Exhibit 99.1

EX-99 3 exhibit_99-1.htm EXHIBIT 99.1 Exhibit 99.1

Vincent P. Finigan, Jr., State Bar No.: 53517 George Donaldson, State Bar No.: 79971
Howard Holderness, State Bar No.: 169814 Daniel B. Harris, State Bar No.: 117230
MORGAN, LEWIS & BOCKIUS LLP LAW OFFICES OF GEORGE DONALDSON
One Market Plaza, Spear Tower 456 Montgomery Street
San Francisco, California 94105 Suite 1250
Telephone: (415) 442-1700 San Francisco, California 94104
Facsimile: (415) 442-1010 Telephone: (415) 394-8500
Facsimile: (415) 394-8506

Attorneys for Plaintiffs

Allan T. Slagel (pro hac vice)
Brett Nolan (pro hac vice)
SHEFSKY & FROELICH LTD.
444 North Michigan Avenue
Suite 2500
Chicago, Illinois 60611
Telephone: (312) 527-4000
Facsimile: (312) 527-1007

Attorneys for Defendants

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF CONTRA COSTA, CALIFORNIA

MORGAN K. BUCHANAN, JAMES P. MILLS, JESSE L. CREWS individually )
and on behalf of all others similarly situated, )
)
Plaintiffs, )
)
v. )
)
NTS-PROPERTIES ASSOCIATES V, a Maryland limited partnership; )
NTS-PROPERTIES ASSOCIATES VI, a Maryland limited partnership; )Case No. C 01 - 05090
NTS CAPITAL CORPORATION, a Kentucky corporation; ORIG, LLC, a )
Kentucky limited liability company and J.D. NICHOLS, )STIPULATION AND AGREEMENT OF
)SETTLEMENT
Defendants. )Location: Courtroom 2
)Judge: David Flinn
)Action Filed: December 12, 2001
)Trial Date: None Set

TABLE OF CONTENTS
Page
ARTICLE I: DEFINITIONS..................................................5

ARTICLE II: SETTLEMENT CONSIDERATION....................................17

ARTICLE III: SETTLEMENT ADMINISTRATION...................................25

ARTICLE IV: SETTLEMENT CLASS CERTIFICATION..............................28

ARTICLE V: DISCHARGE OF CLAIMS.........................................28

ARTICLE VI: REQUESTS FOR EXCLUSIONS AND OBJECTIONS TO SETTLEMENT........30

ARTICLE VII: IMPLEMENTATION OF STIPULATION...............................30

ARTICLE VIII: NOTICE OF SETTLEMENT........................................33

ARTICLE IX: FINAL APPROVAL HEARING AND FINAL ORDER OF JUDGMENT..........34

ARTICLE X: CONDITIONS TO SETTLEMENT....................................36

ARTICLE XI: TERMINATION OF SETTLEMENT...................................37

ARTICLE XII: ATTORNEYS' FEES, COSTS AND EXPENSES.........................38

ARTICLE XIII: RIGHT OF WITHDRAWAL.........................................40

ARTICLE XIV: STIPULATION NOT ADMISSION...................................40

ARTICLE XV: MISCELLANEOUS TERMINOLOGY AND CONSTRUCTION..................41

This Stipulation and Agreement of Settlement, by and among the parties
hereto, is entered into as of December 5, 2003, through their undersigned
attorneys, providing for a full and final settlement, subject to Court approval,
of the above-captioned class action case on the following terms and conditions:

RECITALS

Capitalized terms not otherwise defined shall have the meaning set forth in
Article I of this Stipulation.

WHEREAS,

1. On December 12, 2001, a complaint was filed in the Superior Court of the
State of California, County of Contra Costa, captioned Buchanan, et al. v.
NTS-Properties Associates, et al., Case No. C 01-05090 ("California
Litigation"), by Morgan K. Buchanan, James P. Mills and Jesse L. Crews on behalf
of a putative class of current and former owners of interests in the
Partnerships. Named as defendants were NTS-Properties Associates, NTS-Properties
Associates IV, NTS-Properties Associates V, NTS-Properties Associates VI and
NTS-Properties Associates VII, NTS Capital Corporation, J.D. Nichols, NTS
Development Company, Brian Lavin, ORIG, LLC and Barbara Nichols ("Initial
Defendants").

2. Plaintiffs' claims arise out of alleged acts, errors, omissions,
practices, and course of conduct engaged in by the Initial Defendants in
connection with the operation and management of the Partnerships, including, but
not limited to, violations of the representations in the respective prospectuses
for each Partnership and breaches of their respective Limited Partnership
Agreements. Plaintiffs allege, among other things, that the General Partners,
aided and assisted by the other Initial Defendants, breached their fiduciary
duties through extending the life of the Partnerships and, a series of Tender
Offers wherein the Partnerships or Affiliates of the General Partners
repurchased the Units from Limited Partners at allegedly less than their fair
value and pursuant to allegedly misleading documents.

3. On January 11, 2002, Initial Defendants filed a Notice of Removal Under
28 U.S.C.ss. 1441(b) with the United States District Court for the Northern
District of California,

seeking to remove the Complaint to the Federal District Court for the Northern
District of California on the grounds of diversity jurisdiction.

4. On March 4, 2002, Barbara Nichols, Brian Lavin, J.D. Nichols, NTS
Capital and NTS Development filed a Joint Motion to Dismiss for Lack of Personal
Jurisdiction under Fed. R. Civ. P. 12(b)(2). At the same time the General
Partners filed a Motion to Dismiss Count I under Fed. R. Civ. P. 12(b)(6) and
all Initial Defendants filed a Motion to Dismiss Counts II, III and IV under
Fed. R. Civ. P. 12(b)(6).

5. After the briefing on these motions was completed, the Federal District
Court entered an Order on June 13, 2002, directing Initial Defendants to show
cause why the California Litigation should not be remanded to the Court. On July
8, 2002, Plaintiffs and Initial Defendants entered into a stipulation agreeing
to the remand of the California Litigation to the Court.

6. On August 21, 2002, a Motion to Quash Service of Summons ("Motion to
Quash") was filed by Barbara Nichols, Brian Lavin, J.D. Nichols, NTS Capital and
NTS Development. At the same time, Initial Defendants also filed a demurrer
directed to the First, Third and Fourth causes of action of the Complaint.

7. After document discovery and depositions concerning the Motion to Quash,
a stipulation was entered dismissing the claims against Barbara Nichols, Brian
Lavin and NTS Development, with J.D. Nichols and NTS Capital Corp. agreeing to
submit to the jurisdiction of the Court. On September 25, 2002, an Order was
entered by the Court dismissing Barbara Nichols, Brian Lavin and NTS
Development.

8. On October 25, 2002, after briefing and argument of counsel, the Court
entered a Decision and Order sustaining, in part, and denying, in part, the
demurrer. In its Decision and Order, the Court sustained the demurrer as to
claims against NTS-Properties Associates, NTS-Properties Associates IV and
NTS-Properties Associates VII. The remainder of the demurrer was denied.

9. On November 6, 2002, Defendants filed an answer denying any wrongdoing
or liability to Plaintiffs or the putative Class and asserting a number of
affirmative defenses.

Thereafter, the Defendants and Plaintiffs began document discovery with
Defendants producing approximately 75,000 pages of documents.

10. On February 13, 2003, Plaintiffs filed a Motion for Class
Certification. Plaintiffs sought certification of a class of the current Limited
Partners (excluding the General Partners and their Affiliates) and those former
Limited Partners who sold their interests in the Tender Offers. Thereafter,
Defendants and Plaintiffs engaged in written and oral discovery on the Motion
for Class Certification. On April 4, 2003, due to the settlement negotiations
being conducted at that time, Defendants and Plaintiffs submitted, and the Court
entered, an Agreed Order extending the time for briefing the Motion for Class
Certification. On April 28 and June 6, 2003, the court granted additional
extensions to allow continued negotiations and efforts to consummate a
settlement.

11. On February 27, 2003, a complaint was filed in the Jefferson Circuit
Court, of the State of Kentucky, captioned Joseph Bohm, et al. v. J.D. Nichols,
et al., Case No. 03 CI 01740 (the "Kentucky Litigation"), by Joseph Bohm and
Warren Heller, M.D., on behalf of current and former limited partners against
essentially the same defendants in the California Litigation, except for
NTS-Properties Associates and Barbara Nichols. Gregory Wells, the Chief
Financial Officer of NTS Capital and NTS Development, was also named as a
defendant. Plaintiffs in the Kentucky Litigation sought substantially similar
relief from substantially the same parties as Plaintiffs in the California
Litigation.

12. On March 21, 2003, Plaintiffs in the Kentucky Litigation filed a First
Amended Complaint. The First Amended Complaint asserted the exact same claims
alleged in the complaint, but added two additional Defendants: (1)
NTS-Properties Associates, the general partner of NTS-Properties III; and (2)
NTS-Properties Plus Associates, the general partner of NTS-Properties Plus.

13. Settlement Class Counsel conducted extensive discovery and
investigation into the claims alleged against Defendants and their respective
General Partners during the prosecution of the California Litigation and in
connection with the settlement negotiations. This discovery included inspecting
approximately 100,000 pages of documents produced by the

Defendants, review and analysis of publicly-available information and other
factual investigation. Settlement Class Counsel has also investigated and
researched the law applicable to Plaintiffs' claims and defenses raised by the
Defendants, and hired experts to help evaluate such claims and defenses,
including the damages allegedly suffered by the Settlement Class Members and the
Partnerships.

14. Based on their investigation of the facts and of the applicable law,
Plaintiffs and Settlement Class Counsel have concluded that the proposed
settlement of the California Litigation on the terms and conditions of this
Stipulation is fair, reasonable, and adequate and is in the best interests of
the Settlement Class. Plaintiffs and Settlement Class Counsel have reached their
conclusion concerning the fairness of the settlement after considering the risks
and difficulties involved in attempting to establish a right of recovery on
behalf of the Settlement Class, the expense and length of time necessary to
continue the litigation through trial and the appeals that might follow, and the
uncertainty inherent in any complex litigation and the substantial benefits of
the Settlement for the Settlement Class, including the fact that even if the
Plaintiffs ultimately prevailed in their claims, there could be no assurance
that the Settlement Class Members would receive any greater recovery than they
will receive from the Settlement. Plaintiffs have claimed, and continue to
claim, that each and all of the contentions asserted by them have merit.

15. The Settling Defendants deny the allegations in the California and
Kentucky Litigation, deny any fault, wrongdoing, or liability relating in any
way to, inter alia, the Tender Offers; any statements or demands concerning the
Partnerships; and the operation and management of any of the Partnerships. The
Settling Defendants further deny that they acted improperly in any way, and deny
any liability of any kind to Plaintiffs in either the California or Kentucky
Litigation, the classes they seek to represent or the Partnerships. The Settling
Defendants are entering into this Stipulation because the proposed settlement
would eliminate the burden, inconvenience and expense of further litigation and
disputes concerning the alleged misconduct, and to achieve total and final
release and resolution. In the absence of this

Stipulation, the Settling Defendants would vigorously assert and pursue several
defenses as a complete bar to recovery in the California and Kentucky
Litigations.

16. The Settlement contemplated by this Stipulation is the product of
extensive, good faith, and arm's length negotiation between Settlement Class
Counsel and Counsel for the Defendants conducted over the past ten months. These
negotiations resulted in the settlement set forth in this Stipulation.
Furthermore, Settlement Class Counsel negotiated for and received revisions to
the proposed corporate structure of NTS Realty.

NOW, THEREFORE, in consideration of the foregoing Recitals and the
agreements, covenants, representations and warranties set forth herein, IT IS
HEREBY STIPULATED AND AGREED by and among the Parties, by and through their
counsel, that, subject to the approval of the Court, all claims that have been
or could have been asserted in the California Litigation shall be finally and
fully compromised and settled as to the Released Parties for the Released
Claims, and this action shall be dismissed on the merits and with prejudice upon
the following terms and conditions:

ARTICLE I:
DEFINITIONS

As used in this Stipulation, the following capitalized terms shall have the
meanings respectively assigned to them below.

Section 1.1. "AMEX" shall mean the American Stock Exchange, LLC.

Section 1.2. "Administrative Expenses" shall mean all expenses arising out
of the administration of the Settlement, including but not limited to, payments
to the Claims Administrator and Settlement Trustee or other costs attendant to
the administration of the Settlement.

Section 1.3. "Affiliate" of a Person means, with respect to that Person (a)
a Person that directly or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with that Person; (b) if
the Person is a partnership, any general partner of the partnership, any
shareholder of a corporate general partner of the partnership and any direct or
indirect owner or parent of any such general partner or shareholder; (c) any

partnership in which that person or an affiliate of that Person is a general
partner; and (d) the heirs, executors and administrators, successors and assigns
of each such Person identified in (a)-(c) hereof.

Section 1.4. "Attorneys' Fees and Expenses" shall mean the attorneys' fees,
costs and expenses including fees and expenses of experts, as provided for in
Article XIII and as approved by the Court.

Section 1.5. "CBRE" shall mean C.B. Richard Ellis, Inc., Valuation and
Advisory Services, the national real estate organization retained by the General
Partners and ORIG to appraise the real estate assets to be contributed or merged
into NTS Realty as provided for in Section 2.2(d).

Section 1.6. "California Litigation" shall mean the case captioned Morgan
K. Buchanan, et al. v. NTS-Properties Associates V, et al., Case No. C 01 -
5090, pending in the Superior Court of the State of California, County of Contra
Costa.

Section 1.7. "Claim" shall mean the right to the amount of consideration to
which each Claimant is entitled to receive pursuant to this Settlement as
determined by the Plan of Allocation set forth in Section 2.7.

Section 1.8. "Claimant" shall mean any Former Limited Partner who files a
Proof of Claim in such form and manner and within such time as provided for in
Section 3.2, or as the Court may otherwise prescribe.

Section 1.9. "Claims Administrator" shall mean the firm retained by
Settlement Class Counsel to issue the Notice to Class Members and collect and
process Proofs of Claim and Requests for Exclusion as provided for in Section
3.1.

Section 1.10."Class" or "Settlement Class" shall mean the class proposed to
be certified as described in Section 4.1.

Section 1.11."Class Members" or "Settlement Class Members" shall mean the
members of the Class except those Persons who have submitted a valid and timely
Request for Exclusion.

Section 1.12. "Class Representatives" shall mean Morgan K. Buchanan, James
P. Mills, Jesse L. Crews and any additional representatives identified by the
Settlement Class Counsel.

Section 1.13. "Closing Date" shall mean the date on which all of the acts
and events necessary for the completion of the Merger have occurred, as provided
for in Section 10.2, and the agreement effectuating the Merger has been filed
with the Secretary of State of Delaware and is effective.

Section 1.14. "Complaint" shall mean the Class Action Complaint filed on or
about December 12, 2001 in the Superior Court of the State of California, County
of Contra Costa, captioned Buchanan, et al. v. NTS-Properties Associates, et
al., Case No. C 01-05090.

Section 1.15. "Consent Solicitation Prospectus" shall mean the Joint
Consent Solicitation Statement/Prospectus, any supplements thereto and any
ballot or form of consent, to be filed with the SEC through which the General
Partners of each Merging Partnership will seek approval of the Merger by their
respective Limited Partners.

Section 1.16. "Contribution Agreement" shall mean the Agreement to be
entered into by and between NTS Realty and ORIG whereby ORIG will contribute
substantially all of its real estate assets and its liabilities to NTS Realty.

Section 1.17. "Court" shall mean the Superior Court of the State of
California, County of Contra Costa, California.

Section 1.18. "Defendants" shall mean NTS-Properties Associates V,
NTS-Properties Associates VI, NTS Capital, ORIG and J.D. Nichols.

Section 1.19. "Defendants' Counsel" shall mean the law firms of Shefsky
& Froelich Ltd., 444 North Michigan Avenue, Suite 2500, Chicago, Illinois
60611, and Morgan, Lewis & Bockius LLP, Spear Street Tower, One Market, San
Francisco, California 94105.

Section 1.20. "Effective Date" shall mean the first date on which the Final
Judgment and Order entered by the Court, in a form to be agreed to by counsel
for the Parties consistent with the provisions hereof and as described in
Section 9.2, becomes final, binding and non-appealable which shall be deemed to
occur upon the last of the following: (a) if no appeal or

review of the Final Judgment and Order is sought, the sixty-first (61st) day
after entry of the Final Judgment (or, if the date for taking an appeal shall be
extended, the date of expiration of the extension); or (b) if an appeal or
review of the Final Judgment and Order is sought, the day after such Final
Judgment and Order is affirmed or the appeal or review is dismissed or denied
and such Final Judgment and Order is no longer subject to further appeal or
review.

Section 1.21. "Exchange Value" shall mean an amount equal to the appraised
value, as determined by CBRE, of each Merging Partnership and ORIG's real estate
assets, plus the book value of the Merging Partnerships' and ORIG's other
assets, less their respective indebtedness and the book value of other
liabilities, plus the amount of any payment made to the entity pursuant to
Section 2.1.

Section 1.22. "Final Approval Hearing" shall mean the hearing(s) held by
the Court to consider final approval of the Settlement, as provided in Section
9.1.

Section 1.23. "Final Judgment and Order" shall mean the final judgment
entered by the Court as provided in Section 9.2 in a form to be agreed to by
counsel for the Parties consistent with the provisions hereof, providing final
approval of the Settlement contemplated by this Stipulation.

Section 1.24. "Former Limited Partners" shall mean those Persons in the
Settlement Class who sold Units in one or more of the Partnerships in the Tender
Offers, Partnership Repurchase Program or in other transactions to ORIG or
Affiliates of the General Partners.

Section 1.25. "General Partner" or "General Partners" shall mean
individually or collectively the general partners of the Partnerships,
NTS-Properties Associates, NTS-Properties Associates IV, NTS-Properties
Associates V, NTS-Properties Associates VI, NTS-Properties Associates VII and
NTS-Properties Plus Associates.

Section 1.26. "Houlihan" shall mean Houlihan Lokey Howard & Zukin Financial
Advisers, Inc., the entity retained by the General Partners of the Merging
Partnerships to provide valuation analysis and a fairness opinion in connection
with the Merger as provided for in Section 2.2(e).

Section 1.27. "Independent Director" shall have the meaning ascribed to
such term by the rules and regulations of the AMEX.

Section 1.28. "Interest" shall mean an interest in NTS Realty to be issued
upon the Closing Date and listed on the AMEX.

Section 1.29. "Kentucky Litigation" shall mean the case captioned Joseph
Bohm, et al. v. J.D. Nichols, et al., Case No. 03 CI 1740, filed in the
Jefferson Circuit Court of the State of Kentucky.

Section 1.30. "Limited Partner" shall mean a Person who owns Units of any
of the Merging Partnerships as of the date of the entry of the Preliminary
Approval Order.

Section 1.31. "Limited Partnership Agreements" shall mean, collectively,
the agreements of limited partnership of the Partnerships as respectively
amended.

Section 1.32. "Market Price" shall mean the average closing price of the
Interests on the AMEX for the 30-day period prior to the date of sale. If there
is no trading on a particular day, then closing price shall equal the closing
price on the last day on which trading occurred.

Section 1.33. "Material Adverse Change" shall mean any change or effect
that is, individually or in the aggregate, materially adverse to the business,
prospects, properties, assets or financial condition or results of operations of
any merging Partnerships, ORIG or NTS Development.

Section 1.34. "Merger" shall mean the combination of the Merging
Partnerships and the contribution of substantially all of ORIG's real estate
assets and all of its liabilities to form NTS Realty.

Section 1.35. "Merger Expenses" shall mean all costs and expenses of the
Merger, including, without limitation, SEC filing fees, the costs of mailing and
printing the Notice of the Consent Solicitation Prospectus, any supplement
thereto or other documents related to the Merger, AMEX listing fees, legal fees
(but not including Attorneys' Fees and Expenses), financial advisory fees,
appraisal fees, accounting fees, solicitation expenses, transfer taxes, travel
expenses and all other fees and miscellaneous expenses related to the Merger.

Section 1.36. "Merging Partnerships" shall mean NTS-III, NTS-IV, NTS-V,
NTS-VI, and NTS-VII.

Section 1.37. "NTS III" shall mean NTS-Properties III, Ltd., a Georgia
limited partnership.

Section 1.38. "NTS IV" shall mean NTS-Properties IV, Ltd., a Kentucky
limited partnership.

Section 1.39. "NTS V" shall mean NTS-Properties V, a Maryland Limited
Partnership.

Section 1.40. "NTS VI" shall mean NTS-Properties VI, a Maryland Limited
Partnership.

Section 1.41. "NTS VII" shall mean NTS-Properties VII, Ltd., a Florida
limited partnership.

Section 1.42. "NTS Capital" shall mean NTS Capital Corporation, a Kentucky
Corporation.

Section 1.43. "NTS Plus" shall mean NTS-Plus Properties, Ltd., the former
Florida limited partnership.

Section 1.44. "NTS Realty Capital" shall mean the entity which will serve
as the general partner of NTS Realty.

Section 1.45. "Net Cash Flow from Operations" shall have the meaning set
forth in the United States Treasury Regulations Section 1.701-4(b), 26 C.F.R.ss.
1.701-4(b).

Section 1.46. "Net Settlement Fund" shall mean the aggregate of the
Settlement Trust and Settlement Account, less payment of any Attorney's Fees and
Expenses chargeable against the Settlement Trust and Settlement Account, as
approved by the Court, less Administrative Expenses.

Section 1.47. "Notice" or "Class Notice" shall mean the Notice of Class
Action Determination, Proposed Settlement and Fairness Hearing to be approved by
the Court as set forth in Section 8.1 hereof, in a form to be agreed to by
counsel for the Parties consistent with the provisions hereof.

Section 1.48. "ORIG" shall mean ORIG, LLC, a Kentucky limited liability
company.

Section 1.49. "Operating Agreement" shall mean the Amended and Restated
Operating Agreement for ORIG entered into in connection with the Settlement.

Section 1.50. "Parties" shall mean, collectively, Plaintiffs, the
Settlement Class and the Settling Defendants.

Section 1.51. "Partnership Repurchase Programs" shall mean the programs
conducted by the Partnerships from 1995 to 1999 wherein they purchased Units
from then-limited partners of the Partnerships.

Section 1.52. "Partnerships" shall mean NTS-III, NTS-IV, NTS-V, NTS-VI,
NTS-VII and NTS-Plus.

Section 1.53. "Person" shall mean an individual, corporation, partnership,
limited partnership, limited liability company, association, joint stock
company, estate, legal representative, trust, unincorporated organization and
any other type of legal entity, and their heirs, predecessors, successors,
representatives and assigns.

Section 1.54. "Plaintiffs" shall mean Morgan K. Buchanan, James P. Mills
and Jesse L. Crews.

Section 1.55. "Preliminary Approval Order" shall mean the order(s) of the
Court as provided for in Section 7.3, in a form to be agreed to by counsel for
the Parties consistent with the provisions hereof.

Section 1.56. "Private Entity Restructuring" shall mean the proposed
restructuring of entities owned or controlled by Affiliates of the General
Partners to either merge with or contribute substantially all of their assets
and liabilities to ORIG upon the Closing Date.

Section 1.57. "Proof of Claim" shall mean the Proof of Claim Form and
Release as provided for in Section 3.2 and in a form to be agreed to by counsel
for the Parties consistent with the provisions hereof.

Section 1.58. "Purchasing Members" shall mean the members of ORIG on the
date of this Stipulation.

Section 1.59. "Qualified Settlement Fund" shall mean Qualified Settlement
Fund as provided within United States Treasury Regulationss.1.468B-1. Settlement
Class Counsel and,

as required, the Settling Defendants, shall jointly and timely make the
"relation-back election" (as defined in Treas. Reg.ss.1.468B-1) back to the
earliest permitted date. Such election shall be made in compliance with the
procedures and requirements contained in such regulations. It shall be the
responsibility of Settlement Class Counsel to timely and properly prepare and
deliver the necessary documentation for signature by all necessary parties, and
thereunder to cause the appropriate filing to occur. For the purposes
ofss.1.468B-1 of the Internal Revenue Code of 1986, and Treas. Reg. ss.1.468B,
the "administrator" shall be the Settlement Trustee. The Settlement Trustee
shall comply with all informational and other tax returns necessary or advisable
with respect to the Settlement Trust and Settlement Account (including without
limitation the returns described in Treas. Reg.ss.1.468B-2(1). Such returns (as
well as the election described in (a) shall be consistent with this paragraph
and in all events shall reflect that all taxes (including any estimated taxes,
interest or penalties) on the income earned by the Settlement Trust and
Settlement Account shall be paid out of the Settlement Account as provided in
(c) hereof. All (i) taxes (including any estimated taxes, interest or penalties)
arising with respect to the income earned by the Settlement Trust or Settlement
Account ("Taxes") and (ii) expenses and costs incurred in connection with the
operation and implementation of this Section (including, without limitation,
expenses of tax attorneys and/or accountants and mailing and distribution costs
and expenses relating to filing (or failing to file) the returns described in
this paragraph) ("Tax Expenses"), shall be paid out of the Settlement Account.
In all events, the Settling Defendants shall have no liability or responsibility
for the Taxes, the Tax Expenses, or the filing of any tax returns or other
documents with the Internal Revenue Service or any other state or local taxing
authority. The Settlement Account shall indemnify and hold the Settlement
Trustee harmless for Taxes and Tax Expenses (including without limitation, Taxes
applicable by reason of any such indemnification). Further, Taxes and Tax
Expenses shall be treated as, and considered to be, a cost of administration of
their settlement and shall be timely paid by the Settlement Trustee, at the
instructions of Settlement Class Counsel, out of the Settlement Account without
prior notice or approval from anyone else and the Settlement Trustee shall be
obligated (notwithstanding anything herein to the contrary)

to withhold from distribution to Claimants any funds necessary to pay such
amounts (as well as any amounts that may be required to be withheld under Treas.
Reg. ss.1.468B1-2) and shall make no distribution from the Settlement Account
without first confirming with Settlement Class Counsel that sufficient funds
would thereafter remain to pay any accrued tax liability; the Settling
Defendants are not responsible and shall have no liability therefore, or for any
reporting requirements that may relate thereto. The Settling Defendants agree to
cooperate with Settlement Class Counsel, and their tax attorneys and accountants
to the extent reasonably necessary to carry out the provisions of this
paragraph.

Section 1.60. "Recognized Deficit" shall mean the agreed-upon amount of
loss per Unit of Former Limited Partners as provided for in Section 2.7(b) from
which their Claims will be calculated.

Section 1.61. "Related Party Transaction" shall mean any transaction
between NTS Realty and (i) any Person who, directly or indirectly, controls or
is controlled by or is under common control with NTS Realty; (ii) any Person who
is an officer or director of, general partner in, or trustee of, or serves in a
similar capacity with respect to, NTS Realty Capital or of which NTS Realty
Capital is a general partner or trustee or with respect to which NTS Realty
Capital serves in a similar capacity; or (iii) any Person who, directly or
indirectly, is the beneficial owner of 10 percent or more of any class of equity
securities of NTS Realty, or of which NTS Realty is the beneficial owner of 10
percent or more of any class of equity securities.

Section 1.62. "Released Party" or "Released Parties" shall mean (i) the
Settling Defendants; (ii) past or present beneficiaries, subsidiaries, parents,
members, Affiliates, associates, successors or assigns, of any of the Settling
Defendants; (iii) past or present officers, directors, shareholders, partners,
employees, and attorneys of any of the foregoing; and (iv) agents, Affiliates,
advisors, investment bankers, accountants, financial advisors or other advisors,
including the issuer of the fairness opinion, appraisers, independent
contractors, representatives, trustees, heirs, executors, and administrators of
the Settling Defendants.

Section 1.63. "Releasing Parties" shall mean Class Representatives and all
other Class Members on behalf of themselves and each of their predecessors,
successors, parents, subsidiaries, affiliates, custodians, agents, assigns,
representatives, heirs, executors, trustees, administrators and any other Person
or entity having any legal or beneficial interest in the Units or Interests held
by any Class Member.

Section 1.64. "Request for Exclusion" shall mean a request by any Person
not to participate in the Settlement as provided for in Section 6.1, or as
otherwise provided by the Court.

Section 1.65. "SEC" shall mean the United States Securities and Exchange
Commission.

Section 1.66. "Settled Claims" shall mean, collectively, all claims
including Unknown Claims, demands, rights, liabilities and causes of action of
every nature and description whatsoever, in law or equity, known or unknown,
asserted or that might have been asserted, including, without limitation, claims
for negligence, gross negligence, breach of duty of care, breach of duty of
loyalty, breach of duty of candor, fraud, negligent misrepresentation, breach of
fiduciary duty, or violations of any state or Federal statutes, rules or
regulations, either directly, in a representative capacity or in any other
capacity, by any Releasing Party against any of the Released Parties for any
matter, arising out of, relating to, or in connection with any of the acts,
omissions, misrepresentations, facts, events, matters, transactions or
occurrences referred to, or which could have been referred to, in the complaints
or other pleadings filed in the California Litigation or the Kentucky Litigation
or otherwise alleged, asserted or contended in the California Litigation or the
Kentucky Litigation based upon the facts alleged in the complaints filed in the
California Litigation or the Kentucky Litigation or arising out of the
transactions contemplated or undertaken in connection with this Settlement.

Section 1.67. "Settlement" shall mean the full and final compromise,
settlement and dismissal of the California Litigation and all claims that have
been or could have been asserted therein or in the Kentucky Litigation pursuant
to the terms and conditions of the Stipulation.

Section 1.68. "Settlement Account" shall mean the account created by
Settlement Class Counsel to hold the funds received from the Settling Defendants
or otherwise received or earned by the Class as part of this Settlement.

Section 1.69. "Settlement Class Counsel" shall mean the Law Offices of
George Donaldson, 456 Montgomery Street, Suite 1250, San Francisco, California
94104.

Section 1.70. "Settlement Trust" shall mean the entity which will hold the
rights to the Interests in NTS Realty provided by the Settling Defendants for
the benefit of the Class as described in Section 2.6.

Section 1.71. "Settlement Trustee" shall mean that Person chosen by
Settlement Class Counsel to administer the Settlement Trust in accordance with
Sections 2.5 and 2.6.

Section 1.72. "Settlement Trust Interests" shall mean the Interests
initially allocated to the Settlement Trust pursuant to Section 2.7 and as
adjusted pursuant to Section 2.6.

Section 1.73. "Settling Defendants" shall mean the General Partners, ORIG,
NTS Capital, NTS Development and J.D. Nichols.

Section 1.74. "Stipulation" shall mean this Stipulation and Agreement of
Settlement, together with all exhibits.

Section 1.75. "Summary Notice" shall mean the notice approved by the Court
for publication disclosing the Settlement and Final Approval Hearing as provided
for in Section 8.2 in a form to be agreed to by counsel for the Parties
consistent with the provisions hereof.

Section 1.76. "Tender Offers" shall mean the purchases of Units by the
Partnerships or ORIG Affiliates from December 1998 to September 2002 through a
combination of joint tender offers and tender offers conducted solely by ORIG.

Section 1.77. "Unit" shall mean a limited partnership interest in any of
the Partnerships.

Section 1.78. "Unknown Claims" shall mean any Settled Claim that Class
Representatives or any Settlement Class Member does not know or suspect to exist
in his, her or its favor at the time of the Effective Date that, if known by
him, her or it, might have affected his, her or its settlement with and release
of the Released Parties. With respect to any

and all Settled Claims, the Settling Parties stipulate and agree that, upon the
Effective Date, Class Representatives and the Settlement Class Members shall be
deemed to have, and by operation of the Final Judgment and Order, have expressly
waived and relinquished, to the fullest extent permitted by law, the provisions,
rights, and benefits of Section 1542 of the California Civil Code, which
provides:

A general release does not extend a claim which a creditor does not
know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor.

Class Representatives and each of the Settlement Class Members, upon the
Effective Date, shall be deemed to have, and by operation of the Final Judgment
and Order shall have, also waived any and all provisions, rights and benefits
conferred by any law of any state or territory of the United States, or
principles, or the law, that is similar, comparable or equivalent to Section
1542 of the California Civil Code. Class Representatives and the Settlement
Class Members may hereafter discover facts in addition to or different from
those which he, she or it now knows or believes to be true with respect to the
subject matter of the Settled Claims, but Class Representatives and the
Settlement Class Members, upon the Effective Date, shall be deemed to have, and
by operation of the Final Judgment and Order shall have, fully, finally and
forever settled and released any and all Settled Claims, known or unknown,
suspected or unsuspected, contingent or non-contingent, whether or not concealed
or hidden, that now exist or heretofore may have existed upon any theory of law
or equity now existing or coming into existence in the future, including, but
not limited to, conduct that is negligent, intentional, with or with malice, or
breach of any duty, law or rule, without regard to the subsequent discovery or
existence of such different or additional facts.

Section 1.79. "Weighting Factor" shall mean the recoverable percentage of
Recognized Deficit per Unit as provided for in Section 2.7(c).

ARTICLE II:
SETTLEMENT CONSIDERATION

Subject to Court approval and pursuant to the terms and conditions of this
Stipulation, in full and final disposition, settlement, discharge, release and
satisfaction of the Settled Claims, the following consideration shall be
provided to the Settlement Class or the Partnerships:

Section 2.1. Payment by NTS Development. On the Closing Date, NTS
Development shall make a payment of $1.5 million (One Million Five Hundred
Thousand Dollars) to the Merging Partnerships in the following amounts:

NTS III $202,500.00

NTS IV $202,500.00

NTS V $345,000.00

NTS VI $723,000.00

NTS VII $ 27,000.00

Section 2.2. Merger. On the Closing Date, the Merging Partnerships shall
merge with and into NTS Realty and ORIG shall contribute substantially all of
its real estate assets and all of its liabilities to NTS Realty pursuant to the
terms and conditions contained in the Contribution Agreement.

(a) Consent Solicitation Prospectus. The approval of the Limited
Partners of each Merging Partnership to the Merger will be sought through the
Consent Solicitation Prospectus.

(b) Voting of ORIG and Affiliates on Merger. ORIG and all other
Affiliates of the General Partners owning Units will vote all of their Units in
favor of the Merger.

(c) Failure to Approve Merger. If Limited Partners of any Merging
Partnership fail to approve the Merger, but if all events and conditions
necessary for the Closing Date occur for one or more of the other Merging
Partnerships, then the Settling Defendants shall have the right, but not the
obligation, to proceed with the Merger with regard to all approving Merging
Partnerships. If the Settling Defendants choose to proceed with the

Merger with less than all of the Merging Partnerships, the Settlement shall
proceed as though such Partnership(s) is not part of the Settlement and the
consideration due pursuant to Section 2.1 shall be reduced to reflect such
Merging Partnership's non-participation.

(d) Independent Appraiser. The General Partners and ORIG have retained
CBRE, an independent unaffiliated third party, to appraise the real estate
assets owned by each Merging Partnership and those real estate assets to be
contributed by ORIG to NTS Realty from the Private Entity Restructuring
utilizing solely the income approach to valuation. CBRE's appraisal of the real
estate assets owned by the Merging Partnerships and contributed by ORIG shall be
performed on a consistent basis.

(e) Independent Fairness Valuation Firm. The General Partners have
caused the Merging Partnerships to retain Houlihan, an independent unaffiliated
third party, to deliver prior to the issuance of the Consent Solicitation
Prospectus, an opinion regarding the fairness of the Merger from a financial
point of view. Houlihan's opinion will cover the fairness of: (i) the Merger,
which includes the execution and delivery of a management agreement between NTS
Realty and NTS Development as described in Section 2.3(h), (ii) the
consideration received by the Limited Partners in relation to their respective
General Partner, and (iii) the consideration received by each Merging
Partnership in relation to the other Merging Partnerships.

(f) Allocation of Interests in NTS Realty. As a result of the Merger,
each Merging Partnership will receive Interests of NTS Realty, which will
thereafter be distributed to the Limited Partners and General Partners of each
Merging Partnership. The number of Interests issued to each Merging Partnership
and ORIG will be based on the net asset value of each entity. The number of
Units to be issued will be determined by dividing net asset value by $10.00 or
some other value determined by NTS Realty Capital. The Units received by a
Merging Partnership will be allocated by the Merging Partnership among its
General Partner and Limited Partners in accordance with the liquidation
provisions of its Limited Partnership Agreement.

(g) Merger Expenses. If the Merger is approved, each Merging
Partnership, along with ORIG, will bear a share of the Merger Expenses. The
Merger Expenses will be deducted from the net asset value for each Merging
Partnership and ORIG prior to calculating their respective Exchange Value. The
Merger Expenses will be allocated as follows:

NTS III 9%

NTS IV 16%

NTS V 21%

NTS VI 27%

NTS VII 7%

ORIG 20%

If the Merger is rejected by a Merging Partnership, the General Partner of
such Partnership will bear the portion of the Merger Expenses attributable to
its Merging Partnership equal to the percentage of Units of such Merging
Partnership voting against the Merger.

Section 2.3. Operations of NTS Realty. In connection with the Settlement,
Settlement Class Counsel has negotiated or agreed to the following methods and
procedures to permit the Limited Partners to maximize the value of the Interests
and obtain governance protections above those normally available to limited
partners. Such enhancements are intended to improve and not cause a significant
adverse change with respect to the Merging Partnerships' voting rights,
termination dates or currently stated investment objectives. Furthermore, such
changes are not intended to enhance general partner compensation.

(a) Listed and Traded Interests. Interests in NTS Realty will be
listed for trading on the AMEX.

(b) Independent Directors. NTS Realty Capital will serve as the
general partner of NTS Realty and will have a Board of Directors composed of
five persons, three of whom will be Independent Directors. One of the
Independent Directors shall have the financial experience required by AMEX's
rules and regulations. The initial Independent Directors of NTS Realty Capital
will be selected by Settlement Class Counsel from a slate of five potential
candidates proposed by the General Partners. To make this selection, Settlement
Class Counsel

shall be afforded the opportunity to interview the candidates and to conduct
other reasonable inquiry into their respective qualifications.

(c) Lock-Up Agreement. The executive officers of NTS Realty Capital
will enter into agreements restricting their ability to sell any Interests they
may, directly or indirectly, own or control for a period of the shorter of two
years after the Closing Date or the termination of the special membership
interest in ORIG as provided for in Section 2.6(a).

(d) Cash Distributions. NTS Realty expects to pay a distribution,
based on its projections of Net Cash Flow from Operations, in the first month of
the first full calendar quarter after the Closing Date. The amount of the
initial distribution, as well as all subsequent distributions, will be at least
65 percent but less than 100 percent of the Net Cash Flow from Operations.

(e) Refinancing. In connection with the Merger, in order to permit the
distributions referenced in Section 2.3(d), NTS Realty will refinance a portion
of the outstanding debt on the Partnerships properties, and the real estate
assets being contributed by ORIG from the Private Entity Restructuring.

(f) Governance Changes.

i) The Board of Directors of the NTS Realty Capital will be
elected by the limited partners of NTS Realty on an annual basis.

(ii) The NTS Realty Capital will conduct annual meetings of the
limited partners of NTS Realty.

(iii) The Board of Directors of the NTS Realty Capital will have
an Audit Committee composed entirely of Independent Directors.

(g) Partnership Agreement. The Partnership Agreement for NTS Realty
will provide, among other things:

(i) New Reinvestments Permitted. NTS Realty will be permitted to
make new investments in properties or joint ventures, including by, directly or
indirectly, developing new real estate properties.

(ii) Independent Director Approval of Related Party Transactions. NTS
Realty will be prohibited from engaging in any transaction with the NTS Realty
Capital or its Affiliates except to the extent such transaction is approved by a
majority of the Independent Directors, is fair and is on terms no less favorable
than those generally being provided to or available from unrelated third
parties.

(iii) Dissolution and Liquidation. NTS Realty will be a limited life
entity and will commence winding up its affairs, selling of its properties, and
liquidating by December 31, 2028.

(h) Management Agreement with NTS Development. NTS Realty shall enter
into a one-year property management agreement (terminable upon 60 days notice)
with NTS Development. Prior to the expiration of the management agreement, the
decision to renew the agreement and a review of its terms and conditions shall
be conducted by the Independent Directors, subject to the Related Party
Transaction criteria contained in Section 2.3(g)(ii). As will be set forth in
NTS Realty Audit Committee charter, in making this determination, the
Independent Directors will be specifically authorized to retain a nationally
recognized real estate expert to evaluate the management agreement consistent
with the requirements of this paragraph. As with all related party transactions,
NTS Realty will disclose and describe whether the management agreement was
renewed and, if so, on what terms and conditions.

(i) Publishing of Net Operating Income. NTS Realty shall disclose the
Net Operating Income ("NOI") of its properties on an annual basis.

Section 2.4. Former Limited Partners' Settlement Consideration. On the
Closing Date, ORIG will contribute, for the benefit of the Former Limited
Partners $6.85 million (Six Million Eight Hundred and Fifty Thousand Dollars),
consisting of $650,000 (Six Hundred and Fifty Thousand Dollars) in cash and
rights to $6.2 million (Six Million Six Hundred Thousand Dollars) of Interests
as provided in Section 2.6(a). The cash portion of ORIG's contribution will be
deposited in the Settlement Account. The Interests portion of ORIG's
contribution will be made through the admission of the Settlement Trust as a
special member of ORIG as

provided for in Section 2.6. The consideration provided by ORIG pursuant to this
section will be allocated on a claims-made basis to Claimants as provided for in
Section 2.7.

Section 2.5. Settlement Account.

(a) Creation. Settlement Class Counsel shall establish the Settlement
Account with an appropriate financial institution as an interest-bearing
account. The Settlement Account shall be treated as a Qualified Settlement Fund.

(b) Funding of Settlement Account. The Settling Defendants shall
deposit into the Settlement Account the monies required pursuant to Sections
2.4, 12.1(b) and 12.2. All cash distributions and other income received by the
Settlement Trust shall be deposited into the Settlement Account.

(c) Use of Settlement Account Monies. The Settlement Account will be
used to pay Claimants, Administrative Expenses, taxes, as well as all applicable
Attorneys' Fees and Expenses, or as otherwise approved by the Court. The
Settlement Trustee or Settlement Class Counsel shall not otherwise disburse
monies from the Settlement Account except as provided in this Section or as
ordered by the Court.

(d) Investment of the Settlement Account. The Settlement Trustee or
Settlement Class Counsel shall invest the Settlement Account in an account or
accounts fully insured by the United States Government or an agency thereof. The
Settlement Trustee shall bear all risks related to investment of the Settlement
Account.

(e) Settlement Trustee Authority. Subject to further orders or
directions as may be made by the Court, the Settlement Trustee or Settlement
Class Counsel are authorized to execute such transactions on behalf of the Class
Members which are consistent with the terms of this Stipulation.

(f) Court To Retain Jurisdiction Over Settlement Account and
Settlement Trust. All monies or interests held in the Settlement Account or
Settlement Trust shall be deemed and considered to be in custodia legis of the
Court, and shall remain subject to the jurisdiction of the Court until such
funds or interests are distributed pursuant to this Stipulation or further
orders of the Court.

Section 2.6. Settlement Trust.

(a) Special Membership in ORIG. The Settlement Trust shall be admitted
as a special member of ORIG pursuant to the Operating Agreement. Under the terms
of the Operating Agreement, the Settlement Trust's special membership interest
in ORIG will entitle it to an interest in all of the economic and other rights
associated with the Settlement Trust Interests. Settlement Class Counsel will
have the right, acting as representative of Claimants, to cause ORIG to vote the
Settlement Trust Interests. The Settlement Trustee shall have the right to cause
the sale or transfer of the Settlement Trust Interests as provided in Section
2.6(b). All distributions received by ORIG from NTS Realty with respect to
Settlement Trust Interests shall be deposited in the Settlement Account. All
income, gain, loss or other tax attributes allocated to ORIG by NTS Realty with
respect to these Settlement Trust Interests will be allocated by ORIG to the
Settlement Trust. Once ORIG no longer owns any Settlement Trust Interests, and
the proceeds from any sale of Settlement Trust Interests as provided for in
Section 2.6(b) are deposited in the Settlement Account, the special membership
interest shall terminate and the Settlement Trust shall cease to be a member of
ORIG.

(b) Purchase Obligation. The Purchasing Members shall have the joint
obligation to make payments to the Settlement Trust to cause the Settlement
Trust Interests to be reclassified as Interests allocated to the Purchasing
Members. This obligation shall commence on the first business day following the
date on which NTS Realty makes its initial distribution to its partners as
described in Section 2.3(d). Thereafter, for the subsequent seven quarters, the
Purchasing Members' purchase obligation shall be on the first business day
following each date on which NTS Realty makes a distribution to its partners.
The Purchasing Members' payment shall be equal to 75 percent of the amount of
each distribution received by ORIG from NTS Realty with respect to the Interests
allocated to the Purchasing Members. The price for reclassifying Settlement
Trust Interests as Interests allocated to the Purchasing Members shall be equal
to a fifteen (15) percent premium to Market Price. If, two years after NTS
Realty makes its initial distribution to its partners, there remain any
Settlement Trust Interests, the Purchasing Members shall be obligated to make a
payment (without regard to the

amount of quarterly distributions received) to reclassify the remaining
Settlement Trust Interests as Interests allocated to the Purchasing Members at a
price equal to a 15 percent premium to the Market Price. Once all of the
Settlement Trust Interests are reclassified, the Purchasing Members' purchase
obligation shall cease.

Section 2.7. Plan of Allocation. Once the deadline for filing Proofs of
Claim has passed, as and if extended by the Court, the Claims Administrator will
determine the amount of each Claimant's Claim as provided in a proposed plan of
allocation to be submitted by Settlement Class Counsel prior to the Preliminary
Approval Hearing and approved by the Court. The Settlement is not contingent
upon the Court's approval of the allocation plan proposed by Settlement Class
Counsel. All Interests remaining in the Settlement Trust after all Claims have
been allocated will revert to the Purchasing Members in accordance with their
respective ownership percentages as provided in the Operating Agreement.

(a) Claim Calculation. The calculation of the Claim of each Claimant
shall be made according to the following formula: Recognized Deficit per Unit
multiplied by the number of Units sold multiplied by applicable Weighting Factor
less proportionate share of Administrative Expenses and applicable Attorneys'
Fees and Expenses as provided in Sections 12.1(a), 12.2 and 12.3.

(b) Recognized Deficit. The Recognized Deficit per Unit for each
Partnership shall be determined by Settlement Class Counsel and shall be
included in Settlement Counsel's proposed plan of allocation for approval by the
Court.

(c) Weighting Factors. Taking into consideration the relevant
strengths and weaknesses of the claims of the various Former Limited Partners,
the Recognized Deficit of the Claimants shall be weighted by Settlement Class
Counsel and shall be included in the proposed plan of allocation for approval by
the Court.

(d) Reduction for Attorneys' Fees and Expenses. Each Claim shall be
subject to reduction in proportion to the aggregate amount of Administrative
Expenses and applicable Attorneys' Fees and Expenses awarded by the Court.

(e) Claimant Recovery. At present, the Parties cannot provide an
estimate of the amount to be paid to each Claimant as the amount to be paid will
depend on, among other things, the plan of allocation ultimately approved by the
Court, the number of valid Claims submitted, Administrative Expenses and
allocable Attorneys' Fees and Expenses. To the extent that there are sufficient
funds in the Net Settlement Fund, each Claimant will receive an amount equal to
their Claim. If, however, the amount in the Net Settlement Fund is not
sufficient to make payment of the total Claim of each Claimant, then each
Claimant shall be paid the percentage which each Claimant's Claim bears to the
total of the Claims of all Claimants.

Section 2.8. Extent of Settling Defendants' Obligations. The Settling
Defendants' monetary obligations under this Settlement are limited to the
amounts set forth in this Stipulation. Neither the Settling Defendants nor any
Released Party shall be called upon or required to contribute additional monies
or Interests into the Settlement Trust or the Settlement Account or otherwise
under any circumstances whatsoever. Unless expressly provided otherwise in this
Stipulation, all costs and expenses arising out of or in connection with the
performance of this Settlement shall be paid from the Net Settlement Fund.

ARTICLE III:
SETTLEMENT ADMINISTRATION

Section 3.1. Administration of Settlement Trust and Settlement Account.
Settlement Class Counsel, or their authorized agents, acting on behalf of the
Settlement Class, and subject to the supervision, direction and approval of the
Court, shall administer and oversee the management and administration of the
distribution of the Notice, review of Proofs of Claims, Requests for Exclusions,
the Settlement Trust and Settlement Account. The Settling Defendants and all
Released Parties shall have no responsibility for, interest in or liability
whatsoever with respect to the investment or distribution of the Settlement
Account.

Section 3.2. Proofs of Claim. Subject to the approval and further order(s)
of the Court, the Settlement Account shall be available for allocation to Class
Members who submit valid, timely Proofs of Claim:

(a) Each person claiming to be a Claimant shall be required to submit
a separate Proof of Claim which shall include a general release of the Released
Parties in a form to be agreed to by counsel for the Parties consistent with the
provisions hereof, signed under penalty of perjury and supported by such
documents as specified in the Proof of Claim or requested by Claims
Administrator or Class Settlement Counsel;

(b) All Proof of Claim forms must be postmarked or received within the
time prescribed in the Preliminary Approval Order unless such period is extended
or a late filing of a Proof of Claim is otherwise allowed by the Court.

Section 3.3. Proof of Claims Review Process. The Settlement Administrator
shall review the Proofs of Claim received and recommend acceptance or rejection
to Settlement Class Counsel. If any question arises whether a Person is entitled
to share in the Settlement, Settlement Class Counsel or the Settlement
Administrator may request from such Person any documents or other information
establishing that Person is a Former Limited Partner. Settlement Class Counsel
shall determine whether, and the extent to which, the Person is entitled to
share in the distribution from the Settlement and, if there is any difference
between the Person's assertions and Settlement Class Counsel's determinations,
Settlement Class Counsel shall notify the Person in writing by certified mail,
return receipt requested, of their determination, the reasons therefore, and the
Person's entitlement to a hearing. Any Person who wants to contest the
determination by Settlement Class Counsel shall, within thirty (30) days after
the date of Settlement Class Counsel's letter, file with the Court a written
request for a hearing ("the Request"). A copy of the Request shall be mailed to
Settlement Class Counsel on or before the date it is filed with the Court. If
the Court does not receive a Request within the above thirty (30) day time
limitation (which the Court may waive upon good cause shown), the Person shall
be deemed to have consented to the determination of Settlement Class Counsel.
The Court shall give notice of all hearings upon any claim to participate in the
Settlement to Settlement Class Counsel and to the affected Persons. The Settling
Defendants shall have no standing to object to or challenge any claim
recommended by Settlement Class Counsel or approved by the Court.

Section 3.4. Identification of Location of Former Limited Partners.
Settlement Class Counsel may, in their discretion, employ a search firm to
ascertain current addresses for Former Limited Partners. All fees and expenses
of the search firm shall be considered an Administrative Expense.

Section 3.5. Effect of Failure to File Proof of Claim. Any Class Member who
does not file a valid Proof of Claim with the Settlement Administrator will not
be entitled to receive any of the proceeds from the Settlement, but will
otherwise be bound by all terms of the Stipulation and the Settlement, including
the terms of the judgment to be entered and the releases provided for herein,
and will be barred from bringing any action against any Released Party
concerning the Settled Claims.

Section 3.6. Distribution of Settlement Account. Upon the Effective Date,
or as otherwise provided in this Stipulation, the Settlement Account shall be
applied, subject to the approval of the Court, as follows:

(a) To pay all unpaid fees and costs, and costs of administering and
distributing the Settlement Trust and Settlement Account;

(b) To pay Settlement Class Counsel the Attorneys' Fees and Expenses
attributable to the Settlement Trust and Settlement Account, including interest
thereon; and

(c) Subject to the provisions of this paragraph and the approval of
the Court, the balance of the Settlement Account shall be distributed to
Claimants at such time or times and in such manner as the Court shall order.

Section 3.7. Limitation of Liability. No Person will have any claim against
Settlement Class Counsel, the Claims Administrator, Settlement Trustee or other
agent designated by Settlement Class Counsel, or Defendants or their Counsel,
for actions taken in good faith or distributions made substantially in
accordance with the Stipulation and the Settlement or further orders of the
Court.

ARTICLE IV:
SETTLEMENT CLASS CERTIFICATION

Section 4.1. Class Definition. The Parties consent to, and will recommend
to the Court, for settlement purposes only, the certification of a settlement
class pursuant to Section 382 of the California Code of Civil Procedure and
Rules 1545 and 1859 of the California Rules of Court. The settlement class
consists of all Limited Partners and Former Limited Partners. Excluded from the
Class are the Settling Defendants, members of the immediate family, executive
officers, directors, members and general partners of the Settling Defendants,
any entity in which any of the Settling Defendants has a controlling interest,
and the legal representatives, heirs, successors and assigns or Affiliates of
any of the Settling Defendants. Also, excluded from the Class is any Person who
separately negotiated sales of Units either individually or as a group with the
Settling Defendants or their Affiliates, the identities of which will be
provided by Settling Defendants prior to the Preliminary Approval Hearing.

Section 4.2. Effect of Termination. The Parties consent to the conditional
certification of the Settlement Class, solely for the purposes of this
Stipulation and the Settlement. In the event that this Stipulation is
terminated, canceled, or does not become effective for any reason, the
Preliminary Approval Order shall be vacated without prejudice to the right of
Plaintiffs to move the Court for any order they deem appropriate with respect to
the certification of a plaintiff class, and without prejudice to the rights of
Defendants or Settling Defendants to oppose any such motion.

ARTICLE V:
DISCHARGE OF CLAIMS

Section 5.1. Release by Plaintiffs and Class. Upon the Effective Date, the
Releasing Parties, whether or not each submits a Proof of Claim or otherwise
participates in the Settlement, on behalf of themselves and each of their
predecessors, successors, parents, subsidiaries, affiliates, custodians, agents,
assigns, representatives, heirs, executors, trustees, administrators and any
other Person having any legal or beneficial interest in Units of the Limited
Partnerships owned by any Class Member, will be deemed by this Settlement to
have, and by operation of the Final Judgment shall have, released and forever
discharged the

Released Parties from any and all of the Settled Claims, including Unknown
Claims, except that nothing herein releases any claim arising out of a violation
of this Stipulation.

Section 5.2. Co-Defendant Releases. Upon the Effective Date, each Settling
Defendant releases and agrees not to assert any cross claims, third-party claims
or other claims-over (however denominated) arising out of the Settled Claims
against any other Settling Defendant, its predecessors or successors, or its
present or former and future partners, members, principals, officers, directors,
employees, agents, attorneys, shareholders, investors, insurers, reinsurers,
auditors, accountants, underwriters, investment bankers, advisers, Affiliates,
Released Parties, present, former or future parents, subsidiaries or affiliates
and each of their assigns, representatives, heirs, executors, administrators,
and members of their immediate families.

Section 5.3. Release of Plaintiffs and Settlement Class Counsel by Released
Parties. Upon the Effective Date, each Released Party individually, completely,
voluntarily, knowingly, unconditionally and forever releases, remises, acquits
and discharges Plaintiffs and Settlement Class Counsel from every and all
asserted or potential, separate, joint, individual claims, class claims, or
other claims, actions, rights, causes of action, demands, liabilities, losses
and damages of every kind and nature, anticipated or unanticipated, direct or
indirect, fixed or contingent, known or unknown, under Federal, state or common
law or any other law or regulation, or in equity, against Plaintiffs and
Settlement Class Counsel or any of them for, which are based upon or arise out
of the institution, prosecution, assertion or resolution of the Settled Claims,
including Unknown Claims, except that nothing herein releases any claim arising
out of a violation of this Stipulation.

Section 5.4. Bar on Assertion of Claims. Upon the Effective Date, the
Releasing Parties, and anyone claiming through or on behalf of any of them, will
be forever barred and enjoined from commencing, instituting or prosecuting any
action or other proceeding in any court of law or equity, arbitration tribunal,
or administrative forum, directly, representatively or derivatively, asserting
against any of the Released Parties any claims that relate to or constitute any
of the Settled Claims, including Unknown Claims.

ARTICLE VI:
REQUESTS FOR EXCLUSIONS AND OBJECTIONS TO SETTLEMENT

Section 6.1. Requests for Exclusion. All Class Members shall have the
option to be excluded from the Settlement Class, and thereby elect not to
participate in the Settlement by mailing a timely and valid request for
exclusion postmarked on or before ten (10) business days before the Final
Approval Hearing to the Claims Administrator pursuant to the instructions set
forth in the Notice. All Persons who submit timely and valid Requests for
Exclusion shall not be Class Members and shall have no rights with respect to
the Stipulation and no interest in the Settlement.

Section 6.2. Notice of Exclusions. The Claims Administrator shall notify
Settlement Class Counsel and Defendants' Counsel of all requests for exclusion
at least five (5) business days before the Final Approval Hearing.

Section 6.3. Objection to Settlement. A Class Member may object to the
proposed settlement if they comply with the requirements and procedures set
forth in the Preliminary Approval Order, with respect to the time within which
objections must be served and filed, and with respect to the requirements for
written notices of objection. Unless otherwise permitted by the Court, any Class
Member who fails to comply with the requirements of the Preliminary Approval
Order for asserting objections shall be foreclosed from making any objection to
this Settlement.

ARTICLE VII:
IMPLEMENTATION OF STIPULATION

Section 7.1. Reasonable Efforts. The Parties and their respective Counsel
agree to cooperate, assist, and undertake all reasonable actions to effectuate
the terms and conditions of this Stipulation and the Settlement.

Section 7.2. Preliminary Approval of Settlement; Certification of
Settlement Class. After the execution of this Stipulation, Settlement Class
Counsel and Defendants' Counsel shall jointly submit this Stipulation to the
Court for its consideration and shall jointly request entry of a Preliminary
Approval Order in a form to be agreed to by counsel for the Parties consistent

with the provisions hereof, or the entry of multiple orders that in conjunction
provide the same relief.

Section 7.3. Preliminary Approval Order. The Preliminary Approval Order
shall specifically include provisions which, among other things:

(a) Preliminarily approve the Settlement as being fair, reasonable and
adequate;

(b) Conditionally certify the Class and preliminarily approve the
Class Representatives of the Class;

(c) Approving Notice and Summary Notice consistent with the provisions
hereof, respectively, for mailing and publication to notify the Settlement Class
of the Hearing (i) on final approval of the Settlement, (ii) on final
certification of the Settlement Class and approval of the Class Representatives
for the Class, (iii) on Settlement Class Counsel's application for an award of
Attorneys' Fees and Expenses.

(d) Direct the Claims Administrator to mail or cause to be mailed the
Notice to the Settlement Class Members within fourteen (14) days.

(e) Approving the form of the Proof of Claim consistent with the
provisions hereof;

(f) Direct the Settling Defendants to cause the Summary Notice to be
published;

(g) Direct the responsible party to file with the Court proof, by
affidavits or declarations, of the mailing of the Notice and publication of the
Summary Notice.

(h) Find that the mailing of the Notice and Publication of the Summary
Notice pursuant to Sections 8.1 and 8.2 constitute the best and most practicable
notice to the Settlement Class Members under the circumstances, and is due and
sufficient notice of the Final Approval Hearing, proposed Settlement,
application for an award of Attorneys' Fees and Expenses and other matters set
forth in the Notice and Summary Notice to all members of the Class and that the
Notice and Summary Notice fully satisfy the requirements of due process,

the California Code of Civil Procedure, the California Rules of Court and any
other applicable law.

(i) Provide that, pending final determination of whether the
Settlement should be approved, neither the Class Representatives nor any
Settlement Class Member either directly, in a representative capacity, a
derivative capacity or in any other capacity, shall commence, maintain or
prosecute any other action or proceeding in any court or tribunal against any
Released Parties asserting any of the Settled Claims, including Unknown Claims,
except in this Court.

(j) Provide that all Requests for Exclusion include sufficient
information to identify the number of Units currently owned or the number of
Units sold to the Partnerships, ORIG or its Affiliates, including the dates,
amounts and prices on all such sales and, if requested by any of the Parties,
evidence of such current or former ownership of the Units.

(k) Provide that, pending final determination of whether the
Settlement should be approved, the Plaintiffs and all other Class Members, other
than by operation of law, are barred and enjoined from (i) transferring,
selling, assigning, giving, pledging, hypothecating or otherwise disposing of
any Units to any Person; (ii) granting a proxy to object to the Merger; or (iii)
commencing a tender offer for the Units. In addition, provide that, pending
final determination of whether the Settlement should be approved, the General
Partners are enjoined from recording any transfers made in violation of the
Order.

(l) Provide that all written objections to the Settlement shall be
filed ten (10) days before the final Approval Hearing and, if applicable, must
clearly identify any and all witnesses, documents, and other evidence of any
kind that is to be presented at the Final Approval Hearing in connection with
such objections and must also set forth the substance of any testimony to be
given by such witnesses.

(m) Schedule the Final Approval Hearing to be held by the Court to
consider and determine (i) whether the proposed Settlement, including the terms
and conditions of the Merger, should be approved as fair, reasonable and
adequate; (ii) whether the Class should be certified and the Class
Representatives approved as representatives of the Class; (iii) whether

an order approving the Settlement and a entry of Final Judgment should be
entered dismissing the California Litigation on the merits and with prejudice;
and (iv) whether the application of Settlement Class Counsel for an award of
Attorneys' Fees and Expenses should be approved.

(n) Providing that, pending a final determination of whether the
Settlement should be approved, all discovery and all proceedings in the
California Litigation are stayed, except for proceedings regarding the
Settlement.

(o) Provide that the Final Approval Hearing may, from time to time,
and without further notice to the Class Members or Limited Partners, be
continued or adjourned by order of the Court.

ARTICLE VIII:
NOTICE OF SETTLEMENT

Section 8.1. Notice to Settlement Class. Within fourteen (14) days after
the entry of the Preliminary Approval Order, the Claims Administrator shall send
copies of the Notice and Proof of Claim, by United States Mail, postage prepaid,
to the Settlement Class Members at their last known addresses as appearing in
the records maintained by the General Partners. The Notice shall be in a form to
be agreed to by counsel for the Parties consistent with the provisions hereof.

Section 8.2. Summary Notice. The Settling Defendants shall publish the
Summary Notice, in a form to be agreed to by counsel for the Parties consistent
with the provisions hereof, on one (1) occasion, in Investors Business Daily,
within ten (10) days of the entry of the Preliminary Approval Order.

Section 8.3. Website Posting. The Claims Administrator or Settlement Class
Counsel shall create and host an internet website on which a copy of the Notice
and Proof of Claim Forms will be posted and made available within fifteen (15)
days after entry of the Preliminary Approval Order.

Section 8.4. Costs of Notice. Costs of printing and mailing and publication
of the Notice and Summary Notice shall be paid by the Settling Defendants.

Section 8.5. Affidavit of Compliance. The responsible party shall file an
affidavit of mailing and publication with the Court stating that the Notice was
duly provided to the Settlement Class Members and Summary Notice published in
accordance with the Preliminary Approval Order.

Section 8.6. Adequacy of Notice. The Parties believe that compliance with
the procedures described in this Article constitutes due and sufficient notice
to Class Members of this Settlement and the Final Approval Hearing and satisfies
the requirements of due process. Nothing else shall be required of the Parties,
Settlement Class Counsel or Defendants' Counsel to provide notice of the
Settlement and the Final Approval Hearing.

ARTICLE IX:
FINAL APPROVAL HEARING AND FINAL ORDER OF JUDGMENT

Section 9.1. Final Approval Hearing. Pursuant to Rule 1859 of the
California Rules of Court, the Final Approval Hearing shall be held forty-five
(45) days, or such other period as the Court directs, after the sending of
Notice to the Members of the Settlement Class as provided in Sections 8.1 and
8.2. In connection with the Final Approval Hearing, the Parties shall file with
the Court any such papers as their respective counsel believe necessary and
appropriate. At the Final Approval Hearing, the Court will be asked to consider
the fairness of the Settlement and the transactions contemplated by this
Stipulation, including, without limitation, the Merger. The Court will also be
asked to consider the application by Settlement Class Counsel for Attorneys'
Fees and Expenses.

Section 9.2. Entry of Final Judgment and Order. At or prior to the Final
Approval Hearing, counsel for the Parties shall jointly submit to the Court a
proposed Final Judgment and Order, in a form to be agreed to by counsel for the
Parties consistent with the provisions hereof which shall:

(a) Approve the Stipulation and Settlement and the transactions
contemplated thereby as fair, reasonable and adequate to the Settlement Class

and the Merging Partnerships, and approve the Settlement as being in the best
interests of the Settlement Class and the Merging Partnerships, and directing
consummation of the Settlement in accordance with the terms and conditions of
the Stipulation;

(b) Certify the Settlement Class and approve the Class Representatives
as representatives of the Settlement Class for purposes of this Settlement;

(c) Dismiss the Complaint and each and every cause of action and claim
set forth therein on the merits as to all Released Parties and with prejudice to
the Settlement Class; extinguishing all claims, rights, demands and causes of
action (including Unknown Claims) which might have been asserted therein by the
Class Representatives on behalf of themselves or the Settlement Class for any
settled claims; and discharging the Settling Defendants and all Released Parties
therefrom;

(d) Bar and permanently enjoin the Settlement Class Members, either
directly, representatively, or in any other capacity, from instituting or
prosecuting the Settled Claims, including Unknown Claims, against any of the
Released Parties;

(e) Other than by operation of law, bar and permanently enjoin each
Settlement Class Member from transferring, selling, assigning, giving, pledging,
hypothecating or otherwise disposing of any Units of the Partnerships to any
person until either the Closing Date or the termination of this Settlement as
provided in Article XI, whichever occurs sooner.

(f) Provide that, upon the Effective Date, Class Members who have not
filed timely and valid Requests for Exclusion from the Class, pursuant to the
procedures described in Section 6.1, whether or not they file a Proof of Claim
within the time provided for, and whether or not they participate in the
Settlement Trust, shall be barred from asserting any Settled Claims, including
Unknown Claims, and all Settlement Class Members shall be conclusively deemed to
have released the Settling Defendants and Released Parties from the Settled
Claims, including Unknown Claims;

(g) Reserve exclusive jurisdiction in the Court over all matters
relating to the administration, consummation and enforcement of this Stipulation
and the Settlement.

(h) Determining there is no just reason for delay and directing that
the Final Judgment and Order be final and appealable.

ARTICLE X:
CONDITIONS TO SETTLEMENT

Section 10.1. Conditions to the Settlement. This Settlement shall be of no
force or effect and shall be void ab initio without prejudice to the rights of
any Party unless each of the following conditions is fully satisfied:

(a) Preliminary approval by the Court of the Settlement and the
Court's entry of a Preliminary Order;

(b) Certification of the Settlement Class has not been materially
modified by the Court;

(d) The Consent Solicitation Prospectus is filed with the SEC and
becomes effective; and

(e) The Closing Date occurs.

Section 10.2. Conditions to the Merger. The consummation of the Merger
shall be contingent on and subject to the following conditions.

(a) A majority of the number of Units owned by Limited Partners in the
respective Merging Partnerships vote in favor of the Merger.

(b) The acceptance of the Interests for trading on the AMEX.

(c) Absence of any material adverse change in the overall business or
prospects of the Merging Partnerships or in the tax or other regulatory
provisions applicable to the Merging Partnerships, the Settling Defendants or
NTS Realty and the Settling Defendants shall not have become aware of any facts
that have or may have a material effect, whether adverse or otherwise, on the
Partnerships, taken as a whole, the Merger, or the value to NTS Realty, taken as
a whole.

(d) Absence of any statute, rule, order or regulation enacted or
issued by the United States or any State, or by a court, which prohibits or
challenges the consummation of the Merger.

(e) There having been no declaration of suspension of trading in, or
limitation on prices for, securities generally on the AMEX, declaration of a
banking moratorium by Federal or state authorities or any suspension of payments
by banks in the United States (whether mandatory or not) or of the extension of
credit by lending institutions in the United States, or commencement of war,
armed hostility, or other international or national calamity directly or
indirectly involving the United States, which war, hostility or calamity would
have a material adverse effect on the business objectives of NTS Realty, or, in
the case of any of the foregoing existing on the date of the Consent
Solicitation Prospectus, any material acceleration or worsening thereof.

(f) The Effective Date occurs, or the occurrence of which is waived by
the Settling Defendants upon written notice within ten (10) days to Settlement
Class Counsel.

ARTICLE XI:
TERMINATION OF SETTLEMENT

Section 11.1. In the event the Court declines to enter the Preliminary
Approval Order, Final Approval Order or multiple orders, which in conjunction
provide the same relief, or enters the Preliminary Approval Order, Final
Approval Order or orders that provide relief which is substantially different
than provided therein, the Parties shall have the right, within ten (10) days
thereafter, to withdraw from this Stipulation by written notice to the other
party. The determination of whether any difference between the forms of
Preliminary Approval and Final Approval Orders is substantial, shall be made by
each of the Parties in their sole discretion.

Section 11.2. Neither a modification nor reversal on appeal of any amount
of Attorneys' Fees and Expenses awarded by the Court shall be deemed a material
modification or reversal of a part of the material terms of the Final Judgment,
Settlement or of this Stipulation.

Section 11.3. If as a result of the review of the Consent Solicitation
Prospectus by the SEC, or other governmental entity, a Material Adverse Change
to the terms and conditions of the Merger is necessary or required, the Settling
Defendants shall have the right, upon ten (10) days notice to terminate the
Settlement.

Section 11.4. If the Consent Solicitation Prospectus has not been
distributed to the Limited Partners on or before October 1, 2004, Settlement
Class Counsel and the Settling Defendants shall each have the mutual right to
terminate the Settlement by providing notice of the termination within ten (10)
days.

Section 11.5. If the Closing Date does not occur by December 31, 2004, the
Settlement shall be terminated.

Section 11.6. If the Stipulation is disapproved, terminated or canceled
pursuant to its terms, neither Class Representatives nor Settlement Class
Counsel shall have any obligation to pay any amounts for the costs of printing
or mailing of the Notice or publication of the Summary Notice. In addition, any
costs or expenses already incurred for the costs of printing or mailing of the
Notice at the time of such termination or cancellation, but which have not been
paid, shall be paid by the Settling Defendants and not by the Class
Representatives or Settlement Class Counsel.

Section 11.7. If this Stipulation is disapproved, terminated or canceled
pursuant to its terms, the Parties to this Stipulation shall be deemed to have
reverted to their respective status as prior to the execution of this
Stipulation, and they shall proceed in all respects as if this Stipulation had
not been executed and the related orders and judgments had not been entered,
preserving in that event all of their respective claims and defenses in the
California Litigation.

ARTICLE XII:
ATTORNEYS' FEES, COSTS AND EXPENSES

Section 12.1. Attorneys' Fees, Costs and Expenses. Settlement Class Counsel
will apply to the Court for an award of attorneys' fees incurred in connection
with the Settlement in an aggregate amount not to exceed two times the multiple
of the number of hours reasonably expended by Settlement Class Counsel at their
hourly rate.

(a) Former Limited Partners' Settlement. Settlement Class Counsel will
apply for an award of attorneys' fees incurred in an amount not to exceed
$685,000 in connection with that portion of the Settlement provided for in
Sections 2.4 through 2.7. Any fees awarded pursuant to this paragraph shall be
paid from the Settlement Account.

(b) Remaining Limited Partners' Settlement. Settlement Class Counsel
will apply for an award of attorneys' fees incurred in an amount not to exceed
the difference between the aggregate amount to be applied for as specified in
Section 12.1, less the amount applied for in Section 12.1(a) in connection with
that portion of the Settlement provided for in Sections 2.1, 2.2 and 2.3. The
Settling Defendants will be responsible for fees awarded pursuant to this
paragraph.

Section 12.2. Costs and Expenses. In addition to their application for
Attorneys' Fees and Expenses, Settlement Class Counsel may file with the Court
an application for an award of reasonable costs and expenses. The costs and
expenses will be paid 50 percent from the Settlement Account and 50 percent by
the Settling Defendants.

Section 12.3. Payment of Attorneys' Fees and Expenses. To the extent that
the Court awards Attorneys' Fees and Expenses pursuant to Sections 12.1 and
12.2, they shall become payable to Settlement Class Counsel upon the Effective
Date, Closing Date or the entry of the Court's order awarding fees and expenses,
whichever is later, except if the Closing Date occurs, but the Effective Date
does not, the Settling Defendants agree to pay that portion of the Attorneys'
Fees and Expenses as to which they are obligated in Sections 12.1(b) and 12.2,
such payment to be made within five (5) business days of Closing Date.

Section 12.4. Effect of Appeals. If an appeal is taken from approval of the
Settlement, the Settling Defendants agree to pay Settlement Class Counsel for
the reasonable fees and expenses incurred by them in defending that portion of
the Settlement for which the Settling Defendants are obligated to pay fees and
expenses in this Stipulation. Such fees and expenses are to be paid within five
(5) business days of the Effective Date.

Section 12.5. Agreement Regarding Attorneys Fees and Expenses. Settlement
Class Counsel has agreed they will not seek or receive any award of Attorneys'
Fees and Expenses except as permitted in Sections 12.1, 12.2 or 12.4, and the
Settling Defendants agree not to oppose a request by Settlement Class Counsel
for Attorneys' Fees and Expenses made in compliance with Sections 12.1, 12.2 and
12.4.

Section 12.6. Timely Application - Effect on Settlement. Settlement Class
Counsel shall file and serve their application for Attorneys' Fees Expenses on
or before a date to be set in the Notice. In its application, Settlement Class
Counsel will segregate the amount of Attorneys' Fees and Expenses requested
pursuant to Sections 12.1(a) and 12.1(b). The application shall be considered
separate from the Court's consideration of the fairness, reasonableness and
adequacy of the Settlement. Nothing regarding the Court's decision of the
application of Attorneys' Fees Expenses shall operate to terminate or cancel the
Stipulation or have any effect on the finality of the Final Judgment and Order.

Section 12.7. Limitation on Settling Defendants' Obligations for Attorneys'
Fees and Expenses. Other than as set forth in this Stipulation the Settling
Defendants and the Settlement Class shall not have any obligation with respect
to Settlement Class Counsel's Attorneys' Fees and Expenses.

ARTICLE XIII:
RIGHT OF WITHDRAWAL

The Settling Defendants have the right to withdraw from the Settlement
under certain circumstances. These circumstances shall be set forth in a
supplemental agreement among the Parties to be filed under seal.

ARTICLE XIV:
STIPULATION NOT ADMISSION.

The fact of entering into or carrying out this Settlement, the exhibits
attached to this Stipulation, and any negotiations and proceedings related
hereto, shall not be construed as, offered into evidence as, or deemed to be
evidence of, an admission or concession of liability by or an estoppel against
any of the Parties, a waiver of any applicable statute of limitations or repose,
and shall not be offered or received into evidence, or considered, in any action
or proceeding against any Party in any judicial, quasi-judicial, administrative
agency, regulatory or self-regulatory organization, or other tribunal, or
proceeding for any purpose whatsoever, other than to enforce the provisions of
this Stipulation or the provisions of any related agreement, release, or exhibit
hereto, or in the case of any subsequent action against any of the Released
Parties, Class Representatives or Settlement Class Counsel on any or all of the

Released Claims, in order to support a claim or defense of res judicata,
collateral estoppel, accord and satisfaction, quiet title, release or other
theory of claim or issue preclusion or similar defense.

ARTICLE XV:
MISCELLANEOUS TERMINOLOGY AND CONSTRUCTION

Section 15.1. Captions. The captions contained in this Stipulation are
inserted only as a matter of convenience and in no way define, limit, extent, or
describe the scope of this Stipulation or the intent of any of its provisions.

Section 15.2. Definitions and Recitals. The definitions and recitals set
forth above are essential elements of this Stipulation.

Section 15.3. Entire Agreement. This Stipulation and exhibits attached
hereto set forth the entire agreement of the Parties in respect to the
Settlement and supersedes all prior oral or written agreements, arrangements,
understandings, inducements, promises, and warranties, not embodied or
incorporated herein, relating to the subject matter of this Stipulation.

Section 15.4. No Representations. The Class Representatives acknowledge,
for themselves and for the Settlement Class, that they have not relied upon any
representations, warranties, guarantees, promises, statements or estimates,
whether written or oral, express or implied, by any of the Released Parties, any
Affiliate, broker, agent, employee, accountant, attorney-in-fact or at-law or
other person representing or purporting to represent any such Released Party,
including, without limitation, any representations, warranties, guarantees,
promises, statements or estates regarding the value of the Partnerships, their
properties, the Interests or the Units, except for historical financial
information and various projections concerning the underlying properties
provided by the Settling Defendants which projections are assumed to have been
reasonably prepared and represent the Settling Defendants' best current
available estimates as to the future financial performance of the properties or
NTS Realty. The Class Representatives acknowledge that they or Settlement Class
Counsel have undertaken such investigation as they have deemed necessary in
connection with entering into the Stipulation and Settlement.

Section 15.5. Modifications. The terms and provisions of this Stipulation
may not be changed, waived, modified, or varied in any manner unless in writing
signed by Defendants' Counsel and Settlement Class Counsel, and with consent of
the Court, and without further notice to the Settlement Class.

Section 15.6. Waiver. The failure of any Party to enforce at any time any
provision of this Stipulation shall not be construed as a waiver of such
provision, nor be construed in any way to effect the validity of this
Stipulation or any part hereof or the right of any Party thereafter to insist
upon strict performance of each and every provision of this Stipulation. No
waiver of any breach of this Stipulation shall be held to constitute a waiver of
any other breach.

Section 15.7. Successors and Assigns. This Stipulation shall be binding
upon and inure to the benefit of the Parties and their successors and assigns.
No Party may assign its rights or obligations under the Stipulation without the
prior written consent of all of the other Parties.

Section 15.8. Third Parties. Nothing in this Stipulation, whether express
or implied, is intended to confer any rights or remedies under or by reason of
this Stipulation on any Person other than the Parties and their respective
successors and assigns, nor is anything in this Stipulation intended to relieve
or discharge the obligations or liabilities of any third parties to any Party,
nor shall any provision give any third parties any right of subrogation or
action over or against any Party.

Section 15.9. Notices. Any and all notices, requests, consents, directives
or communications by any Party intended for any other Party shall be in writing,
shall be given personally or by postage prepaid certified or registered mail,
return receipt requested, and shall be deemed delivered on the earlier of (a)
the date received and (b) the date four (4) business days after the date of
deposit in a United States Postal Depository, and shall be addressed as follows:

(a) If to the Settling Defendants:
Allan T. Slagel
Shefsky & Froelich Ltd.
444 North Michigan Avenue
Suite 2500
Chicago, Illinois 60611

(b) If to the Plaintiffs:
George Donaldson
Law Offices of George Donaldson
456 Montgomery Street
Suite 1250
San Francisco, California 94104

Any Party may, from time to time, change the address to which such written
notice, requests, consents, directives or communications are to be mailed, by
giving the other Parties ten (10) days prior written notice of the changed
address in the manner provided above.

Section 15.10. Governing Law. This Stipulation shall be governed by and
construed and enforced in accordance with the laws of the State of California.

Section 15.11. Enforcement of Stipulation. This Stipulation (including,
without limitation, its execution and consummation) shall be enforced solely in
the Court. The Settling Defendants, the Class Representatives and the Settlement
Class hereby waive any objection they may now have or hereafter have to the
venue or forum of any proceedings relating to the enforcement, construction or
interpretation of the Stipulation or the Settlement, and irrevocably consent to
and acknowledge jurisdiction and service of any and all process of the Court in
any such proceedings.

Section 15.12. Collaborative Effort. This Stipulation, including the
exhibits, was executed after arm's length negotiations among the Parties and
reflects the conclusions of counsel for the Parties that the contemplated
Settlement is fair, equitable and in the best interests of their respective
clients. This Stipulation shall not be construed more strictly against one Party
than another merely by virtue of the fact that it may have been prepared by
counsel for one of the Parties, it being recognized that, because of the arm's
length negotiations described above, Parties and their counsel have contributed
substantially and materially to the preparation of this Stipulation.

Section 15.13. No Assignment. Plaintiffs and Settlement Class Counsel
represent and warrant that none of the Plaintiffs' alleged claims or causes of
action against the Settling Defendants have been assigned, encumbered or in any
manner transferred in whole or in part.

Section 15.14. Terminology and Construction. All personal pronouns used in
this Stipulation, whether used in the masculine, feminine or neutral gender,
shall include all other genders, and the singular shall include the plural and
vice versa. Should any of the provisions of this Stipulation conflict with the
terms of the exhibits hereto, the terms of the Stipulation shall control unless
otherwise ordered by the Court.

Section 15.15. Authority. Settlement Class Counsel, on behalf of the
Settlement Class, is expressly authorized to take all appropriate action
required or permitted to be taken by the Settlement Class pursuant to this
Stipulation to effectuate its terms and are also expressly authorized to enter
into any modifications or amendments to this Stipulation on behalf of the
Settlement Class which it deems appropriate. Defendants' Counsel is authorized
to sign this Stipulation on behalf of the Settling Defendants.

Section 15.16. No Severability. Invalidation of any material portion of
this Stipulation or exhibits shall invalidate the Stipulation in its entirety
unless the Parties shall subsequently agree in writing that the remaining
provisions shall remain in full force and effect.

Section 15.17. Counterparts. This Stipulation may be executed in one or
more counterparts. All executed counterparts and each of them shall be deemed to
be one and the same instrument.

IN WITNESS WHEREOF, the Parties have caused this Stipulation to be
executed, by their duly authorized attorneys, as of the day and year first above
written.

By: _________________________________________
One of the Attorneys for Morgan K.
Buchanan, James P. Mills and Jesse
L. Crews

George Donaldson
Daniel B. Harris
LAW OFFICES OF GEORGE DONALDSON
456 Montgomery Street
Suite 1250
San Francisco, California 94104
(415) 394-8500 (Telephone)
(415) 394-8506 (Facsimile)

By: _________________________________________
One of the Attorneys for:
NTS-Properties Associates,
NTS-Properties Associates IV,
NTS-Properties Associates V;
NTS-Properties Associates VI;
NTS-Properties Associates VII;
NTS-Properties Plus Associates;
NTS Capital Corporation; NTS
Development Company, ORIG,
LLC; and J.D. Nichols

Allan T. Slagel Vincent P. Finigan, Jr.,
Brett Nolan Howard Holderness
SHEFSKY & FROELICH LTD. MORGAN, LEWIS & BOCKIUS LLP
444 North Michigan Avenue Spear Street Tower, One Market
Suite 2500 San Francisco, California 94105
Chicago, Illinois 60611 (415) 442-0900 (Telephone)
(312) 527-4000 (Telephone) (415) 442-1010 (Facsimile)
(312) 527-1007 (Facsimile)