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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
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Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
April 26, 1995
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(Date of earliest event reported)
NATIONAL REALTY, L.P.
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(Exact name of registrant as specified in its charter)
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Delaware 1-9648 75-2163175
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification
No.)
</TABLE>
10670 North Central Expressway
Suite 300
Dallas, Texas 75231
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 692-4700
Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On April 26, 1995, Syntek Asset Management, L.P. ("SAMLP"), which
serves as the General Partner of National Realty, and the National Realty
Oversight Committee announced an agreement had been entered into to nominate a
candidate for successor general partner of National Realty and to consummate
the 1990 settlement of a class action lawsuit. The nominee for successor
General Partner will be an entity controlled by William H. Elliott.
National Realty, SAMLP, the Oversight Committee and Mr. Elliott
executed an Implementation Agreement on January 27, 1995, which sets forth an
agreement to nominate the successor general partner, subject to Mr. Elliott's
acceptance. On April 20, 1995, Mr. Elliott provided the parties with his
acceptance notice, which was acknowledged by the parties on April 26, 1995.
The press release generally describing this matter and the
Implementation Agreement are attached as exhibits to this Report on Form 8-K.
Item 7. Financial Statements and Exhibits.
Exhibits:
99.1. Press Release, dated April 26, 1995, regarding
Agreement to Nominate Successor General Partner.
99.2. Implementation Agreement dated January 27, 1995,
among National Realty, L.P., Syntek Asset Management,
L.P., National Realty, L.P. Oversight Committee and
William H. Elliott.
99.3. First Amendment to the Implementation Agreement dated
February 27, 1995.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
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NATIONAL REALTY, L.P.
SYNTEK ASSET MANAGEMENT, L.P.
General Partner
By Its Managing General Partner
Syntek Asset Management, Inc.
Dated: April 26, 1995 By: /s/ Hamilton P. Schrauff
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Hamilton P. Schrauff
Executive Vice President
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NATIONAL REALTY, L.P.
CURRENT REPORT ON FORM 8-K
EXHIBIT INDEX
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Exhibit Document
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99.1 Press Release, dated April 26, 1995, regarding
Agreement to nominate Successor General Partner
99.2 Implementation Agreement dated January 27, 1995,
among National Realty, L.P., Syntek Asset
Management, L.P., National Realty, L.P.
Oversight Committee and William H. Elliott
99.3 First Amendment to the Implementation Agreement
dated February 27, 1995
</TABLE>
<PAGE> 1
PRESS RELEASE
FOR IMMEDIATE RELEASE
NATIONAL REALTY, L. P. ANNOUNCES
AGREEMENT TO NOMINATE SUCCESSOR GENERAL PARTNER
DALLAS, Apr. 26, 1995--National Realty, L.P. (ASE: NLP) ("National Realty")
today announced that an agreement had been entered into which provides for the
nomination of a successor general partner of National Realty. The agreement is
subject to approval of the Supervising Judge who was appointed in connection
with the previously-reported 1990 settlement of a class action entitled Joseph
B. Moorman, et al. v. Southmark Corporation, et al. (the "Moorman
Settlement"). The Moorman Settlement had established a five-year plan which,
among other things, required the appointment and operation of an Oversight
Committee and, under certain circumstances, would require the replacement of
Syntek Asset Management, L.P. ("SAMLP") as the general partner of National
Realty.
On January 27, 1995, National Realty, SAMLP, the Oversight Committee and
William H. Elliott executed an Implementation Agreement which provides for the
nomination of an entity controlled by Mr. Elliott to be the successor general
partner and for the resolution of all related matters under the Moorman
Settlement. The Implementation Agreement was subject to receipt of a notice
from Mr. Elliott that he consented to stand for election as the successor
general partner. On April 20, 1995, Mr. Elliott formally notified the parties
that he would stand for such election.
Mr. Elliott currently serves as President of WHE, Inc. in Beverly Hills,
California. He is the former Chairman and Chief Executive Officer of Angeles
Corporation, a real estate investment company located in Los Angeles,
California.
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The Implementation Agreement shall be submitted to the Supervising Judge for
tentative approval and approval of the notice to be sent to the original class
members. Upon final approval by the Supervising Judge, the proposal to elect
the successor general partner will be submitted to the unitholders of National
Realty for a vote. In addition, the unitholders will vote upon amendments to
the National Realty partnership agreement which relate to the proposed
compensation of the successor general partner and other related matters.
Upon approval by the unitholders, SAMLP shall withdraw as general partner and
the successor general partner shall take office. If the required approvals are
obtained, National Realty anticipates that the successor general partner may be
elected and take office during the third or fourth quarter of 1995.
The Implementation Agreement provides that SAMLP, and its affiliates owning
units in National Realty, shall not vote to remove the successor general
partner, except for removal with cause, for a period of thirty months from the
date the successor general partner takes office. In addition, the Supervising
Judge shall make a determination of any amounts which National Realty may owe
to SAMLP upon SAMLP's withdrawal as general partner and any amounts which SAMLP
or its affiliates may owe to National Realty. Any amounts which National Realty
may be determined to owe to SAMLP may be paid by National Realty over a period
of time to be determined by the parties on terms which shall not hinder
National Realty's ability to meet its other financial obligations.
Upon the election and taking office of the successor general partner, the
Moorman Settlement plan and the Oversight Committee shall be terminated. If the
successor general partner is not elected, the existing Moorman Settlement shall
remain in full force
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and effect and all of the provisions of the Implementation Agreement shall be
voided.
Kenneth R. Kelly, Chairman of the Oversight Committee, commented that: "The
Committee is pleased that an experienced real estate executive of Mr. Elliott's
calibre has agreed to stand for election as general partner of National Realty,
L.P."
Oscar W. Cashwell, President of Syntek Asset Management, Inc., the general
partner of SAMLP, stated that: "The proposal will resolve the uncertainties and
expenses relating to the Moorman Settlement and allow the new general partner
to concentrate his efforts on realizing value for the National Realty
unitholders."
National Realty, L.P. is a national real estate investment partnership engaged
in the acquisition, financing, operation and sale of real estate and related
assets.
# # #
For more information, please contact:
Kevin LeBlanc, Manager, Investor Relations (214) 692-4800
<PAGE> 1
IMPLEMENTATION AGREEMENT
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TABLE OF CONTENTS
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RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1. Elliott GP "Due Diligence" Period . . . . . . . . . . . . . . . . . . . 2
2. Elliott Good Faith Deposit . . . . . . . . . . . . . . . . . . . . . . 2
3. Court Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. Withdrawal of Syntek as General Partner . . . . . . . . . . . . . . . . 3
5. Syntek Exit Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
6. Syntek Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7. Syntek Affiliate Damages . . . . . . . . . . . . . . . . . . . . . . . 5
A. Assumption Agreement . . . . . . . . . . . . . . . . . . . . . . . . 5
B. Note Payable to Garden Capital, L.P . . . . . . . . . . . . . . . . 5
8. Calculation of Net Amounts Owed by Syntek
and the Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . 5
9. Financing Terms of Net Partnership Payment to Syntek . . . . . . . . . 6
10. Consensus Successor General Partner . . . . . . . . . . . . . . . . . . 6
A. Purchase Price of General Partnership Interests . . . . . . . . 7
B. Payment Terms for General Partnership Interest . . . . . . . . 7
C. Redemption of Elliott General Partnership Interest . . . . . . 7
D. Term of Elliott GP . . . . . . . . . . . . . . . . . . . . . . 9
E. Fee Compensation . . . . . . . . . . . . . . . . . . . . . . . 9
i. Asset Management Fee . . . . . . . . . . . . . . . . . . 9
ii. Property Disposition Fees . . . . . . . . . . . . . . . 10
F. Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
G. Services to the Partnership . . . . . . . . . . . . . . . . . . 11
H. Powers of the Elliott GP . . . . . . . . . . . . . . . . . . . 11
11. Partnership Agreement Amendments . . . . . . . . . . . . . . . . . . . 11
12. Proxy Statement/Consent Solicitation . . . . . . . . . . . . . . . . . 11
13. Role of Mr. Elliott . . . . . . . . . . . . . . . . . . . . . . . . . . 12
14. Special Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . 13
15. Indemnification of the Committee . . . . . . . . . . . . . . . . . . . 13
16. Mutual Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
17. Acceptance and Acknowledgment by the Elliott GP . . . . . . . . . . . . 14
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18. Binding Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
19. Compounding of Interest . . . . . . . . . . . . . . . . . . . . . . . . 14
20. Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 14
21. Representations and Warranties . . . . . . . . . . . . . . . . . . . . 15
22. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
23. Press Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
24. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
25. "All-or-None" Deal . . . . . . . . . . . . . . . . . . . . . . . . . . 16
26. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
A. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 16
B. Successors and Assigns . . . . . . . . . . . . . . . . . . . . 16
C. Entire Agreement; No Oral Agreements . . . . . . . . . . . . . 17
D. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
i. Syntek . . . . . . . . . . . . . . . . . . . . . . . . 17
ii. Partnership . . . . . . . . . . . . . . . . . . . . . . 18
iii. Committee . . . . . . . . . . . . . . . . . . . . . . . 18
iv. Mr. Elliott, or the Elliott GP . . . . . . . . . . . . 18
E. Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . 19
F. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . 19
G. Delays or Omissions . . . . . . . . . . . . . . . . . . . . . 19
H. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 19
I. Severability . . . . . . . . . . . . . . . . . . . . . . . . . 19
J. Ambiguities . . . . . . . . . . . . . . . . . . . . . . . . . 19
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IMPLEMENTATION AGREEMENT
This Implementation Agreement ("Agreement"), dated as of January 27,
1995, is made by and among, Syntek Asset Management, L.P. ("Syntek"), the
general partner of National Realty, L.P. (the "Partnership"), the Partnership,
the National Realty, L.P. Oversight Committee (the "Committee") and William H.
Elliott, on behalf of himself and the Elliott GP (as defined herein) and shall
be effective on the parties on the terms set forth herein.
RECITALS
A. Pursuant to a Settlement Agreement, dated as of May 9, 1990,
the plaintiffs, Joseph B. Moorman, et. al., and defendants, the Partnership,
National Operating, L.P., Syntek, Gene E. Phillips, William S. Friedman, Robert
A. McNeil, and Shearson Lehman Hutton, Inc., successor-in-interest to defendant
E.F. Hutton & Company, Inc., agreed to settle a class action litigation matter,
filed in the Superior Court of the State of California in and for the County of
San Mateo, No. 322135, captioned as Moorman, et. al. v. Southmark Corporation,
et. al.
B. In furtherance of the procedures set forth in Sections 6.3 and
6.4 of the Settlement Agreement, with the intent to clarify any ambiguities in
the Settlement Agreement, Syntek and the Committee desire to proceed with the
election of a successor general partner to Syntek, as general partner of the
Partnership, on the terms and conditions set forth in this Agreement. The
Partnership agrees to be bound by the terms and conditions set forth herein.
C. Syntek and the Committee have agreed that if Syntek nominates
the Elliott GP on the terms and conditions set forth in this Agreement, the
Committee will not (i) propose a candidate to run against the Elliott GP and
(ii) will stipulate that the Elliott GP is not an Affiliate (as defined in the
Settlement Agreement) of Syntek and Messrs. Phillips and Friedman and their
affiliates.
D. William H. Elliott, on behalf of himself and the Elliott GP,
has agreed to stand for election as the successor general partner on the terms
and conditions set forth herein, subject only to Mr. Elliott's and the Elliott
GP's right to decline to stand for election based on Mr. Elliott's and the
Elliott GP's right to decline to stand for election during the "due diligence"
period set forth in paragraph 1 of this Agreement.
E. Syntek and the Committee have agreed to submit this Agreement
to the Supervising Judge, the Honorable Thomas Jenkins, for the approval of the
court on the terms and conditions set forth in paragraph 3 of this Agreement.
F. Syntek, the Committee, the Partnership and Mr. Elliott, on
behalf of himself and the Elliott GP, now desire to set forth their intentions
and agreements
<PAGE> 5
with respect to the terms and conditions relating to having the Elliott GP
stand for election as the successor general partner to Syntek.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and obligations contained herein and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Syntek, the Committee,
the Partnership and Mr. Elliott, on behalf of himself and the Elliott GP,
hereto agree as follows:
AGREEMENT
1. Elliott GP "Due Diligence" Period. Mr. Elliott and the Elliott
GP (as defined in paragraph 10) shall have until February 27, 1995 (the "Due
Diligence Period") to decide whether Mr. Elliott and the Elliott GP wish to
accept the rights and responsibilities of the Elliott GP in this Agreement and
to stand for election as the successor general partner of the Partnership. At
any time during the Due Diligence Period, Mr. Elliott, on behalf of himself and
the Elliott GP, can notify Syntek and the Committee in writing of his desire to
be bound by the rights and obligations of the Elliott GP in this Agreement (the
"Elliott Acceptance Notice"). Upon receipt of the Elliott Acceptance Notice by
Syntek and the Committee, Mr. Elliott and the Elliott GP shall have the rights
and obligations of the Elliott GP set forth in this Agreement. If Mr. Elliott
and the Elliott GP condition delivery of the Elliott Acceptance Notice upon any
amendments to this Agreement, no party to this Agreement shall be required, or
have any duty, to negotiate such amendments. If Mr. Elliott either (i)
affirmatively notifies Syntek and the Committee within the Due Diligence Period
of Mr. Elliott's desire not to be bound by this Agreement, for any reason, or
(ii) fails by the expiration of the Due Diligence Period to notify Syntek and
the Committee in writing of Mr. Elliott's desire to be bound by the rights and
obligations of the Elliott GP in this Agreement, Mr. Elliott and the Elliott GP
shall have no rights or obligations under this Agreement.
2. Elliott Good Faith Deposit. Within five business days of
Syntek's and the Committee's receipt of the Elliott Acceptance Notice, Mr.
Elliott, on behalf of himself and the Elliott GP, shall deliver $100,000 in
readily available funds (the "Good Faith Deposit") to an escrow agent mutually
acceptable to Mr. Elliott, Syntek and the Committee (the "Escrow Agent").
Syntek, the Committee and Mr. Elliott shall deliver a tri-party instruction
letter to the Escrow Agent instructing the Escrow Agent to pay the Good Faith
Deposit, plus any interest thereon, to the Partnership if the Elliott GP fails
to stand for election as successor general partner for any reason other than
the following:
A. The termination of the Agreement by (i) the
Supervising Judge or (ii) any party to this Agreement, other than Mr. Elliott,
or the Elliott GP;
B. The death of Mr. Elliott; and
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C. The incapacity of Mr. Elliott to perform the duties
of the controlling person of the Elliott GP.
The tri-party instruction letter to the Escrow Agent shall
require the Escrow Agent to pay the Good Faith Deposit, plus any interest
thereon, to Mr. Elliott, or pursuant to his instructions, upon the final
tabulation of the votes of the limited partners of the Partnership related to
the proposed election of the Elliott GP as successor general partner (the "Vote
Tabulation"). The Escrow Agent shall be required to make this payment after
the Vote Tabulation regardless if the Elliott GP or is not, elected as the
successor general partner.
Mr. Elliott, Syntek and the Committee shall submit any dispute
related to the payment of the Good Faith Deposit to the Supervising Judge and
shall be bound by the Supervising Judge's order. The Escrow Agent shall be
entitled to rely on (i) the Supervising Judge's order with respect to payment
of the Good Faith Deposit or (ii) instructions signed by Syntek, the Committee
and Mr. Elliott. The Partnership shall indemnify the Escrow Agent in accordance
with customary practices for escrow agents.
3. Court Approval. Promptly after receipt of the Elliott
Acceptance Notice, Syntek and the Committee jointly shall move the court for
tentative approval of this Agreement and approval of the notice to be sent to
class members. Syntek and the Committee jointly shall transmit the notice to
class members at the time and in the manner directed by the court. Thereafter,
following receipt of any comments or objections from class members, Syntek and
the Committee jointly shall submit to the court all comments and objections
received and shall serve the other parties hereto, and a final hearing on the
approval of this Agreement shall be scheduled as the court directs. If the
court desires that the parties to the Agreement follow any other procedures not
set forth herein, the parties agree to use their best efforts to follow such
procedures upon notification from the court. Each party's obligation to proceed
with the terms and conditions set forth in this Agreement is subject to the
court issuing an appropriate court order approving this Agreement, the
implementation of the terms set forth herein, and finding that (i) the election
of the Elliott GP upon the terms set forth herein are all in the best interest
of the class members, and (ii) this Agreement and the terms contemplated herein
are not inconsistent with the Settlement Agreement. Paragraph 18 herein shall
govern after the court's tentative approval of this Agreement as set forth in
this paragraph 3.
4. Withdrawal of Syntek as General Partner. The Settlement
Agreement provides that Syntek's resignation shall take effect upon the Elliott
GP (or any other successor general partner) being duty elected and taking
office.(1) Syntek's
_______________
(1) Syntek and the Committee expressly reserve the right herein to assert
in any proceedings before the Supervising Judge (related to (i) the amount of
the Exit Fee (as defined in paragraph 5) and (ii)
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withdrawal, as general partner of the Partnership, shall comply with Section
17.2 of the First Amended and Restated Agreement of Limited Partnership, dated
as of January 29, 1987, as amended on May 14, 1990 ("Partnership Agreement")
except for the 180-day notice period, which shall be shortened pursuant to (i)
a valid amendment to the Partnership Agreement, or (ii) a valid waiver of this
provision, by the limited partners of the Partnership. In addition to the
requirement set forth in Section 17.2.3 of the Partnership Agreement that a
majority of the outstanding Units vote for the Elliott GP as the successor
general partner, Unit holders representing a majority of the Units held by
persons who are not affiliates of Syntek, or Syntek's affiliates
("Non-Affiliated Unitholders") who vote, must vote for the Elliott GP as the
successor general partner, in order for the Elliott GP to be elected as
successor general partner of the Partnership. As set forth in Section 17.2.3 of
the Partnership Agreement, if elected, the Elliott GP shall be admitted as a
general partner immediately prior to the withdrawal of Syntek as general
partner. If the required vote is not obtained, the provisions set forth in
paragraph 25 herein shall apply.
5. Syntek Exit Fee. The Supervising Judge shall determine the
amount of the "fair market value" of the "interest" of Syntek pursuant to
Section 17.10 of the Partnership Agreement, as clarified by Section 6.5 of the
Settlement Agreement (referred to herein as the "Exit Fee"). Syntek and the
Committee shall each submit to the Supervising Judge its good faith calculation
of the amount of the Exit Fee. Syntek and the Committee shall be allowed to
submit supporting documentation. Syntek and the Committee shall each be
entitled to receive copies of the other party's calculations and supporting
documentation. Syntek and the Committee shall each be entitled to submit
written materials in response to the other party's submissions. The Supervising
Judge, upon his own motion, may require the parties to present oral arguments
on the amount of the Exit Fee. The Partnership Agreement shall be amended to
preclude any Exit Fees being paid to the Elliott GP, or any other successor
general partner, other than (i) the redemption of the general partner's
interest on the terms set forth in paragraph 10.C herein and (ii) the payment
of any accrued but unpaid compensation owed to the general partner for the
services set forth in paragraph 10.E herein, each as set forth in the Amended
and Restated Partnership Agreement referred to in paragraph 11 herein.
6. Syntek Note. Syntek shall calculate the amount due on Syntek's
note to the Partnership given as partial consideration for its 1% general
partnership interest in the Partnership in the principal amount of $4,175,593
(the "Capital Contribution Note") plus interest accrued on the Capital
Contribution Note as required by the Settlement Agreement and Partnership
Agreement ("Accrued Interest"). This amount shall be confirmed by the
Partnership's certified public accountants pursuant to a certificate delivered
to the Committee and the Supervising Judge. If the Committee disputes such
amount, the Supervising Judge
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(the amount of Syntek's Capital Contribution (as defined in paragraph 6)) what
the "effective date" of Syntek's resignation under the Settlement Agreement
shall be.
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<PAGE> 8
shall determine the amount. The sum of the principal and Accrued Interest is
referred to herein as "Syntek's Capital Contribution." Syntek shall pay
Syntek's Capital Contribution to the Partnership in accordance with paragraph
8.E herein.
7. Syntek Affiliate Damages. The Supervising Judge shall
determine the amount of damages, if any, owed by Syntek to the Partnership, or
its affiliates, related to the following (referred to herein as "Syntek
Affiliate Damages"):
A. Assumption Agreement. The Partnership's entering into
the Acknowledgement and Assumption Agreement, dated as of December 27, 1991,
with American Realty Trust, Inc., Syntek West, Inc., Gene E. Phillips and
William S. Friedman (damages claim of approximately $1,800,000).
B. Note Payable to Garden Capital, L.P. The
Partnership's execution of a note payable to Garden Capital, L.P. in the
amount of $900,000 to extinguish the Southmark accruing note.
8. Calculation of Net Amounts Owed by Syntek and the Partnership.
The parties shall do the following:
A. Take the Supervising Judge's calculation of the
amount of the Exit Fee, if any, owed to Syntek;
B Subtract from the Exit Fee (or from zero, if no Exit
Fee is owed) the following:
i. The amount of Syntek's Capital Contribution;
and
ii. The amount, if any, of the Syntek Affiliate
Damages.
C. If the result of paragraph B above is a positive
number, the Partnership shall owe this amount to Syntek ("Net Partnership
Payment to Syntek"). If the result of paragraph B above is a negative number,
Syntek and its affiliates shall owe this amount to the Partnership ("Net
Syntek and Affiliates Payment to Partnership").
D. The Partnership shall be entitled to finance the Net
Partnership Payment to Syntek, if any, in accordance with paragraph 9 below.
E. Syntek and its affiliates shall be entitled to
finance the Net Syntek and Affiliates Payment to Partnership by delivering to
the Partnership a promissory note on the following terms:
i. Six quarterly equal installments of the
principal amount, with the first installment due on the 90th day after the
termination of Syntek as general partner;
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<PAGE> 9
ii. Six quarterly installments of the interest
due on the outstanding principal amount of the promissory note, with such
interest due on the same day as the principal payments in (i) above, and with
such interest accruing at the rate of 8 1/2% per year;
iii. The delivery of sufficient collateral to
maintain a 100% loan to value ratio while the promissory note is outstanding
and a corresponding security agreement or pledge agreement with respect to such
collateral, unless all of the following are true at the time of the delivery of
the promissory note, in which event, the debtor shall not be required to secure
the note:
a. The execution of the note will not
cause the maker of the note to be insolvent; and
b. Payment of the note, would not, for
any other reason, be impaired.
iv. If collateral is required to be delivered and
is not delivered, the Elliott GP, as general partner of the Partnership on
behalf of the Partnership, shall be entitled to enforce the Net Syntek and
Affiliates Payment to Partnership pursuant to the rights of a judgment
creditor.
9. Financing Terms of Net Partnership Payment to Syntek. If the
Partnership owes a Net Partnership Payment to Syntek, Syntek shall accept a
combination of (i) cash and (ii) a Partnership note ("Partnership Note") in
aggregate equal to the amount of the Net Partnership Payment to Syntek in full
satisfaction of the Net Partnership Payment to Syntek. The amount and the terms
of the Partnership Note shall be negotiated between Syntek and the Committee,
so that payments may be made by the Partnership to Syntek over a period of time
on terms which shall not hinder the Partnership's ability to meet its financial
obligations.
10. Consensus Successor General Partner. The Elliott GP shall be a
limited partnership, limited liability company or corporation controlled by
William H. Elliott ("Mr. Elliott"). Syntek shall nominate the Elliott GP as the
successor general partner of the Partnership. The Elliott GP must have a net
worth sufficient for special tax counsel to render the tax opinion referred to
in paragraph 14 below. The Committee hereby stipulates that the Elliott GP is
not an "Affiliate" (as defined in the Settlement Agreement) of Syntek, Messrs.
Phillips and Friedman and their affiliates. Syntek and all of its affiliates,
including the ART Group, shall vote all of their limited partnership Units of
the Partnership for the election of the Elliott GP as the successor general
partner. The terms related to the Elliott GP becoming the successor general
partner are set forth below.
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<PAGE> 10
A. Purchase Price of General Partnership Interests. The
Elliott GP shall purchase a 1% general partnership interest in the Partnership
and a 1% general partnership interest in the operating partnership (National
Operating, L.P.) for an aggregate 1.99% interest in the Partnership. The
purchase price for the 1.99% interest shall be equal to (i) the Market
Capitalization (defined below) multiplied by (ii) 2.03% (the "Elliott GP
Purchase Price").
"Market Capitalization" shall mean (i) $30.00
multiplied by (ii) the number of Units outstanding as of the date the Elliott
GP is elected successor general partner of the Partnership.
B. Payment Terms for General Partnership Interest. The
Elliott GP shall pay for the 1.99% interest with a combination of (i) cash and
(ii) a promissory note ("Elliott Note"). The mix of cash and the Elliott Note
shall be satisfactory to special tax counsel and shall be based upon amounts,
in the judgment of tax counsel, necessary for special tax counsel to render the
tax opinion referred to in paragraph 14 below. The Elliott Note shall bear
interest at the rate of 8-1/2% per year. A portion of any cash distributions to
the Elliott GP, or any successor general partner, shall be applied (as set
forth in the rest of this paragraph) to reduce the outstanding balance on the
Elliott Note, or any similar successor general partner note, as applicable. The
Elliott GP, or any successor general partner, shall make payments on the
Elliott Note, or any similar successor general partner note, equal to the
following formula:
C x %F x 2/3
Where,
C = The amount of cash to be distributed on a per Unit equivalent basis; and
%F = The original percentage of the Elliott Note (or successor general partner
note) financed in relation to the Elliott GP Purchase Price (or successor
general partner purchase price).
For example: If the Elliott GP originally financed 90% of the Elliott
GP Purchase Price, the Elliott GP shall repay the Elliott Note out of cash
distributions in an amount equal to 90% multiplied by 2/3, or 60% of the cash
distribution that the Elliott GP would have been entitled to receive, if the
entire distribution was made in cash. Accordingly, if a cash distribution to
the Elliott GP would have been $100, the Elliott GP shall pay $60 towards
repayment of the Elliott Note, and shall be entitled to $40 in cash.
C. Redemption of Elliott General Partnership Interest.
Upon the termination of the Elliott GP as the general partner of the
Partnership, the
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<PAGE> 11
Partnership shall redeem the Elliott GP's 1.99% general partnership interest
based on the following calculations:
i. The Market Capitalization (which shall be
based on the average closing prices of the Units for the 20 trading days
occurring prior to the public announcement of the termination of the Elliott GP
as general partner) shall be calculated (the "New Market Capitalization").
Then, the New Market Capitalization shall be multiplied by 2.03%.
ii. If the amount determined in subparagraph i
above is equal to or less than the Elliott GP Purchase Price multiplied by two,
that amount shall be the redemption price for the Elliott GP's general
partnership interest.
iii. If the amount determined in subparagraph i
above is greater than the Elliott GP Purchase Price multiplied by two, the
amount of the redemption price for the Elliott GP general partnership interest
shall be the sum of the following (an example is set forth as Exhibit A to this
Agreement):
a. The Elliott GP Purchase Price
multiplied by 1.33; and
b. The New Market Capitalization
multiplied by 0.67%.
iv. If the redemption price is greater than the
Elliott Purchase Price plus accrued and unpaid interest, the Partnership shall
pay the Elliott GP the net difference (the '"Net Redemption Amount") as
follows:
a. One-third of the Net Redemption
Amount, in cash on the day of the termination of the Elliott GP general
partnership interest;
b. Two-thirds of the Net Redemption
Amount, in the form of a promissory note, with interest at the rate of 8 1/2%
per year. This note shall be payable in two installments. The first installment
shall be due 12 months from the date of the note and shall be equal to 50% of
the principal amount of the note plus accrued interest. The second and last
installment shall be due 24 months from the date of the note and shall be equal
to the balance of the principal amount plus accrued interest. Provided the
Partnership has sufficient equity in assets available for encumbrance
(including unencumbered assets, or subordinate positions in encumbered assets),
the promissory note shall be secured with an initial loan to value ratio of
70%. Upon payment of the first installment, collateral shall be released so
that the loan to value ratio shall be 70% at that time.
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<PAGE> 12
D. Term of Elliott GP.
i. Syntek and its affiliates, including but not
limited to the ART Group, shall not under any circumstances vote their Units in
any manner in an action related to the removal of the Elliott GP as general
partner for 30 months from the date the Elliott GP takes office, unless such
removal is for cause. Syntek also covenants for a period of 30 months from the
Elliott GP taking office, that it shall not become the successor general
partner to the Elliott GP or any successor partner to the Elliott GP, if the
Elliott GP is removed without cause within 30 months from taking office, if any
of Syntek's or the ART Group's transferees (other than Rule 144(e) transferees)
vote for such removal. The Elliott GP, as successor general partner, shall have
all legal and equitable rights to enforce the provisions set forth herein.
The following provisions of the Partnership Agreement
shall be incorporated into the Amended and Restated Partnership Agreement:
a. Section 16.3A, requiring Unitholders
holding 50% of the total outstanding Units to vote for the removal of the
general partner;
b. Section 17.1, requiring a successor
general partner to be elected prior to the removal of the general partner; and
c. Section 16.3.3, requiring
Unitholders holding 66 2/3% of the total outstanding Units to vote for the
successor general partner.
ii. The limited partners, including Syntek and
its affiliates, may remove the Elliott GP, without cause, in accordance with
the terms of the Amended and Restated Partnership Agreement at any time after
the first 30 months.
iii. If Syntek and its affiliates vote with the
limited partners to remove the Elliott GP without cause, and such removal is
successful, during the period of time beginning on the first day of the 31st
month after the Elliott GP becomes the general partner, and ending on the last
day of the 48th month after the Elliott GP becomes the general partner, Syntek
shall pay, or shall cause its affiliates to pay $250,000, in cash, to the
Partnership (the "Removal Fee"). The Partnership shall make a special
distribution to the Non-Affiliated Unitholders in an amount equal to the
Removal Fee.
E. Fee Compensation. The Elliott GP, or, at Elliott
GP's election, any affiliate of Elliott GP, shall be entitled to receive the
following fees:
i. Asset Management Fee. An asset management fee
equal to the greater of (x) 1/3 of 1% of the Market Capitalization determined
and paid quarterly (at 1/12 of 1% of the Market Capitalization per quarter) or
(y) $60,000 per quarter;
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<PAGE> 13
ii. Property Disposition Fees.
a. A disposition fee equal to 0.5% of
the gross sales price of the asset; and
b. An incentive disposition fee equal
to 10% of the amount, if any, by which the gross sales price of any property or
asset sold by the Partnership exceeds 110% of the "adjusted cost" of such
property or asset. The "adjusted cost" would be modified to reflect property
values at December 31, 1994, with value calculated using the Partnership's
"Reevaluation Equity." "Reevaluation Equity" shall mean the difference between
the 1994 appraised value of the Partnership's real estate, adjusted to reflect
the Partnership's estimate of disposition costs, and the face amount of
mortgage notes payable and accrued interest, if any, encumbering such real
estate.
c. Both of the Property Disposition
Fees shall be paid quarterly, based on sales made for that quarter.
F. Options. Effective as of the date of taking office,
the Partnership shall grant options to purchase a total of 40,000 Units to the
Elliott GP, Mr. Elliott or to an affiliate of Mr. Elliott or Elliott GP in such
percentages or number of Units as Elliott GP determines in its sole discretion.
The exercise price for the options will be as follows:
20,000 Units @ $40 per Unit
20,000 Units @ $45 per Unit
The options shall be fully vested on the date of
issuance and shall be exercisable 6 months from the date of issuance. Any
unexercised options will expire 4 years from the date of issuance (subject to
the provisions set forth below):
i. If the Elliott GP is removed for cause during
the first 12 months, all unexercised options shall be forfeited;
ii. If the Elliott GP is removed for cause after
the first 12 months and before the last day of the 24th month, the optionholder
shall be entitled to exercise up to 50% of the unexercised options within 30
days from the removal date; and
iii. If the Elliott GP is removed for cause after
the 24th month, the optionholder shall be entitled to exercise up to 100% of
the unexercised options within 30 days from the removal date.
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<PAGE> 14
The options shall be subject to customary
anti-dilution protection. In addition, the exercise price will be reduced,
dollar for dollar, on a per Unit basis, for all distributions made by the
Partnership during the terms of the options in excess of 85% of the
Partnership's "Funds Available for Distribution" (as such term shall be defined
in the Option Agreement or Amended and Restated Partnership Agreement).
G. Services to the Partnership.
i. The Elliott GP shall agree that the parties
currently performing asset management (Basic Capital Management, Inc.),
property management (Carmel Realty Services, Ltd. ("Carmel") and its
subcontractors) and brokerage (Carmel) services shall continue to perform such
services for the Partnership unless the Elliott GP determines that another
party can perform such services at least as well and upon more advantageous
terms to the Partnership. The Elliott GP shall be entitled to discontinue such
services and to cancel these contracts upon 75 days notice after making this
determination.
ii. The Elliott GP and/or any parties controlled
by the Elliott GP or members of Mr. Elliott's family shall not directly or
indirectly receive any compensation from the Partnership in excess of the
compensation provided herein.
H. Powers of the Elliott GP. Except as otherwise
restricted herein, the Elliott GP shall have all powers and responsibilities
concerning the management and control of the Partnership that are currently set
forth in Section 15 of the Partnership Agreement.
11. Partnership Agreement Amendments. The Partnership Agreement
will be amended and restated to (i) be updated and (ii) implement the
provisions set forth herein (the "Amended and Restated Partnership Agreement").
The amendments to the Partnership Agreement shall be approved by Syntek, as
general partner, as appropriate. In addition, Syntek and its affiliates,
including the ART Group, shall vote their Units in favor of any of the
amendments which require the vote of the Unitholders. Finally, whether or not
required by the Partnership Agreement, or by law, a majority of the Units held
by the Non-Affiliated Unitholders who vote, must vote in favor of the
amendments. If the required vote is not obtained, the provisions set forth in
paragraph 25 shall apply. All of the compensation provisions for the general
partner of the Partnership in the Amended and Restated Partnership Agreement
shall be conformed to the compensation provided to the Elliott GP as set forth
herein.
12. Proxy Statement/Consent Solicitation. Syntek shall prepare, or
shall cause the Partnership to prepare a Proxy Statement/Consent Solicitation
pursuant to the requirements of the Securities and Exchange Commission ("SEC")
and all applicable state laws. The Partnership shall pay for all of the costs
related thereto. The Committee, the Elliott GP and their attorneys and agents
shall be entitled to
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<PAGE> 15
review and comment upon all documents submitted to the SEC or any other
regulatory agencies. However, the Proxy Statement/Consent Solicitation shall
specify that the Committee and the Elliott GP each:
i. Makes no representation regarding the
information set forth in the Proxy Statement/Consent Solicitation (other than
as set forth in subparagraph ii below);
ii. Has not participated in the preparation of
the Proxy Statement/Consent Solicitation (other than supplying information to
Syntek, in writing, specifically for use in the Proxy Statement/Consent
Solicitation; and
iii. Assumes no legal responsibility for the
information contained in the Proxy Statement/Consent Solicitation.
The Committee and the Elliott GP shall not have any prior
approval rights regarding Syntek's decision to file any documents with the SEC
or any other regulatory agency. However, the Committee shall be entitled to
petition the Supervising Judge to prevent Syntek from making any filing with
the SEC, or other applicable regulatory agency. The Supervising Judge shall be
required to order Syntek not to make such filing if the Supervising Judge finds
that (i) the Committee's objections are material to the solicitation of the
Unitholders or (ii) the Committee has not had adequate time to review the
documents to be filed. Syntek shall be entitled to represent in the Proxy
Statement/Consent Solicitation that the Committee has approved the Elliott GP
as the successor general partner. The Committee shall be entitled to request
that Syntek include statements attributable to the Committee in the Proxy
Statement/Consent Solicitation. Syntek shall be entitled to refuse to include
such statements in the Proxy Statement/Consent Solicitation, unless the
Supervising Judge, after petition by the Committee, orders such statements to
be included. Syntek shall use its best efforts to solicit the Unitholders to
vote for the Elliott GP and for the amendments to the Partnership Agreement.
The Partnership shall pay all costs associated with any proxy
solicitations. Syntek shall use its best efforts to cause the SEC and any other
applicable regulatory agency to approve the Proxy Statement/Consent
Solicitation. The Committee, the Elliott GP and their agents and attorneys
shall have no right to be present at any meetings with the SEC or any other
regulatory agencies.
13. Role of Mr. Elliott. Mr. Elliott shall be the point person
responsible for causing the parties to (i) enter into the additional agreements
contemplated by this Agreement, as set forth in paragraph 20; and (ii) conduct
the proxy solicitation contemplated herein. Mr. Elliott shall not personally
conduct the proxy solicitation. Commencing with execution of this Agreement,
the Partnership shall pay the reasonable fees and expenses of counsel retained
by Mr. Elliott to assist him in this process and for his due diligence, not to
exceed a cap of $50,000, unless the excess is
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<PAGE> 16
approved by the Supervising Judge. In addition, commencing with execution of
this Agreement, the Partnership shall pay Mr. Elliott his reasonable
out-of-pocket expenses related to this process and for his due diligence, not
to exceed a cap of $25,000. At Syntek's sole election, with such election being
made on or before February 8, 1995, the Elliott GP shall be entitled to receive
one of the following additional forms of compensation: (i) $10,000 per month
effective upon the Elliott Acceptance Notice and terminating upon the Vote
Tabulation, up to a maximum of $60,000, or (ii) a break-up fee of $100,000
payable if (x) this Agreement is terminated by Syntek and the Committee or (y)
the Elliott GP stands for election as successor general partner and is not
elected as successor general partner (the "Break-Up Fee"). If Syntek elects the
Break-Up Fee form of compensation, the Partnership shall pay the Break-Up Fee
into escrow, with the same Escrow Agent the parties selected under paragraph 2
for the Elliott Good Faith Deposit. The Break-Up Fee shall be paid into escrow
simultaneous with, or before, the Good Faith Deposit is paid into escrow. In
all situations, the Partnership shall pay the reasonable fees and costs of
special tax counsel, as set forth below in paragraph 14.
14. Special Tax Counsel. The Elliott GP, as the proposed successor
general partner, shall select special tax counsel to the Partnership, who is
reasonably acceptable to Syntek and the Committee. The Partnership shall pay
all of the reasonable fees and costs of such special tax counsel. The special
tax counsel shall render an opinion to the Partnership to the effect that the
election of the Elliott GP and any of the actions taken by the Partnership's
limited partners will not change the Partnership's tax status. If this opinion
cannot be obtained, the provisions set forth in paragraph 25 of this Agreement
shall apply.
15. Indemnification of the Committee. The Partnership shall enter
into separate, but identical, indemnification agreements with each member of
the Committee ("Indemnification Agreements"). The Indemnification Agreements
shall be drafted to be as favorable as possible to the members of the Committee
and shall indemnify the members of the Committee, the Committee's agents and
attorneys. The Indemnification Agreements shall contain terms similar, but not
limited to those contained in Section 21 of the Partnership Agreement,
including, but not limited to, the fullest indemnity possible and the
advancement of expenses.
16. Mutual Releases. Pursuant to separate, but identical releases,
Syntek, the ART Group, the Partnership, Gene Phillips and Bill Friedman shall
release the members of the Committee from any claims known or unknown. The
Committee shall release Syntek, any other defendants, who also release the
Committee, and any persons constituting the ART Group, who also release the
Committee, from any claims known or unknown that the Committee, in its capacity
as a Committee, may have against such persons pursuant to the Committee's
powers as set forth in the Settlement Agreement.
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<PAGE> 17
17. Acceptance and Acknowledgment by the Elliott GP. The
Supervising Judge's order shall cover this paragraph 17 and the Elliott GP
shall, as a condition to becoming the successor general partner of the
Partnership, execute a document acknowledging the Partnership's entering into
the Indemnification Agreements and the releases and shall agree not to
challenge the validity of such agreements.
18. Binding Agreement; Supervising Judge's Powers. The parties
intend for this Agreement to be binding upon the parties upon the terms and
conditions set forth herein. The parties hereby agree to be bound by the
Supervising Judge's order with respect to any dispute that arises in the
parties' interpretation of this Agreement. The parties agree that the
Supervising Judge can compel performance with this Agreement and the agreements
contemplated hereby, in the absence of any mutual agreement by the parties.
19. Compounding of Interest. All references to interest payments
in this Agreement, and the documents contemplated hereby, shall mean that such
interest shall compound annually.
20. Additional Agreements. After receiving the Elliott Acceptance
Notice, the following documents (and all other necessary documents) shall be
prepared:
A. The Proxy Statement/Consent Solicitation;
B. The Amended and Restated Partnership Agreement;
C. The Option Agreement;
D. The various escrow instructions;
E. The Elliott Note;
F. The Committee Indemnification Agreements;
G. The Mutual Releases;
H. The Elliott GP acknowledgment document required by
paragraph 17 herein;
I. An agreement between the Partnership, Syntek and the
ART Group, pursuant to which Syntek and the ART Group shall covenant to cause
any transferee, other than a transferee in a sale pursuant to Rule 144(e) of
the Securities Act of 1933, as amended, to agree not to vote for Syntek, or
Syntek's affiliates as the successor general partner to the Elliott GP upon the
removal of the Elliott GP without cause within 30 months from taking office
(the "Voting Restriction Agreement").
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<PAGE> 18
J. Customary and usual legal opinions.
K. The necessary court papers and notices, induding but
not limited to the approvals contemplated by paragraph 3 and the papers
required to determine the Syntek Exit Fee, the Syntek Capital Contribution and
the Syntek Affiliate Damages.
21. Representations and Warranties. Each party to this Agreement
represents and warrants that:
A. The execution, delivery and performance of this
Agreement have been duly executed and delivered by such party and constitute
the legal and valid binding obligation of such party, legally enforceable
against such party in accordance with the terms of this Agreement, except that
such enforcement may be subject to (a) bankruptcy, insolvency, reorganization
or other similar laws now or hereafter in effect affecting the enforcement of
creditor's rights generally, and (b) the equitable powers of the court, which
has jurisdiction over the underlying litigation. However, the Committee brings
to the other parties' attention that the Committee's powers derive exclusively
from the Settlement Agreement and the Committee' Bylaws;
B. No other proceedings on such party's part are
necessary to authorize this Agreement and the documents and transactions
contemplated hereby;
C. Each party has all requisite corporate power and
authority to execute and deliver this Agreement and the documents contemplated
herein and to carry out and perform its obligations under the terms of this
Agreement and the agreements contemplated hereby. However, the Committee brings
to the other parties' attention that the Committee's powers derive exclusively
from the Settlement Agreement and its Bylaws.
22. Definitions. All terms not defined herein shall have the
meaning set forth in the Partnership Agreement, except that the ART Group shall
mean (i) Syntek, (ii) Syntek Asset Management, Inc., a Texas corporation, (iii)
American Realty Trust, Inc., a Georgia corporation, (iv) Messrs. Phillips and
Friedman, and (v) any other person or persons listed on the Schedule 13D
filings made by American Realty Trust, Inc. related to ownership in the
Partnership. The term "removal for cause" shall be reasonably defined by the
parties.
23. Press Release. Within two business days from receiving the
Elliott Acceptance Notice, the Partnership shall issue a press release in the
form attached hereto as Exhibit B.
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<PAGE> 19
24. Authorization. The signatories of this Agreement represent and
warrant that their respective execution, delivery and performance of this
Agreement has been duly authorized.
25. "All-or-None" Deal, The agreements made by any party to the
this Agreement shall only be binding upon such party if the Elliott GP is
elected as successor general partner. If the Elliott GP is not elected as
successor general partner, the Settlement Agreement, prior to the execution of
this Agreement shall be in full force and effect and the Committee and the
Supervising Judge shall be entitled to exercise any powers the Committee or the
Supervising Judge has under such Settlement Agreement. By way of illustration,
the following would occur, if the Elliott GP is not elected as successor
general partner:
A. This Agreement would terminate;
B. Syntek's status as general partner shall be restored
to Syntek's status immediately prior to signing the Implementation Agreement;
C. The Supervising Judge's determination of the "Exit
Fee" would be voided;
D. The Supervising Judge's determination of the Syntek
Affiliate Damages would be voided;
E. The Partnership Agreement would not be amended;
F. The parties could assert any rights they have under
the Settlement Agreement.
26. Miscellaneous.
A. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of California applicable
to contracts between California residents entered into and to be performed
entirely within the State of California, without regard to principles of
conflict of laws, provided, however, the internal governance of the Amended and
Restated Partnership Agreement and other Partnership documents shall be
governed by the laws of Delaware.
B. Successors and Assigns. Except as expressly set forth
herein, no part of this Agreement or any rights, duties or obligations
described herein shall be assigned or delegated without the express written
consent of the parties hereto. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors and assigns of the parties hereto.
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<PAGE> 20
C. Entire Agreement; No Oral Agreements. This Agreement,
including the documents referred to herein, constitutes the full and entire
understanding and agreement among the parties with regard to the subjects
hereof and supersedes all prior agreements and understandings, both written and
oral. Each party expressly acknowledges that there are no agreements, oral or
written, between the parties other than in this Agreement. Each party expressly
waives the right to assert the existence of any oral agreements with respect to
the transactions contemplated herein.
D. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or mailed by registered or certified mail or commercial overnight courier
(e.g., Federal Express, etc.), return receipt or confirmation of delivery
requested, or by facsimile transmission with voice confirmation of receipt, to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
i. Syntek:
c/o Syntek Asset Management, Inc.
10670 North Central Expressway, Suite 600
Dallas, TX 75231
Attn: Chief Executive Officer
Facsimile: (214) 373-0740
with a copy to:
Basic Capital Management, Inc.
10670 North Central Expressway, Suite 600
Dallas, TX 75231
Attn: Robert A. Waldman, Senior Vice President
and General Counsel
Facsimile: (214) 373-0740
with a copy to:
Alan Halkett
Latham & Watkins
633 West 5th Street, Suite 4000
Los Angeles, CA 90071
Facsimile: (213) 891-8763
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<PAGE> 21
ii. Partnership:
c/o Syntek (listed above)
iii. Committee:
Kenneth R. Kelly, Chair
2533 Allen Drive
Auburn, CA 95602
Facsimile: (916) 878-9339
with copies to:
McDonough, Holland & Allen
A Professional Corporation
555 Capitol Mall, 9th Floor
Sacramento, CA 95814
Attn: Julie Green
Facsimile: (916) 444-8334
Fotenos & Suttle, P.C.
50 California Street, Suite 700
San Francisco, CA 94111
Attn: James F. Fotenos
Facsimile: (415) 398-1869
iv. Mr. Elliott, or the Elliott GP:
William H. Elliott
WHE, Inc.
P.O. Box 15530
Beverly Hills, CA 90209-2530
Facsimile: (310) 276-9730
with a copy to:
Resch, Polster, Alpert & Berger
10390 Santa Monica Blvd., 4th Floor
Los Angeles, CA 90025-5058
Attn: Lee M. Polster
Facsimile: (310) 552-3209
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<PAGE> 22
E. Cooperation. All parties agree to execute and deliver
such other documents, certificates, agreements and other writings and to take
such other actions as may be necessary or desirable in order to expeditiously
consummate or implement the transactions contemplated by this Agreement.
F. Interpretation. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
G. Delays or Omissions. No delay or omission to exercise
any right, power or remedy accruing to any party to this Agreement, upon any
breach or default of another party under this Agreement, shall impair any such
right, power or remedy of such party nor shall it be construed to be a waiver of
any such breach or default, or any acquiescence therein. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, or by law or otherwise afforded to any
party, shall be cumulative and not alternative (except as expressly set forth).
H. Counterparts. This Agreement may be executed in
counterparts, each of which shall be enforceable against the party actually
executing such counterpart, and all of which together shall constitute one
instrument.
I. Severability. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
J. Ambiguities. The provisions of this Agreement shall
be interpreted without regard to the drafting source and as if all parties
drafted this Agreement in a reasonable manner to effect the purposes of the
parties.
[THIS PART INTENTIONALLY LEFT BLANK]
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<PAGE> 23
Syntek, the Partnership, the Committee and Mr. Elliott, on
behalf of himself and the Elliott GP, indicate their agreement to be bound by
the terms of this Agreement by the signatures of their authorized
representatives below.
NATIONAL REALTY, L.P., a Delaware THE NATIONAL REALTY, L.P.
limited partnership OVERSIGHT COMMITTEE
By Syntek Asset Management, L.P., a
Delaware limited partnership, as By /s/ KENNETH R. KELLY
general partner ------------------------------
Committee Member
By Syntek Asset Management, Inc.,
a Texas corporation, as managing By /s/ JOSEPH S. RADOVSKY
general partner ------------------------------
Committee Member
By /s/ HAMILTON P. SCHRAUFF
-----------------------------
Hamilton P. Schrauff, /s/ WILLIAM H. ELLIOTT
Executive Vice President ---------------------------------
WILLIAM H. ELLIOTT, on behalf of
himself, and the Elliott GP (as
defined in this Agreement)
SYNTEK ASSET MANAGEMENT,
L.P., a Delaware limited partnership
By Syntek Asset Management, Inc., a
Texas corporation, as managing general
partner
By /s/ HAMILTON P. SCHRAUFF
------------------------------
Hamilton P. Schrauff,
Executive Vice President
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<PAGE> 24
EXHIBIT A
Example of Paragraph 10.C.(iii)
Assume the following:
1. The Elliott GP Purchase Price was $1,218,000 (calculated below); and
Assume: Market Capitalization
$60,000,000 (2,000,000 Units @ $30)
then, Elliott GP Purchase Price
$60,000,000 X 2.03% = $1,218,000
==========
2. a. The New Market Capitalization is $200,000,000.
b. The New Market Capitalization is $60,000,000.
Then,
A. For $200,000,000 New Market Capitalization:
New Market Capitalization X 2.03% = $4,060,000
Elliott GP Purchase Price = $1,218,000
Redemption Price = $4,060,000 unless
$4,060,000 is greater than ($1,218,000 X 2)
Since $4,060,000 is greater than $2,436,000, do the following:
1. Multiply Elliott Purchase Price ($1,218,000)
by 1.33 = $1,619,940
2. Multiply the New Market Capitalization
by 0.67% ($200,000,000 X 0.67%) = $1,340,000
----------
3. Total $2,959,940
==========
B. For $60,000,000 New Market Capitalization:
New Market Capitalization X 2.03% = $1,218,000
Elliott GP Purchase Price = $1,218,000
Redemption Price = $1,218,000 unless
$1,218,000 is greater than ($1,218,000 X 2)
Therefore, Purchase Price = $1,218,000
<PAGE> 25
EXHIBIT B
Form of Press Release
FOR IMMEDIATE RELEASE
NATIONAL REALTY, L.P. ANNOUNCES
AGREEMENT TO NOMINATE SUCCESSOR GENERAL PARTNER
DALLAS, February ___,1995 -- National Realty, L.P. (ASE: NLP) ("National
Realty") today announced that an agreement had been entered into which provides
for the nomination of a successor general partner of National Realty. The
agreement is subject to approval of the Supervising Judge who was appointed in
connection with the previously-reported 1990 settlement of a class action
entitled Joseph B. Moorman, et al. v. Southmark Corporation, et al. (the
"Moorman Settlement"). The Moorman Settlement had established a five-year plan
which, among other things, required the appointment and operation of an
Oversight Committee and, under certain circumstances, would require the
replacement of Syntek Asset Management, L.P. ("SAMLP") as the general partner
of National Realty.
On January 27, 1995, National Realty, SAMLP, the Oversight Committee and
William H. Elliott executed an Implementation Agreement which provides for the
nomination of an entity controlled by Mr. Elliott to be the successor general
partner and for the resolution of all related matters under the Moorman
Settlement. The Implementation Agreement was subject to receipt of a notice
from Mr. Elliott that he consented to stand for election as the successor
general partner. On February ___, 1995, Mr. Elliott formally notified the
parties that he would stand for such election.
Mr. Elliott currently serves as ________ of _____________ in _________________,
California. He is the former Chairman and Chief Executive Officer of Angeles
Corporation, a real estate investment company located in Los Angeles,
California.
The Implementation Agreement shall be submitted to the Supervising Judge for
tentative approval and approval of the notice to be sent to the original class
members. Upon final approval by the Supervising Judge, the proposal to elect
the successor general partner will be submitted to the unitholders of National
Realty for
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a vote. In addition, the unitholders will vote upon amendments to the National
Realty partnership agreement which relate to the proposed compensation of the
successor general partner and other related matters.
Upon approval by the unitholders, SAMLP shall withdraw as general partner and
the successor general partner shall take office. If the required approvals are
obtained, National Realty anticipates that the successor general partner may be
elected and take office during the third or fourth quarter of 1995.
The Implementation Agreement provides that SAMLP, and its affiliates owning
units in National Realty, shall not vote to remove the successor general
partner, except for removal with cause, for a period of thirty months from the
date the successor general partner takes office. In addition, the Supervising
Judge shall make a determination of any amounts which National Realty may owe
to SAMLP upon SAMLP's withdrawal as general partner and any amounts which SAMLP
or its affiliates may owe to National Realty. Any amounts which National Realty
may be determined to owe to SAMLP may be paid by National Realty over a period
of time to be determined by the parties on terms which shall not hinder
National Realty's ability to meet its other financial obligations.
Upon the election and taking office of the successor general partner, the
Moorman Settlement plan and the Oversight Committee shall be terminated. If the
successor general partner is not elected, the existing Moorman Settlement shall
remain in full force and effect and all of the provisions of the Implementation
Agreement shall be voided.
National Realty is a national real estate investment partnership engaged in the
acquisition, financing, operation and sale of real estate and related assets.
[Quotes from SAMLP or chair of Committee, in either case subject to the
reasonable approval of the other party.]
###
For more information, please contact:
Kevin LeBlanc, Manager Investor Relations (214) 692-4800
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EXHIBIT 99.3
FIRST AMENDMENT TO THE IMPLEMENTATION AGREEMENT
This First Amendment to the Implementation Agreement, dated as
of January 27, 1995, among Syntek Asset Management, L.P. ("Syntek"), the
general partner of National Realty, L.P. (the "Partnership"), the Partnership,
the National Realty, L.P. Oversight Committee (the "Committee") and William H.
Elliott, on behalf of himself and the Elliott GP (as defined herein), is
entered into as of February 27, 1995.
RECITALS
A. As of January 27, 1995, the parties set forth above
entered into the Implementation Agreement (the "Implementation Agreement"). The
Implementation Agreement provided that Mr. Elliott and the Elliott GP (as
defined in paragraph 10 of the Implementation Agreement) were required to
notify Syntek and the Committee of Mr. Elliott's and the Elliott GP's desire to
be bound by the Implementation Agreement by no later than February 27, 1995.
B. The Implementation Agreement also required Syntek to
elect prior to February 8, 1995, whether the Elliott GP would receive a
specified amount of compensation or a "Break-Up Fee" for certain actions taken
by Mr. Elliott and the Elliott GP pursuant to the Implementation Agreement.
C. The parties now desire to modify some of the terms
set forth in the Implementation Agreement.
AMENDMENTS
1. The Elliott Due Diligence Period as defined in
paragraph 1 of the Implementation Agreement shall be amended to be April 7,
1995, rather than February 27, 1995.
2. The third sentence of paragraph 13 shall be amended
to read in its entirety as follows:
<PAGE> 2
"Commencing with execution of this Agreement, the
Partnership shall pay the reasonable fees and
expenses of counsel retained by Mr. Elliott to assist
him in this process and for his due diligence, not to
exceed a cap of $100,000, unless the excess is
approved by the Supervising Judge."
3. The fifth sentence of paragraph 13 shall be amended
to read in its entirety as follows:
"At Syntek's sole election, with such election being
made on or before the end of the Due Diligence
Period, the Elliott GP shall be entitled to receive
one of the following additional forms of
compensation: (i) $10,000 per month effective upon
the Elliott Acceptance Notice and terminating upon
the Vote Tabulation, up to a maximum of $60,000, or
(ii) a break-up fee of $100,000 payable if (x) this
Agreement is terminated by Syntek and the Committee
or (y) the Elliott GP stands for election as
successor general partner and is not elected as
successor general partner (the "Break-Up Fee")."
IN WITNESS WHEREOF, Syntek, the Partnership, the Committee and
Mr. Elliott, on behalf of himself and the Elliott GP, indicate their agreement
to be
[THIS PORTION INTENTIONALLY LEFT BLANK]
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<PAGE> 3
bound by the terms of this First Amendment to the Implementation Agreement by
the signatures of their authorized representatives below.
NATIONAL REALTY, L.P., a Delaware THE NATIONAL REALTY, L.P.
limited partnership OVERSIGHT COMMITTEE
By Syntek Asset Management, L.P., a
Delaware limited partnership, as By /s/ KENNETH R. KELLY
general partner ------------------------------
Committee Member
By Syntek Asset Management, Inc.,
a Texas corporation, as managing By /s/ JOSEPH S. RADOVSKY
general partner ------------------------------
Committee Member
By /s/ HAMILTON P. SCHRAUFF
-----------------------------
Hamilton P. Schrauff, /s/ WILLIAM H. ELLIOTT
Executive Vice President ---------------------------------
WILLIAM H. ELLIOTT, on behalf of
himself, and the Elliott GP (as
defined in this Agreement)
SYNTEK ASSET MANAGEMENT,
L.P., a Delaware limited partnership
By Syntek Asset Management, Inc., a
Texas corporation, as managing general
partner
By /s/ HAMILTON P. SCHRAUFF
------------------------------
Hamilton P. Schrauff,
Executive Vice President
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