SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 31, 1996
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THE PARKWAY COMPANY
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(Exact name of Registrant as specified in its charter)
Texas 0-12505 74-2123597
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification
incorporation) Number)
300 One Jackson Place, 188 E. Capitol St., Jackson, MS 39201
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (601) 948-4091
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(Former name or former address, if changed since last report)
<PAGE>
FORM 8-K
THE PARKWAY COMPANY
Item 2. Acquisition or Disposition of Assets.
On May 31, 1996, a portfolio of 157 mortgage loans
owned by The Parkway Company or wholly-owned subsidiaries
of The Parkway Company were sold for $9,890,000 in cash,
net of estimated expenses, to MTGLQ Investors, LP, a
Delaware limited partnership which is unrelated to The
Parkway Company. The loans had a book value of
$5,114,000 and the transaction will result in a book gain
of approximately $4,776,000 ($1.58 per share) in the
second quarter of 1996. The purchase price was
determined based on a discount from the face values of
the loans.
Item 7. Financial Statements and Exhibits.
(b) Pro Forma Consolidated Financial Statements
The unaudited Pro Forma Consolidated Financial
Statements are attached in an Exhibit hereto.
THE PARKWAY COMPANY
Page
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Pro Forma Consolidated Financial Statements 4
Pro Forma Consolidated Balance Sheet (Unaudited) -
As of March 31, 1996 5
Pro Forma Consolidated Statement of Income (Unaudited)
For the Twelve Months Ended December 31, 1995 6
Pro Forma Consolidated Statement of Income (Unaudited)
For the Three Months Ended March 31, 1996 7
Notes to Pro Forma Consolidated Financial Statements 8
(c) Exhibits.
Loan Acquisition Agreement between EB, Inc. a
Mississippi corporation, The Parkway Company, a Texas
corporation, Parkway Congress Corporation, a Texas
corporation and Parkway Texas Corporation, a Texas
corporation, and MTGLQ Investors, LP, a Delaware limited
partnership.
<PAGE>
FORM 8-K
THE PARKWAY COMPANY
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
DATE: June 14, 1996
THE PARKWAY COMPANY
BY: /s/Sarah P. Clark
Sarah P. Clark
Vice President,
Chief Financial Officer
Secretary<PAGE>
Pro Forma Consolidated Financial Statements
(Unaudited)
The following unaudited pro forma consolidated balance sheet
as of March 31, 1996, and the pro forma consolidated statements of
income for the twelve months ended December 31, 1995 and the three
months ended March 31, 1996, give effect to the sale of 157
mortgage loans. The pro forma consolidated financial statements
give effect to the sale of these mortgage loans as if the sale had
occurred on the first day of the period presented for purposes of
the pro forma consolidated statements of income or had occurred on
March 31, 1996 for purposes of the pro forma consolidated balance
sheet.
The pro forma consolidated financial statements are based on
the financial statements of Parkway (as filed in Parkway's Form 10-
QSB for the three months ended March 31, 1996 and Form 10-KSB for
the year ended December 31, 1995). These pro forma statements may
not be indicative of the results that actually would have occurred
if the transaction had been in effect on the dates indicated or
which may be obtained in the future. The pro forma financial
statements should be read in conjunction with the historical
financial statements and notes of Parkway referred to above.<PAGE>
THE PARKWAY COMPANY AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
(Unaudited)
Parkway Pro Forma Parkway
Historical Adjustments Pro Forma
---------- ----------- ---------
(In thousands)
Assets
Real estate related investments
Office buildings...............$ 66,431 $ $ 66,431
Accumulated depreciation....... (7,526) (7,526)
-------- -------- --------
58,905 58,905
Real estate held for sale
Land......................... 8,386 8,386
Operating properties......... 4,773 4,773
Mortgage loans................. 11,511 (5,406) 6,105
Real estate securities......... 1,993 1,993
Real estate partnerships and
corporate joint venture...... 672 672
-------- -------- --------
86,240 (5,406) 80,834
Interest and rents receivable and
other assets................... 2,559 2,559
Cash and cash equivalents........ 4,245 9,890 14,135
-------- -------- --------
$ 93,044 $ 4,484 $ 97,528
======== ======== ========
Liabilities
Mortgage notes payable without
recourse.......................$ 33,884 $ 33,884
Mortgage notes payable on wrap
mortgages...................... 4,602 4,602
Accounts payable and other
liabilities.................... 4,444 4,444
Deferred gain.................... 292 (292) -
-------- -------- --------
43,222 (292) 42,930
-------- -------- --------
Shareholders' Equity
Common stock, $1.00 par value,
10,000,000 shares authorized,
3,016,512 in 1996.............. 3,017 3,017
Additional paid-in capital....... 31,920 31,920
Retained earnings................ 14,175 4,776 18,951
-------- -------- --------
49,112 4,776 53,888
Unrealized gain on securities.... 710 710
-------- -------- --------
49,822 4,776 54,598
-------- -------- --------
$ 93,044 $ 4,484 $ 97,528
======== ======== ========<PAGE>
THE PARKWAY COMPANY AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED 12/31/95
(Unaudited)
Parkway Pro Forma Parkway
Historical Adjustments Pro Forma
---------- ----------- ---------
(In thousands, except per share data)
Revenues
Income from real estate
properties.......................$ 8,941 $ $ 8,941
Interest on mortgage loans......... 1,421 (896) 525
Management company income.......... 1,041 1,041
Equity in earnings
Real estate companies............ 135 135
Real estate partnerships and
corporate joint venture........ 116 116
Interest on investments............ 167 339 506
Dividend income.................... 601 601
Deferred gains and other income.... 345 345
Gain (loss) on real estate
and mortgage loans............... 6,552 6,552
Gain on securities................. 4,314 4,314
------- ------- -------
23,633 (557) 23,076
------- ------- -------
Expenses
Real estate owned
Operating expense................ 4,876 4,876
Interest expense................. 2,230 2,230
Depreciation and amortization.... 1,331 1,331
Minority interest................ (100) (100)
Interest expense
Notes payable to banks........... 156 156 -
Notes payable on wrap mortgages.. 135 135
Management company expenses........ 804 804
Other expenses..................... 2,299 2,299
------- ------- -------
11,731 (156) 11,575
------- ------- -------
Income before income taxes......... 11,902 (401) 11,501
Income tax provision............... 82 82
------- ------- -------
Net income.........................$11,820 $ (401) $11,419
======= ======= =======
Net income per share...............$ 6.36 $ .21 $ 6.15
======= ======= =======
Weighted average shares
outstanding...................... 1,858 1,858 1,858
======= ======= =======
<PAGE>
THE PARKWAY COMPANY AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED 3/31/96
(Unaudited)
Parkway Pro Forma Parkway
Historical Adjustments Pro Forma
---------- ----------- ---------
(In thousands, except per share data)
Revenues
Income from real estate
properties......................$ 3,475 $ 3,475
Management company income......... 279 279
Interest on mortgage loans........ 564 (231) 333
Equity in earnings (losses):
Real estate partnerships and
corporate joint venture....... 4 4
Loss on securities................ (190) (190)
Interest on investments........... 99 124 223
Deferred gains and other income... 47 47
Dividend income................... 66 66
Gain on real estate and mortgage
loans........................... 193 193
-------- -------- -------
4,537 (107) 4,430
-------- -------- -------
Expenses
Real estate owned:
Operating expense............... 1,677 1,677
Interest expense................ 655 655
Depreciation and amortization... 418 418
Minority interest............... (28) (28)
Interest expense:
Notes payable on wrap mortgages. 120 120
Management company expenses....... 239 239
Other expenses.................... 669 669
-------- -------- -------
3,750 - 3,750
-------- -------- -------
Net income........................$ 787 $ (107) $ 680
======== ======== =======
Net income per share..............$ .26 $ (.03) $ .23
======== ======== =======
Weighted average shares
outstanding 3,012 3,012 3,012
======== ======== =======
<PAGE>
Notes to Pro Forma Consolidated Financials
1. On May 31, 1996, a portfolio of 157 mortgage loans owned by
The Parkway Company or wholly-owned subsidiaries of The
Parkway Company were sold for $9,890,000 in cash, net of
estimated expenses, to MTGLQ Investors, LP, a Delaware limited
partnership which is unrelated to The Parkway Company. The
loans had a book value of $5,114,000 and the transaction will
result in a book gain of approximately $4,776,000 ($1.58 per
share) in the second quarter of 1996. The purchase price was
determined based on a discount from the face values of the
loans.
2. Interest earned on mortgage loans sold was $896,000 for the
twelve months ended December 31,1995 and $231,000 for the
three months ended March 31, 1996.
3. Cash proceeds of $9,890,000 were assumed to be invested in
short-term interest bearing accounts earning 5% interest
annually. For the twelve months ending December 31, 1995,
interest expense was adjusted to zero with a net adjustment
made to interest income.
<PAGE>
LOAN ACQUISITION AGREEMENT
This Loan Acquisition Agreement (this "Agreement") is entered
into by and between EB Inc., a Mississippi corporation ("EB"), The
Parkway Company, a Texas corporation ("Parkway"), Parkway Congress
Corporation, a Texas corporation ("Parkway Congress") and Parkway
Texas Corporation, a Texas corporation ("Parkway Texas") and MTGLQ
Investors, LP, a Delaware limited partnership ("Buyer").
WHEREAS, EB, Parkway Texas, Parkway Congress and Parkway own
certain Transferred Loans;
WHEREAS, EB, Parkway Texas, Parkway Congress and Parkway
desire to sell all of their rights, title and interests in and to
the Transferred Loans to Buyer according to the terms and
conditions set forth herein; and
WHEREAS, Buyer desires to purchase such rights, title and
interests in and to the Transferred Loans from EB, Parkway Texas,
Parkway Congress and Parkway according to the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the premises and the
respective mutual agreements, covenants, representations and
warranties contained herein, the sufficiency of which is hereby
acknowledged, the parties, intending to be legally bound, agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 Terms Defined. When used in this Agreement, the
following terms shall have the meaning set forth below:
"Actual Knowledge" shall mean, when referring to Parkway, EB,
Parkway Texas, Parkway Congress and Buyer, facts actually known to
the current officers and employees of such Party.
"Agreement" shall mean this Loan Acquisition Agreement among
EB, Parkway Texas, Parkway Congress, Parkway and Buyer.
"Assignment of Loan Documents, Title Insurance Policies and
Rights in Escrow Accounts" shall mean the general assignment of
whatever interest EB, Parkway Texas, Parkway Congress and Parkway
have, if any, in any Loan Documents, Title Insurance Policies and
Escrow Accounts related to any Transferred Loan which shall be
executed by Parkway and/or EB to Buyer on the Closing Date in a
form reasonably acceptable to the Parties.
"Assignment of Mortgage" shall mean the separate assignment of
each Mortgage which shall be executed by Parkway or EB on or before
the Closing Date in a form reasonably acceptable to the Parties.
"Assignment of Rents and Leases" shall mean any collateral
assignment of rents or leases as security under a Loan Document.
"Buyer" shall mean MTGLQ Investors, LP, a Delaware limited
partnership.
"Closing Date" shall mean the close of business on May 31,
1996, or an earlier date to be mutually agreed upon by the Parties.
"Collateral" shall mean any real or personal property,
including, without limitation, fixtures, tangible, intangible or
other property referenced as security under any Loan Documents.
"Cutoff Date" shall mean May 1, 1996.
"EB" shall mean EB Inc., a Mississippi corporation.
"Effective Date" shall mean the date this Agreement is signed
by the last Party to sign.
"Escrow Accounts" shall mean any escrow accounts for
Transferred Loans to which EB, Parkway Texas, Parkway Congress or
Parkway has control or custody.
"Loan File" shall mean all documents relating to any
Transferred Loan including, without limitation, the documents
listed in Section 2.3 hereof.
"Loan Documents" shall mean any and all Mortgages, Mortgage
Notes, Assignments of Rents and Leases, guaranties,
indemnifications, certificates or other documents listed on the
Loan Document Schedule or relating to any Transferred Loan and in
the possession of Seller.
"Loan Document Schedule" shall mean that certain Schedule A
attached to this Agreement which identifies each Transferred Loan.
"Mortgage" shall mean any mortgage, deed of trust, indenture
or other security agreement which secures any Collateral under any
Loan Documents referenced on the Loan Document Schedule.
"Mortgagee" shall mean any Person identified as the mortgagee
or secured party in any Loan Documents.
"Mortgagor" shall mean any Person who executed any Loan
Documents as the mortgagor or debtor.
"Note" shall mean any promissory note, recourse or non-
recourse, relating to any Transferred Loan.
"Parkway" shall mean The Parkway Company, a Texas corporation.
"Parkway Congress" shall mean Parkway Congress Corporation, a
Texas corporation.
"Parkway Texas" shall mean Parkway Texas Corporation, a Texas
corporation.
"Parties" shall mean EB, Parkway Texas, Parkway Congress,
Parkway and Buyer.
"Person" shall mean any individual, group, partnership, joint
venture, corporation, organization, trust, association,
governmental entity or any other entity of any type.
"Purchase Price" shall mean the sum of $9,996,428.27 payable
in immediately available funds on the Closing Date. The Purchase
Price shall be allocated: $6,173,950.70 to EB, $1,525,028.54 to
Parkway Texas, $261,875.53 to Parkway Congress and $2,035,573.50
to Parkway.
"Seller" shall mean EB, Parkway Texas, Parkway Congress and/or
Parkway as the context may require.
"Title Insurance Policy" shall mean a mortgagee title
insurance policy relating to certain Collateral.
"Transferred Loan" shall mean each loan listed on the Loan
Document Schedule.
ARTICLE 2
MORTGAGE LOANS TO BE SOLD AND ASSIGNED
TO BUYER, PRICE AND TERMS
2.1 Transaction. Subject to the terms and conditions
hereinafter set forth, on the Closing Date, Seller shall sell,
assign and deliver to Buyer, and Buyer shall purchase, assume and
receive, all of Seller's respective right, title, interest,
obligations and liabilities in and to the Transferred Loans, and
all related Loan Documents, Title Insurance Policies or Escrow
Accounts. Buyer acknowledges and agrees that the Transferred Loans
are owned either by EB, Parkway Texas, Parkway Congress or Parkway
severally and not jointly and as such each party comprising Seller
shall be deemed to make only the covenants, representations and
warranties as to the portion of the Transferred Loans owned by such
Seller.
2.2 Consideration. In consideration of the sale and delivery
of the Transferred Loans to Buyer in accordance with the terms and
provisions hereof and the representations, warranties and covenants
of Seller contained herein, Buyer will pay Seller the Purchase
Price, on the Closing Date. In consideration of the payment of the
Purchase Price, Seller shall, on the Closing Date, assign and
deliver to Buyer all of their respective rights, title and
interests in and to the Transferred Loans, and all related
interests in any Loan Documents, Title Insurance Policies or Escrow
Accounts, in accordance with the terms of this Agreement. Buyer
shall, on the Closing Date, assume in full all of Seller's
obligations and responsibilities with respect to each of the
Transferred Loans, including, without limitation, any liabilities
or obligation relating to the litigation referenced on the Loan
Document Schedule.
2.3 Documentation. In connection with such transfer and
assignment, Seller shall, at Closing deliver to, and deposit with,
Buyer the following documents or instruments with respect to each
Transferred Loan:
2.3.1 The Note, showing a complete chain of endorsements
or assignments from the named payee to Seller and endorsed without
recourse to the order of Buyer;
2.3.2 The Mortgage and any intervening assignments
thereof with evidence of recording indicated thereon or, where the
public recording office has retained the original Mortgage or the
original of any such assignment, a certified copy of the Mortgage
or such assignment with evidence of recording thereon;
2.3.3 An original and a copy of the related Assignment
of Mortgage in recordable form;
2.3.4 An original of each assumption or modification
agreement, if any, relating to any Loan Documents;
2.3.5 An original of each Assignment of Rents and
Leases, if separate from the Mortgage, with evidence of recording
indicated thereon, and of any intervening assignment thereof, with
evidence of recording indicated thereon;
2.3.6 An original Assignment of Seller's interests, if
any, in all Loan Documents, Title Insurance Policies and Escrow
Accounts;
2.3.7 A letter authorizing any non-Party servicer of any
Loan Documents to transfer any Escrow Accounts to a servicer of
Buyer's choosing; and
2.3.8 The Loan Files.
2.4 Escrow/Impound Balances. With respect to each
Transferred Loan to which Seller is the servicer, Seller shall
provide Buyer on the Closing Date with immediately available funds
in the amount of the positive escrow and suspense balances
associated with the Transferred Loans as of the Cutoff Date, in a
manner reasonably acceptable to Buyer. Seller shall provide Buyer
with accounting statements of escrow and suspense balances
sufficient to enable Buyer to reconcile as of the Cutoff Date,
respectively, the amount of such payment with the accounts of the
Transferred Loans.
2.5 Nature of Conveyance. The transfer and assignment of
the Transferred Loans and related Collateral accomplished hereby is
absolute and intended by the Parties to be a complete sale of such
Transferred Loans and of Sellers interest in the Collateral.
2.6 Acceptance by Buyer. Buyer hereby acknowledges receipt
of the Note, the Mortgage and the other documents included in the
Loan File, and any Loan Documents, Title Insurance Policies and
Escrow Accounts, relating to each Transferred Loan listed on the
Loan Document Schedule. The Transferred Loans shall be serviced
from and after the consummation of this transaction by Buyer or a
separate entity to be designated by Buyer in its sole discretion.
2.7 AS IS WHERE IS. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH
HEREIN, SELLER AND BUYER AGREE THAT THE TRANSFERRED LOANS SHALL BE
SOLD AND ASSIGNED, AND THAT BUYER SHALL PURCHASE AND ASSUME, ALL
RIGHTS, TITLE AND INTERESTS IN THE TRANSFERRED LOANS ON THE CLOSING
DATE, "AS IS, WHERE IS, WITH ALL FAULTS", WITH NO RIGHT OF SET-OFF
OR REDUCTION IN THE PURCHASE PRICE, AND THAT, EXCEPT FOR SELLER'S
WARRANTIES EXPRESSLY SET FORTH HEREIN, SUCH SALE SHALL BE WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND OR NATURE WHATSOEVER BY
SELLER, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY WITH RESPECT TO THE
VALUE OF ANY COLLATERAL SECURING ANY TRANSFERRED LOAN, THE CREDIT
WORTHINESS OF ANY MORTGAGE, THE VALIDITY OR PRIORITY OF ANY
SECURITY INTEREST WITH RESPECT TO ANY COLLATERAL AND THE
ENFORCEABILITY OF ANY LOAN DOCUMENTS, AND SELLER DOES HEREBY
DISCLAIM AND RENOUNCE ALL SUCH REPRESENTATIONS OR WARRANTIES.
BUYER SPECIFICALLY ACKNOWLEDGES THAT, EXCEPT FOR SELLER'S
WARRANTIES EXPRESSLY SET FORTH HEREIN, BUYER IS NOT RELYING ON ANY
REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE WHATSOEVER,
WHETHER ORAL OR WRITTEN, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE,
FROM SELLER, AS TO ANY MATTERS CONCERNING THE TRANSFERRED LOANS.
OTHER THAN AS SET FORTH IN ARTICLE 5 OR IN THE DOCUMENTS
EXECUTED BY SELLER AT CLOSING, BUYER FURTHER ACKNOWLEDGES AND
AGREES THAT SELLER IS UNDER NO DUTY TO MAKE ANY AFFIRMATIVE
DISCLOSURES REGARDING ANY MATTER WHICH MAY BE KNOWN TO SELLER, AND
THAT BUYER IS RELYING SOLELY UPON ITS OWN INSPECTION OF THE
TRANSFERRED LOANS AND UNDERLYING COLLATERAL AND NOT UPON ANY
REPRESENTATION MADE TO IT BY SELLER OR ANY OTHER PERSON WHOMSOEVER.
BUYER ACKNOWLEDGES THAT UPON CLOSING BUYER WILL HAVE COMPLETED
ITS DUE DILIGENCE WITH RESPECT TO THE TRANSFERRED LOANS AND
COLLATERAL TO ITS SATISFACTION. BUYER ACKNOWLEDGES AND AGREES THAT
BUYER'S OBLIGATIONS HEREUNDER SHALL REMAIN IN FULL FORCE AND EFFECT
WITH BUYER HAVING NO RIGHT TO DELAY THE CLOSING OR TERMINATE THIS
AGREEMENT REGARDLESS OF ANY FACTS OR INFORMATION LEARNED BY BUYER
AFTER THE END OF THE INSPECTION PERIOD. NOTWITHSTANDING ANYTHING
HEREIN TO THE CONTRARY, THE AGREEMENTS OF BUYER SET FORTH IN THIS
SECTION SHALL SURVIVE THE CLOSING AND SHALL NOT BE MERGED THEREIN.
Buyer indicates its acknowledgement of the foregoing by
initialing this Section below.
Buyer:_____________________
2.8 Expenses of Transaction. Buyer and Seller shall be
responsible for the payment from their separate funds of their
respective expenses, including, without limitation, their
respective legal and accounting fees incurred in connection with
this Agreement and the transactions contemplated hereby.
2.9 Other Costs.
2.9.1 Buyer shall be solely responsible for all costs of
transfer including endorsements to the title insurance policies,
title and UCC searches, recording fees, any other transfer tax,
documentary stamp or similar tax or fee which becomes payable by
reason of the transfer of the Transferred Loans.
2.9.2 Buyer shall arrange for and pay all expenses
associated with, the shipping and insuring all of the Loan Files at
or after the Closing Date.
2.9.3 Buyer shall bear all costs of preparing and
recording assignments of the Mortgages, Loan Documents and any
other documents Buyer wishes to record.
2.9.4 Buyer shall undertake, and shall bear all costs
and expenses of, transferring any escrow accounts and tax records
not currently serviced by Seller to a servicer of Buyer's choice.
2.10 Payments Received After Cutoff Date. Any and all
principal, interest and escrow/suspense payments and interest
accruals with respect to each Transferred Loan which are received
after the Cutoff Date shall be allocated as set forth on the Cutoff
Schedule attached hereto as Schedule B.
2.11 Pending Legal Proceedings.
(a) After the Cutoff Date and prior to the Closing Date,
Seller shall prosecute its legal remedies with respect to the
Transferred Loans employing the same standards and procedures
employed as of the date hereof, consistent with the servicing
practices of prudent mortgage lending institutions and applicable
law. Buyer shall reimburse Seller for any costs and legal fees
incurred by Seller after the Cutoff Date. Seller shall not have
any right to participate after the Closing Date for its own account
in litigation relating to any Transferred Loan sold to Buyer and
will cooperate with and make its employees who are knowledgeable in
matters relating to any such litigation reasonably available to
Buyer.
(b) With respect to any Transferred Loan which is, as of
the Closing Date, the subject of litigation, bankruptcy or
foreclosure, Buyer and Seller agree to cooperate and use their best
efforts, within thirty (30) days after the Closing Date, to (i)
notify the Clerk of the Court, any foreclosing trustee and all
counsel of record in each such proceeding of transfer of the
Transferred Loan from Seller to Buyer, (ii) file pleadings to
relieve Seller's counsel of record from further responsibility in
such litigation (unless said counsel has agreed, with Seller's
written consent, to represent Buyer in said proceedings at Buyer's
expense), and (iii) remove Seller as a party in such action and
substitute Buyer as the real party-in-interest, and change the
caption thereof accordingly. In connection therewith, after the
Closing Date, Buyer shall have the sole responsibility to determine
the appropriate direction and strategy for such litigation or
proceeding. If Buyer fails to use its best efforts to comply with
the above requirements, Seller, upon prior written notice to Buyer,
may on Buyer's behalf complete any of the actions specified in
clauses (i), (ii) and (iii) above. Buyer acknowledges that its
failure to comply with the provisions in this paragraph may affect
Buyer's rights in any such litigation or proceeding (including,
without limitation, any dismissal with prejudice or the running of
any statute of limitations), if any such action or proceeding is
dismissed. Buyer acknowledges that its obligations with respect to
any such litigated matter are subject to the indemnification
provisions of this Agreement.
ARTICLE 3
[Intentionally left blank]
ARTICLE 4
INSPECTION
4.1 Inspection Period. Buyer acknowledges that it has had
the opportunity to inspect each Loan File prior to execution of
this Agreement and to conduct such due diligence as Buyer deemed
necessary.
4.2 Access. During normal business hours prior to Closing
and with prior notice, Seller agrees to give to Buyer and its
agents and representatives reasonable access to the Loan Files. At
Buyer's expense, Buyer and/or Buyer's agents and representatives
may copy any documents contained in the Loan Files. BY
FURNISHING THE LOAN FILES NEITHER SELLER NOR ANY OF THEIR
RESPECTIVE AGENTS, PARTNERS, OFFICERS, DIRECTORS, EMPLOYEES, OR
ATTORNEYS, NOR ANY OTHER PARTY RELATED IN ANY WAY TO ANY OF THE
FOREGOING, SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION OR
WARRANTY OF ANY KIND OR NATURE WHATSOEVER WITH RESPECT TO ANY
MATTER SET FORTH, CONTAINED OR ADDRESSED IN SUCH MATERIALS,
DOCUMENTS, REPORTS OR AGREEMENTS, INCLUDING, BUT NOT LIMITED TO,
THE ACCURACY AND COMPLETENESS THEREOF, EXCEPT AS OTHERWISE STATED
IN ARTICLE 5 OR IN THE DOCUMENTS EXECUTED BY SELLER AT CLOSING.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
Each party comprising Seller makes the following
representations and warranties with respect to the Transferred
Loans owned by such Party, as of the date of execution of this
Agreement and as of the Closing Date, which shall, in accordance
with section 8.4 survive for a two year period beginning on the
Closing Date, after which time such warranties and representations
shall be null, void, and of no further force or effect:
5.1 Authority. EB, Parkway Texas, Parkway Congress and
Parkway are corporations, duly formed, organized, existing and in
good standing under the laws of the States of Mississippi, Texas,
Texas and Texas, respectively. Seller has full legal right, power
and authority to execute and fully perform their obligations under
this Agreement. The execution, delivery and performance of this
Agreement by Seller and all transactions contemplated hereby have
been duly authorized and will not result in violation of any of the
terms and provisions of its Certificate or Articles of
Incorporation or Bylaws.
5.2 Compliance with Obligations. Neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (i) conflict with or constitute a breach
of, or constitute a default under or an event which, with or
without notice or lapse of time or both, would be a breach of or
default under Seller's Certificate or Articles of Incorporation,
Bylaws or other corporate governing documents; (ii) conflict with
or constitute a breach of, or constitute a default under or an
event which, with or without notice or lapse of time or both, would
be a breach of or default under or give rise to any right of
termination or acceleration under, any agreement, indenture,
mortgage, deed of trust or other instrument or undertaking to which
Seller is a party or by which any of the Transferred Loans are
subject, (iii) constitute a violation of any law, regulation,
judgment, order or decree applicable to Seller, (iv) result in the
creation or imposition of any lien, charge or encumbrance upon any
of the Transferred Loans or (v) except as set forth in the Loan
Documents require any consent, approval, authorization, order,
license or permit from any Person.
5.3 Loan Document Schedule. The information set forth in the
Loan Document Schedule is true and correct in all material
respects.
5.4 Ownership. Immediately prior to the transfer and
assignment of each Transferred Loan to Buyer, Seller had title to,
and were the sole owners of, each Transferred Loan, and had full
right and authority to transfer and assign such Transferred Loan to
Buyer pursuant to this Agreement. Seller has not granted any
liens, charges or encumbrances or any ownership or participation
interests in favor of any other Person except as set forth on the
Loan Document Schedule.
5.5 Current Loan Status. To Seller's Actual Knowledge and
except as set forth on the Loan Document Schedule, no facts
currently exist which would impair the validity or the
enforceability of the Transferred Loans, and there is no default,
breach, violation or event of acceleration currently existing under
the Transferred Loans, and Seller has not knowingly waived any such
default, breach, violation or event of acceleration. Seller has no
Actual Knowledge that the lien position with respect to a Mortgage
is different than the lien position set forth in the Title
Insurance Policy applicable to such Mortgage.
5.6 Modification of Loan Terms. To Seller's Actual Knowledge
and except as set forth on the Loan Document Schedule, the terms of
the related Note and Mortgage have not been impaired, waived,
altered or modified by Seller in any respect, except by written
instruments included in the related Loan File and no related
Mortgagor or guarantor, if any, has been released, in whole or in
part, by Seller, from its/their obligations under the applicable
Note, Mortgage or any guaranty related to such Note, as the case
may be, other than pursuant to a written release previously
approved in writing, copies of which are included in the relevant
Loan File.
5.7 Loan Proceeds. To Seller's Actual Knowledge, the
proceeds of each Transferred Loan has been fully disbursed, or, in
cases of partial disbursement there is no requirement for future
advances thereunder, and any and all requirements imposed by the
Mortgagee as to completion of any on-site or off-site improvements
and as to disbursements of any escrow funds therefor have been
complied with.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties, as
of the date of execution of this Agreement and as of the Closing
Date, which shall, in accordance with section 8.4, survive for a
two year period beginning on the Closing Date, after which time
such warranties and representations shall be null, void, and of no
further force or effect:
6.1 Authority. Buyer is a Delaware limited partnership duly
formed, organized, existing and in good standing under the laws of
the State of Delaware. Buyer has full legal right, power and
authority to execute and fully perform its obligations under this
Agreement. The execution, delivery and performance of this
Agreement by Buyer and all transactions contemplated hereby have
been duly authorized and will not result in violation of any of the
terms and provisions of its certificate of limited partnership or
partnership agreement.
6.2 Compliance with Obligations. Neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (i) conflict with or constitute a breach
of, or constitute a default under or an event which, with or
without notice or lapse of time or both, would be a breach of or
default under Buyer's certificate of limited partnership,
partnership agreement or any other governing documents; (ii)
conflict with or constitute a breach of, or constitute a default
under or an event which, with or without notice or lapse of time or
both, would be a breach of or default under or give rise to any
right of termination or acceleration under, any agreement,
indenture, mortgage, deed of trust or other instrument or
undertaking to which Buyer is a party, (iii) constitute a violation
of any law, regulation, judgment, order or decree applicable to
Buyer, or (iv) require any consent, approval, authorization, order,
license or permit from any Person.
6.3 Inspection. Buyer has made, as of the expiration of the
Inspection Period, an independent investigation, to the extent
Buyer deems necessary or appropriate, concerning the Transferred
Loans, including an investigation of the related Loan Files and the
physical condition and value of the Collateral.
6.4 No Other Seller Representations. Except as expressly set
forth herein, Buyer acknowledges that no representations or
warranties, express or implied, have been made by Seller or their
representatives.
6.5 Inspection Acknowledgement. BUYER HEREBY EXPRESSLY
ACKNOWLEDGES THAT IT HAS INSPECTED AND EXAMINED OR WILL INSPECT AND
EXAMINE THE TRANSFERRED LOANS, THE RELATED LOAN FILES AND THE
COLLATERAL TO THE EXTENT DEEMED NECESSARY BY BUYER IN ORDER TO
ENABLE BUYER TO EVALUATE THE PURCHASE OF THE TRANSFERRED LOANS.
BUYER REPRESENTS THAT IT IS A KNOWLEDGEABLE BUYER OF LOANS AND
THAT, EXCEPT AS SET FORTH IN ARTICLE 5, IT IS RELYING SOLELY ON ITS
OWN EXPERTISE AND THAT OF BUYER'S CONSULTANTS, AND THAT BUYER HAS
CONDUCTED OR WILL CONDUCT COMPREHENSIVE INSPECTIONS AND
INVESTIGATIONS OF THE TRANSFERRED LOANS, LOAN FILES AND, IF IT
DEEMS NECESSARY, THE COLLATERAL. BUYER FURTHER ACKNOWLEDGES AND
AGREES THAT BUYER IS ACQUIRING THE TRANSFERRED LOANS ON AN "AS IS,
WHERE IS, WITH ALL FAULTS BASIS", WITHOUT REPRESENTATIONS,
WARRANTIES OR COVENANTS, EXPRESS OR IMPLIED, OF ANY KIND OR NATURE,
OTHER THAN AS EXPRESSLY SET FORTH HEREIN.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification by Sellers. Each Party comprising Seller
does, solely with respect to its own actions or omissions in
connection with the Transferred Loans owned by such Party, hereby
indemnify and hold Buyer and its respective agents and attorneys
harmless from and against the following:
(i) any and all losses, claims, liabilities,
damages, deficiencies, costs and expenses suffered or
incurred by Buyer resulting from a material breach of any
representation, warranty or covenant contained herein;
and
(ii) any and all actions, suits, proceedings,
claims, complaints, demands, assessments, judgments,
costs and expenses suffered or incurred by Buyer,
including reasonable attorneys' fees and disbursements,
incident to any such indemnified matter.
7.2 Indemnification by Buyer. Buyer does hereby indemnify
and hold each of the Parties comprising Seller and their respective
agents and attorneys harmless from and against the following:
(i) any and all losses, claims, liabilities,
damages, deficiencies, costs and expenses suffered or
incurred by Seller resulting from: (a) a material breach
of any representation, warranty or covenant contained
herein; and (b) Buyer's ownership, servicing or
management of any Transferred Loan, including, without
limitation, all litigation referenced on the Loan
Document Schedule and assumed by Buyer.
(ii) any and all actions, suits, proceedings,
claims, complaints, demands, assessments, judgments,
costs and expenses suffered or incurred by such Sellers,
including reasonable attorneys' fees and disbursements,
incident to any such indemnified matter.
7.3 Notice of Third-Party Claims. If any action, suit or
proceeding shall be commenced against, or any claim or demand shall
be asserted against, Seller or Buyer, in respect of which a Party
proposes to seek indemnification under this Article 7, the Party
seeking indemnification (singly or collectively the "Indemnitee")
shall give prompt notice to the other Party (singly or collectively
the "Indemnitor") thereof, and shall permit the Indemnitor, at its
sole cost and expense, to assume the defense of any such claim or
any litigation resulting therefrom; provided, however, that the
Indemnitee shall have the option, at its own expense, to
participate in the defense thereof. Failure by the Indemnitor to
notify the Indemnitee of its election to defend any such action
within fifteen (15) days after notice thereof shall be deemed a
waiver by the Indemnitor of its right to defend such action. In
the defense of such claim or any litigation resulting therefrom,
the Indemnitor shall not, without the written consent of the
Indemnitee: (a) consent to the entry of any judgment, or (b) enter
into any settlement which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the
Indemnitee of a release from all liability in respect to such claim
or litigation. If such defense is unsuccessful or abandoned by the
Indemnitor, then, upon the Indemnitor's failure to pay an amount
sufficient to discharge any such claim or judgment, the Indemnitee
may pay and settle the same and the Indemnitor's liability shall be
conclusively established by any such payment. If the Indemnitor
fails to assume the defense of any such claim or litigation
resulting therefrom, the Indemnitee may defend against and settle
such claim or litigation in such manner as it may deem appropriate
and the Indemnitor shall promptly reimburse the Indemnitee for the
amount of all expenses, legal or otherwise, incurred by the
Indemnitee in connection with the defense against or settlement of
such claim or litigation. If no settlement is made, the Indemnitor
shall promptly reimburse the Indemnitee for the amount of any
judgment rendered with respect to such claim or such litigation and
of all expenses, legal or otherwise, incurred by the Indemnitee in
the defense thereof.
ARTICLE 8
MISCELLANEOUS
8.1 Transferred Loans to which Seller Is the Servicer. With
respect to any Transferred Loans to which Seller is the servicer:
8.1.1 Notice to Mortgagors. Buyer shall, at its expense,
mail to each Mortgagor a letter with a copy of said letter to
Seller advising the Mortgagor of the transfer of the servicing to
Buyer in accordance with the Cranston-Gonzalez National Affordable
Housing Act (Pub. L. 101-625), as amended, if applicable, or any
other applicable laws or regulations and in any event, no later
than fifteen (15) days after the Closing Date; provided, however,
the content and format of the letter shall have the prior written
approval of Seller.
8.1.2 Loan Payments Received Prior to Closing Date.
Prior to the Closing Date, all payments received by Seller on each
Transferred Loan shall be properly applied by Seller to the account
of the particular Mortgagor subject to the provisions of Section
2.10.
8.1.3 Loan Payments Received After Closing Date. Any
payments received by Seller after the Closing Date that relate to
the Transferred Loan shall forthwith be endorsed to Buyer and
delivered to Buyer along with identification of the customer.
8.2 Nonwaiver. No waiver by a Party of any provision of this
Agreement shall be deemed to have been made unless expressed in
writing and signed by such Party.
Notice. Any notice, request, instruction or other
document to be given or furnished under this Agreement by any Party
to the other Parties shall be in writing and shall be delivered
personally or shall be sent by facsimile transmission or registered
or certified mail, postage prepaid, or by prepaid overnight
delivery service, at the addresses or telecopy number shown in this
Section 8.3 or to such other address, telecopy number or person as
any party may designate by written notice to the other parties. A
notice, request, instruction or other document shall be deemed to
be given (i) when delivered personally, (ii) when sent by facsimile
transmission, or (iii) if sent by certified mail or overnight
delivery service, at the time of delivery as indicated on the duly
completed U. S. Postal Service return receipt or the time of
package pickup as indicated on the records of or certificates
provided by the overnight delivery service. Any notice from a
party to the other parties may be given by counsel for such party
rather than directly by such party.
If to any Seller, addressed to the specific Seller at the following
address:
Address: Attn: David R. Fowler
188 East Capitol Street
Suite 300, One Jackson Place
Jackson, Mississippi 39201
Telephone: (601) 948-4091
Facsimile: (601) 949-4077
BUYER MTGLQ Investors, LP
Address: c/o Security National
11911 Justice Avenue
Baton Rouge, Louisiana 70816
Attention: Jack J. Mendheim
Telephone: (504) 293-0095
Facsimile: (504) 293-8891
<PAGE>
Survival. Each of the Parties' representations,
warranties and covenants and all other provisions contained in this
Agreement or in any document given or furnished under or in
connection with this Agreement shall survive the Closing for a
period of two years except for the provisions of Section 7.2 which
shall survive for the duration of the statute of limitations
relating to the underlying Transferred Loan. At the applicable
time, all of the representations and warranties made in this
Agreement shall be deemed null, void, and without any further force
or effect.
8.5 Further Assurances. The Parties hereto shall execute and
deliver such further instruments, documents and agreements as may
be reasonably necessary or appropriate to carry out the terms and
provisions of this Agreement.
8.6 Construction. When the context so requires in this
Agreement, words of gender shall include either or both of the
other genders and the singular number shall include the plural. The
headings of the sections of this Agreement are inserted for
convenience of reference only and shall not be deemed to constitute
a part hereof and shall not be deemed to limit, expand or modify in
any way the provisions of this Agreement.
8.7 Assignment. This Agreement shall be binding upon the
Parties hereto, and their representatives, successors and assigns,
if any. This Agreement shall not be assignable without the prior
express written consent of all Parties hereto.
8.8 Amendments. This Agreement may be amended only by
written agreement executed by the Parties hereto.
8.9 Entire Agreement. This Agreement, together with the
schedules attached hereto and made a part hereof by this reference,
constitute the entire agreement among the Parties and supersedes
all prior oral and/or written agreements or understandings among
the Parties with respect to the transactions contemplated hereby.
8.10 Governing Law. The Parties agree that this Agreement
shall be governed by and construed in accordance with the internal
laws of the State of Mississippi. No presumption shall be deemed
to exist in favor of or against any Party as a result of the
negotiation or preparation of this Agreement.
8.11 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but
all of which shall constitute but one and the same instrument.
8.12 Attorneys Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the
prevailing party, as ultimately determined by the appropriate
court, shall be entitled to reimbursement of its reasonable
attorneys' fees, costs and necessary disbursements incurred in
connection with such action or appeal thereof in addition to any
other relief to which it may be otherwise entitled either at law or
in equity.
<PAGE>
Brokers. Except for the separate agreement between
Seller and Dan Friedman of Enterprise, the Parties represent to
each other that none of them or their representatives have incurred
any liability for any broker's, finder's or similar fee in
connection with this Agreement and the transactions contemplated
hereby and agree to indemnify and hold the other harmless with
respect to any claims by brokers through such Party. Seller shall
pay the fees of Dan Friedman.
8.14 Officers. The respective officers who execute this
Agreement and any certificate or other document required under this
Agreement, are executing this Agreement and such certificate or
other document in their respective capacities as officers of such
entity, and not individually, and the officers shall not be held
personally liable by virtue thereof to any Party to this Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement on the day and year written set forth opposite their
signature.
EB INC.
Date: May 31, 1996 BY: _____________________________
Name: ___________________________
Title: __________________________
BY: _____________________________
Name: ___________________________
Title: __________________________
PARKWAY TEXAS CORPORATION
Date: May 31, 1996 BY: _____________________________
Name: ___________________________
Title: __________________________
BY: _____________________________
Name: ___________________________
Title: __________________________
THE PARKWAY COMPANY
Date: May 31, 1996 BY: _____________________________
Name: ___________________________
Title: __________________________
BY: _____________________________
Name: ___________________________
Title: __________________________
PARKWAY CONGRESS CORPORATION
Date: May 31, 1996 BY: _____________________________
Name: ___________________________
Title: __________________________
BY: _____________________________
Name: ___________________________
Title: __________________________
MTGLQ INVESTORS, LP
Date: May 31, 1996 BY: MTGLQ, Inc., Its General Partner
BY:______________________________
Peter T. Cirenza, Vice President
