UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------------------------
FORM 8-K/A
AMENDMENT TO FORM 8-K
Filed Pursuant to
THE SECURITIES EXCHANGE ACT OF 1934
PARKWAY PROPERTIES, INC.
- ------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
AMENDMENT NO. 1
The undersigned registrant hereby amends the Form 8-K dated
January 7, 1997 and filed on January 10, 1997 to include the
inadvertently omitted signature page.
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this amendment to be signed on
its behalf by the undersigned, thereunder duly authorized.
Date: January 13, 1997 PARKWAY PROPERTIES, INC.
By /s/ Sarah P. Clark
---------------------------------
Sarah P. Clark
Vice President, Chief Financial
Officer, Treasurer, and Secretary
FORM 8-K
PARKWAY PROPERTIES, INC.
Item 2. Acquisition or Disposition of Assets.
(1) Completed Acquisition. On January 7, 1997, Parkway
Properties LP, a Limited Partnership, in which Parkway
Properties, Inc. is a 99% limited partner and a wholly-owned
subsidiary is a 1% general partner, purchased Forum II & III in
Memphis, Tennessee from a major insurance company. Forum II &
III are four-story and five-story Class A office buildings with
approximately 177,000 square feet of rentable area situated in a
five-building office park in the East Memphis Suburban Submarket.
The buildings are currently 92% leased to 20 tenants with two
tenants occupying approximately 50% of the building under leases
expiring December 2000 and September 2003. The purchase price of
$16,425,000 was funded with existing cash reserves and borrowings
of $7,440,000 on a line of credit with Deposit Guaranty National
Bank, Jackson, Mississippi, at a rate equal to the 90-day LIBOR
rate plus 2.35%, currently 8.0062%.
(2) Proposed Acquisition. Parkway Properties, Inc. has a
contract to purchase Charlotte Park Executive Center for
$14,800,000. Charlotte Park Executive Center is a three-building
portfolio located in Charlotte, North Carolina with approximately
187,000 square feet of rentable area. Charlotte Park Executive
Center was 90% leased at December 31, 1996 with two tenants
occupying approximately 73% of the rentable area with leases
expiring January 1999 and November 1999. This acquisition is
still subject to Parkway's due dilegence review and the
negotiation of definitive documentation. Therefore, there can be
no assurance that the purchase of this office property will be
completed.
Item 5. Other Events.
(1) Completed Acquisition. On March 7, 1996, Parkway
Texas, Inc. a wholly-owned subsidiary of Parkway Properties, Inc.
("Parkway") purchased the One Park 10 Plaza Office Building in
Houston, Texas from a major insurance company. One Park 10 Plaza
is an eight story office building with approximately 161,000
square feet of rentable area and 609 parking spaces located in
the Katy Freeway/Energy Corridor office submarket of Houston. The
$6,700,000 purchase price was funded with existing cash reserves.
(2) Proposed Acquisition. Parkway Properties, Inc. has
a contract to purchase Ashford II & IV for $4,400,000. Ashford
II & IV are two-story office buildings located in west Houston
with approximately 116,000 square feet of rentable area and
additional above ground and underground parking and storage
areas. As of December 31, 1996, Ashford II & IV were 91% leased.
This acquisition is still subject to Parkway's due dilegence
review and the negotiation of definitive documentation.
Therefore, there can be no assurance that the purchase of this
office property will be completed.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements
The following audited combined financial
statement of Forum II & III for the twelve months ended
December 31, 1995 is attached hereto. Also included is
the unaudited combined financial statement for the nine
months ended September 30, 1996.
Page
----
Report of Independent Auditors 6
Combined Statement of Rental Revenue and
Direct Operating Expenses 7
Notes to Combined Statement of Rental Revenue
and Direct Operating Expenses 8
The following audited combined financial statement
of Charlotte Park Executive Center for the twelve
months ended December 31, 1995 is attached hereto. Also
included is the unaudited combined financial statement
for the nine months ended September 30, 1996.
Page
----
Report of Independent Auditors 10
Combined Statement of Rental Revenue and
Direct Operating Expenses 11
Notes to Combined Statement of Rental Revenue
and Direct Operating Expenses 12
The following audited financial statement of One
Park 10 Plaza for the twelve months ended December 31,
1995 is attached hereto. Also included is the unaudited
financial statement for the nine months ended September
30, 1996.
Page
----
Report of Independent Auditors 14
Statement of Rental Revenue and
Direct Operating Expenses 15
Notes to Statement of Rental Revenue
and Direct Operating Expenses 16
(b) Pro Forma Consolidated Financial Statements
The following unaudited Pro Forma
Consolidated Financial Statements are attached hereto.
PARKWAY PROPERTIES, INC.
Page
----
Pro Forma Consolidated Financial Statements (Unaudited) 18
Pro Forma Consolidated Balance Sheet (Unaudited) -
As of September 30, 1996 20
Pro Forma Consolidated Statement of Income (Unaudited) -
For the Twelve Months Ended December 31, 1995 22
Pro Forma Consolidated Statement of Income (Unaudited) -
For the Nine Months Ended September 30, 1996 23
Notes to Pro Forma Consolidated Financial
Statements (Unaudited) 24
(c) Exhibits.
(10)(a) Agreement of Sale among Tennessee
Forum, Inc. and Parkway Properties, Inc. dated December 4,
1996. Parkway agrees to furnish supplementally to the
Securities and Exchange Commission on request a copy of any
omitted schedule or exhibit to this agreement.
(10)(b) Purchase and Sale Agreement among Charlotte
Park Limited Partnership, CEP Investors Limited Partnership
and Parkway Carolina, Inc. dated November 4, 1996. Parkway
agrees to furnish supplementally to the Securities and
Exchange Commission on request a copy of any omitted
schedule or exhibit to this agreement.
FORM 8-K
PARKWAY PROPERTIES, INC.
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersinged hereunto duly authorized.
DATE: January 10, 1997 PARKWAY PROPERTIES, INC.
By /s/ Sarah P. Clark
Sarah P. Clark
Vice President, Chief Financial
Officer, Treasurer and Secretary
Report of Independent Auditors
The Board of Directors
Parkway Properties, Inc.
We have audited the accompanying combined statement of rental
revenue and direct operating expenses of Forum II & III for the
year ended December 31, 1995. This statement is the
responsibility of management. Our responsibility is to express
an opinion on this statement based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the combined statement of rental revenue and direct operating
expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the statement. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall statement
presentation. We believe that our audit provides a reasonable
basis for our opinion.
The accompanying statement was prepared for the purpose of
complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in Form 8-K of Parkway
Properties, Inc. as described in Note 2, and is not intended to
be a complete presentation of Forum II & III's combined revenue
and expenses.
In our opinion, the combined statement of rental revenue and
direct operating expenses referred to above presents fairly, in
all material respects, the combined rental revenue and direct
operating expenses described in Note 2 of Forum II & III for the
year ended December 31, 1995, in conformity with generally
accepted accounting principles.
We have compiled the accompanying combined statement of rental
revenue and direct operating expenses of Forum II & III for the
nine months ended September 30, 1996 in accordance with the
Statement on Standards for Accounting and Review Services issued
by the American Institute of Certified Public Accountants. A
compilation is limited to presenting in the form of financial
statement information that is the representation of management.
We have not audited or reviewed the combined statement of rental
revenue and direct operating expenses of Forum II & III for the
nine months ended September 30, 1996 and, accordingly, do not
express an opinion or any other form of assurance on the
statement.
Jackson, Mississippi /s/ Ernst & Young LLP
December 19, 1996
Forum II & III
Combined Statement of Rental Revenue
and Direct Operating Expenses
Year ended Nine months ended
December 31, 1995 September 30, 1996
----------------- ------------------
(unaudited)
Rental revenue(Note 1):
Minimum rents ............. $2,489,064 $1,813,786
Reimbursed charges........... 337,232 210,698
Other income.................. 32,191 37,173
---------- ----------
2,858,487 2,061,657
---------- ----------
Direct operating expenses
(Note 2):
Utilities................... 326,734 283,678
Real estate taxes........... 263,845 197,884
Management fees (Note 3).... 118,059 76,518
Janitorial services
and supplies............... 130,219 103,057
Maintenance services
and supplies............... 193,037 143,283
Security services........... 41,704 45,636
Insurance................... 61,323 51,311
Legal and professional
fees...................... 115,738 62,930
Administrative and
miscellaneous expenses..... 38,543 33,555
---------- ----------
1,289,202 997,852
---------- ----------
Excess of rental revenue over
direct operating expenses.... $1,569,285 $1,063,805
========== ==========
See accompanying notes.
Forum II & III
Notes to Combined Statement of Rental Revenue
and Direct Operating Expenses
1. Organization and Significant Accounting Policies
Description of Property
On January 7, 1997, Parkway Properties LP, a Limited Partnership,
in which Parkway Properties, Inc. is a 99% limited partner with a
wholly-owned subsidiary as a 1% general partner, purchased Forum
II & III (the "Buildings") in Memphis, Tennessee from an
unrelated party. The Buildings are four-story and five-story
Class A office buildings with approximately 177,000 combined
unaudited square feet of rentable area situated in a five-
building office park in the East Memphis Suburban Submarket.
Rental Income
Minimum rents from leases are accounted for ratably over the term
of each lease. Tenant reimbursements are recognized as income as
the applicable services are rendered or expenses incurred.
The future minimum rents on non-cancelable operating leases at
December 31, 1995 are as follows:
Year Amount
--------------------------------
1996 $ 2,414,000
1997 2,302,000
1998 2,114,000
1999 2,025,000
2000 1,767,000
Thereafter 1,838,000
-----------
$12,460,000
===========
The above amounts do not include tenant reimbursements for
utilities, insurance and common area maintenance.
Two tenants, whose leases expire December 31, 2000 and September
30, 2003, accounted for approximately 43% of the Buildings' 1995
rental revenue.
Forum II & III
Notes to Combined Statement of Rental Revenue
and Direct Operating Expenses (continued)
2. Basis of Accounting
The accompanying combined statement of rental revenue and direct
operating expenses is presented on the accrual basis. The
statement has been prepared in accordance with the applicable
rules and regulations of the Securities and Exchange Commission
for real estate properties acquired. Accordingly, the statement
excludes certain expenses, such as depreciation and mortgage
interest expense, which would not be comparable to the proposed
future operations of the Buildings. Management is not aware of
any material factors relating to the Buildings that would cause
the reported financial information not to be necessarily
indicative of future operating results.
3. Management Fees
Management fees of 4% of rental revenue received from the
operations of the Buildings were paid to an unrelated management
company.
Report of Independent Auditors
The Board of Directors
Parkway Properties, Inc.
We have audited the accompanying combined statement of rental
revenue and direct operating expenses of Charlotte Park Executive
Center for the year ended December 31, 1995. This statement is
the responsibility of management. Our responsibility is to
express an opinion on this statement based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the combined statement of rental revenue and direct operating
expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the statement. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall statement
presentation. We believe that our audit provides a reasonable
basis for our opinion.
The accompanying statement was prepared for the purpose of
complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in Form 8-K of Parkway
Properties, Inc. as described in Note 2, and is not intended to
be a complete presentation of Charolotte Park Executive Center's
combined revenue and expenses.
In our opinion, the combined statement of rental revenue and
direct operating expenses referred to above presents fairly, in
all material respects, the combined rental revenue and direct
operating expenses described in Note 2 of Charlotte Park
Executive Center for the year ended December 31, 1995, in
conformity with generally accepted accounting principles.
We have compiled the accompanying combined statement of rental
revenue and direct operating expenses of Charlotte Park Executive
Center for the nine months ended September 30, 1996 in accordance
with the Statement on Standards for Accounting and Review
Services issued by the American Institute of Certified Public
Accountants. A compilation is limited to presenting in the form
of financial statement information that is the representation of
management. We have not audited or reviewed the combined
statement of rental revenue and direct operating expenses of
Charlotte Park Executive Center for the nine months ended
September 30, 1996 and, accordingly, do not express an opinion or
any other form of assurance on the statement.
Jackson, Mississippi /s/ Ernst & Young LLP
January 9, 1997
Charlotte Park Executive Center
Combined Statement of Rental Revenue
and Direct Operating Expenses
Year ended Nine months ended
December 31, 1995 September 30, 1996
----------------- ------------------
(unaudited)
Rental revenue (Note 1):
Minimum rents ............... $1,731,277 $1,227,516
Reimbursed charges........... 984,178 707,162
Other income.................. 16,408 26,926
---------- ----------
2,731,863 1,961,604
---------- ----------
Direct operating expenses
(Note 2):
Utilities................... 278,371 181,979
Real estate taxes........... 222,800 167,100
Management fees (Note 3).... 114,571 86,599
Janitorial services
and supplies............... 145,512 101,028
Maintenance services
and supplies............... 165,331 134,638
Security services........... 35,761 25,471
Insurance................... 8,606 23,641
Legal and professional
fees...................... 30,180 39,644
Administrative and
miscellaneous expenses..... 170,341 124,247
---------- ----------
1,171,473 884,347
---------- ----------
Excess of rental revenue over
direct operating expenses.... $1,560,390 $1,077,257
========== ==========
See accompanying notes.
Charlotte Park Executive Center
Notes to Combined Statement of Rental Revenue
and Direct Operating Expenses
1. Organization and Significant Accounting Policies
Description of Property
Parkway Properties, Inc. (the "Company"), expects to complete its
acquisition of the Charlotte Park Executive Center (the
"Buildings") effective March 16, 1997 from an unrelated party.
The Buildings are office buildings located in Charlotte, North
Carolina with a total of approximately 187,000 (unaudited) square
feet of leasable area.
Rental Income
Minimum rents from leases are accounted for ratably over the term
of each lease. Tenant reimbursements are recognized as income as
the applicable services are rendered or expenses incurred.
The future minimum rents and scheduled reimbursed charges on non-
cancelable operating leases at December 31, 1995 are as follows:
Year Amount
--------------------------------
1996 $ 2,386,000
1997 2,289,000
1998 2,223,000
1999 1,454,000
2000 67,000
-----------
$ 8,419,000
===========
Two tenants, whose leases will expire January 31, 1999 and
November 30, 1999, accounted for approximately 75% of the
Buildings' 1995 rental revenue.
Charlotte Park Executive Center
Notes to Combined Statement of Rental Revenue
and Direct Operating Expenses (continued)
2. Basis of Accounting
The accompanying combined statement of rental revenue and direct
operating expenses is presented on the accrual basis. The
statement has been prepared in accordance with the applicable
rules and regulations of the Securities and Exchange Commission
for real estate properties acquired. Accordingly, the statement
excludes certain expenses, such as depreciation and mortgage
interest expense, which would not be comparable to the proposed
future operations of the Buildings. Management is not aware of
any material factors relating to the Buildings that would cause
the reported financial information not to be necessarily
indicative of future operating results.
3. Management Fees
Management fees of 5% of rental revenue received from the
operations of two of the buildings and management fees of 3% of
rental revenue received from the operations of the other building
were paid to an unrelated management company.
Report of Independent Auditors
The Board of Directors
Parkway Properties, Inc.
We have audited the accompanying statement of rental revenue and
direct operating expenses of One Park 10 Plaza for the year ended
December 31, 1995. This statement is the responsibility of
management. Our responsibility is to express an opinion on this
statement based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the statement of rental revenue and direct operating expenses is
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the statement. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall statement presentation. We
believe that our audit provides a reasonable basis for our
opinion.
The accompanying statement was prepared for the purpose of
complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in Form 8-K of Parkway
Properties, Inc. as described in Note 2, and is not intended to
be a complete presentation of One Park 10 Plaza's revenue and
expenses.
In our opinion, the statement of rental revenue and direct
operating expenses referred to above presents fairly, in all
material respects, the rental revenue and direct operating
expenses described in Note 2 of One Park 10 Plaza for the year
ended December 31, 1995, in conformity with generally accepted
accounting principles.
We have compiled the accompanying statement of rental revenue and
direct operating expenses of One Park 10 Plaza for the ten-week
period ended March 7, 1996 in accordance with the Statement on
Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants. A compilation
is limited to presenting in the form of financial statement
information that is the representation of management. We have
not audited or reviewed the statement of rental revenue and
direct operating expenses of the One Park 10 Plaza for the ten-
week period ended March 7, 1996 and, accordingly, do not express
an opinion or any other form of assurance on the statements.
Jackson, Mississippi /s/ Ernst & Young LLP
January 3, 1997
Statement of Rental Revenue
and Direct Operating Expenses
Ten-week
Year ended period ended
December 31, 1995 March 7, 1996
----------------- ------------------
(unaudited)
Rental revenue (Note 1):
Minimum rents ............... $1,658,883 $ 285,715
Reimbursed charges........... 46,471 10,345
Other income.................. 26,068 3,066
---------- ----------
1,731,422 299,126
---------- ----------
Direct operating expenses
(Note 2):
Utilities................... 256,017 40,202
Real estate taxes........... 160,059 26,676
Management fees (Note 3).... 53,366 8,426
Janitorial services
and supplies............... 114,883 20,991
Maintenance services
and supplies............... 184,430 23,727
Security services........... 77,042 14,491
Insurance................... 18,858 3,540
Legal and professional
fees...................... 19,921 -
Administrative and
miscellaneous expenses..... 121,621 21,956
---------- ----------
1,006,197 160,009
---------- ----------
Excess of rental revenue over
direct operating expenses.... $ 725,225 $ 139,117
========== ==========
See accompanying notes.
One Park 10 Plaza
Notes to Statement of Rental Revenue
and Direct Operating Expenses
1. Organization and Significant Accounting Policies
Description of Property
Parkway Texas, Inc., a wholly-owned subsidiary of Parkway
Properties, Inc. (the "Company"), purchased One Park 10 Plaza
(the "Building") on March 7, 1996 from an unrelated party. The
Building is an office building located in Houston, Texas with a
total of approximately 161,000 (unaudited) square feet of
leasable area.
Rental Income
Minimum rents from leases are accounted for ratably over the term
of each lease. Tenant reimbursements are recognized as income as
the applicable services are rendered or expenses incurred.
The future minimum rents on non-cancelable operating leases at
December 31, 1995 are as follows:
Year Amount
--------------------------------
1996 $ 1,482,000
1997 1,562,000
1998 1,263,000
1999 1,022,000
2000 657,000
Thereafter 1,332,000
-----------
$ 7,318,000
===========
The above amounts do not include tenant reimbursements for
utilities, insurance and common area maintenance.
Four tenants' leases accounted for approximately 49% of the
Building's 1995 rental revenue. One of the four tenants' leases,
which totaled approximately 10% of the Building's 1995 rental
revenue, expired January 31, 1996, and the other three tenants'
leases will expire April 14, 1998, January 31, 2000 and March 31,
2003.
One Park 10 Building
Notes to Statement of Rental Revenue
and Direct Operating Expenses (continued)
2. Basis of Accounting
The accompanying statement of rental revenue and direct operating
expenses is presented on the accrual basis. The statement has
been prepared in accordance with the applicable rules and
regulations of the Securities and Exchange Commission for real
estate properties acquired. Accordingly, the statement excludes
certain expenses, such as depreciation and mortgage interest
expense, which would not be comparable to the proposed future
operations of the Buildings. Management is not aware of any
material factors relating to the Buildings that would cause the
reported financial information not to be necessarily indicative
of future operating results.
3. Management Fees
Management fees of 3% of minimum rents received from the
operations of the Building were paid to an unrelated management
company.
PARKWAY PROPERTIES, INC
Pro Forma Consolidated Financial Statements
(Unaudited)
The following unaudited pro forma consolidated balance sheet as
of September 30, 1996 and pro forma consolidated statements of
income of Parkway Properties, Inc. ("Parkway") for the twelve
months ended December 31, 1995 and nine months ended September
30, 1996 give effect to the September 30, 1996 purchase of the
BB&T Financial Center ,the October 31, 1996 purchase of the
Tensor Building, the January 7, 1997 purchase of Forum II & III
and the proposed purchases of Charlotte Park Executive Center and
Ashford II & IV as well as the December 24, 1996 sale of the
Virginia Beach mortgage loan. The pro forma consolidated
financial statements have been prepared by management of Parkway
based upon the historical financial statements of Parkway and the
adjustments and assumptions in the accompanying notes to the pro
forma consolidated financial statements.
The pro forma consolidated balance sheet sets forth the effect of
Parkway's purchases of the Tensor Building and Forum II & III,
the proposed purchases of Charlotte Park Executive Center and
Ashford II & IV and the effect of the sale of the mortgage loan.
No pro forma adjustments were needed for the purchase of the BB&T
Financial Center due its September 30th purchase date.
The pro forma consolidated statements of income set forth the
effects of Parkway's purchases of the following buildings as if
they had been consumated on January 1, 1995.
BUILDING DATE OF PURCHASE
Forum II & III 1/07/97
Tensor 10/31/96
BB&T Financial Center 9/30/96
Falls Pointe 8/09/96
Roswell North 8/09/96
Cherokee 7/09/96
Courthouse 7/09/96
400 Northbelt 4/15/96
Woodbranch 4/15/96
One Park 10 Plaza 3/07/96
Waterstone 12/18/95
IBM Building 10/02/95
MTEL Centre' 7/31/95
In addition to the purchases listed above, the pro forma
consolidated statements of income set forth the effect of the May
31, 1996 sale of 157 mortgage loans, the placement of non-
recourse mortgage debt on recently acquired properties, the
proposed
PARKWAY PROPERTIES, INC.
Pro Forma Consolidated Financial Statements (continued)
(Unaudited)
purchases of Charlotte Park Executive Center and Ashford II & IV
and the December 24, 1996 sale of the Virginia Beach mortgage
loan as if the transactions occurred January 1, 1995.
These pro forma consolidated financial statements may not be
indicative of the results that actually would have occurred if
the purchases, sale and/or financings had been in effect on the
dates indicated or which may be obtained in the future. The pro
forma consolidated financial statements should be read in
conjunction with the financial statements and notes of Parkway
included in its annual report on Form 1O-KSB for the period ended
December 31, 1995.
PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
(Unaudited)
Parkway Pro Forma(2) Parkway
Historical Adjustments Pro Forma
---------- ----------- ---------
(In thousands)
Assets
Real estate related investments
Office buildings.............$129,507 $ 38,445 $167,952
Accumulated depreciation..... (8,671) - (8,671)
-------- -------- --------
120,836 38,445 159,281
Real estate held for sale
Land....................... 8,206 - 8,206
Operating properties....... 3,928 - 3,928
Mortgage loans............... 6,173 (5,784) 389
Real estate securities....... 507 - 507
Real estate partnerships and
corporate joint venture.... 312 - 312
-------- -------- --------
139,962 32,661 172,623
Interest and rents receivable
and other assets............. 3,865 (227) 3,638
Cash and cash equivalents...... 134 (134) -
-------- -------- --------
$143,961 $ 32,300 $176,261
======== ======== ========
Liabilities
Notes payable to banks.........$ 6,836 $ 23,360 $ 30,196
Mortgage notes payable without
recourse..................... 53,452 9,850 63,302
Mortgage notes payable on wrap
mortgages.................... 4,470 (4,470) -
Accounts payable and other
liabilities.................. 5,999 - 5,999
-------- -------- --------
70,757 28,740 99,497
-------- -------- --------
Shareholders' Equity
Preferred stock, $.001 par
value, 576,000 shares
authorized, 576,000 shares
issued in 1996............... 1 1
Common stock, $.001 par value,
69,424,000 shares authorized,
3,636,421 shares issued...... 3 - 3
Additional paid-in capital..... 51,924 - 51,924
Retained earnings.............. 21,061 3,560 24,621
-------- -------- --------
72,989 3,560 76,549
Unrealized gain on securities.. 215 - 215
-------- -------- --------
73,204 3,560 76,764
-------- -------- --------
$143,961 $ 32,300 $176,261
======== ======== ========
PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED 12/31/95
(Unaudited)
Parkway Pro Forma Parkway
Historical Adjustments Pro Forma
---------- ----------- ---------
(In thousands, except per share data)
Revenues
Income from real estate
properties.......................$ 8,941 $25,571 (a)$34,512
Interest on mortgage loans......... 1,421 (1,265)(e) 156
Management company income.......... 1,041 - 1,041
Equity in earnings
Real estate companies............ 135 - 135
Real estate partnerships and
corporate joint venture........ 116 - 116
Interest on investments............ 167 - 167
Dividend income.................... 601 - 601
Deferred gains and other income.... 345 - 345
Gain on real estate
and mortgage loans............... 6,552 - 6,552
Gain on securities................. 4,314 - 4,314
------- ------- -------
23,633 24,306 47,939
------- ------- -------
Expenses
Real estate owned
Operating expense................ 4,876 12,350 (a) 17,226
Interest expense................. 2,230 3,457 (c) 5,687
Depreciation and amortization.... 1,331 2,904 (a) 4,235
Minority interest................ (100) - (100)
Interest expense
Notes payable to banks........... 156 2,434 (e) 2,590
Notes payable on wrap mortgages.. 135 (135) -
Management company expenses........ 804 - 804
Other expenses..................... 2,299 - 2,299
------- ------- -------
11,731 21,010 32,741
------- ------- -------
Income before taxes................ 11,902 3,296 15,198
Income tax provision............... 82 - (4) 82
------- ------- -------
Net income.........................$11,820 $ 3,296 $15,116
======= ======= =======
Net income per share...............$ 4.24 $ 3.85
======= =======
Weighted average shares
outstanding...................... 2,787 3,927
======= =======
PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED 9/30/96
(Unaudited)
Parkway Pro Forma Parkway
Historical Adjustments Pro Forma
---------- ----------- ---------
(In thousands, except per share data)
Revenues
Income from real estate
properties...................... $13,559 $12,044 (b) $25,603
Management company income......... 537 - 537
Interest on mortgage loans........ 1,435 (1,384)(f) 51
Equity in earnings:
Real estate partnerships and
corporate joint venture....... 121 - 121
Gain on securities................ 304 - 304
Interest on investments........... 471 - 471
Deferred gains and other income... 91 - 91
Dividend income................... 118 - 118
Gain on real estate and mortgage
loans........................... 5,863 - 5,863
------- ------- -------
22,499 10,660 33,159
------- ------- -------
Expenses
Real estate owned:
Operating expense............... 6,570 5,672 (b) 12,242
Interest expense................ 2,390 1,452 (d) 3,842
Depreciation and amortization... 1,591 1,494 (b) 3,085
Minority interest............... (12) - (12)
Interest expense:
Notes payable to banks.......... 95 1,826 (f) 1,921
Notes payable on wrap mortgages. 340 (340) -
Management company expenses....... 483 - 483
Other expenses.................... 2,198 - 2,198
------- ------- -------
13,655 10,104 23,759
------- ------- -------
Income before taxes............... 8,844 556 9,400
Income tax provision.............. 23 - (4) 23
------- ------- -------
Net income........................ $ 8,821 $ 556 $ 9,377
======= ======= =======
Net income per share.............. $ 2.54 $ 2.25
======= =======
Weighted average shares
outstanding 3,474 4,169
======= =======
PARKWAY PROPERTIES, INC.
Notes to Pro Forma Consolidated Financial Statements
(Unaudited)
1. On September 30, 1996, Parkway Carolina, Inc., a wholly-
owned subsidiary of Parkway Properties, Inc. ("Parkway" or
the "Company"), purchased the BB&T Financial Center for
$24,500,000 from an unrelated party. This building consists
of approximately 239,000 net rentable square feet. No pro
forma adjustments were needed to the Consolidated Balance
Sheet as of September 30, 1996 due to the September 30th
purchase date.
2. On October 31, 1996, Parkway Houston, Inc., a wholly-owned
subsidiary of Parkway Properties, Inc. ("Parkway"),
purchased the Tensor Building in Houston, Texas from a major
property company. The Tensor Building consists of
approximately 92,000 square feet of rentable square feet.
The purchase price of $2,820,000 was funded with existing
cash reserves.
3. On December 24, 1996, Parkway Properties, Inc. ("Parkway" or
the "Company") sold the Virginia Beach mortgage loan to an
unrelated party for $9,700,000 in cash. A portion of the
proceeds from the sale were used to repay the underlying
first mortgages on the buildings totaling $4,415,000.
4. On January 7, 1997, Parkway Properties LP purchased Forum II
& III for $16,425,000 from an unrelated party. The
buildings consist of approximately 173,000 net rentable
square feet. The purchase was funded with existing cash
reserves and borrowings of $7,440,000 on a line of credit
with Deposit Guaranty National Bank, Jackson, Mississippi,
at a rate equal to 8.0062%.
5. The pro forma adjustments to the Consolidated Balance Sheet
as of September 30, 1996 include the proposed purchases of
Charlotte Park Executive Center for $14,800,000 and Ashford
II & IV for $4,400,000.
PARKWAY PROPERTIES, INC.
Notes to Pro Forma Consolidated Financial Statements (continued)
(Unaudited)
6. The pro forma adjustments to the Consolidated Statements of
Income for the twelve months ended December 31, 1995 and the
nine months ended September 30, 1996 set forth the effects of
Parkway's purchases of the following buildings as if they had
been consumated on January 1, 1995.
BUILDING DATE OF PURCHASE
Forum II & III 1/07/97
Tensor 10/31/96
BB&T Financial Center 9/30/96
Falls Pointe 8/09/96
Roswell North 8/09/96
Cherokee 7/09/96
Courthouse 7/09/96
400 Northbelt 4/15/96
Woodbranch 4/15/96
One Park 10 Plaza 3/07/96
Waterstone 12/18/95
IBM Building 10/02/95
MTEL Centre' 7/31/95
In addition to the purchases listed above, the adjustments on
the pro forma consolidated statements of income set forth
the effect of the May 31, 1996 sale of 157 mortgage loans,
the December 24, 1996 sale of the Virginia Beach mortgage
loan, the placement of non-recourse mortgage debt on
recently acquired properties and the proposed purchases of
Charlotte Park Executive Center and Ashford II & IV as if
the transactions occurred January 1, 1995. These pro forma
adjustments are detailed below by property for the twelve
months ended December 31, 1995 and nine months ended
September 30, 1996.
PARKWAY PROPERTIES, INC.
Notes to Pro Forma Consolidated Financial Statements (continued)
(Unaudited)
The effect on income and expenses from real estate
properties due to the above purchases and proposed purchase
are as follows:
(a) For the twelve months ended December 31, 1995:
Revenue Expenses
----------- ---------------------------
Income From Real Estate Owned
Real Estate Operating Depreciation
Properties Expense Expense
----------- ------------ ------------
Mtel Centre' $ 2,420,000 $ 1,442,000 $ 177,000
IBM Building 959,000 449,000 102,000
Waterstone 1,183,000 499,000 181,000
One Park 10 Plaza 1,731,000 1,006,000 151,000
400 North Belt
& Woodbranch 3,470,000 1,970,000 313,000
Cherokee &
Courthouse
Road Bldgs. 1,848,000 841,000 249,000
Falls Pointe &
Roswell North 2,270,000 929,000 315,000
BB&T Financial
Center 3,999,000 1,378,000 551,000
Tensor 1,001,000 618,000 63,000
Forum II & III 2,858,000 1,289,000 370,000
Charlotte Ex.Park 2,732,000 1,172,000 333,000
Ashford II & IV 1,100,000 757,000 99,000
----------- ----------- -----------
$25,571,000 $12,350,000 $ 2,904,000
=========== =========== ===========
PARKWAY PROPERTIES, INC.
Notes to Pro Forma Consolidated Financial Statements (continued)
(Unaudited)
(b) For the nine months ended September 30, 1996:
Revenue Expenses
----------- ---------------------------
Income From Real Estate Owned
Real Estate Operating Depreciation
Properties Expense Expense
----------- ------------ ------------
One Park 10 $ 299,000 $ 160,000 $ 25,000
400 North Belt
& Woodbranch 1,036,000 551,000 92,000
Cherokee &
Courthouse
Road Bldgs. 917,000 480,000 124,000
Falls Pointe &
Roswell North 1,161,000 439,000 191,000
BB&T Financial
Center 3,072,000 1,055,000 413,000
Tensor 729,000 477,000 48,000
Forum II & III 2,062,000 998,000 277,000
Charlotte Park 1,962,000 885,000 250,000
Ashford II & IV 806,000 627,000 74,000
----------- ----------- -----------
$12,044,000 $ 5,672,000 $ 1,494,000
=========== =========== ===========
Depreciation is provided by the straight-line method over
the estimated useful lives of the buildings (40 years).
PARKWAY PROPERTIES, INC.
Notes to Pro Forma Consolidated Financial Statements (continued)
(Unaudited)
Pro forma interest expense on real estate owned reflects the
non-recourse debt placed on the buildings at the actual
amounts and rates by property as if placed January 1, 1995
is as follows:
Property/Placement Twelve Months Nine Months
Date/Rate Debt 12/31/95 (c) 9/30/96 (d)
------------------ ----------- ------------- -----------
Mtel Centre
12/95 7.75% $11,000,000 $ 595,000 $ -
IBM Building
2/96 7.78% 4,800,000 370,000 41,000
Waterstone
6/96 8.00% 5,620,000 450,000 185,000
One Park 10
7/96 8.35% 4,700,000 392,000 196,000
400 North Belt &
Woodbranch
7/96 8.25% 10,000,000 825,000 412,000
Falls Pointe &
Roswell North
12/96 8.375% 9,850,000 825,000 618,000
---------- ----------
$3,457,000 $1,452,000
========== ==========
The January 1, 1995 pro forma effect of the sale of 157
mortgage loans on May 31, 1996 and the December 24, 1996
sale of the Virginia Beach mortgage loan is as follows:
Twelve Months Nine Months
12/31/95 (e) 9/30/96 (f)
------------- -----------
Interest Income:
Mortgage loans $(1,265,000) $(1,384,000)
PARKWAY PROPERTIES, INC.
Notes to Pro Forma Consolidated Financial Statements (continued)
(Unaudited)
The pro forma effect of the purchases of BB&T, Tensor, Forum
II & III and the proposed purchase of Charlotte Park
Executive Center and Ashford II & IV on interest expense on
notes payable to banks for the twelve months ended December
31, 1995 and the nine months ended September 30, 1996 is
$2,434,000 and $1,826,000, respectively.
The pro forma effect of the sale of the Virginia Beach
mortgage loan on interest expense on notes payable on wrap
mortgages for the twelve months ended December 31, 1995 and
the nine months ended September 30, 1996 is a decrease of
$135,000 and $340,000, respectively.
7. No additional income tax expenses were provided because of
the Company's net operating loss carryover.
8. All per share information for the twelve months ended
December 31, 1995 has been restated to reflect a 3 for 2
common stock split effected as a dividend of one share for
every two shares outstanding on April 30, 1996 as well as
the June 14, 1996 private placement of 1,140,000 shares as
if both transactions had occurred January 1, 1995.
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of
the 4th day of December 1996, by and between Parkway Properties,
Inc., a Maryland corporation ("Purchaser"), and Tennessee Forum,
Inc., an Illinois corporation ("Seller").
W I T N E S S E T H:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller
agrees to sell at the price of Sixteen Million Four Hundred
Twenty-Five Thousand Dollars ($16,425,000) ("Purchase Price"),
and on the terms and conditions hereinafter set forth, the
property commonly known as Forum II and III, Memphis, Tennessee,
consisting of the following:
1.1 All of Seller's right, title and interest in the real
property ("Land") and all buildings and other improvements
("Improvements") situated on the Land, as more particularly
described on Exhibit A attached hereto and made a part hereof
(the Land and the Improvements are sometimes referred to herein
together as the "Property"), together with all easements and
appurtenances thereunto belonging and all of Seller's right,
title and interest in and to all streets, alleys and public ways
adjacent thereto, if any, and together with all of Seller's
right, title and interest in and to all strips and gores located
on or adjacent to the Property or located between any parcels
constituting the Land, if any;
1.2 The personal property set forth on Exhibit B attached
hereto ("Personal Property");
1.3 The tenant leases described in the rent roll set forth
on Exhibit C attached hereto and made a part hereof ("Rent Roll")
together with such other tenant leases of the Property as may be
made prior to Closing (as hereinafter defined) in accordance with
the terms of this Agreement ("Leases");
1.4 If and to the extent assignable and to the extent of
Seller's interest therein, if any: (a) all guarantees, warranties
and indemnifications, if any, received from suppliers,
contractors, materialmen or subcontractors arising out of, or in
connection with, the installation, construction or maintenance of
the Property including, without limitation, the right to sue any
obligor for any breach of any covenant, agreement,
representation, warranty or guarantee contained therein; (b) all
licenses, permits, certificates of occupancy and franchises
issued by any federal, state, county or municipal authority
relating to the use, maintenance or operation of the Property
running to or in favor of Seller or pertaining to the Property;
(c) all trade styles, and trade names, including, without
limitation, the names "Forum II" and "Forum III", and all
contract rights, brochures, manuals, lists of prospective
tenants, advertising material, books and records, utility
contracts and telephone numbers; (d) the plans and specifications
for the Improvements and all unexpired claims and sureties, if
any, received in connection with the construction, improvement or
equipment of the Improvements; and (e) those service and
maintenance contracts set forth in Exhibit D ("Service
Contracts") which are Assumed Contracts (hereafter defined).
1.5 Notwithstanding anything contained in this Agreement to
the contrary, Seller is not conveying or assigning to Purchaser
the items described in Paragraph 15.3 hereof.
2. PURCHASE PRICE. The Purchase Price shall be paid by
Purchaser as follows:
2.1 Within two (2) days of the execution of this Agreement,
the sum of Three Hundred Thousand Dollars ($300,000) ("Earnest
Money"), by check payable to the escrow agent, to be held in
escrow by and in accordance with the provisions of the Escrow
Agreement ("Escrow Agreement") attached hereto as Exhibit E; and
2.2 On the Closing Date (as hereinafter defined), the
balance of the Purchase Price, adjusted in accordance with the
prorations, by federally wired "immediately available" funds, on
or before 3:00 p.m. Chicago time. Any provisions herein
providing for the delivery of the Earnest Money to either party
hereof are intended to mean the Earnest Money plus any interest
earned thereon and less all escrow and investment fees, if any.
3. TITLE COMMITMENT AND SURVEY.
3.1 Attached hereto as Exhibit F is a copy of a title
commitment for an owner's standard title insurance policy issued
by Charter Title Company, as agent for Lawyers Title Insurance
Corporation, (hereinafter referred to as "Title Insurer"), dated
October 10, 1996 for the Property ("Title Commitment"). For
purposes of this Agreement, "Permitted Exceptions" shall mean:
(a) general ad valorem real estate taxes for the year 1996 and
subsequent years not yet due and payable; (b) matters shown on
the Survey (as hereinafter defined); (c) matters caused by the
action or inaction of Purchaser or its agents; (d) the title
exceptions set forth in Schedule B of the Title Commitment as
Numbers 2(a) - 2(l) and 2(n), subject to the matters raised in
the letters dated November 12, 1996 and November 19, 1996 from
Forman, Perry, Watkins & Krutz; (e) the rights of tenants under
leases; and (f) liens or encumbrances of a definite or
ascertainable amount which may be removed or insured over (but
with respect to any exceptions to be insured over, not to exceed
$25,000 without Purchaser's prior approval, which will not be
unreasonably withheld) by the payment of money or other security
at the Closing Date, and which Seller removes or causes to be
insured over at the Closing Date in accordance with Paragraph 5
hereof. All other exceptions to title shall be referred to as
"Unpermitted Exceptions". On the Closing Date, Title Insurer
shall deliver to Purchaser a standard title policy in conformance
with the previously delivered Title Commitment, with extended
coverage, including deletion of the survey and
mechanics/materialmen lien exceptions, and subject only to
Permitted Exceptions (excluding, however, the Permitted
Exceptions described in subclause (f) above) and Unpermitted
Exceptions waived in writing by Purchaser ("Title Policy"). The
Title Policy shall be conclusive evidence of good title as
therein shown as to all matters to be insured by the Title
Policy, subject only to the exceptions and requirements therein
stated. Seller and Purchaser shall share equally in the costs of
the Title Commitment and Title Policy (exclusive of extended
coverage costs) and Purchaser shall pay for the cost of any
endorsements to, or extended coverage on, the Title Policy as
requested by Purchaser or Purchaser's lender.
3.2 Purchaser has received a survey of the Property dated
October 28, 1996 prepared by Haynie Associates ("Survey").
Seller and Purchaser shall share equally in the cost of the
Survey. Purchaser hereby acknowledges that with the exception of
the items raised in the November 12, 1996 letter from Forman,
Perry, Watkins & Krutz, all matters disclosed by the Survey are
acceptable to Purchaser and are Permitted Exceptions for purposes
of Paragraph 3.1 above.
3.3 The obligations of Purchaser and Seller to pay various
costs set forth in Paragraphs 3.1 and 3.2 shall survive the
termination of this Agreement.
4. PAYMENT OF CLOSING COSTS.
4.1 In addition to the costs set forth in Paragraphs 3.1
and 3.2, Seller and Purchaser shall share equally in the costs of
the documentary or transfer stamps to be paid with reference to
the Deed (as hereinafter defined) and all other stamps,
intangible, transfer, documentary, recording, sales tax and
surtax imposed by law with reference to any other sale documents
delivered in connection with the sale of the Property to
Purchaser.
5. CONDITION OF TITLE.
5.1 If, prior to Closing (as hereinafter defined), a date-
down to the Title Commitment discloses any new Unpermitted
Exceptions which, in the aggregate, do not exceed $25,000 (each,
a "Minor Unpermitted Exception"), Seller shall, at Seller's
expense, bond over, cure and/or have such Minor Unpermitted
Exceptions removed from the Title Commitment or have the Title
Insurer commit to insure against loss or damage that may be
occasioned by such Minor Unpermitted Exceptions. Notwithstanding
the foregoing, if such date down to the Title Commitment
discloses any new Unpermitted Exceptions which, in the aggregate,
equal or exceed $25,000, Seller shall have the right, but not the
obligation, to bond over, cure and/or have such exceptions
removed from the Title Commitment or to have the Title Insurer
commit to insure against loss or damage that may be occasioned by
such Unpermitted Exceptions. If Seller fails to bond over, cure
or have any Unpermitted Exception removed or have the Title
Insurer commit to insure as specified above within five (5)
business days from the date of the date down to the Title
Commitment, Purchaser may terminate this Agreement upon written
notice to Seller within five (5) days after Seller's notice to
Purchaser specifying such Unpermitted Exceptions; provided,
however, and notwithstanding anything contained herein to the
contrary, if the Unpermitted Exception which gives rise to
Purchaser's right to terminate was recorded against the Property
as a result of the affirmative action of Seller (and not by any
unrelated third party) or if Seller is able to bond over, cure or
remove a Minor Unpermitted Exception for a cost not to exceed
$25,000 or the Title Insurer is willing to insure over a Minor
Unpermitted Exception for a cost not to exceed $25,000 in
accordance with the terms hereof and Seller fails to expend such
funds in either case, then Purchaser shall have the additional
rights contained in Paragraph 14 herein. Absent notice from
Purchaser to Seller in accordance with the preceding sentence,
Purchaser shall be deemed to have elected to take title subject
to said Unpermitted Exception, without any reduction in or setoff
against the Purchase Price as a result thereof. If Purchaser
terminates this Agreement in accordance with the terms of this
Paragraph 5.1, this Agreement shall terminate without further
action of the parties and all Earnest Money theretofore deposited
into the escrow by Purchaser, together with any interest accrued
thereon, shall be returned to Purchaser, and neither party shall
have any further liability to the other, except for those
covenants and obligations that specifically survive termination
of this Agreement.
5.2 Seller agrees to convey fee simple title to the
Property to Purchaser by special warranty deed ("Deed") (in the
form attached hereto as Exhibit G) in recordable form subject
only to the Permitted Exceptions and any Unpermitted Exceptions
not objected to by Purchaser in accordance with Paragraph 5.1
above.
6. CONDEMNATION, EMINENT DOMAIN, DAMAGE AND CASUALTY.
6.1 Except as provided in the indemnity provisions
contained in Paragraph 7.1 of this Agreement, Seller shall bear
all risk of loss with respect to the Property through the
Closing. Seller agrees to maintain its existing "all risk"
replacement cost casualty insurance and rent loss insurance in
place until the Closing Date. Notwithstanding the foregoing, in
the event of damage to the Property by fire or other casualty
prior to the Closing Date, repair of which would cost less than
or equal to $150,000 (as determined by Seller in good faith),
Purchaser shall not have the right to terminate its obligations
under this Agreement by reason thereof, but Seller shall have the
right to elect to either repair and restore the Property if such
repair or restoration may be completed prior to the Closing Date
or to assign and transfer to Purchaser on the Closing Date all of
Seller's right, title and interest in and to all insurance
proceeds paid or payable to Seller on account of such fire or
casualty plus the amount of Seller's insurance deductible.
Seller shall promptly notify Purchaser in writing of any such
fire or other casualty and Seller's estimate of the cost to
repair the damage caused thereby. In the event of damage to the
Property by fire or other casualty prior to the Closing Date,
repair of which would cost in excess of $150,000 (as determined
by Seller in good faith), then this Agreement may be terminated
at the option of Purchaser, which option shall be exercised, if
at all, by Purchaser's written notice thereof to Seller within
fifteen (15) business days after Purchaser receives written
notice of such fire or other casualty from Seller and Seller and
Purchaser agree upon the amount of such damages, and upon the
exercise of such option by Purchaser this Agreement shall
terminate without further action by the parties, the Earnest
Money deposited by Purchaser shall be returned to Purchaser
together with interest thereon, and neither party shall have any
further liability or obligations hereunder, except for those
covenants and obligations which expressly survive termination of
this Agreement. In the event that Purchaser does not exercise
the option to terminate in accordance with this Paragraph 6.1,
the Closing shall take place on the Closing Date and Seller shall
assign and transfer to Purchaser on the Closing Date all of
Seller's right, title and interest in and to all insurance
proceeds paid or payable to Seller on account of the fire or
casualty and shall pay to Purchaser the amount of Seller's
insurance deductible. Notwithstanding anything contained herein
to the contrary, Seller's obligation to transfer all insurance
proceeds paid to Seller as set forth more fully in this Paragraph
6.1 shall survive the Closing and the recording of the Deed.
6.2 If between the date of this Agreement and the Closing
Date, any condemnation or eminent domain proceedings are
initiated which might result in the taking of any part of the
Property or the taking or closing of any right of access to the
Property, Seller shall immediately notify Purchaser of such
occurrence. In the event that the taking of any part of the
Property shall: (i) impair access to the Property; (ii) cause any
non-compliance with any applicable law, ordinance, rule or
regulation of any federal, state or local authority or
governmental agencies having jurisdiction over the Property or
any portion thereof; or (iii) adversely impair the use of the
Property as it is currently being operated (hereinafter
collectively referred to as a "Material Event"), Purchaser may:
6.2.1 terminate this Agreement by written notice to
Seller, in which event the Earnest Money deposited by Purchaser,
together with interest thereon, shall be returned to Purchaser
and all rights and obligations of the parties hereunder with
respect to the closing of this transaction will cease, except for
those covenants and obligations hereunder which expressly survive
termination of this Agreement; or
6.2.2 proceed with the Closing, in which event Seller
shall assign to Purchaser all of Seller's right, title and
interest in and to any award made or to be made in connection
with such condemnation or eminent domain proceedings.
Notwithstanding anything contained herein to the contrary,
Seller's obligation to transfer Seller's interest in such award
as set forth more fully in this Paragraph 6.2.2 shall survive the
Closing and the recording of the Deed.
Purchaser shall then notify Seller, within ten (10) business days
after Purchaser's receipt of Seller's notice, whether Purchaser
elects to exercise its rights under Paragraph 6.2.1 or Paragraph
6.2.2. Closing shall be delayed, if necessary, until Purchaser
makes such election. If Purchaser fails to make an election
within such ten (10) business day period, Purchaser shall be
deemed to have elected to proceed with Closing in accordance with
Paragraph 6.2.2. If between the date of this Agreement and the
Closing Date, any condemnation or eminent domain proceedings are
initiated which do not constitute a Material Event, Purchaser
shall be required to proceed with the Closing, in which event
Seller shall assign to Purchaser all of Seller's right, title and
interest in and to any award made in connection with such
condemnation or eminent domain proceedings.
7. INSPECTION AND AS-IS CONDITION.
7.1 Purchaser acknowledges that Purchaser has, prior to the
date hereof, been provided with access to the Property in order
to inspect the Property and to conduct and prepare such studies,
tests and surveys as Purchaser desired, including, without
limitation, a review of the Leases, and the following information
to the extent in Seller's possession or control: (i) any prior
engineering, environmental, structural or mechanical studies or
reports, (ii) any plans, permits and licenses; (iii) any
assignable warranties, and (iv) any repair or capital improvement
history. In connection with Purchaser's review of the Property,
Seller has delivered to Purchaser copies of the current rent roll
for the Property, the most recent tax and insurance bills, copies
of the Leases, utility account numbers, a personal property
inventory, the Service Contracts, unaudited annual operating
statements for 1995 and monthly unaudited operating statements
from January 1996 through the calendar month ending prior to the
date hereof.
All of the foregoing tests, investigations and studies to be
conducted under this Paragraph 7.1 by Purchaser shall be subject
to the following:
(i) Except as may be required by Purchaser
to complete its due diligence during the Inspection
Period or to obtain financing in order to close this
transaction, all information set forth in the documents
to be reviewed hereunder by Purchaser, its employees
and agents shall be held in strict confidence until
Closing and thereafter in the event that the Closing
does not occur;
(ii) In the event the Closing does not
occur, Purchaser shall promptly return to Seller any
documents obtained from Seller or Seller's agents;
(iii) Purchaser shall not have suffered or
permitted any lien, claim or charge of any kind
whatsoever to attach to the Property or any part
thereof; and
(iv) such tests, investigations and studies
were conducted at Purchaser's sole cost and expense,
and in the event of any damage to the Property caused
by Purchaser, its agents, engineers, employees,
contractors or surveyors (including, without
limitation, pavement, landscaping and surface damage),
Purchaser shall pay the cost incurred by Seller to
restore the Property to the condition existing prior to
the performance of such tests, investigations or
studies.
Purchaser shall defend, indemnify and hold Seller and any
affiliate or parent of Seller, and all shareholders, employees,
officers, directors and partners of Seller or Seller's affiliate
or parent (hereinafter collectively referred to as "Affiliates of
Seller") harmless from any and all liability, cost and expense
(including without limitation, reasonable attorneys' fees, court
costs and costs of appeal) suffered or incurred by Seller or
Affiliates of Seller for injury to persons or property caused by
Purchaser's investigations, tests, studies and inspections of the
Property. Purchaser shall undertake its obligation to defend set
forth in the preceding sentence using attorneys selected by
Purchaser and reasonably acceptable to Seller.
7.2 Except for the express representations and warranties
of Seller set forth herein, Purchaser acknowledges and agrees
that it will be purchasing the Property and the Personal Property
based solely upon its inspections and investigations of the
Property and the Personal Property, and that Purchaser will be
purchasing the Property and the Personal Property "AS IS" and
"WITH ALL FAULTS", based upon the condition of the Property and
the Personal Property as of the date of this Agreement, and that
except as expressly set forth herein, Seller makes no warranty or
representation, express or implied, or arising by operation of
law, including, but not limited to, any warranty of condition,
habitability, merchantability or fitness for a particular
purpose, in respect of the Property. Without limiting the
foregoing, Purchaser acknowledges that, except as may otherwise
be specifically set forth elsewhere in this Agreement, neither
Seller nor its consultants, brokers or agents have made any
representations or warranties of any kind upon which Purchaser is
relying as to any matters concerning the Property or the Personal
Property, including, but not limited to: (i) the condition of the
Land or any improvements comprising the Property; (ii) the
existence or non-existence of any pollutant, toxic waste and/or
any hazardous materials or substances; (iii) economic projections
or market studies concerning the Property, or the income to be
derived from the Property; (iv) any development rights, taxes,
bonds, covenants, conditions and restrictions affecting the
Property; (v) the nature and extent of any right of way, lease,
lien, encumbrance, license, reservation or other title matter;
(vi) water or water rights, topography, geology, drainage, soil
or subsoil of the Property; (vii) the utilities serving the
Property; (viii) the suitability of the Property for any and all
activities and uses which Purchaser may elect to conduct thereon;
or (ix) the compliance of the Property with any zoning,
environmental, building or other laws, rules or regulations
affecting the Property. Seller makes no representation or
warranty that the Property complies with the Americans with
Disabilities Act or any fire code or building code. Purchaser
hereby releases Seller and the Affiliates of Seller from any and
all liability in connection with any claims which Purchaser may
have against Seller or the Affiliates of Seller, and Purchaser
hereby agrees not to assert any claims for contribution, cost
recovery or otherwise, against Seller or the Affiliates of
Seller, relating directly or indirectly to the existence of
asbestos or hazardous materials or substances on, or
environmental conditions of, the Property, whether known or
unknown. As used herein, the term "hazardous materials or
substances" means (i) hazardous wastes, hazardous substances,
hazardous constituents, toxic substances or related materials,
whether solids, liquids or gases, including but not limited to
substances defined as "hazardous wastes," "hazardous substances,"
"toxic substances," "pollutants, "contaminants," "radioactive
materials," or other similar designations in, or otherwise
subject to regulation under, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. 9601 et seq.; the Toxic Substance Control Act, 15 U.S.C.
2601 et seq.; the Hazardous Materials Transportation Act, 49
U.S.C. 1802; the Resource Conservation and Recovery Act, 42
U.S.C. 9601. et seq.; the Clean Water Act, 33 U.S.C. 1251;
the Safe Drinking Water Act, 42 U.S.C. 30Of et seq; the Clean
Air Act, 42 U.S.C. 7401 et seq.; and in any permits, licenses,
approvals, plans, rules, regulations or ordinances adopted, or
other criteria and guidelines promulgated pursuant to the
preceding laws or other similar federal, state or local laws,
regulations, rules or ordinance now or hereafter in effect
relating to environmental matters (collectively, "Environmental
Laws"); and (ii) any other substances, constituents or wastes
subject to any applicable federal, state or local law, regulation
or ordinance, including any Environmental Law, now or hereafter
in effect, including but not limited to (A) petroleum, (B)
refined petroleum products, (C) waste oil, (D) waste aviation or
motor vehicle fuel and (E) asbestos. Purchaser acknowledges that
having been given the opportunity to inspect the Property,
Purchaser is relying solely on its own investigation of the
Property and not on any information provided or to be provided by
Seller. Purchaser further acknowledges that the information
provided and to be provided with respect to the Property was
obtained from a variety of sources, and that Seller (x) has not
made any independent investigation or verification of such
information and (y) makes no representations as to the accuracy
or completeness of such information, except as provided herein.
Purchaser's Initials Seller's Initials
7.3 Seller has provided to Purchaser certain unaudited
historical financial information regarding the Property relating
to certain periods of time in which Seller owned the Property.
With the exception of any express representation of Seller set
forth herein, Seller and Purchaser hereby acknowledge that such
information has been provided to Purchaser at Purchaser's request
solely as illustrative material. Except for the express
representations and warranties of Seller set forth herein, Seller
makes no representation or warranty that such material is
complete or accurate or that Purchaser will achieve similar
financial or other results with respect to the operations of the
Property, it being acknowledged by Purchaser that Seller's
operation of the Property and allocations of revenues or expenses
may be vastly different than Purchaser may be able to attain.
Purchaser acknowledges that it is a sophisticated and experienced
purchaser of real estate and further that Purchaser has relied
upon its own investigation and inquiry with respect to the
operation of the Property. With the exception of any liability
under any express representation of Seller set forth herein,
Purchaser releases Seller and the Affiliates of Seller from any
liability with respect to such historical information.
Purchaser's Initials Seller's Initials
7.4 Seller has provided to Purchaser a Phase I/Limited ACM
Report dated March 16, 1992 prepared by Law Engineering
("Existing Report"). Seller makes no representation or warranty
concerning the accuracy or completeness of the Existing Report.
With the exception of any liability under any express
representation of Seller set forth herein, Purchaser hereby
releases Seller and the Affiliates of Seller from any liability
whatsoever with respect to the Existing Report, including,
without limitation, the matters set forth in the Existing Report,
and the accuracy and/or completeness of the Existing Report.
Furthermore, Purchaser acknowledges that it will be purchasing
the Property with all faults disclosed in the Existing Report.
Purchaser's Initials Seller's Initials
7.5 Notwithstanding anything contained herein to the
contrary, the acknowledgements, agreements, waivers and releases
of Purchaser set forth in this Paragraph 7 shall survive Closing
and recording of the Deed and the termination of this Agreement
as applicable.
8. CLOSING. The closing of this transaction ("Closing") shall
be on January 7, 1997 ("Closing Date"), at the office of Seller's
attorneys, Hopkins & Sutter, Three First National Plaza, Suite
4300, Chicago, Illinois 60602, or at Seller's option, at the
office of the Title Insurer in Chicago, Illinois, at which time
Seller shall deliver possession of the Property to Purchaser.
This transaction shall be closed in accordance with the
provisions of the Escrow Agreement. All joint order Earnest
Money escrow costs (with the exception of investment fees which
shall be paid by Purchaser) and all deed and money escrow fees
(including, so-called "New York style" closing fees) shall be
shared equally between Seller and Purchaser.
9. CLOSING DOCUMENTS.
9.1 On the Closing Date, Seller and Purchaser shall execute
and deliver to one another a joint closing statement. In
addition, Purchaser shall deliver to Seller the balance of the
Purchase Price, an assumption of the documents set forth in
Paragraph 9.2.3 and 9.2.4, counterparts of any transfer tax
declarations and such other documents as may be reasonably
required by the Title Insurer and not inconsistent with the terms
of this Agreement in order to consummate the transaction as set
forth in this Agreement.
9.2 On the Closing Date, Seller shall deliver to Purchaser
the following:
9.2.1 the Deed, subject to Permitted Exceptions and
those Unpermitted Exceptions waived by Purchaser in writing
or not objected to by Purchaser in accordance with Paragraph
5.1 hereof;
9.2.2 a special warranty bill of sale conveying the
Personal Property (in the form of Exhibit H attached
hereto);
9.2.3 assignment and assumption of intangible property
(in the form attached hereto as Exhibit I);
9.2.4 an assignment and assumption of Leases and
security deposits (in the form attached hereto as Exhibit
J);
9.2.5 non-foreign affidavit (in the form of Exhibit K
attached hereto);
9.2.6 originals, and/or certified copies of, the Leases
in Seller's possession (which shall be transferred directly
from the existing property manager to Purchaser as may be
directed by Purchaser at Closing);
9.2.7 all documents and instruments reasonably required
by the Title Insurer to issue the Title Policy;
9.2.8 possession of the Property to Purchaser, subject
to the Leases and the Permitted Exceptions;
9.2.9 evidence of the termination of the management
agreement, along with a lien waiver executed by the property
manager, if applicable;
9.2.10 notice to the tenants of the Property of the
transfer of title and assumption by Purchaser of the
landlord's obligation under the Leases and the obligation to
refund the refundable security deposits (in the form of
Exhibit L);
9.2.11 an updated rent roll certified by Seller to be
true and correct, subject to the provisions of Paragraph
17.1 and Paragraph 19 hereof;
9.2.12 a Broker's Lien Waiver signed by Insignia
Mortgage & Investment Company ("Insignia"), if required by
the Title Insurer;
9.2.13 an Owner's Title Affidavit or ALTA extended
coverage statement in form reasonably acceptable to Seller
and Title Insurer;
9.2.14 such formative and authorization documents of
Seller as may be reasonably required by Title Insurer; and
9.2.15 copies of all books and records as may be
necessary to calculate tenant escalations and
reconciliations (which shall be transferred directly from
the existing property manager to Purchaser as may be
directed by Purchaser at Closing).
10. ESTOPPEL CERTIFICATES. Seller agrees to use reasonable
efforts to obtain tenant estoppel certificates in the form of
Exhibit M for tenants listed on the rent roll attached hereto as
Exhibit C ("Tenant Certificates"). Purchaser's obligation to
close the transaction contemplated herein is contingent upon the
delivery to Purchaser without any Qualification (hereafter
defined) of a Tenant Certificate from all tenants occupying the
Property. As used herein, "Qualification" means any material
information which adversely affects the use or value of the
Property or the obligations of the tenant or the rights of the
landlord under any lease, to the extent such information is not
disclosed on the Rent Roll attached hereto as Exhibit C or in the
copies of the Leases delivered to Purchaser. Notwithstanding the
foregoing, a tenant's deletion or modification of the provisions
in the Tenant Certificate following the language "from and after
the date Parkway acquires title to the Property" shall not be
deemed a Qualification. Seller shall request the property
manager to execute the certificate attached hereto as Exhibit O
("Manager's Certificate"). Purchaser acknowledges and agrees
that the delivery of the Manager's Certificate is not a condition
precedent to Purchaser's obligation to close the transaction
contemplated hereby.
11. SERVICE CONTRACTS. Purchaser and Seller shall cooperate in
good faith to obtain the consent of each contractor under a
Service Contract to (i) terminate its existing Service Contract
with Seller as of the Closing Date, and (ii) enter into a new
contract with Purchaser on the same terms and conditions from and
after the Closing Date. In the event any contractor refuses to
terminate a Service Contract as of the Closing Date, Seller shall
provide notice of termination to such contractor and Purchaser
and Seller shall prorate the payments due under such Service
Contract (each, an "Assumed Contract") as of the Closing Date,
with the Purchaser being responsible for its pro rata share of
any payments attributable to the period after the Closing Date
and prior to the termination date of such Assumed Contract. On
the Closing Date, Seller shall assign the Assumed Contracts to
Purchaser, and Purchaser shall assume in writing responsibility
of the obligations arising from and after the Closing Date under
the Assumed Contracts. Seller shall use reasonable efforts to
obtain any required consent with respect to the assignment of the
Assumed Contracts; provided, however, that Seller's inability to
obtain such approval shall not be a default hereunder or a
condition precedent to Purchaser's obligations to close
hereunder. Purchaser shall not be required to assume any Service
Contract for which Seller is unable to obtain the required
consent. Except to the extent that Purchaser is required
hereunder to specifically assume obligations of Seller, including
obligations under Assumed Contracts or Leases, or to the extent
Purchaser receives a credit pursuant to Closing prorations
provided for herein, or to the extent of any non-delinquent
obligations and liabilities accruing under any Permitted
Exceptions, Purchaser shall not be deemed to have assumed any
other liabilities or obligations of Seller, and contractual and
tort liabilities accruing prior to the Closing Date, or relating
to events that occurred prior to the Closing Date, shall remain
the responsibility of Seller.
12. LEASING OF PROPERTY. Seller and Seller's agents and
representatives, in consultation with Purchaser, shall continue
to advance in good faith all leasing activity for the Property,
including new leases, renewals, extensions, expansions or other
modifications in accordance with Seller's prior course of dealing
prior to the execution of this Agreement and in accordance with
prevailing market standards in the Memphis, Tennessee area.
Seller shall not enter into any lease for any portion of the
Property or any modification, extension or amendment to any Lease
without first obtaining the prior consent of Purchaser. If
Purchaser has not responded within five (5) business days of
receipt of a request by Seller, Purchaser's consent shall be
deemed given. If Purchaser closes the transaction contemplated
by this Agreement, Purchaser shall be responsible to pay for all
leasing commission, tenant improvement costs or other costs and
expenses (including reasonable attorneys' fees) incurred by
Seller with respect to any such lease approved by Purchaser.
Seller agrees to pay any outstanding brokerage commissions now or
hereafter due or payable with respect to the existing term of any
Lease with the exception of the commission due under the
October 25, 1996 amendment to the PSI Process Systems lease,
which shall be paid by Purchaser (or, if paid by Seller prior to
Closing, shall be credited to Seller at Closing). Seller does
not represent or warrant that any particular Lease will be in
effect at Closing or that the tenant will have performed the
tenant's obligations thereunder. Other than as expressly
provided herein, Purchaser and Seller acknowledge and agree that
Purchaser is not assuming any obligations of Seller under any
brokerage agreements.
13. DEFAULT BY PURCHASER. ALL EARNEST MONEY DEPOSITED INTO THE
ESCROW IS TO SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS
OBLIGATIONS AND UNDERTAKINGS UNDER THIS AGREEMENT. IN THE EVENT
OF A DEFAULT OF THE PURCHASER UNDER THE PROVISIONS OF THIS
AGREEMENT, SELLER SHALL RETAIN ALL OF THE EARNEST MONEY AND THE
INTEREST THEREON AS SELLER'S SOLE RIGHT WITH RESPECT TO DAMAGES
OR ANY OTHER REMEDY, EXCEPT FOR THOSE COVENANTS AND OBLIGATIONS
OF PURCHASER WHICH EXPRESSLY SURVIVE TERMINATION OF THIS
AGREEMENT. THE PARTIES HAVE AGREED THAT SELLER'S ACTUAL DAMAGES,
IN THE EVENT OF A DEFAULT BY PURCHASER, WOULD BE EXTREMELY
DIFFICULT OR IMPRACTICAL TO DETERMINE. THEREFORE, BY PLACING
THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT THE EARNEST
MONEY HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES'
REASONABLE ESTIMATE OF SELLER'S DAMAGES.
Purchaser's Initials Seller's Initials
14. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF
SELLER'S DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE THE RETURN OF
ALL EARNEST MONEY TOGETHER WITH ANY INTEREST ACCRUED THEREON,
EXCEPT THAT PURCHASER SHALL ALSO HAVE THE RIGHT TO REIMBURSEMENT
FROM SELLER FOR ITS ACTUAL, DOCUMENTED THIRD PARTY EXPENSES (NOT
TO EXCEED $25,000 IN ANY EVENT) INCURRED IN THE NEGOTIATION OF
THIS AGREEMENT AND THE PERFORMANCE OF ITS DUE DILIGENCE
HEREUNDER. UPON THE RETURN OF THE EARNEST MONEY AND THE
REIMBURSEMENT BY SELLER FOR OUT OF POCKET COSTS AS PROVIDED
ABOVE, THIS AGREEMENT SHALL TERMINATE WITHOUT FURTHER ACTION OF
THE PARTIES AND THE PARTIES SHALL HAVE NO FURTHER LIABILITY TO
EACH OTHER AT LAW OR IN EQUITY, EXCEPT FOR THOSE COVENANTS AND
OBLIGATIONS WHICH EXPRESSLY SURVIVE TERMINATION OF THIS
AGREEMENT. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE
CONTRARY, IF SELLER'S DEFAULT RESULTS FROM (i) ITS (AND NOT AN
UNRELATED THIRD PARTY'S) AFFIRMATIVE ACTION TO PREVENT THE SALE;
(ii) ITS FAILURE TO EXPEND UP TO $25,000 IF (a) SELLER IS ABLE TO
BOND OVER, CURE OR REMOVE A MINOR UNPERMITTED EXCEPTION FOR A
COST NOT TO EXCEED $25,000 OR (b) THE TITLE INSURER IS WILLING TO
INSURE OVER A MINOR UNPERMITTED EXCEPTION FOR A COST NOT TO
EXCEED $25,000 IN ACCORDANCE WITH THE TERMS HEREOF OR (iii) ITS
REFUSAL TO DELIVER THE DEED, THEN PURCHASER WILL BE ENTITLED TO
SUE FOR SPECIFIC PERFORMANCE. UNDER THE CONDITIONS SET FORTH
ABOVE, SELLER SPECIFICALLY AGREES THAT THE REMEDY OF SPECIFIC
PERFORMANCE IS APPROPRIATE FOR PURCHASER AND SELLER WAIVES AND
AGREES NOT TO ASSERT ANY CLAIM OR DEFENSE THAT SPECIFIC
PERFORMANCE IS NOT AN APPROPRIATE REMEDY FOR PURCHASER. IN NO
EVENT SHALL (i) SELLER BE LIABLE FOR ANY ACTUAL, PUNITIVE,
SPECULATIVE OR CONSEQUENTIAL DAMAGES RESULTING FROM ANY DEFAULT
BY SELLER, OR (ii) SELLER'S LIABILITY UNDER ANY REPRESENTATION,
WARRANTY, COVENANT, AGREEMENT, PRORATION, REPRORATION OBLIGATION
OR INDEMNITY MADE HEREUNDER OR UNDER ANY CLOSING DOCUMENTS EXCEED
$250,000 IN THE AGGREGATE ("SELLER'S MAXIMUM LIABILITY");
PROVIDED, HOWEVER, THAT THE LIMITATIONS ON LIABILITY PROVIDED
HEREIN SHALL NOT APPLY TO ANY DAMAGES INCURRED BY PURCHASER AS
THE RESULT OF THE ACTUAL FRAUDULENT CONDUCT OF SELLER.
Purchaser's Initial Seller's Initials
15. PRORATIONS.
15.1 Except as otherwise provided herein and to the extent
the costs of such items are not prorated at Closing as provided
herein, any and all expenses and payables relating to the
operation, management or ownership of the Property arising or
accruing prior to the Closing Date are the responsibility of
Seller and will be paid promptly upon receipt of billing
therefor. Water and other utility charges; fuels; prepaid
operating expenses; real and personal property taxes prorated on
a "net" basis (i.e. adjusted for all tenants' liabilities, if
any, for such items); operating expenses paid by Seller which are
reimbursable by the tenants for the period prior to the Closing
Date (which amount shall be reduced by any amount previously paid
by the tenants); unpaid operating expenses for the period prior
to the Closing Date prorated on a "net" basis, as set forth
above; and all other items of expense and income shall be
adjusted ratably as of 12:01 a.m. on the Closing Date ("Proration
Date"). All utility deposits, if any, shall be withdrawn by and
refunded to Seller and Purchaser shall make its own replacement
deposits for utilities as may be required by the respective
utilities involved. Prior to Closing, Purchaser and Seller shall
notify all utilities providing service to the Property of the
prospective change in ownership and that all bills for the period
from and after the Proration Date shall be paid by Purchaser,
with no interruption in service and that all bills for the period
prior to the Proration Date (which shall be based on final meter
readings as of the Proration Date, if available), shall be paid
by Seller. Assessments, excluding regular ad valorem real estate
taxes, payable in installments which are due prior to the Closing
Date shall be paid by Seller. Assessments, excluding regular ad
valorem real estate taxes, payable in installments which are due
subsequent to the Closing Date shall be paid by Purchaser. If
the amount of any of the items to be prorated is not then
ascertainable, the adjustments thereof shall be on the basis of
the most recent ascertainable data. If any ongoing real estate
tax contest has not been finalized as of the Closing Date,
Purchaser and Seller agree that the tax bill existing prior to
the contest, shall be the most recent data for the tax year being
contested and (i) Purchaser agrees to re-prorate such amount as
it relates to the real estate tax proration for the current tax
year to the extent such tax contest is successful. All other
prorations will be final except as to delinquent rent referred to
in Paragraph 15.2 below and as provided in Paragraph 15.3.
15.2 All rents under the Leases for the month in which the
Closing occurs which are actually received by Seller shall be
prorated as of the Proration Date. All advance payments of
rents, other than for the month in which Closing occurs, and all
security deposits, shall be paid by Seller to Purchaser at
Closing. There shall be no credit to Seller for rents which are
delinquent as of the Closing Date. Delinquent rents shall remain
the property of Seller (subject to Purchaser's right to a pro
rata share of any delinquent rents for the month during which
Closing occurs. All rent received by Purchaser after the Closing
Date shall be applied first to current rents then due and
payable, and then to delinquent rents, in the inverse order of
maturity. All basic rent paid following the Closing Date by any
tenant of the Property who is indebted under a Lease for basic
rent for any period prior to the Proration Date in an amount
greater than the amount of all current basic rent owed by said
tenant to Purchaser shall be deemed a "Post-Closing Receipt"
until such time as all such indebtedness is paid in full. Within
ten (10) days following each receipt by Purchaser of a Post-
Closing Receipt, Purchaser shall pay such Post-Closing Receipt to
Seller. Purchaser shall use its reasonable, good faith efforts
(not to include any eviction action or other litigation to
collect such delinquency), at no additional cost or expense to
Purchaser, to collect all amounts which, upon collection, would
constitute Post-Closing Receipts hereunder. Seller shall retain
the right to pursue all remedies (excluding eviction of tenants)
against tenants from whom Purchaser is unable to collect such
delinquent rents and additional rents despite diligent efforts.
This Paragraph 15.2 of this Agreement shall survive the Closing
and the delivery and recording of the Deed.
15.3 All refunds, if any, for time periods prior to the
Proration Date in connection with any ongoing real estate tax
protests for the Property initiated by Seller prior to the
Closing shall remain the property of Seller and are not being
assigned by Seller to Purchaser pursuant to this Agreement. In
the event any such refunds are paid to Purchaser, Purchaser
agrees to promptly remit all such sums to Seller. Purchaser
agrees, at no cost or expense to Purchaser, to execute any
documents reasonably requested by Seller in connection with such
tax protests, but Purchaser shall be held harmless and
indemnified from any liability thereunder.
15.4 In addition to the foregoing proration and credits,
Seller shall provide Purchaser at Closing with a credit in the
amount of the unpaid tenant improvement allowance which Purchaser
is assuming under the Lease with Federal Express. As of the date
hereof, the unpaid allowance is $115,121.
16. BROKER. The parties hereto represent and warrant that no
broker commission or finder fee is due and payable in connection
with this transaction, by reason of their respective actions,
other than to Insignia (to be paid by Seller). Seller's
commission to Insignia shall only be payable out of the proceeds
of the sale of the Property in the event the transaction set
forth herein closes. Purchaser and Seller shall indemnify,
defend and hold the other party hereto harmless from any claim
whatsoever (including without limitation, reasonable attorneys'
fees, court costs and costs of appeal) from anyone claiming by or
through the indemnifying party any fee, commission or
compensation on account of this Agreement, its negotiation or the
sale hereby contemplated other than to Insignia. Seller shall
indemnify, defend and hold Purchaser harmless from any claim
(including, without limitation, reasonable attorneys' fees, court
costs and costs of appeal) for any claim by Insignia for any fee,
commission or compensation on account of this Agreement, its
negotiation or the sale hereby contemplated. Purchaser shall
indemnify, defend and hold Seller harmless from any claim
(including, without limitation reasonable attorneys' fees, court
costs and costs of appeal) from any claim by the Weston Companies
for any fee, commission or compensation on account of this
Agreement, its negotiation, or the sale hereby contemplated.
Notwithstanding the foregoing indemnity, Purchaser has informed
Seller that Purchaser does not have any agreement with the Weston
Companies and the foregoing indemnity shall not imply that any
such contract exists. The indemnifying party shall undertake its
obligations set forth in this Paragraph 16 using attorneys
selected by the indemnifying party and reasonably acceptable to
the indemnified party. The provisions of this Paragraph 16 will
survive the Closing and delivery of the Deed.
17. REPRESENTATIONS, WARRANTIES AND COVENANTS.
17.1 Any reference herein to Seller's knowledge or notice of
any matter or thing shall only mean such knowledge or notice that
has actually been received by James Mendelson or Alan Muench
("Seller's Representatives"), and any representation or warranty
of the Seller is based upon those matters of which the Seller's
Representatives has actual knowledge. Any knowledge or notice
given, had or received by any of Seller's agents, servants or
employees shall not be imputed to Seller or Seller's
Representatives.
17.2 Subject to the limitations set forth in Paragraph 17.1,
Seller hereby makes the following representations and warranties,
which representations and warranties are made to Seller's
knowledge and which shall survive Closing for a period of 180
days: (i) except as listed on Exhibit P, there is no pending or
to Seller's knowledge, threatened litigation, claim, cause of
action or administrative proceeding concerning the Property; (ii)
Seller is an Illinois corporation, duly formed, organized and in
good standing under the laws of the state of Illinois, and has
the power to execute this Agreement and consummate the
transactions contemplated herein; (iii) the Rent Roll attached
hereto as Exhibit C and updated as of the Closing Date is
accurate in all material respects as of the date set forth
therein; (iv) except as disclosed by the Title Commitment, the
Seller has not given or suffered any assignment, pledge or
encumbrance with respect to any of the Property, the Leases or
its interests thereunder; (v) the list of Service Contracts
attached hereto as Exhibit D and updated as of the Closing Date
is accurate as of the date hereof; (vi) except as listed on
Exhibit P, Seller has received no written notice or claim from
any governmental authority having jurisdiction over the Property
relating to an uncured breach or violation of any Environmental
Laws or any other laws in connection with the Property including,
without limitation, the Americans With Disabilities Act; (vii)
Seller has received no notice of any uncured landlord default
from any tenant in connection with any Lease or Service Contract;
(viii) to Seller's knowledge, the unaudited operating statements
delivered by Seller to Purchaser are the same statements Seller
uses to present to investors the results of operations for the
periods indicated and to file tax returns; (ix) to Seller's
knowledge: (a) no governmental, public or private authority has
threatened any condemnation, eminent domain or similar
proceeding; and (b) no fact or condition exists which will result
in the termination of the Property's current access to and from
existing streets and utilities; (x) to Seller's knowledge, no
tenant has any counterclaim, defense or offset to any action for
collection of rents or other amounts accruing after the Closing
Date under any Lease except as set forth in the Leases; (xi) with
the exception of the commission described in Paragraph 12 hereof
with respect to the October 25, 1996 amendment to the PSI Lease,
Seller has paid in full all leasing or similar commissions or
payment obligations, if any, relating to any existing Lease
except for any commissions due to renewals, extensions,
expansions or other elections of any tenant which occur after the
date hereof; and (xii) attached hereto as Exhibit Q is a schedule
listing all leasing commission and brokerage agreements entered
into by Seller (copies of which have been delivered to
Purchaser).
17.3 Purchaser hereby represents and warrants to Seller that
Purchaser is a Maryland corporation, duly formed, organized and
in good standing under the laws of the State of Maryland, and has
the full right, power and authority to execute this Agreement and
consummate the transactions contemplated herein.
17.4 Seller covenants (i) to operate, maintain and manage
the Property in the same manner that it has managed, maintained
and operated the Property during the period of Seller's
ownership, subject to reasonable wear and tear and casualty;
(ii) during normal business hours prior to the Closing Date, to
provide Purchaser and its agents and representatives reasonable
access to the Property and the books and records directly
relating to the ownership, management, maintenance and operation
of the Property that are in the possession of Seller, or any of
Seller's agents or representatives; (iii) to promptly file or
submit and diligently prosecute any and all applications or
notices with federal, state and/or local authorities and all
other requests with any private persons or entities for consents,
approvals, authorizations and permissions which are reasonably
considered necessary or appropriate by Seller or Purchaser for
the consummation of the transaction contemplated by this
Agreement or to prevent the termination of any lease, contract or
permit, or as may be necessary to otherwise operate the Property
in the normal course of business prior to the Closing Date;
(iv) to cause to be paid when due all taxes, license fees, trade
accounts and costs and expenses of operation and maintenance of
the Property incurred through the Closing Date, except amounts
subject to proration under Paragraph 15; (v) to assist and
cooperate, at no material cost, obligation or potential liability
to Seller, with any environmental evaluation, study or audit of
the Property or the Personal Property prepared by, for or at the
request of Purchaser; (vi) prior to the Closing Date to notify
Purchaser of any written notice received by Seller of any
material adverse event affecting the Property including, without
limitation, any notice from any insurance company regarding the
cancellation of any insurance policy for the Property or material
increase in any premiums relating thereto; (v) to provide
Purchaser, in addition to any inspection or audit rights
contained elsewhere in this Agreement, the right to conduct a
full audit of the books and records of Seller, at Seller's
principal place of business upon five (5) day's prior written
notice, to the extent such books and records relate to the
operations and financial results of the Property, at Purchaser's
sole cost and expense, in such form and at such time (but in any
event within 270 days after Closing), as is reasonably necessary
for Purchaser to comply with applicable securities laws
requirements, including, without limitation, Regulation
210.3-14 promulgated under the Securities Exchange Act of 1934,
as amended and (vi) to reserve from any distribution of net
proceeds of sale to its shareholders an amount equal to Seller's
Maximum Liability until the expiration of the 180 day period
contained herein for the survival of Seller's representations and
warranties.
17.5 The representations, warranties and covenants of Seller
set forth herein and in any Closing Document shall survive
Closing for a period of 180 days after the Closing Date
("Survival Period"). All rights of Purchaser hereunder with
respect to any such surviving representation, warranty or
covenant shall be deemed waived if Purchaser does not, (i) by
notice to Seller, advise Seller of any alleged breach of
representation, warranty or covenant prior to the expiration of
the Survival Period; and (ii) commence any cause of action based
on such alleged breach within 210 days after the Closing Date.
Notwithstanding anything herein to the contrary, Seller's
liability under any representation, warranty or covenant made
hereunder or in any Closing Document shall in no event exceed
Seller's Maximum Liability.
17.6 Except to the extent expressly provided for herein,
Seller shall remain responsible for all tort liabilities, if any,
relating to events that occur prior to the Closing Date.
18. CONDITIONS TO PURCHASER'S OBLIGATIONS. The obligations of
Purchaser to consummate the transactions contemplated by this
Agreement are subject to the satisfaction of each of the
following conditions as of the Closing Date, except to the extent
any such condition is waived in whole or in part by Purchaser in
writing at or prior to Closing:
18.1 The representations and warranties of Seller contained
in this Agreement shall have been true in all material respects
on the date of this Agreement and at Closing, and Seller shall
have performed all material obligations and complied with all
material covenants required by this Agreement.
18.2 The Title Insurer shall be prepared to deliver to
Purchaser on the Closing Date the Title Policy in the form
required by this Agreement.
18.3 On the Closing Date, there shall be no third party
injunction, writ, preliminary restraining order or any order of
any nature issued against Seller by a court of competent
jurisdiction and directing that the transactions contemplated
herein not be consummated as herein provided, but any such order
issued against Purchaser which is unrelated to Seller shall not
be a condition precedent to Purchaser's obligations to close.
18.4 At the Closing Date, Seller shall own the Property free
and clear of all liens, encumbrances, claims, and rights of
others, except for Permitted Exceptions and Unpermitted
Exceptions waived by Purchaser, and will convey the same to
Purchaser.
18.5 Purchaser has received the Tenant Certificates required
pursuant to Paragraph 10 hereof.
18.6 At the Closing Date, the Leases with PSI Process
Systems, Federal Express, Instituform Technologies, Inc., Paine
Webber Incorporated and JH Networking Agency shall not have been
terminated.
19. LIMITATION OF LIABILITY. None of Seller's directors,
shareholders, officers, agents, or employees, or the successors
or assigns or such shareholders, directors, officers, agents or
employees shall have any personal liability of any kind or nature
for or by reason of any matter or thing whatsoever under, in
connection with, arising out of or in any way related to this
Agreement and the transactions contemplated herein, and Purchaser
hereby waives for itself and anyone who may claim by, through or
under Purchaser any and all rights to sue or recover on account
of any such alleged personal liability.
20. NOTICES. Any notice or demand which either party hereto is
required or may desire to give or deliver to or make upon the
other party shall be in writing and may be personally delivered
or given or made by overnight courier such as Federal Express, by
facsimile transmission or made by United States registered or
certified mail addressed as follows:
TO SELLER: c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attention: Ilona Adams
with copies to: The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attention: James Mendelson
(847) 267-1600
(847) 317-4462 (FAX)
TO PURCHASER: Parkway Properties, Inc.
300 One Jackson Place
188 East Capitol Street
Jackson, Mississippi 39201
Attention: David R. Fowler
subject to the right of either party to designate a different
address for itself by notice similarly given. Any notice or
demand so given shall be deemed to be delivered or made on the
next business day if sent by overnight courier, or the same day
as given if sent via facsimile transmission and received by 5:00
p.m. Chicago time, or on the fourth (4th) business day after the
same is deposited in the United States Mail as registered or
certified mail, addressed as above provided, with postage thereon
fully prepaid. Any such notice, demand or document not given,
delivered or made by registered or certified mail or by overnight
courier or by facsimile transmission as aforesaid shall be deemed
to be given, delivered or made upon receipt of the same by the
party to whom the same is to be given, delivered or made. Copies
of all notices shall be served upon the Escrow Agent. All time
periods for responses by either party set forth in this Agreement
shall commence upon the receipt of notice as set forth
hereinabove.
21. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will
execute two (2) copies of this Agreement and three (3) copies of
the Escrow Agreement and forward them to Seller for execution.
Seller will forward one (1) copy of the executed Agreement to
Purchaser and will forward to the escrow agent three (3) copies
of the Escrow Agreement signed by the parties with a direction to
execute two (2) copies of the Escrow Agreement and deliver a
fully executed copy to each of the Purchaser and the Seller.
22. MISCELLANEOUS
(a) Time is of the essence of each provision of this
Agreement.
(b) This Agreement and all provisions hereof shall
extend to and be obligatory upon and inure to the benefit of
the respective heirs, legatees, legal representatives,
successors and assigns of the parties hereto.
(c) The section and paragraph headings of this
Agreement are for convenience only and in no way define,
limit or enlarge the scope or meaning of the language
hereof. The terms "hereby," "herein," "hereof," "hereto,"
"hereunder" and any similar terms used in this Agreement
refer to this Agreement. The term "including" shall not be
construed in a limiting nature, but shall be construed to
mean "including, without limitation." Words importing
persons shall include firms, associations, partnerships,
trusts, corporations and other legal entities, including
public bodies, as well as natural persons. Words importing
the singular shall include the plural and vice versa. Words
of the masculine gender shall be deemed to include
correlative words of the feminine and neuter genders.
(d) This Agreement contains the entire agreement
between the parties relating to the transactions
contemplated hereby, and all prior or contemporaneous
agreements, understandings, representations and statements,
oral or written, are merged herein. No representations,
warranties, undertakings or promises (whether oral or
written, express or implied), can be made or have been made
by Seller or its agents, representatives or brokers to
Purchaser or any other person unless expressly stated
herein. No modification or amendment of this Agreement or
any waiver of any provision hereof shall be effective unless
the same is in writing signed by the party against whom
enforcement of such modification, amendment or waiver is
sought.
(e) This Agreement shall be governed by and construed
in accordance with the laws of the State of Tennessee. If
any of the provisions of this Agreement or the application
thereof to any persons or circumstances shall, to any
extent, be deemed invalid or unenforceable, the remainder of
this Agreement and the application of such provisions to
persons or circumstances other than those as to whom or
which it is held invalid or unenforceable shall not be
affected thereby, and every provision of this Agreement
shall be valid and enforceable to the fullest extent
permitted by law.
(f) This Agreement and any document or instrument
executed pursuant hereto may be executed in any number of
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
(g) The submission by Seller of this Agreement to
Purchaser for examination does not constitute an offer by
Seller to sell, or a reservation of or option to purchase
the Property. This Agreement shall not become a contract
until executed and delivered by Purchaser and Seller in the
manner set forth herein.
(h) Purchaser shall not record this Agreement or any
memorandum hereof, and any such recording shall be a default
hereunder.
(i) Prior to Closing, Purchaser and Seller shall
jointly prepare and issue all releases of information
relating to the sale of the Property, and any inquiries
regarding the transaction contemplated hereby shall be
responded to only after consultation with the other party
hereto.
(j) If either party institutes a legal action against
the other relating to this Agreement or any default
hereunder, the unsuccessful party to such action will
reimburse the successful party for the reasonable expenses
of prosecuting or defending such action, including without
limitation, attorneys fees and disbursements and court
costs.
(k) This Agreement shall not be construed more
strictly against one party than against the other merely by
virtue of the fact that the Agreement may have been prepared
primarily by counsel for one of the parties, it being
recognized that both Purchaser and Seller have contributed
substantially and materially to the preparation of this
Agreement.
(l) The Purchaser shall not have the right to assign
its interest in this Agreement without the prior written
consent of the Seller. Any assignment or transfer of, or
attempt to assign or transfer, Purchaser's interest in this
Agreement shall be an act of default hereunder by Purchaser
and subject to the provisions of Paragraph 13 hereof.
Notwithstanding the foregoing, Purchaser may assign its
interest in this Agreement without the consent of Seller to
any entity affiliated with or controlled by Purchaser
("Assignee"), provided that Purchaser remains liable for and
the Assignee assumes the obligations of Purchaser hereunder.
If the Assignee petitions or applies for relief under any
bankruptcy laws or is adjudicated as a bankrupt or
insolvent, or if Assignee files any petition, application
for relief or answer-seeking or acquiescing in any
reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief for itself under
any present or future federal, state or other statute, law,
code or regulation relating to bankruptcy, insolvency, or
other relief for debtors (collectively, a "Bankruptcy
Filing") on or before the Closing Date, said Bankruptcy
Filing shall be a default under this Agreement and Purchaser
shall indemnify Seller for all costs, attorney's fees and
expenses of Seller resulting from Seller's efforts to obtain
the Earnest Money as liquidated damage and to clear title to
the Property with respect to any encumbrance resulting from
the Bankruptcy Filing.
(m) Notwithstanding anything contained herein to the
contrary, Seller acknowledges and agrees that no limited
partner of Purchaser, nor any trustee, director, holder of
any beneficial interests, shareholder, officer or employee
of Purchaser or any affiliate of Purchaser shall have any
personal liability, directly or indirectly, under this
Agreement, or under any certificate, representation,
warranty or other instrument delivered in connection
herewith, and Seller shall have recourse hereunder only
against Purchaser's assets. Each document to be executed by
Purchaser at Closing shall contain a similar exculpation.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first set forth above.
PURCHASER:
PARKWAY PROPERTIES, INC.
By:
Name:
Its:
SELLER:
TENNESSEE FORUM, INC.
By:
Name:
Its:
Insignia Mortgage & Investment Company ("Broker") executes this
Agreement in its capacity as a real estate broker and
acknowledges that the fee or commission ("Fee") due to it as a
result of the transaction described in this Agreement is the
amount as set forth in the listing agreement between Broker and
Seller. Broker also acknowledges that payment of the aforesaid
Fee is conditioned upon the Closing and the receipt of the
Purchase Price by the Seller. Broker agrees to deliver a receipt
to the Seller at the Closing for the Fee and a release stating
that no other fees or commissions are due to Broker from Seller
or Purchaser.
INSIGNIA MORTGAGE & INVESTMENT
COMPANY
By:
LIST OF EXHIBITS
A. Legal Description
B. Personal Property
C. Leases/Rent Roll
D. Service and Maintenance Contracts
E. Escrow Agreement
F. Copy of Title Commitment
G. Limited Warranty Deed
H. Special Warranty Bill of Sale
I. Assignment and Assumption of Intangible Property
J. Assignment and Assumption of Leases and Security Deposits
K. FIRPTA
L. Tenant Notice Letter
M. Tenant Estoppel Certificate
N. Intentionally Deleted
O. Manager's Certificate
P. Disclosures
Q. Leasing Commission Agreements
PURCHASE AND SALE AGREEMENT
among
CHARLOTTE PARK LIMITED PARTNERSHIP,
CEP INVESTORS LIMITED PARTNERSHIP
and
PARKWAY CAROLINA, INC.
NOVEMBER 4, 1996
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement ("Agreement") is made and
entered into on or as of the Effective Date (as defined in
Section 11.18), by and among CHARLOTTE PARK LIMITED PARTNERSHIP,
a North Carolina limited partnership ("Charlotte Park"), CEP
INVESTORS LIMITED PARTNERSHIP, a North Carolina limited
partnership ("CEP") (Charlotte Park and CEP shall be sometimes
collectively referred to herein as "Seller") and PARKWAY
CAROLINA, INC., a North Carolina corporation ("Purchaser").
WHEREAS, CEP is the owner of three separate parcels of land
and a "private road" located at 4501 Charlotte Park Drive, 4651
Charlotte Park Drive and Lot 3 of Charlotte Park Executive Center
("Lot 3"), Mecklenburg County, North Carolina (collectively, the
"CEP Property"), and Charlotte Park is the owner of one parcel of
land located at 4601 Charlotte Park Drive, Mecklenburg County,
North Carolina described on Exhibit 1.2(a) attached hereto (the
"Charlotte Park Property"; the CEP Property and the Charlotte
Park Property may be collectively referred to as the "Land"); and
WHEREAS, there are certain real property improvements in, on
or under the Land consisting principally, but not exclusively, of
office buildings known as the "4501 Building," the "4601
Building," and the "4651 Building (collectively, the
"Improvements"); and
WHEREAS, Seller owns certain items of tangible and
intangible personal property listed on Exhibit 1.3 attached
hereto (collectively "Personal Property"); and
WHEREAS, Seller desires to sell, transfer, assign and convey
to Purchaser, and Purchaser desires to purchase and acquire from
Seller all of Seller's right, title and interest in and to the
Land and Improvements, including the Buildings, and the Personal
Property pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises, and the
mutual covenants, agreements, representations and warranties
contained in this Agreement, and intending to be legally
obligated, Purchaser and Seller agree as follows:
ARTICLE 1
PURCHASE AND SALE
1.1 Purchase and Sale. Subject to the provisions of, and
on the basis of the covenants, agreements, representations and
warranties contained in this Agreement, Seller agrees to sell,
transfer, assign and convey all of its right, title and interest
in and to the Real Property and the Personal Property
(collectively "Assets") to Purchaser, and Purchaser agrees to
purchase and acquire the Assets from Seller (this "Transaction").
1.2 Real Property Identified. As used herein, the Real
Property shall mean:
(a) Description of Land. The real estate described in
Exhibit 1.2(a) attached hereto.
(b) Description of Improvements. The Improvements,
including the 4501 Building, the 4601 Building, and the 4651
Building, all building materials, fixtures, heating,
ventilation and air conditioning systems, canopies,
sidewalks, walkways, planters and landscape materials, and
all other real property improvements owned by Seller and
located in, on or under the Land or related to, used or
available for use in the ownership, conduct, operation or
maintenance of the Real Property.
(c) Rights and Appurtenances. All and singular, the
rights and appurtenances pertaining to the Real Property,
including, but not limited to, any right, title and interest
of Seller in and to adjacent streets, roads, alleys,
easements and rights-of-way. Provided, however, the Real
Property specifically does not include any rights or
appurtenances relating to the adjacent property owned by
Seller or its affiliates. In the event any such rights and
appurtenances benefit both the Real Property and the
adjacent property, Seller shall convey such an interest
therein to the extent applicable to the Real Property to
Purchaser so that the Real Property will continue to have
the benefit of any such joint rights and benefits after
Closing.
1.3 Personal Property Identified.
(a) Description of Tangible Personal Property. The
tangible Personal Property consists of all material tangible
personal property located on or attached to the Real
Property and owned by Seller and used or available for use
by Seller in the ownership, operation and/or management of
the Real Property and in the repair, operation and
maintenance of the Assets, including, without limitation,
all of Seller's right, title and interest in all equipment,
tools, machinery, furniture, furnishings, office and other
supplies, inventories, spare parts and other tangible
personal property located on or attached to the Real
Property. The tangible Personal Property specifically
includes all tangible personal property located in any
management office at the real property owned or leased by
Seller. The tangible Personal Property is generally
described on Exhibit 1.3 attached hereto.
(b) Description of Intangible Personal Property. The
intangible Personal Property consists of all material
intangible personal property owned by Seller and used by
Seller in connection with the operation and/or management of
the Real Property and in the repair, operation and
maintenance of the Assets and includes, without limitation,
(i) all assignable guarantees and warranties (including
those pertaining to construction of the Improvements, if
any); (ii) all assignable licenses and other permits
relating to the Assets or the operation thereof; (iii) all
assignable contracts, agreements and contract rights; (iv)
rights, if any, to use the name Charlotte Park Executive
Center on a non-exclusive basis with Seller for itself and
its successors and assigns reserving the right to use the
name in connection with the use and development of Seller's
adjoining property; and (v) all leases, tenancies and rental
agreements or arrangements (collectively "Leases") with
tenants, and security, damage and other deposits and
payments which have been collected by Seller with respect to
the Leases and not retained by Seller in accordance with the
terms of the Leases (collectively "Deposits").
ARTICLE 2
PURCHASE PRICE
2.1 Escrow Deposit. Purchaser shall within two (2)
business days following the Effective Date deliver to First
American Title Insurance Company ("Title Company") the sum of ONE
HUNDRED AND FIFTY THOUSAND AND NO/100 DOLLARS ($150,000.00)
("Escrow Deposit") in lawful funds of the United States of
America. If Purchaser elects in writing not to proceed with this
transaction prior to the conclusion of the Inspection Period or
elects to terminate this Agreement pursuant to the express
provisions hereof, then Title Company shall refund to Purchaser
the Escrow Deposit and all interest accrued thereon. If
Purchaser shall fail to terminate this transaction at the
conclusion of the Inspection Period, the Escrow Deposit and all
interest thereon, shall become non-refundable to Purchaser
(except as otherwise provided herein) but shall be credited
toward the Purchase Price upon Closing. Title Company is hereby
instructed to invest the Escrow Deposit in an FDIC insured high
yield interest bearing account in the name of Purchaser.
Purchaser's taxpayer identification number is 62-1655337.
Purchaser and Seller hereby acknowledge and agree that all
accrued interest on the deposit shall be credited to Purchaser,
provided, however, in the event that this transaction does not
close due to an event of default by Purchaser and through no
event of default of Seller unless Seller's performance is excused
due to a prior default of Purchaser, the Escrow Deposit and all
accrued interest thereon shall be delivered to Seller as
hereinafter set forth.
2.2 Purchase Price. Seller agrees to sell, and Purchaser
agrees to purchase, the Assets for a total purchase price equal
to FOURTEEN MILLION EIGHT HUNDRED THOUSAND NO/100 DOLLARS
($14,800,000.00) ("Purchase Price"), plus or minus prorations and
other adjustments provided by this Agreement, upon and in
accordance with the terms and conditions of this Agreement
("Transaction"). The Purchase Price shall be allocated as
follows: (a) $5,923,885 to the 4501 Building; (b) $3,914,388 to
the 4601 Building; (c) $4,415,727 to the 4651 Building; and (d)
$250,000 to Lot 3.
2.3 Balance of Purchase Price. The Purchase Price (of
which the Escrow Deposit may be a part), plus or minus
prorations, shall be paid in immediately available funds to
Seller on the Closing Date.
2.4 Independent Consideration. Seller has received a check
from Purchaser in the amount of One Hundred and No/100 Dollars
($100.00), (the "Independent Contract Consideration"), which
amount Seller and Purchaser acknowledge and agree has been
bargained for and agreed to for Seller's execution and delivery
of this Agreement. At Closing (defined below) the Independent
Contract Consideration shall be applied to the Purchase Price.
In the event this Agreement is terminated for any reason, Seller
shall be entitled to retain the Independent Contract
Consideration.
ARTICLE 3
ESCROW; CLOSING
3.1 Escrow Agent. Title Company is authorized and
instructed to act as escrow agent pursuant to the terms of this
Agreement. By execution of the acknowledgment attached hereto,
Title Company acknowledges receipt of the Escrow Deposit.
Purchaser and Seller shall execute any additional escrow
instructions reasonably required by Title Company to complete the
transactions provided for herein provided that such instructions
are not inconsistent with the terms of this Agreement.
3.2 Closing. Closing shall be on such date and at such
place as Seller shall designate by at least twenty-five (25)
days prior notice to Purchaser or as Seller and Purchaser may
otherwise mutually determine (hereafter referred to as "Closing
Date" or "Closing") provided, however, in no event shall the
Closing Date be less than fifteen (15) calendar days after the
end of the Inspection Period, nor later than ninety (90) days
after the end of the Inspection Period, unless such date is
extended by the mutual agreement of Seller and Purchaser.
3.3 Closing Costs.
(a) Seller's Payments. Seller shall pay the cost and
expenses, if any, of (i) the survey; (ii) the title search
and title insurance commitment; (iii) the fees for recording
the deed conveying the Real Property; (iv) any other
transfer tax, documentary stamp tax or similar tax which
becomes payable by reason of the transfer of the Assets; (v)
one-half of any escrow fees charged by Title Company; and
(vi) recording of the Declaration of Covenants, Conditions
and Restrictions referenced in Section (j).
(b) Purchaser's Payments. Purchaser shall pay (i) the
premium of the owner's and/or mortgagee extended coverage
title policy and the cost of any endorsements as Purchaser
may obtain; and (ii) one-half of any escrow fees charged by
Title Company.
(c) Other Costs. Each party will pay all its own
expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including, without
limitation (i) all costs and expenses stated herein to be
borne by a party, and (ii) all of their respective
consulting, accounting, legal and appraisal fees.
3.4 Prorations. The following prorations shall be made
effective as of the Closing Date and, to the extent possible,
shall be made tentatively at Closing:
(a) Proration Date. All prorations shall be made as
of 12:01 a.m., according to the time zone in which the
Assets are located, on the Closing Date, as if Purchaser
were vested with title to the Assets during the entire
Closing Date.
(b) Rents. All rents under the Leases for the month
in which Closing occurs which are actually received by
Seller shall be prorated as of the Closing Date. All
advance payments of rents, other than for the month in which
Closing occurs, and all Deposits shall be paid by Seller to
the Purchaser at Closing. Delinquent rents and additional
rents owed for the month during which Closing occurs (for
the pro rata period of Seller's ownership of such Property)
or prior to the month during which the Closing takes place
shall remain the property of Seller, and Purchaser shall use
reasonable efforts (not to include commencing any eviction
action or other litigation to collect such delinquency) to
collect such delinquent rents and additional rents for the
benefit of Seller and shall cooperate with Seller in the
collection of any such delinquent rents and additional
rents. Seller shall retain the right to pursue all remedies
(excluding eviction of tenants) against tenants from whom
Purchaser is unable to collect such delinquent rents and
additional rents despite diligent efforts. All rent
received by Purchaser after the Closing Date shall be
applied first to current rentals and then to delinquent
rentals, if any, in the inverse order of maturity.
(c) Taxes. Ad Valorem and personal property taxes and
assessments against the Assets for the year of Closing shall
be prorated between Seller and Purchaser as of the Closing
Date. If actual taxes are unknown, they shall be prorated
based upon the best available information from the local
taxing authority. To the extent that the actual taxes for
the current year differ from the amounts so apportioned at
Closing, Seller and Purchaser shall make all necessary
adjustments by appropriate payments between themselves
following Closing.
(d) Utilities. Charges for utilities serving the
Assets shall be determined as of the day preceding the
Closing Date, and Seller shall pay the amount of the utility
charges to such date to the utility companies involved or to
Purchaser in the event Purchaser is responsible for the
payment of such utility charges. All utility deposits of
Seller shall belong to Seller.
(e) Contract Charges. Charges with respect to
Contracts transferred and assigned to Purchaser shall be
prorated as of the Closing Date. Payments for obligations
under leases of tangible Personal Property transferred and
assigned to Purchaser will be prorated as of the Closing
Date. To the extent not reflected in the closing statements
evidencing the transaction contemplated by this Agreement,
Purchaser and Seller agree to adjust between themselves
outside of Closing any amounts which are the responsibility
of the other party pursuant to this subsection.
(f) Operating Expenses. Except as otherwise provided
herein, any and all expenses and payables relating to the
operation, management or ownership of the Assets arising or
accruing prior to the Closing Date in the ordinary course of
business are the responsibility of the Seller and will be
paid by Seller promptly upon receipt of billing therefor.
(g) Leasing Commissions. Seller shall be responsible
for paying the costs associated with any lease executed by
Seller prior to the expiration of the Inspection Period
unless Purchaser approves such lease in writing, in which
event upon Closing, Purchaser shall be responsible for such
costs and Seller shall receive a credit at Closing for any
such costs previously paid by Seller. Unless Purchaser does
not acquire the Property, Purchaser shall be responsible for
paying the costs associated with all leases executed after
the end of the Inspection Period which have been approved by
Purchaser and Seller shall receive a credit at Closing for
any such costs previously paid by Seller. If, for any
reason, Purchaser does not purchase the Assets, Purchaser
shall not be responsible or liable to any entity with
respect to any such costs or leasing commissions.
All prorations, credits and other apportionments shall be
allocated separately between the CEP Property and the Charlotte
Park Property. The agreements with respect to prorations in this
Section shall survive Closing. Final settlement of all prorated
items, except real estate taxes if not possible and delinquent
rentals if collected, shall occur on or before 90 days after the
Closing Date, or on the next business day if the 90th day is a
Saturday, Sunday or legal holiday. Contractual and tort
liabilities accruing, or relating to events that occurred, prior
to the Closing Date shall be the responsibility of Seller.
ARTICLE 4
TITLE MATTERS
4.1 Title Report/Commitment for Title Insurance. Seller
hereby instructs Title Company to prepare and deliver to
Purchaser, Seller and the surveyor described below, at Seller's
expense, as soon as possible after the Effective Date a title
commitment issued by First American Title Insurance Company (the
"Title Commitment") covering the Real Property, showing all
matters affecting title to the Real Property and binding Title
Company to issue to Purchaser at Closing an owner's policy of
title insurance on an ALTA (1970 form) Extended Form of policy in
the full amount of the Purchase Price pursuant to Section 4.4
hereof. Seller and Purchaser further instruct Title Company to
deliver to such parties copies of all instruments referenced in
Schedule B, Section II of the Title Commitment.
4.2 Survey. As soon as possible after the Effective Date,
Seller shall, at its expense, order a survey or an update to a
survey to be delivered to Purchaser and Title Company. Such
survey shall be a currently dated ALTA/ASCM land title survey of
the Land and of the Improvements situated thereon (the "Survey"),
prepared by a surveyor licensed by the State of North Carolina
and certified to Purchaser and Title Company by such surveyors
in conformity to the Certificate attached hereto as Exhibit
4.2(a). In addition to the requirements set forth in attached
Exhibit 4.2(b), the Survey shall reflect the total area of the
Real Property, the location of all improvements, recorded
easements and encroachments, if any, located thereon and all
building and set back lines and other matters of record with
respect thereto. Said Survey shall also certify that the Land is
not in an area identified by FEMA as having special flood or
mudslide hazards which require flood insurance under the Flood
Insurance Act of 1968. Seller shall provide at Closing a
certificate to Purchaser and Title Company if requested, that
there have been no improvements made to the Real Property since
the date of the Survey which would materially alter the
depictions on the Survey.
4.3 Title Defects. Within ten (10) business days after
receipt of the later of the Title Commitments and the Survey but
in no event later than five (5) days prior to the expiration of
the Inspection Period, Purchaser shall notify Seller of any title
matters to which Purchaser objects (the "Title Defects")
("Purchaser's Notice"). Any matter disclosed in a Title
Commitment or Survey and not objected to by Purchaser or
subsequently waived by Purchaser shall be deemed a permitted
exception ("Permitted Exception"). Seller shall notify
Purchaser of Seller's decision not to cure any Title Defect
within five (5) days after receipt of Purchaser's Notice.
Seller's failure to respond shall be deemed a decision by Seller
not to cure any Title Defect. Within ten days of Seller's
election not to cure certain Title Defects, Purchaser may elect
to waive such Title Defects or terminate this Agreement in which
event Purchaser shall receive a return of the Escrow Deposit and
all interest accrued thereon. Purchaser's failure to respond
shall be deemed a decision by Purchaser to waive the Title
Defects to which Seller decides not to cure. If the Title
Defects, that Seller elected to cure, are not cured by Seller or
waived by Purchaser on or before the Closing Date then Purchaser
may (i) elect to waive the uncured Title Defects, or (ii)
terminate this Agreement in which event Purchaser shall receive a
return of the Escrow Deposit and all interest accrued thereon.
4.4 Title Insurance. At Closing, Seller and Purchaser
shall instruct Title Company to issue a final update to the Title
Commitment in which the "GAP" exception has been deleted, binding
Title Company to issue to Purchaser an owner policy of title
insurance (the "Title Policy") covering the Real Property in the
full amount of the Purchase Price. The Title Policy shall be an
ALTA Form 1970-B owner's policy of Extended Coverage title
insurance containing such endorsements as may be reasonably
requested by Purchaser and agreed to by Title Company subject
only to: (a) current non-delinquent real estate taxes and
assessments; (b) matters set forth in the Title Commitment and
approved or waived by Purchaser; (c) any other matters approved
in writing by Purchaser; (d) title exceptions caused by acts or
omissions of Purchaser; and (e) matters excepted or excluded from
coverage by the printed terms of the title insurance policy
standard form (except for survey (if requested by Purchaser) and
mechanics and materialmen's lien exceptions which shall be
deleted). Purchaser shall use reasonable efforts to reach
agreement with Title Company regarding any applicable
endorsements during the Inspection Period.
ARTICLE 5
INFORMATION SCHEDULES
5.1 Information Schedules. Seller has delivered or caused
to be delivered to Purchaser, and Purchaser hereby acknowledges
receipt and delivery thereof, copies of all schedules and
documents referred to in this Agreement ("Information
Schedules"), including the following schedules and other
information described below:
(a) Rent Roll. A complete list and description ("Rent
Roll Schedule"), and true and complete copies, of all
Leases.
(b) Contracts. An itemized schedule ("Contracts
Schedule") of all written and oral service, maintenance,
management and other agreements, equipment or appliance
leases, non-governmental franchises, contracts and
arrangements relating or pertaining to the Assets
(collectively "Contracts"). Unless Purchaser makes written
request to cancel any Contract contained in the Contracts
Schedule prior to the end of the Inspection Period, the
Contracts contained in the Contracts Schedule shall be
transferred and assigned by Seller to Purchaser at Closing,
to the extent assignable.
(c) Personal Property. A materially true and complete
schedule and description ("Personal Property Schedule") of
all material tangible Personal Property.
(d) Permits. A list ("Permits Schedule") of all
current franchises, business or other licenses, bonds,
permits, certificates, authorizations and other evidences of
consent, approval, authorization or permission relating to
or affecting the Assets (collectively "Permits") of or from
any person, including any governmental authority, held by
Seller including any pending applications, but only to the
extent that Purchaser may obtain or derive a benefit from
such Permits after Closing. In lieu of providing a detailed
Permits Schedule, Seller may provide to Purchaser copies of
all Permits in its possession or control.
(e) Warranties. A list and description ("Warranty
Schedule") of all material third party bonds, warranties and
guaranties, including any warranties relating to equipment,
structures, roof, landscaping, parking lot or parking lot
surfaces, if any, which are in effect with respect to or
which benefit any portion of the Assets.
(f) Operating Statements. Materially true and
complete copies of all operating statements for the Assets
for the last two calendar years and for each calendar month
of 1996 through the month ending September 30.
(g) Prior Studies. True and complete copies of any
prior third party studies and reports, in the possession of
Seller or to Seller's actual knowledge, in the possession of
Seller's agents, affiliates or management companies relating
in any manner to the environmental, structural, mechanical,
or engineering status of any portion of the Assets.
(h) Plans. Copies of all construction plans, diagrams
and schematics of the Real Property and Improvements in
Seller's possession or control made available to Purchaser
at the Assets' location.
ARTICLE 6
INSPECTION
6.1 Inspection Period. During the period beginning upon
the Effective Date and ending at 5:00 p.m., local time, on the
thirtieth (30th) day after the Effective Date, but in no event
later than December 3, 1996 (such period of time hereinafter
referred to as the "Inspection Period"), Purchaser and/or its
attorneys, consultants or employees ("Authorized
Representatives") shall have the right to: (i) make a physical
inspection of the Assets subject to the rights of tenants, (ii)
examine the financial and operating books and records relating to
the Assets maintained by or for the benefit of Seller, (iii)
interview tenants of the Property, and (iv) conduct such non-
destructive physical engineering, feasibility and other studies
and tests on or of the Assets as Purchaser considers to be
appropriate. Purchaser and/or Purchaser's Authorized
Representatives may also copy any documents referred to or
described in the Information Schedules but not required to be
provided to Purchaser as part of any such schedule.
Notwithstanding the foregoing, Purchaser shall not be permitted
to interfere unreasonably with Seller's operations at the
Property or interfere with any tenant's operations at the
Property, and the scheduling of any inspections, interviews,
and/or testing shall take into account the timing and
availability of access to tenant's premises, subject to and in
accordance with tenants' rights under the Leases or as tenants
may otherwise agree. Purchaser shall at all times conduct such
due diligence in compliance with applicable laws and the terms
of any leases of the Property, and in a manner so as to not cause
undue damage, loss, cost or expense to Seller, the Property or
the tenants of the Property, and Purchaser shall promptly restore
the Property to its condition immediately preceding such
inspections and examinations and shall keep the Property free and
clear of any mechanic's liens or materialmen's liens in
connection with such inspections and investigations. Seller
shall have the right, at its option, to cause a representative of
Seller to be present at all such inspections, reviews and
examinations. Purchaser shall keep all information or data
received or discovered in connection with such due diligence
strictly confidential. Purchaser shall indemnify, protect,
defend and hold Seller harmless from and against any obligation,
liability, claim (including any claim for damage to property or
injury to or death of any persons), lien or encumbrance, loss,
damage, cost or expense, including attorney's fees, in any way
caused by the inspections or examinations of the Property by
Purchaser or its agents or contractors. The foregoing
indemnification shall survive the Closing or the termination of
this Agreement.
6.2 Right of Termination. Notwithstanding anything in this
Agreement to the contrary, Purchaser shall have the right, for
any reason in Purchaser's sole and absolute discretion, to
terminate this Agreement by written notice to Seller on or before
the expiration of the Inspection Period and Title Company shall
immediately refund to Purchaser the Escrow Deposit and any
interest thereon. In the event the transaction does not close
for any reason other than a default by Seller, Purchaser shall
deliver to Seller all materials, studies or documents received
from third parties or Seller relating to the Assets.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
7.1 Purchaser's Representations and Warranties. Purchaser
makes the following representations and warranties, as of the
date of execution of this Agreement, which shall survive Closing
and conveyance of the Assets to Purchaser:
(a) Authority. Purchaser is a North Carolina
corporation, duly formed, organized, existing and in good
standing under the laws of the State of North Carolina;
Purchaser has full legal right, power and authority to
execute and fully perform its obligations under this
Agreement, without the need for any further action under its
governing instruments; and the persons executing this
Agreement and the other documents required hereunder are the
duly designated officers of Purchaser and are authorized to
do so.
(b) Inspection. Purchaser has made, or will make
prior to expiration of the Inspection Period, an independent
investigation, to the extent Purchaser deems necessary or
appropriate, concerning the physical condition, value,
development, use, marketability, feasibility and suitability
of the Assets, including, without limitation, land use,
zoning and other governmental restrictions.
(c) No Other Seller Representations. Except as
expressly set forth herein, Purchaser acknowledges that no
representations or warranties, express or implied, have been
made by Seller or Seller's representatives.
(d) "AS IS, WHERE IS". PURCHASER HEREBY EXPRESSLY
ACKNOWLEDGES THAT IT HAS INSPECTED AND EXAMINED OR WILL
INSPECT AND EXAMINE THE PROPERTY TO THE EXTENT DEEMED
NECESSARY BY PURCHASER IN ORDER TO ENABLE PURCHASER TO
EVALUATE THE PURCHASE OF THE PROPERTY. PURCHASER REPRESENTS
THAT IT IS A KNOWLEDGEABLE PURCHASER OF REAL ESTATE AND
OFFICE DEVELOPMENTS AND THAT, EXCEPT AS SET FORTH IN SECTION
, IT IS RELYING SOLELY ON ITS OWN EXPERTISE AND THAT OF
PURCHASER'S CONSULTANTS, AND THAT PURCHASER HAS CONDUCTED OR
WILL CONDUCT SUCH INSPECTIONS AND INVESTIGATIONS OF THE
PROPERTY, INCLUDING, BUT NOT LIMITED TO, THE PHYSICAL AND
ENVIRONMENTAL CONDITIONS THEREOF. PURCHASER FURTHER
ACKNOWLEDGES AND AGREES THAT PURCHASER IS ACQUIRING THE
PROPERTY ON AN "AS IS, WHERE IS" BASIS WITHOUT
REPRESENTATIONS OR WARRANTIES OTHER THAN THOSE SET FORTH
HEREIN AND IN THE DOCUMENTS OF TRANSFER RELATING TO THIS
TRANSACTION.
7.2 Seller's Representations and Warranties. Each of the
parties comprising Seller severally makes the following
representations and warranties as of the date of execution of
this Agreement, which shall survive conveyance of the Assets to
Purchaser:
(a) Authority. CEP is a North Carolina limited
partnership, duly formed, organized, existing and in good
standing under the laws of the State of North Carolina. CEP
has full legal right, power and authority to execute and
fully perform its obligations under this Agreement, without
the need for any further action under its governing
instruments; and the persons executing this Agreement and
the other documents required hereunder are the duly
designated officers of CEP and are authorized to do so.
(b) Authority. Charlotte Park is a North Carolina
limited partnership, duly formed, organized, existing and in
good standing under the laws of the State of North Carolina.
Charlotte Park has full legal right, power and authority to
execute and fully perform its obligations under this
Agreement, without the need for any further action under its
governing instruments; and the persons executing this
Agreement and the other documents required hereunder are the
duly designated officers of Charlotte Park and are
authorized to do so.
(c) Marketable Title. At the Effective Date and as of
Closing, Seller will own the Personal Property free and
clear of all liens, claims, encumbrances, and rights of
others, except the leased or financed equipment disclosed
pursuant to Exhibit 1.3, and will convey same to Purchaser.
Seller is not a party to any contract agreement, or
commitment to sell, convey, assign, transfer or otherwise
dispose of any portion or portions of the Assets.
(d) Liabilities. Except as created by this Agreement
or disclosed in the Information Schedules or the documents
referenced therein, there are no contractual obligations or
to Seller's actual knowledge, any other liabilities of any
type which might, with notice, passage of time or both, have
a material adverse effect on the Assets.
(e) Contracts. Except as may be delivered to
Purchaser during the Inspection Period, there are no other
management, maintenance, service or other contracts relating
to the Assets. If Purchaser requests during the Inspection
Period, any such existing contracts will be terminated at
Closing, or, in the case of Charlotte Executive Secretarial
Services as soon thereafter as permitted.
(f) No Undisclosed Matters. To Seller's actual
knowledge, there are no unsatisfied written requests for
material repairs, restorations or improvements from any
insurance carrier or governmental authority. Seller has not
received any written notice from any insurer of any defects
or inadequacies in any part of the Assets which would
adversely affect its insurability, or written notice of any
claims of any governmental agency to the effect that the
construction, operation or use of any of the Assets is in
violation of any applicable law, ordinance, rule, regulation
or order.
(g) No Defaults. Seller is not in default in respect
of any of its material obligations or liabilities pertaining
to the Assets (including, but not limited to, such
obligations and liabilities under the Contracts or Leases).
To Seller's actual knowledge, no present dispute or fact
exists which might with notice, passage of time or both,
give rise to a dispute under any Contracts or Leases.
(h) Litigation. There is no litigation of a material
nature pending or to Seller's actual knowledge, threatened
against Seller or the Assets which relates to, or if decided
adversely, could have a material adverse effect upon, the
Assets (including condemnation or similar proceeding).
(i) Environmental Matters. For the purpose of this
Agreement, the term "Hazardous Materials" shall mean (i)
each and every substance included within the term "hazardous
substance" or "hazardous waste" as defined in any one or
more of the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C.A. Section
9601 et seq. (as heretofore amended), the Hazardous
Materials Transportation Act of 1975, 49 U.S.C.A. Section
1801 et seq. (as heretofore amended), the Resource
Conservation and Recovery Act of 1976, 42 U.S.C.A. Section
6901 et seq. (as heretofore amended) and any other federal,
state or local environmental laws or regulations now or
hereafter enacted; (ii) all substances to which the rules
and regulations promulgated by any Federal or state agency
pursuant to any one or more of said statutes applies; and
(iii) any and all petroleum products and petroleum
derivatives. Seller represents unto Purchaser that the
following matters are true as of the date of execution of
this Agreement by Seller, and shall survive Closing and not
merge into any documents delivered at Closing:
(i) Seller has no notice or actual knowledge of
any (i) currently existing violations of federal,
state, county or municipal environmental laws in
respect to the Assets, or (ii) past, pending or
threatened administrative or judicial litigation or
other legal proceedings including, without limitation,
any enforcement proceeding under any federal, state,
county or municipal statute, ordinance, rule or
regulation concerning Hazardous Materials, relating to
the Assets, or of any settlement thereof; and
(ii) to Seller's actual knowledge, there are no
underground storage tanks ("USTs") located on or below
the Land.
(j) Certification of Rent Roll. No person has any
title, interest or right to possession of any portion of the
Real Property as a lessee, tenant or concessionaire of
Seller except as shown on the Rent Roll Schedule or
Contracts Schedule. Except as disclosed in writing to
Purchaser, the Rent Roll Schedule lists all Leases,
amendments and modifications thereof. Seller is not, and to
Seller's actual knowledge no tenant is, in default in the
performance of or under any such Lease in any material
respect except as otherwise disclosed. The Rent Roll
Schedule states all Deposits, prepaid rents and other
deposits or prepayments for each Lease. No tenant is
entitled to any rebate, concession, special allowance or
other benefits, except as stated in the Leases. To Seller's
actual knowledge, no tenant has any counterclaim, defense or
offset to any action for collection of rents or other
amounts accruing after the Closing Date under any Lease.
The rents and other sums due or to become due under each
Lease have not been and will not be assigned, encumbered or
subjected to any liens by Seller, except to lenders whose
liens shall be assigned or released at Closing. Except as
disclosed in the Rent Roll Schedule, there has been no
waiver of Seller's rights under or modification of any Lease
or other documents executed by tenants in connection with
the Leases which could have a material adverse affect
thereon. Seller has paid in full all leasing or similar
commissions or payment obligations, if any, relating to any
Lease.
(k) Operating Statements. To Seller's actual
knowledge, the Operating Statements prepared by the
management agent are true, accurate and complete in all
material respects and present fairly the results of
operations for the periods indicated.
(l) Use of Property. To Seller's actual knowledge,
(i) no governmental, public or private authority intends or
desires to appropriate the use of or limit the use of any of
the Property pursuant to any condemnation, eminent domain or
similar proceeding; (ii) no fact or condition exists which
will result in the termination of the Property's current
access to and from existing streets and utilities.
(m) Documentation. To Seller's actual knowledge, all
documents which shall be delivered to Purchaser by or on
behalf of Seller under this Agreement shall be complete in
all material respects, including, without limitation, the
Information Schedules.
(n) FIRPTA. Seller is not a "foreign person"
(asdefined in the Internal Revenue Code and Income Tax
Regulations). The provisions of the Foreign Investment in
Real Property Tax Act of 1980, as amended, are not
applicable to the Transaction.
7.3 Knowledge as a Defense. Seller shall have no liability
with respect to a breach of the covenants, representations and
warranties of Seller set forth in this Article 7 or elsewhere in
this Agreement or any documents delivered pursuant hereto to the
extent that Purchaser proceeds with the closing of the
transaction contemplated with actual knowledge of such breach or
such breach was otherwise disclosed in the Information Schedules.
7.4 Certain Limitations. Notwithstanding anything to the
contrary in this Agreement and without limitation upon the
limitations elsewhere in this Agreement but subject to the
provisions of Section ; under no circumstances, other than any
acts or omissions of Seller constituting wilful misconduct or
fraud shall Seller be liable to Purchaser on account of this
Agreement, any covenant, representation, warranty, or
indemnification obligation herein, any document executed in
connection with this Agreement or any transaction or matter
contemplated hereby, in an aggregate amount in excess of Eight
Hundred Thousand Dollars ($800,000). In the event of a breach of
this Agreement by Seller, Purchaser shall not be entitled to
recover damages in excess of such amount. Provided, however, no
limitation contained herein shall have any effect or limitation
on Purchaser's rights or recoveries in the event of acts or
omissions based upon Seller's willful misconduct or fraud.
Prior to any distribution by Seller of any portion of the
net proceeds of this Transaction to its partners or otherwise,
Seller shall place $800,000 in escrow for a period of twelve (12)
months following Closing as security for any potential
liabilities or obligations of Seller to Purchaser hereunder. The
location and terms of the escrow shall be subject to Purchaser's
prior approval, which shall not be unreasonably withheld,
conditioned or delayed. The foregoing does not apply to any
distributions by Seller in connection with a like-kind exchange
as contemplated by Article 10 hereof.
None of Seller's partner's shall individually have any
personal liability of any kind or nature with respect to this
Transaction in excess of the net proceeds, if any, that any such
partner may receive as a result of this Transaction; provided,
however, this exculpation provision shall have no effect or
limitation on Purchaser's rights or recoveries in the event of
acts or omissions based upon any such partner's willful
misconduct or fraud.
7.5 Knowledge Standard. As used in this Agreement, "the
Seller's actual knowledge" or "to Seller's knowledge" or any
similar phrase, shall mean the actual knowledge of John B.
Detwiler; provided, however, that nothing in this Agreement shall
be deemed to create or impose any personal liability of any kind
on John B. Detwiler.
7.6 Covenants of Seller. Each of the parties comprising
Seller severally covenants and agrees with Purchaser as follows:
(a) Access. Subject to the terms and conditions of
Section 6.1, during normal business hours prior to Closing,
Seller agrees to give to Purchaser and its agents and
representatives reasonable access to the Assets and the
books and records directly relating to the ownership,
management, maintenance and operation of the Assets, and all
documents directly pertaining to the Assets that are in the
possession of Seller, or any of Seller's agents or
representatives. Prior to Closing, Seller will furnish
Purchaser with such additional financial and operating data
and other information reasonably available to Seller as may
be reasonably necessary for Purchaser to thoroughly evaluate
the Assets.
(b) Additional Audits. Purchaser shall have, in
addition to any inspection or audit rights contained
elsewhere in this Agreement, the right to conduct a full
audit of the books and records of Seller relating to the
operations and financial results of the Property, in such
form and at such time, including up to 270 days after
Closing, as Purchaser may reasonably determine is necessary
to comply with applicable securities laws requirements,
including, without limitation, Regulation 210.3-14
promulgated under the Securities Exchange Act of 1934, as
amended. All costs incurred as a result of a Purchaser's
undertaking such audit shall be borne exclusively by
Purchaser; however, Seller shall make available such books,
records and materials as may be reasonably requested by
Purchaser or its accountants in order to conduct such audit.
All such audit activities shall be conducted at Seller's
place of business in a commercially reasonable fashion
during normal business hours and upon five (5) days prior
notice from Purchaser to Seller.
(c) No Material Changes. Prior to Closing, Seller
shall: (i) not cancel or permit cancellation of any hazard
or liability insurance carried with respect to the Assets;
(ii) remedy all material violations of laws, ordinances,
orders or requirements relating to the Assets which are not
caused by Purchaser and of which Seller has received actual
notice and provide Purchaser with evidence of curing of same
(provided that Seller shall not be required to expend more
than $10,000, in the aggregate, with respect to such
matters); and (iii) operate the Property on a basis
consistent with historical operations including, without
limitation, undertaking all reasonably required ordinary
maintenance and repair of the Property. Prior to Closing,
Seller also will not, without the prior written consent of
Purchaser, (i) sell, transfer or dispose or become obligated
to sell, transfer or dispose of any of the Assets, except
for the use and consumption of inventory, office and other
supplies and spare parts, and the replacement of worn out,
obsolete and defective tools, equipment and appliances, in
the ordinary course of the business, (ii) after the
expiration of the Inspection Period except as specifically
permitted by this Agreement, enter into any transaction, or
make any commitment with respect to the Assets other than in
the ordinary course of the business, (iii) amend, renew,
extend, modify or terminate any Contract, Permit or Lease
except as contemplated by this Agreement or except in the
ordinary course of business. Subject to Section (i) below
regarding Seller's continued leasing obligations, prior to
Closing, Seller shall operate and maintain the Assets in
substantially the same manner and condition as Seller has
operated and maintained the Assets immediately prior to the
Effective Date. Seller will perform current or routine
maintenance and repairs in the ordinary course of business
of or to the Assets as may be required or reasonably
appropriate to operate and maintain the Assets other than
tenant improvements relating to new leases. Provided,
however, that Seller shall not be obligated to make a
capital expenditure in excess of $15,000 and in the event
Seller elects not to make an expenditure greater than said
amount, then Purchaser may terminate this Agreement and
receive a return of the Escrow Deposit and all interest
thereon. After expiration of the Inspection Period, Seller
shall be required to gain Purchaser's written approval of
any new or modified contract or agreement which will affect
the operation of the Property.
(d) Consents. Seller and Purchaser shall each
promptly file or submit and diligently prosecute any and all
applications or notices with federal, state and/or local
authorities and all other requests with any private persons
or entities for consents, approvals, authorizations and
permissions which are reasonably considered necessary or
appropriate the other party for the consummation of the
Transaction or to prevent the termination of any Lease,
Contract or Permit, or any loss or disadvantage to the
Assets.
(e) Payments. Seller will cause to be paid when due
or shall be responsible for all taxes, license fees, trade
accounts and costs and expenses of operation and maintenance
of the Assets incurred through the Closing Date, except
amounts subject to proration under Section .
(f) Cooperation. Seller will reasonably assist and
cooperate with any environmental evaluation, study or audit
of the Real Property or the Personal Property prepared by,
for or at the request of Purchaser.
(g) Notification of Subsequent Events. Prior to
Closing, Seller shall notify Purchaser of any written notice
received by Seller of any material adverse change in or to
the Assets including, without limitation, any notice
relating to any insurance contract or policy now held or
owned by Seller to cancel or materially increase any
premiums relating thereto.
(h) Estoppel Certificates. Ten days before the
scheduled Closing Date, Seller shall have delivered
currently dated (no earlier than twenty-five (25) days prior
to the scheduled Closing Date) estoppel certificates in
material conformance with the form attached hereto as
Exhibit 7.6(1) (except that the failure of tenant(s) to
agree to the provisions following "from and after the date
that Parkway acquires title to the Property" shall not
constitute material non-conformance) from each Tenant
referenced on the Rent Roll or a Seller's estoppel
certificate in the form attached hereto as Exhibit 7.6(2)
for each tenant not providing an estoppel certificate.
Seller and Purchaser acknowledge that the tenant
Computerland does not occupy its space and the occupancy
provision shall be excluded from the form estoppel
certificate for this tenant. Seller and Purchaser shall use
reasonable efforts to obtain a Subordination Non-Disturbance
Agreement ("SD&A") in the form attached hereto as Exhibit
7.6(3) from each Tenant occupying 10% or more of the net
rentable area of the applicable Building. Seller and
Purchaser shall use reasonable efforts to negotiate the
final form of any SD&A with the applicable tenant and lender
during the Inspection Period. In the event Seller and
Purchaser mutually agree to obtain tenant estoppel
certificates during the Inspection Period, Seller and
Purchaser shall use reasonable efforts to obtain prior to
Closing currently dated certificates from each tenant
stating that no change has occurred since the date of the
applicable tenant estoppel certificate for such tenant in
the form attached hereto as Exhibit (4).
(i) Leasing. Seller (and/or Seller's agents), in
consultation with Purchaser, shall continue in good faith to
advance all leasing activities for the Assets including,
without limitation, new leases, renewals, extensions,
expansions or other modifications. Notwithstanding any
provision herein to the contrary, Seller shall have no
obligation to enter into any new, renewal or modification of
any lease that Purchaser has failed to approve. Seller
shall use reasonable efforts to provide to Purchaser a
representation letter regarding operations and leasing from
Seller's current property manager in the form attached
hereto as Exhibit (5).
(j) CC&R's. During the Inspection Period, Purchaser
and Seller shall use reasonable efforts to negotiate and
finalize for recording in Mecklenburg County, North
Carolina, the Declaration of Covenants, Conditions and
Restrictions, (and corresponding Architectural and Site
Development Guidelines) to be attached as Exhibit (6) hereto
(the "CC&R's"). The CC&R's shall apply to both the Land,
Improvements and the adjacent property owned by Seller.
7.7 Conditions to Purchaser's Obligations. The obligations
of Purchaser to consummate the transactions contemplated by this
Agreement are subject to the satisfaction of each of the
following conditions as of the Closing Date, except to the extent
any such condition is waived in whole or in part by Purchaser in
writing at or prior to Closing:
(a) Satisfaction. The representations and warranties
of Seller contained in this Agreement shall have been true
on the date of this Agreement and on Closing. Seller shall
have performed all obligations and complied with all
covenants required by this Agreement. Seller shall have
delivered to Purchaser a certificate, in a form reasonably
acceptable to Purchaser, dated as of the Closing Date and
signed by Seller to its knowledge, concerning this Section
7.7(a).
(b) Title Defects. All Title Defects, except
Permitted Exceptions, shall have been cured by Seller or
waived in writing by Purchaser.
(c) No Injunction. On the Closing Date, there shall
be no third party injunction, writ, preliminary restraining
order or any order of any nature issued by a court of
competent jurisdiction directing that the transactions
contemplated herein not be consummated as herein provided
which relates to the acts or omissions of Seller.
(d) CC&R's. Purchaser and Seller will have recorded
in Mecklenburg County, North Carolina, the CC&R's.
(e) Certificates. Purchaser shall have received the
estoppel certificates (and no change certificates, if
applicable) and the SD&A's referenced in Section 7.6(h)
above, from or for each tenant referenced on the Rent Roll.
Purchaser shall have received the property manager's
representation letter referenced in Section (i) above.
(f) No Adverse Change. No material and adverse change
shall have occurred without Purchaser's written consent, in
the state of title matters described in the Title Commitment
and the Survey.
7.8 Conditions to Seller's Obligations. The obligations of
Seller to consummate the transactions contemplated by this
Agreement are subject to the satisfaction of each of the
following conditions as of the Closing Date, except to the extent
any such condition is waived in whole or in part by Seller in
writing at or prior to Closing:
(a) Satisfaction. The representations and warranties
of Purchaser contained in this Agreement shall have been
true on the date of this Agreement and on Closing.
Purchaser shall have performed all obligations and complied
with all covenants required by this Agreement. Purchaser
shall have delivered to Seller a certificate, in a form
reasonably acceptable to Seller, dated as of the Closing
Date and signed by Purchaser to its knowledge, concerning
this Section 7.8(a).
(b) No Injunction. On the Closing Date, there shall
be no third party injunction, writ, preliminary restraining
order or any order of any nature issued by a court of
competent jurisdiction directing that the transactions
contemplated herein not be consummated as herein provided
which relates to acts or omissions of Purchaser.
(c) CC&R's. Purchaser and Seller will have recorded
in Mecklenburg County, North Carolina, the CC&R's.
7.9 Closing Documents. At Closing, Seller shall deliver to
Purchaser the following documents, all properly executed by
Seller and delivered to Purchaser and/or executed by Purchaser
and delivered to Seller shall be in a form reasonably acceptable
to Purchaser and Seller and include, but are not limited to:
(a) Special Warranty Deed. A Special Warranty Deed in
form attached hereto.
(b) Bill of Sale. A Bill of Sale and Assignment in
form attached hereto.
(c) Assignment. An Assignment of Leases, Contracts
and Intangibles in form attached hereto. Such Assignment of
Leases, Contracts and Intangibles shall be joined in by
Purchaser for the purpose of assuming all obligations under
any assigned item arising from and after the Closing Date.
(d) Documents. Executed original copies, or copies
certified as correct by Seller, if originals are not
available, of (i) all Leases in force on the Closing Date
covering portions of the Real Property and all other
documents referred to in the Rent Roll Schedule, (ii) all
Contracts and Permits of which Seller is aware transferred
and assigned to Purchaser, (iii) all "as built" plans,
specifications, surveys or other documents relating or
pertaining to the Assets in the possession of Seller
(collectively "Plans"), including, but not limited to, all
records relating to repair, renovation and maintenance of
the Improvements; (iv) all notices to tenants relating to
this Transaction and the receipt of security deposits as
necessary or appropriate under applicable law; and (v) all
other documents referred to in the schedules.
(e) Rent Roll. A current and updated Rent Roll
Schedule.
(f) FIRPTA. Affidavit from Seller that Seller is not
a foreign person as defined in the Foreign Investment in
Real Property Tax Act of 1980, as amended, in the form
attached hereto.
(g) Keys. All keys and master keys in Seller's
possession or control to all locks located on the Real
Property properly tagged for identification as well as cards
keys and cards for the security systems, if any.
(h) Telephone and Mail. Such documents as may be
reasonably requested by Purchaser and required by (i) the
local telephone company to assign to Purchaser all of
Seller's rights and interest in each telephone number or
phone line used by Seller exclusively for the operation of
the Assets, and (ii) the U.S. Postal Service to assign to
Purchaser all of Seller's rights and interest in each post
office box and drawer exclusively for the operation of the
Assets.
(i) Miscellaneous. Such other documents as may be
required under other provisions of this Agreement or as may
reasonably be required by Purchaser to consummate the
Transaction, so long as such document does not increase
either party's liability or obligations hereunder,
including, but not limited to, (i) a Closing Statement and
(ii) a Quitclaim Deed with the legal description contained
in Exhibit 1.2(a) and/or the Survey, if the legal
description of the Land contained in the Survey differs from
the legal description contained in Exhibit 1.2(a).
ARTICLE 8
DEFAULTS AND REMEDIES
8.1 Damages Against Purchaser. If Purchaser defaults under
any provision of this Agreement and Closing does not occur, then
Seller shall be released from all obligations in law or equity to
convey the Property to Purchaser. Purchaser and Seller agree
that as Seller's sole remedy for a default hereunder, by written
notice to Purchaser and Title Company, Seller shall be entitled
to terminate this Agreement and be entitled to receive the Escrow
Deposit plus accrued interest thereon as liquidated damages.
Purchaser and Seller acknowledge and agree that actual damages
will be extremely difficult and impractical to ascertain.
Therefore, the sum represented by the Escrow Deposit plus any
accrued interest thereon shall be deemed to constitute a
reasonable estimate and agreed stipulation of Seller's damages
and shall constitute Seller's sole and exclusive remedy in the
event this transaction fails to close as a result of Purchaser's
default. Notwithstanding the foregoing, Purchaser's liability
under the last sentence of Section 6.1 hereof and the last
sentence of Section 10.1 hereof shall remain in full force and
effect.
Initialed by:
________________ ________________
Seller Purchaser
8.2 Damages against Seller. In the event that Seller fails
to perform all of Seller's obligations under this Agreement and
Purchaser performs all of its obligations or tenders performance,
including the obligation to consummate the Transaction, then
Purchaser may make written demand to Seller for performance of
this Agreement. If Seller fails to comply with Purchaser's
written demand within 30 days after receipt of such written
demand for performance, Purchaser shall have the exclusive right
to (i) waive such default, (ii) seek specific performance of
Seller's obligations under this Agreement, or (iii) terminate
this Agreement and promptly receive a full refund of the Escrow
Deposit and all interest thereon and payment by Seller of an
amount not to exceed $25,000 in order to reimburse Purchaser's
reasonable out of pocket expenses associated with this
transaction, but without further liability on Purchaser's part.
Seller agrees that the Assets are unique and that damages for
failure by Seller to consummate the Transaction will be
impracticable and extremely difficult to determine. Therefore,
in the event that Seller fails or refuses to consummate the
Transaction and Purchaser seeks specific performance, Seller
specifically agrees that the remedies of specific performance are
appropriate remedies for Purchaser, and Seller waives and agrees
not to assert any claim or defense that specific performance is
not an appropriate remedy for Purchaser. The parties acknowledge
and agree that the provisions of this Section shall be
Purchaser's sole remedy for breaches by Seller discovered or
known to Purchaser prior to Closing and that the provisions of
Section apply to breaches by Seller discovered post-Closing even
if such relates to acts or omissions which actually occurred
prior to Closing.
Initialed by:
________________ ________________
Seller Purchaser
ARTICLE 9
RISK OF LOSS
9.1 Risk of Loss. Prior to Closing, Seller shall have full
risk of loss or damage with respect to the Assets. Upon Closing,
full risk of loss or damage with respect to the Assets shall pass
to Purchaser. For purposes of this Article 9, "loss or damage"
shall mean the following: (i) any loss, damage, destruction or
injury by fire, storm, accident, flood or other casualty or
hazard to the Assets; and (ii) any condemnation, eminent domain
or other similar proceeding.
9.2 Minor Damage. In the event of loss or damage to the
Real Property or any portion thereof (the "premises in question")
which is not "major" as hereinafter defined), this Agreement
shall remain in full and effect provided Seller performs any
necessary repairs or, at Seller's option, reduces the cash
portion of the Purchase Price in an amount equal to the cost of
such repairs, Seller thereby retaining all of the Seller's right,
title and interest to any claims and proceeds Seller may have
with respect to any casualty insurance policies or condemnation
awards relating to the premises in question. In the event Seller
elects to perform repairs upon the Real Property, Seller shall
use reasonable efforts to complete such repairs promptly and if
necessary, the date of Closing shall be extended a reasonable
time in order to allow for the completion of such repairs;
provided, however, Closing may not be extended for a period of
more than thirty (30) days without the prior consent of
Purchaser.
9.3 Major Damage. In the event of a "major" loss or
damage, Purchaser may either (i) terminate this Agreement and
immediately receive a refund of the Escrow Deposit and all
interest thereon, or (ii) it may proceed with this transaction
and receive Seller's insurance proceeds, if any, for such damage,
plus payment from Seller of the amount of the applicable
insurance deductible relating thereto. In such event, Seller
shall execute all documents reasonably requested by Purchaser to
assign Seller's rights and interest to such insurance proceeds.
9.4 Definition of Major Loss or Damage. For purposes of
Sections and , "major" loss or damage refers to the following:
(i) loss or damage to the Assets or any portion thereof such that
the cost of repairing or restoring the premises in question to a
condition substantially identical to that of the premises in
question prior to the event of damage or loss would be, in the
certified opinion of a mutually acceptable architect, equal to or
greater than Fifty Thousand Dollars ($50,000), and (ii) any loss
or damage due to a condemnation which permanently or materially
impairs the current use of the Assets.
ARTICLE 10
LIKE-KIND EXCHANGE
10.1 Exchange Right. Seller wishes to effect an exchange
of the Property for other, like kind property (the "Exchange"),
and Purchaser is willing to contract to acquire such like kind
property and to exchange such property with Seller as
consideration for Seller's conveyance of the Property to
Purchaser, subject to and upon the terms and conditions set forth
below. Seller shall have the right, exercisable by delivering
notice to Purchaser before the Closing, to (a) designate a
property or properties that Seller wishes to have Purchaser
(acting on its own behalf and not as Seller's agent) agree to
acquire for exchange with Seller for the Property (such property
or properties, the "Exchange Property") and(b) direct Purchaser
to execute and deliver the contract covering the Exchange
Property (the "Exchange Property Acquisition Agreement"), if any.
Purchaser shall have no obligation to locate any Exchange
Property or to find or negotiate with any seller of any potential
Exchange Property, nor shall Purchaser be under any obligation to
enter into any Exchange Property Acquisition Agreement unless it
provides in substance that Purchaser's liability to the seller of
any Exchange Property for any breach of or default under the
Exchange Property Acquisition Agreement is without recourse of
any type to Purchaser or is limited to liquidated damages in the
amount of the deposit or down payment prescribed by the Exchange
Property Acquisition Agreement.
10.2 Seller shall cause to be advanced to Purchaser the
amount of any deposit or down payment that may be required to be
made by Purchaser under the Exchange Property Acquisition
Agreement together with all title transfer fees and closing
costs, recording fees, documentary stamps, mortgage recording
taxes, real estate transfer, gains, and other transactional
taxes, title insurance and survey premiums and costs, and
brokerage fees or commissions.
10.3 Upon Seller's request, Purchaser shall instruct the
seller of the Exchange Property to convey title to the Exchange
Property directly to Seller. If Seller shall not make that
request, as a condition precedent to Purchaser's obligations to
close the acquisition of title to the Exchange Property under the
Exchange Property Acquisition Agreement, Seller shall have
conveyed prior thereto, or concurrently therewith shall convey,
title to the Property to Purchaser in accordance with this
Agreement. Notwithstanding anything to the contrary contained in
this Article , Purchaser shall have no obligation to take title
directly to the Exchange Property and if Purchaser declines to
accept such title Purchaser shall so indicate to Seller and
Seller shall have the option of taking title directly to the
Exchange Property from the seller thereof.
10.4 If Seller shall not request Purchaser to cause title
to the Exchange Property to be conveyed by the seller of the
Exchange Property directly to Seller, then, upon the acquisition
of title to the Exchange Property by Purchaser, Purchaser shall
convey the Exchange Property, subject and pursuant to the terms
and conditions of the Exchange Property Acquisition Agreement, to
Seller, in exchange for the concurrent or prior conveyance by
Seller to Purchaser of the Property, subject and pursuant to the
terms of this Agreement. In connection with such exchange,
Seller shall accept title to the Exchange Property subject to all
of the conditions specified in the Exchange Property Acquisition
Agreement and shall comply with all of the obligations on the
part of Purchaser to be performed under the Exchange Property
Acquisition Agreement. The failure of the seller of the Exchange
Property to enter into the Exchange Property Acquisition
Agreement or any other document, or any default by the seller of
the Exchange Property or any failure of title to close under the
Exchange Property Acquisition Agreement (other than by reason of
Purchaser's default), shall not relieve Purchaser or Seller of
their respective obligations to purchase and sell the Property
under this Agreement.
10.5 If before the Closing, Seller shall not designate an
Exchange Property and submit to Purchaser an Exchange Property
Acquisition Agreement, if any, in accordance with the terms of
this Section, then Purchaser and Seller shall close the sale and
purchase of the property under this Agreement, without regard to
this Section, provided, however, Seller shall have the right at
its option to cause Purchaser, at the Closing and concurrently
with the conveyance of the Property to Purchaser, to deposit the
entire Purchase Price for the Property, in the amount required
under Section of this Agreement, at the Closing with Escrow
Agent, who is designated by Seller but acting on behalf of
Purchaser for the purpose of purchasing with such funds, in
accordance with a separate escrow agreement (the "Escrow
Agreement") to be entered into by Seller, Purchaser, and Escrow
Agent and in accordance with Seller's time schedule for an
Exchange Property. The Escrow Agreement shall provide that
Seller will have no right to receive, pledge, borrow, or
otherwise obtain the benefits of any funds held in escrow by
Escrow Agent. If, however, Seller shall not cause an Exchange
Property to be designated under the Escrow Agreement within 45
days following the Closing or if Seller shall, after causing an
Exchange Property to be designated within the said 45-day period,
fail for any reason to take title thereto on or before the
earlier of (i) 180 days following the Closing or (ii) the due
date (as extended) of Seller's tax return for the year in which
the Closing occurred, then the Escrow Agreement shall require
Escrow Agent to deliver the funds held in escrow, and any
interest thereon, to Seller.
10.6 Purchaser and Seller acknowledge that any actions to
be taken by Seller in accordance with this Section in connection
with the Exchange Property Acquisition Agreement and the
conveyancing of the Exchange Property, if taken, shall be taken
by Seller as Purchaser's agent and on Purchaser's behalf. The
acquisition of the Exchange Property under the Exchange Property
Acquisition Agreement shall be for the sole account of Purchaser
and not as agent for Seller.
10.7 Subject to the provisions of this Section, Purchaser
shall cooperate fully with Seller to effect the contemplated
exchange including, without limitation, executing such documents,
instruments and certificates to facilitate the purchase, mortgage
and/or transfer to Seller of title to the Exchange Property as
may be required of Purchaser relative thereto provided the same
are without recourse too Purchaser personally (or liability is
limited to the down payment of deposit under the Exchange
Property Acquisition Agreement), and otherwise comply with the
requirements of this Section. If Purchaser receives any notice
under or relating to the Exchange Property Acquisition Agreement,
it shall immediately notify Seller and provide Seller with a copy
of same. Unless directed to do so in writing by Seller,
Purchaser shall not modify, amend, extend, cancel or give any
notice or take any other action under the Exchange Property
Acquisition Agreement. If Seller directs Purchaser in writing to
cancel, modify, amend or extend the Exchange Property Acquisition
Agreement, or to give any notice or take any other action under
the Exchange Property Acquisition Agreement, Purchaser shall take
such actions as may be necessary to comply with such direction so
long as Purchaser's potential liability is not increased by any
such actions.
10.8 Purchaser shall acquire the Exchange Property only upon
such terms, and with such financing, as shall be acceptable to
Seller, and as are otherwise in accordance with this Article 10.
Purchaser shall not transfer, assign, mortgage or otherwise
encumber the Exchange Property without Seller's prior consent.
10.9 The provisions of this Article shall survive the
Closing and the closing under the Exchange Property Acquisition
Agreement, or the termination of this Agreement prior to the
Closing or the closing under the Exchange Property Acquisition
Agreement.
10.10 Seller acknowledges and confirms that Purchaser shall
be under no duty or obligation to Seller to take any action
whatsoever under any Exchange Property Acquisition Agreement in
connection with the acquisition of any Exchange Property except
pursuant to explicit written direction from Seller or Seller's
counsel and any such instructions shall not require that
Purchaser take any action which would impose any liability upon
Purchaser or require Purchaser to take title to the Exchange
Property and any such action required to be taken must only be
taken within a reasonable time after receiving such instruction.
In addition, Seller indemnifies and agrees to defend and hold
Purchaser harmless from and against all loss, cost, damage or
claim (including reasonable attorneys' fees, court costs and
costs of investigation) arising out of or resulting from
Purchaser's participating in the Exchange described in this
Article , including without limitation, arising from Purchaser's
negligence, breach or violation of this Agreement other than
through Purchaser's wilful misconduct or gross negligence.
ARTICLE 11
GENERAL PROVISIONS
11.1 Brokerage Commission. Seller shall pay any and all
brokerage commissions due to Stover Properties, Inc. and Real
Estate Management Corporation pursuant to a separate written
agreement. If the purchase and sale hereunder does not close for
any reason, including default by either Seller or Purchaser, then
no commission shall be due by any party hereto. Except as set
forth in the preceding sentence, Seller and Purchaser represent
to each other that they have acted directly and independently
with the other as principals and that neither Seller nor
Purchaser have retained or authorized the services of any broker
or finder with respect to this transaction. Seller agrees to
indemnify and hold Purchaser harmless from and against all
claims, liabilities, and obligations for any commission, finder's
fee, or other compensation in connection with this Agreement
claimed by or through Seller. Purchaser agrees to indemnify and
hold Seller harmless from and against all claims, liabilities,
and obligations for any commission, finder's fee, or other
compensation in connection with this Agreement claimed by or
through Purchaser.
11.2 Confidentiality. Unless Seller otherwise agrees in
writing, Purchaser agrees that all confidential proprietary
information regarding the Property of whatsoever nature made
available to it by Seller or Seller's agents or representatives
or developed by Purchaser ("Confidential Information"), is
confidential and shall not be disclosed to any other person
except those assisting Purchaser with this transaction, or
Purchaser's lender, if any. The provisions of the foregoing
sentence shall not apply to any information which is otherwise
available to the public or which has been obtained from sources
that are not subject to a similar confidentiality restriction or
to disclosures as required by law. Further, Purchaser agrees not
to use any Confidential Information for any purpose other than to
determine whether to proceed with the transaction contemplated by
this Agreement. Upon Closing, all such Confidential Information
shall be the sole and exclusive property of Purchaser and not
subject in any manner to this confidentiality restriction.
Provided, however, in the event the transaction contemplated by
this Agreement does not close for any reason other than a breach
by Seller, the provisions of this Section shall survive the
termination of this Agreement.
11.3 Entire Agreement. This Agreement, together with all
exhibits or schedules either attached or delivered pursuant
hereto and other agreements expressly referred to herein,
constitutes the entire agreement between the parties with respect
to the purchase and sale of the Assets. All prior to or
contemporaneous agreements, understandings, representations,
warranties and statements, oral or written, are superseded.
11.4 Further Assurances. The parties agree to take such
further action and execute such documents and instruments as may
be reasonably required in order to more effectively carry out the
terms of this Agreement and the intentions of the parties.
11.5 Modification, Waiver. Except as expressly
contemplated herein, no modification, waiver, supplement or
discharge of this Agreement shall be valid unless the same is in
writing and signed by the party against whom the enforcement
thereof is or may be sought. No waiver of a breach of any of the
terms, covenants or conditions of this Agreement by either party
shall be construed or held to be a waiver of any succeeding or
preceding breach of the same or any other term, covenant or
condition herein contained. No waiver of any default by either
party hereunder shall be implied from any omissions by either
party to take any action on account of such default if such
default persists or is repeated, and no express waiver shall
affect a default other than as specified in such waiver.
11.6 Severability. If any term, provision, covenant or
condition of this Agreement is held to be invalid, void or
otherwise unenforceable to any extent by any court of competent
jurisdiction, the remainder of this Agreement shall not be
affected thereby, and each term, provision, covenant or condition
of this Agreement shall be valid and enforceable to the fullest
extent permitted by law.
11.7 Successors. Subject to the restriction on assignment
provided herein, all terms of this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the parties
hereto and their respective heirs, legal representatives,
successors and assigns.
11.8 Assignment. Purchaser may assign its rights under
this Agreement to a wholly owned subsidiary of Parkway
Properties, Inc. or to a limited partnership controlled by either
Purchaser or its wholly owned subsidiary without Seller's
consent; provided, however, no such assignment shall relieve
Purchaser of its obligations hereunder and the assignee must sign
an assumption agreement in form reasonably acceptable to Seller.
Except as contemplated by the preceding sentence, Seller and
Purchaser shall not assign their respective rights, obligations
or interest under this Agreement without the prior written
consent of the other.
11.9 Survival of Representations and Warranties. All
obligations hereunder to be performed after Closing, and all
warranties and representations contained herein, shall survive
Closing and the delivery of the Special Warranty Deed to
Purchaser for a period of only twelve (12) months after the
Closing, at which time such warranties, representations and
covenants shall terminate. Provided, however, the terms of this
Section shall not be deemed to extend the specific period for
performance of any obligations to be performed hereunder
subsequent to Closing. Any cause of action resulting from a
breach thereof must be commenced within fifteen (15) months after
the Closing, so long as notice of such breach was delivered
during the twelve (12) month period after the Closing.
11.10 Attorneys' Fees. If either party commences legal
proceedings for any relief against the other party arising out of
this Agreement, the losing party shall pay the prevailing party's
reasonable attorneys' fees.
11.11 Time. Time is of the essence with respect to this
Agreement.
11.12 No Other Inducement. The making, execution and
delivery of this Agreement by the parties hereto has been induced
by no representations, statements, warranties or agreements other
than those expressed herein.
11.13 Computation of Time Periods. All periods of the time
referred to in this Agreement shall include all Saturdays,
Sundays and state or national holidays, unless the period of time
specifies business days, provided that if the date or last date
to perform any act or give any notice or approval shall fall on a
Saturday, Sunday or state or national holiday, such act or notice
may be timely performed or given on the next succeeding day which
is not a Saturday, Sunday or state or national holiday.
11.14 Notices. Any notice, request, instruction or other
document to be given or furnished under this Agreement by either
party to the other party or to the Title Company shall be in
writing and shall be delivered personally or shall be sent by
facsimile transmission (with a copy sent by regular U. S. mail)
or registered or certified mail, postage prepaid, or by prepaid
overnight delivery service, at the address or telecopy number in
this Section or to such other address, telecopy number of
person as either party may designate by written notice to the
other party. A notice, request, instruction or other documents
shall be deemed to be given (a) when delivered personally, (b)
sent by facsimile transmission (with a copy sent by regular U. S.
mail), or (c) if sent by certified mail or overnight delivery
service, at the time the delivery is indicated on the duly
completed United States Postal Service return receipt or the time
of package pick up as indicated on the records of or certificates
provided by the overnight delivery service.
Seller: Charlotte Park Limited Partnership
Attention: John B. Detwiler
Office Address: c/o Stonebridge Associates, Inc.
4800 Montgomery Lane
Suite 875
Bethesda, MD 20817
Telephone Number: (301) 913-9610
Telecopy Number: (301) 913-9615
and: CEP, Limited Partnership
Attention: John B. Detwiler
Office Address: c/o Stonebridge Associates, Inc.
4800 Montgomery Lane
Suite 875
Bethesda, MD 20817
Telephone Number: (301) 913-9610
Telecopy Number: (301) 913-9615
with a copy to: Pircher, Nichols & Meeks
1999 Avenue of the Stars
Suite 2600
Los Angeles, CA 90067
Attn: Real Estate Notices (DLP; SAC)
Telephone Number: (310) 201-8973
Telecopy Number: (310) 201-8922
Purchaser: Parkway Carolina, Inc.
Attention: David R. Fowler
Office Address: 188 East Capitol Street, Suite 300
Jackson, Mississippi 39201
Mailing Address: Post Office Box 22728
Jackson, Mississippi 39225
Telephone Number: (601) 948-4091
Telecopy Number (601) 949-4077
with a copy to: Forman, Perry, Watkins & Krutz, PLLC
Attention: Steven M. Hendrix
Office Address: 188 East Capitol Street
Suite 1200 One Jackson Place
Jackson, Mississippi 39201
Telephone Number: (601) 960-8600
Telecopy Number: (601) 960-8609
11.15 Headings. The captions and paragraph headings used
in this Agreement are inserted for convenience of reference only
and are not intended to define, limit or affect the
interpretation or construction of any term or provision hereof.
11.16 Exhibits. All schedules or exhibits referred to
herein or attached hereto are incorporated herein by this
reference.
11.17 Counterparts. This Agreement may be executed in
multiple copies, each of which shall be deemed an original, but
all of which shall constitute one Agreement binding on all
parties.
11.18 Governing Law. This Agreement shall be governed,
construed and enforced in accordance with the laws of the State
of North Carolina.
11.19 Effective Date. The date of delivery to Title
Company of a fully executed counterpart of this Agreement, as
evidenced by Title Company's notation in the space set forth
below, shall be deemed the effective date of this Agreement (the
"Effective Date").
11.20 Notwithstanding anything to the contrary contained
herein, Purchaser understands that CEP only has an interest in
the CEP Property and Charlotte Park only has an interest in the
Charlotte Park Property and (a) CEP is severally liable to
Purchaser only to the extent that representations, warranties and
covenants of Seller contained herein relate to the CEP Property
(and is not liable to the extent that any such representations,
warranties and covenants relate to the Charlotte Park Property),
and (b) Charlotte Park is severally liable to Purchaser only to
the extent that representations, warranties and covenants of
Seller contained herein relate to the Charlotte Park Property
(and is not liable to the extent that any such representations,
warranties and covenants relate to the CEP Property).
IN WITNESS WHEREOF, Seller and Purchaser have executed this
Agreement as of the Effective Date.
SELLER:
CHARLOTTE PARK LIMITED PARTNERSHIP,
a North Carolina limited
partnership
Executed by Charlotte
Park this ___ By: KSSA-CEP ASSOCIATES II,
day of November, 1996. a Pennsylvania General
Partnership,
its General Partner
By:______________________________
Name:____________________________
Title:_____________________________
By: LIVE OAK PROPERTIES, INC.
a Delaware Corporation,
its General Partner
By:________________________________
Name:_____________________________
Title:______________________________
CEP INVESTORS LIMITED PARTNERSHIP
a North Carolina Limited
Partnership
Executed by CEP this ___ By: SPAULDING & SLYE
PROPERTIES
day of November, 1996. LIMITED PARTNERSHIP, a
Massachusetts Limited
Partnership
its General Partner
By: SPAULDING & SLYE
PROPERTIES
INC., a Delaware
corporation, its
General Partner
By:_____________________________
Name:__________________________
Title:___________________________
By: KSSA-CEP ASSOCIATES II,
a Pennsylvania General
Partnership,
its General Partner
By:______________________________
Name:____________________________
Title:_____________________________
By: LIVE OAK PROPERTIES, INC.
a Delaware Corporation,
its General Partner
By:________________________________
Name:_____________________________
Title:______________________________
PURCHASER:
PARKWAY CAROLINA, INC.
Executed by Purchaser this ___
By:
__________________________________
day of November, 1996.
Steven G. Rogers, President
By:
__________________________________
David R. Fowler, Vice
President
ACKNOWLEDGMENT BY TITLE COMPANY
Title Company hereby agrees to perform its obligations under
this Agreement and acknowledge receipt of (a) the Escrow Deposit
from Purchaser in the amount of ONE HUNDRED THOUSAND AND NO/100
DOLLARS ($100,000.00) on the _____ day of ______________, 1996
and (b) a fully executed counterpart of this Agreement on the
_____ day of _____________, 1996.
___________________________________
____, as Agent for First American
Title Insurance Company
By:
__________________________________
Name:
____________________________
Title:
_____________________________
LIST OF EXHIBITS
Exhibit (a) Legal Description
Exhibit Personal Property
Exhibit (a) Survey Certification
Exhibit (1) Form of Tenant Estoppel Certificate
Exhibit (2) Form of Seller Estoppel Certificate
Exhibit (3) Form of Combined Tenant Estoppel and
Subordination, Nondisburbance and Attornment
Agreement
Exhibit (4) Certificate of Tenant
Exhibit (5) From of Certificate of Property Manager Regarding
Property Operations
Exhibit (6) Declaration of Covenants, Conditions and
Restrictions
Exhibit Certificate of Seller
Exhibit Certificate of Purchaser
Exhibit (a) Form of Special Warranty Deed
Exhibit (b) Form of Bill of Sale and Assignment
Exhibit (c) Form of Assignment and Assumption of Leases,
Contracts and Intangibles
Exhibit (f) Form of Firpta Affidavit
