UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):September 9, 1997
-----------------
PARKWAY PROPERTIES, INC.
- ------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Maryland 1-11533 74-2123597
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification
incorporation) Number)
One Jackson Place Suite 1000
188 East Capitol Street
P. O. Box 24647
Jackson, Mississippi 39225-4647
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (601) 948-4091
---------------
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(Former name or former address, if changed since last report)
FORM 8-K
PARKWAY PROPERTIES, INC.
Item 5. Other Events
Proposed Acquisitions:
(1) A limited partnership in which Parkway Properties, Inc.
is a 99% limited partner and a wholly-owned subsidiary is a 1%
general partner, has a contract to purchase First Tennessee Plaza
for $29,200,000 from an unrelated party. The Company also expects to
pay approximately $786,000 in fees to pay off the existing first
mortgage. First Tennessee Plaza is a 419,809 rentable square foot,
27 floor office building with a four-level, 390 space parking garage
located in Knoxville, Tennessee. This acquisition is still subject
to Parkway's due diligence review and the negotiation of definitive
documentation. Therefore, there can be no assurance that the purchase
of this office property will be completed.
(2) A limited partnership in which Parkway Properties, Inc.
is a 99% limited partner and a wholly-owned subsidiary is a 1%
general partner, has a contract to purchase Morgan Keegan Tower
for $36,000,000 from Morgan Properties, LLC. The Company
also expects to pay approximately $591,000 in fees to pay off the
existing first mortgage. Morgan Keegan Tower is a 334,668 rentable
square foot, 21 floor office building located in Memphis, Tennessee.
This acquisition is still subject to Parkway's due diligence review
and the negotiation of definitive documentation. Therefore, there can
be no assurance that the purchase of this office property will be completed.
(3) A limited partnership in which Parkway Properties, Inc. is a
99% limited partner and a wholly-owned subsidiary is a 1% general
partner, has a contract to purchase Hightower Centre for
$6,750,000 from an unrelated party. Hightower Centre consists of
two multi-story buildings containing 78,199 rentable square feet
with 332 parking spaces in Atlanta, Georgia. This acquisition is
still subject to Parkway's due diligence 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
(1) The following audited financial statement of First
Tennessee Plaza for the year ended December 31, 1996 is attached
hereto. Also included is the unaudited financial statement for the
six months ended June 30, 1997.
Page
----
Report of Independent Auditors 5
Statement of Rental Revenue and
Direct Operating Expenses 6
Notes to Statement of Rental Revenue
and Direct Operating Expenses 7
(2) The following audited financial statement of Morgan
Keegan Tower for the year ended December 31, 1996 is attached
hereto. Also included is the unaudited financial statement for the
six months ended June 30, 1997.
Page
----
Report of Independent Auditors 9
Statement of Rental Revenue and
Direct Operating Expenses 10
Notes to Statement of Rental Revenue
and Direct Operating Expenses 11
(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) 13
Pro Forma Consolidated Balance Sheet (Unaudited) -
As of June 30, 1997 15
Pro Forma Consolidated Statement of Income (Unaudited) -
For the Year Ended December 31, 1996 16
Pro Forma Consolidated Statement of Income (Unaudited) -
For the Six Months Ended June 30, 1997 17
Notes to Pro Forma Consolidated Financial
Statements (Unaudited) 18
(c) Exhibits.
(10)(a) Purchase and Sale Agreement between Carlyle
Real Estate Limited Partnership - XIII and Parkway Properties,
L. P. dated August 20, 1997. 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 between Morgan
Properties, LLC and Parkway Properties, L. P. dated August 28,
1997. Parkway agrees to furnish supplementally to the Securities
and Exchange Commission on request a copy of any omitted schedule
or exhibit to this agreement.
(23) Consent of Ernst & Young LLP.
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 First Tennessee Plaza for the year
ended December 31, 1996. 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 First Tennessee 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 First Tennessee Plaza for the year
ended December 31, 1996, in conformity with generally accepted
accounting principles.
We have compiled the accompanying statement of rental revenue and
direct operating expenses of First Tennessee Plaza for the six
months ended June 30, 1997 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 a 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 First Tennessee Plaza for the six months
ended June 30, 1997 and, accordingly, do not express an opinion or
any other form of assurance on the statement.
Jackson, Mississippi /s/ Ernst & Young LLP
August 27, 1997
First Tennessee Plaza
Statement of Rental Revenue
and Direct Operating Expenses
Year Ended Six Months Ended
December 31, 1996 June 30, 1997
------------------ ----------------
(unaudited)
Rental revenue:
Minimum rents ............... $5,041,584 $2,561,797
Parking fee income........... 428,889 203,363
Reimbursed charges and
other income............... 487,591 237,112
---------- ----------
5,958,064 3,002,272
---------- ----------
Direct operating expenses
(Note 2):
Utilities................... 931,191 423,338
Real estate taxes........... 641,403 320,702
Maintenance services
and supplies.............. 572,238 267,843
Janitorial services
and supplies.............. 273,226 155,174
Management fees (Note 3).... 177,246 89,597
Salaries.................... 200,591 87,348
Insurance................... 72,038 36,019
Security service............ 102,183 48,900
Administrative and
miscellaneous expenses..... 112,688 38,744
---------- ----------
3,082,804 1,467,665
---------- ----------
Excess of rental revenue over
direct operating expenses... $2,875,260 $1,534,607
========== ==========
See accompanying notes.
First Tennessee Plaza
Notes to 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 the
acquisition of First Tennessee Plaza (the "Building") effective
September 30, 1997 from an unrelated party. The twenty-seven
story building is located in Knoxville, Tennessee and contains
approximately 419,809 (unaudited) rentable square feet.
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 noncancelable operating leases at
December 31, 1996 are as follows:
Year Amount
--------------------------------
1997 $ 5,047,000
1998 4,867,000
1999 4,256,000
2000 3,519,000
2001 3,228,000
Thereafter 9,075,000
-----------
$29,992,000
===========
The above amounts do not include tenant reimbursements for
utilities, taxes, insurance and common area maintenance.
One tenant, whose lease expires September 30, 2004, accounted for
approximately 27% of the Building's 1996 rental revenue.
First Tennessee Plaza
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 not comparable to the proposed future operations
of the Building such as depreciation and mortgage interest
expense. Management is not aware of any material factors relating
to the Building that would cause the reported financial
information not to be necessarily indicative of future operating
results.
3. Management Fees
Management fees of approximately 3% of revenues received from the
operations of the 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 Morgan Keegan Tower for the year
ended December 31, 1996. 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 Morgan Keegan Tower'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 Morgan Keegan Tower for the year
ended December 31, 1996, in conformity with generally accepted
accounting principles.
We have compiled the accompanying statement of rental revenue and
direct operating expenses of Morgan Keegan Tower for the six
months ended June 30, 1997 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 a 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 Morgan Keegan Tower for the six months ended
June 30, 1997 and, accordingly, do not express an opinion or any
other form of assurance on the statement.
Jackson, Mississippi /s/ Ernst & Young LLP
August 28, 1997
Morgan Keegan Tower
Statement of Rental Revenue
and Direct Operating Expenses
Year Ended Six Months Ended
December 31, 1996 June 30, 1997
----------------- ----------------
(unaudited)
Rental revenue:
Minimum rents ............... $4,166,546 $ 2,014,271
Parking fee income........... 191,871 77,777
Reimbursed charges and
other income............... 274,679 126,199
---------- ----------
4,633,096 2,218,247
---------- ----------
Direct operating expenses
(Note 2):
Utilities................... 572,971 287,120
Real estate taxes........... 88,196 644,098
Garage expenses............. 407,321 166,800
Maintenance services
and supplies............... 362,798 260,119
Janitorial services
and supplies............... 232,079 128,218
Management fees (Note 3).... 149,440 61,724
Salaries.................... 93,379 46,129
Insurance................... 25,158 815,769
Security service............ 73,649 41,871
Administrative and
miscellaneous expenses.... 87,828 858,383
---------- ----------
2,092,819 91,110,231
---------- ----------
Excess of rental revenue over
direct operating expenses.... $2,540,277 $1,108,016
========== ==========
See accompanying notes.
Morgan Keegan Tower
Notes to 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 the
acquisition of the Morgan Keegan Tower (the "Building")
effective September 30, 1997 from Morgan Properties, LLC, an
unrelated party. The twenty-one story building is located in
Memphis, Tennessee and contains approximately 334,668
(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, 1996 are as follows:
Year Amount
--------------------------------
1997 $ 4,127,000
1998 4,071,000
1999 3,905,000
2000 3,771,000
2001 3,214,000
Thereafter 5,999,000
-----------
$25,087,000
===========
The above amounts do not include tenant reimbursements for
utilities, taxes, insurance and common area maintenance.
Two tenants, whose leases expire January 31, 2002 and November 30,
2003, accounted for approximately 56% of the Building's 1996
rental revenue.
Morgan Keegan Tower
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 not comparable to the proposed future operations
of the Building such as depreciation and mortgage interest
expense. Management is not aware of any material factors relating
to the Building that would cause the reported financial
information not to be necessarily indicative of future operating
results.
3. Management Fees
Management fees of approximately 3% of revenues 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
June 30, 1997 and pro forma consolidated statements of income of
Parkway Properties, Inc. ("Parkway") for the year ended December
31, 1996 and six months ended June 30, 1997 give effect to the
recent purchases of Parkway for the periods stated and the
proposed purchases of First Tennessee Plaza, Morgan Keegan Tower
and Hightower Centre. 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 Lakewood II, NationsBank Tower and Fairway
Plaza as well as the proposed purchases of First Tennessee Plaza,
Morgan Keegan Tower and Hightower Centre, as if they had been
consummated on June 30, 1997.
The pro forma consolidated statements of income sets forth the
effects of Parkway's purchases of the following buildings as well
as the proposed purchases of First Tennessee Plaza, Morgan Keegan
Tower and Hightower Centre. as if they had been consummated on
January 1, 1996.
BUILDING DATE OF PURCHASE
Fairway Plaza 08/12/97
NationsBank Tower 07/31/97
Lakewood II 07/10/97
Sugar Grove 05/01/97
Vestavia Centre 04/04/97
Meridian 03/31/97
Charlotte Park Executive Center 03/18/97
Courtyard at Arapaho 03/06/97
Ashford II 01/28/97
Forum II & III 01/07/97
Tensor 10/31/96
BB&T Financial Center 09/30/96
Falls Pointe 08/09/96
Roswell North 08/09/96
Cherokee 07/09/96
Courthouse 07/09/96
400 Northbelt 04/15/96
Woodbranch 04/15/96
One Park 10 Plaza 03/07/96
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 certain properties acquired during 1995 and 1996
or assumed in the purchases, the December 24, 1996 sale of the
Virginia Beach mortgage loan and the sale of 2,012,500 shares of
common stock on January 22, 1997 as if all the transactions had
occurred January 1, 1996.
These pro forma consolidated financial statements may not be
indicative of the results that actually would have occurred if the
purchases, sales 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 consolidated financial statements and notes of Parkway
included in its annual report on Form 1O-KSB for the year ended
December 31, 1996.
PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
June 30, 1997
(Unaudited)
Parkway Pro Forma Parkway
Historical Adjustments Pro Forma
---------- ----------- ---------
(In thousands)
Assets
Real estate related investments:
Office buildings.............$204,510 $ 112,132(1-6)$316,642
Land held for development.... 1,721 - 1,721
Accumulated depreciation..... (10,749) - (10,749)
-------- -------- --------
195,482 112,132 307,614
Real estate held for sale:
Land....................... 5,187 - 5,187
Operating properties....... 1,492 - 1,492
Other non-core
real estate assets......... 253 - 253
Mortgage loans............... 326 - 326
Real estate partnership...... 311 - 311
-------- -------- --------
203,051 112,132 315,183
Interest, rents receivable
and other assets............. 6,343 - 6,343
Cash and cash equivalents...... 480 (480) -
-------- -------- --------
$209,874 $111,652 $321,526
======== ======== ========
Liabilities
Notes payable to banks..........$ 8,200 $104,742 $112,942
Mortgage notes payable
without recourse.............. 61,681 6,910(1) 68,591
Accounts payable and other
liabilities................... 7,644 - 7,644
-------- -------- --------
77,525 111,652 189,177
-------- -------- --------
Stockholders' Equity
Common stock, $.001 par value,
70,000,000 shares authorized,
6,289,230 shares issued in
1997.......................... 6 - 6
Additional paid-in capital...... 103,719 - 103,719
Retained earnings............... 28,624 - 28,624
-------- -------- --------
132,349 - 132,349
-------- -------- --------
$209,874 $111,652 $321,526
======== ======== ========
See accompanying notes
PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(Unaudited)
Parkway Pro Forma Parkway
Historical Adjustments(7) Pro Forma
---------- -------------- ---------
(In thousands, except per share data)
Revenues
Income from office properties...$18,840 $37,297 (a) $56,137
Income from other real estate
properties.................... 1,773 - 1,773
Interest on mortgage loans...... 1,740 (1,384)(d) 356
Management company income....... 784 - 784
Interest on investments......... 500 - 500
Dividend income................. 118 - 118
Deferred gains and other income. 324 - 324
Gains on real estate held
for sale and mortgage loans... 9,909 - 9,909
Gain on securities.............. 549 - 549
------- ------- -------
34,537 35,913 70,450
------- ------- -------
Expenses
Office properties
Operating expense............. 8,466 17,564 (a) 26,030
Interest expense.............. 3,526 2,158 (c) 5,684
Depreciation and amortization. 2,444 5,041 (a) 7,485
Minority interest............. (28) - (28)
Other real estate properties
Operating expense............. 1,379 - 1,379
Interest expense
Notes payable to banks........ 281 7,921 (e) 8,202
Notes payable on wrap
mortgages................... 340 (340)(f) -
Management company expense...... 673 - 673
General and administrative...... 2,982 - 2,982
------- ------- -------
20,063 32,344 52,407
------- ------- -------
Income before income taxes...... 14,474 3,569 18,043
Income tax expense.............. 103 - 103
------- ------- -------
Net income......................$14,371 $ 3,569 $17,940
======= ======= =======
Net income per share............$ 3.92 $ 3.16(8)
======= =======
Weighted average shares
outstanding................... 3,662 5,674
======= =======
See accompanying notes
PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(Unaudited)
Parkway Pro Forma Parkway
Historical Adjustments(7) Pro Forma
---------- -------------- ---------
(In thousands, except per share data)
Revenues
Income from office properties...$18,065 $11,317 (b) $29,382
Income from other real estate
properties.................... 440 - 440
Interest on mortgage loans...... 32 - 32
Management company income....... 251 - 251
Interest on investments......... 330 - 330
Dividend income................. 128 - 128
Deferred gains and other income. 64 - 64
------- ------- -------
19,310 11,317 30,627
------- ------- -------
Expenses
Office properties
Operating expense............. 7,459 5,198 (b) 12,657
Interest expense:
Contractual................. 2,499 279 (c) 2,778
Amortization of loan cost... 43 - 43
Depreciation and amortization. 2,255 1,520 (b) 3,775
Minority interest............. 59 - 59
Other real estate properties
Operating expense............. 293 - 293
Interest expense on bank notes:
Contractual................... 130 3,960 (e) 4,090
Amortization of loan costs.... 77 - 77
Management company expense...... 172 - 172
General and administrative...... 1,677 - 1,677
------- ------- -------
14,664 10,957 25,621
------- ------- -------
Income before gains............. 4,646 360 5,006
------- ------- -------
Gain on sales
Gain on real estate held for
sale.......................... 1,574 - 1,574
------- ------- -------
Net income......................$ 6,220 $ 360 $ 6,580
======= ======= =======
Net income per share............$ 1.04 $ 1.10
======= =======
Weighted average shares
outstanding................... 6,004 6,004
======= =======
See accompanying notes
PARKWAY PROPERTIES, INC.
Notes to Pro Forma Consolidated Financial Statements
(Unaudited)
1. On July 10, 1997, the Company purchased the 118,750 square
foot Lakewood II office building in Atlanta, Georgia for
$11,500,000 from an unrelated party. This five-story
office building was constructed in 1988. The Company
assumed a $6,910,000 first mortgage on the property with an
8.08% interest rate as part of the purchase. The remaining
balance was funded with advances under bank lines of
credit.
2. On July 31, 1997, the Company purchased the 296,797 square
foot NationsBank Tower in Columbia, South Carolina for
$20,600,000 from an unrelated party. NationsBank Tower is a
twenty-story office building with an attached 565 space,
eight-level parking deck. The building was constructed in
1973 and is located on Gervais Street in the Central
Business District (CBD). The purchase was funded with
advances under bank lines of credit.
3. On August 12, 1997, the Company purchased Fairway Plaza in
Los Colinas, Texas for $6,705,000 from an unrelated party.
Fairway Plaza consists of two multi-story office buildings
containing 82,268 net rentable square feet with 321 surface
parking spaces situated on 6.31 acres. The purchase was
funded with advances under bank lines of credit
4. The Company has a contract to purchase First Tennessee Plaza
in Knoxville, Tennessee for $29,200,000 from an unrelated party.
The Company also expects to pay approximately $786,000 in fees
to pay off the existing first mortgage. First Tennessee Plaza
is a 27 story office building containing 419,809 net rentable
square feet with a four level 390 space parking garage.
5. The Company has a contract to purchase Morgan Keegan Tower in
Memphis, Tennessee for $36,000,000 from Morgan Properties, LLC,
an unrelated party. The Company also expects to pay approximately
$591,000 in fees to pay off the existing first mortgage. Morgan
Keegan Tower is a 21 story office building containing 334,668 net
rentable square feet.
6. The Company has a contract to purchase Hightower Centre in
Atlanta, Georgia for $6,750,000 from an unrelated party.
Hightower Centre consists of two multi-story buildings
containing 78,199 rentable square feet with 332 parking
spaces.
7. The pro forma adjustments to the Consolidated Statement of
Income for the year ended December 31, 1996 and six months
ended June 30, 1997 set forth the effects of Parkway's
purchase of the following buildings as well as the proposed
purchase of First Tennessee Plaza, Morgan Keegan Tower and
Hightower Centre as if they had been consummated on January
1, 1996.
BUILDING DATE OF PURCHASE
Fairway Plaza 08/12/97
NationsBank Tower 07/31/97
Lakewood II 07/10/97
Sugar Grove 05/01/97
Vestavia Centre 04/04/97
Meridian 03/31/97
Charlotte Park Executive Center 03/18/97
Courtyard at Arapaho 03/06/97
Ashford II 01/28/97
Forum II & III 01/07/97
Tensor 10/31/96
BB&T Financial Center 09/30/96
Falls Pointe 08/09/96
Roswell North 08/09/96
Cherokee 07/09/96
Courthouse 07/09/96
400 Northbelt 04/15/96
Woodbranch 04/15/96
One Park 10 Plaza 03/07/96
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
and the placement of non-recourse mortgage debt on certain
properties acquired during 1995 and 1996 or assumed in the
purchases as if the transactions occurred January 1, 1996.
These pro forma adjustments are detailed below by property
for the year ended December 31, 1996 and six months ended
June 30, 1997.
The effect on income and expenses from real estate properties
due to the above purchases are as follows:
(a) For the year ended December 31, 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 810,000 530,000 64,000
Forum II & III 2,749,000 1,331,000 370,000
Charlotte Park 2,616,000 1,180,000 333,000
Ashford II 649,000 441,000 50,000
Courtyard at
Arapaho 2,196,000 948,000 340,000
Meridian 843,000 503,000 236,000
Vestavia 878,000 394,000 105,000
Sugar Grove 1,082,000 643,000 174,000
Lakewood II 1,915,000 839,000 259,000
NationsBank Tower 4,094,000 1,782,000 464,000
Fairway Plaza 1,408,000 682,000 151,000
First Tennessee
Plaza 5,958,000 3,083,000 675,000
Morgan Keegan
Tower 4,633,000 2,093,000 823,000
Hightower Centre 981,000 430,000 152,000
----------- ----------- ----------
$37,297,000 $17,564,000 $5,041,000
=========== =========== ==========
Depreciation is provided by the straight-line method over the
estimated useful lives of the buildings (40 years).
(b) For the six months ended June 30, 1997:
Revenue Expenses
----------- ---------------------------
Income From Real Estate Owned
Real Estate Operating Depreciation
Properties Expense Expense
----------- ------------ ------------
Charlotte Park $ 505,000 $ 208,000 $ 69,000
Ashford II 54,000 37,000 4,000
Courtyard at
Arapaho 366,000 164,000 58,000
Meridian 354,000 123,000 59,000
Vestavia 240,000 91,000 26,000
Sugar Grove 309,000 165,000 43,000
Lakewood II 977,000 447,000 129,000
NationsBank Tower 2,050,000 860,000 232,000
Fairway Plaza 687,000 303,000 75,000
First Tennessee
Plaza 3,002,000 1,468,000 337,000
Morgan Keegan
Tower 2,218,000 1,110,000 412,000
Hightower Centre 555,000 222,000 76,000
----------- ----------- -----------
$11,317,000 $ 5,198,000 $ 1,520,000
=========== =========== ===========
Depreciation is provided by the straight-line method over the
estimated useful lives of the buildings (40 years).
(c) Pro forma interest expense on real estate owned reflects
the non-recourse debt placed on certain buildings
acquired during 1995 and 1996 and debt assumed upon
purchase at the actual amounts and rates by property as
if placed January 1, 1996 and is detailed below.
Property/Placement Year Ended
Date/Rate Debt 12/31/96
------------------ ----------- ----------
IBM Building
2/96 7.78% $ 4,800,000 $ 41,000
Waterstone
6/96 8.00% 5,620,000 185,000
One Park 10
7/96 8.35% 4,700,000 196,000
400 North Belt &
Woodbranch
7/96 8.25% 10,000,000 412,000
Falls Pointe &
Roswell North
12/96 8.375% 9,850,000 766,000
Lakewood II*
7/97 8.08% 6,910,000 558,000
----------
$2,158,000
==========
*The only pro forma adjustment to interest expense on
real estate owned for the six months ended June 30, 1997
is due to the debt assumed in the purchase of Lakewood
II in the amount of $279,000.
(d) The January 1, 1996 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:
Year Ended
12/31/96
------------
Interest Income:
Mortgage loans $(1,384,000)
(e) The pro forma effect of the building purchases as well
as the stock offering of 2,012,500 shares on interest
expense on notes payable to banks for the year ended
December 31, 1996 and six months ended June 30, 1997 is
an increase of $7,921,000 and $3,960,000, respectively.
(f) The pro forma effect of the sale of the Virginia Beach
mortgage loan on interest expense on notes payable on
wrap mortgages for the year ended December 31, 1996 is
a decrease of $340,000.
8. The pro forma earnings per share for the year ended December
31, 1996 reflect the sale of 2,012,500 shares of common stock
under its existing shelf registration on January 22, 1997.
9. No additional income tax expenses were provided because of
the Company's net operating loss carryover and status as a
REIT.
10. All per share information for the year ended December 31,
1996 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, 1996.
FORM 8-K
PARKWAY PROPERTIES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
DATE: September 9, 1997 PARKWAY PROPERTIES, INC.
BY: /s/Sarah P. Clark
Sarah P. Clark
Senior Vice President,
Chief Financial Officer,
Treasurer and Secretary
PURCHASE AGREEMENT
(First Tennessee Plaza; Knoxville, Texas)
THIS AGREEMENT is made and entered into as of August
_______, 1997 (the "Effective Date") by and between CARLYLE REAL
ESTATE LIMITED PARTNERSHIP-XIII, an Illinois limited partnership
(hereinafter called "Seller"), and PARKWAY PROPERTIES, L.P., a
Delaware limited partnership (hereinafter called "Buyer").
R E C I T A L S
A. Seller is the owner of that certain real property
located in the City of Knoxville, County of Knox, State of
Tennessee, consisting primarily of an office building (the
"Building") sometimes known as "First Tennessee Plaza".
B. Buyer desires to purchase such premises on the terms
and conditions hereinafter documented.
NOW, THEREFORE, in consideration of the mutual undertakings
of the parties hereto, it is hereby agreed as follows:
1. Purchase and Sale. Seller shall sell to Buyer, and
Buyer shall purchase from Seller, the land (the "Land")
described in Exhibit "A" attached hereto and made a part hereof,
together with all right, title and interest of Seller in and to
all improvements, structures and fixtures located upon the Land,
all right, title and interest of Seller in and to those items of
personal property described in Exhibit "B" attached hereto and
made a part hereof, all right, title and interest of Seller in
and to the name "First Tennessee Plaza", to the extent
assignable, all right, title and and interest of Seller in and
to all contract rights and agreements, and all right, title and
interest of Seller in and to all leases, tenant lists,
advertising material and telephone exchange numbers relating
solely to the Property (hereinafter, collectively, the
"Property"), all upon the terms, covenants and conditions
hereinafter set forth.
2. Purchase Price.
A. The purchase price (the "Purchase Price") for the
Property shall be the sum of Twenty-Nine Million Two Hundred
Thousand and No/100 Dollars ($29,200,000.00).
3. Payment of Purchase Price. The Purchase Price shall
be paid to Seller by Buyer as follows:
A. Escrow Deposit. Concurrently herewith, Buyer
shall deliver $100,000 (together with all interest thereon, the
"Initial Escrow Deposit") to Ticor Title Insurance Company, 201
North LaSalle Street, Suite 1400, Chicago, Illinois, 60601,
Attention: Rick Lucchesi (which company, in its capacity as
escrow holder hereunder, is called "Escrow Holder"). In
addition, if Buyer shall deliver the "Approval Notice" prior to
the expiration of the "Due Diligence Period", as provided (and
defined) in paragraph 4B hereof, Seller shall concurrently
therewith deliver an additional deposit of $150,000 (the
"Additional Escrow Deposit") to Escrow Holder. Each deposit to
be made hereunder shall be made by a bank or cashier's check
drawn on a major national money center banking institution
reasonably acceptable to Seller (or by other delivery of good
funds reasonably acceptable to Seller), and the amounts so
deposited shall be held by Escrow Holder as a deposit against
the Purchase Price in accordance with the terms and provisions
of this Agreement. As used herein, the term "Escrow Deposit"
means the Initial Escrow Deposit and, from and after the deposit
thereof, the Additional Escrow Deposit, together with all
interest earned on such deposits while the same are held in
escrow hereunder. At all times in which the Escrow Deposit is
being held by the Escrow Holder, the Escrow Deposit shall be
invested by Escrow Holder in the following investments
("Approved Investments"): (i) an insured interest bearing
account of a financial institution reasonably acceptable to
Buyer and Seller, or (ii) such other manner as may be reasonably
approved by Seller and Buyer. The Escrow Deposit shall be
disposed of by Escrow Holder only as provided in this Agreement.
B. Independent Consideration. Seller and Buyer
acknowledge and agree that One Hundred and No/100 Dollars
($100.00) of the Escrow Deposit (the "Independent Contract
Consideration") shall be paid to Seller is terminated for any
reason. Seller and Buyer acknowledge and agree that the
Independent Contract Consideration has been bargained for and
agreed to as additional consideration for Seller's execution and
delivery of this Agreement. At "Closing" (as hereinafter
defined), the Independent Contract Consideration shall be
applied to the Purchase Price. Notwithstanding the foregoing to
the contrary, the payment to Seller of such Independent Contract
Consideration shall in no way limit, and are in addition to, any
other rights or remedies of Seller hereunder (including, without
limitation, disposition of the Escrow Deposit in accordance with
paragraph 9 below).
C. Existing Debt. Subject to the provisions of
paragraph 4C below, payment of a portion of the Purchase Price
shall be evidenced by Buyer taking title to the Property subject
to the "Existing Encumbrance" and the "Loan Documents"
(including, the "Existing Note") secured thereby (as such terms
are defined in Exhibit "C" attached hereto and made a part
hereof), such payment being in an amount equal to the
outstanding principal balance of the Existing Note as of the
"Closing Date" (as hereinafter defined). Assuming the Closing
Date occurs on September 4, 1997, the outstanding principal
balance of the Existing Note is anticipated to be approximately
$14,900,000.
D. Closing Payment. The balance of the Purchase
Price (i.e., the Purchase Price less the sum of the Deposit and
the amounts, if any, deemed paid pursuant to paragraph 3B above,
as such amounts shall be adjusted by the prorations and credits
specified herein) shall be paid by wire transfer of immediately
available federal funds on the Closing Date as directed by
Seller (the amount to be paid under this subparagraph D being
herein called the "Closing Payment"). Assuming the Closing Date
occurs in September, 1997, the
Closing Payment is anticipated to be approximately $29,200,000,
less the Deposit and adjusted by the prorations and credits
specified herein (i.e., $26,700,000, less the anticipated
principal balance of the Existing Note of approximately
$14,900,000).
4. Conditions Precedent.
A. Title Matters.
(1) Title Report. Seller has delivered a
commitment for title insurance ("Title Commitment") covering the
Property from Ticor Title Insurance Company dated June 16, 1997
(which company, in its capacity as title insurer hereunder, is
herein called the "Title Company"). In addition, Seller has
delivered to Buyer an update of that certain survey of the
Property dated February 23, 1995, and last revised July 25,
1997, prepared by Barge, Waggoner, Sumner & Cannon, Inc., which
survey shall be certified to Buyer and the "Lender" (as
hereinafter defined) and Title Company ("Survey"). If Buyer
shall deliver the Approval Notice on or before the end of the
Due Diligence Period, Buyer shall be deemed to have approved the
exceptions to title shown on the Title Commitment and the
matters disclosed on the Survey so long as the Title Commitment
and Survey have been previously delivered to Buyer. Approval by
Buyer of any additional exceptions to title or survey matters
disclosed after the end of the Due Diligence Period shall be a
condition precedent to Buyer's obligation to purchase the
Property (Buyer hereby agreeing that its approval of such
additional exceptions to title or survey matters shall not be
unreasonably withheld). Unless Buyer gives written notice that
it disapproves any such additional exceptions to title or survey
matters, stating the exceptions so disapproved, on or before the
sooner to occur of 5 days after receipt of written notice
thereof or the Closing Date, Buyer shall be deemed to have
approved said exceptions. If, for any reason, on or before the
Closing Date, Seller does not cause any exceptions to title or
survey matters which Buyer disapproves (to the extent Buyer is
permitted hereunder to so disapprove) either to be removed or to
obtain a title endorsement (if available) insuring over such
disapproved matter on or before the Closing Date at no cost or
expense to Buyer (Seller having the right but not the obligation
to do so), the obligation of Seller to sell, and Buyer to buy,
the Property as herein provided shall terminate (and Seller and
Buyer shall have no further obligations in connection herewith).
Buyer shall have the option to waive the condition precedent
set forth in this Paragraph 4A(1) by notice to Seller. In the
event of such waiver, such condition shall be deemed satisfied.
(2) Exceptions to Title. Buyer shall be
obligated to accept title to the Property, subject to the
following exceptions to title:
(a) Real estate taxes and assessments not
yet due and payable;
(b) The Loan Documents; and
(c) Such exceptions to title as may be
approved or deemed approval by Buyer pursuant to the provisions
of subparagraph A(1) above.
Conclusive evidence of the availability of such title shall be
the willingness of Title Company to issue to Buyer on the
Closing Date an owner's title insurance policy in the standard
form issued in the State of Tennessee ("Owner's Policy"), in the
face amount of the Purchase Price, which policy shows (i) title
to the Property to be vested of record in Buyer, and (ii) the
above exceptions to be the only exceptions to title.
B. Due Diligence Reviews. Buyer shall have until
5:00 p.m. (Central time) on August 22, 1997 (the "Due Diligence
Period") within which to perform and complete all of Buyer's due
diligence examinations, reviews and inspections of all matters
pertaining to the purchase of the Property, including all
leases, documents relating to the existing financing (including
Loan Documents), service contracts, survey and title matters,
and all physical, environmental and compliance matters and
conditions respecting the Property. During the Due Diligence
Period, Seller shall provide Buyer with reasonable access to the
Property upon reasonable advance notice and shall also make
available to Buyer, upon reasonable advance notice, such leases,
service contracts and other contracts respecting the Property as
Buyer shall reasonably request (to the extent the same are in
Seller's possession). Buyer shall promptly commence, and shall
diligently and in good faith pursue, its due diligence review
hereunder. Buyer shall at all times conduct its due diligence
review, inspections and examinations in a manner so as to not
cause damage, loss, cost or expense to Seller or the Property
and so as to not interfere with or disturb any tenant at the
Property, and Buyer will indemnify, defend, and hold Seller and
the Property harmless from and against any such damage, loss,
cost or expense (the foregoing obligation surviving any
termination of this Agreement). Without limitation on the
foregoing, in no event shall Buyer (a) make any intrusive
physical testing (environmental, structural or otherwise) at the
Property (such as soil borings, water samplings or the like)
without Seller's express written consent; (b) contact any tenant
of the Property without Seller's express written consent; and
(c) contact any governmental authority having jurisdiction over
the Property without Seller's express written consent (which
consent as to tenants and governmental authorities shall not be
unreasonably withheld). Seller shall have the right, at its
option, to cause a representative of Seller to be present at all
inspections, reviews and examinations conducted hereunder.
Buyer shall promptly deliver to Seller true, accurate and
complete copies of any written reports relating to the Property
prepared for or on behalf of Buyer by any third party and in the
event of termination hereunder, shall return all documents and
other materials furnished by Seller hereunder. Buyer shall keep
all information or data received or discovered in connection
with any of the inspections, reviews or examinations strictly
confidential. If, on or before the expiration of the Due
Diligence Period, based upon such review, examination or
inspection, Buyer shall determine that it intends to proceed
with the acquisition of the Property, then Buyer shall promptly
notify Seller and Escrow Holder of such determination in writing
(such notice being herein called the "Approval Notice") and
concurrently therewith Buyer shall deliver the Additional Escrow
Deposit to Escrow Holder (and thereafter, Buyer shall have no
further right to terminate this Agreement pursuant to this
paragraph 4B). If, however, on or before the expiration of the
Due Diligence Period, based upon such review, examination or
inspection, Buyer shall determine in its sole and absolute
discretion that it no longer intends to acquire the Property,
then Buyer shall promptly notify Seller of such determination in
writing (such notice being herein called the "Termination
Notice"), whereupon the Escrow Deposit shall be returned to
Buyer and this Agreement, and the obligations of the parties
hereunder, shall terminate. In the event that, on or before the
expiration of the Due Diligence Period, Buyer shall fail to have
delivered the Approval Notice to Seller (and concurrently
therewith deposit the Additional Escrow Deposit with Escrow
Holder as provided for in this Agreement), Buyer shall be deemed
to have elected not to proceed with the acquisition of the
Property whereupon the Escrow Deposit shall be returned to Buyer
and this Agreement, and the obligations of the parties
hereunder, shall terminate.
C. Existing Loan Matters. Receipt of the written
consent to the transactions contemplated herein from all parties
whose consent to the assumption by Buyer of such Loan Documents
is required thereunder, together with a release of Seller from
any liability under the Loan Documents, and an "estoppel
certificate" executed by The Prudential Insurance Company of
America (the "Existing Lender") certifying that the Loan
Documents are in full force and effect and that no default
exists thereunder, shall be conditions precedent to Seller's
obligation to sell, and Buyer's obligation to purchase, the
Property. To the extent required by the Existing Lender, Seller
shall pay to the Existing Lender up to 1% of the outstanding
principal balance of the Existing Note as a loan transfer fee or
prepayment premium or fee. Seller shall pay any other transfer,
assumption or other fees and costs (including reasonable
attorneys' fees, but not attorneys' fees of Buyer's counsel)
imposed by any of such parties with respect to such consent and
assumption (including any loan transfer, assumption fee or
prepayment premium in excess of 1% of the outstanding principal
balance of the Existing Note) up to a maximum of $15,000.
Buyer shall reasonably cooperate with Seller in connection with
such consent and assumption (and shall promptly deliver such
information, including financial information, respecting Buyer
or its principals as any of such parties may request). Seller's
sole obligations in connection with the consent matters herein
contemplated (unless Buyer agrees otherwise) shall be to utilize
reasonable efforts to obtain such consents, and to reasonably
cooperate with Buyer to the extent necessary, including, but not
limited to, with respect to its efforts in connection with
substitution of the letter of credit. If such consents are not
obtained on or before the Closing Date, the obligation of Seller
to sell, and Buyer to purchase, the Property shall terminate.
Seller's sole obligation hereunder with respect to obtaining an
"estoppel certificate" from the Existing Lender shall be to
utilize reasonable efforts to obtain such "estoppel certificate"
(such reasonable efforts not including any obligation to
institute legal proceedings or to expend any additional monies
therefor, other than for minor administrative charges).
D. Estoppel Certificates. Receipt of estoppel
certificates ("Tenant Estoppel Certificates"), from (i) each
tenant listed on Exhibit "D-1" attached hereto and made a part
hereof, and (ii) from a sufficient number of the balance of the
tenants at the Property so that Tenant Estoppel Certificates
shall be received under clauses (i) and (ii) hereof with respect
to not less than 80% of the net rentable square feet of space
covered by leases in effect as of the Closing Date, shall be a
condition precedent to Buyer's obligation to purchase the
Property hereunder. Each Tenant Estoppel Certificate shall
either be substantially in the form provided in Exhibit "D-2"
attached hereto and made a part hereof or in the form, if any,
prescribed in the applicable tenant lease. Seller's sole
obligation hereunder shall be to utilize commercially reasonable
efforts to obtain a Tenant Estoppel Certificate from each tenant
at the Property (such reasonable efforts obligations not
including any obligation to institute legal proceedings or to
expend monies therefor), but such obligation shall not affect
the provision of such Tenant Estoppel Certificates as a
condition precedent to closing. In addition, it shall be a
condition precedent to Buyer's obligation to close hereunder
that, as of the Closing Date, Buyer shall have received an
estoppel certificate addressed to Buyer from Seller with respect
to those tenants which fail to deliver tenant estoppel
certificates ("Seller's Estoppel Certificates") certifying the
following: that the applicable lease is in full force and
effect, that a true and complete copy of the applicable lease is
attached to the applicable Seller's Estoppel Certificate; that
neither the tenant nor the landlord under the applicable lease
is in default thereunder; that the Seller's Estoppel Certificate
states the present amount of annual base rent being paid by the
tenant under the applicable lease and the commencement and
termination dates under the applicable lease. A Seller's
Estoppel Certificate shall be of no further force and effect as
to any tenant which delivers an Tenant Estoppel Certificate
subsequent to Seller's delivery of the Seller's Estoppel
Certificates to Buyer, provided such Tenant Estoppel Certificate
is consistent in all material respects with the information with
respect to such tenant contained in the applicable Seller's
Estoppel Certificate previously delivered to Buyer.
E. Removal of Stained Soil. The removal of certain
black stained soil located in the sump pits of the garage
elevators at the Property, as the same was disclosed in a phase
I environmental report prepared by PSI for Buyer as project
number 360-7E015 ("Buyer's Phase I"), shall be a condition
precedent to Buyer's obligation to purchase the Property
hereunder.
5. Closing Procedure. The closing of the sale and
purchase herein provided (the "Closing") shall be consummated at
a closing conference ("Closing Conference"), which shall be held
on the Closing Date at Seller's offices at 900 North Michigan
Avenue, Chicago, Illinois or through escrow through the mail.
As used herein, "Closing Date" means the date which is 15 days
after the end of the Due Diligence Period, or such earlier date
as may be agreed upon by Buyer and Seller; provided, however, if
any of the conditions to closing set forth in paragraph 4C above
are not satisfied on or before the Closing Date, and so long as
Buyer shall not then be in default or have otherwise breached
its obligations under this Agreement, Buyer and/or Seller shall
have the right to extend the Closing Date for up to forty-five
(45) days in order to attempt to satisfy such conditions.
A. Escrow. On or before the Closing Date, the
parties shall deliver to Title Company the following: (1) by
Seller, a duly executed and acknowledged original limited
warranty deed ("Deed") in the form of Exhibit "E" attached
hereto and made a part hereof, and (2) by Buyer, the Closing
Payment in immediately available federal funds. Such deliveries
shall be made pursuant to escrow instructions ("Escrow
Instructions") to be executed among Buyer, Seller and Title
Company in form reasonably acceptable to such parties in order
to effectuate the intent hereof. The conditions to the closing
of such escrow shall include the Title Company's receipt of the
Deed, the Closing Payment and a notice from each of Buyer and
Seller authorizing Title Company to close the transactions as
contemplated herein (each of Buyer and Seller being obligated to
deliver such authorization notice at the Closing Conference as
soon as it is reasonably satisfied that the other party is in a
position to deliver the items to be delivered by such other
party under subparagraph B below).
B. Delivery to Parties. Upon the satisfaction of
the conditions set forth in the Escrow Instructions, then
(x) the Deed shall be delivered to Buyer by Title Company's
depositing the same for recordation, (y) the Closing Payment
(and the Escrow Deposit) shall be delivered by Title Company to
Seller and (z) at the Closing Conference, the following items
shall be delivered:
(1) Seller Deliveries. Seller shall deliver to
Buyer the following:
(a) A duly executed and acknowledged bill
of sale, assignment and assumption agreement ("Assignment and
Assumption Agreement") in the form of Exhibit "F" attached
hereto and made a part hereof;
(b) Duly executed and acknowledged
certificates regarding the "non-foreign" status of Seller;
(c) Evidence reasonably satisfactory to
Buyer and Title Company respecting the due organization of
Seller and the due authorization and execution of this Agreement
and the documents required to be delivered hereunder;
(d) Appropriate documentation to evidence
the assignment and assumption of the Loan Documents as may be
reasonably required in order to effectuate the release,
assignment and assumption transactions respecting the Loan
Documents as contemplated in this Agreement;
(e) A certificate of Seller ("Seller
Closing Certificate") updating the representations and
warranties contained in paragraph 7A hereof to the Closing Date,
and noting any changes thereto;and
(f) Such additional documents as may be
reasonably required by Buyer and Title Company in order to
consummate the transactions hereunder (provided the same do not
materially increase the costs to, or liability or obligations
of, Seller in a manner not otherwise provided for herein).
(2) Buyer Deliveries. Buyer shall deliver to
Seller the following:
(a) A duly executed and acknowledged
Assignment and Assumption Agreement;
(b) Evidence reasonably satisfactory to
Seller and Title Company respecting the due organization of
Buyer and the due authorization and execution of this Agreement
and the documents required to be delivered hereunder;
(c) Appropriate documentation to evidence
the assignment and assumption of the Loan Documents as may be
reasonably required in order to effectuate the release,
assignment and assumption transactions respecting the Loan
Documents as contemplated in this Agreement;
(d) A certificate of Buyer ("Buyer's
Closing Certificate") updating the representations and
warranties contained in paragraph 7B hereof to the Closing Date,
and noting any changes thereto;and
(e) Such additional documents as may be
reasonably required by Seller and Title Company in or to
consummate the transactions hereunder (provided the same do not
materially increase the costs to, or liability or obligations
of, Buyer in a manner not otherwise provided for herein).
C. Closing Costs. Seller shall pay (i) all of any
deed or other transfer taxes, mortgage taxes and sales or use
taxes applicable to the transactions hereunder, (ii) the costs
to update the Survey and (iii) one-half of any escrow or
recording charges attributable to the Deed. Buyer shall pay (i)
the title insurance premium for the Owner's Policy, as well as
any portion of the title insurance premium attributable to any
additional or extended coverage or endorsements requested by
Buyer, (ii) one-half of any escrow or recording charges and
(iii) all fees, costs or expenses incurred by Buyer in
connection with Buyer's due diligence reviews hereunder. Each
of Seller and Buyer shall pay its own attorneys' fees and its
respective share of prorations as hereinafter provided.
Notwithstanding the foregoing, in the event the sale
contemplated hereby does not close on the Closing Date, then
each party shall pay all costs incurred by it.
D. Prorations.
(1) Items to be Prorated. The following shall
be prorated between Seller and Buyer as of the Closing Date:
(a) All real estate taxes and assessments
on the Property for the current year on a per diem basis. In no
event shall Seller be charged with or be responsible for any
increase in the taxes on the Property resulting from the sale of
the Property or from any improvements made or leases entered
into on or after the Closing Date. If any assessments on the
Property are payable in installments, then the installment for
the current period shall be prorated (with Buyer assuming the
obligation to pay any installments due after the Closing Date).
(b) All fixed and additional rentals under
the leases, security deposits and other tenant charges. Seller
shall deliver or provide a credit in an amount equal to all
prepaid rentals for periods after the Closing Date and all
refundable security deposits (to the extent the foregoing are
not applied or forfeited prior to the Closing Date) to Buyer on
the Closing Date. Rents which are delinquent as of the Closing
Date shall not be prorated on the Closing Date. Buyer shall
include such delinquencies in its normal billing and shall
diligently pursue the collection thereof in good faith after the
Closing Date (but Buyer shall not be required to litigate or
declare a default in any lease). To the extent Buyer receives
rents on or after the Closing Date, such payments shall be
applied first toward then current rent owed to Buyer in
connection with the applicable lease for which such payments are
received, and any excess monies received shall be applied toward
the payment of any delinquent rents, with Seller's share thereof
being promptly delivered to Seller. Buyer may not waive any
delinquent rents nor modify a lease so as to reduce or otherwise
affect amounts owed thereunder for any period in which Seller is
entitled to receive a share of charges or amounts without first
obtaining Seller's written consent. Seller hereby reserves the
right to pursue any monetary remedy against any tenant owing
delinquent rents and any other amounts to Seller. Buyer shall
reasonably cooperate with Seller in any collection efforts
hereunder (but shall not be required to litigate or declare a
default in any lease). With respect to delinquent rents and any
other amounts or other rights of any kind respecting tenants who
are no longer tenants of the Property as of the Closing Date,
Seller shall retain all rights relating thereto.
(c) Interest and any other payments, fees
and charges owed under the Loan Documents, including, but not
limited to, any amounts owed to the Existing Lender, loan
administrator or any other party thereunder.
(d) On or before the Closing Date, Seller
shall pay or cause to be paid (or there shall be escrowed for
payment at closing) all tenant improvement costs and leasing and
brokerage commissions which are payable with respect to Tenant
Leases affecting such Property executed prior to the date hereof
(including those costs and commissions set forth on Exhibit "H-
2" hereto, but excluding the tenant improvement costs due with
respect to the GSA-OHA lease), whether the same are due on or
prior to the Closing Date or payable in installments subsequent
thereto and including any portion thereof due upon any renewals
of any such Tenant Lease or options to lease additional space
but only if such renewal or additional space option commences
prior to the date of this Agreement. Buyer shall assume the
payment of all tenant improvement costs and leasing and
brokerage commissions which are or may hereafter become due with
respect to (i) any renewals of any Tenant Leases or options to
lease additional space under any Tenant Leases if such renewals
or additional space options are exercised and commence or arise
after the date of this Agreement so long as Buyer has received
copies of all commission agreements for such renewals or
additional space options prior to the date of this Agreement,
(ii) the GSA-OHA lease, and (iii) any Tenant Leases hereinafter
executed prior to the closing with Buyer's written consent.
(e) All operating expenses.
(2) Calculation. The prorations and payments
shall be made on the basis of a written statement submitted to
Buyer and Seller by Escrow Holder prior to the Close of Escrow
and approved by Buyer and Seller. In the event any prorations
or apportionments made under this subparagraph D shall prove to
be incorrect for any reason, then any party shall be entitled to
an adjustment to correct the same provided written notice of
such inaccuracy and request for correction is given within six
months after the date hereof. Any item which cannot be finally
prorated because of the unavailability of information shall be
tentatively prorated on the basis of the best data then
available and reprorated when the information is available, but
not later than six months after the date hereof.
(3) Reimbursement of Tenant Improvement and
Leasing Costs. Buyer agrees that it will pay or reimburse
Seller or the tenant, as applicable, for all tenant improvement
and leasing commission obligations of the landlord under any
leases entered into after the date hereof in accordance with
paragraph 7D(3) below, and the GSA/OHA lease (with any amounts
due to Seller being credited on the Closing Date).
6. Condemnation or Destruction of Property. In the event
that, after the date hereof but prior to the Closing Date,
either any portion of the Property is taken pursuant to eminent
domain proceedings or any of the improvements on the Property
are damaged or destroyed by any casualty, Seller shall have no
obligation to repair or replace any such damage or destruction.
Seller shall, upon consummation of the transaction herein
provided, assign to Buyer all claims of Seller respecting any
condemnation or casualty insurance coverage, as applicable, and
all condemnation proceeds or proceeds from any such casualty
insurance received by Seller on account of any casualty (the
damage from which shall not have been repaired by Seller prior
to the Closing Date), and shall credit the Purchase Price for
any applicable deductible relating thereto, as applicable;
provided, however, that Seller shall retain any proceeds
received (and the right to receive any proceeds) of rental
income insurance or a temporary taking award that are
attributable to a period prior to the Closing Date. In the
event the condemnation award or the cost of repair of damage to
the Property on account of a casualty, as applicable, shall
exceed $100,000, Buyer may, at its option, terminate this
Agreement by notice to Seller, given on or before the Closing
Date.
7. Representations, Warranties and Covenants.
A. Representations, Warranties and Covenants of
Seller.
(1) General Disclaimer. Except as specifically
set forth in Paragraph 7A(2) below, the sale of the Property
hereunder is and will be made on an "as is" basis, without
representations and warranties of any kind or nature, express,
implied or otherwise, including, but not limited to, any
representation or warranty concerning title to the Property
(except to the extent any warranties of title are specifically
contained in the Deed), the physical condition of the Property
(including, but not limited to, the condition of the soil or the
Improvements), the environmental condition of the Property
(including, but not limited to, the presence or absence of
hazardous substances on or respecting the Property), the
compliance of the Property with applicable laws and regulations
(including, but not limited to, zoning and building codes or the
status of development or use rights respecting the Property),
the financial condition of the Property or any other
representation or warranty respecting any income, expenses,
charges, liens or encumbrances, rights or claims on, affecting
or pertaining to the Property or any part thereof. Buyer
acknowledges that, during the Due Diligence Period, Buyer will
examine, review and inspect all matters which in Buyer's
judgment bear upon the Property and its value and suitability
for Buyer's purposes. Except as to matters specifically set
forth in Paragraph 7A(2) below, Buyer will acquire the Property
solely on the basis of its own physical and financial
examinations, reviews and inspections and the title insurance
protection afforded by the Owner's Policy; provided, however,
that the foregoing shall in no way affect or limit those
warranties of title specifically contained in the Deed. Without
limitation thereon, Buyer hereby waives any and all rights of
contribution or other rights or remedies against Seller under
the Commercial Environmental Responsibility Compensation and
Liability Act or any other applicable environmental laws, rules
or regulations.
(2) Limited Representations and Warranties of
Seller. Subject to the provisions of Paragraph 7A(1) above,
Seller hereby represents and warrants that, except as set forth
in Exhibit "G" attached hereto and made a part hereof, Seller
has no knowledge that any of the following statements is untrue
(and, for this purpose, Seller's knowledge shall mean only the
present actual knowledge of Brian K. Ellison, Vice President of
JMB Realty Corporation and portfolio manager overseeing the
investment of Seller in the Property (after having made inquiry
of Seller's third party property manager with respect to the
representations and warranties contained in this Agreement):
(a) Rent Roll. Attached as Exhibit "H-1"
and made a part hereof is a true, complete and accurate list, as
of the date thereof, of all tenant leases respecting the
Property ("Rent Roll"), and Seller has not received any written
notice of a material default under any of such tenant leases
that remains uncured. Except as disclosed in the Rent Roll, no
Tenant Lease has been modified, altered or amended in any
respect. There are no leases, tenancies or other rights of
occupancy or use for any portion of the Property other than as
set forth in the Rent Roll. Except as set forth in Exhibit "H-
2" attached hereto and made a part hereof (the "Additional
Tenant Information List"), there are no outstanding tenant
improvement or leasing commission obligations of the landlord
under the Tenant Leases. In addition, the Additional Tenant
Matter List accurately sets forth amount of any security deposit
paid by the tenant under each Tenant Lease. Notwithstanding
anything to the contrary contained herein, Seller shall have no
obligation or liability to Buyer with respect to any of the
foregoing matters which shall be confirmed as correct in any
Tenant Estoppel Certificate which may be delivered hereunder.
(b) Litigation. There is no pending
action, litigation, condemnation or other proceeding against the
Property or against Seller with respect to the Property.
(c) Compliance. Seller has received no
written notice from any insurance company, governmental
authority or agency having jurisdiction over the Property (i)
regarding any violation of any restrictive covenant or deed
restriction affecting the Property and/or to the effect that the
Property is not in compliance with applicable laws or
ordinances, or (ii) regarding any pending or threatened
condemnation proceedings.
(d) Service Agreements. Other than those
which are cancelable on 30 days' notice, Seller has not entered
into any service agreements or contracts ("Service Agreements")
or other agreements (other than as set forth in this Agreement)
relating to the Property which will be in force on the Closing
Date, except as described in Exhibit "I" attached hereto, and
Seller has not received any written notice of any material
default thereunder that remains uncured. If Buyer requests
during the Due Diligence Period, any such Service Agreements
will be terminated at Closing; provided, however, that Buyer
shall be responsible for paying any termination fees or costs
associated therewith.
(e) Due Authority. This Agreement and all
agreements, instruments and documents herein provided to be
executed or to be caused to be executed by Seller are and on the
Closing Date will be duly authorized, executed and delivered by
and are binding upon Seller. Seller is a partnership, duly
organized and validly existing under the laws of the State of
Illinois, and is duly authorized and qualified to do all things
required of it under this Agreement. Seller has the capacity
and authority to enter into this Agreement and consummate the
transactions herein provided.
(f) Environmental Matters. Except as set
forth in the reports described in Exhibit "J" attached hereto
and made a part hereof (the "Environmental Reports"), and in
Buyer's Phase I, there has been no release of any material known
to Seller to be a "Hazardous Material" at, upon, under or within
the Property, in an amount which would, as of the date hereof,
give rise to an "Environmental Compliance Cost". The term
"Hazardous Material" shall mean asbestos, petroleum products,
and any other hazardous waste or substance which has, as of the
date hereof, been determined to be hazardous or a pollutant by
the U.S. Environmental Protection Agency, the U.S. Department of
Transportation, or any instrumentality authorized to regulate
substances in the environment which has jurisdiction over the
Property ("Environmental Agency") which substance causes the
Property (or any part thereof) to be in material violation of
any applicable environmental laws; provided, however, that the
term "Hazardous Material" shall not include (x) motor oil and
gasoline contained in or discharged from vehicles not used
primarily for the transport of motor oil or gasoline, or
(y) materials which are stored or used in the ordinary course of
a tenant's occupancy at (or the Company's, or the Company's
managing agents' operation of) the Property, and which are
stored, used, held, or disposed of in compliance with all
applicable environmental laws. The term "Environmental
Compliance Cost" means any reasonable out-of-pocket cost, fee or
expense exceeding $2,500 and incurred directly to satisfy any
requirement imposed by an Environmental Agency to bring the
Property into compliance with applicable Federal, State and
local laws and regulations directly relating to the existence on
the Property of any Hazardous Material.
(g) Loan Documents. The loan documents
described in Exhibit "K" attached hereto and made a part hereof
constitute all of the documents which relate to the Existing
Encumbrance. Seller has not received any written notice of a
material default under the Loan Documents that remains uncured.
(h) Operating Statements. The operating
statements delivered to Buyer have been prepared by or on behalf
of Seller in the ordinary course of business.
B. Representations and Warranties of Buyer. Buyer
hereby represents and warrants that this Agreement and all
agreements, instruments and documents herein provided to be
executed or to be caused to be executed by Buyer are and on the
Closing Date will be duly authorized, executed and delivered by
and are binding upon Buyer; Buyer is a limited partnership, duly
organized and validly existing and in good standing under the
laws of the State of Delaware, and is duly authorized and
qualified to do all things required of it under this Agreement;
and Buyer has the capacity and authority to enter into this
Agreement and consummate the transactions herein provided.
C. Survival. Any cause of action of a party for a
breach of the foregoing representations and warranties shall
survive until December 15, 1997, at which time such
representations and warranties (and any cause of action
resulting from a breach thereof not then in litigation) shall
terminate. Notwithstanding the foregoing, if Buyer shall have
actual knowledge as of the Closing Date that any of the
representations or warranties of Seller contained herein are
false or inaccurate or that Seller is in breach or default of
any of its obligations under this Agreement, and Buyer
nonetheless closes the transactions hereunder and acquires the
Property, then Seller shall have no liability or obligation
respecting such false or inaccurate representations or
warranties or other breach or default (and any cause of action
resulting therefrom shall terminate upon such closing
hereunder).
D. Interim Covenants of Seller. Until the Closing
Date or the sooner termination of this Agreement:
(1) Seller shall maintain the Property in the
same manner as prior hereto pursuant to its normal course of
business (such maintenance obligations not including
extraordinary capital expenditures or expenditures not incurred
in such normal course of business), subject to reasonable wear
and tear and further subject to destruction by casualty or other
events beyond the control of Seller. Seller shall maintain
current insurance coverage (or substantially equivalent
coverage) in place at the Property. Seller will not initiate or
knowingly permit (unless required by applicable law or an
existing agreement affecting the Property) any zoning
reclassification of the Property or seek any variance under
existing zoning ordinances applicable to the Property to use or
permit the use of the Property in such a manner which would
result in such use becoming a nonconforming use under applicable
zoning ordinances. Seller will not impose any restrictive
covenants on the Property or execute or file any subdivision
plat affecting the Property.
(2) Seller shall not enter into any additional
service contracts or other similar agreements without the prior
consent of Buyer, except those deemed reasonably necessary by
Seller which are cancelable on 30 days' notice without premium
or penalty.
(3) Seller shall have the right to continue to
offer the Property for lease in the same manner as prior hereto
pursuant to its normal course of business and, upon request,
shall keep Buyer reasonably informed as to the status of leasing
prior to the Closing Date. After the Effective Date (unless
Buyer shall have theretofor delivered a termination notice
hereunder), Seller shall not enter into any new leases or
material modifications of existing leases thereafter without the
consent of Buyer (which consent will not be unreasonably
withheld or materially delayed). In no event shall Seller have
any obligation to enter into any new lease or modify any
existing lease unless Buyer shall agree to pay or reimburse
Seller on the Closing Date for all tenant improvement costs and
leasing commissions incurred by Seller under or in connection
therewith (Buyer's agreement to pay or reimburse for such
amounts not to be unreasonably withheld).
(4) Subject to the terms and conditions of
paragraph 4B above, during normal business hours with 24 hours
prior notice to Seller, prior to Closing, Seller agrees to give
Buyer and its agents and representatives reasonable access to
the Property and the books and records directly relating to the
ownership, management, maintenance and operations of the
Property and all documents (other than those containing
proprietary information) in the possession or control of Seller.
9. DISPOSITION OF DEPOSIT. IF THE TRANSACTION HEREIN
PROVIDED SHALL NOT BE CLOSED BY REASON OF SELLER'S DEFAULT UNDER
THIS AGREEMENT OR THE FAILURE OF SATISFACTION OF THE CONDITIONS
DESCRIBED IN PARAGRAPH 4 HEREOF OR THE TERMINATION OF THIS
AGREEMENT IN ACCORDANCE WITH PARAGRAPH 6 HEREOF, AND BUYER SHALL
NOT HAVE DEFAULTED UNDER THIS AGREEMENT, THEN THE ESCROW DEPOSIT
SHALL BE RETURNED TO BUYER, AND NEITHER PARTY SHALL HAVE ANY
FURTHER OBLIGATION OR LIABILITY TO THE OTHER; PROVIDED, HOWEVER,
IF THE TRANSACTIONS HEREUNDER SHALL FAIL TO CLOSE SOLELY BY
REASON OF A MATERIAL DEFAULT BY SELLER, AND BUYER SHALL HAVE
FULLY PERFORMED ITS OBLIGATIONS HEREUNDER AND SHALL BE READY,
WILLING AND ABLE TO CLOSE, THEN BUYER SHALL BE ENTITLED TO
EITHER (1) TERMINATE THIS AGREEMENT, RECEIVE A RETURN OF THE
ESCROW DEPOSIT AND TO OBTAIN REIMBURSEMENT FROM SELLER FOR
BUYER'S ACTUAL OUT-OF-POCKET EXPENSES PAID TO UNAFFILIATED THIRD
PARTIES IN CONNECTION WITH ITS DUE DILIGENCE REVIEWS HEREUNDER
(SUCH REIMBURSEMENT OBLIGATION NOT TO EXCEED $20,000 IN THE
AGGREGATE), OR (2) SPECIFICALLY ENFORCE THIS AGREEMENT (BUT NO
OTHER ACTION, FOR DAMAGES OR OTHERWISE, SHALL BE PERMITTED). IN
THE EVENT THE TRANSACTION HEREIN PROVIDED SHALL NOT CLOSE FOR
ANY REASON OTHER THAN THE FAILURE OF SATISFACTION OF THE
CONDITIONS DESCRIBED IN PARAGRAPH 4 HEREOF OR THE TERMINATION OF
THIS AGREEMENT IN ACCORDANCE WITH PARAGRAPH 6 HEREOF OR THE
DEFAULT OF SELLER, THEN THE ESCROW DEPOSIT SHALL BE DELIVERED TO
SELLER AS FULL COMPENSATION AND LIQUIDATED DAMAGES UNDER AND IN
CONNECTION WITH THIS AGREEMENT. IN THE EVENT THE TRANSACTION
HEREIN PROVIDED SHALL CLOSE, THE ESCROW DEPOSIT SHALL BE APPLIED
AS A PARTIAL PAYMENT OF THE PURCHASE PRICE. IN CONNECTION WITH
THE FOREGOING, THE PARTIES RECOGNIZE THAT SELLER WILL INCUR
EXPENSE IN CONNECTION WITH THE TRANSACTION CONTEMPLATED BY THIS
AGREEMENT AND THAT THE PROPERTY WILL BE REMOVED FROM THE MARKET;
FURTHER, THAT IT IS EXTREMELY DIFFICULT AND IMPRACTICABLE TO
ASCERTAIN THE EXTENT OF DETRIMENT TO SELLER CAUSED BY THE BREACH
BY BUYER UNDER THIS AGREEMENT AND THE FAILURE OF THE
CONSUMMATION OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT
OR THE AMOUNT OF COMPENSATION SELLER SHOULD RECEIVE AS A RESULT
OF BUYER'S BREACH OR DEFAULT. IN THE EVENT THE SALE OF THE
PROPERTY SHALL NOT BE CONSUMMATED ON ACCOUNT OF BUYER'S DEFAULT,
THEN THE RETENTION OF THE ESCROW DEPOSIT SHALL BE SELLER'S SOLE
AND EXCLUSIVE REMEDY UNDER THIS AGREEMENT BY REASON OF SUCH
DEFAULT, SUBJECT TO THE PROVISIONS OF PARAGRAPH 9I HEREOF.
Seller's Initials Buyer's Initials
9. Miscellaneous.
A. Brokers.
(1) Except as provided in subparagraph (2) below,
Seller represents and warrants to Buyer, and Buyer represents
and warrants to Seller, that no broker or finder has been
engaged by it, respectively, in connection with any of the
transactions contemplated by this Agreement or to its knowledge
is in any way connected with any of such transactions. In the
event of a claim for broker's or finder's fee or commissions in
connection herewith, then Seller shall indemnify and defend
Buyer from the same if it shall be based upon any statement or
agreement alleged to have been made by Seller, and Buyer shall
indemnify and defend Seller from the same if it shall be based
upon any statement or agreement alleged to have been made by
Buyer. The indemnification obligations under this Paragraph
9A(1) shall survive the closing of the transactions hereunder or
the earlier termination of this Agreement.
(2) If and only if the sale contemplated herein
closes, Seller agrees to pay a brokerage commission to Richard
Ellis, LLC (the "Broker") pursuant to a separate written
agreement. The foregoing payment shall be the sole commission,
fee or payment payable to Broker in connection with the
transactions hereunder.
B. Limitation of Liability.
(1) Notwithstanding anything to the contrary
contained herein, if the closing of the transactions hereunder
shall have occurred (and Buyer shall not have waived,
relinquished or released any applicable rights in further
limitation), the aggregate liability of Seller arising pursuant
to or in connection with the representations, warranties,
indemnifications, covenants or other obligations (whether
express or implied) of Seller under this Agreement (or any
document executed or delivered in connection herewith) shall not
exceed $750,000; provided that, the foregoing shall not limit
the liability of Seller arising from or out of Seller's
affirmative fraud in connection with the representations,
warranties, indemnifications, covenants or other obligations of
Seller under this Agreement (or any document executed or
delivered in connection herewith).
(2) No constituent partner in or agent of
Seller, nor any advisor, trustee, director, officer, employee,
beneficiary, shareholder, participant, representative or agent
of any corporation or trust that is or becomes a constituent
partner in Seller (including, but not limited to, JMB Realty
Corporation) shall have any personal liability, directly or
indirectly, under or in connection with this Agreement or any
agreement made or entered into under or pursuant to the
provisions of this Agreement, or any amendment or amendments to
any of the foregoing made at any time or times, heretofore or
hereafter, and Buyer and its successors and assigns and, without
limitation, all other persons and entities, shall look solely to
Seller's assets for the payment of any claim or for any
performance, and Buyer, on behalf of itself and its successors
and assigns, hereby waives any and all such personal liability.
Notwithstanding anything to the contrary contained in this
Agreement, neither the negative capital account of any
constituent partner in Seller (or in any other constituent
partner of Seller), nor any obligation of any constituent
partner in Seller (or in any other constituent partner of
Seller) to restore a negative capital account or to contribute
capital to Seller (or to any other constituent partner of
Seller), shall at any time be deemed to be the property or an
asset of Seller or any such other constituent partner (and
neither Buyer nor any of its successors or assigns shall have
any right to collect, enforce or proceed against or with respect
to any such negative capital account of partner's obligation to
restore or contribute).
(3) No constituent partner in or agent of Buyer,
nor any advisor, trustee, director, officer, employee,
beneficiary, shareholder, participant, representative or agent
of any corporation or trust that is or becomes a constituent
partner in Buyer shall have any personal liability, directly or
indirectly, under or in connection with this Agreement or any
agreement made or entered into under or pursuant to the
provisions of this Agreement, or any amendment or amendments to
any of the foregoing made at any time or times, heretofore or
hereafter, and Seller and its successors and assigns and,
without limitation, all other persons and entities, shall look
solely to Buyer's assets for the payment of any claim or for any
performance, and Seller, on behalf of itself and its successors
and assigns, hereby waives any and all such personal liability.
Notwithstanding anything to the contrary contained in this
Agreement, neither the negative capital account of any
constituent partner in Buyer (or in any other constituent
partner of Buyer), nor any obligation of any constituent partner
in Buyer (or in any other constituent partner of Buyer) to
restore a negative capital account or to contribute capital to
Buyer (or to any other constituent partner of Buyer), shall at
any time be deemed to be the property or an asset of Buyer or
any such other constituent partner (and neither Seller nor any
of its successors or assigns shall have any right to collect,
enforce or proceed against or with respect to any such negative
capital account of partner's obligation to restore or
contribute).
(4) Notwithstanding the foregoing, (i) if Seller
or its successor-in-interest shall fail to retain reserves of at
least $850,000 at the time of closing hereunder or (ii) if
during the period commencing on the Closing Date and ending on
December 15, 1997 (the "Survival Period"), Seller or its
successor-in-interest shall utilize such reserves for any
purpose other than the payment of claims, expenses, liabilities
or attorneys' fees of Seller or such successor-in-interest
(including any amounts incurred in connection with resolving or
defending any claim of liability hereunder) with respect to a
breach or alleged breach of the representations, warranties,
indemnifications, covenants or other obligations (whether
express or implied) of Seller under this Agreement (or any
document executed or delivered in connection herewith), or is
otherwise related to, connected with or concerns the Property in
any manner (collectively, the "Specified Liabilities"), then
subject to the terms and conditions of this Agreement, Buyer
may, during the Survival Period, look to the assets of JMB
Realty Corporation, as the general partner of Seller, for the
payment of any Specified Liabilities; provided, however, the
aggregate liability of JMB Realty Corporation in connection
therewith shall not exceed $750,000 in the aggregate and shall
be further limited as follows:
(x) with respect to the initial reserve amount,
such liability shall be limited to the lesser of the amount by
which $850,000 exceeds the amount actually reserved by Seller or
its successor-in-interest in closing hereunder, and $750,000; or
(y) during the Survival Period, such liability
shall be limited to the lesser of the amount of such reserves
which, during the Survival Period, are utilized for purposes
other than the payment of the Specified Liabilities, and
$750,000.
C. Entire Agreement. This Agreement contains the
entire agreement between the parties respecting the matters
herein set forth and supersedes all prior agreements between the
parties hereto respecting such matters. This Agreement may not
be modified or amended except by written agreement signed by
both parties.
D. Time of the Essence. Time is of the essence of
this Agreement.
E. Interpretation. Paragraph headings shall not be
used in construing this Agreement. Each party acknowledges that
such party and its counsel, after negotiation and consultation,
have reviewed and revised this Agreement. As such, the terms of
this Agreement shall be fairly construed and the usual rule of
construction, to the effect that any ambiguities herein should
be resolved against the drafting party, shall not be employed in
the interpretation of this Agreement or any amendments,
modifications or exhibits hereto or thereto.
F. Governing Law. This Agreement shall be construed
and enforced in accordance with the laws of the State of
Illinois.
G. Successors and Assigns. Buyer may not assign or
transfer its rights or obligations under this Agreement without
the prior written consent of Seller (in which event such
transferee shall assume in writing all of the transferor's
obligations hereunder, but such transferor shall not be released
from its obligations hereunder); provided, however, Buyer may
assign its interest in this Agreement to a limited partnership
in which Buyer is the managing general partner and has not less
than a 51% interest in capital and profits in such limited
partnership. No consent given by Seller to any transfer or
assignment of Buyer's rights or obligations hereunder shall be
construed as a consent to any other transfer or assignment of
Buyer's rights or obligations hereunder. No transfer or
assignment in violation of the provisions hereof shall be valid
or enforceable. Subject to the foregoing, this Agreement and
the terms and provisions hereof shall inure to the benefit of
and be binding upon the successors and assigns of the parties.
H. Notices. Any notice which a party is required or
may desire to give the other shall be in writing and shall be
sent by personal delivery or by mail (either [i] by United
States registered or certified mail, return receipt requested,
postage prepaid, or [ii] by Federal Express or similar generally
recognized overnight carrier regularly providing proof of
delivery), addressed as follows (subject to the right of a party
to designate a different address for itself by notice similarly
given):
To Buyer:
Parkway Properties, L.P.
One Jackson Place
188 East Capitol Street, Ste. 1000
Jackson, MS 39201-2195
Attention: David Fowler
Facsimile: (601) 352-1441
With Copy To:
Forman, Perry, Watkins, Krutz & Tardy
1200 One Jackson Place
188 E. Capitol Street
Jackson, Mississippi 39201
Attention: Steven Hendrix, Esq.
Facsimile: (601) 960-8609
Telephone: (601) 960-8600
To Seller:
c/o JMB Realty Corporation
900 North Michigan Avenue
12th Floor
Chicago, Illinois 60611
Attention: Mr. Brian Ellison
Facsimile: (312) 915-2343
Telephone: (312) 915-2399
With Copy To:
Pircher, Nichols & Meeks
1999 Avenue of the Stars
Suite 2600
Los Angeles, California 90067
Attention: Real Estate Notices (GML)
Facsimile: (310) 201-8922
Telephone: (310) 201-8900
And To:
Richard Ellis, LLC
Three First National Plaza
Chicago, Illinois 60602
Attention: Mr. Jeffrey Bramson
Facsimile: (312) 899-8923
Telephone: (312) 899-1900
Any notice so given by mail shall be deemed to have been given
as of the date of delivery (whether accepted or refused)
established by U.S. Post Office return receipt or the overnight
carrier's proof of delivery, as the case may be. Any such
notice not so given shall be deemed given upon receipt of the
same by the party to whom the same is to be given.
I. Legal Costs. The parties hereto agree that they
shall pay directly any and all legal costs which they have
incurred on their own behalf in the preparation of this
Agreement, all deeds and other agreements pertaining to this
transaction and that such legal costs shall not be part of the
closing costs. In addition, if either Buyer or Seller brings
any suit or other proceeding with respect to the subject matter
or the enforcement of this Agreement, the prevailing party (as
determined by the court, agency or other authority before which
such suit or proceeding is commenced), in addition to such other
relief as may be awarded, shall be entitled to recover
reasonable attorneys' fees, expenses and costs of investigation
actually incurred. The foregoing includes, but is not limited
to, attorneys' fees, expenses and costs of investigation
(including, without limitation, those incurred in appellate
proceedings), costs incurred in establishing the right to
indemnification, or in any action or participation in, or in
connection with, any case or proceeding under Chapter 7, 11 or
13 of the Bankruptcy Code (11 United States Code Sections 101
et seq.), or any successor statutes.
J. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same
document.
K. SEC Requirements. If required by rules of the
Securities and Exchange Commission, Seller grants Buyer the
right, at Buyer's sole expense, to prepare an audited income
statement of the Property for the most recent fiscal year(s) as
specified by Rule 3-14 of Regulation S-X under the Securities
Act of 1933 and the Securities Exchange Act of 1934, and Seller
shall reasonably cooperate, at Buyer's expense, in making
available any and all such other data and financial information
which shall be available to Seller (including, without
limitation, data and information obtainable from Seller's
management agent for the Property) in connection with Buyer's
disclosure obligations as a public company subject to the rules
and regulations of the Securities and Exchange Commission.
10. Indemnification.
A. By Buyer. Buyer shall hold harmless, indemnify and
defend Seller and its constituent partners from and against:
(1) any and all third party claims for Buyer's torts or breaches
of contract related to the Property and occurring on or after
the Closing Date,
(2) any and all loss, damage and third party claims in any way
arising from Buyer's inspections or examinations of the Property
prior to the Closing Date, and (3) all costs and expenses,
including reasonable attorney's fees incurred by Seller as a
result of the foregoing.
B. By Seller. Seller shall hold harmless, indemnify and
defend Buyer and its constituent partners from and against: (1)
any and all third party claims for Seller's torts or breaches of
contract related to the Property and occurring prior to the
Closing Date, and
(2) all costs and expenses, including reasonable attorney's fees
incurred by Buyer as a result of the foregoing. The foregoing
indemnity shall not cover any matters relating to title or
marketability of the Property (Buyer relying on the coverage
provided by the Owner's Policy as to such matters.)
C. Generally. Each indemnification under this Agreement
shall be subject to the following provisions: The indemnitee
shall notify indemnitor of any such claim against indemnitee
within thirty (30) days after it has notice of such claim, but
failure to notify indemnitor shall in no case prejudice the
rights of indemnitee under this Agreement unless indemnitor
shall be prejudiced by such failure and then only to the extent
of such prejudice. Should indemnitor fail to discharge or
undertake to defend indemnitee against such liability within 10
days after the indemnitee gives the indemnitor written notice of
the same, then indemnitee may settle such liability, and
indemnitor's liability to indemnitee shall be conclusively
established by such settlement, the amount of such liability to
include both the settlement consideration and the reasonable
costs and expenses, including attorneys' fees, incurred by
indemnitee in effecting such settlement.
THE SUBMISSION OF THIS AGREEMENT FOR EXAMINATION IS NOT
INTENDED TO NOR SHALL CONSTITUTE AN OFFER TO SELL, OR A
RESERVATION OF, OR OPTION OR PROPOSAL OF ANY KIND FOR THE
PURCHASE OF THE PROPERTY. IN NO EVENT SHALL ANY DRAFT OF THIS
AGREEMENT CREATE ANY OBLIGATION OR LIABILITY, IT BEING
UNDERSTOOD THAT THIS AGREEMENT SHALL BE EFFECTIVE AND BINDING
ONLY WHEN A COUNTERPART HEREOF HAS BEEN EXECUTED AND DELIVERED
BY EACH PARTY HERETO TO ESCROW HOLDER. ESCROW HOLDER SHALL DATE
THIS AGREEMENT WITH THE DATE ON WHICH ESCROW HOLDER SHALL HAVE
RECEIVED THIS AGREEMENT EXECUTED BY
BOTH BUYER AND SELLER (AND SUCH DATE SHALL BE THE "EFFECTIVE
DATE" FOR PURPOSES HEREOF).
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the Effective Date.
SELLER:
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XIII,
an Illinois limited partnership
By: JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By: ________________________
Name: _______________________
Title: _______________________
BUYER:
PARKWAY PROPERTIES, L.P.,
a Delaware limited partnership
By: PARKWAY PROPERTIES GENERAL
PARTNERS, INC.,
a Delaware corporation
By: _________________________
Name: _________________________
Title: _________________________
By: _________________________
Name: _________________________
Title: _________________________
ESCROW HOLDER'S ACKNOWLEDGEMENT
The undersigned hereby executes this Agreement to evidence
its agreement to act as Escrow Holder in accordance with the
terms of this Agreement.
Effective Date: ________, 1997 TICOR TITLE INSURANCE
COMPANY,
a _______________________________
By:______________________________
Name:____________________________
Title:___________________________
"Escrow Holder"
EXHIBIT LIST
"A" - Property Description
"B" - Personal Property
"C" - Description of Loan Documents
"D-1" - List of Required Tenants
"D-2" - Form of Tenant Estoppel Certificate
"E" - Deed
"F" - Assignment and Assumption Agreement
"G" - Exceptions to Seller's Representations
and Warranties
"H-1" - Rent Roll
"H-2" - Additional Tenant Information List
"I" - Service Agreements
"J" - Environmental Reports
EXHIBIT "B"
LIST OF PERSONAL PROPERTY
(SEE ATTACHED)
EXHIBIT "C"
DESCRIPTION OF LOAN DOCUMENTS
1. Promissory Note dated April 28, 1995 from Seller to Lender.
2. Deed of Trust and Security Agreement dated as of April 28,
1995 by Seller in favor of Lender.
3. Assignment of Leases and Rents dated as of April 28, 1995,
from Seller to Lender.
4. Affidavit of Title dated April 28, 1995, from Seller to
Lender.
5. Closing Certification dated April 28, 1995, from Seller to
Lender.
6. Uniform Commercial Code Financing Statement by Seller in
favor of Lender and filed with the Secretary of State of the
State of Tennessee.
7. Uniform Commercial Code Financing Statement by Seller in
favor of Lender and recorded with the Knox County
Registrar's Office.
8. ERISA Certification dated as of April 28, 1995, from Seller
to Lender.
9. Escrow Agreement dated as of April 28, 1995, among Seller,
Lender and LaSalle National Trust, N.A.
EXHIBIT "D-1"
LIST OF REQUIRED TENANTS
1. First Tennessee
2. Lacy & Winchester
3. Paine, Swiney & Tarwater
4. GSA-OHA
5. GSA-Bankruptcy
6. Coopers & Lybrand
7. Watson, Hollan & Reeves
8. Wagner, Myers & Sanders
9. FIS Associates
10. Barger, Wagoner & Sumner
11. McCambell & Young
12. Jenkins & Jenkins
13. Merrill Lynch
14. Tennessee Valley Title Insurance
15. Arnett, Draper & Hagood
16. Kramer, Rayson & McVeigh
17. Prudential Securities
18. Club LeConte
19. Sir Speedy
20. J.C. Bradford
21. Lunchbox
22. Rainwater, Humble & Vowell
23. Emporium
24. McCord & Troutman, P.C.
EXHIBIT "D-2"
FORM OF TENANT ESTOPPEL CERTIFICATE
(SEE ATTACHED)
EXHIBIT "E"
FORM OF DEED
(SEE ATTACHED)
EXHIBIT "F"
FORM OF ASSIGNMENT AND ASSUMPTION
(SEE ATTACHED)
EXHIBIT "G"
EXCEPTIONS TO SELLER'S REPRESENATIONS AND WARRANTIES
None.
EXHIBIT "H-1"
RENT ROLL
(SEE ATTACHED)
EXHIBIT "H-2"
ADDITIONAL TENANT INFORMATION
(SEE ATTACHED)
FIRST TENNESSEE PLAZA
OUTSTANDING TENANT IMPROVEMENT OBLIGATIONS
First Tennessee Bank $500,000 1999
Merrill Lynch $70,500 Processed
Merrill Lynch $44,220 2001
GSA/OHA $500,000 (est.) November 1997/January 1998
Emporium $5,218 By lease end
First Tennessee Bank $8,762.74 August 1997-Window Blinds
Sir Speedy $36,000 Sept./Oct. 1997
Sir Speedy $7,500 New Wall
Rainwater $10,912 By lease end
Barge Waggoner $80,455 Aug./Oct. 1997
$22,000 January 1999
J.C. Bradford $123,784 Sept./Oct. 1997
Club LeConte $40,000 Sept./Oct. 1997
EXHIBIT "I"
LIST OF SERVICE AGREEMENTS
(SEE ATTACHED)
EXHIBIT "J"
LIST OF ENVIRONMENTAL REPORTS
1. Phase I Environmental Assessment dated December 14, 1994
and prepared by Versar.
PURCHASE AND SALE AGREEMENT
between
MORGAN PROPERTIES, LLC
and
PARKWAY PROPERTIES, L.P.
AUGUST 28, 1997
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 ), by and between Morgan Properties, LLC, a Tennessee
limited liability company ("Seller") and Parkway Properties,
L.P., a Delaware limited partnership ("Purchaser").
WHEREAS, Seller is the lessee of a parcel of land located
at Fifty Front Street, Memphis, Shelby County, Tennessee, as
more specifically described on Exhibit (a) attached hereto (the
"Land"); and
WHEREAS, there are certain real property improvements in,
on or under the Land consisting principally, but not
exclusively, of an office building known as "Morgan Keegan
Tower" (collectively, the "Improvements"); and
WHEREAS, Seller is the owner of the Improvements; 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, Improvements, and the Personal Property (as
defined below) 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:
I. ARTICLE
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,
as each are defined below (collectively referred to as the
"Project") to Purchaser, and Purchaser agrees to purchase and
acquire the Project from Seller (this "Transaction").
1.1 Real Property Identified. As used herein, the "Real
Property" shall mean:
(a) Description of Land. The real estate described in
Exhibit (a) attached hereto (the "Land").
(a) Description of Improvements. The Improvements,
including Morgan Keegan Tower, Memphis, Tennessee containing
approximately 334,668 rentable square feet and Seller's rights
as lessee of 350 parking spaces within Tower Place Parking
Garage, together with all building materials, fixtures, heating,
ventilation and air conditioning systems, canopies, sidewalks,
walkways, planters and landscape materials, and all other real
property improvements owned or leased 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.
(a) 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.
1.1 Personal Property Identified. As used herein, the
"Personal Property" shall mean:
(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 Project,
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 attached hereto.
(a) 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
Project and includes, without limitation, (i) all assignable
guarantees and warranties (including those pertaining to
construction of the Project, if any); (ii) all assignable
licenses and other permits relating to the Project or the
operation thereof; (iii) all assignable contracts, agreements
and contract rights; (iv) rights, if any, to use the name
"Morgan Keegan Tower" on a non-exclusive basis with respect to
the Project only and only for the period Seller is a tenant in
the Project; and (v) all leases, tenancies and rental agreements
or arrangements with tenants (collectively "Leases" or any one
individually "Lease") 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").
1 ARTICLE
PURCHASE PRICE
1.1 Escrow Deposit.
(a) Purchaser shall within two (2) business days following
the Effective Date deliver to Lawyer's Title Insurance
Corporation-Memphis Branch Office ("Title Company") the sum of
NINETY THOUSAND AND NO/100 DOLLARS ($90,000.00) ("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. Unless this Agreement
has been terminated by Purchaser as above provided, Purchaser
shall within two (2) business days following expiration of the
Inspection Date deliver to Title Company the sum of TWO HUNDRED
SIXTY THOUSAND AND NO/100 DOLLARS ($260,000.00) (the "Additional
Escrow Deposit"). If Purchaser shall fail to terminate this
transaction prior to the conclusion of the Inspection Period or
to deliver to the Title Company the Additional Escrow Deposit as
herein required, the Escrow Deposit and all interest thereon,
shall become non-refundable to Purchaser except in the case:
(i) Seller's default; (ii) the non-satisfaction of the
conditions set forth in Section ; or (iii) except as otherwise
set forth herein, but shall be credited toward the Purchase
Price upon Closing. Title Company is hereby instructed to
invest the Escrow Deposit and, if received, the Additional
Escrow Deposit in an FDIC insured interest bearing account in
the name of Purchaser. Purchaser's taxpayer identification
number is 72-1344324. Purchaser and Seller hereby acknowledge
and agree that all accrued interest on the Escrow Deposit and
Additional Escrow 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,
the Additional Escrow Deposit and all accrued interest thereon
shall be delivered to Seller as herein set forth.
(b) The sole responsibility of Title Company shall be to
hold and disburse the Escrow Deposit, the Additional Escrow
Deposit and accrued interest in accordance with the terms of
this Agreement and, if a dispute shall arise with respect to the
disposition of such funds, the Title Company may continue to
hold such funds until receipt of written instructions
acknowledged and agreed to by Purchaser and Seller or may
deposit such funds with the Circuit Court of Shelby County,
Tennessee and interplead the Purchaser and Seller in connection
therewith.
1.1 Purchase Price. Seller agrees to sell, and
Purchaser agrees to purchase, the Project for a total purchase
price equal to THIRTY-SIX MILLION AND NO/100 DOLLARS
($36,000,000.00) ("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.
Subject to the provisions hereof. At Buyer's sole option, with
the concurrence of Lender (as defined below) payment of a
portion of the Purchase Price may be evidenced by assumption of
the "Existing Indebtedness" (as defined below), such payment
shall equal the amount of the outstanding principal balance of
the existing note. The balance of the Purchase Price, plus or
minus prorations, shall be paid in immediately available funds
at Closing.
Subject to Purchaser's review of all loan documents
relating to the Existing Indebtedness and of any required
assumption documents, Purchaser may at its election assume
Seller's obligations under the Loan Documents at Closing.
Purchaser agrees to use reasonable efforts to cooperate with
Lender in the assumption of the Existing Indebtedness. Seller
acknowledges that Purchaser retains the right to request certain
reasonable modifications and/or alterations to the Loan
Documents (and to any assumption documents required by Lender)
prior to its assumption thereof. In the event Lender is
unwilling to allow Purchaser to assume the Existing Indebtedness
on terms consistent with this Agreement, then Purchaser shall
pay the Purchase Price in immediately available funds at
Closing.
1.1 Independent Consideration. Seller and Purchaser
acknowledge and agree that Ten Thousand and No/100 ($10,000.00)
of the Escrow Deposit shall be paid to Seller if this Agreement
is terminated for any reason (the "Independent Contract
Consideration") in lawful funds of the United States of America.
Seller and Purchaser acknowledge and agree that the Independent
Contract Consideration has been bargained for and agreed to as
additional consideration 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 the Independent Contract Consideration.
1 ARTICLE
ESCROW; CLOSING
1.1 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.
1.1 Closing. Closing shall be on such date and location
as mutually agreed to by Purchaser and Seller (hereafter
referred to as "Closing Date" or "Closing") provided, however,
in no event shall the Closing Date be more than fifteen (15)
calendar days after the end of the Inspection Period.
1.1 Closing Costs.
(a) Seller's Payments. Seller shall pay the cost and
expenses, if any, of (i) the title search and title insurance
commitment for the owner's title insurance policy; (ii) the fees
for recording the assignment of that certain Lease Agreement
dated December 27, 1984, by and between Memphis Center City
Revenue Finance Corporation, a public not for profit corporation
of the State of Tennessee, lessor and One Court Square Investors
Limited Partnership, a Tennessee limited partnership, lessee,
and all amendments thereto ("Ground Lease"), and for recording
the bill of sale if Purchaser requests its recording; and (iii)
one-half of any escrow fees charged by Title Company, if any.
(a) Purchaser's Payments. Purchaser shall pay the cost
and expenses, if any, of (i) the cost of the premium for the
owner's extended coverage title policy and all endorsements
which Purchaser may obtain to the title insurance policy; (ii)
the survey update; and (iii) one-half of any escrow fees charged
by Title Company, if any.
(a) Other Costs. Each party will pay all its own
expenses incurred in connection with this Agreement and this
Transaction 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,
investigation, legal and appraisal fees. Each party understands
that no transfer tax or other documentary stamp or similar tax
will be payable in connection with the Transaction contemplated
hereby based on the legal opinion of Wyatt, Tarrant & Combs.
1.1 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 Project is
located, on the Closing Date, as if Purchaser were vested with
title to the Project during the entire Closing Date.
(a) 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 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 Project) 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 reasonable 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.
(a) Additional Rents. Seller and Purchaser acknowledge
and agree that certain additional rents are collected on an
estimated basis and are attributable to percentage rents,
expense escalation reimbursements, operating expense pass
throughs and/or common area maintenance reimbursements. The
parties further agree to credit any difference in the amounts
collected as compared to the actual expenses associated
therewith to the applicable party effective as of the Closing
Date.
(a) Taxes. Ad valorem and personal property taxes and
assessments against the Project 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.
(a) Utilities. Charges for utilities serving the
Project 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.
(a) Contract Charges. Charges with respect to Contracts
(as defined below) transferred and assigned to Purchaser shall
be prorated as of the Closing Date, including, without
limitation, the Ground Lease. 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.
(a) Operating Expenses. Except as otherwise provided
herein, any and all expenses and payables relating to the
operation, management or ownership of the Project 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.
(h) Leasing Costs. Seller shall be responsible for
paying all costs, including, without limitation, tenant
improvements and leasing commissions, associated with any
existing or new lease executed by Seller prior to the
expiration of the Inspection Period. If Purchaser acquires
the Project, Purchaser shall be responsible for paying the
costs, including without limitation, tenant improvements
and leasing commissions, associated with all leases or any
lease renewal, expansion or other modification executed
after the Inspection Period which have been approved by
Purchaser. If, for any reason, Purchaser does not purchase
the Project, Purchaser shall not be responsible or liable
to any entity with respect to any such costs or leasing
commissions.
The agreements with respect to prorations in this Section
shall survive Closing. Final settlement of all prorated items
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, except property taxes and delinquent and pass
through rentals which shall be determined upon collection or the
date upon which any such amounts shall become ascertainable.
Contractual and tort liabilities accruing, or relating to events
that occurred, prior to the Closing Date shall remain the
responsibility of Seller. Tort liabilities relating to events
that occurred on or after the Closing Date, and contractual
liabilities relating to contracts expressly assumed by Purchaser
and accruing from and after the Closing Date, shall be the
responsibility of Purchaser.
1 ARTICLE
TITLE MATTERS
1.1 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, within five business (5) days after the Effective Date
a commitment to issue an owner's title insurance policy to be
issued by a title company reasonably acceptable to Purchaser
(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.
1.1 Survey. Seller shall provide Purchaser with a copy
of all existing surveys of the Project which are in Seller's
possession or control. Within five (5) days after the Effective
Date, Purchaser shall order an update to Seller's existing
survey and shall use reasonable efforts to cause such survey to
be delivered to Purchaser and Title Company within ten (10)
business days after the Effective Date. 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 Tennessee 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.
1.1 Title Defects. Within seven (7) days after receipt
of the later of the Title Commitment and the Survey, 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 three (3) days after receipt of
Purchaser's Notice; provided, however, Seller shall remove
monetary liens relating to borrowed funds or other liens
securing indebtedness of an ascertainable amount and mechanic or
materialmen's liens, if any, except for the Existing
Indebtedness if assumed by Purchaser. Seller's failure to
respond shall be deemed a decision by Seller not to cure any
Title Defect except for the Existing Indebtedness if assumed by
Purchaser. Within three (3) 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, the
Additional Escrow Deposit, if any, 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, the Additional Escrow Deposit, if any, and all interest
accrued thereon.
1.1 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.
1 ARTICLE
INFORMATION SCHEDULES
1.1 Information Schedules. Seller will deliver or cause
to be delivered to Purchaser within ten (10) days after the
Effective Date, 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,
including all Deposits ("Rent Roll"), and true and complete
copies, of all Leases.
(a) Delinquency Report. A complete list and description
of any and all delinquencies or defaults under any of the Leases
("Delinquency Report").
(a) Contracts. An itemized schedule ("Contracts
Schedule") of all written and oral service, maintenance,
management, leasing, brokerage, and other agreements, equipment
or appliance leases, non-governmental franchises, contracts and
arrangements relating or pertaining to the Project (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. The
Contracts Schedule shall note any Contracts which are not
assignable or cancelable at Closing.
(a) Personal Property. A true and complete schedule and
description ("Personal Property Schedule") of all material
tangible Personal Property.
(a) Permits. A list ("Permits Schedule") of all current
franchises, business or other licenses, bonds, permits,
certificates of occupancy, authorizations and other evidences of
consent, approval, authorization or permission relating to or
affecting the Project (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.
(a) Property Taxes. Copies of the two most recent tax
statements with respect to the Project, including, without
limitation, real and personal property taxes and any special
assessments.
(a) 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 Project.
(a) Repair History. A true and complete list of all
major (i.e., costing more than $5,000) repairs of a capital
nature which Seller has undertaken with respect to the Project
during its ownership thereof.
(a) Operating Statements. Materially true and complete
copies of all operating statements for the Project for the last
two calendar years and for each calendar month of 1997 through
the month ending July 31.
(a) Prior Studies. True and complete copies of any
prior third party studies and reports, in the possession of
Seller or Seller's agents, affiliates or management companies
relating in any manner to the environmental, structural,
mechanical, or engineering status of any portion of the Project.
(a) 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
Project. Copies of all existing surveys of the Project.
(a) Operating Agreements. A list ("Operating Agreements
Schedule") of all Ground Leases, skywalk agreements, parking
garage agreements and other similar agreements material to the
operation of the Project, together with true and complete copies
of all such Ground Leases, including, without limitation, any
and all amendments or modifications thereto.
1 ARTICLE
INSPECTION
1.1 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 (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 Project subject to the rights of
tenants, (ii) examine the financial and operating books and
records relating to the Project maintained by or for the benefit
of Seller, (iii) interview tenants of the Project, and (iv)
conduct such non-destructive physical engineering, feasibility
and other studies and tests on or of the Project 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
Project or interfere with any tenant's operations at the
Project, 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 Project, and in a manner so as to not cause
undue damage, loss, cost or expense to Seller, the Project or
the tenants of the Project, and Purchaser shall promptly restore
the Project to its condition immediately preceding such
inspections and examinations and shall keep the Project 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
(collectively, the "Loss"), in any way caused by the inspections
or examinations of the Project by Purchaser or its agents or
contractors. The foregoing indemnification shall survive the
Closing or the termination of this Agreement for any reason.
1.1 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 Project. On or
about August 8, 1997, Purchaser executed and delivered to Seller
a Confidentiality Agreement pertaining to Confidential
Information as therein defined. The Confidentiality Agreement,
by its terms, shall survive any termination of this Agreement.
1 ARTICLE
REPRESENTATIONS AND WARRANTIES OF PURCHASER
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 Project to Purchaser:
1.1 Authority. Purchaser is a limited partnership,
duly formed, existing and in good standing under the laws of
the State of Delaware; 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 the sole general partner of
Purchaser and are authorized to do so.
1.1 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 Project, including, without limitation, land use, zoning and
other governmental restrictions.
1.1 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.
1.1 "AS IS, WHERE IS". PURCHASER HEREBY EXPRESSLY
ACKNOWLEDGES THAT IT HAS INSPECTED AND EXAMINED OR WILL INSPECT
AND EXAMINE THE PROJECT TO THE EXTENT DEEMED NECESSARY BY
PURCHASER IN ORDER TO ENABLE PURCHASER TO EVALUATE THE PURCHASE
OF THE PROJECT. PURCHASER REPRESENTS THAT IT IS A KNOWLEDGEABLE
PURCHASER OF REAL ESTATE AND RETAIL OFFICE PROPERTIES AND THAT,
EXCEPT AS SET FORTH IN ARTICLE , 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 PROJECT, INCLUDING, BUT NOT LIMITED TO,
THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF. PURCHASER
FURTHER ACKNOWLEDGES AND AGREES THAT PURCHASER IS ACQUIRING THE
PROJECT 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.
Initialed by:
________________ ________________
Seller Purchaser
1 ARTICLE
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller's Representations and Warranties. Seller makes the
following representations and warranties as of the date of
execution of this Agreement, which shall survive conveyance of
the Project to Purchaser:
1.1 Authority. Seller is a limited liability
company, duly formed, organized, existing and in good standing
under the laws of the State of Tennessee. Seller 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 members or officers of Seller
and are authorized to do so.
1.1 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 Project.
1.1 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 knowledge, any other liabilities of any type which
might, with notice, passage of time or both, have a material
adverse effect on the Project.
1.1 Contracts. Except as disclosed in the
Information Schedules, there are no other management, leasing,
brokerage, maintenance, service or other contracts relating to
the Project. If Purchaser requests during the Inspection
Period, any such existing contracts which permit Seller's
unilateral termination, without monetary penalty, will be
terminated at Closing.
1.1 No Undisclosed Matters. To Seller's 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 Project 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 Project is in violation of any
applicable law, ordinance, rule, regulation or order.
1.1 No Defaults. Seller is not in default in respect
of any of its material obligations or liabilities pertaining to
the Project (including, but not limited to, such obligations and
liabilities under the Contracts or Leases). To Seller's
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.
1.1 Litigation. There is no litigation pending or to
Seller's knowledge, threatened against Seller or the Project
which relates to, or if decided adversely, could have a material
adverse effect upon, the Project (including condemnation or
similar proceeding).
1.1 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 knowledge of any (i)
currently existing violations of federal, state, county or
municipal environmental laws in respect to the Project, 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 Project, or of
any settlement thereof; and
(i) to Seller's knowledge and except for emergency
generator purposes, there are no underground storage tanks
("USTs") located on or below the Land.
1.1 Certification of Rent Roll. No person has any
title, interest or right to possession of any portion of the
Project as a lessee, tenant or concessionaire of Seller except
as shown on the Rent Roll. Except as disclosed in writing to
Purchaser, the Rent Roll lists all Leases, amendments and
modifications thereof. Seller is not, and to Seller's knowledge
no tenant is, in default in the performance of or under any such
Lease in any material respect except as disclosed in the
Delinquency Report. The Rent Roll states all Deposits, prepaid
rents and other deposits or prepayments for each Lease and
Seller or Seller's agent are currently in possession of all such
deposits. No tenant is entitled to any rebate, concession,
special allowance or other benefits, except as stated in the
Leases. 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. 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
released at Closing. Except as disclosed in the Rent Roll,
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. To Seller's knowledge, except for the
right of the tenants in possession under the Leases and
permitted sublessees, there are no parties in possession of, or
claiming any possession to any portion of the Project as
lessees, tenants at sufferance, trespassers or otherwise. To
Seller's knowledge, there has been no material, adverse change
with respect to the information set forth in the Rent Roll or
Delinquency Report. Except as disclosed in Exhibit , all
leasing commissions payable in connection with the Leases have
been paid in full. Exhibit lists any and all leasing
commissions and brokerage agreements which may be due and
payable in connection with the Leases upon a subsequent renewal,
expansion, modification or waiver of any rights by a tenant
under the terms of the Leases. Seller has paid in full all
leasing or similar commissions or payment obligations, if any,
relating to any Lease. Purchaser is not assuming any
obligations for tenant improvements or purported leasing
commissions except for tenant improvements and leasing
commissions set forth on Exhibit and which relate to renewals,
extensions, expansions or modifications occurring after the
expiration of the Inspection Period. Seller shall indemnify and
hold Purchaser harmless for any Loss with respect to any claims
by tenants or third party brokers for tenant improvements or
leasing commissions not expressly assumed by Purchaser.
1.1 Existing Indebtedness. The "Loan Documents"
described on Exhibit constitute all of the loan documents
relating in any manner to Seller's "Existing Indebtedness" to
National Bank of Commerce ("Lender") which relates to the
Project. The outstanding principal balance of the Existing
Indebtedness as of the Effective Date is approximately
$20,000,000. The Loan Documents correctly and accurately state
the terms and condition of the Existing Indebtedness. Except as
disclosed in writing to Purchaser prior to the expiration of the
Inspection Period, the Loan Documents contain the entire
agreement between Seller, any guarantors and any lenders; are in
full force and effect in accordance with their written terms;
and, are valid obligations of the Seller, any guarantors and
Lender. Seller is not, and to Seller's knowledge any
guarantors and Lender are not in default in the performance of
or under any of the Loan Documents in any material respect
except as disclosed on Exhibit . Lender is not entitled to any
payments, offsets or remuneration of any kind except as set
forth in the Loan Documents. As of the Effective Date, and as of
the Closing Date, Seller has complied with all requirements of
the Loan Documents and is not in default thereunder.
1.1 Certification of Operating Agreements. Exhibit
lists all Ground Leases, skywalk agreements, parking garage
agreements and all amendments and modifications thereof relating
to the Project (collectively, "Operating Agreements"). Seller
is not, and to Seller's knowledge ground lessor is not, in
default in the performance of or under any such Operating
Agreements in any material respect. To Seller's knowledge, no
counterclaim, defense or offset exists with respect to any of
the Operating Agreements. Except as disclosed in Exhibit ,
there has been no waiver of any rights under or modification of
any Operating Agreements or other documents executed in
connection with the Operating Agreements which could have a
material adverse affect thereon.
1.1 Operating Statements. To Seller's knowledge, the
Operating Statements are true, accurate and complete in all
material respects and present fairly the results of operations
for the periods indicated on a consistent basis.
1.1 Use of Project. To Seller's knowledge, (i) no
governmental, public or private authority intends or desires to
appropriate the use of or limit the use of any of the Project
pursuant to any condemnation, eminent domain or similar
proceeding; (ii) no fact or condition exists which will result
in the termination of the Project's current access to and from
existing streets and utilities.
1.1 Documentation. To Seller's knowledge, all
documents which shall be delivered to Purchaser by or on behalf
of Seller under this Agreement shall be accurate and complete in
all material respects, including, without limitation, the
Information Schedules.
1.2 FIRPTA. Seller is not a "foreign person" (as
defined 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.
1 ARTICLE
COVENANTS
Covenants of Seller. Seller covenants and agrees with
Purchaser as follows:
1.1 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 Project and the books
and records directly relating to the ownership, management,
maintenance and operation of the Project, and all documents
directly pertaining to the Project 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 Project.
1.1 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.
1.1 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 Project; (ii)
remedy all material violations of laws, ordinances, orders or
requirements relating to the Project 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
Project on a basis consistent with Seller's operations
including, without limitation, undertaking all reasonably
required ordinary maintenance and repair of the Project. 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 Project,
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 Project 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 below regarding Seller's continued leasing
obligations, prior to Closing, Seller shall operate and maintain
the Project in substantially the same manner and condition as
Seller has operated and maintained the Project 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 Project as may be required or reasonably appropriate to
operate and maintain the Project other than tenant improvements
relating to new leases. Provided, however, that Seller shall
not be obligated to make an expenditure, which would be
capitalized pursuant to generally accepted accounting
principles, in excess of $15,000 and in the event Seller elects
not to make an expenditure greater than said amount, then at
Closing, Purchaser shall receive a credit for such excess amount
as evidenced by a bona fide third party contract, proposal or
bid for such item(s). 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 Project, which approval will not be
unreasonably withheld, conditioned or delayed.
1.1 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 by 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 Project.
1.1 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 Project incurred through the Closing Date, except amounts
subject to proration under Section .
1.1 Cooperation. Seller will reasonably assist and
cooperate with any environmental evaluation, study or audit of
the Project prepared by, for or at the request of Purchaser.
1.1 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
Project 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.
1.1 Existing Loan Matters. In the event Purchaser
has elected for part of the Purchase Price to be paid by an
assumption of of the Existing Indebtedness, Seller and Purchaser
shall use their reasonable efforts to obtain the written consent
to the transactions contemplated herein from all parties whose
consent to the assumption by Purchaser of such Loan Documents is
required thereunder, together with a release of Seller from any
liability under the Loan Documents, and an "estoppel
certificate" executed by Lender substantially in the form
attached hereto as Exhibit certifying that Loan Documents are
in full force and effect and that no default exists thereunder.
To the extent required by the Lender, Seller shall pay to the
Lender up to 1% of the outstanding principal balance of the
existing note as a loan transfer and assumption fee. Seller
shall pay any other transfer, assumption or other fees and costs
(including reasonable attorneys' fees, but not attorneys' fees
of Purchaser's counsel) imposed by any of such parties with
respect to such consent and assumption (including any loan
transfer or assumption fee in excess of 1% of the outstanding
balance of the existing note) up to a maximum of $10,000.
Purchaser and Seller shall reasonably cooperate with each other
and the Lender in connection with such consent and assumption
(and shall promptly deliver such information, including
financial information, respecting Purchaser or its principals as
any of such parties may request). The parties' sole obligations
in connection with the consent matters herein contemplated
shall be to utilize reasonable efforts to obtain such consents,
and to reasonably cooperate with Purchaser to the extent
necessary. If such consents are not obtained on or before the
Closing Date, the obligation of Purchaser to purchase the
Project shall not terminate and the Purchase Price shall be paid
in immediately available funds at Closing and the Existing
Indebtedness shall be paid in full at Closing. In the event the
Existing Indebtedness is paid in full at Closing, Buyer agrees
to and shall pay, on behalf of Seller as additional
consideration and not part of or a credit to the Purchase Price,
any and all prepayment fees assessed by Lender upon prepayment
of the Existing Indebtedness. Seller's sole obligation
hereunder with respect to obtaining an "estoppel certificate"
from the Lender shall be to utilize reasonable efforts to obtain
such "estoppel certificate" (such reasonable efforts not
including any obligation to institute legal proceedings or to
expend any additional monies therefor, other than for minor
administrative charges).
1.1 Estoppel Certificates. Before the expiration of
the Inspection Period, Seller shall have delivered currently
dated (no earlier than thirty (30) days prior to the scheduled
Closing Date) estoppel certificates in material conformance with
the form attached hereto as Exhibit .1 from each Major Tenant or
a Seller's estoppel certificate in the form attached hereto as
Exhibit .2 for each non-major tenant not providing an estoppel
certificate directly. "Major Tenant" shall mean Morgan Keegan &
Company, Inc., and tenants identified on Exhibit .3. Seller and
Purchaser shall use reasonable efforts to obtain a Subordination
Non-Disturbance and Attornment Agreement ("SD&A") in the form
reasonably requested by any lender of Purchaser and from each
Tenant requested by any such lender. 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. If such SD&A are not obtained on or before the Closing
Date, the obligation of Purchaser to purchase the Project shall
not terminate and the Purchase Price shall be paid in
immediately available funds at Closing. Seller shall also
deliver to Purchaser an estoppel certificate from the lessor
under the Ground Lease in material conformance with the form
attached hereto as Exhibit .4
1.1 Leasing. Seller (and/or Seller's agents), in
consultation with Purchaser, shall continue in good faith to
advance all leasing activities for the Project including,
without limitation, new leases, renewals, extensions, expansions
or other modifications. Provided, however, Seller shall not
enter into any new lease or any renewal, expansion or other
modification of any existing Lease without Purchaser's prior
written consent which shall not be unreasonably withheld,
conditioned or delayed.
1.1 Leasing Commissions. Except as set forth in
Section and Exhibit , there are no outstanding commissions,
leasing, brokerage or otherwise, payable to any leasing agents,
brokers, or similar type parties, regarding the sale of the
Project or the execution, renewal, amendment, or modification of
any Lease in the Project.
1.1 Knowledge Standard. As used in this Agreement,
"the Seller's knowledge "or any similar phrase, shall mean the
current actual knowledge of Joseph C. Weller; provided, however,
that nothing in this Agreement shall be deemed to create or
impose any personal liability of any kind on Joseph C. Weller.
Joseph C. Weller is the Chief Manager of the Seller with respect
to the Project and as such has personal knowledge of the Project
and its operations.
1 ARTICLE
CLOSING MATTERS
1.1 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.
(a) 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.
(a) Certificates. Purchaser shall have received the
estoppel certificates referenced in Section above, from or for
each tenant referenced on the Rent Roll and the ground lessor
under the Ground Lease.
(a) Ground Lease Consent. Receipt of consent from the
ground lessor or other appropriate governmental authority
regarding the assignment of the Ground Lease contemplated
hereby.
(a) Lease Renewal By Morgan Keegan. Purchaser shall have
received an executed lease agreement or renewal from Morgan
Keegan & Company, Inc. for a term of at least ten (10) years
from Closing encompassing no less than 159,910 rentable square
feet on terms and conditions reasonably consistent with the form
lease agreement attached hereto as Exhibit . Purchaser and
Seller shall finalize negotiations of the lease agreement during
the Inspection Period, however, Seller hereby commits to the
financial terms in Paragraphs 1, 3, 4, 5, 19 and 33 of the form
lease agreement attached hereto.
(a) No Adverse Change. No material and adverse change
shall have occurred without Purchaser's written consent, in the
state or condition of the Project or in the title matters
described in the Title Commitment and the Survey.
1.1 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.
(a) 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.
1.1 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) Limited Assignment of Leases. A limited warranty
Assignment of Leases in form attached hereto as Exhibit (a).
Such Assignment of Leases shall be joined in by Purchaser for
the purpose of assuming all obligations under the Operating
Agreements arising from and after the Closing Date.
(a) Assignment and Bill of Sale. An Assignment and
Assumption Agreement and Bill of Sale in form attached hereto as
Exhibit (b). Such Assignment and Bill of Sale shall be joined
in by Purchaser for the purpose of assuming all obligations
under any assigned item arising from and after the Closing Date.
(a) Existing Indebtedness. If applicable, appropriate
documentation to evidence the assumption by Purchaser of the
Loan Documents as contemplated by this Agreement.
(a) 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 Project and all other documents referred to in the Rent
Roll, (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 Project in the possession of Seller
(collectively "Plans"), including, but not limited to, all
records relating to repair, renovation and maintenance of the
Project; (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 and exhibits referred to herein.
(a) Rent Roll. A current and updated Rent Roll.
(a) 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 as Exhibit (f).
(a) Keys. All keys and master keys in Seller's
possession or control to all locks located on the Project
properly tagged for identification as well as cards keys and
cards for the security systems, if any.
(a) 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 Project, 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 Project.
(a) Evidence of Authority. Both parties will deliver to
each other and the Title Company such evidence or documents as
may reasonably be required evidencing the authority of any
person who is executing any of the documents required hereunder.
(a) 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, (ii) tenant's notice
letter, and (iii) a Quitclaim Deed with the legal description
contained in Exhibit (a) and/or the Survey, if the legal
description of the Land contained in the Survey differs from the
legal description contained in Exhibit (a).
1 ARTICLE
DEFAULTS AND REMEDIES
1.1 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 PROJECT 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, THE ADDITIONAL ESCROW
DEPOSIT, IF ANY, 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, THE ADDITIONAL ESCROW DEPOSIT, IF ANY, 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
SECTION 6.1 HEREOF AND SHALL REMAIN IN FULL FORCE AND EFFECT.
Initialed by:
________________ ________________
Seller Purchaser
1.1 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, THE ADDITIONAL ESCROW DEPOSIT, IF
ANY, 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 SELLER'S PART.
SELLER AGREES THAT THE PROJECT IS 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 REMEDY OF SPECIFIC PERFORMANCE IS
AN APPROPRIATE REMEDY FOR PURCHASER, AND SELLER WAIVES AND
AGREES NOT TO ASSERT ANY CLAIM OR DEFENSE THAT SPECIFIC
PERFORMANCE IS NOT AN APPROPRIATE REMEDY FOR PURCHASER.
Initialed by:
________________ ________________
Seller Purchaser
1 ARTICLE
RISK OF LOSS
1.1 Risk of Loss. Prior to Closing, Seller shall have
full risk of loss or damage with respect to the Project. Upon
Closing, full risk of loss or damage with respect to the Project
shall pass to Purchaser. For purposes of this Article, "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 Project; and (ii) any condemnation,
eminent domain or other similar proceeding.
1.1 Minor Damage. In the event of loss or damage to the
Project 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 Project,
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.
1.1 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 not to exceed the actual
repair cost. In such event, Seller shall execute all documents
reasonably requested by Purchaser to assign Seller's rights and
interest to such insurance proceeds.
1.1 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 Project 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 One Hundred Thousand Dollars ($100,000), and
(ii) any loss or damage due to a condemnation which permanently
and materially impairs the current use of the Project.
1 ARTICLE
GENERAL PROVISIONS
1.1 Brokerage Commission. 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.
1.1 Confidentiality. Unless Seller otherwise agrees in
writing, Purchaser agrees that all confidential proprietary
information regarding the Project 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, except as required by law. 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. This Section is in addition to and not in
limitation of the Confidentiality Agreement executed by
Purchaser dated August 8, 1997 pertaining to the Project.
1.1 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 Project. All prior to
or contemporaneous agreements, understandings, representations,
warranties and statements, oral or written, are superseded.
1.1 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.
1.1 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.
1.1 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.
1.1 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.
1.1 Assignment. Purchaser may assign its rights under
this Agreement to a wholly owned subsidiary of Purchaser, 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.
1.1 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 Limited Assignment of Leases to
Purchaser for a period of eighteen (18) months after the
Closing, at which time such warranties, representations and
covenants shall terminate in all respects unless written notice
of any such breach has been delivered to the breaching party
prior to such date.
1.1 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.
1.1 Time. Time is of the essence with respect to this
Agreement.
1.1 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.
1.1 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.
1.1 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: Morgan Properties, LLC
Attention: Joseph C. Weller
Office Address: Morgan Keegan Tower
Fifty Front Street
Memphis, Tennessee 38103
Telephone Number: (901) 524-4165
Telecopy Number: (901) 579-4443
with a copy to: David M. Minnick, Esq.
Morgan Properties, LLC
Morgan Keegan Tower
50 North Front Street
Memphis, Tennessee 38103
Telephone Number: (901) 524-4165
Telecopy Number: (901) 579-4443
Purchaser: Parkway Properties, L.P.
Attention: James M. Ingram
Office Address: Suite 1000, One Jackson Place
188 East Capitol Street
Jackson, Mississippi 39201
Mailing Address: Post Office Box 24647
Jackson, Mississippi 39225
Telephone Number: (601) 948-4091
Telecopy Number: (601) 949-4077
with a copy to: Forman, Perry, Watkins, Krutz & Tardy, PLLC
Attention: Steven M. Hendrix
Office Address: Suite 1200, One Jackson Place
188 East Capitol Street
Jackson, Mississippi 39201
Telephone Number: (601) 960-8603
Telecopy Number: (601) 960-8609
1.1 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.
1.1 Exhibits. All schedules or exhibits referred to
herein or attached hereto are incorporated herein by this
reference.
1.1 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.
1.1 Governing Law. This Agreement shall be governed,
construed and enforced in accordance with the laws of the State
of Tennessee.
1.1 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").
1.1 Limitation on Liability. 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 (except an
affiliate to which this Agreement has been assigned) 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, Seller and Purchaser have executed this
Agreement as of the Effective Date.
SELLER:
Morgan Properties, LLC
Executed by Seller this
____ day of August, 1997
By:________________________________________
Joseph C. Weller, Chief
Manager
PURCHASER:
Executed by Purchaser this
PARKWAY PROPERTIES, L.P.
____ day of August, 1997
By:
Parkway Properties General
Partners, Inc., its sole general partner
By:___________________________________
Name:_________________________________
Title:________________________________
By:___________________________________
Name:_________________________________
Title:________________________________
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 SEVENTY-FIVE THOUSAND
AND NO/100 DOLLARS ($75,000.00) on the _____ day of August, 1997
and (b) a fully executed counterpart of this Agreement on the
_____ day of August, 1997.
Lawyers Title Insurance
Corporation
By:
____________________________
Name:
____________________________
Title:
____________________________
LIST OF EXHIBITS
Exhibit (a) 1
Exhibit 2
Exhibit 4.2(a) 7
Exhibit 4.2(b) 7
Exhibit 14
Exhibit 14
Exhibit 15
Exhibit 17
Exhibit .1 18
Exhibit .2 18
Exhibit .3 18
Exhibit .4 18
Exhibit 19
Exhibit (a) 20
Exhibit (b) 20
Exhibit (f) 21
EXHIBIT (a)
Legal Description
[attached hereto]
EXHIBIT
Personal Property
[attached hereto]
EXHIBIT (a)
SURVEY CERTIFICATION
The plat of survey must be accompanied by a certificate
meeting the following requirements:
1. The certification should be by a registered land
surveyor.
2. The certification should include the signature with
the seal and registration number of the certifying party.
3. The certification should contain a jurat executed by a
notary public.
4. If the surveyor finds that any easement furnished to
him which purports to affect the property does not, in fact,
affect the property, he should specifically certify that such
easement, identified by book and page of recording, does not
affect the property.
5. The form of certificate should be substantially as
follows: "I,_______________________a registered land surveyor
do hereby certify to______________________and____________________
Title Company, that the accompanying plat of survey represents a
true and correct survey made by me and has: (i) been prepared in
accordance with the most current minimum standard detail
requirements for a Land Title Survey adopted by the American
Land Title Association and the American Congress on Surveying
and Mapping; (ii) includes optional items 2-11 of Table A
thereof; and (iii) has been prepared pursuant to the Accuracy
Standards (as adopted by ALTA and ACSM) in effect on the date of
this Certification of an Urban Survey of the following described
property (the "Project") on the______day of___________________, 199_:
[Insert legal description]
I further certify that:
(i) the accompanying plat of survey correctly shows the
location of all buildings, structures, and other improvements
situated on the Project,
(ii) except as shown, there are no visible easements or
rights-of-way across the Property or other easements or rights-
of-way affecting the Property of which the undersigned has been
advised,
(iii) there are no party walls included in any
buildings, structures, or other improvements on the Property,
(iv) except as shown, there are no encroachments on
adjoining premises, streets, or alleys by any of the buildings,
structures, or other improvements on the Property, and
(v) except as shown, there are no encroachments on the
property by any buildings, structures, or other improvements
located on adjoining premises.
EXHIBIT
OUTSTANDING COMMISSIONS
AND BROKERAGE AGREEMENTS
EXHIBIT
EXISTING INDEBTEDNESS
1. Promissory Note, dated May 31, 1996.
2. Fee Deed of Trust, Assignment of Leases and Security
Agreement dated May 31, 1996.
3. Leasehold Deed of Trust, Assignment of Leases and
Security Agreement dated May 31, 1996.
4. Assignment of Rents and Leases, dated May 31, 996.
5. Certificate and Indemnity Regarding Hazardous
Substances dated May 31, 1996.
6. Unlimited Guaranty - Morgan Keegan, Inc. dated May 31,
1996.
7. UCC-1 financing statements filed with the Shelby
County Register and the Tennessee Secretary of State.
EXHIBIT .1
FORM OF TENANT ESTOPPEL CERTIFICATE
Parkway Properties, L.P.
300 One Jackson Place
188 East Capitol Street
Jackson, MS 39201
RE: _______________________
Gentlemen:
The undersigned as Tenant hereby certifies to Parkway
Properties, L.P., and its successors or assigns ("Purchaser"),
and any beneficiary under a deed of trust covering the above
captioned property ("Mortgagee") that:
(a) It is a Tenant of a portion of the captioned
property under a certain lease (the "Lease")
as follows:
Landlord: _________________________________________
Tenant: ___________________________________________
Lease Dated: ______________________________________
Amendment(s) Dated (if any):_______________________
Current Annual Base Rent:__________________________
Current CAM or Operating Expense Charges:__________
Square Footage:____________________________________
Original term (or current option period,
if applicable) expires:____________________________
Security Deposit and/or
Lease Deposit: $__________________________________
Outstanding Tenant Improvement Allowance (if any):
$_______________
Outstanding Leasing Commission (if any):
$______________
(b) All rentals payable under the Lease have been paid
through ______, 19___; and except for _________, no
rent has been paid more than one month in advance of
its due date.
(c) That attached hereto as Exhibit A is a true
and complete copy of the Lease and all
amendments thereto.
(d) Tenant has unconditionally accepted and
occupied the leased premises, is paying rent
under the Lease without claim or right of
set-off, or claim of any default by the
Landlord, and is now conducting business on
the premises;
(e) The Lease sets forth the entire agreement
between the Landlord and Tenant, is in full
force and effect in accordance with its
terms and has not, in any way, been amended,
modified, assigned or sublet;
(f) There exists no default by either party to
the Lease, or other grounds for ceasing or
reducing the payment of rental, or for
cancellation or termination of the Lease;
(g) All requirements of the Lease have been
complied with and no charges, set-offs or
other credits exist against the rentals;
(h) The Lease contains, and Tenant has, no outstanding
options or rights of first refusal to purchase the
Premises nor any part of the real property of which
the Premises are a part.
(i) Tenant has not assigned, mortgaged, sublet, encumbered
or otherwise transferred any of its interest under the
Lease and has received no notice of any assignment,
mortgage or encumbrance of the Lease by Landlord.
From and after the date that Purchaser acquires title to
the Project:
(j) Tenant shall not agree to any alteration,
modification, amendment or termination of
its Lease, nor subordinate or permit
subordination of the Lease to any lien in
favor of anyone other than Purchaser or
Mortgagee, without first obtaining
Purchaser's or such Mortgagee's prior
written approval provided Tenant has been
provided the name and address of such
Mortgagee;
(k) Tenant shall give any Mortgagee 30 days
notice of any default by the Landlord under
the Lease and a reasonable opportunity for
Mortgagee to cure any default upon
Borrower's failure to do so;
(l) Tenant will not pay rent in advance for more
than the current month without Mortgagee's
prior written consent. No concession or
allowance has been granted by Landlord which
permits Tenant to occupy the leased premises
without payment of Rent or any other
financial obligation contained in the Lease,
nor will Tenant accept such concession or
allowance or negotiate for the same without
the prior written consent of Purchaser or
Mortgagee;
(m) Purchaser may subsequently execute and
deliver to Mortgagee an Assignment of Leases
and Rents conveying the rentals under the
Lease as additional security for a loan
secured by the Morgan Keegan Tower Building,
and Tenant hereby expressly consents to such
Assignment and has no notice of a prior
Assignment of the Lease or the rents
thereunder;
(n) Tenant will not look to any mortgagee, or
its successors or assigns, for the return of
or credit for security deposit or prepaid
rent, if any, unless said sums have been
actually transferred to such mortgagee or
its successors or assigns.
Tenant understands that Purchaser is relying on the above
representations in connection with the purchase of the above
referenced building and does hereby warrant and affirm to and
for the benefit of Purchaser, its successors and assigns, that
each of the foregoing representations is true, correct and
complete as of the date hereof.
By:___________________________________________
Name:_________________________________________
Title:________________________________________
Date:_________________________________________
EXHIBIT .2
FORM OF SELLER ESTOPPEL CERTIFICATE
Parkway Properties, L.P.
300 One Jackson Place
188 East Capitol Street
Jackson, MS 39201
RE: _____________
Gentlemen:
The undersigned as Landlord hereby certifies to Parkway
Properties, L.P. and its successors and assigns ("Purchaser")
that:
(a) It is a Landlord of a portion of the above
referenced property under a certain lease
(the "Lease") as follows:
Landlord:________________________________________
Tenant:__________________________________________
Lease Dated:_____________________________________
Amendment(s) Dated (if any):_____________________
Current Annual Base Rent:________________________
Current CAM or Operating Expense Charges:________
Square Footage:__________________________________
Original term (or current option period,
if applicable) expires:__________________________
Security Deposit and/or
Lease Deposit: $_________________________________
Outstanding Tenant Improvement Allowance (if any):
$_______________
Outstanding Leasing Commission (if any):
$______________
(b) All rentals payable under the Lease have been paid
through ________, 19___.
(c) That attached hereto as Exhibit A is a true
and complete copy of the Lease and all
amendments thereto.
(d) Tenant has unconditionally accepted and
occupied the leased premises, commenced
payment of rent under the Lease without
claim or right of set-off, or claim of any
default by the Landlord, and is now
conducting business on the premises;
(e) The Lease sets forth the entire agreement
between the Landlord and Tenant, is in full
force and effect in accordance with its
terms and has not, in any way, been amended,
modified, assigned or sublet;
(f) There exists no default by either party to
the Lease, or other grounds for ceasing or
reducing the payment of rental, or for
cancellation or termination of the Lease;
(g) All requirements of the Lease have been
complied with and no charges, set-offs or
other credits exist against the rentals;
Landlord understands that Purchaser is relying on the above
representations in consenting to purchase the above referenced
building and does hereby warrant and affirm to and for the
benefit of Purchaser, its successors and assigns, that each of
the foregoing representations is true, correct and complete as
of the date hereof. Purchaser acknowledges that this Seller's
Estoppel Certificate shall terminate upon delivery of a Tenant's
Estoppel Certificate in a form reasonably acceptable to
Purchaser and containing information consistent with the
information set forth herein.
By:___________________________________________
Name:_________________________________________
Title:________________________________________
Date:_________________________________________
EXHIBIT .3
MAJOR TENANTS
1. Morgan Keegan & Company, Inc.
2. King Cotton Cafe
3. Deloitte & Touche
4. KPMG/Peat Marwick
5. Waring Cox
6. Walker & Associates
7. Coopers & Lybrand
8. Birch, Porter & Johnson
9. Tennessee Valley Authority
EXHIBIT .4
FORM OF GROUND LEASE ESTOPPEL CERTIFICATE
Parkway Properties, L.P.
300 One Jackson Place
188 East Capitol Street
Jackson, MS 39201
RE: Morgan Keegan Tower, 50 Front Street, Memphis, Shelby
County, Tennessee
Gentlemen:
The undersigned as Lessor hereby certifies to Parkway
Properties, L.P., and its successors or assigns ("Purchaser"),
and any beneficiary under a deed of trust covering the above
captioned property ("Mortgagee") that:
(a) It is a Lessor of the captioned property
under a certain Ground Lease (the "Lease")
as follows:
Lessor:_____________________________________________________
Lessee:_____________________________________________________
Lease Dated:________________________________________________
Amendment(s) Dated (if any):________________________________
Current Annual Rent:________________________________________
Any Other Charges or Fees:__________________________________
Original term (or current option period,
if applicable) expires:_____________________________________
Security Deposit and/or
Lease Deposit: $___________________________________________
Outstanding Leasing Commission (if any):
$______________
(b) Lessor is the sole current owner and holder
of lessor's interest in the Lease and the
fee title owner to the leased premises.
(c) All rentals payable under the Lease have
been paid through ______, 19___; and except
for _________, no rent has been paid more
than one month in advance of its due date.
(d) That attached hereto as Exhibit A is a true
and complete copy of the Lease and all
amendments thereto.
(e) The Lease sets forth the entire agreement
between the Lessor and Lessee, is in full
force and effect in accordance with its
terms and except as set forth herein has
not, in any way, been amended, modified,
assigned or sublet;
(f) There exists no default by either party to
the Lease, or other conditions which with
the giving of notice or passage of time, or
both, would constitute a default or create
other grounds for terminating Lessee's
rights thereunder or increasing the payment
of rent, or for cancellation or termination
of the Lease in any other manner;
(g) All requirements of the Lease have been
complied with and no charges, expenses,
offsets or other credits exist thereunder;
(h) The Lease contains, and Lessee has (and upon
closing Purchaser shall have) an option,
exercisable at any time, to purchase the
real property of which the Project is a part
for $___________ as more fully set forth in
Section 11.01 of the Lease.
(i) Lessor has not assigned, mortgaged,
encumbered or otherwise transferred any of
its interest under the Lease and has
received no notice of any assignment,
mortgage, sublet or encumbrance of the Lease
by Lessee.
(j) Lessor hereby consents to the assignment to
and assumption of the Lease by Purchaser.
Lessor understands that Purchaser is relying on the above
representations in connection with the purchase of the above
referenced building and does hereby warrant and affirm to and
for the benefit of Purchaser, its successors and assigns, that
each of the foregoing representations is true, correct and
complete as of the date hereof.
By:________________________________________________
Name:______________________________________________
Title:_____________________________________________
Date:______________________________________________
EXHIBIT
FORM LEASE AGREEMENT
EXHIBIT (c)
FORM OF LENDER'S ESTOPPEL
Parkway Properties L.P.
1000 One Jackson Place
188 East Capitol Street
Jackson, MS 39201
RE: Assignment to Parkway Properties L.P. ("Buyer") by Morgan
Keegan & Company, Inc. ("Seller"), of its obligations under
_____________________ ("Lender") loan #_____, in the
original principal amount of $______________ (the "Loan")
Gentlemen:
Lender hereby certifies to Parkway Properties L.P., and its
successors or assigns that:
(a) All sums payable under the Loan have been paid through
______, 19___;
(b) The outstanding principal balance of the Loan as of
, 1997 is .
(c) Attached hereto as Exhibit A are true and complete
copies of the following documents (the "Loan Documents"):
1. Promissory Note, dated May 31, 1996.
2. Fee Deed of Trust, Assignment of Leases and
Security Agreement dated May 31, 1996.
3. Leasehold Deed of Trust, Assignment of Leases and
Security Agreement dated May 31, 1996.
4. Assignment of Rents and Leases, dated May 31,
1996.
5. Certificate and Indemnity Regarding Hazardous
Substances dated May 31, 1996.
6. Unlimited Guaranty - Morgan Keegan, Inc. dated
May 31, 1996.
7. UCC-1 financing statements filed with the Shelby
County Register and the Tennessee Secretary of
State.
(d) The Loan Documents set forth the entire agreement
between the Lender and Seller, are in full force and
effect in accordance with their terms and, to Lender's
knowledge, have not, in any way, been amended,
modified, or assigned;
(e) To Lender's knowledge, there exists no default by
either party to the Loan Documents, or other grounds
for declaring an event of default thereunder;
(f) Lender has not assigned or otherwise transferred any
of its interest under the Loan Documents.
(g) There are no escrow, improvement accounts maintained,
by Lender, or required to be maintained by Lender or
funded by Seller in connection with the Loan
Documents. Seller has met all of its obligations to
fund any such accounts.
Lender understands that Purchaser is relying on the above
representations in connection with the purchase of the above
referenced property and assuming the Loan and does hereby
warrant and affirm to and for the benefit of Purchaser, its
successors and assigns, that each of the foregoing
representations is true, correct and complete as of the date
hereof.
NATIONAL BANK OF COMMERCE
By:____________________________
Name:__________________________
Title:_________________________
Date:__________________________
EXHIBIT (a)
FORM OF LIMITED WARRANTY ASSIGNMENT OF LEASES
ASSIGNMENT AND ASSUMPTION
OF INTERESTS IN LEASES AND AGREEMENTS
THIS ASSIGNMENT AND ASSUMPTION OF INTERESTS IN LEASES AND
AGREEMENTS made and entered into this ____ day of _____________,
1997, by and between MORGAN PROPERTIES, LLC, a Tennessee limited
liability company with offices at 50 North Front Street, 21st
Floor, Memphis, Tennessee 38103 (herein "Assignor"); and
PARKWAY PROPERTIES, L.P., a Delaware limited partnership with
offices at 188 East Capitol Street, Suite 1000, Jackson,
Mississippi 39201 (herein "Assignee").
WITNESSETH:
That each of the aforesaid parties acknowledges the receipt
and sufficiency of a valuable consideration from the other,
Assignor hereby grants, bargains, sells, transfers, conveys,
assigns and confirms to Assignee any and all of Assignor's
rights, titles, privileges, interests and obligations in those
certain Leases and other Agreements described on Schedule "1"
annexed hereto and incorporated herein by this reference
(collectively, herein the "Leases and Agreements"), together
with the buildings and improvements thereon and all
appurtenances thereto. The Leases and Agreements lease and
otherwise pertain to the premises described on Exhibit "A"
annexed hereto and incorporated herein by this reference (the
"Premises"), such Premises being located in the City of Memphis,
County of Shelby, State of Tennessee.
TO HAVE AND TO HOLD the same unto the Assignee, its
successors and assigns, from the date hereof for the remainder
of the term set forth in the Leases and Agreements and any
extensions, options and otherwise contained therein, subject to
the rents, covenants, conditions, and provisions therein.
The Assignor covenants, represents and warrants that:
(a) The Leases and Agreements are, on Assignor's part, in
full force and effect;
(b) To the best knowledge of the Assignor, the Assignor is
not in default or breach of the Leases or Agreements;
(c) The rents reserved in the Lease and Agreements have
been fully paid to the date hereof and, to the best
knowledge of the Assignor, all other terms, covenants,
and conditions reserved and contained in the Leases
and Agreements have, on the Assignor's part, been
fully paid, observed and performed up to the date
hereof.
(d) Assignor has the right and power to assign the Leases
and Agreements unto the Assignee;
(e) The Premises at all times hereafter during the terms
of the Leases and Agreements may be entered into and
held, and the rents and profits thereof received
accordingly, without any lawful interruption by the
Assignor, or any person or persons claiming by,
through or under Assignor, but not further or
otherwise, free from all encumbrances, claims and
demands created or occasioned by the Assignor, or by
any person or persons claiming by through or under
Assignor, but not further or otherwise, except the
rent, covenants, and conditions reserved and contained
in the Leases and Agreements, and which on Assignee's
part are or ought to be paid, observed and performed;
and
(f) Assignor, its successors and assigns, will at all
times during the term, at the request and expense of
the Assignee, its successors and assigns, execute and
do every such lawful assurance and thing for further
assuring the Leases and Agreements unto the Assignee,
its successors; and assigns, for the remainder of the
term of the Leases and Agreements, together with any
extensions, options and otherwise contained therein as
may be reasonably required by Assignee; and
(g) Assignor hereby warrants that Assignor will defend
Assignee's title thereto against the lawful claims of
all persons claiming by, through or under Assignor but
not otherwise.
The Assignee hereby agrees to and does hereby assume the
Leases and Agreements and to perform each and every term,
condition and provision contained therein on the part of
Assignee to be performed from and after the date hereof. The
Assignee covenants and agrees that Assignee will observe and
perform the covenants, provisions, and conditions contained in
the Leases and Agreements, and which, by or on the part of the
lessee or obligor therein, are henceforth to be observed and
performed; and will at all times hereafter, at its own cost or
expense, defend, save harmless and keep indemnified the
Assignor, its successors and assigns, against all payments,
costs, losses, damages, and expenses whatsoever, which Assignor
may make, pay, sustain, or be liable to, on account of the
aforedescribed Leases and Agreements which shall henceforth
become due and payable, or any part thereof, and on account of
the breach, non-performance, or nonobservance, by or on the part
of Assignee from and after the date hereof, of all and every or
any of the covenants, provisions, and conditions contained in
the Leases and Agreements, to be observed and/or performed by
the lessee or obligor therein, and against all actions and/or
suits at law, or in equity, which shall be commenced or
prosecuted against the Assignor, its successors or assigns, for
or on account of the rent, covenants, provisions, and
conditions, or any of them, and henceforth to be paid, observed
and performed by Assignee.
Assignor will at all times hereafter, at its own cost or
expense, defend, save harmless and keep indemnified the
Assignee, its successors and assigns, against all payments,
costs, losses, damages, and expenses whatsoever, which Assignee
may make, pay, sustain, or be liable to, on account of the
aforedescribed Leases and Agreements which became due and
payable prior to the date hereof, or any part thereof, and on
account of the breach, non-performance, or nonobservance, by or
on the part of Assignor prior to the date hereof, of all and
every or any of the covenants, provisions, and conditions
contained in the Leases and Agreements, to be observed and/or
performed by the lessee or obligor therein, and against all
actions and/or suits at law, or in equity, which shall be
commenced or prosecuted against the Assignee, its successors or
assigns, for or on account of the rent, covenants, provisions,
and conditions, or any of them, and to be paid, observed and
performed by Assignor prior to the date hereof.
This Assignment and Assumption of Lessee's interest in
Leases and Agreements is made, executed and delivered by and
between the parties hereto pursuant to that certain Purchase and
Sale Agreement dated August ___, 1997, by and between Morgan
Properties, LLC, as seller, and Parkway Properties, L.P., as
buyer.
IN WITNESS WHEREOF, Assignor and Assignee have executed or
has caused this Assignment and Assumption of Interests in Leases
and Agreements to be executed by and through its duly authorized
officer(s) or employees the day and year first above mentioned.
ASSIGNOR:
By:________________________________________
Joseph C. Weller, Chief
Manager
ASSIGNEE:
PARKWAY PROPERTIES, L.P.
By: Parkway Properties General
Partners, Inc., its sole general partner
By:____________________________________
Name:__________________________________
Title:_________________________________
By:____________________________________
Name:__________________________________
Title:_________________________________
(Add applicable acknowledgements for Shelby County, Tennessee)
EXHIBIT (b)
FORM OF
BILL OF SALE AND ASSIGNMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
AND BILL OF SALE
This ASSIGNMENT AND ASSUMPTION AGREEMENT AND BILL OF SALE
("Assignment"), is made by and between Morgan Properties, LLC, a
Tennessee limited liability company ("Assignor") and Parkway
Properties, L.P., a Delaware limited partnership ("Assignee").
W I T N E S S E T H:
WHEREAS, by Purchase and Sale Agreement ("Purchase
Agreement") dated as of August _____, 1997, by and between
Assignor and Assignee, Assignor agreed to sell to Assignee
certain real property, and the improvements located thereon
("Project") as more particularly described in the Purchase
Agreement; and
WHEREAS, the Purchase Agreement provides, inter alia, that
Assignor shall assign to Assignee certain contractual and other
intangible rights, that Assignee shall assume all of the
obligations of Assignor with respect to the property so assigned
from and after the date of such assignment, and that Assignor
and Assignee shall enter into this Assignment.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto hereby
agree as follows:
1. Assignment. Assignor hereby assigns, sets over and
transfers to Assignee all tangible and intangible personal
property owned by Assignor, located on the real property
described on Exhibit A hereto, and used in the ownership,
operation and maintenance of such real property including,
without limitation, the following (collectively called the
"Personal Property"):
(i) All right, title, interest, estate, claim or
demand in and to the buildings, structure, other
improvements, fixtures and landscaping relating to the
real property described on Exhibit A hereto;
(ii) All rights (if any) to use the name "Morgan
Keegan Tower" to the extent such rights are assignable
without expense to Assignor and only as such rights
relate directly to the Project (but Assignor does not
represent that it has exclusive rights to use such
trade name and Assignor has not registered the same in
any manner); provided, however, such rights may be
used by Assignee only as long as Assignor is a tenant
in the Project;
(iii) The items of personal property
described on Exhibit B hereto;
(iv) The interest of Assignor under the contracts
and agreements described on Exhibit C hereto
(collectively, the "Contract");
(v) The interest of the landlord under the
tenant leases encumbering the real property described
on Exhibit D hereto (collectively, the "Leases");
(vi) To the extent assignable without expense to
Assignor, the interest of Assignor in and to tenant
lease files and correspondence relating to the Leases,
plans and specifications with respect to the Project,
promotional materials with respect to the leasing of
space within the Project, warranties and guaranties
relating to any of the other property to be conveyed
pursuant to the Purchase Agreement, licenses and
permits relating to the Project, and all other
property to be conveyed pursuant to the Purchase
Agreement.
2. Assignee's Assumption and Indemnification. Assignee
hereby assumes the obligation to pay any and all liabilities and
obligations arising or accruing under any of the Contracts and
Leases on or after the effective date hereof. Assignee agrees
to indemnify, defend and hold harmless Assignor from any loss,
cost, claim, liability, expense or demand of whatever nature
under any of the Contracts and Leases above arising or accruing
on or after the effective date hereof.
3. Assignor's Indemnification. Assignor agrees to
indemnify, defend and hold harmless Assignee from any loss,
cost, claim, liability, expense or demand of whatever nature
under any of the property described in Paragraph 1 above arising
or accruing prior to the effective date hereof.
4. Special Warranty of Title. Assignor does hereby bind
itself, its legal representatives, successors and assigns, to
SPECIALLY WARRANT, and FOREVER DEFEND title to the property
conveyed hereby unto Assignee, its legal representatives,
successors and assigns, against every person whomsoever lawfully
claiming or to claim same or any part thereof, by, through or
under Assignor, but not otherwise.
5. Limitation on Liability. Notwithstanding anything
contained herein to the contrary, Assignor acknowledges and
agrees that no limited partner of Assignee, nor any trustee,
director, holder of any beneficial interests, shareholder,
officer or employee of Assignee or any affiliate of Assignee
shall have any personal liability, directly or indirectly, under
this Assignment, and Assignor shall have recourse hereunder only
against Assignee's assets.
6. Miscellaneous. This Assignment and the obligations of
the parties hereunder shall survive the closing of the
transaction referred to in the Purchase Agreement, shall be
binding upon and inure to the benefit of the parties hereto,
their respective legal representatives, successors and assigns,
shall be governed by and construed in accordance with the laws
of the State of Tennessee applicable to agreements made and to
be wholly performed within said State, and may not be modified
or amended in any manner other than by a written agreement
signed by the party to be charged therewith.
EXECUTED TO BE EFFECTIVE as of the ______ day of
________________, 1997.
ASSIGNOR:
MORGAN PROPERTIES, LLC
By:__________________________________
Joseph C. Weller, Chief
Manager
ASSIGNEE:
PURCHASER:
PARKWAY PROPERTIES, L.P.
By: Parkway Properties General Partners, Inc.,
its sole general partner
By:____________________________________
Name:__________________________________
Title:_________________________________
By:____________________________________
Name:__________________________________
Title:_________________________________
EXHIBIT (f)
FORM OF FIRPTA AFFIDAVIT
STATE OF TENNESSEE
KNOW ALL MEN BY THESE
PRESENTS:
COUNTY OF SHELBY
Section 1445 of the Internal Revenue Code provides that a
transferee of a U.S. real property interest must withhold tax if
the transferor is a foreign person. To inform Parkway
Properties, L.P., a Delaware limited partnership ("Transferee"),
that withholding of tax is not required upon the disposition of
a U.S. real property interest by Morgan Properties, LLC, a
Tennessee limited liability company ("Transferor"), the
undersigned hereby certifies as follows:
1. Transferor is not a foreign corporation, foreign
partnership, foreign trust or foreign estate (as those
terms are defined in the Internal Revenue Code and Income
Tax Regulations);
2. Transferor's U.S. employer identification number is:
#______________________;
3. Transferor's office address is 50 North Front Street, 21st
Floor, Memphis, Tennessee 38103;
Transferor understands that this certification may be
disclosed to the Internal Revenue Service by the Transferee and
that any false statement contained herein could be punished by
fine, imprisonment, or both.
Under penalties of perjury, the undersigned, in the
capacity set forth below, hereby declares that he has examined
this certification and to the best of his knowledge and belief
it is true, correct and complete, and the undersigned further
declares that he has authority to sign this document in such
capacity.
EXECUTED to be effective as of the ____ day of ___________,
1997.
TRANSFEROR:
MORGAN PROPERTIES, LLC
By:__________________________________
Joseph C. Weller, Chief
Manager
STATE OF TENNESSEE
COUNTY OF SHELBY
I, ___________________, a Notary Public of the County and
State aforesaid, certify that Joseph C. Weller personally came
before me this day and acknowledged that he is the Chief Manager
of Morgan Properties, LLC, a Tennessee limited liability
company, and that by authority duly given and as the act of the
company the foregoing instrument was signed in its name by its
Chief Manager.
WITNESS MY HAND AND OFFICIAL SEAL, this the _____ day of
________________, 1997.
____________________________________
NOTARY PUBLIC
My Commission Expires:______________________
[AFFIX NOTARIAL SEAL]
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-3, No. 33329259) and related Prospectus and Prospectus Supplement
of Parkway Properties, Inc. of our reports iwth respect to the statements
of rental revenue and direct operating expenses fo rhte year ended December
1, 1996 dated April 17, 1997 for Courtyard of Arapaho included in Parkway
Properties, Inc.'s Form 8-K/A dated May 14, 1997; dated May 29, June 20 and
June 25, 1997 for Sugar Grove, Vestavia Centre and Meridian, respectively,
including in Parkway Properties, Inc.'s Form 8-K dated June 27, 1997;
dated August 8, August 15 and August 19, 1997 for Lakewood II, NationsBank
Tower and Fairway Plaza, respectively, included in Parkway Properties,
Inc.'s Form 8-K/A dated August 25, 1997; and dated August 27 and August 28,
1997 for First Tennessee Plaza and Morgan Keegan Tower, respectively,
included in Parkway Properties, Inc.'s Form 8-K dated September 9, 1997,
filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Jackson, Mississippi
September 9, 1997
