<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 23, 1996
REGISTRATION NO. 333-11631
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------------
PARKWAY PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 74-2123597
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
300 ONE JACKSON PLACE
188 EAST CAPITOL STREET
JACKSON, MISSISSIPPI 39201-2195
(601) 948-4091
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
STEVEN G. ROGERS, PRESIDENT
300 ONE JACKSON PLACE
188 EAST CAPITOL STREET
JACKSON, MISSISSIPPI 39201-2195
(601) 948-4091
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------------------
Copies to:
JOSEPH P. KUBAREK, ESQ.
JAECKLE FLEISCHMANN & MUGEL, LLP
800 FLEET BANK BUILDING
TWELVE FOUNTAIN PLAZA
BUFFALO, NEW YORK 14202
(716) 856-0600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME
TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED
PURSUANT TO A DIVIDEND OR INTEREST REINVESTMENT PLAN, PLEASE CHECK THE FOLLOWING
BOX. / /
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE
OFFERED ON A DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), OTHER THAN THE SECURITIES
OFFERED ONLY IN CONNECTION WITH DIVIDEND OR INTEREST REINVESTMENT PLANS,
CHECK THE FOLLOWING BOX. /X/
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING
PURSUANT TO RULE 462(b) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING BOX
AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER
EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. / /
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(c)
UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING. / /
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX. / /
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT
TO SAID SECTION 8(a), MAY DETERMINE.
<PAGE> 2
<PAGE> 3
SUBJECT TO COMPLETION, DATED OCTOBER 23, 1996
PROSPECTUS
1,140,000 SHARES OF COMMON STOCK,
$0.001 PAR VALUE PER SHARE,
OF PARKWAY PROPERTIES, INC.
---------------------------
The 1,140,000 shares of common stock, $0.001 par value per share (the
Stock"), of Parkway Properties, Inc. ("Parkway"), to which this Prospectus
relates are offered for the stockholders identified in this Prospectus under
the heading "Selling Stockholders," or for the account of pledgees, donees,
transferees or other successors in interest of the Selling Stockholders. Such
sales may be made to or through one or more brokers or dealers on the New York
Stock Exchange, Inc. (the "NYSE") at prices and at terms then prevailing or at
prices related to the then-current market price, or in negotiated transactions.
Such transactions may include, but are not limited to, one or more of the
following: (i) a block trade in which the broker or dealer so engaged will
attempt to sell the Common Stock as an agent, but may position and resell a
portion of the block as principal to facilitate the transaction; (ii) purchases
by a broker or dealer for its account pursuant to this Prospectus; and (iii)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers. In effecting sales, brokers or dealers engaged by the Selling
Stockholders may arrange for other brokers or dealers to participate. In the
event of a transaction hereunder in which a broker or dealer acts as a principal
(other than to facilitate an installment sale transaction, or to a market maker
acting as such in routine transactions in the over-the-counter market), this
Prospectus will be supplemented to provide material facts with respect to such
transaction.
Brokers or dealers involved in sales hereunder will receive commissions or
discounts in amounts to be negotiated prior to the sale. Such brokers or dealers
and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), in connection with such sales, and any profits or commissions
earned by them in such transactions may be deemed to be underwriting discounts
or commissions under the Securities Act.
THE COMMON STOCK OFFERED HEREBY INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 3.
Parkway will receive no portion of the proceeds of the sale of the Common
Stock hereunder. Parkway will incur the costs of preparation, reproduction and
distribution for this Registration Statement. The Selling Stockholders will pay
any brokerage discounts or commissions.
Sales of Common Stock may also be made for the account of the Selling
Stockholders or for the account of donees, transferees or other successors in
interest of the Selling
i
<PAGE> 4
Stockholders pursuant to Rule 144 under the Securities Act. The securities
offered herein are "restricted securities" as defined by Rule 144 under the
Securities Act and investors of such securities are required by Rule 144 to
hold the restricted securities for a minimum of two years from the date of
purchase for full consideration. The Common Stock became listed on the
NYSE under the symbol "PKY" on August 22, 1996. On October 22, 1996, the
closing sale price was reported to be $20.75 per share of Common Stock.
No dealer, salesman or other person has been authorized to give any
information or to make any representation not contained or incorporated by
reference in this Prospectus and, if given or made, such information or
representation must not be relied upon as having been authorized by Parkway.
This Prospectus does not constitute an offer to sell or a solicitation of any
offer to buy any of the securities offered hereby in any jurisdiction to any
person to whom it is unlawful to make such offer or solicitation in such
jurisdiction. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that the
information herein is correct as of any time subsequent to the date hereof or
that there has been no change in the affairs of Parkway since such date or, in
the case of information incorporated herein by reference, the date of filing
with the Securities and Exchange Commission (the "SEC").
-------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THE SHARES OF COMMON STOCK HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SHARES OF COMMON STOCK MAY
NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SHARES OF COMMON STOCK IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE
WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES
LAWS OF ANY SUCH STATE.
-------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED
THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
-------------
ii
<PAGE> 5
The date of this Prospectus is October ___, 1996.
iii
<PAGE> 6
AVAILABLE INFORMATION
Parkway is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
SEC. Such reports, proxy statements and other information filed by Parkway may
be inspected at, and, upon payment of the SEC's customary charges, copies
obtained from, the Public Reference Section of the SEC, 450 Fifth Street, N.W.,
Washington, DC 20549. Such reports, proxy statements and other information are
also available for inspection and copying at prescribed rates at the SEC's
regional offices in New York, New York (Seven World Trade Center, 13th Floor,
New York, New York 10048) and in Chicago, Illinois (Suite 1400, Citicorp
Center, 500 West Madison Street, Chicago, Illinois 60661-2511). The SEC
maintains a Web site (http://www.sec.gov) that also contains reports, proxy
statements and other information concerning Parkway. In addition, the Common
Stock is traded on the NYSE under the symbol "PKY" and reports, proxy
statements and other information concerning Parkway can be inspected and
copied at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
Parkway has filed with the SEC a Registration Statement on Form S-3
(the "Registration Statement") under the Securities Act and the rules and
regulations promulgated thereunder, with respect to the Common Stock. This
Prospectus constitutes the Prospectus of Parkway, filed as part of the
Registration Statement. As permitted by the rules and regulations of the SEC,
this Prospectus omits certain information contained in the Registration
Statement, and reference is made to the Registration Statement and the exhibits
listed therein, which can be inspected at the public reference facilities of the
SEC noted above, and copies of which can be obtained from the SEC at prescribed
rates as indicated above.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN AS CONTAINED HEREIN IN CONNECTION WITH THE MATTERS
DESCRIBED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PARKWAY. NEITHER THE DELIVERY
HEREOF NOR ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS
HEREIN SET FORTH SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES OFFERED BY
THIS PROSPECTUS IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
iv
<PAGE> 7
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated into this Prospectus by reference are the documents listed
below filed by Parkway or its predecessor, The Parkway Company, under the
Exchange Act. Copies of any such documents, other than exhibits to such
documents, are available without charge to each person to whom a copy of this
Prospectus has been delivered upon written or oral request of such person from
Parkway, 300 One Jackson Place, 188 East Capitol Street, Jackson, Mississippi
39201-2195, Attention: Chief Financial Officer, telephone number (601) 948-4091.
The following documents or portions thereof are hereby incorporated
into this Prospectus by reference:
1. The Parkway Company's Annual Report on Form 10-KSB for
the year ended December 31, 1995 (Commission File No.
0-12505).
2. The Parkway Company's Quarterly Report on Form 10-QSB
for the quarter ended March 31, 1996 (Commission File
No. 0-12505).
3. The Parkway Company's Quarterly Report on Form 10-QSB
for the quarter ended June 30, 1996 (Commission File
No. 0-12505), as amended by Form 10-QSB/A dated
August 30, 1996.
4. The Parkway Company's Current Report on Form 8-K/A
dated March 1, 1996 (Commission File No. 0-12505).
5. The Parkway Company's Current Report on Form 8-K dated
April 15, 1996 (Commission File No. 0-12505).
6. The Parkway Company's Current Report on Form 8-K dated
May 31, 1996 (Commission File No. 0-12505).
7. The Parkway Company's Current Report on Form 8-K dated
June 14, 1996 (Commission File No. 0-12505).
8. The Parkway Company's Proxy Material for its Annual
Meeting of Shareholders held on July 18, 1996
(Commission File No. 0-12505).
9. The Parkway Company's Current Report on Form 8-K/A
dated June 28, 1996 (Commission File No. 0-12505).
10. The Parkway Company's Current Report on Form 8-K dated
July 9, 1996 (Commission File No. 0-12505).
v
<PAGE> 8
11. Parkway Properties, Inc.'s Current Report on Form 8-K
dated August 2, 1996 (Commission File No. 1-11533).
12. Parkway Properties, Inc.'s Current Report on Form 8-K
dated August 9, 1996 (Commission File No. 1-11533).
13. Parkway Properties, Inc.'s Current Report on Form 8-K/A
dated August 30, 1996 (Commission File No. 1-11533).
14. Parkway Properties, Inc.'s Current Report On Form 8-K
dated September 30, 1996 (Commission File No. 1-11533).
15. Parkway Properties, Inc.'s Current Report On Form 8-K/A
dated October 22, 1996 (Commission File No. 1-11533).
All documents filed by Parkway pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering shall be deemed to be incorporated by reference
herein and to be a part hereof from the respective dates of the filing thereof.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein, or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
vi
<PAGE> 9
TABLE OF CONTENTS
PAGE
THE COMPANY................................................................ 1
Organization...................................................... 1
Operating Strategy................................................ 1
Possible Election of REIT Status.................................. 2
RISK FACTORS............................................................... 3
Risks Associated with Indebtedness................................ 3
Risks of Real Estate Ownership.................................... 3
Tax Risks Associated with Potential REIT Election................. 4
Limitation on Net Operating Loss Carryforwards.................... 5
Tenant Defaults.................................................. 6
Americans with Disabilities Act................................... 6
Risk of Catastrophic Loss......................................... 6
Possible Environmental Liabilities............................... 7
Competition....................................................... 7
Risk of Acquisitions............................................. 8
Possible Ownership Restrictions.................................. 8
SELLING STOCKHOLDERS...................................................... 8
USE OF PROCEEDS........................................................... 9
PLAN OF DISTRIBUTION...................................................... 10
DESCRIPTION OF SECURITIES................................................. 10
Common Stock..................................................... 11
Restrictions on Transfer......................................... 11
Right of Board of Directors to Classify or Reclassify Shares..... 11
Excess Stock..................................................... 12
Class A Preferred Stock.......................................... 13
Anti-Takeover Provisions......................................... 13
FEDERAL INCOME TAX CONSIDERATIONS......................................... 16
Introductory Notes............................................... 16
Taxation of the Company.......................................... 16
Taxation of Stockholders......................................... 20
LEGAL MATTERS............................................................. 22
EXPERTS ................................................................. 22
INDEMNIFICATION OF DIRECTORS AND OFFICERS................................. 22
i
<PAGE> 10
THE COMPANY
ORGANIZATION
Parkway Properties, Inc. ("Parkway") was incorporated under the laws of the
State of Maryland on May 17, 1996. Formed as a wholly-owned subsidiary of The
Parkway Company, a Texas corporation, Parkway merged with The Parkway Company on
August 2, 1996 (the "Merger") pursuant to the Agreement and Plan of Merger dated
July 17, 1996 by and between Parkway and The Parkway Company. As a result of the
Merger, Parkway succeeded to the business and operations of The Parkway Company.
This reincorporation in Maryland allows Parkway to avail itself of the benefits
of the Maryland General Corporation Law, something management of Parkway
believes to be beneficial should Parkway elect to be taxed as a real estate
investment trust ("REIT") under the Internal Revenue Code of 1986, as amended
(the "Code"). See "--Possible Election of REIT Status."
Additionally, on August 22, 1996 shares of common stock, par value $0.001
per share of Parkway ("Common Stock") became listed on the New York Stock
Exchange, Inc. ("NYSE") under the symbol "PKY." Prior to this date, the Common
Stock had been listed on the NASDAQ National Market under the symbol "PKWY."
OPERATING STRATEGY
Parkway is a full service, self-managed real estate investment company
specializing primarily in the ownership, management and leasing of office
properties in the southeast and southwest United States (particularly the states
of Mississippi, North Carolina, Georgia, Texas and Virginia). Parkway seeks
investments where the expertise of Parkway's management can add value through
direct asset and/or property management, a "hands-on" operating philosophy and
Parkway's liquidity and financial strength. Parkway owns a portfolio of income
producing real estate properties. At September 30, 1996, Parkway owned or had an
interest in 16 office buildings in eight states with an aggregate of
approximately 1,877,000 square feet of leasable space.
Through its wholly-owned subsidiary, Eastover Realty Corporation ("Eastover
Realty"), Parkway is also involved in the management of commercial properties
for which it receives management fees. Eastover Realty currently manages and
leases a portfolio of approximately 1,560,000 square feet of office and
industrial space. Eastover Realty also performs brokerage services to third
parties on a commission basis. Eastover Realty manages Parkway's office
buildings in Jackson, Mississippi.
1
<PAGE> 11
In addition to direct real estate acquisitions, Parkway's investment
strategy has also historically included the consummation of business combination
transactions with other public real estate and financial companies which Parkway
deemed to be undervalued. Since 1979, Parkway has completed eight such business
combinations. Most recently, Parkway acquired First Continental Real Estate
Investment Trust effective May 10, 1994, Congress Street Properties, Inc.
effective November 29, 1994 and EB, Inc. effective April 27, 1995. As a result
of these various business combinations, Parkway has acquired a portfolio of
non-core real estate assets, securities and mortgage loans, which it is
proceeding to liquidate.
POSSIBLE ELECTION OF REIT STATUS
Parkway presently pays virtually no federal income taxes ($64,000 in
1995) because net operating losses ("NOLs") shelter most of Parkway's income
from such taxes. However, the increase in the number of outstanding shares of
Common Stock which resulted from the completion of the private placement of
shares of Common Stock in June 1996 (the "Private Placement") and Parkway's
recent mergers caused the use of Parkway's NOLs to be significantly limited in
any one year. Accordingly, subject to further analysis, Parkway intends to elect
to qualify as a REIT for the taxable year beginning January 1, 1997, which will
allow Parkway to be generally exempt from federal income taxes even if its NOLs
are limited or exhausted providing it makes sufficient distributions to its
stockholders. Parkway and its advisors are presently examining Parkway's assets,
sources of revenue and operating history to determine if Parkway will be
eligible to be taxed as a REIT and the steps that need to be taken for Parkway
to qualify as a REIT under the Code. However, the examination is ongoing and
there can be no assurance whether a REIT election can or will be made. See "Risk
Factors--Tax Risks Associated with Potential REIT Election."
2
<PAGE> 12
RISK FACTORS
An investment in the Common Stock involves various risks. Prospective
investors should carefully consider the following information in conjunction
with the other information contained or incorporated by reference in this
Prospectus before making a decision to purchase any Common Stock.
RISKS ASSOCIATED WITH INDEBTEDNESS
Although Parkway intends to maintain what it believes to be acceptable
leverage, there are no formal limits on the amount of indebtedness that Parkway
may incur. Furthermore, certain of Parkway's indebtedness have variable interest
rates which may rise if the level of interest rates in general increases.
Parkway intends to repay amounts drawn under its line of credit with Deposit
Guaranty National Bank which can be used only to purchase income producing real
property (the "Acquisition Line of Credit"), with funds obtained from fixed rate
financing secured by the buildings purchased with the Acquisition Line of Credit
or with cash available from operations and proceeds from the sale of non-core
assets. There can be no assurance that such fixed rate financing will be
available or available on acceptable terms, or that non-core assets will be sold
to purchase office properties or repay debt, and in the event variable rate debt
remains outstanding, any increase in interest rates could have a material
adverse impact on Parkway's financial results.
RISKS OF REAL ESTATE OWNERSHIP
Parkway's assets primarily consist of equity investments in various types
of real property. As a result, stockholders of Parkway are subject to the risks
inherent in the ownership and management of real property owned by Parkway.
These risks include, among others: adverse changes in general or local economic
conditions; adverse changes in interest rates and in the availability of
permanent mortgage financing which may render the acquisition, sale or
refinancing of properties difficult or unattractive; existing law, rules and
regulations and judicial decisions regarding liability for a variety of
potential problems related to real estate generally; adverse changes in real
estate, zoning, environmental or land-use laws; increases in real property taxes
and federal or local economic or rent controls; other governmental rules;
increases in operating costs and the need for additional capital and tenant
improvements; the cash demands of tenant improvements and leasing commission
obligations; the supply of and demand for properties; possible insolvencies and
other material defaults by tenants; overbuilding in certain markets; ability to
obtain or maintain full occupancy of properties or to provide for adequate
maintenance or insurance; the presence of hazardous waste materials; mechanics
liens resulting from construction; property related claims and litigation;
fiscal policies; and acts of God. The illiquidity of real estate investments
generally impairs the ability of real estate owners to respond quickly to
changed circumstances.
3
<PAGE> 13
Additionally, a substantial percentage of Parkway's properties are located
in the southeast and southwest United States (particularly the states of
Mississippi, North Carolina, Georgia, Texas and Virginia) and such properties
consist predominantly of office properties. Parkway's performance, therefore,
will be linked to economic conditions in the southeast and southwest United
States as well as the market for office space generally. To the extent that
these conditions impact the market rents for office space, they could result in
a reduction of net income, funds from operations and cash available for
distribution and thus affect the financial performance of Parkway.
Certain significant expenditures associated with investments in real estate
(such as mortgage payments, real estate taxes, insurance and maintenance costs
and the cash demands of tenant improvements and leasing commission obligations)
are generally not reduced when circumstances cause a reduction in rental
revenues from the property. In addition, real estate values and yields from
investments in properties may also be affected by such factors as conditions in
financial markets, environmental conditions and compliance with laws. If large
numbers of vacancies occur in Parkway's office properties, Parkway may be
required to make significant expenditures for marketing, tenant improvements and
leasing commissions in connection with attracting new tenants for such vacant
space. Any of these factors may adversely affect Parkway's net income, funds
from operations and cash available for distribution.
TAX RISKS ASSOCIATED WITH POTENTIAL REIT ELECTION
Subject to its eligibility to do so, Parkway intends to elect to qualify as
a REIT under the Code in order to qualify for the tax benefits of such a
classification. No assurance can be given that Parkway will be eligible to make
such election, and, if it does, that all benefits potentially arising from such
an election will be realized. Among the risk factors to be considered in this
context are the following:
Earnings and Profits Calculation. In order to elect REIT status, Parkway
cannot have earnings and profits which have been generated during years in which
Parkway was not qualified as a REIT. For this purpose, under the Code, earnings
and profits of companies which have been acquired by Parkway and the earnings
and profits of any of Parkway's subsidiaries are included in calculating
Parkway's earnings and profits account. The determination of the earnings and
profits account of a company is a highly technical and complex undertaking.
Parkway's predecessor, The Parkway Company, was organized in 1971 and over the
years has acquired several companies. In calculating the earnings and profits
account, studies have been undertaken of not only Parkway's earnings and profits
history, but also the history of all acquired companies. Although these studies
have not been finalized, Parkway believes that a reasonably accurate
determination of Parkway's earnings and profits account is possible. To the
extent such account is positive, Parkway will be required to distribute
dividends sufficient to reduce that account to zero prior to the end of the
first taxable year in which Parkway's election of REIT status under the Code
becomes effective. Any determination made by Parkway with respect to its
earnings and profits account is not binding on the Internal Revenue Service
(the "Service"). In
4
<PAGE> 14
the event the Service were to successfully challenge Parkway's calculation of
earnings and profits, a possible outcome of such challenge could be the
termination of Parkway's status as a REIT in the event of its future election to
be qualified as a REIT.
Possible Restructuring. In order to qualify as a REIT, Parkway must
restructure both the manner in which it owns certain of its assets and its
active business operations. Because no assurance can be given that REIT status
will be obtained, it is possible that the substantial costs incurred and the
operating structures adopted in anticipation of such election will not result in
the benefits intended.
LIMITATION ON NET OPERATING LOSS CARRYFORWARDS
For federal income tax purposes, Parkway has approximately $9,688,000 of
NOLs as of June 30, 1996. In addition to the NOLs, two of Parkway's subsidiaries
have NOLs of approximately $23,500,000 in the aggregate. Parkway estimates that
approximately $10,440,000 of these NOLs will be available, on a limited basis,
for use by Parkway after application of certain restrictions under the Code. As
a consequence of the issuances of shares in business combination transactions
and for cash, the ability of Parkway to apply NOLs to offset its taxable income
is significantly limited, and Parkway may be required to pay federal income
tax on a portion of its income unless it is able to elect to qualify as a REIT,
in which case the rules relating to taxation of REITs would apply.
5
<PAGE> 15
TENANT DEFAULTS
A substantial part of Parkway's income is expected to be derived from
rental income from real property. Consequently, Parkway's ability to make
expected distributions to stockholders would be adversely affected if a
significant number of tenants failed to meet their lease obligations. In the
event of a default by a tenant, Parkway may experience delays in enforcing its
rights as lessor and may incur substantial costs in protecting its investment.
At any time, a tenant may also seek protection under the bankruptcy laws, which
could result in the rejection and termination of such tenant's lease and thereby
cause a reduction in the net income, funds from operations and cash available
for distribution of Parkway. If a tenant rejects its lease pursuant to
applicable bankruptcy laws, Parkway's claim for breach of the lease in excess of
any applicable security deposit would (absent collateral securing the claim) be
treated as a general unsecured claim. The amount of the claim would be capped at
the amount owed for unpaid pre-petition lease payments unrelated to the
rejection, plus the greater of one year's lease payment or 15% of the remaining
lease payments payable under the lease (but not to exceed the amount of three
years' lease payments).
AMERICANS WITH DISABILITIES ACT
Under the Americans with Disabilities Act of 1990, as amended (the "ADA"),
all public accommodations are required to meet certain federal requirements
related to access and use by disabled persons. Compliance with the public
accommodations provision of the ADA could require the removal of access
barriers, and noncompliance could result in the imposition of fines or awards of
damages. Additional legislation may impose further burdens or restrictions on
owners with respect to access by disabled persons. The ultimate amount of the
cost of compliance with the ADA or such legislation is not currently
ascertainable, and, while such costs are not expected to have a material effect
on Parkway, such costs could be substantial. Parkway has not undertaken ADA
studies of all of its properties and, as to those properties with respect to
which Parkway has not undertaken ADA studies, possible costs of compliance could
arise.
RISK OF CATASTROPHIC LOSS
Parkway has obtained or has caused its tenants to obtain, commercial
general liability, fire and extended coverage insurance with respect to its
properties, of the types and in the amounts which management believes are
customarily obtained for similar properties. There are, however, certain types
of losses (generally of a catastrophic nature, such as earthquakes, floods and
wars) that may be either uninsurable or not economically insurable. Should such
an uninsured loss occur, Parkway could lose both its invested capital and
anticipated profits relating to such property.
6
<PAGE> 16
POSSIBLE ENVIRONMENTAL LIABILITIES
Under various federal, state and local laws, ordinances and
regulations, an owner of real estate is liable for the costs of removal or
remediation of certain hazardous or toxic substances on or in such property.
Such laws often impose liability without regard to whether the owner knew of, or
was responsible for, the presence of such hazardous or toxic substances. The
presence of such substances, or the failure to properly remediate such
substances, may adversely affect the owner's ability to sell or rent such
property or to use such property as collateral in its borrowings. Management of
Parkway is not aware of any environmental liability with respect to the
properties that management believes would have a material adverse effect on
Parkway's business, assets or results of operations. Phase I environmental
audits have been conducted at each of the properties acquired by Parkway since
June 1, 1995 and Parkway will perform such audits with respect to properties
acquired in the future. No assurance can be given that there are no existing
environmental liabilities with respect to any of Parkway's properties or that
any prior owner of any such property did not create any material environmental
condition not known to Parkway.
Asbestos was formerly used in commercial construction as a
fireproofing and insulation material. Under certain circumstances, asbestos can
become a hazard to the health of the occupants of buildings and it must be
regularly monitored to ensure that it has not become a health hazard. Parkway is
not aware of any material asbestos problems at the properties owned by Parkway,
but is aware of asbestos at certain properties which secure mortgage loans owned
by Parkway. The fact that asbestos is present in properties which are collateral
for Parkway's loans could have an adverse effect on the value of Parkway's
collateral. Further, there can be no assurance that asbestos problems do not
exist at properties owned by Parkway. If there is asbestos in Parkway's
properties (or in a property upon which Parkway forecloses) that requires
removal or other remediation, the costs thereof could be substantial.
COMPETITION
All of the properties owned by Parkway are located in developed areas.
There are numerous other office properties and real estate companies within the
market area of each such property which will compete with Parkway for tenants
and development and acquisition opportunities. The number of competitive office
properties and real estate companies in such areas could have a material effect
on (i) Parkway's ability to rent space at the properties, the amount of rents
currently charged and tenant improvements and other tenant concessions required
to lease the property; and (ii) development and acquisition opportunities.
Parkway will compete for tenants and acquisitions with others who may have
greater resources than Parkway. Furthermore, Parkway has more than one office
building in certain markets (e.g., Jackson, Mississippi) and those buildings may
compete against one another for the same tenants.
7
<PAGE> 17
RISK OF ACQUISITIONS
Parkway has acquired 11 office properties since July 31, 1995 and is
in the process of acquiring additional properties. Although Parkway believes it
has sufficient management depth to take Parkway through this period of asset
growth, there can be no assurance that Parkway will be able to assimilate the
acquisitions into its portfolio without certain operating disruptions and
unanticipated costs.
POSSIBLE OWNERSHIP RESTRICTIONS
The provisions of the Charter of Parkway (the "Charter") provide that
if a transfer of stock of Parkway or a change in the capital structure of
Parkway would result in (i) any person (as defined in the Charter) directly or
indirectly acquiring beneficial ownership of more than 9.8% of the equity
securities of Parkway; (ii) the outstanding Common Stock and preferred stock of
Parkway being constructively or beneficially owned by fewer than 100 persons;
or (iii) Parkway being "closely held" within the meaning of Section 856 of the
Code, then: (A) any proposed transfer will be void ab initio and will not be
recognized by Parkway; (B) Parkway will have the right to redeem the shares
proposed to be transferred; and (C) the shares proposed to be transferred will
be automatically converted into and exchanged for shares of a separate class of
stock, the Excess Stock (as hereinafter defined), having no dividend or voting
rights. Holders of Excess Stock do have certain rights in the event of any
liquidation, dissolution or winding up of the corporation. The Charter further
provides that the Excess Stock will be held by Parkway as trustee for the
person or persons to whom the shares are ultimately transferred, until such
time as the shares are retransferred to a person or persons in whose hands the
shares would not be Excess Stock and certain price-related restrictions are
satisfied. These provisions are designed to enable Parkway to meet the share
ownership requirements applicable to REITs under the Code, but may also have an
anti-takeover effect.
SELLING STOCKHOLDERS
All of the Common Stock offered hereby is to be offered for the
account of the security holders (the "Selling Stockholders") set forth in the
table below. Each of the Selling Stockholders acquired its securities from the
Company in transactions that were exempt from the registration requirements of
the Securities Act.
8
<PAGE> 18
<TABLE>
<CAPTION>
Shares of Shares of
Common Stock Shares of Common Stock
Owned Prior Common Stock Owned After
Selling Stockholders (1) to the Offering Offered for Sale the Offering
------------------------ --------------- ---------------- ------------
<S> <C> <C> <C>
Morgan Stanley U.S. Real Estate (Retail)............ 14,000 14,000 0
MS SICAV REAL ESTATE................................ 253,000 253,000 0
Morgan Stanley
Institutional Fund
Real Estate Portfolio............................. 323,000 323,000 0
Delaware Group Dividend and
Income Fund, Inc.................................. 120,500 120,500 0
Delaware Pooled Trust, Inc. for
The Real Estate Investment
Trust Portfolio................................... 29,500 29,500 0
Charter Oak Partners................................ 200,000 200,000 0
Pennsylvania Public School
Employees' Retirement System...................... 200,000 200,000 0
<FN>
(1) None of the Selling Stockholders had any material relationship with
Parkway, its predecessor or any affiliates of Parkway, within the past
three years.
(2) MS SICAV REAL ESTATE currently owns 253,000 shares of Class A
preferred stock, $0.001 par value per share, of Parkway (the "Class A
Preferred Stock"). Subject to stockholder approval, MS SICAV REAL
ESTATE has the right to exchange, on a share-for-share basis, its
shares of Class A Preferred Stock for shares of Common Stock. To the
extent such exchange occurs, such shares of Common Stock are
registered hereunder.
(3) Morgan Stanley Institutional Fund Real Estate Portfolio currently
owns 323,000 shares of Class A Preferred Stock. Subject to
stockholder approval, Morgan Stanley Institutional Fund Real Estate
Portfolio has the right to exchange, on a share-for-share basis, its
shares of Class A Preferred Stock for Common Stock. To the extent
such exchange occurs, such shares of Common Stock are registered
hereunder.
</TABLE>
USE OF PROCEEDS
Parkway will not receive any proceeds from this offering of Common
Stock by the Selling Stockholders.
9
<PAGE> 19
PLAN OF DISTRIBUTION
Parkway has been advised by the Selling Stockholders that the Selling
Stockholders may sell all or a portion of the securities offered by it hereby
from time to time on the NYSE at prices prevailing at the time of such sales.
The Selling Stockholders may also make private sales directly to or through a
broker or brokers. Alternatively, the Selling Stockholders may from time to time
offer the securities through underwriters, dealers or agents, who may receive
compensation in the form of underwriting discounts, commissions or concessions
from the Selling Stockholders and/or the purchasers of the securities for whom
they may act as agent. To the extent required, the number of securities to be
sold, the purchase price, the name of any such agent, dealer or underwriter and
any applicable commissions with respect to a particular offer will be set forth
in an accompanying Prospectus Supplement. The aggregate net proceeds to the
Selling Stockholders from the sale of the securities sold by the Selling
Stockholders hereby will be the purchase price of such securities less any
broker's commissions.
No determination has been made whether the Selling Stockholders will sell
any of the securities offered hereby.
In order to comply with the securities laws of certain states, if
applicable, the securities will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, the securities may not
be sold in certain states unless they have been registered or qualified for sale
in the applicable state or an exemption from the registration or qualification
requirement is available and complied with.
The Selling Stockholders and any broker-dealers, agents or underwriters
that participate with the Selling Stockholders in the distribution of the
securities may be deemed to be "underwriters" within the meaning of the
Securities Act, in which event any commissions received by such broker-dealers,
agents or underwriters and any profit on the resale of the securities purchased
by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
DESCRIPTION OF SECURITIES
The total number of shares of capital stock of all classes that Parkway is
authorized to issue is 100,000,000. The capital stock is currently classified as
(i) 69,424,000 shares of Common Stock, 4,211,896 of which are currently issued
and outstanding ; (ii) 576,000 shares of Class A Preferred Stock, none of which
are currently issued or outstanding; and (iii) 30,000,000 shares of excess
stock, par value $0.001 per share
10
<PAGE> 20
("Excess Stock"), none of which are currently issued or outstanding.
COMMON STOCK
The holders of shares of Common Stock are entitled to one vote per
share on all matters to be voted upon by the stockholders. The holders of
shares of Common Stock have no cumulative voting rights. Additionally, subject
to the rights of holders of preferred stock, holders of shares of Common Stock
are entitled to receive, pro rata in relation to the number of shares of Common
Stock held by them, such dividends as may be declared from time to time by the
directors out of funds legally available therefor.
In the event of the voluntary or involuntary liquidation, dissolution
or winding-up of Parkway, after distribution in full of the preferential
amounts, if any, to be distributed to the holders of any then outstanding
preferred stock, and subject to the right, if any, of the holders of any
outstanding preferred stock to participate further in any liquidating
distributions, all of the assets of Parkway, if any, remaining, of whatever kind
available for distribution to stockholders after the foregoing distributions
have been made shall be distributed to the holders of the Common Stock, ratably
in proportion to the number of shares of Common Stock held by them.
RESTRICTIONS ON TRANSFER
Pursuant to the provisions of the Charter, if a transfer of stock
occurs whereby any person would own, beneficially or constructively, in excess
of 9.8 percent of the outstanding capital stock of Parkway (excluding shares of
Excess Stock) ("Transfer"), then such amount in excess of the 9.8 percent
limit shall automatically be converted into shares of Excess Stock and any
such Transfer will be void ab initio. However, such restrictions will not
prevent the settlement of a transaction entered into through the facilities of
any interdealer quotation system or national securities exchange upon which
shares of capital stock of Parkway are traded, provided that certain
transactions may be settled by providing shares of Excess Stock.
RIGHT OF BOARD OF DIRECTORS TO CLASSIFY OR RECLASSIFY SHARES
The Board of Directors of Parkway is authorized by the Charter to
classify or reclassify any unissued shares of the capital stock of Parkway, by
setting, altering or eliminating the designation, preferences, conversion or
other rights, voting powers, qualifications and terms and conditions of
redemption of, limitations as to dividends
11
<PAGE> 21
and any other restrictions on, such capital stock. The power of the Board of
Directors to classify and reclassify any of the shares of capital stock includes
the authority to classify or reclassify such shares into a class of preferred
stock. The Board of Directors, without stockholder approval, can issue preferred
stock with voting and conversion rights which could adversely affect the rights
of holders of shares of Common Stock. This could create an impediment to a
future tender or exchange offer for Parkway by, among other things, increasing
the number of shares necessary to gain control of Parkway.
EXCESS STOCK
Holders of shares of Excess Stock have no voting rights except as required
by law, and are not entitled to any dividends. Any dividend or distribution paid
prior to the discovery by Parkway that shares of capital stock have been
converted into Excess Stock shall be repaid to Parkway upon demand. Upon any
purported transfer resulting in Excess Stock, Excess Stock shall not be issued
in certificated form but shall be held by Parkway, in book entry form, as
trustee in trust (the "Trust") for the exclusive benefit of the beneficiary or
beneficiaries to whom an interest in such Excess Stock may later be transferred.
The purported record transferee in such a case may freely designate a
beneficiary of an interest in the Trust (representing the number of shares of
Excess Stock held by the Trust attributable to a purported transfer that
resulted in Excess Stock), if the Excess Stock held in the trust would not be
Excess Stock in the hands of such beneficiary and the purported record
transferee does not receive a price for designating such beneficiary that
reflects a price per share of Excess Stock that exceeds (i) the price per share
such purported record transferee paid for the shares in the purported transfer
that resulted in the Excess Stock; or (ii) if the purported record transferee
did not give value for such Excess Stock (through a gift, devise or other
transaction), a price per share equal to the market price on the date of the
purported transfer that resulted in the Excess Stock. Upon such transfer of an
interest in the Trust, the corresponding Excess Stock in the Trust shall
automatically be exchanged for an equal number of shares of capital stock, and
such shares shall be transferred of record to the transferee of the interest in
the Trust. Prior to any transfer of any interest in the Trust, the purported
record transferee must give advance notice to Parkway of the intended transfer
and must have waived in writing its redemption rights under the Charter.
Notwithstanding the foregoing, if a purported record transferee receives a price
for designating a beneficiary of an interest in the Trust that exceeds the
allowable amounts, such purported record transferee shall pay, or cause such
beneficiary to pay, such excess to Parkway. Excess Stock so held in Trust shall
be issued and outstanding capital stock of Parkway. The purported record
transferee shall have no rights in such Excess Stock except the right to
designate a transferee upon the terms specified above. The purported beneficial
transferee shall have no rights in such Excess Stock except as provided above.
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of, or any distribution of the assets of, Parkway, each holder of
Excess Stock shall be entitled to receive that portion of the assets of Parkway
that would have been distributed to the shares of capital stock in respect of
which the Excess Stock was issued. Parkway, as holder of the Excess Stock in
Trust or, if Parkway has been dissolved, any trustee
12
<PAGE> 22
appointed by Parkway prior to its dissolution, shall distribute ratably to the
beneficiaries of the Trust, when determined, any such assets received in respect
of the Excess Stock in any liquidation, dissolution or winding up of, or any
distribution of the assets of, Parkway. Except as provided above, Excess Stock
is not transferable.
CLASS A PREFERRED STOCK
The holders of Class A Preferred Stock have no voting rights and, except as
provided above, such shares are not convertible. Dividends on shares of Class A
Preferred Stock will be declared and paid simultaneously with any dividends
payable on the Common Stock and, for all dividends paid and declared on or
before December 31, 1996, such dividend will be paid at a per share dividend
rate of the greater of (i) twenty-four cents ($0.24) per share per quarter or
(ii) the per share dividend declared and paid on Common Stock for the same
quarter, as adjusted for stock dividends, stock splits or similar capital
changes. For all dividends paid and declared on Class A Preferred Stock after
December 31, 1996, such dividends will be paid at a per share dividend rate of
the greater of (i) thirty-eight cents ($0.38) per share per quarter or (ii) the
per share dividend declared and paid on Common Stock for the same quarter, as
adjusted for stock dividends, stock splits or similar capital changes. No
dividend will be paid or declared, nor any distribution made on any other class
of stock (other than a dividend payable in stock of the same class) nor will any
shares of Common Stock be acquired for consideration by Parkway unless all
accrued dividends on the Class A Preferred Stock for all past dividend periods
have been paid.
In the event of the voluntary or involuntary liquidation, dissolution or
winding up of Parkway, each holder of Class A Preferred Stock will be entitled
to receive out of Parkway's assets, before any distribution or payment shall be
made to the holders of any other class of stock, an amount equal to $15.25 per
share of Class A Preferred Stock plus any accrued dividends not paid, without
interest. If the amounts payable on liquidation, dissolution or winding up in
respect to the shares of Class A Preferred Stock are not paid in full, the
shares of such class will share ratably in any distribution of assets in
accordance with the sums which would be payable in such distribution if all sums
payable were discharged in full. If such payment has been made in full to the
holders of all shares of Class A Preferred Stock on voluntary or involuntary
liquidation, dissolution or winding up, the remaining assets of Parkway shall be
distributed among the holders of preferred stock and the remaining stock of
Parkway in accordance with their respective rights.
ANTI-TAKEOVER PROVISIONS
Special Voting Requirements for Certain Business Combinations. Pursuant to
Maryland law, Parkway is governed by special procedures that apply to certain
business combinations between a corporation and interested stockholders. The
purpose of such provisions is to protect the corporation and its stockholders
against hostile takeovers by requiring that certain criteria are satisfied.
These criteria include prior approval by the
13
<PAGE> 23
board of directors, prior approval by a majority or supermajority vote of
disinterested stockholders and requirements that a "fair price" be paid to the
disinterested stockholders.
Maryland law provides that a Maryland corporation may not engage in any
"business combination" with any "interested stockholder." An "interested
stockholder" is defined, in essence, as any person owning beneficially, directly
or indirectly, ten percent or more of the outstanding voting stock of a Maryland
corporation. Unless an exemption applies, Parkway may not engage in any business
combination with an interested stockholder for a period of five years after the
interested stockholder became an interested stockholder, and thereafter may not
engage in a business combination unless it is recommended by the Board of
Directors and approved by the affirmative vote of at least (i) eighty percent of
the votes entitled to be cast by the holders of all outstanding voting stock of
Parkway, voting together as a single voting group and (ii) two-thirds of the
votes entitled to be cast by all holders of outstanding shares of voting stock
other than voting stock held by the interested stockholder. The voting
requirements do not apply at any time to business combinations with an
interested stockholder or its affiliates if approved by the Board of Directors
of the corporation prior to the time the interested stockholder first became an
interested stockholder. Additionally, if the business combination involves the
receipt of consideration by the stockholders in exchange for the corporation's
stock, the voting requirements do not apply if certain "fair price" conditions
are met.
Control Share Acquisitions. Maryland law provides for the elimination of
the voting rights of shares held by any person who makes a "control share
acquisition" except to the extent that such acquisition is exempt or is approved
by at least two-thirds of all votes entitled to be cast on the matter, excluding
shares of capital stock owned by the acquirer or by officers or directors who
are employees of the corporation whose shares were acquired. A "control share
acquisition" is the direct or indirect acquisition by any person of ownership
of, or the power to direct the exercise of voting power with respect to, shares
of voting stock ("control shares") that would, if aggregated with all other
voting stock owned by such person, entitle such person to exercise voting power
in electing directors within one of the following ranges of voting power: (i)
one-fifth or more but less than one-third; (ii) one-third or more but less than
a majority; or (iii) a majority or more of voting power.
A person who has made or proposes to make a control share acquisition, upon
the satisfaction of certain conditions (including an undertaking to pay
expenses), may compel the board of directors to call a special meeting of
stockholders to be held within 50 days of demand to consider the voting rights
of the shares. If no request for a meeting is made, the corporation may itself
present the question at any stockholders meeting. If voting rights are not
approved at the meeting or if the acquiring person does not deliver an acquiring
person statement as permitted by the statute, then, subject to certain
conditions and limitations, the corporation may redeem any or all of the control
shares (except those for which voting rights have previously been approved) for
fair value determined, without regard to voting rights, as of the date of the
last control share acquisition or as of the date of any meeting of stockholders
at which the voting rights of such shares are considered and not approved.
14
<PAGE> 24
If voting rights for control shares are approved at a stockholders meeting
and the acquirer becomes entitled to vote a majority of the shares entitled to
vote, all other stockholders may exercise appraisal rights. The fair value of
the stock as determined for purposes of such appraisal rights may not be less
than the highest price per share paid in the control share acquisition, and
certain limitations and restrictions otherwise applicable to the exercise of
dissenters' rights do not apply in the context of a control share acquisition.
The control share acquisition statute does not apply to stock acquired in a
merger, consolidation or stock exchange if the corporation is a party to the
transaction. Thus, Maryland law makes it difficult for a change in control to
occur, even though such change in control may be in the best interests of the
corporation's stockholders.
Supermajority Votes. The Charter provides that certain provisions of the
Charter may not be repealed or amended except upon the affirmative vote of
holders of not less than eighty percent of all votes entitled to be cast on the
matter. The Charter provisions to which this supermajority vote applies include
the following: (i) certain provisions the amendment or repeal of which would
threaten Parkway's status as a REIT; (ii) the removal of directors; (iii) the
provision giving the Board of Directors the authority to adopt, amend or repeal
Parkway's bylaws; (iv) the provision regarding the indemnification of agents and
limitation of liability of officers and directors; (v) the provision concerning
cumulative voting in the election of directors; and (vi) the vote required to
amend that part of the Charter requiring a supermajority vote for the above
provisions.
15
<PAGE> 25
FEDERAL INCOME TAX CONSIDERATIONS
INTRODUCTORY NOTES
The following discussion summarizes certain Federal income tax
considerations that may be relevant to a prospective stockholder. This
discussion is based on current law. The discussion is not exhaustive of all
possible tax considerations and does not give a detailed discussion of any
state, local, or foreign tax considerations. It also does not discuss all of the
aspects of federal income taxation that may be relevant to a prospective
stockholder in light of his or her particular circumstances or to certain types
of stockholders (including insurance companies, tax-exempt entities, financial
institutions or broker-dealers, foreign corporations and persons who are not
citizens or residents of the united states) who are subject to special treatment
under the federal income tax laws.
EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT WITH HIS OR HER OWN TAX
ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF THE PURCHASE,
OWNERSHIP AND SALE OF SECURITIES IN AN ENTITY ELECTING TO BE TAXED AS A REAL
ESTATE INVESTMENT TRUST, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER
TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP, SALE AND ELECTION AND OF POTENTIAL
CHANGES IN APPLICABLE TAX LAWS.
TAXATION OF THE COMPANY
General. Subject to its eligibility to do so, Parkway intends to elect to
be taxed as a REIT under sections 856 through 860 of the Code effective January
1, 1997. Parkway's qualification and taxation as a REIT depends upon its ability
to meet on a continuing basis, through actual annual operating results,
distribution levels and diversity of stock ownership, the various qualification
tests and organizational requirements imposed under the Code, as discussed
below. No assurances, however, can be given that Parkway will be eligible to
make such election, and, if it does, that all benefits potentially arising from
such an election will be realized. See "--Failure to Qualify" below.
The following is a general summary of the Code provisions that govern the
Federal income tax treatment of a REIT and its stockholders. These provisions of
the Code are highly technical and complex. This summary is qualified in its
entirety by the applicable Code provisions, the regulations promulgated
thereunder ("Treasury Regulations"), and administrative and judicial
interpretations thereof.
If Parkway qualifies for taxation as a REIT, it generally will not be
subject to federal corporate income taxes on net income that it currently
distributes to stockholders. This treatment substantially eliminates the "double
taxation" (at the corporate and stockholder levels) that generally results from
investment in a corporation. Notwithstanding its REIT election, however, Parkway
will be subject to Federal income tax
16
<PAGE> 26
in the following circumstances. First, Parkway will be taxed at regular
corporate rates on any undistributed taxable income, including undistributed net
capital gains. Second, under certain circumstances, the company may be subject
to the "alternative minimum tax" on its items of tax preference. Third, if
Parkway has (i) net income from the sale or other disposition of "foreclosure
property" (which is, in general, property acquired by foreclosure or otherwise
on default of a loan secured by the property) which is held primarily for sale
to customers in the ordinary course of business or (ii) other non-qualifying
income from foreclosure property, it will be subject to tax at the highest
corporate rate on such income. Fourth, if Parkway has net income from prohibited
transactions (which are, in general, certain sales or other dispositions of
property (other than foreclosure property) held primarily for sale to customers
in the ordinary course of business), such income will be subject to a 100% tax.
Fifth, if Parkway should fail to satisfy the 75% gross income test or the 95%
gross income test (as discussed below), and has nonetheless maintained its
qualification as a REIT because certain other requirements have been met, it
will be subject to a 100% tax on the net income attributable to the greater of
the amount by which it fails the 75% or 95% test, multiplied by a fraction
intended to reflect its profitability. Sixth, if Parkway should fail to
distribute during each calendar year at least the sum of (i) 85% of its REIT
ordinary income for such year; (ii) 95% of its REIT capital gain net income for
such year; and (iii) any undistributed taxable income from prior years, Parkway
would be subject to a 4% excise tax on the excess of such required distribution
over the amounts actually distributed. Seventh, if Parkway acquires any asset
from a C corporation (i.e., a corporation generally subject to full corporate
level tax) in a transaction in which the basis of the asset in Parkway's hands
is determined by reference to the basis of the asset (or any other property) in
the hands of the C corporation, and Parkway recognizes gain on the disposition
of such asset during the 10-year period beginning on the date on which such
asset was acquired by it, then, to the extent of such property's built-in gain
(the excess of the fair market value of such property at the time of
acquisition by Parkway over the adjusted basis of such property at such time),
such gain will be subject to tax at the highest regular corporate rate
applicable (as provided in Treasury Regulations that have not yet been
promulgated). This tax will also apply to built-in gain on the disposition of
assets owned by Parkway at the time of its election of REIT status, for the
ten year period following such election.
Requirements for Qualification. The Code defines a REIT as a
corporation, trust or association (i) which is managed by one or more trustees
or directors; (ii) the beneficial ownership of which is evidenced by
transferable shares or by transferable certificates of beneficial interest;
(iii) which would be taxable as a domestic corporation but for Sections 856
through 860 of the Code; (iv) which is neither a financial institution nor an
insurance company Subject to certain provisions of the Code; (v) the beneficial
ownership of which is held by 100 or more persons; (vi) during the last half of
each taxable year not more than 50% in value of the outstanding stock of which
is owned, directly or indirectly, by five or fewer individuals (as defined in
the Code to include certain entities); and (vii) which meets certain other
tests, described below, regarding the nature of its income and assets. The Code
provides that conditions (i) through (iv), inclusive, must be met during the
entire taxable year and that condition (v) must be met during at least 335 days
of a taxable year of 12 months, or during a proportionate part of a taxable year
of less than 12 months.
17
<PAGE> 27
Conditions (v) and (vi) will not apply until after the first taxable year for
which an election is made to be taxed as a REIT. Parkway's Charter contains
restrictions regarding the transfer of its shares that are intended to assist it
in satisfying the share ownership requirements described in (v) and (vi) above.
See "Risk Factors--Possible Ownership Restrictions."
In addition, a corporation may not elect to become a REIT unless its
taxable year is the calendar year. Parkway's taxable year is the calendar year.
Income Tests. In order to maintain qualification as a REIT, three gross
income requirements must be satisfied annually. First, at least 75% of the
REIT's gross income (excluding gross income from prohibited transactions) for
each taxable year must be derived directly or indirectly from investments
relating to real property or mortgages on real property (including "rents from
real property" and, in certain circumstances, interest) or from certain types of
temporary investments. Second, at least 95% of the REIT's gross income
(excluding gross income from prohibited transactions) for each taxable year must
be derived from such real property investments described above, and from
dividends, interest and gain from the sale or disposition of stock or
securities, or from any combination of the foregoing. Third, short-term gain
from the sale or other disposition of stock or securities, gain from prohibited
transactions and gain on the sale or other disposition of real property held for
less than four years (apart from involuntary conversions and sales of
foreclosure property) must represent less than 30% of the REIT's gross income
(including gross income from prohibited transactions) for each taxable year.
Rents received by Parkway will qualify as "rents from real property" in
satisfying the above gross income tests only if several conditions are met.
First, the amount of rent must not be based in whole or in part on the income or
profits of any person. However, amounts received or accrued generally will not
be excluded from "rents from real property" solely by reason of being based on a
fixed percentage or percentages of receipts or sales. Second, rents received
from a tenant will not qualify as "rents from real property" if Parkway, or an
owner of 10% or more of Parkway, directly or constructively owns 10% or more of
such tenant (a "related party tenant"). Third, if rent attributable to personal
property that is leased in connection with a lease of real property is greater
than 15% of the total rent received under the lease, then the portion of rent
attributable to such personal property will not qualify as "rents from real
property." Finally, for rents received to qualify as "rents from real property,"
Parkway generally must not operate or manage the property or furnish or render
services to tenants, other than through an "independent contractor" from whom
Parkway derives no revenue. The "independent contractor" requirement, however,
does not apply to the extent the services provided by Parkway are "usually or
customarily rendered" in connection with the rental of space for occupancy only
and are not otherwise considered "rendered to the occupant." Parkway believes
that all services that are provided to its tenants will be considered "usually
or customarily" rendered in connection with the rental of comparable properties.
Further, any noncustomary services will be provided only through qualifying
independent contractors.
18
<PAGE> 28
If Parkway fails to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, it may nevertheless qualify as a REIT for such year
if it is entitled to relief under certain provisions of the Code. These relief
provisions generally will be available if its failure to meet such tests was due
to reasonable cause and not due to willful neglect, Parkway attaches a schedule
of the sources of its income to its return, and any income information on the
schedules was not due to fraud with intent to evade tax. It is not possible,
however, to state whether in all circumstances Parkway would be entitled to the
benefit of these relief provisions. As discussed above in "General," even if
these relief provisions were to apply, a tax would be imposed with respect to
the excess net income.
Asset Tests. At the close of each quarter of its taxable year, Parkway must
also satisfy three tests relating to the nature of its assets. First, at least
75% of the value of Parkway's total assets must be represented by real estate
assets (including stock or debt instruments held for not more than one year
purchased with the proceeds of a stock or debt offering of the company), cash,
cash items and government securities. Second, not more than 25% of Parkway's
total assets may be represented by securities other than those in the 75% asset
class. Third, of the investments included in the 25% asset class, the value of
any one issuer's securities owned by Parkway may not exceed 5% of the value of
Parkway's total assets, and Parkway may not own more than 10% of any one
issuer's outstanding voting securities. The 5% test must generally be met for
any quarter in which a REIT acquires securities of an issuer.
Annual Distribution Requirements. Parkway, in order to qualify as a REIT,
is required to distribute dividends (other than capital gain dividends) to its
stockholders in an amount at least equal to (i) the sum of (a) 95% of its "REIT
taxable income" (computed without regard to the dividends paid deduction and the
REIT's net capital gain) and (b) 95% of the net income (after tax), if any, from
foreclosure property, minus (ii) the sum of certain items of noncash income.
Such distributions must be paid in the taxable year to which they relate, or in
the following taxable year if declared before Parkway timely files its tax
return for such year and if paid on or before the first regular dividend payment
after such declaration. To the extent that Parkway does not distribute all of
its net capital gain or distributes at least 95%, but less than 100%, of its
"REIT taxable income," as adjusted, it will be subject to tax on the
nondistributed amount at regular capital gains and ordinary corporate tax rates.
Furthermore, if Parkway should fail to distribute during each calendar year at
least the sum of (i) 85% of its REIT ordinary income for such year; (ii) 95% of
its REIT capital gain income for such year; and (iii) any undistributed taxable
income from prior periods, it will be subject to a 4% excise tax on the excess
of such required distribution over the amounts actually distributed.
Parkway has made and intends to continue to make timely distributions
sufficient to satisfy the annual distribution requirements. It is possible,
however, that Parkway, from time to time, may not have sufficient cash or
liquid assets to meet the distribution requirements due to timing differences
between the actual receipt of income and actual payment of deductible expenses
and the inclusion of such income and deduction of such expenses in arriving at
Parkway's taxable income, or if the amount of nondeductible expenses such as
principal amortization or capital expenditures exceed the amount of
19
<PAGE> 29
noncash deductions. In the event that such timing differences occur, in order to
meet the distribution requirements, Parkway may arrange for short-term, or
possible long-term, borrowing to permit the payment of required dividends. If
the amount of nondeductible expenses exceeds noncash deductions, Parkway may
refinance its indebtedness to reduce principal payments and borrow funds for
capital expenditures.
Under certain circumstances, Parkway may be able to rectify a failure to
meet the distribution requirement for a year by paying "deficiency dividends" to
stockholders in a later year that may be included in Parkway's deduction for
dividends paid for the earlier year. Thus, Parkway may be able to avoid being
taxed on amounts distributed as deficiency dividends; however, Parkway will
be required to pay interest to the Service based upon the amount of any
deduction taken for deficiency dividends.
Failure to Qualify. If Parkway fails to qualify for taxation as a REIT in
any taxable year and no relief provisions apply, Parkway will be subject to tax
(including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. Distributions to stockholders in any year in which
Parkway fails to qualify will not be deductible by it, nor will such
distributions be required to be made. In such event, to the extent of current
and accumulated earnings and profits, all distributions to stockholders will be
taxable as ordinary income, and, subject to certain limitations in the Code,
corporate distributees may be eligible for the dividends received deduction.
Unless entitled to relief under specific statutory provisions, Parkway also will
be disqualified from taxation as a REIT for the four taxable years following the
year during which qualification was lost. It is not possible to state whether in
all circumstances Parkway would be entitled to such statutory relief.
TAXATION OF STOCKHOLDERS
Taxation of Taxable Domestic Stockholders. As long as Parkway qualifies as
a REIT, distributions made to its taxable domestic stockholders out of current
or accumulated earnings and profits (and not designated as capital gain
dividends) will be taken into account by them as ordinary income, and corporate
stockholders will not be eligible for the dividends received deduction as to
such amounts. Distributions that are designated as capital gain dividends will
be taxed as long-term capital gains (to the extent they do not exceed Parkway's
actual net capital gain for the taxable year) without regard to the period for
which the stockholder has held his or her shares. However, corporate
stockholders may be required to treat up to 20% of certain capital gain
dividends as ordinary income. Distributions in excess of current and accumulated
earnings and profits will not be taxable to a stockholder to the extent that
they do not exceed the adjusted basis of the stockholder's shares, but rather
will reduce the adjusted basis of such shares. To the extent that such
distributions exceed the adjusted basis of a stockholder's shares, they will be
included in income as long-term capital gain (or short-term capital gain if the
shares have been held for one year or less), assuming the shares are a capital
asset in the hands of the stockholders. In addition, any dividend declared by
Parkway in October, November or December of any year payable to a
stockholder of record on a specific date in any such month shall be treated as
both paid by Parkway and received by the stockholder on
20
<PAGE> 30
December 31 of such year, provided that the dividend is actually paid by
Parkway during January of the following calendar year. Stockholders may not
include in their individual income tax returns any net operating losses or
capital losses of Parkway.
In general, any loss upon a sale or exchange of shares by a stockholder who
has held such shares for six months or less (after applying certain holding
period rules) will be treated as long-term capital loss to the extent of
distributions from Parkway required to be treated by such stockholder as
long-term capital gain.
Backup Withholding. Parkway will report to its domestic stockholders and
the Service the amount of dividends paid during each calendar year, and the
amount of tax withheld, if any, with respect thereto. Under the backup
withholding rules, a stockholder may be subject to backup withholding at the
rate of 31% with respect to dividends paid unless such holder (i) is a
corporation or comes within certain other exempt categories and, when required,
demonstrates this fact, or (ii) provides a taxpayer identification number,
certifies as to no loss of exemption from backup withholding, and otherwise
complies with applicable requirements of the backup withholding rules. A
stockholder who does not provide Parkway with its correct taxpayer
identification number may also be subject to penalties imposed by the Service.
Any amount paid as backup withholding will be creditable against the
stockholder's income tax liability. In addition, Parkway may be required to
withhold a portion of capital gain distributions made to any stockholders
who fail to certify their non-foreign status to the company.
Taxation of Foreign Stockholders and Tax-Exempt Stockholders. The rules
governing U.S. Federal income taxation of nonresident alien individuals, foreign
corporations, foreign partnerships and other foreign stockholders, as well as
U.S. Tax-Exempt Stockholders, are complex, and no attempt will be made herein to
review these rules. Prospective stockholders who fall within these categories
should consult with their own tax advisors to determine the impact of U.S.
Federal, state and local income tax laws with regard to an investment in the
shares, including any reporting requirements.
State and Local Taxes. Parkway and its stockholders may be subject to state
or local taxation in various state or local jurisdictions, including those in
which it or they transact business or reside (although stockholders who are
individuals generally should not be required to file state income tax returns
outside of their state of residence with respect to Parkway's operations and
distributions). The state and local tax treatment of Parkway and its
stockholders may not conform to the federal income tax consequences discussed
above. Consequently, prospective stockholders should consult their own tax
advisors regarding the effect of state and local tax laws on an investment in
the shares.
21
<PAGE> 31
LEGAL MATTERS
The legality of the issuance of the Common Stock offered hereby has been
passed upon for Parkway by Jaeckle Fleischmann & Mugel, LLP, Buffalo, New York.
EXPERTS
The consolidated financial statements of The Parkway Company (Parkway
Properties, Inc.'s predecessor) included in The Parkway Company's Annual Report
on Form 10-KSB for the year ended December 31, 1995, have been audited by Ernst
& Young LLP, independent auditors, as set forth in their report thereon and
included therein and incorporated by reference herein. Such financial statements
are incorporated herein by reference in reliance on such reports given upon the
authority of such firm as experts in accounting and auditing.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Parkway's Charter contains a provision authorizing Parkway to indemnify, to
the fullest extent permitted by Maryland law, its directors and officers,
whether serving Parkway or, at its request, any other entity. Additionally, the
Charter provides that to the fullest extent permitted by Maryland law, no
director or officer shall be liable to Parkway or its stockholders for money
damages.
Section 2-418 of the Maryland General Corporation Law (the "Indemnification
Statute"), the law of the state in which Parkway is organized, empowers a
company, subject to certain limitations, to indemnify its officers and directors
against expenses, including attorneys' fees, judgments, penalties, fines,
settlements and expenses, actually and reasonably incurred by them in any suit
or proceeding to which they are parties unless the act or omission of the
director was material to the matter giving rise to the proceeding and was
committed in bad faith, or was the result of active and deliberate dishonesty,
or the director received an improper personal benefit or, with respect to a
criminal action or proceeding, the director had no reasonable cause to believe
their conduct was unlawful.
Parkway has entered into an indemnification agreement (the "Indemnification
Agreement") with each of its directors and officers and the Board of Directors
has authorized Parkway to enter into an Indemnification Agreement with each of
the future directors and officers of Parkway. The Indemnification Statute
permits a corporation to indemnify its directors and officers. However, the
protection that is specifically afforded by the Indemnification Statute
authorizes other arrangements for indemnification of directors and officers,
including insurance. The Indemnification Agreement is intended to provide
22
<PAGE> 32
indemnification to the maximum extent allowable by, or not in violation of, or
offensive to, any law of the State of Maryland.
The Indemnification Agreement provides that Parkway shall indemnify a
director or officer who is a party to the agreement (the "Indemnitee") if he or
she was or is a party to or otherwise involved in any proceeding by reason of
the fact that he or she was or is a director or officer of Parkway, or was or is
serving at its request in a certain capacity of another entity, against losses
incurred in connection with the defense or settlement of such proceeding. This
indemnification shall be provided to the fullest extent permitted by the
Indemnification Agreement. This is similar to the indemnification provided by
the Indemnification Statute except that indemnification is not available under
the Indemnification Agreement to the Indemnitee who pays any amount in
settlement of a proceeding without Parkway's written consent.
23
<PAGE> 33
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following expenses, other than the Securities and Exchange Commission
registration fee, are estimated. All expenses of the offering listed below
will be paid by Parkway.
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee............ $ 7,518
Blue Sky fees and expenses..................................... 3,000
Printing and engraving expenses................................ 15,000
Legal fees and expenses........................................ 20,000
Accounting fees and expenses................................... 13,000
Miscellaneous.................................................. 1,482
TOTAL $60,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Parkway's Charter contains a provision authorizing Parkway to
indemnify, to the fullest extent permitted by Maryland law, its
directors and officers, whether serving Parkway or, at its request,
any other entity. Additionally, the Charter provides that to the
fullest extent permitted by Maryland law, no director or officer shall
be liable to Parkway or its stockholders for money damages.
II-1
<PAGE> 34
Section 2-418 of the Maryland General Corporation Law (the
"Indemnification Statute"), the law of the state in which Parkway is
organized, empowers a company, subject to certain limitations, to
indemnify its officers and directors against expenses, including
attorneys' fees, judgments, penalties, fines, settlements and
expenses, actually and reasonably incurred by them in any suit or
proceeding to which they are parties unless the act or omission of the
director was material to the matter giving rise to the proceeding and
was committed in bad faith, or was the result of active and deliberate
dishonesty, or the director received an improper personal benefit or,
with respect to a criminal action or proceeding, the director had no
reasonable cause to believe their conduct was unlawful.
Parkway has entered into an indemnification agreement (the
"Indemnification Agreement") with each of its directors and officers,
and the Board of Directors has authorized Parkway to enter into an
Indemnification Agreement with each of the future directors and
officers of Parkway. The Indemnification Statute permits a corporation
to indemnify its directors and officers. However, the protection that
is specifically afforded by the Indemnification Statute authorizes
other arrangements for indemnification of directors and officers,
including insurance. The Indemnification Agreement is intended to
provide indemnification to the maximum extent allowable by, or not in
violation of, or offensive to, any law of the State of Maryland.
The Indemnification Agreement provides that Parkway shall indemnify a
director or officer who is a party to the agreement (the "Indemnitee")
if he or she was or is a party to or otherwise involved in any
proceeding by reason of the fact that he or she was or is a director
or officer of Parkway, or was or is serving at its request in a
certain capacity of another entity, against losses incurred in
connection with the defense or settlement of such proceeding. This
indemnification shall be provided to the fullest extent permitted by
the Indemnification Agreement. This is similar to the indemnification
provided by the Indemnification Statute except that indemnification is
not available under the Indemnification Agreement to the Indemnitee
who pays any amount in settlement of a proceeding without Parkway's
written consent.
ITEM 16. EXHIBITS.
5 Opinion of Jaeckle Fleischmann & Mugel, LLP regarding the
legality of shares being registered, filed herewith.
23(a) Consent of Ernst & Young LLP, filed herewith.
(b) Consent of Jaeckle Fleischmann & Mugel, LLP (incorporated by
reference to Exhibit 5).
24 Power of Attorney, (incorporated by reference to Exhibit 24
to Parkway's Registration Statement on Form S-3
(No. 333-11631) dated September 9, 1996).
II-2
<PAGE> 35
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
In the event that a payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding is asserted by such director, officer
or
II-3
<PAGE> 36
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by them is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 37
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Jackson, State of Mississippi on October 23, 1996.
PARKWAY PROPERTIES, INC.
By /s/ Steven G. Rogers
----------------------------------------
Steven G. Rogers, Director,
President and Chief Operating
Officer
II-5
<PAGE> 38
Pursuant to the requirements of the Securities Act of 1933, this Amendment
has been signed by the following person in the capacity indicated on October
23, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C> <C>
Leland R. Speed Director and Chief Executive
Officer
Steven G. Rogers Director, President and Chief
Operating Officer
Sarah P. Clark Vice President, Chief Financial
Officer, Treasurer and Secretary /s/ Sarah P. Clark
Sarah P. Clark, Individually
Daniel C. Arnold Director and as attorney-in-fact
George R. Farish Director
Roger P. Friou Director
Joe F. Lynch Director
C. Herbert Magruder Director
W. Lincoln Mossop, Jr. Director
</TABLE>
II-6
<PAGE> 1
[JAECKLE FLEISCHMANN & MUGEL, LLP LETTERHEAD]
EXHIBIT 5
October 23, 1996
Parkway Properties, Inc.
300 One Jackson Place
188 East Capitol Street
Jackson, Mississippi 39201
Ladies and Gentlemen:
Re: Registration Statement on Form S-3 under the Securities Act of
1933, as amended, covering the registration of 1,140,000 shares of
common stock, $0.001 par value per share, of Parkway Properties, Inc.
("Common Stock")--opinion regarding legality
As your counsel we have examined the above referenced Registration
Statement and we are familiar with the documents referred to therein, as well as
your Articles of Incorporation, as amended, Bylaws and other relevant documents,
and we have made such investigation with respect to your corporate affairs as we
have deemed necessary in order for us to render the opinion herein set forth.
We have examined the proceedings heretofore taken and we are informed as
to the procedures proposed to be followed by Parkway Properties, Inc. in
connection with the authorization, issuance and sale of the above described
shares of Common Stock. In our opinion the shares of Common Stock to be sold by
certain stockholders of Parkway Properties, Inc. under and in accordance with
the Registration Statement are or will be when issued, legally issued, fully
paid and nonassessable.
We consent to the filing of this opinion letter as an exhibit to the
Registration Statement.
Very truly yours,
JAECKLE FLEISCHMANN & MUGEL, LLP
<PAGE> 1
Exhibit 23(a)
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Amendment No. 1 (Form S-3, No. 333-11631) and related Prospectus of Parkway
Properties, Inc. for the registration of 1,140,000 shares of its common stock
and to the incorporation by reference therein of our report dated March 25,
1996, with respect to the consolidated financial statements of The Parkway
Company (Parkway Properties, Inc.'s predecessor) included in its Annual Report
(Form 10-KSB) for the year ended December 31, 1995, filed with the Securities
and Exchange Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Jackson, Mississippi
October 22, 1996
