<PAGE> 1
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
December 15, 1997
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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)
Delaware 1-9648 75-2163175
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(State of incorporation (Commission File (IRS Employer
or organization) Number) Identification No.)
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 December 17, 1997, National Realty, L.P. ("National Realty") announced
that an agreement had been entered into which provides for the nomination of a
successor general partner of National Realty and provides for the transfer of
certain assets of National Realty to a new entity. 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 December 15, 1997, National Realty, SAMLP, the Oversight Committee,
Joseph B. Moorman, Invenex and the Class Counsel executed an Agreement for
Establishment of Class Distribution Fund and Election of Successor General
Partner (the "Agreement") which provides for the nomination of an entity
affiliated with SAMLP to be the successor general partner of National Realty,
for the establishment of a fund for the benefit of the Moorman Class Members
consisting of cash and properties owned by National Realty and for the
resolution of all related matters under the Moorman Settlement.
The Agreement shall be submitted to the Supervising Judge for approval.
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.
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, it is anticipated that the successor general partner will be
elected and take office during the second quarter of 1998.
SAMLP has agreed to waive its rights under the Moorman Settlement
Agreement to receive any payment from National Realty of the fees it is
entitled to receive upon the election of a successor general partner. As of
December 31, 1996, this fee was calculated to be $42.0 million.
Upon final approval by the Supervising Judge, National Realty will
transfer $1.9 million in cash and five shopping center properties to the new
entity which will be owned by the Moorman Class Members and managed for their
benefit by a court approved board. This fund is being established in order to
provide additional benefits to the Moorman Class Members.
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Upon the election and taking office of the successor general partner and
the transfer of the cash and properties to the Class Fund, the Moorman
Settlement Plan and the Oversight Committee shall be terminated.
The press release generally describing this matter and the Agreement are
attached as exhibits to this Report on Form 8-K.
ITEM 7. Financial Statements and Exhibits.
Exhibits:
99.1. Press Release, dated December 17, 1997, regarding the Agreement
for Establishment of Class Distribution Fund and Election of
Successor General Partner.
99.2. Agreement for Establishment of Class Distribution Fund and
Election of Successor General Partner dated December 15, 1997,
among National Realty, L.P., Syntek Asset Management, L.P.,
National Realty, L.P. Oversight Committee, Joseph B. Moorman,
Invenex and Class Counsel.
SIGNATURE
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 hereunto duly authorized.
NATIONAL REALTY, L.P.
SYNTEK ASSET MANAGEMENT, L.P.
General Partner
By Its Managing General Partner
Syntek Asset Management, Inc.
Dated: December 22, 1997 By: /s/ RANDALL M. PAULSON
--------------------------------
Randall M. Paulson
President
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
99.1. Press Release, dated December 17, 1997, regarding the Agreement
for Establishment of Class Distribution Fund and Election of
Successor General Partner.
99.2. Agreement for Establishment of Class Distribution Fund and
Election of Successor General Partner dated December 15, 1997,
among National Realty, L.P., Syntek Asset Management, L.P.,
National Realty, L.P. Oversight Committee, Joseph B. Moorman,
Invenex and Class Counsel.
</TABLE>
<PAGE> 1
PRESS RELEASE
FOR IMMEDIATE RELEASE FOR ADDITIONAL INFORMATION:
CONTACT: Dee Littrell
Manager, Investor Relations
(214) 692-4800
NATIONAL REALTY, L.P. ANNOUNCES
AGREEMENT TO NOMINATE SUCCESSOR GENERAL PARTNER
AND ESTABLISH A CLASS DISTRIBUTION FUND
DALLAS, December 17, 1997--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 and the
establishment of a class distribution fund. 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 December 15, 1997, National Realty, SAMLP, the Oversight Committee, Joseph
B. Moorman, Invenex and the Class Counsel executed an Agreement for
Establishment of a Class Distribution Fund and Election of a Successor General
Partner, (the "Agreement"). The Agreement provides for the nomination of an
entity affiliated with SAMLP to be the successor general partner, the
establishment of the fund for the benefit of the Moorman Class Members
consisting of cash and properties owned by National Realty and for the
resolution of all related matters under the Moorman Settlement.
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SAMLP has agreed to waive its rights under the Moorman Settlement to receive
any payment from National Realty of the fees it is entitled to receive upon
the election of a successor general partner. As of December 31, 1996, this fee
was calculated to be $42.0 million.
The Agreement shall be submitted to the Supervising Judge for approval. 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.
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 second quarter of 1998.
Upon final approval by the Supervising Judge, National Realty will transfer
$1.9 million in cash and five shopping center properties to the new entity
which will be owned by the Moorman Class Members and managed for their benefit
by a court approved board. This fund is being established in order to provide
additional benefits to the Moorman Class Members.
Upon the election and taking office of the successor general partner and the
transfer of the cash and properties to the Class Fund, the Moorman Settlement
Plan and the Oversight Committee shall be terminated.
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Randall M. Paulson, President of Syntek Asset Management, Inc., the managing
general partner of SAMLP, stated that: "The waiver of the fees owed to SAMLP
will relieve National Realty of a substantial liability and be extremely
beneficial to the limited partners of National Realty. The election of a
successor general partner will satisfy the last remaining requirement of the
Moorman Settlement and will completely and finally resolve the uncertainties
and expenses relating to the Moorman Settlement. In addition, the
establishment of the class fund will provide the Moorman Class Members with a
significant pool of assets from which they will be able to receive cash
benefits."
National Realty, L.P. is a nationwide real estate investment partnership.
# # #
<PAGE> 1
AGREEMENT FOR ESTABLISHMENT
OF CLASS DISTRIBUTION FUND
AND ELECTION OF SUCCESSOR GENERAL PARTNER
This Agreement for Establishment of Class Distribution Fund and
Election of Successor General Partner ("Agreement"), dated as of December 15,
1997, 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"), Joseph B.
Moorman ("Moorman"), James F. Fotenos ("Class Counsel"), and Invenex, a
California corporation ("Invenex"), and shall be effective on the parties on
the terms set forth herein.
R E C I T A L S
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 (the "Court") of the State of California in and for
the County of San Mateo, Case No. 322135, captioned as Moorman, et al., v.
Southmark Corporation, et al.
B. In furtherance of the provisions set forth in the Settlement
Agreement, the parties to this Agreement 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.
C. The parties have agreed that if Syntek nominates an affiliate of
Syntek ("Syntek Affiliate") on the terms and conditions set forth in this
Agreement, the parties to this Agreement (i) will not oppose the election of
the Syntek Affiliate and (ii) will not propose, or otherwise assist, a
candidate to run against the Syntek Affiliate.
D. The Partnership has agreed to contribute, on the terms and
conditions set forth in this Agreement, $1,900,000 plus the Partnership's
interests, subject to wrap mortgages, in five specified properties (the
"Properties") to an entity (the "Class Entity") which will be owned by the
Class Members and managed for the benefit of the Class Members.
E. The parties to this Agreement have agreed to submit this Agreement
to the Supervising Judge, The Honorable Thomas M. Jenkins, for the approval of
the Court.
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F. The parties to this Agreement now desire to set forth their
intentions and agreements with respect to the terms and conditions relating to
the election of the Syntek Affiliate as the successor general partner to Syntek
and the contribution by the Partnership of the cash and Properties to the Class
Entity.
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, the parties to this
Agreement hereby agree as follows:
AGREEMENT
1. Nomination of Syntek Affiliate. Upon the Court's approval of this
Agreement, Syntek shall provide formal notice to the parties of the nomination
by Syntek of the Syntek Affiliate to stand for election as general partner of
the Partnership. Syntek, for and on behalf of the Partnership, shall promptly
prepare and file with the Securities and Exchange Commission a proxy statement
or consent solicitation under the provisions of Section 14 of the Securities
Exchange Act of 1934, as amended.
2. Non-Opposition to Syntek Affiliate. Subject to the satisfaction of
the conditions to the approval and establishment of the Class Entity, the
parties to this Agreement have agreed that they will not oppose the election of
the Syntek Affiliate nor will they propose any candidate to run against the
Syntek Affiliate.
3. Pro Rata Voting Requirement. All Units of the Partnership held by
Syntek, or any affiliate of Syntek, shall be voted pro rata (without regard to
abstentions) to the votes cast by the limited partners of the Partnership who
are not affiliates of Syntek.
4. Transfer of General Partner Interests/ Assumption of Notes. Upon
the election and taking of office by the Syntek Affiliate, Syntek shall assign
to the Syntek Affiliate all of Syntek's rights under the Agreement of Limited
Partnership of the Partnership. At the same time, the Syntek Affiliate shall
assume all of Syntek's obligations under the promissory note given to the
Partnership by Syntek as partial consideration for Syntek's general partnership
interest in the Partnership. As of September 30, 1997, the note had a principal
balance of $4,175,593 plus accrued interest of approximately $6,900,000.
5. Waiver of Exit Fee. Upon the election and taking of office of the
Syntek Affiliate, Syntek shall, on its own behalf and its successors, waive all
of its rights to the payment of any fee which may be required to be paid by the
Partnership pursuant to Section 6.5 of the Settlement Agreement. As disclosed
in the Partner ship's 1996 Annual Report of Form 10-K and the financial
statements contained therein, the Managing General Partner of Syntek calculated
the fee owed to Syntek to be $42 million at December 31, 1996.
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6. Resolution of Disputes. This Agreement resolves any and all
disputes or claims arising under the Settlement Agreement among the parties to
this Agreement. As consideration for the waiver by Syntek of any fees owed
under Section 5 above, and its performance of this Agreement, Syntek shall have
no obligation to pay any sums to the Partnership, the unitholders of the
Partnership or the Class Members.
7. (a) Treatment of the Class Entity as Qualified Settlement Fund. It
is the intent of the parties that the Class Entity be treated and taxed as a
"Qualified Settlement Fund" ("QSF") pursuant to the provisions of Section
1.468B-1 -- 1.468B-5 of the Treasury Regulations (the "QSF Regulations"). Each
of the Partnership and the Class Entity shall treat and report the contribution
of cash and Properties by the Partnership to the Class Entity contemplated
hereby in accordance with the provisions of the QSF Regulations. The Class
Entity shall, within the meaning of Treas. Reg. Section 1.468B-1(c)(1), remain
subject to the continuing jurisdiction of the Court throughout the term of the
existence of the Class Entity.
(b) Issuance of Interests in the Class Entity. (i) The Class
Entity intends to qualify for the exemption (the "Exemption") provided by
Section 3(a)(10) of the Securities Act of 1933, as amended (the "Securities
Act"), 15 U.S.C. Section 77c(a)(10), in connection with the issuance of
interests (the "Interests") in the Class Entity to the Class Members. The
Partnership agrees to cooperate with the Class Entity in perfecting the
Exemption from registration of the Interests under the Securities Act. The
parties understand that, as one condition to perfection of the Exemption,
before issuance of any Interests in the Class Entity to the Class Members, the
terms and conditions of the issuance must be approved, after a hearing upon the
fairness of such terms and conditions at which all Class Members shall have the
right to appear, by the Supervising Judge or the Court, as the case may be. If
such approval is not obtained, or any other condition to the perfection of the
Exemption is not met, then the Class Entity shall register the Interests, as
required, pursuant to the provisions of the Securities Act. In such event the
Partnership agrees to pay all costs and expenses reasonably incurred by the
Class Entity to register and issue the Interests under the Securities Act to
the Class Members, including, without limitation, attorneys' fees, audit fees,
and printing and distribution expenses.
(ii) The Class Entity shall issue the Interests to the Class
Members pro rata to the Units of the Partnership initially issued by the
Partnership to the Class Members upon the Partnership's organization in 1987.
The Partnership agrees to provide its full cooperation to the Class Entity to
locate Class Members who have moved ("Missing Class Members") since the last
posting of their addresses on the list of Class Members (the "Class Members'
List") maintained by the Partnership. The Class Entity agrees to exercise
reasonable diligence to locate Missing Class Members. In the event that the
Class Entity is unable to locate one or more Missing Class Members, then, no
later than twelve (12) months from the date that the Class Entity first issues
Interests to the Class Members, the Class Entity shall petition the Supervising
Judge or the Court for instructions on the proper distribution of those
Interests issuable to Missing Class Members pursuant to the provisions of
Section 384 of the Code of Civil Procedure. The Partnership agrees to cooperate
with the Class Entity with respect to any such petition.
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8. Contribution of Properties. (a) Within fifteen days after the later
to occur of the Court's approval of this Agreement and the Court's tentative
approval of a business plan for the operation of the Class Entity (Section 15
hereof) (the last of such agreements to occur referred to as "Court Approval")
and within five days of obtaining any required lender approval for the transfer
of each Property (not to exceed sixty days), the Partnership shall transfer all
of its right, title and interest in the following five Properties to the Class
Entity:
i. Cross County Mall
Mattoon, Illinois
ii. Harbor Plaza Shopping Center
Aurora, Colorado
iii. Katella Plaza
Orange, California
iv. Southern Palms Shopping Center
Tempe, Arizona
v. Westwood Shopping Center
Tallahassee, Florida
(b) The Partnership shall pay all closing costs of transferring
the Properties to the Class Entity, including escrow fees, title insurance fees
and expenses, and transfer taxes.
(c) Invenex and Class Counsel shall have until January 19, 1998
(or, upon written notice by either of them to the other parties, until February
2, 1998) (the "Drop Dead Date") to complete their due diligence on the
Properties. The Partnership agrees to fully cooperate with Invenex and Class
Counsel to enable them to conduct their due diligence. The Partnership shall
reimburse, upon demand, Invenex and Class Counsel for all expenses reasonably
incurred by them in conducting such due diligence, including the cost of
consultants, advisors, or experts retained by them to conduct such due
diligence. Invenex or Class Counsel may terminate this Agreement, by notice in
writing to the partes given on or prior to the close of business on the Drop
Dead Date, in the event that Invenex or Class Counsel, in good faith, based
upon their due diligence of the Properties, concludes that any of the
representations made by the Partnership in Section 20 hereof is untrue in any
material respect.
(d) Neither Syntek nor any affiliate of Syntek shall charge or
accept from the Partnership a fee, commission, or other compensation in
connection with the transfer of the Properties to the Class Entity.
9. Cash Contribution. Within fifteen days of the date of Court
Approval, the Partnership shall contribute $1,900,000 in cash to the Class
Entity.
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10. Issuance of Wrap Mortgages. The Partnership shall remain liable
for the payment of all indebtedness currently encumbering the Properties. The
Class Entity shall issue to the Partnership wrap mortgages in the aggregate
principal amount of $32,050,000. The Class Entity shall issue a separate wrap
mortgage to the Partnership on each of the Properties. The wrap mortgages shall
be nonrecourse to the assets (other than the specific Property to which it
relates) of the Class Entity and shall be nonrecourse to the assets of the
directors or trustees of the Class Entity and to the assets of the Class
Members. The wrap mortgages shall not contain cross- default provisions with
respect to the other wrap mortgages issued by the Class Entity with respect to
the Properties. The wrap mortgage indebtedness shall be for a term of no more
than five years and shall bear interest at 7.75% per annum for years one
through three, and shall bear interest at 10% per annum for years four through
five. Interest only shall be payable on the wrap mortgage indebtedness,
monthly. The wrap mortgage indebtedness may be prepaid at any time, in whole or
in part, without premium or penalty. The Partnership shall not have the right
to accelerate or exercise any right of foreclosure under the wrap mortgages for
any failure by the Class Entity to pay interest on the wrap mortgages for the
first 18 months of their terms, as long as the net operating income (before
payment of management fees) generated by the Properties is insufficient to make
any such interest payment(s) and to service all indebtedness senior to the wrap
mortgages. In such event, the interest unpaid shall be added to the principal
of the wrap mortgage(s), and bear interest at 7.75% or 10% per annum, as the
case may be.
11. Value of Properties. The parties acknowledge that the value of the
Partnership's interest in the properties was appraised at $43,996,000 as of
December 31, 1996. However, neither Syntek nor the Partnership warrants the
value which may ultimately be realized by the Class Entity or the amount of
distributions which Class Members may receive from the Class Entity.
12. Invenex Fee and Reimbursement. The parties acknowledge and agree
that Invenex has been instrumental in the negotiation of this Agreement and
shall be responsible for the creation and operation of the Class Entity,
subject to the supervision of the Class Entity's board of directors or
trustees. From December 1, 1997, through the earlier of the date that the
Properties are transferred to the Class Entity or this Agreement is terminated,
the Partnership shall pay to Invenex a fee of $15,000 per month plus
reimbursement of the reasonable costs and expenses incurred in negotiating and
completing the transaction contemplated under this Agreement, conducting due
diligence, inspecting the Properties and retaining experts. Such fee shall be
paid on the first of each month.
13. Additional Fees. (a) Other than as explicitly provided
hereby, any fees sought by attorneys or others in connection with this
Agreement shall be submitted to the Class Entity for approval. Other than as
explicitly provided hereby, any fees approved shall be paid by the Class
Entity.
(b) The fees and expenses of Fotenos & Suttle, P.C. in
representing the Class Members in connection with this Agreement, its
implementation, the organization of the Class Entity, and the issuance of
Interests in the Class Entity to the Class Members, shall be as authorized by
the Supervising Judge and shall be paid by the Partnership, monthly.
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14. Class Entity Costs. Other than as explicitly provided hereby,
all costs of the organization and operation of the Class Entity, including
legal fees, shall be the sole responsibility of the Class Entity.
15. Structure and Operation of Class Entity. The Class Entity shall be
managed by a board of directors or trustees, a majority of whose members shall
by independent of the management of the Class Entity. The initial directors or
trustees shall be nominated by Invenex and approved by Class Counsel and the
Supervising Judge. The board of directors or trustees of the Class Entity
shall, within 60 days of its organization, prepare and submit for approval of
Class Counsel and for the tentative approval of the Supervising Judge a
business plan for the operation of the Class Entity. The business plan, as so
approved, shall be described in the notice transmitted to the Class Members, as
contemplated by Section 7(b) hereof. The business plan shall be subject to the
final approval of the Supervising Judge or Court, as the case may be, at the
hearing contemplated by Section 7(b).
16. Termination of the Settlement Agreement. (a) Upon the later to
occur of (i) the organization of the Class Entity and the transfers to the
Class Entity as contemplated by Sections 8 and 9 hereof, after approval by the
Court, and (ii) the selection and taking of office of the successor general
partner of the Partnership on the terms and conditions set forth in this
Agreement, the Settlement Agreement and the Settlement Plan thereunder shall
terminate.
(b) Article 21 of the Partnership Agreement of the Partnership
provides for indemnification by the Partnership of each "Indemnitee," as
defined in the Partnership Agreement. Effective the date of termination of the
Settlement Agreement hereunder, the Partnership agrees to indemnify the members
of the Oversight Committee, and each of them, and the Committee's agents,
advisors, attorneys, and affiliates (collectively, "Indemnified Persons"), in
the same manner and to the full extent that each "Indemnitee" is indemnified
pursuant to the provisions of Article 21 of the Partnership Agreement of the
Partnership, in connection with the Indemnified Person's participation in the
activities of the Oversight Committee under the Settlement Agreement.
(c) Effective the date of termination of the Settlement
Agreement hereunder, the Partnership, on its own behalf and on behalf of each
and every of its affiliates, hereby releases the Indemnified Persons, and each
of them, from any and all claims, demands, rights, liabilities, and causes of
action of every nature and description, known or unknown, arising out of or in
connection with such Indemnified Person's participation in the activities of
the Oversight Committee under the Settlement Agreement.
17. 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 and supersedes all prior drafts, understanding and agreements.
This Agreement shall not be binding on any party hereto until it is executed by
at least two of the members of the Oversight Committee and by each other party
hereto. The parties hereby agree to submit to the Supervising Judge 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
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parties. In the event any dispute under this Agreement arises among the
parties, within two business days of the notice of the disagreement, each party
shall submit a written statement of their respective position on the dispute to
the Supervising Judge, who shall select the position most in accordance with
this Agreement. The parties in dispute shall submit such further or additional
evidence in connection with any such dispute as ordered or requested by the
Supervising Judge. This decision shall be final and binding upon the parties.
18. Compounding of Interest. All references to interest payments in
this Agreement, and the documents contemplated hereby, shall mean that such
interest shall compound annually, unless a specific contrary provisions has
been set forth herein.
19. Additional Agreements. The following documents (and all other
necessary documents) shall be prepared:
A. The Proxy Statement/Consent Solicitation;
B. The Assignment of Interests to Syntek Affiliate;
C. The Assumption of Syntek's Note by Syntek Affiliate;
D. Notice of Hearing to the Class Members as Required by Section
3(a)(10) of the Securities Act;
E. The Class Entity Business Plan;
F. The Assignment of the Partnership's Interests in the
Properties, including all additional documentation customarily
employed in the transfer of commercial properties, including,
without limitation, warranty deeds attesting to the transfer of
good and marketable title to the Properties to the Class
Entity; and
G. The Wrap Mortgages on the Properties.
20. Representations and Warranties. Syntek, for and on behalf of the
Partnership, hereby represents and warrants to the other parties hereto that:
A. The execution, delivery, and performance of this Agreement
has been duly executed and delivered by the Partnership and constitutes the
legal and valid and binding obligation of the Partnership, enforceable against
the Partnership in accordance with its terms, except as such enforcement may be
subject to bankruptcy, insolvency, reorganization, or other similar laws now or
hereinafter in effect, and subject to the equitable powers of the Court which
has jurisdiction over the underlying litigation.
B. The execution, delivery, and performance of this Agreement
has been duly executed and delivered by Syntek and constitutes the legal and
valid and binding obligation of Syntek, enforceable against Syntek in
accordance with its terms, except as such
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enforcement may be subject to bankruptcy, insolvency, reorganization, or other
similar laws now or hereinafter in effect, and subject to the equitable powers
of the Court which has jurisdiction over the underlying litigation.
C. The appraised value, as determined by the Partnership's
independent appraisers, of the Properties was, at December 31, 1996,
$43,996,000.
D. The current principal of the aggregate indebtedness encumbering
the Properties does not exceed $20,000,000.
E. The Properties generated net operating income (before
management fees) of $3,969,237 for the 11 months ended November 30, 1997, and
are reasonably projected by the Partnership to generate no less than $4,500,000
in net operating income for the calendar year 1998 (before payment of
management fees).
F. The Properties generated cash flow, after payment of management
fees, debt service, and repairs, but before payment of capital expenditures, of
$1,469,228 for the 11 months ended November 30, 1997, and are reasonably
projected to generate cash flow, after payment of debt service (assuming the
wrap mortgages contemplated by Section 10 hereof were in place) and repairs,
but before payment of management fees, of no less than $2,215,745 for the
calendar year 1998.
G. On transfer of the Properties to Class Entity, Class Entity
shall have the full right, power, and authority to manage the Properties,
subject only to the terms and provisions of the loan agreements and mortgages
currently encumbering the Properties and, in the case of the Southern Palms
Shopping Center, the joint venture agreement with the joint venture partner
owning a 25% interest therein.
21. Definitions. All terms not defined herein shall have the meaning
set forth in the Partnership Agreement or Moorman Settlement Agreement, as
applicable.
22. Press Release. Within two (2) business days from the approval of
this Agreement by the Court, or at such earlier date as the Partnership, upon
the advice of its counsel, determines such disclosure is required by applicable
securities law, the Partnership shall issue a press release describing the
terms of this Agreement.
23. Authorization. The signatories of this Agreement represent and
warrant that their respective execution, delivery, and performance of this
Agreement has been duly authorized.
24. Failure to Elect Affiliates. If the Syntek Affiliate does not
obtain the required vote to be elected, Syntek shall promptly nominate a
non-affiliate to be the candidate as successor general partner. Syntek's
affiliates will vote all of their Units in favor of the election of such
non-affiliate and the non-affiliate shall take office as successor general
partner on the same terms as set forth for the Syntek Affiliate under this
Agreement.
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25. Miscellaneous.
A. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California
applicable to contacts between California residents entered into
and to be performed entirely within the State of California,
without regard to the 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 de
scribed herein shall be assigned or delegated without the
express written consent of the parties hereto. Except as
otherwise provided herein, the provisions hereof shall inure to
the benefit of, and be binding upon, the successors and assigns
of the parties hereto.
C. Entire Agreement; No Oral Agreements. This Agreement,
including the documents referred to herein, constitutes the
full and entire understanding and agreement among the parties
with regard to the subject hereof and supersedes all prior
agreements and understanding, 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 required, 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, Texas 75231
Attention: Chief Executive Officer
Facsimile: (214) 373-0740
with a copy to:
Basic Capital Management, Inc.
10670 North Central Expressway, Suite 600
Dallas, Texas 75231
Attention: Robert A. Waldman, Senior Vice President
and General Counsel
Facsimile: (214) 373-0740
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<PAGE> 10
ii. Partnership:
c/o Syntek (listed above)
iii. Committee:
Kenneth R. Kelly, Chair
2533 Allen Drive
Auburn, California 95603
Facsimile: (916) 878-9339
with a copy to:
McDonough, Holland & Allen
A Professional Corporation
555 Capitol Mall, 9th Floor
Sacramento, California 95814
Attention: Julie Green
Facsimile: (916) 444-8334
iv. Invenex:
Ronald T. Baker
1940 Olivera Road, Suite E
Concord, California 94520
Facsimile: (510) 609-1808
v. Moorman:
Joseph B. Moorman
6851 Glen Lake Parkway, Apt. J
Atlanta, Georgia
Facsimile: (404) 256-9882
vi. Class Counsel:
James F. Fotenos
Fotenos & Suttle, P.C.
50 California Street, Suite 700
San Francisco, California 94111
Facsimile: (415) 398-1869
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<PAGE> 11
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.
Syntek, the Partnership, the Committee, Moorman, Invenex, and
Class Counsel indicate their agreement to be bound by the terms of this
Agreement by the signature of their authorized representatives below.
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<PAGE> 12
<TABLE>
<S> <C>
NATIONAL REALTY, L.P., By SYNTEK ASSET MANAGEMENT,
a Delaware Limited Partnership INC., a Texas Corporation, as
Managing General Partner
By SYNTEK ASSET MANAGEMENT,
L.P., a Delaware Limited Partnership, By ___________________________________
as General Partner Randall M. Paulson, President
THE NATIONAL REALTY, L.P.
And ____________________________________ OVERSIGHT COMMITTEE
Gene E. Phillips
By ___________________________________
By SYNTEK ASSET MANAGEMENT, Kenneth R. Kelly
L.P., a Delaware Limited Partnership, Committee Chair
By SYNTEK ASSET MANAGEMENT, By ___________________________________
INC., a Texas Corporation, as Ronald T. Baker
Managing General Partner Committee Member
By _____________________________________
Randall M. Paulson, President
______________________________________
And ____________________________________ Joseph B. Moorman
Gene E. Phillips On behalf of himself
INVENEX
By ___________________________________
Ronald T. Baker, President
CLASS COUNSEL
______________________________________
James F. Fotenos
</TABLE>
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