2925 Briarpark, Ltd., James C. Motley, Tax Matters Partner - Page 4

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          loan or the build-out loan.  Briarpark was not subject to an                
          examination by the IRS for the taxable year 1987.                           
               First Republic Bank Houston (First Republic) became the                
          successor in interest to InterFirst.  The Federal Deposit                   
          Insurance Corporation, as receiver for First Republic, assigned             
          the modified loan and the build-out loan (the loans) to NCNB                
          Texas National Bank (NCNB or bank).                                         
               During March 1989, Briarpark submitted an application to               
          NCNB seeking to modify the loans.  On March 15, 1989, Mr. Motley            
          submitted several similar proposals to NCNB regarding the sale of           
          the property.  In NCNB's view, the best proposal was one in which           
          the property would be sold for $12,700,000.                                 
               As of July 1989, Briarpark was in default on the loans.  On            
          July 21, 1989, Briarpark signed a sale agreement to sell the                
          property to Dan Associates.  Dan Associates conditioned its                 
          purchase of the property upon Briarpark's arranging the                     
          satisfaction or removal of the encumbrances for consideration               
          paid to NCNB not in excess of $11,490,000.  On July 31, 1989,               
          NCNB agreed to release its liens to allow the sale of the                   
          property to Dan Associates for $12,200,000 with the proceeds                
          being assigned to NCNB.                                                     
               On October 5, 1989, Briarpark and Dan Associates amended the           
          sale agreement.  Under the amended agreement, Briarpark was                 
          required to arrange the satisfaction of the loans and removal of            
          the encumbrances for consideration not exceeding $11,036,000.  On           




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