National Industrial Investors, Inc. - Page 5

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                  Over the years NII has had four subsidiaries engaged in                              
            various businesses, but its primary asset and source of income                             
            has always been its building on Senter Road in San Jose,                                   
            California (the Burke Building).  The original owner of the                                
            building, Parr Properties (Parr), an industrial real estate                                
            developer, leased the building to Burke Rubber Company (Burke) on                          
            May 10, 1968, and later, in April of 1969, borrowed $310,000 from                          
            Teachers Insurance & Annuity Association of America (TIAA)                                 
            against both the building and the lease.  Shortly thereafter,                              
            Parr liquidated all of its assets, including disposition of the                            
            Burke Building.                                                                            
                  Before that time, Byrne had worked for Parr for                                      
            approximately 20 years, and at the time of the liquidation, he                             
            was an executive vice-president and industrial director of Parr.                           
            When Parr sold off its assets,  Byrne and a group of investors                             
            bought the Burke Building.                                                                 
                  Parr's board of directors approved the sale, but suggested                           
            that Byrne not participate as a partner in the venture until                               
            after Parr had liquidated so as to avoid the appearance of self-                           
            dealing on his part.  Consequently, Byrne devised an alternative                           
            plan.                                                                                      
                  Byrne lent his brother-in-law, Hugh McMahon, Jr.,                                    
            (McMahon), money to invest in Senter Associates, the partnership                           
            acquiring the Burke Building.  With this loan and his own funds,                           





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