. (#93245)
LAW OFFICES OF LIONEL Z. GLANCY PROSKAUER ROSE LLP
1801 Avenue of the Stars, Suite 308 2049 Century Park East, Suite 3200
Los Angeles, CA 9006 Los Angeles, California 90067-3200
Telephone: (310) 201-9150 Telephone: (310) 557-2900
Liaison Counsel for Plaintiffs Attorneys for Defendants
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES
MARK ERWIN, TRUSTEE, MARK ERWIN ) CASE NO.: BC 080254
SALES, INC. DEFINED BENEFIT PLAN; )
LEONARD DRESCHER, TRUSTEE OF ) STATEMENT OF SETTLEMENT
DRESCHER FAMILY TRUST ACCOUNT; ) CONSUMMATION
individually, and J/B INVESTMENT )
PARTNERS, STEVEN, J. KLINE, RUSH and )
NANCY STUDINSKI, SAUL SILVERMAN, )
and RAY THOMPSON, individually and on ) NO APPEARANCE REQUIRED
behalf of all others similarly situated, )
)
Plaintiffs, )
v. )
(CONTINUED ON NEXT PAGE)
<PAGE>
RESOURCES HIGH EQUITY, INC.; )
RESOURCES CAPITAL CORP., INTEGRATED )
RESOURCES EQUITY CORPORATION, and )
PRESIDIO CAPITAL CORPORATION, )
)
Defendants. )
------------------------------------------------------------------
</TABLE>
Pursuant to Section 4.6 of the Stipulation of Settlement of
Consolidated Class and Derivative Action dated January, 1999 (the "Settlement
Stipulation"), the parties state the following:
A. On April 29, 1999, this Court entered an order, the terms
of which are expressly incorporated herein by reference, approving, among other
matters, the Settlement Stipulation in its entirety, subject to the performance
of certain acts and the satisfaction or waiver of certain conditions.
B. Each limited partner was entitled, and given the
opportunity, to vote separately for or against the Partnership Agreement
Amendments or to abstain from voting. The failure of a limited partner to return
a signed Consent card had the effect of being a vote against the Partnership
Agreement Amendments. Abstaining from voting had the effect of being a vote
against the Partnership Agreement Amendments.
C. As set forth in the declaration of Allan B. Rothschild, the
President of Resources High Equity, Inc. and Resources Capital Corp., attached
hereto as Exhibit 1, limited partners owning a majority of the outstanding units
of each Partnership have voted in favor of the respective Partnership Agreement
Amendments.
D. All the conditions set forth in Section 5.1 of the
Settlement Stipulation have been fulfilled or waived.
2
<PAGE>
F. The conditions to the Settlement having been satisfied, the
parties shall proceed to consummate the Settlement in accordance with the terms
of the Settlement Stipulation.
<TABLE>
<CAPTION>
<S> <C>
DATED: _________, 1999 PROSKAUER ROSE LLP
LOIS D. THOMPSON
LESLIE A. WEDERICH
By:________________________________________
Lois D. Thompson
Attorneys for Defendants RESOURCES HIGH
EQUITY, INC., RESOURCES CAPITAL CORP., and PRESIDIO CAPITAL
CORPORATION
DATED: _________, 1999 LAW OFFICES OF LIONEL Z. GLANCY
LIONEL Z. GLANCY
PETER BINKOW
By:________________________________________
Liaison Counsel for plaintiffs
DATED: _________, 1999 WECHSLER HARWOOD HALEBIAN & FEFFER ANDREW FRIEDMAN
By:________________________________________
Andrew Friedman
Co-lead Counsel for plaintiffs
DATED: _________, 1999 THE MILLS FIRM
ROBERT MILLS
ELIZABETH LEAVY
By:________________________________________
Robert Mills
Elizabeth Leavy
Co-lead Counsel for plaintiffs
</TABLE>
3
<PAGE>
PROOF OF SERVICE BY MAIL
I, the undersigned, say:
I am a citizen of the United States and am employed in the
office of a member of the Bar of this Court. I am over the age of 18 and not a
party to the within action. My business address is 1801 Avenue of the Stars,
Suite 308, Los Angeles, California 90067.
On January 11, 1999, I served the following:
1) STIPULATION OF SETTLEMENT OF CONSOLIDATED CLASS AND
DERIVATIVE ACTION;
on the parties shown below by placing a true copy thereof enclosed in a sealed
envelope with postage thereon fully prepaid in the United States mail at Los
Angeles, California.
SEE SERVICE LIST
Executed on January 11, 1999, at Los Angeles, California. I
certify under penalty of perjury that the foregoing is true
and correct.
-----------------------------
Daniel C. Rann
