National Industrial Investors, Inc. - Page 6

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            McMahon purchased a 50-percent interest in Senter Associates.                              
            When Byrne stopped working for Parr, McMahon repaid the debt by                            
            transferring half of his interest in Senter Associates to Byrne.                           
            Parr knew of this arrangement.                                                             
                  Parr sold the Burke Building, along with the lease, to                               
            Senter Associates sometime before July 10, 1970.  The sole                                 
            consideration was the assumption by Senter Associates of the TIAA                          
            encumbering liability, which at the time of acquisition had a                              
            remaining principal balance of $304,271.63.                                                
                  In August of 1971, Senter Associates and Burke entered into                          
            a second lease (the Burke Lease), which superseded the original                            
            lease negotiated by Parr.  The Burke Lease provided for the                                
            construction of a 34,000 square foot addition to the Burke                                 
            Building (the Addition) and for a corresponding increase in rent.                          
            The lease guaranteed an annual rent, starting at $65,250 and                               
            increasing over time.  Senter Associates purchased land for the                            
            Addition from Burke for $21,600 on September 22, 1971.                                     
                  Shortly before the Addition was completed and paid for,                              
            Senter Associates incorporated and on December 18, 1971, became                            
            NII.  The partners contributed all the assets of Senter                                    
            Associates to NII, which also assumed all of the liabilities of                            
            Senter Associates.  In return the partners, including Byrne, each                          
            received 500 shares of NII stock and a corporate note for                                  

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