UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the
Securities Exchange Act of 1934
Date of Report (Date earliest event reported): July 1, 1998
------------------
PARKWAY PROPERTIES, INC.
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(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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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 2. Acquisition or Disposition of Assets.
On July 1, 1998, Parkway Properties, Inc. ("Parkway") closed
on the previously announced sale of its investment portfolio of
four office properties located in Dallas, Texas for $53,250,000
in cash to Triad Properties Corporation, a Huntsville, Alabama-
based private real estate investment and operating company. The
properties contain approximately 534,400 net rentable square
feet. The Company expects to record a gain for financial
reporting purposes of approximately $3.3 million on the sale in
the third quarter. The Company anticipates that the taxable gain
from this transaction will be deferred through a Section 1031
like-kind exchange and, accordingly, no special dividend of the
capital gain will be required. Approximately $25,000,000 of the
sale proceeds will be held in trust under the like-kind exchange
rules, pending the purchase of replacement properties.
Item 5. Other Events.
On June 30, 1998, the Company closed on a $97 million fixed
rate loan at a rate of 6.945% from Teachers Insurance and Annuity
Association of America. Proceeds of $78.9 million were funded on
June 30, 1998 with additional proceeds of $18.1 million to be
funded in July 1998. The loan will amortize over a 15-year term
and matures on July 1, 2008. The loan is secured by certain
properties of the Company. The loan contains a conversion
feature that gives the Company an option to unsecure all or part
of the loan upon receipt of an investment grade credit rating
from two of the major rating agencies during the first 24 months
of the loan. Proceeds of the loan were used to repay existing
variable rate debt.
On July 1, 1998, the Company purchased a partnership owning
the 171,800 square foot 111 East Capitol Building in Jackson,
Mississippi for $11,350,000 in the Company's first UPREIT
transaction. The Company assumed existing debt on the property
of $5,647,000 at a rate of 8%. The building was constructed in
1983 and includes an attached 200-space two-level parking garage.
The 111 East Capitol Building is located in the Central Business
District of Jackson and was 83% occupied at June 30, 1998.
Item 7. Financial Statements and Exhibits.
(b) Pro Forma Consolidated Financial Statements
The following unaudited Pro Forma Consolidated Financial
Statements are attached hereto.
Page
----
Pro Forma Consolidated Financial Statements (Unaudited) 5
Pro Forma Consolidated Balance Sheet (Unaudited) -
March 31, 1998 7
Pro Forma Consolidated Statement of Income (Unaudited) -
For the Year Ended December 31, 1997 8
Pro Forma Consolidated Statement of Income (Unaudited) -
For the Three Months ended March 31, 1998 9
Notes to Pro Forma Consolidated Financial
Statements (Unaudited) 10
(c) Exhibits
(10) (a) Purchase and Sale Agreement between Parkway
Properties LP and Triad Properties Corporation is
incorporated by reference to the Registrant's Form 8-K
dated and filed April 22, 1998. 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 Parkway
Portfolio I LLC and Triad Properties Corporation, and
Parkway Properties LP, a Delaware limited partnership
is incorporated by reference to the Registrant's Form
8-K dated and filed April 22, 1998. Parkway agrees to
furnish supplementally to the Securities and Exchange
Commission on request a copy of any omitted schedule or
exhibit to this agreement.
(99) (a) Amended and Restated Agreement of Limited
Partnership of Parkway Properties LP, including Amended
and Restated Exhibit A of the Amended and Restated
Agreement of Limited Partnership. Parkway agrees to
furnish supplementally to the Securities and Exchange
Commission on request a copy of any omitted schedule or
exhibit to this agreement.
(99) (b) Admission Agreement between Parkway Properties LP
and Lane N. Meltzer. Parkway agrees to furnish
supplementally to the Securities and Exchange
Commission on request a copy of any omitted schedule or
exhibit to this agreement.
(99) (c) Promissory Note between Parkway Properties LP and
Teachers Insurance and Annuity Association of America.
Parkway agrees to furnish supplementally to the
Securities and Exchange Commission on request a copy of
any omitted schedule or exhibit to this agreement.
(99) (d) Form of Mortgage, Assignment of Leases and Rents
Security Agreement and Fixture Filing Statement by
Parkway Properties LP as borrower for the benefit of
Teachers Insurance and Annuity Association of America
as lender. Parkway agrees to furnish supplementally to
the Securities and Exchange Commission on request a
copy of any omitted schedule or exhibit to this
agreement.
(99) (e) Conversion and Note Agreement between Parkway
Properties LP Parkway Properties, Inc. and Teachers
Insurance and Annuity Association of America. Parkway
agrees to furnish supplementally to the Securities and
Exchange Commission on request a copy of any omitted
schedule or exhibit to this agreement.
PARKWAY PROPERTIES, INC.
Pro Forma Consolidated Financial Statements
(Unaudited)
The following unaudited pro forma consolidated balance sheet
as of March 31, 1998 and pro forma consolidated statements of
income of Parkway Properties, Inc. ("Parkway") for the year ended
December 31, 1997 and the three months ended March 31, 1998 give
effect to the recent purchases of Parkway listed below for the
periods stated as well as the sale of the four office buildings
owned by Parkway in Dallas, Texas (the "Dallas Portfolio"). 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 sale of the Dallas Portfolio, as if it had
been consummated on March 31, 1998.
The pro forma consolidated statements of income sets forth
the effects of Parkway's purchases of the buildings listed below
as if they had been consummated on January 1, 1997.
BUILDING DATE OF PURCHASE
SouthTrust Bank Building 03/31/98
Brookdale Portfolio 02/25/98
Schlumberger Building 01/21/98
Greenbrier Towers 11/25/97
Raytheon Building 11/17/97
First Little Rock Plaza 11/07/97
Hightower Centre 10/01/97
Morgan Keegan Tower 09/30/97
First Tennessee Plaza 09/18/97
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
In addition to the purchases listed above, the pro forma
consolidated statement of income sets forth the effect of the sale
of 1,750,000 shares of Common Stock on January 22, 1997, 262,500
shares of Common Stock on February 19, 1997, 3,000,000 shares of
Common Stock on September 24, 1997, 450,000 shares of Common Stock
On October 6, 1997, 451,128 shares of Common Stock on February 3,
1998 and 855,900 shares of Common Stock on March 11, 1998, as well
as the sale of the Dallas Portfolio as if these transactions had
occurred January 1, 1997.
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 10-K for the year ended
December 31, 1997.
PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(Unaudited)
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
(In thousands)
Assets
Real estate related investments:
Office buildings.............$507,477 $ - $507,477
Office buildings held
for sale................... 48,864 (48,864) -
Land held for development.... 1,721 - 1,721
Accumulated depreciation..... (16,238) - (16,238)
-------- -------- --------
541,824 (48,864) 492,960
Land held for sale........... 5,341 - 5,341
Mortgage loans............... 1,115 - 1,115
Real estate partnership...... 322 - 322
-------- -------- --------
548,602 (48,864) 499,738
Interest, rents receivable
and other assets............. 9,755 - 9,755
Cash and cash equivalents...... 1,060 25,000 26,060
-------- -------- --------
$559,417 $(23,864) $535,553
======== ======== ========
Liabilities
Notes payable to banks..........$152,404 $(27,164) $125,240
Mortgage notes payable
without recourse.............. 104,157 - 104,157
Accounts payable and other
liabilities................... 15,057 - 15,057
-------- -------- --------
$271,618 (27,164) $244,454
-------- -------- --------
Stockholders' Equity
Common stock, $0.001 par value,
70,000,000 shares authorized,
11,085,823 shares issued
and outstanding............... 11 - 11
Additional paid-in capital...... 254,828 - 254,828
Retained earnings............... 32,960 3,300 36,260
-------- -------- --------
287,799 3,300 291,099
-------- -------- --------
$559,417 $(23,864) $535,553
======== ======== ========
See accompanying notes
PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(Unaudited)
Pro Forma
Historical Adjustments(1-2)Pro Forma
---------- -------------- ---------
(In thousands, except per share data)
Revenues
Income from office properties...$45,799 $38,745 (a) $84,544
Income from other real estate
properties.................... 722 - 722
Interest on mortgage loans...... 63 - 63
Management company income....... 539 - 539
Interest on investments......... 373 (373)(d) -
Dividend income................. 388 - 388
Deferred gains and other income. 203 - 203
------- ------- -------
48,087 38,372 86,459
------- ------- -------
Expenses
Office properties
Operating expense............. 19,697 16,879 (a) 36,576
Interest expense:
Contractual................. 5,486 2,849 (c) 8,335
Amortization of loan cost... 95 - 95
Depreciation and amortization. 6,033 6,039 (a) 12,072
Minority interest............. 59 - 59
Other real estate properties
Operating expense............. 462 - 462
Interest expense on bank notes:
Contractual................... 810 5,624 (d) 6,434
Amortization of loan costs.... 187 - 187
Management company expense...... 362 - 362
General and administrative...... 3,312 - 3,312
------- ------- -------
36,503 31,391 67,894
------- ------- -------
Income before gains............. 11,584 6,981 18,565
------- ------- -------
Gain on sales
Gain on real estate held for
sale and mortgage loans....... 2,907 - 2,907
------- ------- -------
Net income......................$14,491 $ 6,981 $21,472
======= ======= =======
Net income per share:
Basic.........................$ 2.05 $ 1.94(3)
Diluted.......................$ 2.01 $ 1.92(3)
Weighted average shares
outstanding:
Basic......................... 7,078 11,072(3)
Diluted....................... 7,214 11,208(3)
See accompanying notes
PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(Unaudited)
Pro Forma
Historical Adjustments(1-2)Pro Forma
---------- -------------- ---------
(In thousands, except per share data)
Revenues
Income from office properties...$19,644 $ 2,759 (b) $22,403
Income from other real estate
properties.................... - - -
Interest on mortgage loans...... 24 - 24
Management company income....... 129 - 129
Interest on investments......... 7 - 7
Dividend income................. - - -
Deferred gains and other income. 110 - 110
------- ------- -------
19,914 2,759 22,673
------- ------- -------
Expenses
Office properties
Operating expense............. 8,244 1,293 (b) 9,537
Interest expense:
Contractual................. 2,043 - 2,043
Amortization of loan cost... 25 - 25
Depreciation and amortization. 2,591 673 (b) 3,264
Minority interest............. - - -
Other real estate properties
Operating expense............. 30 - 30
Interest expense on bank notes:
Contractual................... 1,122 353 (d) 1,475
Amortization of loan costs.... 234 - 234
Management company expense...... 105 - 105
General and administrative...... 902 - 902
------- ------- -------
15,296 2,319 17,615
------- ------- -------
Income before gains............. 4,618 440 5,058
------- ------- -------
Gain on sales
Gain on real estate held for
sale and mortgage loans....... 952 - 952
------- ------- -------
Net income......................$ 5,570 440 $ 6,010
======= ======= =======
Net income per share:
Basic.........................$ .55 $ .54(3)
Diluted.......................$ .54 $ .54(3)
Weighted average shares
outstanding:
Basic......................... 10,156 11,078(3)
Diluted....................... 10,301 11,223(3)
See accompanying notes
PARKWAY PROPERTIES, INC.
Notes to Pro Forma Consolidated Financial Statements
(Unaudited)
1. On July 1, the Company sold the four-building Dallas
Portfolio for $53,250,000. The Company expects to record a
gain for financial purposes of approximately $3.3 million on
the sale. Approximately $25,000,000 of the sale proceeds
will be held in trust under the like-kind exchange rules,
pending the purchase of replacement properties.
2. The pro forma adjustments to the historical Consolidated
Statement of Income for the year ended December 31, 1997 and
the three months ended March 31, 1998 set forth the effects
of Parkway's purchases of the following buildings as if they
had been consummated on January 1, 1997.
BUILDING DATE OF PURCHASE
SouthTrust Bank Building 03/31/98
Brookdale Portfolio 02/25/98
Schlumberger Building 01/21/98
Greenbrier Towers 11/25/97
Raytheon Building 11/17/97
First Little Rock Plaza 11/07/97
Hightower Centre 10/01/97
Morgan Keegan Tower 09/30/97
First Tennessee Plaza 09/18/97
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
(a) The pro forma adjustments to the Consolidated Statement of
Income are detailed below by property for the year ended
December 31, 1997.
Revenue Expenses
----------- ---------------------------
Income From Real Estate Owned
Real Estate Operating Depreciation
Properties Expense Expense*
----------- ------------ ------------
Purchases:
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 2,392,000 1,003,000 271,000
Fairway Plaza 859,000 379,000 94,000
First Tennessee
Plaza 4,253,000 2,080,000 477,000
Morgan Keegan
Tower 3,327,000 1,665,000 618,000
Hightower Centre 833,000 333,000 113,000
Raytheon Building 2,417,000 1,072,000 315,000
First Little Rock 1,298,000 517,000 191,000
Greenbrier Towers 1,913,000 835,000 330,000
Schlumberger 2,260,000 817,000 275,000
Brookdale Portfolio 20,543,000 9,108,000 3,668,000
SouthTrust Bank Bldg. 2,751,000 1,205,000 392,000
Sale of Dallas Portfolio (6,906,000) (3,370,000) (1,093,000)
----------- ----------- -----------
$38,745,000 $16,879,000 $ 6,039,000
=========== =========== ===========
*Depreciation is provided by the straight-line method over
the estimated useful lives of the buildings (40 years).
(b) The pro forma adjustments to the Consolidated Statement of
Income are detailed below by property for the three months
ended March 31, 1998.
Revenue Expenses
----------- ---------------------------
Income From Real Estate Owned
Real Estate Operating Depreciation
Properties Expense Expense*
----------- ------------ ------------
Purchases:
Schlumberger $ 125,000 $ 45,000 $ 15,000
Brookdale Portfolio 3,139,000 1,392,000 560,000
SouthTrust Bank Building 720,000 335,000 98,000
Sale of Dallas Portfolio (1,225,000) (479,000) -
----------- ------------ ------------
$ 2,759,000 $ 1,293,000 $ 673,000
=========== ============ ============
*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 in
1996 and 1997 and debt assumed upon purchase at the actual
amounts and rates by property as if in place January 1, 1997
and is detailed below.
Property/Placement Year Ended
Date/Rate Debt 12/31/97
------------------ ----------- ----------
Lakewood II*
7/97 8.08% $ 6,910,000 $ 294,000
BB&T
11/97 7.3% 15,000,000 958,000
Raytheon Building*
11/97 8.125% 7,958,000 566,000
First Tennessee
Plaza
12/97 7.17% 15,000,000 1,031,000
----------
$2,849,000
==========
*Assumed in purchase.
(d) The pro forma effect of the building purchases, the
placement of non-recourse debt, the sales of Common
Stock and the proposed sale of the Dallas portfolio on
interest expense on notes payable to banks was
$5,624,000 for the year ended December 31, 1997 and
$353,000 for the three months ended March 31, 1998.
3. The pro forma basic and diluted earnings per share for the
year ended December 31, 1997 reflect the sale of 1,750,000
shares of Common Stock on January 22, 1997, 262,500 shares of
Common Stock on February 19, 1997, 3,000,000 shares of Common
Stock on September 24, 1997, 450,000 shares of Common Stock
on October 6, 1997, 451,128 shares of Common Stock on
February 23, 1998 and 855,900 shares of Common Stock on March
11, 1998.
4. No income tax expenses were provided because of the Company's
net operating loss carryover and status as a REIT.
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: July 15, 1998 PARKWAY PROPERTIES, INC.
BY: /s/Steven G. Rogers
President and CEO
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
PARKWAY PROPERTIES LP
January 1, 1998
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
PARKWAY PROPERTIES LP
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINED TERMS 1
Section 1.1 DEFINITIONS 1
ARTICLE 2
ORGANIZATIONAL MATTERS 16
Section 2.1 ORGANIZATION 16
Section 2.2 NAME 16
Section 2.3 RESIDENT AGENT; PRINCIPAL OFFICE 16
Section 2.4 POWER OF ATTORNEY 17
Section 2.5 TERM 18
ARTICLE 3
PURPOSE 18
Section 3.1 PURPOSE AND BUSINESS 18
Section 3.2 POWERS 18
Section 3.3 PARTNERSHIP ONLY FOR PURPOSES SPECIFIED 19
Section 3.4 REPRESENTATIONS AND WARRANTIES BY THE PARTIES 19
ARTICLE 4
CAPITAL CONTRIBUTIONS 21
Section 4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS 21
Section 4.2 LOANS BY THIRD PARTIES 22
Section 4.3 ADDITIONAL FUNDING AND CAPITAL CONTRIBUTIONS 22
(a) GENERAL 22
(b) GENERAL PARTNER LOANS 22
(c) ISSUANCE OF ADDITIONAL PARTNERSHIP
INTERESTS 22
(d) ISSUANCE OF REIT SHARES OR OTHER
SECURITIES BY THE COMPANY 23
(e) PERCENTAGE INTEREST ADJUSTMENTS IN THE
CASE OF CAPITAL CONTRIBUTIONS FOR
PARTNERSHIP UNITS 23
Section 4.4 STOCK PLAN 24
Section 4.5 NO THIRD PARTY BENEFICIARY 24
Section 4.6 OTHER CONTRIBUTION PROVISIONS 24
ARTICLE 5
DISTRIBUTIONS 25
Section 5.1 REQUIREMENT AND CHARACTERIZATION OF
DISTRIBUTIONS 25
Section 5.2 DISTRIBUTIONS IN KIND 25
Section 5.3 DISTRIBUTIONS UPON LIQUIDATION 25
Section 5.4 DISTRIBUTIONS TO REFLECT ISSUANCE OF
ADDITIONAL PARTNERSHIP INTERESTS 26
ARTICLE 6
ALLOCATIONS 26
Section 6.1 TIMING AND AMOUNT OF ALLOCATIONS OF NET INCOME
AND NET LOSS 26
Section 6.2 GENERAL ALLOCATIONS 26
(a)IN GENERAL 26
(b) ALLOCATIONS TO REFLECT ISSUANCE OF
ADDITIONAL PARTNERSHIP INTERESTS 26
Section 6.3 ADDITIONAL ALLOCATION PROVISIONS 26
(a)REGULATORY ALLOCATIONS 26
Section 6.4 TAX ALLOCATIONS 29
(a)IN GENERAL 29
(b)ALLOCATIONS RESPECTING SECTION 704(C)
REVALUATIONS 29
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS 29
Section 7.1 MANAGEMENT 29
Section 7.2 CERTIFICATE OF LIMITED PARTNERSHIP 33
Section 7.3 RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY 33
Section 7.4 REIMBURSEMENT OF THE GENERAL PARTNER 36
Section 7.5 CONTRACTS WITH AFFILIATES 36
Section 7.6 INDEMNIFICATION 37
Section 7.7 LIABILITY OF THE GENERAL PARTNER 39
Section 7.8 OTHER MATTERS CONCERNING THE GENERAL PARTNER 40
Section 7.9 TITLE TO PARTNERSHIP ASSETS 40
Section 7.10 RELIANCE BY THIRD PARTIES 41
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNER 41
Section 8.1 LIMITATION OF LIABILITY 41
Section 8.2 MANAGEMENT OF BUSINESS 42
Section 8.3 OUTSIDE ACTIVITIES OF LIMITED PARTNERS 42
Section 8.4 RETURN OF CAPITAL 42
Section 8.5 RIGHTS OF LIMITED PARTNERS RELATING TO THE
PARTNERSHIP 43
Section 8.6 REDEMPTION RIGHTS 43
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS 46
Section 9.1 RECORDS AND ACCOUNTING 46
Section 9.2 FISCAL YEAR 46
Section 9.3 REPORTS 47
ARTICLE 10
TAX MATTERS 47
Section 10.1 PREPARATION OF TAX RETURNS 47
Section 10.2 TAX ELECTIONS 47
Section 10.3 TAX MATTERS PARTNER 47
Section 10.4 ORGANIZATIONAL EXPENSES 49
Section 10.5 WITHHOLDING 49
ARTICLE 11
TRANSFERS AND WITHDRAWALS 50
Section 11.1 TRANSFER 50
Section 11.2 TRANSFER OF GENERAL PARTNER'S PARTNERSHIP
INTEREST 50
Section 11.3 LIMITED PARTNERS' RIGHTS TO TRANSFER 52
(i)GENERAL PARTNER RIGHT OF FIRST REFUSAL 52
(ii)QUALIFIED TRANSFEREE 53
Section 11.4 SUBSTITUTED LIMITED PARTNERS 54
Section 11.5 ASSIGNEES 55
Section 11.6 GENERAL PROVISIONS 55
ARTICLE 12
ADMISSION OF PARTNERS 57
Section 12.1 ADMISSION OF SUCCESSOR GENERAL PARTNER 57
Section 12.2 ADMISSION OF ADDITIONAL LIMITED PARTNERS 57
Section 12.3 AMENDMENT OF AGREEMENT AND CERTIFICATE OF
LIMITED PARTNERSHIP 58
ARTICLE 13
DISSOLUTION AND LIQUIDATION 58
Section 13.1 DISSOLUTION 58
Section 13.2 WINDING UP 59
Section 13.3 COMPLIANCE WITH TIMING REQUIREMENTS OF
REGULATIONS 60
Section 13.4 RIGHTS OF LIMITED PARTNERS 61
Section 13.5 NOTICE OF DISSOLUTION 61
Section 13.6 CANCELLATION OF CERTIFICATE OF LIMITED
PARTNERSHIP 61
Section 13.7 REASONABLE TIME FOR WINDING UP 61
Section 13.8 WAIVER OF PARTITION 62
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS 62
Section 14.1 AMENDMENTS 62
Section 14.2 ACTION BY THE PARTNERS 62
ARTICLE 15
GENERAL PROVISIONS 63
Section 15.1 ADDRESSES AND NOTICE 63
Section 15.2 TITLES AND CAPTIONS 63
Section 15.3 PRONOUNS AND PLURALS 63
Section 15.4 FURTHER ACTION 64
Section 15.5 BINDING EFFECT 64
Section 15.6 CREDITORS 64
Section 15.7 WAIVER 64
Section 15.8 COUNTERPARTS 64
Section 15.9 APPLICABLE LAW 64
Section 15.10 INVALIDITY OF PROVISIONS 64
Section 15.11 LIMITATION TO PRESERVE REIT STATUS 65
Section 15.12 ENTIRE AGREEMENT 65
Section 15.13 NO RIGHTS AS STOCKHOLDERS 66
EXHIBIT A
Partners, Contributions and Partnership Interests 67
EXHIBIT B
Notice of Redemption 68
EXHIBIT C
Schedule of Partners' Ownership with Respect to Tenants 69
EXHIBIT D
Schedule of REIT Shares Actually or
Constructively Owned by Limited Partners Other
than those Acquired Pursuant to an Exchange 70
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
PARKWAY PROPERTIES LP
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP, dated as of January 1, 1998, is entered into by and
among Parkway Properties Inc., a Maryland corporation (the
"Company"), Parkway Properties General Partners Inc. ("PPGP"),
together with any other Persons who become Partners in the
Partnership as provided herein.
WHEREAS, the limited partnership was formed pursuant to
the Revised Uniform Limited Partnership Act of the State of
Delaware by filing a certificate of limited partnership on
January 6, 1997;
WHEREAS, the Agreement of Limited Partnership of
Parkway Properties LP was executed on January 3, 1997 with PPGP
as the original general partner and the Company as the original
Limited Partner, and amended on November 1, 1997;
WHEREAS, the Company proposes to restructure its
operations by contributing substantially all of its assets and
properties to the Partnership in exchange for additional Limited
Partnership interests;
NOW, THEREFORE, BE IT RESOLVED, that for good and
adequate consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINED TERMS
Section 1.1 DEFINITIONS
The following definitions shall be for all purposes,
unless otherwise clearly indicated to the contrary, applied to
the terms used in this Agreement:
"ACT" means the Delaware Revised Uniform Limited
Partnership Act, as it may be amended from time to time, and any
successor to such statute.
"ADDITIONAL FUNDS" shall have the meaning set forth in
Section 4.3(a).
"ADDITIONAL LIMITED PARTNER" means a Person admitted to
the Partnership as a Limited Partner pursuant to Section 12.2
hereof and who is shown as such on the books and records of the
Partnership.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect
to any Partner, the deficit balance, if any, in such Partner's
Capital Account as of the end of the relevant fiscal year, after
giving effect to the following adjustments:
(a) decrease such deficit by any amounts which such
Partner is obligated, or is treated as obligated, to restore
pursuant to this Agreement or is deemed to be obligated to
restore pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or
the penultimate sentence of each of Regulations Sections
1.704-2(i)(5) and 1.704-2(g)(1); and
(b) increase such deficit by the items described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of Adjusted Capital Account
Deficit is intended to comply with the provisions of Regulations
Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith.
"ADJUSTMENT DATE" means, with respect to any Capital
Contribution, the close of business on the Business Day last
preceding the date of the Capital Contribution, PROVIDED THAT, if
such Capital Contribution is being made by the Company in respect
of the proceeds from the issuance of REIT Shares (or the issuance
of the Company's securities exercisable for, convertible into or
exchangeable for REIT Shares), then the Adjustment Date shall be
as of the close of business on the Business Day last preceding
the date of the issuance of such securities.
"AFFILIATE" means, with respect to any Person, any
Person directly or indirectly controlling, controlled by or under
common control with such Person.
"AGENT" shall have the meaning set forth in Section
7.7(a).
"AGREED VALUE" means (i) in the case of any Contributed
Property set forth in Exhibit A and as of the time of its
contribution to the Partnership, the Agreed Value of such
property as set forth in Exhibit A; (ii) in the case of any
Contributed Property not set forth in Exhibit A and as of the
time of its contribution to the Partnership, the fair market
value of such property or other consideration as determined by
the General Partner, reduced by any liabilities either assumed by
the Partnership upon such contribution or to which such property
is subject when contributed; and (iii) in the case of any
property distributed to a Partner by the Partnership, the fair
market value of such property as determined by the General
Partner at the time such property is distributed, reduced by any
liabilities either assumed by such Partner upon such distribution
or to which such property is subject at the time of the
distribution as determined under Section 752 of the Code and the
Regulations thereunder.
"AGREEMENT" means this Amended and Restated Agreement
of Limited Partnership, as it may be amended, supplemented or
restated from time to time.
"APPRAISAL" means, with respect to any assets, the
opinion of an independent third party experienced in the
valuation of similar assets, selected by the General Partner in
good faith; such opinion may be in the form of an opinion by such
independent third party that the value for such property or asset
as set by the General Partner is fair, from a financial point of
view, to the Partnership.
"ASSIGNEE" means a Person to whom one or more
Partnership Units have been transferred in a manner permitted
under this Agreement, but who has not become a Substituted
Limited Partner, and who has the rights set forth in Section
11.5.
"AVAILABLE CASH" means, with respect to any period for
which such calculation is being made,
(a) the sum of:
(i) the Partnership's Net Income or Net Loss
(as the case may be) for such period,
(ii) Depreciation and all other noncash
charges deducted in determining Net Income or Net Loss for such
period,
(iii) the amount of any reduction in reserves
of the Partnership referred to in clause (b)(vi) below
(including, without limitation, reductions resulting because the
General Partner determines such amounts are no longer necessary),
(iv) the excess of the net proceeds from the
sale, exchange, disposition, or refinancing of Partnership
property for such period over the gain (or loss, as the case may
be) recognized from any such sale, exchange, disposition, or
refinancing during such period (excluding Terminating Capital
Transactions), and
(v) all other cash received by the
Partnership for such period that was not included in determining
Net Income or Net Loss for such period;
(b) less the sum of:
(vi) all principal debt payments made during
such period by the Partnership,
(vii) capital expenditures made by the
Partnership during such period,
(viii) investments in any entity (including
loans made thereto) to the extent that such investments are not
otherwise described in clause (vi) or (vii),
(ix) all other expenditures and payments not
deducted in determining Net Income or Net Loss for such period,
(x) any amount included in determining Net
Income or Net Loss for such period that was not received by the
Partnership during such period,
(xi) the amount of any increase in reserves
established during such period which the General Partner
determines are necessary or appropriate in its sole and absolute
discretion, and
(xii) the amount of any working capital
accounts and other cash or similar balances which the General
Partner determines to be necessary or appropriate in its sole and
absolute discretion.
Notwithstanding the foregoing, Available Cash shall not
include any cash received or reductions in reserves, or take into
account any disbursements made or reserves, established, after
commencement of the dissolution and liquidation of the
Partnership.
"BUSINESS DAY" means any day except a Saturday, Sunday
or other day on which commercial banks in New York, New York are
authorized or required by law to be closed.
"CAPITAL ACCOUNT" means, with respect to any Partner,
the Capital Account maintained for such Partner in accordance
with the following provisions:
(a) To each Partner's Capital Account there shall be
added such Partner's Capital Contributions, such Partner's share
of Net Income and any items in the nature of income or gain which
are specially allocated pursuant to Section 0 hereof, and the
amount of any Partnership liabilities assumed by such Partner or
which are secured by any property distributed to such Partner.
(b) From each Partner's Capital Account there shall be
subtracted the amount of cash and the Gross Asset Value of any
property distributed to such Partner pursuant to any provision of
this Agreement, such Partner's distributive share of Net Losses
and any items in the nature of expenses or losses which are
specially allocated pursuant to Section 0 hereof, and the amount
of any liabilities of such Partner assumed by the Partnership or
which are secured by any property contributed by such Partner to
the Partnership.
(c) In the event any interest in the Partnership is
transferred in accordance with the terms of this Agreement (which
does not result in a termination of the Partnership for federal
income tax purposes), the transferee shall succeed to the Capital
Account of the transferor to the extent it relates to the
transferred interest.
(d) In determining the amount of any liability for
purposes of subsections (a) and (b) hereof, there shall be taken
into account Code section 752(c) and any other applicable
provisions of the Code and Regulations.
(e) The foregoing provisions and the other provisions
of this Agreement relating to the maintenance of Capital Accounts
are intended to comply with Regulations Sections 1.704-1(b) and
1.704-2, and shall be interpreted and applied in a manner
consistent with such Regulations. In the event the General
Partner shall determine that it is prudent to modify the manner
in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to
liabilities which are secured by contributed or distributed
property or which are assumed by the Partnership, the General
Partner, or the Limited Partners) are computed in order to comply
with such Regulations, the General Partner may make such
modification, PROVIDED THAT it is not likely to have a material
effect on the amounts distributable to any Person pursuant to
Article 13 of the Agreement upon the dissolution of the
Partnership. The General Partner also shall (i) make any
adjustments that are necessary or appropriate to maintain
equality between the Capital Accounts of the Partners and the
amount of Partnership capital reflected on the Partnership's
balance sheet, as computed for book purposes, in accordance with
Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any
appropriate modifications in the event unanticipated events might
otherwise cause this Agreement not to comply with Regulations
Section 1.704-1(b) or Section 1.704-2.
"CAPITAL CONTRIBUTION" means, with respect to any
Partner, the amount of money and the initial Gross Asset Value of
any property (other than money) contributed to the Partnership by
such Partner.
"CASH AMOUNT" means, with respect to any Partnership
Units subject to a Redemption, an amount of cash equal to the
Deemed Partnership Interest Value attributable to such
Partnership Units.
"CERTIFICATE" means the Certificate of Limited
Partnership relating to the Partnership filed in the office of
the Secretary of State of Delaware, as amended from time to time
in accordance with the terms hereof and the Act.
"CHARTER" means the Articles of Incorporation of the
Company filed with the Maryland State Department of Assessments
and Taxation on May 17, 1996, as amended or restated from time to
time.
"CODE" means the Internal Revenue Code of 1986, as
amended from time to time or any successor statute thereto, as
interpreted by the applicable regulations thereunder. Any
reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding
provision of future law.
"CONSENT" means the consent to, approval of, or vote on
a proposed action by a Partner given in accordance with Article
14 hereof.
"CONSENT OF THE LIMITED PARTNERS" means the Consent of
a Majority In Interest of the Limited Partners, which Consent
shall be obtained prior to the taking of any action for which it
is required by this Agreement and may be given or withheld by a
Majority in Interest of the Limited Partners, unless otherwise
expressly provided herein, in their sole and absolute discretion.
"CONSENT OF THE PARTNERS" means the Consent of Partners
holding Percentage Interests that, in the aggregate are equal to
or greater than 66 2/3% of the aggregate Percentage Interests of
all Partners, which Consent shall be obtained prior to the taking
of any action for which it is required by this Agreement and may
be given or withheld by such Partners, in their sole and absolute
discretion.
"CONSENT OF THE SUPER MAJORITY LIMITED PARTNERS" means
the consent of Limited Partners (other than the General Partner
and any Limited Partner 50% or more of whose equity is owned,
directly or indirectly, by the General Partner) holding
Percentage Interests that, in the aggregate are equal to or
greater than 66 2/3% of the aggregate Percentage Interests of all
Limited Partners (other than the General Partner and any Limited
Partner 50% or more of whose equity is owned, directly or
indirectly, by the General Partner), which Consent shall be
obtained prior to the taking of any action for which it is
required by this Agreement and may be given or withheld by such
Limited Partners, in their sole and absolute discretion.
"CONSTRUCTIVELY OWN" means ownership under the
constructive ownership rules of Section 856(d)(5) of the Code.
"CONTRIBUTED PROPERTY" means each property or other
asset, in such form as may be permitted by the Act, but excluding
cash, contributed or deemed contributed to the Partnership (or,
to the extent provided in applicable regulations, deemed
contributed to the Partnership on termination and reconstitution
thereof pursuant to Section 708 of the Code).
"DEBT" means, as to any Person, as of any date of
determination, (i) all indebtedness of such Person for borrowed
money or for the deferred purchase price of property or services;
(ii) all amounts owed by such Person to banks or other Persons in
respect to reimbursement obligations under letters of credit,
surety bonds and other similar instruments guaranteeing payment
or other performance of obligations by such Person; (iii) all
indebtedness for borrowed money or for the deferred purchase
price of property or services secured by any lien on any property
owned by such Person, to the extent attributable to such Person's
interest in such property, even though such Person has not
assumed or become liable for the payment thereof; and (iv) lease
obligations of such Person which, in accordance with generally
accepted accounting principles, should be capitalized.
"DEEMED PARTNERSHIP INTEREST VALUE" means, as of any
date with respect to any class of Partnership Interests, the
Deemed Value of the Partnership Interests of such class
multiplied by the applicable Partner's Percentage Interest of
such class.
"DEEMED VALUE OF THE PARTNERSHIP INTERESTS" means, as
of any date with respect to any class of Partnership Interests,
(i) the total number of shares of capital stock of the Company
corresponding to the Percentage Interest of the Company in such
class of Partnership Interests issued and outstanding as of the
close of business on such date (excluding any treasury shares)
multiplied by the Fair Market Value of a share of such capital
stock on such date; (ii) DIVIDED BY the Percentage Interest of
the General Partner in such class of Partnership Interests on
such date.
"DEPRECIATION" means, for each fiscal year or other
period, an amount equal to the depreciation, amortization or
other cost recovery deduction allowable with respect to an asset
for such year or other period, except that if the Gross Asset
Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other
period, Depreciation shall be an amount which bears the same
ratio to such beginning Gross Asset Value as the federal income
tax depreciation, amortization or other cost recovery deduction
for such year or other period bears to such beginning adjusted
tax basis; PROVIDED, HOWEVER, that if the federal income tax
depreciation, amortization or other cost recovery deduction for
such year is zero, Depreciation shall be determined with
reference to such beginning Gross Asset Value using any
reasonable method selected by the General Partner.
"EFFECTIVE DATE" means the date upon which
contributions set forth on Exhibit A shall become completed.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, or any successor statute.
"FAIR MARKET VALUE" means, with respect to any REIT
Share, the average of the daily market price for the ten (10)
consecutive trading days immediately preceding the date with
respect to which "Fair Market Value" must be determined hereunder
or, if such date is not a Business Day, the immediately preceding
Business Day. The market price for each such trading day shall
be: (i) if such shares are listed or admitted to trading on any
securities exchange or the Nasdaq National Market, the closing
price, regular way, on such day, or if no such sale takes place
on such day, the average of the closing bid and asked prices on
such day, (ii) if such shares are not listed or admitted to
trading on any securities exchange or the Nasdaq National Market,
the last reported sale price on such day or, if no sale takes
place on such day, the average of the closing bid and asked
prices on such day, as reported by a reliable quotation source
designated by the Company, or (iii) if such shares are not listed
or admitted to trading on any securities exchange or the Nasdaq
National Market and no such last reported sale price or closing
bid and asked prices are available, the average of the reported
high bid and low asked prices on such day, as reported by a
reliable quotation source designated by the Company, or if there
shall be no bid and asked prices on such day, the average of the
high bid and low asked prices, as so reported, on the most recent
day (not more than 10 days prior to the date in question) for
which prices have been so reported; PROVIDED THAT, if there are
no bid and asked prices reported during the 10 days prior to the
date in question, the Fair Market Value of such shares shall be
determined by the General Partner acting in good faith on the
basis of such quotations and other information as it considers,
in its reasonable judgment, appropriate. In the event the REIT
Shares Amount for such shares includes rights that a holder of
such shares would be entitled to receive, then the Fair Market
Value of such rights shall be determined by the General Partner
acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment,
appropriate; and PROVIDED FURTHER THAT, in connection with
determining the Deemed Value of the Partnership Interests for
purposes of determining the number of additional Partnership
Units issuable upon a Capital Contribution funded by an
underwritten public offering of shares of capital stock of the
Company, the Fair Market Value of such shares shall be the public
offering price per share of such class of capital stock sold.
"FUNDING DEBT" means the incurrence of any Debt by or
on behalf of the General Partner for the purpose of providing
funds to the Partnership.
"GENERAL PARTNER" means Parkway Properties General
Partners, Inc. or its successors as general partner of the
Partnership.
"GENERAL PARTNER INTEREST" means a Partnership Interest
held by the General Partner. A General Partner Interest may be
expressed as a number of Partnership Units.
"GENERAL PARTNER LOAN" shall have the meaning set forth
in Section 4.3(b).
"GENERAL PARTNER PAYMENT" shall have the meaning set
forth in Section 15.11.
"GROSS ASSET VALUE" means, with respect to any asset,
the asset's adjusted basis for federal income tax purposes,
except as follows:
(a) The initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be the gross
fair market value of such asset, as determined by the
contributing Partner and the General Partner (as set forth on
Exhibit A attached hereto, as such Exhibit may be amended from
time to time); PROVIDED THAT, if the contributing Partner is the
General Partner then, except with respect to the General
Partner's initial Capital Contribution which shall be determined
as set forth on Exhibit A, or capital contributions of cash, REIT
Shares or other shares of capital stock of the General Partner,
the determination of the fair market value of the contributed
asset shall be determined by the price paid by the General
Partner if the asset is acquired by the General Partner
contemporaneously with its contribution to the Partnership.
(b) As of the times listed below, the Gross Asset
Values of all Partnership assets shall be adjusted to equal their
respective gross fair market values, as determined by the General
Partner using such reasonable method of valuation as it may
adopt, PROVIDED, HOWEVER, that for such purpose, the net value of
all of the Partnership assets, in the aggregate, shall be equal
to the Deemed Value of the Partnership Interests of all classes
of Partnership Interests then outstanding, regardless of the
method of valuation adopted by the General Partner:
(i) the acquisition of an additional
interest in the Partnership by a new or existing Partner in
exchange for more than a de minimis Capital Contribution, if the
General Partner reasonably determines that such adjustment is
necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership;
(ii) the distribution by the Partnership to a
Partner of more than a de minimis amount of Partnership property
as consideration for an interest in the Partnership if the
General Partner reasonably determines that such adjustment is
necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership;
(iii) the liquidation of the Partnership
within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g);
and
(iv) at such other times as the General Partner
shall reasonably determine necessary or advisable in order to
comply with Regulations Sections 1.704-1(b) and 1.704-2.
(c) The Gross Asset Value of any Partnership asset
distributed to a Partner shall be the gross fair market value of
such asset (taking Section 7701(g) of the Code into account),
without reduction for liabilities, on the date of distribution as
determined by the distributee and the General Partner, or if the
distributee and the General Partner cannot agree on such a
determination, by Appraisal.
(d) The Gross Asset Values of Partnership assets shall
be increased (or decreased) to reflect any adjustments to the
adjusted basis of such assets pursuant to Code Section 734(b) or
Code Section 743(b), but only to the extent that such adjustments
are taken into account in determining Capital Accounts pursuant
to Regulations Section 1.704-1(b)(2)(iv)(m); PROVIDED, HOWEVER,
that Gross Asset Values shall not be adjusted pursuant to this
subparagraph (d) to the extent that the General Partner
reasonably determines that an adjustment pursuant to subparagraph
(b) is necessary or appropriate in connection with a transaction
that would otherwise result in an adjustment pursuant to this
subparagraph (d).
(e) If the Gross Asset Value of a Partnership asset
has been determined or adjusted pursuant to subparagraph (a), (b)
or (d), such Gross Asset Value shall thereafter be adjusted by
the Depreciation taken into account with respect to such asset
for purposes of computing Net Income and Net Losses.
"HOLDER" means either the Partner or Assignee owning a
Partnership Unit.
"IMMEDIATE FAMILY" means, with respect to any natural
Person, such natural Person's estate or heirs or current spouse,
parents, parents-in-law, children, siblings and grandchildren and
any trust or estate, all of the beneficiaries of which consist of
such Person or such Person's current spouse, parents,
parents-in-law, children, siblings or grandchildren.
"INCAPACITY" or "INCAPACITATED" means, (i) as to any
individual Partner, death, total physical disability or entry by
a court of competent jurisdiction adjudicating him or her
incompetent to manage his or her Person or his or her estate;
(ii) as to any corporation which is a Partner, the filing of a
certificate of dissolution, or its equivalent, for the
corporation or the revocation of its charter; (iii) as to any
partnership which is a Partner, the dissolution and commencement
of winding up of the partnership; (iv) as to any estate which is
a Partner, the distribution by the fiduciary of the estate's
entire interest in the Partnership; (v) as to any trustee of a
trust which is a Partner, the termination of the trust (but not
the substitution of a new trustee); or (vi) as to any Partner,
the bankruptcy of such Partner. For purposes of this definition,
bankruptcy of a Partner shall be deemed to have occurred when (a)
the Partner commences a voluntary proceeding seeking liquidation,
reorganization or other relief under any bankruptcy, insolvency
or other similar law now or hereafter in effect, (b) the Partner
is adjudged as bankrupt or insolvent, or a final and
nonappealable order for relief under any bankruptcy, insolvency
or similar law now or hereafter in effect has been entered
against the Partner, (c) the Partner executes and delivers a
general assignment for the benefit of the Partner's creditors,
(d) the Partner files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed
against the Partner in any proceeding of the nature described in
clause (b) above, (e) the Partner seeks, consents to or
acquiesces in the appointment of a trustee, receiver or
liquidator for the Partner or for all or any substantial part of
the Partner's properties, (f) any proceeding seeking liquidation,
reorganization or other relief under any bankruptcy, insolvency
or other similar law now or hereafter in effect has not been
dismissed within 120 days after the commencement thereof, (g) the
appointment without the Partner's consent or acquiescence of a
trustee, receiver or liquidator has not been vacated or stayed
within 90 days of such appointment, or (h) an appointment
referred to in clause (g) is not vacated within 90 days after the
expiration of any such stay.
"INDEMNITEE" means (i) any Person subject to a claim or
demand or made or threatened to be made a party to, or involved
or threatened to be involved in, a proceeding by reason of his or
her status as (A) the General Partner or (B) a director or
officer of the Partnership or the General Partner, and (ii) such
other Persons (including Affiliates of the General Partner or the
Partnership) as the General Partner may designate from time to
time, in its sole and absolute discretion.
"INDEPENDENT TRUST MANAGER" means a member of the
General Partner's or the Company's Board of Directors who is not
an officer of the General Partner or the Company.
"IRS" means the Internal Revenue Service, which
administers the internal revenue laws of the United States.
"LIMITED PARTNER" means any Person named as a Limited
Partner in Exhibit A attached hereto, as such Exhibit may be
amended from time to time, or any Substituted Limited Partner or
Additional Limited Partner, in such Person's capacity as a
Limited Partner in the Partnership.
"LIMITED PARTNERSHIP INTEREST" means a Partnership
Interest of a Limited Partner representing a fractional part of
the Partnership Interests of all Limited Partners and includes
any and all benefits to which the holder of such a Partnership
Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and
provisions of this Agreement. A Limited Partnership Interest may
be expressed as a number of Partnership Units.
"LIQUIDATING EVENTS" shall have the meaning set forth
in Section 13.1.
"LIQUIDATOR" shall have the meaning set forth in
Section 13.2(a).
"MAJORITY IN INTEREST OF THE LIMITED PARTNERS" means
Limited Partners (other than the General Partner and any Limited
Partner 50% or more of whose equity is owned, directly or
indirectly, by the General Partner) holding Percentage Interests
that in the aggregate are greater than fifty percent (50%) of the
aggregate Percentage Interests of all Limited Partners (other
than the General Partner and any Limited Partner 50% or more of
whose equity is owned, directly or indirectly, by the General
Partner).
"MAJORITY OF REMAINING PARTNERS" means Partners other
than the General Partner owning (i) greater than fifty percent
(50%) of the profits interests in the Partnership held by all
Partners other than the General Partner, determined and allocated
based on any reasonable estimate of profits from the relevant
date to the projected termination of the Partnership and taking
into account present and future allocations of profits under this
Agreement as it is in effect on the relevant date, and (ii)
greater than fifty percent (50%) of the capital interests in the
Partnership, determined as of the relevant date under this
Agreement, owned by all the Partners other than the General
Partner.
"NET INCOME" or "NET LOSS" means, for each fiscal year
of the Partnership, an amount equal to the Partnership's taxable
income or loss for such fiscal year, determined in accordance
with Code Section 703(a) (for this purpose, all items of income,
gain, loss, or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
(a) Any income of the Partnership that is exempt from
federal income tax and not otherwise taken into account in
computing Net Income or Net Loss pursuant to this definition of
Net Income or Net Loss shall be added to such taxable income or
loss;
(b) Any expenditures of the Partnership described in
Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i)
and not otherwise taken into account in computing Net Income or
Net Loss pursuant to this definition of Net Income or Net Loss
shall be subtracted from such taxable income or loss;
(c) In the event the Gross Asset Value of any
Partnership asset is adjusted pursuant to subparagraph (b) or
subparagraph (c) of the definition of Gross Asset Value, the
amount of such adjustment shall be taken into account as gain or
loss from the disposition of such asset for purposes of computing
Net Income or Net Loss;
(d) Gain or loss resulting from any disposition of
property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the
Gross Asset Value of the property disposed of, notwithstanding
that the adjusted tax basis of such property differs from its
Gross Asset Value;
(e) In lieu of the depreciation, amortization, and
other cost recovery deductions taken into account in computing
such taxable income or loss, there shall be taken into account
Depreciation for such fiscal year;
(f) To the extent an adjustment to the adjusted tax
basis of any Partnership asset pursuant to Code Section 734(b) or
Code Section 743(b) is required pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining
Capital Accounts as a result of a distribution other than in
liquidation of a Partner's interest in the Partnership, the
amount of such adjustment shall be treated as an item of gain (if
the adjustment increases the basis of the asset) or loss (if the
adjustment decreases the basis of the asset) from the disposition
of the asset and shall be taken into account for purposes of
computing Net Income or Net Loss; and
(g) Notwithstanding any other provision of this
definition of Net Income or Net Loss, any items which are
specially allocated pursuant to Section 6.3 hereof shall not be
taken into account in computing Net Income or Net Loss. The
amounts of the items of Partnership income, gain, loss, or
deduction available to be specially allocated pursuant to Section
6.3 hereof shall be determined by applying rules analogous to
those set forth in this definition of Net Income or Net Loss.
"NEW SECURITIES" means (i) any rights, options,
warrants or convertible or exchangeable securities having the
right to subscribe for or purchase REIT Shares or other shares of
capital stock of the Company, excluding grants under any Stock
Plan, or (ii) any Debt issued by the Company that provides any of
the rights described in clause (i).
"NONRECOURSE DEDUCTIONS" shall have the meaning set
forth in Regulations Section 1.704-2(b)(1), and the amount of
Nonrecourse Deductions for a Partnership Year shall be determined
in accordance with the rules of Regulations Section 1.704-2(c).
"NONRECOURSE LIABILITY" shall have the meaning set
forth in Regulations Section 1.752-1(a)(2).
"NOTICE OF REDEMPTION" means the Notice of Redemption
substantially in the form of Exhibit B to this Agreement.
"PARTNER" means a General Partner or a Limited Partner,
and "PARTNERS" means the General Partner and the Limited
Partners.
"PARTNER MINIMUM GAIN" means an amount, with respect to
each Partner Nonrecourse Debt, equal to the Partnership Minimum
Gain that would result if such Partner Nonrecourse Debt were
treated as a Nonrecourse Liability, determined in accordance with
Regulations Section 1.704-2(i)(3).
"PARTNER NONRECOURSE DEBT" shall have the meaning set
forth in Regulations Section 1.704-2(b)(4).
"PARTNER NONRECOURSE DEDUCTIONS" shall have the meaning
set forth in Regulations Section 1.704-2(i)(2), and the amount of
Partner Nonrecourse Deductions with respect to a Partner
Nonrecourse Debt for a Partnership Year shall be determined in
accordance with the rules of Regulations Section 1.704-2(i)(2).
"PARTNERSHIP" means the limited partnership formed
under the Act and pursuant to this Agreement, and any successor
thereto.
"PARTNERSHIP INTEREST" means an ownership interest in
the Partnership of either a Limited Partner or the General
Partner and includes any and all benefits to which the holder of
such a Partnership Interest may be entitled as provided in this
Agreement, together with all obligations of such Person to comply
with the terms and provisions of this Agreement. There may be
one or more classes of Partnership Interests as provided in
Section 4.3. A Partnership Interest may be expressed as a number
of Partnership Units. Unless otherwise expressly provided for by
the General Partner at the time of the original issuance of any
Partnership Interests, all Partnership Interests (whether of a
Limited Partner or a General Partner) shall be of the same class.
"PARTNERSHIP MINIMUM GAIN" shall have the meaning set
forth in Regulations Section 1.704-2(b)(2), and the amount of
Partnership Minimum Gain, as well as any net increase or decrease
in Partnership Minimum Gain, for a Partnership Year shall be
determined in accordance with the rules of Regulations Section
1.704-2(d).
"PARTNERSHIP RECORD DATE" means the record date
established by the General Partner for the distribution of
Available Cash pursuant to Section 5.1 hereof which record date
shall be the same as the record date established by the General
Partner for a distribution to its stockholders of some or all of
its portion of such distribution.
"PARTNERSHIP UNIT" means, with respect to any class of
Partnership Interest, a fractional, undivided share of such class
of Partnership Interest issued pursuant to Sections 4.1 and 4.3.
The ownership of Partnership Units may be evidenced by a
certificate for units substantially as the General Partner may
determine with respect to any class of Partnership Units issued
from time to time under Sections 4.1 and 4.3.
"PARTNERSHIP YEAR" means the fiscal year of the
Partnership, which shall be the calendar year.
"PERCENTAGE INTEREST" means, as to a Partner holding a
class of Partnership Interests, its interest in the Partnership
as determined by dividing the Partnership Units of such class
owned by such Partner by the total number of Partnership Units of
such class then outstanding as specified in Exhibit A attached
hereto, as such Exhibit may be amended from time to time. If the
Partnership issues more than one class of Partnership Interest,
the interest in the Partnership among the classes of Partnership
Interests shall be determined as set forth in the amendment to
the Partnership Agreement setting forth the rights and privileges
of such additional classes of Partnership Interest, if any, as
contemplated by Section 4.3(c) hereof.
"PERSON" means an individual or a corporation,
partnership, limited liability company, trust, unincorporated
organization, association or other entity.
"PLEDGE" shall have the meaning set forth in Section
11.3(a).
"PROPERTIES" means such interests in real property and
personal property including, without limitation, fee interests,
interests in ground leases, interests in joint ventures,
interests in mortgages, and Debt instruments, as the Partnership
may hold from time to time.
"QUALIFIED REIT SUBSIDIARY" means any Subsidiary of the
Company that is a "qualified REIT subsidiary" within the meaning
of Section 856(i) of the Code.
"QUALIFIED TRANSFEREE" means an "Accredited Investor"
as defined in Rule 501 promulgated under the Securities Act.
"REDEMPTION" shall have the meaning set forth in
Section 8.6(a).
"REGULATIONS" means the Income Tax Regulations
promulgated under the Code, as such regulations may be amended
from time to time (including corresponding provisions of
succeeding regulations).
"REGULATORY ALLOCATIONS" shall have the meaning set
forth in Section 6.3(a)(vii) of this Agreement.
"REIT" means a real estate investment trust under
Section 856 of the Code.
"REIT REQUIREMENTS" shall have the meaning set forth in
Section 5.1.
"REIT SHARE" means a share of common stock of the
Company.
"REIT SHARES AMOUNT" means, as of any date, (i) with
respect to Tendered Units, an aggregate number of REIT Shares
equal to the number of such Tendered Units, as adjusted pursuant
to Section 8.6(h) (in the event the Company acquires material
assets, other than on behalf of the Partnership) and for stock
dividends and distributions, stock splits and subdivisions,
reverse stock splits and combinations, distributions of rights,
warrants or options, and distributions of evidences of
indebtedness or assets received by the Company pursuant to a
distribution by the Partnership other than a pro rata
distribution to all Partners based on their respective Percentage
Interests, and (ii) with respect to Partnership Units in any
other context, the amount of REIT Shares determined in accordance
with clause (i) assuming for such purpose that all such
Partnership Units are Tendered Units.
"SECURITIES ACT" means the Securities Act of 1933, as
amended, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.
"SECURITIES EXCHANGE ACT" means the Securities Act of
1934, as amended, and the rules and regulations of the Securities
and Exchange Commission promulgated thereunder.
"SPECIFIED REDEMPTION DATE" means the day of receipt by
the General Partner of a Notice of Redemption.
"STOCK PLAN" means any stock incentive, stock option,
stock ownership or employee benefits plan of the Company.
"SUBSIDIARY" means, with respect to any Person, any
corporation or other entity of which a majority of (i) the voting
power of the voting equity securities or (ii) the outstanding
equity interests is owned, directly or indirectly, by such
Person.
"SUBSIDIARY PARTNERSHIP" means any partnership that is
a Subsidiary of the Partnership.
"SUBSTITUTE GENERAL PARTNER" means a Person who is
admitted as a successor General Partner to the Partnership
pursuant to Section 11.2(a).
"SUBSTITUTED LIMITED PARTNER" means a Person who is
admitted as a Limited Partner to the Partnership pursuant to
Section 11.4.
"TAX ITEMS" shall have the meaning set forth in Section
6.4(a).
"TENANT" means any tenant from which the Company
derives rent either directly or indirectly through partnerships,
including the Partnership.
"TENDERED UNITS" shall have the meaning set forth in
Section 8.6(a).
"TENDERING PARTNER" shall have the meaning set forth in
Section 8.6(a).
"TERMINATING CAPITAL TRANSACTION" means any sale or
other disposition of all or substantially all of the assets of
the Partnership or a related series of transactions that, taken
together, result in the sale or other disposition of all or
substantially all of the assets of the Partnership.
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1 ORGANIZATION
The Partnership is a limited partnership formed
pursuant to the provisions of the Act and upon the terms and
conditions set forth in this Agreement. Except as expressly
provided herein, the rights and obligations of the Partners and
the administration and termination of the Partnership shall be
governed by the Act. The Partnership Interest of each Partner
shall be personal property for all purposes.
Section 2.2 NAME
The name of the Partnership is Parkway Properties LP.
The Partnership's business may be conducted under any other name
or names deemed advisable by the General Partner, including the
name of the General Partner or any Affiliate thereof. The words
"Limited Partnership," "L.P.," "Ltd." or similar words or letters
shall be included in the Partnership's name where necessary for
the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole and absolute
discretion may change the name of the Partnership at any time and
from time to time and shall notify the Limited Partners of such
change in the next regular communication to the Limited Partners.
Section 2.3 RESIDENT AGENT; PRINCIPAL OFFICE
The name and address of the resident agent of the
Partnership in the State of Delaware shall be United Corporate
Services, Inc., 15 Corporation Trust Center, 1209 Charge Street,
Wilmington, New Castle County, Delaware 19801 or such other
person as the General Partner may select in its sole discretion.
The registered office of the Partnership in the State of Delaware
shall be United Corporate Services, Inc. at such address or such
other location as the General Partner may select in its sole
discretion. The Partnership may maintain offices at such other
place or places within or outside the State of Delaware as the
General Partner deems advisable.
Section 2.4 POWER OF ATTORNEY
(a) Each Limited Partner and each Assignee constitutes
and appoints the General Partner, any Liquidator, and authorized
officers and attorneys-in-fact of each, and each of those acting
singly, in each case with full power of substitution, as its true
and lawful agent and attorney-in-fact, with full power and
authority in its name, place and stead to:
(i) execute, swear to, acknowledge, deliver, file
and record in the appropriate public offices (a) all
certificates, documents and other instruments (including, without
limitation, this Agreement and the Certificate and all amendments
or restatements thereof) that the General Partner or the
Liquidator deems appropriate or necessary to form, qualify or
continue the existence or qualification of the Partnership as a
limited partnership (or a partnership in which the Limited
Partners have limited liability) in the State of Delaware and in
all other jurisdictions in which the Partnership may conduct
business or own property; (b) all instruments that the General
Partner or any Liquidator deems appropriate or necessary to
reflect any amendment, change, modification or restatement of
this Agreement in accordance with its terms; (c) all conveyances
and other instruments or documents that the General Partner or
any Liquidator deems appropriate or necessary to reflect the
dissolution and liquidation of the Partnership pursuant to the
terms of this Agreement, including, without limitation, a
certificate of cancellation; (d) all instruments relating to the
admission, withdrawal, removal or substitution of any Partner
pursuant to, or other events described in, Article 11, 12 or 13
hereof or the Capital Contribution of any Partner; and (e) all
certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of
Partnership Interests; and
(ii) execute, swear to, acknowledge and file all
ballots, consents, approvals, waivers, certificates and other
instruments appropriate or necessary, in the sole and absolute
discretion of the General Partner or any Liquidator, to make,
evidence, give, confirm or ratify any vote, consent, approval,
agreement or other action which is made or given by the Partners
hereunder or is consistent with the terms of this Agreement or
appropriate or necessary, in the sole discretion of the General
Partner or any Liquidator, to effectuate the terms or intent of
this Agreement.
Nothing contained herein shall be construed as
authorizing the General Partner or any Liquidator to amend this
Agreement except in accordance with Article 14 hereof or as may
be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared
to be irrevocable and a power coupled with an interest, in
recognition of the fact that each of the Partners will be relying
upon the power of the General Partner and any Liquidator to act
as contemplated by this Agreement in any filing or other action
by it on behalf of the Partnership, and it shall survive and not
be affected by the subsequent Incapacity of any Limited Partner
or Assignee and the transfer of all or any portion of such
Limited Partner's or Assignee's Partnership Units and shall
extend to such Limited Partner's or Assignee's heirs, successors,
assigns and personal representatives. Each such Limited Partner
or Assignee hereby agrees to be bound by any representation made
by the General Partner or any Liquidator, acting in good faith
pursuant to such power of attorney; and each such Limited Partner
or Assignee hereby waives any and all defenses which may be
available to contest, negate or disaffirm the action of the
General Partner or any Liquidator, taken in good faith under such
power of attorney and in accordance with the provisions of this
Agreement. Each Limited Partner or Assignee shall execute and
deliver to the General Partner or any Liquidator, within 15 days
after receipt of the General Partner's or Liquidator's request
therefor, such further designation, powers of attorney and other
instruments as the General Partner or the Liquidator, as the case
may be, deems necessary to effectuate this Agreement and the
purposes of the Partnership.
Section 2.5 TERM
The term of the Partnership commenced on January 6,
1997 and shall continue until December 31, 2057 unless it is
dissolved sooner pursuant to the provisions of Article 13 or as
otherwise provided by law.
ARTICLE 3
PURPOSE
Section 3.1 PURPOSE AND BUSINESS
The purpose and nature of the business to be conducted
by the Partnership is (i) to conduct any business that may be
lawfully conducted by a limited partnership organized pursuant to
the Act, PROVIDED, HOWEVER, that such business shall be limited
to and conducted in such a manner as to permit the Company at all
times to be classified as a REIT for federal income tax purposes,
unless the Company ceases to qualify as a REIT for reasons other
than the conduct of the business of the Partnership, (ii) to
enter into any partnership, joint venture or other similar
arrangement to engage in any business described in the foregoing
clause (i) or to own interests in any entity engaged, directly or
indirectly, in any such business and (iii) to do anything
necessary or incidental to the foregoing. In connection with the
foregoing, and without limiting the Company's right in its sole
discretion to cease qualifying as a REIT, the Partners
acknowledge that the Company's current status as a REIT inures to
the benefit of all the Partners and not solely the Company.
Section 3.2 POWERS
The Partnership is empowered to do any and all acts and
things necessary, appropriate, proper, advisable, incidental to
or convenient for the furtherance and accomplishment of the
purposes and business described herein and for the protection and
benefit of the Partnership, including, without limitation, full
power and authority, directly or through its ownership interest
in other entities, to enter into, perform and carry out contracts
of any kind, borrow money and issue evidences of indebtedness,
whether or not secured by mortgage, deed of trust, pledge or
other lien, acquire and develop real property, and manage, lease,
sell, transfer and dispose of real property; PROVIDED, HOWEVER,
that the Partnership shall not take, or refrain from taking, any
action which, in the judgment of the General Partner, in its sole
and absolute discretion, (i) could adversely affect the ability
of the Company to continue to qualify as a REIT, (ii) could
subject the Company to any taxes under Section 857 or Section
4981 of the Code, or (iii) could violate any law or regulation of
any governmental body or agency having jurisdiction over the
Company or its securities, unless any such action (or inaction)
under (i), (ii) or (iii) shall have been specifically consented
to by the Company in writing.
Section 3.3 PARTNERSHIP ONLY FOR PURPOSES SPECIFIED
The Partnership shall be a partnership only for the
purposes specified in Section 3.1 hereof, and this Agreement
shall not be deemed to create a partnership among the Partners
with respect to any activities whatsoever other than the
activities within the purposes of the Partnership as specified in
Section 3.1 hereof. Except as otherwise provided in this
Agreement, no Partner shall have any authority to act for, bind,
commit or assume any obligation or responsibility on behalf of
the Partnership, its properties or any other Partner. No
Partner, in its capacity as a Partner under this Agreement, shall
be responsible or liable for any indebtedness or obligation of
another Partner, nor shall the Partnership be responsible or
liable for any indebtedness or obligation of any Partner,
incurred either before or after the execution and delivery of
this Agreement by such Partner, except as to those
responsibilities, liabilities, indebtedness or obligations
incurred pursuant to and as limited by the terms of this
Agreement and the Act.
Section 3.4 REPRESENTATIONS AND WARRANTIES BY THE
PARTIES
(a) Each Partner that is an individual represents and
warrants to each other Partner that (i) such Partner has, in the
case of any Person other than an individual, the power and
authority, and in the case of an individual, the legal capacity
to enter into this Agreement and perform such Partner's
obligations hereunder, (ii) the consummation of the transactions
contemplated by this Agreement to be performed by such Partner
will not result in a breach or violation of, or a default under,
any agreement by which such Partner or any of such Partner's
property is or are bound, or any statute, regulation, order or
other law to which such Partner is subject, (iii) such Partner is
neither a "foreign person" within the meaning of Section 1445(f)
of the Code nor a "foreign partner" within the meaning of Section
1446(e) of the Code, and (iv) this Agreement has been duly
executed and delivered by such Partner and is binding upon, and
enforceable against, such Partner in accordance with its terms.
(b) Each Partner that is not an individual represents
and warrants to each other Partner that (i) it has the requisite
corporate or other power and authority to enter into this
Agreement, (ii) its execution and delivery of this Agreement, and
performance of all transactions contemplated by this Agreement to
be performed by it, have been duly authorized by all necessary
action, including, without limitation, that of its general
partner(s), committee(s), trustee(s), beneficiaries, directors
and/or stockholder(s), as the case may be, as required, (iii) the
consummation of such transactions shall not result in a breach or
violation of, or a default under, its certificate of limited
partnership, partnership agreement, trust agreement, limited
liability company operating agreement, charter, by-laws or other
organizational documents, as the case may be, any agreement by
which such Partner or any of such Partner's properties or any of
its partners, beneficiaries, trustees or stockholders, as the
case may be, is or are bound, or any statute, regulation, order
or other law to which such Partner or any of its partners,
trustees, beneficiaries or stockholders, as the case may be, is
or are subject, (iv) such Partner is neither a "foreign person"
within the meaning of Section 1445(f) of the Code nor a "foreign
partner" within the meaning of Section 1446(e) of the Code, and
(v) this Agreement has been duly executed and delivered by such
Partner and is binding upon, and enforceable against, such
Partner in accordance with its terms.
(c) Each Partner represents, warrants and agrees that
it has acquired and continues to hold its interest in the
Partnership for its own account for investment only and not for
the purpose of, or with a view toward, the resale or distribution
of all or any part thereof, nor with a view toward selling or
otherwise distributing such interest or any part thereof at any
particular time or under any predetermined circumstances. Each
Partner further represents and warrants that it is a
sophisticated investor, able and accustomed to handling
sophisticated financial matters for itself, particularly real
estate investments, and that it has a sufficiently high net worth
that it does not anticipate a need for the funds it has invested
in the Partnership in what it understands to be a highly
speculative and illiquid investment.
(d) Each Partner further represents, warrants and
agrees as follows:
(i) Except as provided in Exhibit C, it does not
and will not, without the prior written consent of the General
Partner, actually own or Constructively Own (a) with respect to
any Tenant that is a corporation, any stock of such Tenant, and
(b) with respect to any Tenant that is not a corporation, any
interests in either the assets or net profits of such Tenant;
PROVIDED, HOWEVER, that so long as there are fewer than 20
Partners, each partner may own or Constructively Own (x) with
respect to any Tenant that is a corporation, stock of such Tenant
possessing up to, but not more than, one-half of one percent
(0.5%) of the total combined voting power of all classes of stock
entitled to vote and one-half of one percent (0.5%) of the total
number of shares of all classes of stock of such Tenant and (y)
with respect to any Tenant that is not a corporation, interests
in such Tenant representing up to, but not more than, one-half of
one percent (0.5%) of the assets and one-half of one percent
(0.5%) of the net profits of such Tenant, so long as such actual
or Constructive Ownership otherwise permitted under clause (x) or
(y) would not cause the General Partner to receive amounts
described in Section 856(d)(2)(B) of the Code.
(ii) Except as provided in Exhibit D, it does not,
and agrees that it will not without the prior written consent of
the General Partner, actually own or Constructively Own, any
stock in the Company, other than any REIT Shares or other shares
of capital stock of the Company such Partner may acquire (a) as a
result of an exchange of Tendered Units pursuant to Section 8.6
or (b) upon the exercise of options granted or delivery of REIT
Shares pursuant to any Stock Plan, or (c) in open market
transactions, in each case subject to the ownership limitations
set forth in the Charter.
(iii) Upon request of the General Partner, it
will disclose to the General Partner the amount of REIT Shares or
other shares of capital stock of the Company that it actually
owns or Constructively Owns.
(iv) It understands that if, for any reason, (a)
the representations, warranties or agreements set forth in d(i)
or (ii) above are violated, or (b) the Partner's actual or
Constructive ownership of REIT Shares or other shares of capital
stock of the Company violates the limitations set forth in the
Charter, then (1) some or all of the Redemption rights of the
Partners may become non-exercisable, and (2) some or all of the
REIT Shares owned by the Partners may be automatically converted
to Excess Shares, as provided in the Charter.
(e) The representations and warranties contained in
Sections 3.4(a) - 3.4(d) hereof shall survive the execution and
delivery of this Agreement by each Partner and the dissolution
and windup of the Partnership.
(f) Each Partner hereby acknowledges that no
representations as to potential profit, cash flows, funds from
operations or yield, if any, in respect of the Partnership or the
General Partner have been made by any Partner or any employee or
representative or Affiliate of any Partner, and that projections
and any other information, including, without limitation,
financial and descriptive information and documentation, which
may have been in any manner submitted to such Partner shall not
constitute any representation or warranty of any kind or nature,
express or implied.
ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS
The Partners confirm that they have made the Capital
Contributions as set forth in Exhibit A to this Agreement. The
Partners shall own Partnership Units of the class and in the
amounts set forth in Exhibit A and shall have a Percentage
Interest in the Partnership as set forth in Exhibit A, which
Percentage Interest shall be adjusted in Exhibit A from time to
time by the General Partner to the extent necessary to reflect
accurately exchanges, redemptions, Capital Contributions, the
issuance of additional Partnership Units or similar events having
an effect on a Partner's Percentage Interest. Except as required
by law or as otherwise provided in Sections 4.3, 4.4, and 10.5,
no Partner shall be required or permitted to make any additional
Capital Contributions or loans to the Partnership. Unless
otherwise specified by the General Partner at the time of the
creation of any class of Partnership Interests, the corresponding
class of capital stock for any Partnership Units issued shall be
REIT Shares.
Section 4.2 LOANS BY THIRD PARTIES
Subject to Section 4.3, the Partnership may incur Debt,
or enter into other similar credit, guarantee, financing or
refinancing arrangements for any purpose (including, without
limitation, in connection with any further acquisition of
Properties) with any Person that is not the General Partner upon
such terms as the General Partner determines appropriate.
Section 4.3 ADDITIONAL FUNDING AND CAPITAL
CONTRIBUTIONS
(a) GENERAL. The General Partner may, at any time and
from time to time, determine that the Partnership requires
additional funds ("Additional Funds") for the acquisition of
additional Properties or for such other Partnership purposes as
the General Partner may determine. Additional Funds may be
raised by the Partnership, at the election of the General
Partner, in any manner provided in, and in accordance with, the
terms of this Section 4.3. No Person shall have any preemptive,
preferential or similar right or rights to subscribe for or
acquire any Partnership Interest.
(b) GENERAL PARTNER LOANS. The General Partner or an
Affiliate may enter into a Funding Debt, including, without
limitation, a Funding Debt that is convertible into REIT shares,
and lend the Additional Funds to the Partnership (a "General
Partner Loan"). If the General Partner enters into such a
Funding Debt, the General Partner Loan will consist of the net
proceeds from such Funding Debt and will be on comparable terms
and conditions, including principal amount, interest rate,
repayment schedule and costs and expenses, as shall be applicable
with respect to or incurred in connection with such Funding Debt.
(c) ISSUANCE OF ADDITIONAL PARTNERSHIP INTERESTS. The
General Partner, in its sole and absolute discretion, may raise
all or any portion of the Additional Funds by accepting
additional Capital Contributions, including, without limitation,
the issuance of Partnership Units for interests in real property.
In connection with any such additional Capital Contributions (of
cash or property), the General Partner is hereby authorized to
cause the Partnership from time to time to issue to Partners
(including the General Partner or the Company) or other persons
(including, without limitation, in connection with the
contribution of property to the Partnership) additional
Partnership Units or other Partnership Interests in one or more
classes, or one or more series of any of such classes, with such
designations, preferences and relative, participating, optional
or other special rights, powers, and duties, including rights,
powers, and duties senior to then existing Limited Partnership
Interests, all as shall be determined by the General Partner in
its sole and absolute discretion subject to Delaware law, and as
set forth in an amendment to this Agreement, including, without
limitation, (i) the allocations of items of Partnership income,
gain, loss, deduction, and credit to such class or series of
Partnership Interests; (ii) the right of each such class or
series of Partnership Interests to share in Partnership
distributions; (iii) the rights of each such class or series of
Partnership Interests upon dissolution and liquidation of the
Partnership; and (iv) the right to vote; PROVIDED THAT no such
additional Partnership Units or other Partnership Interests shall
be issued to the Company unless either (a) the additional
Partnership Interests are issued in connection with the grant,
award, or issuance of shares of the Company pursuant to Section
4.3(d) below, which shares have designations, preferences, and
other rights (except voting rights) such that the economic
interests attributable to such shares are substantially similar
to the designations, preferences and other rights of the
additional Partnership Interests issued to the Company in
accordance with this Section 4.3(c), (b) the additional
Partnership Interests are issued to all Partners holding
Partnership Interests in the same class in proportion to their
respective Percentage Interests in such class or (c) pursuant to
Section 4.4; PROVIDED FURTHER, that no such additional
Partnership Units or Partnership Interests shall be issued if
such issuance would cause, or in the opinion of counsel selected
by the General Partner, could cause (i) the Partnership to
become, with respect to any employee benefit plan subject to
Title I of ERISA or Section 4975 of the Code, a "party in
interest" (as defined in Section 3(14) of ERISA) or a
"disqualified person" (as defined in Section 4975(e) of the
Code); and (ii) any portion of the assets of the Partnership to
constitute assets of any employee benefit plan pursuant to
Section 2510.3-101 of the regulations of the United States
Department of Labor. In the event that the Partnership issues
additional Partnership Units or Partnership Interests pursuant to
this Section 4.3(c), the General Partner shall make such
revisions to this Agreement (including but not limited to the
revisions described in Section 5.4, Section 6.2(d), and Section
8.6) as it determines are necessary to reflect the issuance of
such additional Partnership Interests.
(d) ISSUANCE OF REIT SHARES OR OTHER SECURITIES BY THE
COMPANY. Except as contemplated by Section 4.4, the Company
shall not issue any additional REIT Shares (other than REIT
Shares issued pursuant to Section 8.6 hereof or pursuant to a
dividend or distribution (including any stock split) of REIT
Shares to all of its stockholders), other shares of capital stock
of the Company or New Securities unless the Company shall make a
Capital Contribution of the net proceeds from the issuance of
such additional REIT Shares, other shares of capital stock or New
Securities, as the case may be, and from the exercise of the
rights contained in such additional New Securities, as the case
may be. The Company's Capital Account shall be increased by the
amount of cash so contributed.
(e) PERCENTAGE INTEREST ADJUSTMENTS IN THE CASE OF
CAPITAL CONTRIBUTIONS FOR PARTNERSHIP UNITS. Upon the acceptance
of additional Capital Contributions in exchange for Partnership
Units, the Percentage Interest related to such Partnership Units
shall be equal to a fraction, the numerator of which is equal to
the amount of cash and the Agreed Value of the Property
contributed as of the Business Day immediately preceding the date
on which the additional Capital Contributions are made (an
"Adjustment Date") and the denominator of which is equal to the
sum of (i) the Deemed Value of the Partnership Interests of such
class (computed as of the Business Day immediately preceding the
Adjustment Date) and (ii) the aggregate amount of additional
Capital Contributions contributed to the Partnership on such
Adjustment Date in respect of such class of Partnership
Interests. The Percentage Interest of each other Partner holding
Partnership Interests of such class not making a full pro rata
Capital Contribution shall be adjusted to equal a fraction, the
numerator of which is equal to the sum of (i) the Deemed
Partnership Interest Value of such Limited Partner of such class
(computed as of the Business Day immediately preceding the
Adjustment Date) and (ii) the amount of additional Capital
Contributions made by such Partner to the Partnership in respect
of such class of Partnership Interests as of such Adjustment
Date, and the denominator of which is equal to the sum of (i) the
Deemed Value of the Partnership Interests of such class (computed
as of the Business Day immediately preceding the Adjustment
Date), and (ii) the aggregate amount of additional Capital
Contributions contributed to the Partnership on such Adjustment
Date in respect of such class. Notwithstanding the foregoing,
solely for purposes of calculating a Partner's Percentage
Interest pursuant to this Section 4.3(e), cash Capital
Contributions by the Company will be deemed to equal the cash
contributed by the Company plus, in the case of cash
contributions funded by an offering of any capital stock of the
Company, the offering costs attributable to the cash contributed
to the Partnership.
Section 4.4 STOCK PLAN
If at any time or from time to time the Company sells
or issues REIT Shares pursuant to any Stock Plan, the Company
shall contribute any proceeds therefrom to the Partnership as an
additional Capital Contribution and shall receive an amount of
additional Partnership Units equal to the number of REIT Shares
so sold or issued. The Company's Capital Account shall be
increased by the amount of cash so contributed.
Section 4.5 NO THIRD PARTY BENEFICIARY
No creditor or other third party having dealings with
the Partnership shall have the right to enforce the right or
obligation of any Partner to make Capital Contributions or loans
or to pursue any other right or remedy hereunder or at law or in
equity, it being understood and agreed that the provisions of
this Agreement shall be solely for the benefit of, and may be
enforced solely by, the parties hereto and their respective
successors and assigns. None of the rights or obligations of the
Partners herein set forth to make Capital Contributions or loans
to the Partnership shall be deemed an asset of the Partnership
for any purpose by any creditor or other third party, nor may
such rights or obligations be sold, transferred or assigned by
the Partnership or pledged or encumbered by the Partnership to
secure any debt or other obligation of the Partnership or of any
of the Partners.
Section 4.6 OTHER CONTRIBUTION PROVISIONS
In the event that any Partner is admitted to the
Partnership and is given a Capital Account in exchange for
services rendered to the Partnership, such transaction shall be
treated by the Partnership and the affected Partner as if the
Partnership had compensated such Partner in cash, and the Partner
had contributed such cash to the capital of the Partnership. In
addition, with the consent of the General Partner, one or more
Limited Partners may enter into contribution agreements with the
Partnership which have the effect of providing a guarantee of
certain obligations of the Partnership.
ARTICLE 5
DISTRIBUTIONS
Section 5.1 REQUIREMENT AND CHARACTERIZATION OF
DISTRIBUTIONS
The General Partner shall cause the Partnership to
distribute quarterly all, or such portion as the General Partner
may in its discretion determine, of Available Cash generated by
the Partnership during such quarter to the Partners who are
Partners on the Partnership Record Date with respect to such
quarter, (1) first, with respect to any Partnership Interests
that are entitled to any preference in distribution, in
accordance with the rights of such class of Partnership Interests
(and within such class, pro rata in proportion to the respective
Percentage Interests on such Partnership Record Date), and, (2)
second, with respect to Partnership Interests that are not
entitled to any preference in distribution, pro rata to each such
class in accordance with the terms of such class (and within each
such class, pro rata in proportion with the respective Percentage
Interests on such Partnership Record Date). Unless otherwise
expressly provided for herein or in an agreement at the time a
new class of Partnership Interests is created in accordance with
Article 4 hereof, no Partnership Interest shall be entitled to a
distribution in preference to any other Partnership Interest.
The General Partner shall take such reasonable efforts, as
determined by it in its sole and absolute discretion, and
consistent with the qualification of the Company as a REIT, to
cause the Partnership to distribute sufficient amounts to enable
the Company to pay stockholder dividends that will (a) satisfy
the requirements for qualifying as a REIT under the Code and
Regulations ("REIT Requirements"), and (b) avoid any federal
income or excise tax liability of the Company.
Section 5.2 DISTRIBUTIONS IN KIND
No right is given to any Partner to demand and receive
property other than cash. The General Partner may determine, in
its sole and absolute discretion, to make a distribution in kind
to the Partners of Partnership assets, and such assets shall be
distributed in such a fashion as to ensure that the fair market
value is distributed and allocated in accordance with Articles 5,
6 and 10.
Section 5.3 DISTRIBUTIONS UPON LIQUIDATION
Proceeds from a Terminating Capital Transaction shall
be distributed to the Partners in accordance with Section 13.2.
Section 5.4 DISTRIBUTIONS TO REFLECT ISSUANCE OF
ADDITIONAL PARTNERSHIP INTERESTS
In the event that the Partnership issues additional
Partnership Interests to the General Partner, the Company, or any
Additional Limited Partner pursuant to Section 4.3(c) or 4.4
hereof, the General Partner shall make such revisions to this
Article 5 as it determines are necessary to reflect the issuance
of such additional Partnership Interests.
ARTICLE 6
ALLOCATIONS
Section 6.1 TIMING AND AMOUNT OF ALLOCATIONS OF NET
INCOME AND NET LOSS
Net Income and Net Loss of the Partnership shall be
determined and allocated with respect to each fiscal year of the
Partnership as of the end of each such year. Subject to the
other provisions of this Article 6, an allocation to a Partner of
a share of Net Income or Net Loss shall be treated as an
allocation of the same share of each item of income, gain, loss
or deduction that is taken into account in computing Net Income
or Net Loss.
Section 6.2 GENERAL ALLOCATIONS
(a) IN GENERAL. Except as otherwise provided in this
Article 6, Net Income and Net Loss shall be allocated to each of
the Partners holding the same class of Partnership Interests in
accordance with their respective Percentage Interest of such
class.
(b) ALLOCATIONS TO REFLECT ISSUANCE OF ADDITIONAL
PARTNERSHIP INTERESTS. In the event that the Partnership issues
additional Partnership Interests to the General Partner, the
Company, or any Additional Limited Partner pursuant to Section
4.3 or 4.4 hereof, the General Partner shall make such revisions
to this Section 6.2 as it determines are necessary to reflect the
terms of the issuance of such additional Partnership Interests,
including making preferential allocations to certain classes of
Partnership Interests.
Section 6.3 ADDITIONAL ALLOCATION PROVISIONS
Notwithstanding the foregoing provisions of this
Article 6:
(a) REGULATORY ALLOCATIONS.
(i) MINIMUM GAIN CHARGEBACK. Except as otherwise
provided in Regulations Section 1.704-2(f), notwithstanding the
provisions of Section 6.2 of the Agreement, or any other
provision of this Article 6, if there is a net decrease in
Partnership Minimum Gain during any fiscal year, each Partner
shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in an amount
equal to such Partner's share of the net decrease in Partnership
Minimum Gain, as determined under Regulations Section 1.704-2(g).
Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to
each Partner pursuant thereto. The items to be allocated shall
be determined in accordance with Regulations Sections
1.704-2(f)(6) and 1.704-2(j)(2). This Section 6.3(a)(i) is
intended to qualify as a "minimum gain chargeback" within the
meaning of Regulation Section 1.704-2(f) which shall be
controlling in the event of a conflict between such Regulation
and this Section 6.3(a)(i).
(ii) PARTNER MINIMUM GAIN CHARGEBACK. Except as
otherwise provided in Regulations Section 1.704-2(i)(4), and
notwithstanding the provisions of Section 6.2 of the Agreement,
or any other provision of this Article 6 (except Section
6.3(a)(i)), if there is a net decrease in Partner Minimum Gain
attributable to a Partner Nonrecourse Debt during any fiscal
year, each Partner who has a share of the Partner Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in
accordance with Regulations Section 1.704-2(i)(5), shall be
specially allocated items of Partnership income and gain for such
year (and, if necessary, subsequent years) in an amount equal to
such Partner's share of the net decrease in Partner Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in
accordance with Regulations Section 1.704-2(i)(4). Allocations
pursuant to the previous sentence shall be made in proportion to
the respective amounts required to be allocated to each General
Partner and Limited Partner pursuant thereto. The items to be so
allocated shall be determined in accordance with Regulations
Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section
6.3(a)(ii) is intended to qualify as a "chargeback of partner
nonrecourse debt minimum gain" within the meaning of Regulation
Section 1.704-2(i) which shall be controlling in the event of a
conflict between such Regulation and this Section 6.3(a)(ii).
(iii) NONRECOURSE DEDUCTIONS AND PARTNER
NONRECOURSE DEDUCTIONS. Any Nonrecourse Deductions for any
fiscal year shall be specially allocated to the Partners in
accordance with their Percentage Interests. Any Partner
Nonrecourse Deductions for any fiscal year shall be specially
allocated to the Partner(s) who bears the economic risk of loss
with respect to the Partner Nonrecourse Debt to which such
Partner Nonrecourse Deductions are attributable, in accordance
with Regulations Sections 1.704-2(b)(4) and 1.704-2(i).
(iv) QUALIFIED INCOME OFFSET. If any Partner
unexpectedly receives an adjustment, allocation or distribution
described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or
(6), items of Partnership income and gain shall be allocated, in
accordance with Regulations Section 1.704-1(b)(2)(ii)(d), to the
Partner in an amount and manner sufficient to eliminate, to the
extent required by such Regulations, the Adjusted Capital Account
Deficit of the Partner as quickly as possible provided that an
allocation pursuant to this Section 6.3(a)(iv) shall be made if
and only to the extent that such Partner would have an Adjusted
Capital Account Deficit after all other allocations provided in
this Article 6 have been tentatively made as if this Section
6.3(a)(iv) were not in the Agreement. It is intended that this
Section 6.3(a)(iv) qualify and be construed as a "qualified
income offset" within the meaning of Regulations
1.704-1(b)(2)(ii)(d), which shall be controlling in the event of
a conflict between such Regulations and this Section 6.3(a)(iv).
(v) GROSS INCOME ALLOCATION. In the event any
Partner has a deficit Capital Account at the end of any fiscal
year which is in excess of the sum of (1) the amount (if any)
such Partner is obligated to restore to the Partnership, and (2)
the amount such Partner is deemed to be obligated to restore
pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or the
penultimate sentences of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5), each such Partner shall be specially allocated
items of Partnership income and gain in the amount of such excess
as quickly as possible, PROVIDED THAT an allocation pursuant to
this Section 6.3(a)(v) shall be made if and only to the extent
that such Partner would have a deficit Capital Account in excess
of such sum after all other allocations provided in this Article
6 have been tentatively made as if this Section 6.3(a)(v) and
Section 6.3(a)(iv) were not in the Agreement.
(vi) LIMITATION ON ALLOCATION OF NET LOSS. To the
extent any allocation of Net Loss would cause or increase an
Adjusted Capital Account Deficit as to any Partner, such
allocation of Net Loss shall be reallocated among the other
Partners in accordance with their respective Percentage
Interests, subject to the limitations of this Section 6.3(a)(vi).
(vii) SECTION 754 ADJUSTMENT. To the extent
an adjustment to the adjusted tax basis of any Partnership asset
pursuant to Code Section 734(b) or Code Section 743(b) is
required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2)
or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into
account in determining Capital Accounts as the result of a
distribution to a Partner in complete liquidation of his interest
in the Partnership, the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment
decreases such basis) and such gain or loss shall be specially
allocated to the Partners in accordance with their interests in
the Partnership in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(2) applies, or to the Partners to whom such
distribution was made in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.
(viii) CURATIVE ALLOCATION. The allocations
set forth in Sections 6.3(a)(i), (ii), (iii), (iv), (v), (vi),
and (vii) (the "Regulatory Allocations") are intended to comply
with certain regulatory requirements, including the requirements
of Regulations Sections 1.704-1(b) and 1.704-2. Notwithstanding
the provisions of Sections 6.1 and 6.2, the Regulatory
Allocations shall be taken into account in allocating other items
of income, gain, loss and deduction among the Partners so that,
to the extent possible, the net amount of such allocations of
other items and the Regulatory Allocations to each Partner shall
be equal to the net amount that would have been allocated to each
such Partner if the Regulatory Allocations had not occurred.
Section 6.4 TAX ALLOCATIONS
(a) IN GENERAL. Except as otherwise provided in this
Section 6.4, for income tax purposes each item of income, gain,
loss and deduction (collectively, "Tax Items") shall be allocated
among the Partners in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated pursuant to
Sections 6.2 and 6.3.
(b) ALLOCATIONS RESPECTING SECTION 704(C)
REVALUATIONS. Notwithstanding Section 6.4(a), Tax Items with
respect to Partnership property that is contributed to the
Partnership by a Partner shall be shared among the Partners for
income tax purposes pursuant to Regulations promulgated under
Section 704(c) of the Code, so as to take into account the
variation, if any, between the basis of the property to the
Partnership and its initial Gross Asset Value. With respect to
Partnership property that is initially contributed to the
Partnership upon its formation pursuant to Section 4.1, such
variation between basis and initial Gross Asset Value shall be
taken into account under the "traditional without curative
allocations method" of Regulations Section 1.704-3. With respect
to properties subsequently contributed to the Partnership, the
Partnership shall account for such variation under any method
approved under Section 704(c) of the Code and the applicable
regulations as chosen by the General Partner. In the event the
Gross Asset Value of any Partnership asset is adjusted pursuant
to subparagraph (b) of the definition of Gross Asset Value
(provided in Article 1 of this Agreement), subsequent allocations
of Tax Items with respect to such asset shall take account of the
variation, if any, between the adjusted basis of such asset and
its Gross Asset Value in the same manner as under Section 704(c)
of the Code and the applicable regulations consistent with the
requirements of Regulations Section 1.704-1(b)(2)(iv)(g) using
any method approved under 704(c) of the Code and the applicable
regulations as chosen by the General Partner.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 MANAGEMENT
(a) Except as otherwise expressly provided in this
Agreement, all management powers over the business and affairs of
the Partnership are exclusively vested in the General Partner,
and no Limited Partner shall have any right to participate in or
exercise control or management power over the business and
affairs of the Partnership. The General Partner may not be
removed by the Limited Partners with or without cause, except
with the consent of the General Partner. In addition to the
powers now or hereafter granted a General Partner of a limited
partnership under applicable law or which are granted to the
General Partner under any other provision of this Agreement, the
General Partner, subject to the other provisions hereof including
Section 7.3, shall have full power and authority to do all things
deemed necessary or desirable by it to conduct the business of
the Partnership, to exercise all powers set forth in Section 3.2
hereof and to effectuate the purposes set forth in Section 3.1
hereof, including, without limitation:
(i) the making of any expenditures, the lending
or borrowing of money (including, without limitation, making
prepayments on loans and borrowing money to permit the
Partnership to make distributions to its Partners in such amounts
as will permit the Company (so long as the Company has determined
to qualify as a REIT) to avoid the payment of any federal income
tax (including, for this purpose, any excise tax pursuant to
Section 4981 of the Code) and to make distributions to its
stockholders sufficient to permit the Company to maintain REIT
status), the assumption or guarantee of, or other contracting
for, indebtedness and other liabilities, the issuance of
evidences of indebtedness (including the securing of same by
mortgage, deed of trust or other lien or encumbrance on all or
any of the Partnership's assets) and the incurring of any
obligations it deems necessary for the conduct of the activities
of the Partnership;
(ii) the making of tax, regulatory and other
filings, or rendering of periodic or other reports to
governmental or other agencies having jurisdiction over the
business or assets of the Partnership;
(iii) the acquisition, disposition, mortgage,
pledge, encumbrance, hypothecation or exchange of any assets of
the Partnership or the merger or other combination of the
Partnership with or into another entity;
(iv) the mortgage, pledge, encumbrance or
hypothecation of all or any assets of the Partnership, and the
use of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with the
terms of this Agreement and on any terms it sees fit, including,
without limitation, the financing of the conduct or the
operations of the General Partner, the Company, or the
Partnership, the lending of funds to other Persons (including,
without limitation, the General Partner or the Company (if
necessary to permit the financing or capitalization of a
subsidiary of the General Partner, the Company, or the
Partnership) or any Subsidiaries of the Partnership) and the
repayment of obligations of the Partnership, the Company, any of
its Subsidiaries and any other Person in which it has an equity
investment;
(v) the negotiation, execution, and performance
of any contracts, leases, conveyances or other instruments that
the General Partner considers useful or necessary to the conduct
of the Partnership's operations or the implementation of the
General Partner's powers under this Agreement;
(vi) the distribution of Partnership cash or other
Partnership assets in accordance with this Agreement;
(vii) the selection and dismissal of employees
of the Partnership (including, without limitation, employees
having titles such as "president," "vice president," "secretary"
and "treasurer"), and agents, outside attorneys, accountants,
consultants and contractors of the Partnership, the determination
of their compensation and other terms of employment or hiring,
including waivers of conflicts of interest and the payment of
their expenses and compensation out of the Partnership's assets;
(viii) the maintenance of such insurance for
the benefit of the Partnership and the Partners as it deems
necessary or appropriate;
(ix) the formation of, or acquisition of an
interest in, and the
contribution of property to, any further limited or general
partnerships, joint ventures or other relationships that it deems
desirable (including, without limitation, the acquisition of
interests in, and the contributions of property to any Subsidiary
and any other Person in which it has an equity investment from
time to time); PROVIDED THAT, as long as the Company has
determined to continue to qualify as a REIT, the Partnership may
not engage in any such formation, acquisition or contribution
that would cause the Company to fail to qualify as a REIT;
(x) the control of any matters affecting the
rights and obligations of the Partnership, including the conduct
of litigation and the incurring of legal expense and the
settlement of claims and litigation, and the indemnification of
any Person against liabilities and contingencies to the extent
permitted by law;
(xi) the undertaking of any action in connection
with the Partnership's direct or indirect investment in any
Person (including, without limitation, contributing or loaning
Partnership funds to, incurring indebtedness on behalf of, or
guarantying the obligations of any such Persons);
(xii) subject to the other provisions in this
Agreement, the determination of the fair market value of any
Partnership property distributed in kind using such reasonable
method of valuation as it may adopt, PROVIDED THAT such methods
are otherwise consistent with requirements of this Agreement;
(xiii) the management, operation, leasing,
landscaping, repair, alteration, demolition or improvement of any
real property or improvements owned by the Partnership or any
Subsidiary of the Partnership or any Person in which the
Partnership has made a direct or indirect equity investment;
(xiv) holding, managing, investing and
reinvesting cash and other assets of the Partnership;
(xv) the collection and receipt of revenues and
income of the Partnership;
(xvi) the exercise, directly or indirectly
through any attorney-in-fact acting under a general or limited
power of attorney, of any right, including the right to vote,
appurtenant to any asset or investment held by the Partnership;
(xvii) the exercise of any of the powers of the
General Partner enumerated in this Agreement on behalf of or in
connection with any Subsidiary of the Partnership or any other
Person in which the Partnership has a direct or indirect
interest, or jointly with any such Subsidiary or other Person;
(xviii) the exercise of any of the powers of the
General Partner enumerated in this Agreement on behalf of any
Person in which the Partnership does not have an interest
pursuant to contractual or other arrangements with such Person;
and
(xix) the making, execution and delivery of
any and all deeds, leases, notes, deeds to secure debt,
mortgages, deeds of trust, security agreements, conveyances,
contracts, guarantees, warranties, indemnities, waivers, releases
or legal instruments or agreements in writing necessary or
appropriate in the judgment of the General Partner for the
accomplishment of any of the powers of the General Partner
enumerated in this Agreement.
(b) Each of the Limited Partners agrees that the
General Partner is authorized to execute, deliver and perform the
above-mentioned agreements and transactions on behalf of the
Partnership without any further act, approval or vote of the
partners, notwithstanding any other provisions of this Agreement
(except as provided in Section 7.3), the Act or any applicable
law, rule or regulation. The execution, delivery or performance
by the General Partner or the Partnership of any agreement
authorized or permitted under this Agreement shall not constitute
a breach by the General Partner of any duty that the General
Partner may owe the Partnership or the Limited Partners or any
other Persons under this Agreement or of any duty stated or
implied by law or equity.
(c) At all times from and after the date hereof, the
General Partner may cause the Partnership to obtain and maintain
(i) casualty, liability and other insurance on the properties of
the Partnership and (ii) liability insurance for the Indemnitees
hereunder.
(d) At all times from and after the date hereof, the
General Partner may cause the Partnership to establish and
maintain working capital and other reserves in such amounts as
the General Partner, in it sole and absolute discretion, deems
appropriate and reasonable from time to time.
(e) Other than as set forth in the following sentence,
and subject to Section 11.2(d), in exercising its authority under
this Agreement, the General Partner may, but shall be under no
obligation to, take into account the tax consequences to any
Partner (including the General Partner or the Company) of any
action taken by it. The General Partner, on behalf of the
Partnership, shall use commercially reasonable efforts to
cooperate with the Limited Partners to minimize any taxes payable
in connection with any repayment, refinancing, replacement or
restructuring of Debt, or any sale, exchange or any other
disposition of assets, of the Partnership, including, without
limitation, amending this Agreement to provide obligations on the
part of any affected Partner to restore deficit balances in their
Capital Accounts as of the time of liquidation of the Partnership
and to maintain a corresponding level of recourse debt to match
such obligations or maintaining a level of non-recourse debt that
can be allocated to, and included in the Partnership tax basis
of, such Partners, pursuant to the regulations under Section 752
of the Code. The General Partner and the Partnership shall not
have liability to a Limited Partner under any circumstances as a
result of an income tax liability incurred by such Limited
Partner as a result of an action (or inaction) by the General
Partner pursuant to its authority under this Agreement.
(f) Except as otherwise provided herein, to the extent
the duties of the
General Partner require expenditures of funds to be paid to third
parties, the General Partner shall not have any obligations
hereunder except to the extent that Partnership funds are
reasonably available to it for the performance of such duties,
and nothing herein contained shall be deemed to authorize or
require the General Partner, in its capacity as such, to expend
its individual funds for payment to third parties or to undertake
any individual liability or obligation on behalf of the
Partnership.
Section 7.2 CERTIFICATE OF LIMITED PARTNERSHIP
To the extent that such action is determined by the
General Partner to be reasonable and necessary or appropriate,
the General Partner shall file amendments to and restatements of
the Certificate and do all the things to maintain the Partnership
as a limited partnership (or a partnership in which the limited
partners have limited liability) under the laws of the State of
Delaware and each other state, the District of Columbia or other
jurisdiction, in which the Partnership may elect to do business
or own property. Subject to the terms of Section 8.5(a)(i)
hereof, the General Partner shall not be required, before or
after filing, to deliver or mail a copy of the Certificate or any
amendment thereto to any Limited Partner. The General Partner
shall use all reasonable efforts to cause to be filed such other
certificates or documents as may be reasonable and necessary or
appropriate for the formation, continuation, qualification and
operation of a limited partnership (or a partnership in which the
limited partners have limited liability) in the State of
Delaware, any other state, the District of Columbia or other
jurisdiction, in which the Partnership may elect to do business
or own property.
Section 7.3 RESTRICTIONS ON GENERAL PARTNER'S
AUTHORITY
(a) The General Partner may not take any action in
contravention of an
express prohibition or limitation of this Agreement, including,
without limitation:
(i) take any action that would make it
impossible to carry on the ordinary business of the Partnership,
except as otherwise provided in this Agreement;
(ii) possess Partnership property, or assign
any rights in specific Partnership property, for other than a
Partnership purpose except as otherwise provided in this
Agreement;
(iii) admit a Person as a Partner, except as
otherwise provided in this Agreement;
(iv) perform any act that would subject a Limited
Partner to liability as a general partner in any jurisdiction or
any other liability except as provided herein or under the Act;
or
(v) enter into any contract, mortgage, loan
or other agreement that expressly prohibits or restricts, or has
the effect of limiting or restricting, the ability of a Limited
Partner to exercise its rights to a Redemption in full, except
with the written consent of such Limited Partner.
(b) The General Partner shall not, without the prior
Consent of the Partners, undertake, on behalf of the Partnership,
any of the following actions or enter into any transaction which
would have the effect of such actions:
(i) except as provided in Section 7.3(e),
amend, modify or terminate this Agreement other than to reflect
the admission, substitution, termination or withdrawal of
partners pursuant to Article 12 hereof;
(ii) make a general assignment for the
benefit of creditors or appoint or acquiesce in the appointment
of a custodian, receiver or trustee for all or substantially all
of the assets of the Partnership;
(iii) institute any proceeding for bankruptcy
on behalf of the Partnership; or
(iv) confess a judgment against the
Partnership.
(c) The General Partner shall not, without the prior
Consent of the Super Majority Limited Partners, undertake, on
behalf of the Partnership, any of the following actions or enter
into any transaction which would have the effect of such actions:
(i) approve or acquiesce to the transfer of
the Partnership Interest of the General Partner to any Person
other than the Partnership or an Affiliate of the General
Partner; or
(ii) admit into the Partnership any
Additional or Substitute General Partners, other than Affiliates
of the General Partner.
(d) Notwithstanding Sections 7.3(b), and 7.3(c)
hereof, the General Partner shall have the exclusive power to
amend this Agreement as may be required to facilitate or
implement any of the following purposes:
(i) to add to the obligations of the General
Partner or surrender any right or power granted to the General
Partner or any Affiliate of the General Partner for the benefit
of the Limited Partners;
(ii) to reflect the issuance of additional
Partnership Interests pursuant to Section 4.3(c) or 4.4 or the
admission, substitution, termination, or withdrawal of Partners
in accordance with this Agreement;
(iii) to reflect a change that is of an
inconsequential nature and does not adversely affect the Limited
Partners in any material respect, or to cure any ambiguity,
correct or supplement any provision in this Agreement not
inconsistent with law or with other provisions, or make other
changes with respect to matters arising under this Agreement that
will not be inconsistent with law or with the provisions of this
Agreement;
(iv) to satisfy any requirements, conditions,
or guidelines contained in any order, directive, opinion, ruling
or regulation of a federal or state agency or contained in
federal or state law;
(v) to reflect such changes as are
reasonably necessary for the Company to maintain status as a
REIT, including changes which may be necessitated due to a change
in applicable law (or an authoritative interpretation thereof) or
a ruling of the IRS; and
(vi) to modify, as set forth in the
definition of "Capital Account," the manner in which Capital
Accounts are computed.
The General Partner will provide notice to the Limited
Partners when any action under this Section 7.3(d) is taken.
(e) Notwithstanding Sections 7.3(b), 7.3(c) and 7.3(d)
hereof, this Agreement shall not be amended with respect to any
Partner adversely affected, and no action may be taken by the
General Partner, without the Consent of such Partner adversely
affected if such amendment or action would (i) convert a Limited
Partner's interest in the Partnership into a general partner's
interest (except as the result of the General Partner acquiring
such interest), (ii) modify the limited liability of a Limited
Partner, (iii) alter rights of the Partner to receive
distributions pursuant to Article 5 or Section 13.2(a)(i), or the
allocations specified in Article 6 (except as permitted pursuant
to Section 4.3 and Section 7.3(d)(iii) hereof), (iv) materially
alter or modify the rights to a Redemption or the REIT Shares
Amount as set forth in Section 8.6, and related definitions
hereof or (v) amend this Section 7.3(e). Further, no amendment
may alter the restrictions on the General Partner's authority set
forth elsewhere in this Section 7.3 without the Consent specified
in such section. In addition, notwithstanding Sections 7.3(b),
7.3(c) and 7.3(e) hereof, Section 11.2 of this Agreement shall
not be amended, and no action in contravention of Section 11.2
hereof shall be taken, without the Consent of the Limited
Partners. This Section 7.3(e) does not require unanimous consent
of all Partners adversely affected unless the amendment is to be
effective against all Partners adversely affected.
Section 7.4 REIMBURSEMENT OF THE GENERAL PARTNER
(a) Except as provided in this Section 7.4 and
elsewhere in this Agreement (including the provisions of Articles
5 and 6 regarding distributions, payments and allocations to
which it may be entitled), the General Partner shall not be
compensated for its services as general partner of the
Partnership.
(b) Subject to Section 15.11, the General Partner
shall be reimbursed on a monthly basis, or such other basis as
the General Partner may determine in its sole and absolute
discretion, for all expenses it incurs relating to the ownership
of interests in and operation of, or for the benefit of, the
Partnership. The General Partner shall not, however, be
reimbursed for expenses it incurs relating to the organization of
the Partnership or any public offerings of REIT Shares, other
shares of capital stock or Funding Debt by the General Partner,
but shall be reimbursed for expenses it incurs with respect to
any other issuance of additional Partnership Interests pursuant
to the provisions hereof. Such reimbursements shall be in
addition to any reimbursement to the General Partner as a result
of indemnification pursuant to Section 7.7 hereof.
(c) If and to the extent any reimbursements to the
General Partner pursuant
to this Section 7.4 constitute gross income of the General
Partner (as opposed to the repayment of advances made by the
General Partner on behalf of the Partnership), such amounts shall
constitute guaranteed payments within the meaning of Section
707(c) of the Code, shall be treated consistently therewith by
the Partnership and all Partners, and shall not be treated as
distributions for purposes of computing the Partners' Capital
Accounts.
Section 7.5 CONTRACTS WITH AFFILIATES
(a) The Partnership may lend or contribute to Persons
in which it has an equity investment, and such Persons may borrow
funds from the Partnership, on terms and conditions established
in the sole and absolute discretion of the General Partner. The
foregoing authority shall not create any right or benefit or
favor of any Person.
(b) Except as provided in Section 7.5(a), the
Partnership may transfer assets to joint ventures, other
partnerships, corporations, limited liability companies or other
business entities in which it is or thereby becomes a participant
upon such terms and subject to such conditions consistent with
this Agreement and applicable law.
(c) The General Partner, in its sole and absolute
discretion and without the approval of the Limited Partners, may
propose and adopt on behalf of the Partnership employee benefit
plans funded by the Partnership for the benefit of employees of
the General Partner, the Partnership, Subsidiaries of the
Partnership or any Affiliate of any of them in respect of
services performed, directly or indirectly, for the benefit of
the Partnership, the General Partner, or any of the Partnership's
Subsidiaries. The General Partner also is expressly authorized
to cause the Partnership to issue to it Partnership Units
corresponding to REIT Shares issued by the Company pursuant to
any Stock Plan or any similar or successor plan and to repurchase
such Partnership Units from the Company to the extent necessary
to permit the General Partner to repurchase such REIT Shares in
accordance with such plan.
(d) The General Partner is expressly authorized to
enter into, in the name and on behalf of the Partnership, a right
of first opportunity arrangement and other conflict avoidance
agreements with various Affiliates of the Partnership and the
General Partner, on such terms as the General Partner, in its
sole and absolute discretion, believes are advisable.
Section 7.6 INDEMNIFICATION
(a) The Partnership shall indemnify an Indemnitee from
and against any and all losses, claims, damages, liabilities,
joint or several, expenses (including legal fees and expenses),
judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil,
criminal, administrative or investigative, including, without
limitation, reasonable attorneys' fees and expenses, that relate
to the operations of the Partnership as set forth in this
Agreement in which any Indemnitee may be involved, or is
threatened to be involved, as a party or otherwise, unless it is
established that: (i) the act or omission of the Indemnitee was
material to the matter giving rise to the proceeding and either
was committed in bad faith or was the result of active and
deliberate dishonesty; (ii) the Indemnitee actually received an
improper personal benefit in money, property or services; or
(iii) in the case of any criminal proceeding, the Indemnitee had
reasonable cause to believe that the act or omission was
unlawful. Except as otherwise specifically provided in writing
to the contrary, without limitation, the foregoing indemnity
shall extend to any liability of any Indemnitee, pursuant to a
loan guaranty or otherwise, for any indebtedness of the
Partnership or any Subsidiary of the Partnership (including,
without limitation, any indebtedness which the Partnership or any
Subsidiary of the Partnership has assumed or taken subject to),
and the General Partner is hereby authorized and empowered, on
behalf of the Partnership, to enter into one or more indemnity
agreements consistent with the provisions of this Section 7.6 in
favor of any Indemnitee having or potentially having liability
for any such indebtedness. The termination of any proceeding by
judgment, order or settlement does not create a presumption that
the Indemnitee did not meet the requisite standard of conduct set
forth in this Section 7.6(a). The termination of any proceeding
by conviction or upon a plea of nolo contendere or its
equivalent, or any entry of an order of probation prior to
judgment, creates a rebuttable presumption that the Indemnitee
acted in a manner contrary to that specified in this Section
7.6(a) with respect to subject matter of such proceeding. Any
indemnification pursuant to this Section 7.6 shall be made only
out of the assets of the Partnership.
(b) Reasonable expenses incurred by an Indemnitee in
connection with any proceeding which are otherwise indemnifiable
under this Section 7.6 may be paid or reimbursed by the
Partnership in advance of the final disposition of the proceeding
upon receipt by the Partnership of (i) a written affirmation by
the Indemnitee of the Indemnitee's good faith belief that the
standard of conduct necessary for indemnification by the
Partnership as authorized in this Section 7.6 has been met, and
(ii) a written undertaking by or on behalf of the Indemnitee to
repay the amount if it shall ultimately be determined that the
standard of conduct has not been met.
(c) The indemnification provided by this Section 7.6
shall be in addition to any other rights to which an Indemnitee
or any other Person may be entitled under any agreement, pursuant
to any vote of the Partners, as a matter of law or otherwise, and
shall continue as to an Indemnitee who has ceased to serve in
such capacity.
(d) The Partnership may purchase and maintain
insurance, on behalf of the Indemnitees and such other Persons as
the General Partner shall determine, against any liability that
may be asserted against or expenses that may be incurred by such
Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to
indemnify such Person against such liability under the provisions
of this Agreement.
(e) For purposes of this Section 7.6, the Partnership
shall be deemed to have requested an Indemnitee to serve as
fiduciary of an employee benefit plan whenever the performance by
it of its duties to the Partnership also imposes duties on, or
otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee
with respect to an employee benefit plan pursuant to applicable
law shall constitute fines within the meaning of Section 7.6; and
actions taken or omitted by the Indemnitee with respect to an
employee benefit plan in the performance of its duties for a
purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be
for a purpose which is not opposed to the best interests of the
Partnership.
(f) In no event may an Indemnitee subject the Limited
Partners to personal liability by reason of the indemnification
provisions set forth in this Agreement.
(g) An Indemnitee shall not be denied indemnification
in whole or in part under this Section 7.6 because the Indemnitee
had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise
permitted by the terms of this Agreement.
(h) The provisions of this Section 7.6 are for the
benefit of the Indemnitees, their heirs, successors, assigns and
administrators and shall not be deemed to create any rights for
the benefit of any other Persons. Any amendment, modification or
repeal of this Section 7.6 or any provision hereof shall be
prospective only and shall not in any way affect the limitations
on the Partnership's liability to any Indemnitee under this
Section 7.6 as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims
may arise or be asserted.
(i) If and to the extent any reimbursements to the
General Partner pursuant to this Section 7.6 constitute gross
income of the General Partner (as opposed to the repayment of
advances made by the General Partner on behalf of the
Partnership) such amounts shall constitute guaranteed payments
within the meaning of Section 707(c) of the Code, shall be
treated consistently therewith by the Partnership and all
Partners, and shall not be treated as distributions for purposes
of computing the Partners' Capital Accounts.
(j) Any indemnification hereunder is subject to, and
limited by, the provisions of Section 17-108 of the Act.
(k) In the event the Partnership is made a party to
any litigation or otherwise incurs any loss or expenses as a
result of or in connection with any Partner's personal
obligations or liabilities unrelated to Partnership business,
such Partner shall indemnify and reimburse the Partnership for
all such loss and expense incurred, including legal fees, and the
Partnership Interest of such Partner may be charged therefor.
The liability of a Partner under this Section 7.6(k) shall not be
limited to such Partner's Partnership Interest, but shall be
enforceable against such Partner personally.
Section 7.7 LIABILITY OF THE GENERAL PARTNER
(a) Notwithstanding anything to the contrary set forth
in this Agreement, neither the General Partner nor any director,
officer, employee or agent of the Partnership or the General
Partner (each, an "Agent") shall be liable or accountable in
damages or otherwise to the Partnership, any Partners or any
Assignees for losses sustained, liabilities incurred or benefits
not derived as a result of errors in judgment or mistakes of fact
or law or any act or omission if such Person acted in good faith.
(b) The Limited Partners expressly acknowledge that
the General Partner is acting for the benefit of the Partnership,
the Limited Partners and the Company's stockholders collectively,
that the General Partner is under no obligation to give priority
to the separate interests of the Limited Partners or the
Company's stockholders (including, without limitation, the tax
consequences to Limited Partners or Assignees or to stockholders)
in deciding whether to cause the Partnership to take (or decline
to take) any actions and that the General Partner shall not be
liable to the Partnership or to any Limited Partner for monetary
damages for losses sustained, liabilities incurred, or benefits
not derived by Limited Partners in connection with such
decisions, PROVIDED THAT the General Partner has acted in good
faith.
(c) Subject to its obligations and duties as General
Partner set forth in Section 7.1(a) hereof, the General Partner
may exercise any of the powers granted to it by this Agreement
and perform any of the duties imposed upon it hereunder either
directly or by or through its Agents. The General Partner shall
not be responsible for any misconduct or negligence on the part
of any such Agent appointed by it in good faith.
(d) Any amendment, modification or repeal of this
Section 7.7 or any provision hereof shall be prospective only and
shall not in any way affect the limitations on the General
Partner's or any Agent's liability to the Partnership and the
Limited Partners under this Section 7.7 as in effect immediately
prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or
in part, prior to such amendment, modification or repeal,
regardless of when such claims may arise or be asserted.
Section 7.8 OTHER MATTERS CONCERNING THE GENERAL
PARTNER
(a) The General Partner and any Agent may rely and
shall be protected in
acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties.
(b) The General Partner and any Agent may consult with
legal counsel, accountants, appraisers, management consultants,
investment bankers and other consultants and advisers selected by
it, and any act taken or omitted to be taken in reliance upon the
opinion of such Persons as to matters which such General Partner
or Agent reasonably believes to be within such Person's
professional or expert competence shall be conclusively presumed
to have been done or omitted in good faith and in accordance with
such opinion.
(c) The General Partner shall have the right, in
respect of any of its powers or obligations hereunder, to act
through any of its duly authorized officers and a duly appointed
attorney or attorneys-in-fact. Each such attorney shall, to the
extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform all and every act
and duty which is permitted or required to be done by the General
Partner hereunder.
(d) Notwithstanding any other provisions of this
Agreement or any non-mandatory provision of the Act, any action
of the General Partner on behalf of the Partnership or any
decision of the General Partner to refrain from acting on behalf
of the Partnership, undertaken in the good faith belief that such
action or omission is necessary or advisable in order (i) to
protect the ability of the Company to continue to qualify as a
REIT or (ii) to avoid the Company incurring any taxes under
Section 857 or Section 4981 of the Code, is expressly authorized
under this Agreement and is deemed approved by all of the Limited
Partners.
Section 7.9 TITLE TO PARTNERSHIP ASSETS
Title to Partnership assets, whether real, personal or
mixed and whether tangible or intangible, shall be deemed to be
owned by the Partnership as an entity, and no Partners,
individually or collectively, shall have any ownership interest
in such Partnership assets or any portion thereof. Title to any
or all of the Partnership assets may be held in the name of the
Partnership, the General Partner or one or more nominees, as the
General Partner may determine, including Affiliates of the
General Partner. The General Partner hereby declares and
warrants that any Partnership assets for which legal title is
held in the name of the General Partner or any nominee or
Affiliate of the General Partner shall be deemed held by the
General Partner or such nominee or Affiliate for the use and
benefit of the Partnership in accordance with the provisions of
this Agreement; PROVIDED, HOWEVER, that the General Partner shall
use its best efforts to cause beneficial and record title to such
assets to be vested in the Partnership as soon as reasonably
practicable. All Partnership assets shall be recorded as the
property of the Partnership in its books and records,
irrespective of the name in which legal title to such Partnership
assets is held.
Section 7.10 RELIANCE BY THIRD PARTIES
Notwithstanding anything to the contrary in this
Agreement, any Person dealing with the Partnership shall be
entitled to assume that the General Partner has full power and
authority to encumber, sell or otherwise use in any manner any
and all assets of the Partnership and to enter into any contracts
on behalf of the Partnership, and such Person shall be entitled
to deal with the General Partner as if it were the Partnership's
sole party in interest, both legally and beneficially. Each
Limited Partner hereby waives any and all defenses or other
remedies which may be available against such Person to contest,
negate or disaffirm any action of the General Partner in
connection with any such dealing. In no event shall any Person
dealing with the General Partner or its representatives be
obligated to ascertain that the terms of this Agreement have been
complied with or to inquire into the necessity or expedience of
any act or action of the General Partner or its representatives.
Each and every certificate, document or other instrument executed
on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and
every Person relying thereon or claiming thereunder that (i) at
the time of the execution and delivery of such certificate,
document or instrument, this Agreement was in full force and
effect, (ii) the Person executing and delivering such
certificate, document or instrument was duly authorized and
empowered to do so for and on behalf of the Partnership and (iii)
such certificate, document or instrument was duly executed and
delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 LIMITATION OF LIABILITY
The Limited Partners shall have no liability under this
Agreement except as expressly provided in this Agreement or under
the Act.
Section 8.2 MANAGEMENT OF BUSINESS
No Limited Partner or Assignee (other than the General
Partner, any of its Affiliates or any officer, director,
employee, partner (other than a Limited Partner), agent or
trustee of the General Partner, the Partnership or any of their
Affiliates, in their capacity as such) shall take part in the
operations, management or control (within the meaning of the Act)
of the Partnership's business, transact any business in the
Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such
business by the General Partner, any of its Affiliates or any
officer, director, employee, partner (other than a Limited
Partner), agent or trustee of the General Partner, the
Partnership or any of their Affiliates, in their capacity as
such, shall not affect, impair or eliminate the limitations on
the liability of the Limited Partners or Assignees under this
Agreement.
Section 8.3 OUTSIDE ACTIVITIES OF LIMITED PARTNERS
Subject to any agreements entered into by a Limited
Partner or its Affiliates with the General Partner, Partnership
or a Subsidiary thereof, any Limited Partner and any officer,
director, employee, agent, trustee, Affiliate or stockholder of
any Limited Partner shall be entitled to and may have business
interests and engage in business activities in addition to those
relating to the Partnership, including business interests and
activities in direct competition with the Partnership or that are
enhanced by the activities of the Partnership. Neither the
Partnership nor any Partners shall have any rights by virtue of
this Agreement in any business ventures, or the income or profits
derived therefrom, of any Limited Partner or Assignee. Subject
to such agreements, none of the Limited Partners nor any other
Person shall have any rights by virtue of this Agreement or the
partnership relationship established hereby in any business
ventures of any other Person, other than the Limited Partners
benefitting from the business conducted by the General Partner,
and such Person shall have no obligation pursuant to this
Agreement to offer any interest in any such business ventures to
the Partnership, any Limited Partner or any such other Person,
even if such opportunity is of a character which, if presented to
the Partnership, any Limited Partner or such other Person, could
be taken by such other Person.
Section 8.4 RETURN OF CAPITAL
Except pursuant to the rights of Redemption set forth
in Section 8.6, no Limited Partner shall be entitled to the
withdrawal or return of his or her Capital Contribution, except
to the extent of distributions made pursuant to this Agreement or
upon termination of the Partnership as provided herein. Except
as otherwise expressly set forth in this Agreement, no Limited
Partner or Assignee shall have priority over any other Limited
Partner or Assignee either as to the return of Capital
Contributions or as to profits, losses, distributions or credits.
Section 8.5 RIGHTS OF LIMITED PARTNERS RELATING TO
THE PARTNERSHIP
(a) In addition to other rights provided by this
Agreement or by the Act, and except as limited by Section 8.5(b)
hereof, each Limited Partner shall have the right, for a purpose
reasonably related to such Limited Partner's interest as a
limited partner in the Partnership, upon written demand with a
statement of the purpose of such demand and at the Partnership's
expense:
(i) to obtain a copy of the most recent
annual and quarterly reports filed with the Securities and
Exchange Commission by the Company pursuant to the Securities
Exchange Act, and each communication sent to the stockholders of
the Company;
(ii) to obtain a copy of the Partnership's
federal, state and local income tax returns for each Partnership
Year;
(iii) to obtain a copy of this Agreement and
the Certificate and all amendments thereto, together with
executed copies of all powers of attorney pursuant to which this
Agreement, the Certificate and all amendments thereto have been
executed; and
(iv) to obtain true and full information
regarding the amount of cash and a description and statement of
any other property or services contributed by each Partner and
which each Partner has agreed to contribute in the future, and
the date on which each became a Partner.
(b) Notwithstanding any other provision of this
Section 8.5, the General Partner may keep confidential from the
Limited Partners, for such period of time as the General Partner
determines in its sole and absolute discretion to be reasonable,
any information that (i) the General Partner believes to be in
the nature of trade secrets or other information the disclosure
of which the General Partner in good faith believes is not in the
best interests of the Partnership or (ii) the Partnership or the
General Partner is required by law or by agreements with
unaffiliated third parties to keep confidential.
Section 8.6 REDEMPTION RIGHTS
(a) On or after December 31, 1999, each Limited
Partner shall have the right (subject to the terms and conditions
set forth herein), but not the obligation, to require the
Partnership to redeem all or a portion of the Partnership Units
held by such Limited Partner (such Partnership Units being
hereafter referred to as "Tendered Units") in exchange for the
Cash Amount (a "Redemption"); provided that the terms of such
Partnership Units do not provide that such Partnership Units are
not entitled to a right of Redemption. Unless otherwise
expressly provided in this Agreement or in a separate agreement
entered into between the Partnership and the holders of such
Partnership Units, all Partnership Units shall be entitled to a
right of Redemption hereunder. Any Redemption shall be exercised
pursuant to a Notice of Redemption delivered to the General
Partner and the Company, by the Limited Partner who is exercising
the right (the "Tendering Partner"). The Cash Amount shall be
delivered as a certified check payable to the Tendering Partner
within ten (10) days of the Specified Redemption Date in
accordance with the instructions set forth in the Notice of
Redemption.
(b) Notwithstanding Section 8.6(a) above, if a Limited
Partner has delivered to the General Partner a Notice of
Redemption, then the Company may, in its sole and absolute
discretion (subject to the limitations on ownership and transfer
of REIT Shares set forth in the Charter), elect to acquire some
or all of the Tendered Units from the Tendering Partner in
exchange for the REIT Shares Amount (as of the Specified
Redemption Date) and, if the Company so elects, the Tendering
Partner shall sell the Tendered Units to the Company in exchange
for the REIT Shares Amount. In such event, the Tendering Partner
shall have no right to cause the Partnership to redeem such
Tendered Units. The Company shall promptly give the General
Partner and the Tendering Partner written notice of its election,
and the Tendering Partner may elect by written notice to the
Partnership to withdraw its redemption request at any time prior
to the acceptance of the Cash Amount or REIT Shares Amount by
such Tendering Partner.
(c) The REIT Shares Amount, if applicable, shall be
delivered as duly authorized, validly issued, fully paid and
nonassessable REIT Shares and, if applicable, free of any pledge,
lien, encumbrance or restriction, other than those provided in
the Charter, the Bylaws of the Company, the Securities Act,
relevant state securities or blue sky laws and any applicable
registration rights agreement with respect to such REIT Shares
entered into by the Tendering Partner. The REIT Shares Amount
shall be registered in the name and otherwise delivered as set
forth in the Notice of Redemption. Notwithstanding any delay in
such delivery (but subject to Section 8.6(e), the Tendering
Partner shall be deemed the owner of such REIT Shares for all
purposes, including without limitation, rights to vote or
consent, and receive dividends, as of the Specified Redemption
Date. Each Limited Partner covenants and agrees with the General
Partner and the Company that all Tendered Units shall be
delivered to the General Partner free and clear of all liens,
claims and encumbrances whatsoever and should any such liens,
claims and/or encumbrances exist or arise with respect to such
Tendered Units, the General Partner and the Company shall be
under no obligation to acquire the same. Each Limited Partner
further agrees that, in the event any state or local property
transfer tax is payable as a result of the transfer of its
Tendered Units, such Limited Partner shall assume and pay such
transfer tax. Each Limited Partner further agrees that it shall
enter into such documentation with respect to a Redemption for
cash or an exchange for REIT Shares as the Partnership, the
Company, or the General Partner shall reasonably request.
(d) Each Limited Partner covenants and agrees with the
General Partner and the Company, as the case may be, that all
Tendered Units shall be delivered to the General Partner or the
Company free and clear of all liens, claims and encumbrances
whatsoever and should any such liens, claims and/or encumbrances
exist or arise with respect to such Tendered Units, the General
Partner and the Company shall be under no obligation to acquire
the same. Each Limited Partner further agrees that, in the event
any state or local property transfer tax is payable as a result
of the transfer of its Tendered Units to the General Partner or
the Company (or the designee), such Limited Partner shall assume
and pay such transfer tax.
(e) Notwithstanding the provisions of Section 8.6(a),
8.6(b), 8.6(c) or any other provision of this Agreement, a
Limited Partner (i) shall not be entitled to effect a Redemption
for cash or an exchange for REIT Shares to the extent the
ownership or right to acquire REIT Shares pursuant to such
exchange by such Partner on the Specified Redemption Date would
cause such Partner or another Person, or, in the opinion of
counsel selected by the General Partner, may cause such Partner
or any other Person, to violate the restrictions on ownership and
transfer of REIT Shares set forth in the Charter and (ii) shall
have no rights under this Agreement to acquire REIT Shares which
would otherwise be prohibited under the Charter. To the extent
any attempted Redemption or exchange for REIT Shares would be in
violation of this Section 8.6(e), it shall be null and void AB
INITIO and such Limited Partner shall not acquire any rights or
economic interest in the cash otherwise payable upon such
Redemption or the REIT Shares otherwise issuable upon such
exchange.
(f) Notwithstanding anything herein to the contrary
(but subject to Section
8.6(e), with respect to any Redemption or exchange for REIT
Shares pursuant to this Section 8.6:
(i) All Partnership Units acquired by the
General Partner pursuant thereto shall automatically, and without
further action required, be converted into and deemed to be
General Partner Interests comprised of the same number and class
of Partnership Units.
(ii) All Partnership Units acquired by the
Company shall maintain their status as Limited Partnership
Interests of the same number and class as the Partnership Units
so acquired.
(iii) Without the consent of the General
Partner, each Limited Partner may not effect a Redemption for
less than 500 Partnership Units or, if the Limited Partner holds
less than 500 Partnership Units, all of the Partnership Units
held by such Limited Partner.
(iv) Without the consent of the General
Partner, each Limited Partner may not effect a Redemption during
the period after the Partnership Record Date with respect to a
distribution and before the record date established by the
Company for a distribution to its stockholders of some or all of
its portion of such distribution.
(v) The consummation of any Redemption or
exchange for REIT Shares shall be subject to the expiration or
termination of the applicable waiting period, if any, under the
Hart-Scott-Redino Antitrust Improvements Act of 1976, as amended.
(vi) Each Tendering Partner shall continue to
own all Partnership Units subject to any Redemption or exchange
for REIT Shares, and be treated as a Limited Partner with respect
to such Partnership Units for all purposes of this Agreement,
until such Partnership Units are transferred to the General
Partner or the Company, as the case may be, and paid for or
exchanged on the Specified Redemption Date. Until a Specified
Redemption Date, the Tendering Partner shall have no rights as a
stockholder of the Company with respect to such Tendering
Partner's Partnership Units.
(g) In the event that the Partnership issues
additional Partnership Interests to any Additional Limited
Partner pursuant to Section 4.3(c) hereof, the General Partner
shall make such revisions to this Section 8.6 as it determines
are necessary to reflect the issuance of such additional
Partnership Interests.
(h) If, at any time, the General Partner acquires
material assets (other than on behalf of the Partnership) the
definition of "REIT Shares Amount" shall be adjusted, as
reasonably agreed to by the General Partner and a Majority in
Interest of the Limited Partners, to reflect the relative Fair
Market Value of a share of capital stock of the General Partner
relative to the Deemed Partnership Interest Value of the related
Partnership Unit.
(i) The Partnership shall notify each Limited Partner
in writing of any adjustment made in the calculation of the REIT
Shares Amount within 10 Business Days of the date such change
becomes effective.
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 RECORDS AND ACCOUNTING
The General Partner shall keep or cause to be kept at
the principal office of the Partnership appropriate books and
records with respect to the Partnership's business, including
without limitation, all books and records necessary to provide to
the Limited Partners any information, lists and copies of
documents required to be provided pursuant to Section 9.3 or
8.5(a)(i) hereof. Any records maintained by or on behalf of the
Partnership in the regular course of its business may be kept on,
or be in the form of, punch cards, magnetic tape, photographs,
micrographics or any other information storage device, PROVIDED
THAT the records so maintained are convertible into clearly
legible written form within a reasonable period of time. The
books of the Partnership shall be maintained, for financial and
tax reporting purposes, on an accrual basis in accordance with
generally accepted accounting principles.
Section 9.2 FISCAL YEAR
The fiscal year of the Partnership shall be the
calendar year.
Section 9.3 REPORTS
As soon as practicable, but in no event later than 105
days after the close of each Partnership Year, or such earlier
date as they are filed with the Securities and Exchange
Commission, the General Partner shall cause to be mailed to each
Limited Partner as of the close of the Partnership Year, an
annual report containing financial statements of the Partnership,
or of the General Partner if such statements are prepared solely
on a consolidated basis with the General Partner, for such
Partnership Year, presented in accordance with generally accepted
accounting principles, such statements to be audited by a
nationally recognized firm of independent public accountants
selected by the General Partner.
ARTICLE 10
TAX MATTERS
Section 10.1 PREPARATION OF TAX RETURNS
The General Partner shall arrange for the preparation
and timely filing of all returns of the Partnership and, to the
extent applicable, Subsidiary Partnership income, gains,
deductions, losses and other items required of the Partnership
for federal and state income tax purposes and shall use all
reasonable efforts to furnish, within 90 days of the close of
each taxable year, the tax information reasonably required by
Limited Partners for federal and state income tax reporting
purposes.
Section 10.2 TAX ELECTIONS
Except as otherwise provided herein, the General
Partner shall, in its sole and absolute discretion, determine
whether to make any available election pursuant to the Code,
including the election under Section 754 of the Code. The
General Partner shall have the right to seek to revoke any such
election (including without limitation, any election under
Section 754 of the Code) upon the General Partner's determination
in its sole and absolute discretion that such revocation is in
the best interests of the Partners.
Section 10.3 TAX MATTERS PARTNER
(a) The General Partner shall be the "tax matters
partner" of the Partnership for federal income tax purposes.
Pursuant to Section 6223(c) of the Code, upon receipt of notice
from the IRS of the beginning of an administrative proceeding
with respect to the Partnership, the tax matters partner shall
furnish the IRS with the name, address and profit interest of
each of the Limited Partners and Assignees; PROVIDED, HOWEVER,
that such information is provided to the Partnership by the
Limited Partners and Assignees.
(b) The tax matters partner is authorized, but not
required:
(i) to enter into any settlement with the
IRS with respect to any administrative or judicial proceedings
for the adjustment of Partnership items required to be taken into
account by a Partner for income tax purposes (such administrative
proceedings being referred to as a "tax audit" and such judicial
proceedings being referred to as "judicial review"), and in the
settlement agreement the tax matters partner may expressly state
that such agreement shall bind all Partners, except that such
settlement agreement shall not bind any Partner (i) who (within
the time prescribed pursuant to the Code and Regulations) files a
statement with the IRS providing that the tax matters partner
shall not have the authority to enter into a settlement agreement
on behalf of such Partner or (ii) who is a "notice partner" (as
defined in Section 6231 of the Code) or a member of a "notice
group" (as defined in Section 6223(b)(2) of the Code);
(ii) in the event that a notice of a final
administrative adjustment at the Partnership level of any item
required to be taken into account by a Partner for tax purposes
(a "final adjustment") is mailed to the tax matters partner, to
seek judicial review of such final adjustment, including the
filing of a petition for readjustment with the Tax Court or the
United States Claims Court, or the filing of a complaint for
refund with the District Court of the United States for the
district in which the Partnership's principal place of business
is located;
(iii) to intervene in any action brought by
any other Partner for judicial review of a final adjustment;
(iv) to file a request for an administrative
adjustment with the IRS at any time and, if any part of such
request is not allowed by the IRS, to file an appropriate
pleading (petition or complaint) for judicial review with respect
to such request;
(v) to enter into an agreement with the IRS
to extend the period for assessing any tax which is attributable
to any item required to be taken into account by a Partner for
tax purposes, or an item affected by such item; and
(vi) to take any other action on behalf of
the Partners of the Partnership in connection with any tax audit
or judicial review proceeding to the extent permitted by
applicable law or regulations.
The taking of any action and the incurring of any
expense by the tax matters partner in connection with any such
proceeding, except to the extent required by law, is a matter in
the sole and absolute discretion of the tax matters partner and
the provisions relating to indemnification of the General Partner
set forth in Section 7.7 of this Agreement shall be fully
applicable to the tax matters partner in its capacity as such.
(c) The tax matters partner shall receive no
compensation for its services. All third party costs and
expenses incurred by the tax matters partner in performing its
duties as such (including legal and accounting fees) shall be
borne by the Partnership. Nothing herein shall be construed to
restrict the Partnership from engaging an accounting firm to
assist the tax matters partner in discharging its duties
hereunder, so long as the compensation paid by the Partnership
for such services is reasonable.
Section 10.4 ORGANIZATIONAL EXPENSES
The Partnership shall elect to deduct expenses, if any,
incurred by it in organizing the Partnership ratably over a
60-month period as provided in Section 709 of the Code.
Section 10.5 WITHHOLDING
Each Limited Partner hereby authorizes the Partnership
to withhold from or pay on behalf of or with respect to such
Limited Partner any amount of federal, state, local, or foreign
taxes that the General Partner determines that the Partnership is
required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to
this Agreement, including, without limitation, any taxes required
to be withheld or paid by the Partnership pursuant to Section
1441, 1442, 1445 or 1446 of the Code. Any amount paid on behalf
of or with respect to a Limited Partner shall constitute a loan
by the Partnership to such Limited Partner, which loan shall be
repaid by such Limited Partner within 15 days after notice from
the General Partner that such payment must be made unless (i) the
Partnership withholds such payment from a distribution which
would otherwise be made to the Limited Partner or (ii) the
General Partner determines, in its sole and absolute discretion,
that such payment may be satisfied out of the available funds of
the Partnership which would, but for such payment, be distributed
to the Limited Partner. Any amounts withheld pursuant to the
foregoing clauses (i) or (ii) shall be treated as having been
distributed to such Limited Partner. Each Limited Partner hereby
unconditionally and irrevocably grants to the Partnership a
security interest in such Limited Partner's Partnership Interest
to secure such Limited Partner's obligation to pay to the
Partnership any amounts required to be paid pursuant to this
Section 10.5. In the event that a Limited Partner fails to pay
any amounts owed to the Partnership pursuant to this Section 10.5
when due, the General Partner may, in its sole and absolute
discretion, elect to make the payment to the Partnership on
behalf of such defaulting Limited Partner, and in such event
shall be deemed to have loaned such amount to such defaulting
Limited Partner and shall succeed to all rights and remedies of
the Partnership as against such defaulting Limited Partner
(including, without limitation, the right to receive
distributions and the holding of a security interest in such
Limited Partner's Partnership Interest). Any amounts payable by
a Limited Partner hereunder shall bear interest at the base rate
on corporate loans at large United States money center commercial
banks, as published from time to time in the WALL STREET JOURNAL,
plus two percentage points (but not higher than the maximum
lawful rate) from the date such amount is due (i.e., 15 days
after demand) until such amount is paid in full. Each Limited
Partner shall take such actions as the Partnership or the General
Partner shall request in order to perfect or enforce the security
interest created hereunder.
ARTICLE 11
TRANSFERS AND WITHDRAWALS
Section 11.1 TRANSFER
(a) The term "transfer," when used in this Article 11
with respect to a Partnership Interest, shall be deemed to refer
to a transaction by which the General Partner purports to assign
all or any portion of its General Partner Interest to another
person or by which a Limited Partner purports to assign all or
any portion of its Limited Partnership Interest to another
Person, and includes a sale, assignment, gift (outright or in
trust), pledge, encumbrance, hypothecation, mortgage, exchange or
any other disposition by law or otherwise. The term "transfer"
when used in this Article 11 does not include any Redemption or
exchange for REIT Shares pursuant to Section 8.6. No part of the
interest of a Limited Partner shall be subject to the claims of
any creditor, any spouse for alimony or support, or to legal
process, and may not be voluntarily or involuntarily alienated or
encumbered except as may be specifically provided for in this
Agreement.
(b) No Partnership Interest shall be transferred, in
whole or in part, except in accordance with the terms and
conditions set forth in this Article 11. Any transfer or
purported transfer of a Partnership Interest not made in
accordance with this Article 0 shall be null and void.
Section 11.2 TRANSFER OF GENERAL PARTNER'S
PARTNERSHIP INTEREST
(a) The General Partner shall not withdraw from the
Partnership and shall not transfer all or any portion of its
interest in the Partnership (whether by sale, statutory merger or
consolidation, liquidation or otherwise) without the Consent of
the Majority in Interest of the Limited Partners, which may be
given or withheld by each Limited Partner in its sole and
absolute discretion, and only, in the case of a purported
transfer of all of the General Partner's General Partner
Interest, upon the appointment and admission of a successor
General Partner pursuant to Section 12.1 and 13.1(b). Upon any
transfer of all of the General Partner's General Partner Interest
in accordance with the provisions of this Section 11.2, the
transferee shall become a Substitute General Partner for all
purposes herein, and shall be vested with the powers and rights
of the transferor General Partner, and shall be liable for all
obligations and responsible for all duties of the General
Partner, once such transferee has executed such instruments as
may be necessary to effectuate such admission and to confirm the
agreement of such transferee to be bound by all the terms and
provisions of this Agreement with respect to the Partnership
Interest so acquired. It is a condition to any transfer
otherwise permitted hereunder that the transferee assumes, by
operation of law or express agreement, all of the obligations of
the transferor General Partner under this Agreement with respect
to such transferred Partnership Interest, and no such transfer
(other than pursuant to a statutory merger or consolidation
wherein all obligations and liabilities of the transferor General
Partner are assumed by a successor corporation by operation of
law) shall relieve the transferor General Partner of its
obligations under this Agreement without the Consent of the Super
Majority Limited Partners, in their reasonable discretion.
Subject to Section 7.3(c), in the event the General Partner
withdraws from the Partnership, in violation of this Agreement or
otherwise, or otherwise dissolves or terminates, or upon the
Incapacity of the General Partner, all of the remaining Partners
may elect to continue the Partnership business by selecting a
Substitute General Partner in accordance with the Act.
(a) Except as otherwise provided in Section 11.2(c),
the General Partner shall not engage in any merger, consolidation
or other combination with or into another person, sale of all or
substantially all of its assets or any reclassification,
recapitalization or change of its outstanding equity interests
(each, a "Termination Transaction"), unless the Termination
Transaction has been approved by a Consent of the Partners and in
connection with which all Limited Partners either will receive,
or will have the right to elect to receive, for each Partnership
Unit an amount of cash, securities or other property equal to the
product of the REIT Shares Amount and the greatest amount of
cash, securities or other property paid to a holder of one REIT
Share in consideration of one REIT Share pursuant to the terms of
the Termination Transaction; PROVIDED THAT, if, in connection
with the Termination Transaction, a purchase, tender or exchange
offer shall have been made to and accepted by the holders of more
than thirty-three and one-third percent (33 1/3%) of the
outstanding REIT Shares, each holder of Partnership Units shall
receive, or shall have the right to elect to receive, the
greatest amount of cash, securities, or other property which such
holder would have received had it exercised its right to
Redemption (as set forth in Section 8.6) and received REIT Shares
in exchange for its Partnership Units immediately prior to the
expiration of such purchase, tender or exchange offer and had
thereupon accepted such purchase, tender or exchange offer.
(b) Notwithstanding Section 11.2(b), the General
Partner may merge, or otherwise combine its assets, with another
entity if: (i) immediately after such merger or other
combination, substantially all of the assets directly or
indirectly owned by the surviving entity, other than Partnership
Units held by such General Partner, are owned directly or
indirectly by the Partnership or another limited partnership or
limited liability company which is the survivor of a merger,
consolidation or combination of assets with the Partnership (in
each case, the "Surviving Partnership"); (ii) the Limited
Partners own a percentage interest of the Surviving Partnership
based on the relative fair market value of the net assets of the
Partnership (as determined pursuant to Section 11.2(e) and the
other net assets of the Surviving Partnership (as determined
pursuant to Section 11.2(e)) immediately prior to the
consummation of such transaction; (iii) the rights, preferences
and privileges of the Limited Partners in the Surviving
Partnership are at least as favorable as those in effect
immediately prior to the consummation of such transaction and as
those applicable to any other limited partners or non-managing
members of the Surviving Partnership; and (iv) such rights of the
Limited Partners include the right to exchange their interests in
the Surviving Partnership for at least one of: (a) the
consideration available to such Limited Partners pursuant to
Section 11.2(b) or (b) if the ultimate controlling person of the
Surviving Partnership has publicly traded common equity
securities, such common equity securities, with an exchange ratio
based on the relative fair market value of such securities (as
determined pursuant to Section 11.2(e)) and the REIT Shares.
(c) In connection with any transaction permitted by
Section 11.2(b) or Section 11.2(c) hereof, the General Partner
shall use its commercially reasonable efforts to structure such
Termination Transaction to avoid causing the Limited Partners to
recognize gain for federal income tax purposes by virtue of the
occurrence of or their participation in such Termination
Transaction. The sole remedy for a breach by the General Partner
of this Section 11.2(d) shall be a claim for damages.
(d) In connection with any transaction permitted by
Section 11.2(b) or 11.2(c), the relative fair market values shall
be reasonably determined by the General Partner as of the time of
such transaction and, to the extent applicable, shall be no less
favorable to the Limited Partners than the relative values
reflected in the terms of such transaction.
Section 11.3 LIMITED PARTNERS' RIGHTS TO TRANSFER
(a) Prior to December 31, 1999, no Limited Partner
shall transfer all or any portion of its Partnership Interest to
any transferee without the consent of the General Partner, which
consent is to be exercised by its Independent Trust Managers and
may be withheld in its sole and absolute discretion; PROVIDED,
HOWEVER, that any Limited Partner may, at any time, without the
consent of the General Partner, (i) transfer all or any portion
of its Partnership Interest to the General Partner, (ii) transfer
all or any portion of its Partnership Interest to an Affiliate of
such Limited Partner, another original Limited Partner or to an
Immediate Family member, subject to the provisions of Section
11.6, (iii) transfer all or any portion of its Partnership
Interest to a trust for the benefit of a charitable beneficiary
or to a charitable foundation, subject to the provisions of
Section 11.6, and (iv) subject to the provisions of Section 11.6,
pledge (a "Pledge") all or any portion of its Partnership
Interest to a lending institution, which is not an Affiliate of
such Limited Partner, as collateral or security for a bona fide
loan or other extension of credit, and transfer such pledged
Partnership Interest to such lending institution in connection
with the exercise of remedies under such loan or extension or
credit, and the transfer of such pledged Partnership Interest by
the lender to any transferee. Each Limited Partner or Assignee
(resulting from a transfer made pursuant to clauses (i)-(iv) of
the proviso of the preceding sentence) shall have the right to
transfer all or any portion of its Partnership Interest, subject
to the satisfaction of each of the following conditions (in
addition to the right of each such Limited Partner or Assignee to
continue to make any such transfer permitted by clauses (i)-(iv)
of such proviso without satisfying either of the following
conditions):
(i) GENERAL PARTNER RIGHT OF FIRST REFUSAL. The
transferring Partner shall give written notice of the proposed
transfer to the General Partner, which notice shall state (i) the
identity of the proposed transferee, and (ii) the amount and type
of consideration proposed to be received for the transferred
Partnership Units. The General Partner shall have ten (10) days
upon which to give the transferring Partner notice of its
election to acquire the Partnership Units on the proposed terms.
If it so elects, it shall purchase the Partnership Units on such
terms within ten (10) days after giving notice of such election.
If it does not so elect, the transferring Partner may transfer
such Partnership Units to such third party, on economic terms no
more favorable to the transferee than the proposed terms, subject
to the other conditions of this Section 11.3, for a period of
ninety (90) days, after which such transfer shall again be
subject to compliance herewith.
(ii) QUALIFIED TRANSFEREE. Any transfer of a
Partnership Interest shall be made only to Qualified Transferees.
It is a condition to any transfer otherwise permitted hereunder
that the transferee assumes by operation of law or express
agreement all of the obligations of the transferor Limited
Partner under this Agreement with respect to such transferred
Partnership Interest and no such transfer (other than pursuant to
a statutory merger or consolidation wherein all obligations and
liabilities of the transferor Partner are assumed by a successor
corporation by operation of law) shall relieve the transferor
Partner of its obligations under this Agreement without the
approval of the General Partner, in its reasonable discretion.
Notwithstanding the foregoing, any transferee of any transferred
Partnership Interest shall be subject to any and all ownership
limitations contained in the Charter and the representations in
Section 3.4(d). Any transferee, whether or not admitted as a
Substituted Limited Partner, shall take subject to the
obligations of the transferor hereunder. Unless admitted as a
Substituted Limited Partner, no transferee, whether by a
voluntary transfer, by operation of law or otherwise, shall have
rights hereunder, other than the rights of an Assignee as
provided in Section11.5.
(b) If a Limited Partner is subject to Incapacity, the
executor, administrator, trustee, committee, guardian,
conservator, or receiver of such Limited Partner's estate shall
have all the rights of a Limited Partner, but not more rights
than those enjoyed by other Limited Partners, for the purpose of
settling or managing the estate, and such power as the
Incapacitated Limited Partner possessed to transfer all or any
part of his or its interest in the Partnership. The Incapacity
of a Limited Partner, in and of itself, shall not dissolve or
terminate the Partnership.
(c) The General Partner may prohibit any transfer
otherwise permitted under Section 11.3 by a Limited Partner of
such Limited Partner's Partnership Units if, in the opinion of
legal counsel to the Partnership, such transfer would require the
filing of a registration statement under the Securities Act by
the Partnership or would otherwise violate any federal or state
securities laws or regulations applicable to the Partnership or
the Partnership Units.
(d) No transfer by a Limited Partner of such Limited
Partner's Partnership Units (including any Redemption or exchange
for REIT Shares pursuant to Section 8.6) may be made to any
person if (i) in the opinion of legal counsel for the
Partnership, it would result in the Partnership being treated as
an association taxable as a corporation, or (ii) such transfer is
effectuated through an "established securities market" or a
"secondary market (or the substantial equivalent thereof)" within
the meaning of Section 7704 of the Code.
(e) No transfer of any Partnership Units may be made
to a lender to the Partnership or any Person who is related
(within the meaning of Section 1.752-4(b) of the Regulations) to
any lender to the Partnership whose loan constitutes a
Nonrecourse Liability, without the consent of the General
Partner, in its sole and absolute discretion; PROVIDED THAT, as a
condition to such consent, the lender will be required to enter
into an arrangement with the Partnership and the General Partner
to redeem or exchange for the REIT Shares Amount any Partnership
Units in which a security interest is held simultaneously with
the time at which such lender would be deemed to be a partner in
the Partnership for purposes of allocating liabilities to such
lender under Section 752 of the Code.
(f) In addition to any other restrictions on transfer
contained in this Agreement, in no event may any transfer of any
Partnership Units by any Partner be made if such transfer would
cause, or in the opinion of counsel selected by the General
Partner, could cause (i) the Partnership to become, with respect
to any employee benefit plan subject to Title I of ERISA or
Section 4975 of the Code, a "party-in-interest" (as defined in
Section 3(14) of ERISA) or a "disqualified person" (as defined in
Section 4975(c) of the Code); or (ii) any portion of the assets
of the Partnership to constitute assets of any employee benefit
plan pursuant to Section 2510.3-101 of the regulations of the
United States Department of Labor.
Section 11.4 SUBSTITUTED LIMITED PARTNERS
(a) No Limited Partner shall have the right to
substitute a transferee as a Limited Partner in such Limited
Partner's place (including any transferee permitted by Section
11.3). The General Partner shall, however, have the right to
consent to the admission of a transferee permitted under Section
11.3 of the interest of a Limited Partner as a Substituted
Limited Partner pursuant to this Section 11.4, which consent may
be given or withheld by the General Partner in its sole and
absolute discretion. The General Partner's failure or refusal to
permit a transferee of any such interests to become a Substituted
Limited Partner shall not give rise to any cause of action
against the Partnership or any Partner.
(b) A transferee who has been admitted as a
Substituted Limited Partner in accordance with this Article 11
shall have all the rights and powers and be subject to all the
restrictions and liabilities of a Limited Partner under this
Agreement. The admission of any transferee as a Substituted
Limited Partner shall be subject to the transferee executing and
delivering to the Partnership an acceptance of all of the terms
and conditions of this Agreement (including, without limitation,
the provisions of Section 2.4 and such other documents or
instruments as may be required in the discretion of the General
Partner to effect the admission, each in form and substance
satisfactory to the General Partner) and the acknowledgment by
such transferee that each of the representations and warranties
set forth in Section 3.4 hereof are true and correct with respect
to such transferee as of the date of the transfer of the
Partnership Interest to such transferee.
(c) Upon the admission of a Substituted Limited
Partner, the General Partner shall amend Exhibit A to reflect the
name, address, number of Partnership Units, and Percentage
Interest of such Substituted Limited Partner and to eliminate or
adjust, if necessary, the name, address and interest of the
predecessor of such Substituted Limited Partner.
Section 11.5 ASSIGNEES
If the General Partner, in its sole and absolute
discretion, does not consent to the admission of any permitted
transferee under Section 11.3 as a Substituted Limited Partner,
as described in Section 11.4, such transferee shall be considered
an Assignee for purposes of this Agreement. An Assignee shall be
entitled to all the rights of an assignee of a limited
partnership interest under the Act, including the right to
receive distributions from the Partnership and the share of Net
Income, Net Losses, gain and loss attributable to the Partnership
Units assigned to such transferee, the rights to transfer the
Partnership Units provided in this Article 11, and the right of
Redemption provided in Section 8.6, but shall not be deemed to be
a holder of Partnership Units for any other purpose under this
Agreement, and shall not be entitled to effect a Consent with
respect to such Partnership Units on any matter presented to the
Limited Partners for approval (such Consent remaining with the
transferor Limited Partner). In the event any such transferee
desires to make a further assignment of any such Partnership
Units, such transferee shall be subject to all the provisions of
this Article 11 to the same extent and in the same manner as any
Limited Partner desiring to make an assignment of Partnership
Units.
Section 11.6 GENERAL PROVISIONS
(a) No Limited Partner may withdraw from the
Partnership other than as a result of (i) a permitted transfer of
all of such Limited Partner's Partnership Units in accordance
with this Article 11 and the transferee(s) of such Units being
admitted to the Partnership as a Substituted Limited Partner or
(ii) pursuant to a Redemption or exchange for REIT Shares of all
of such Limited Partner's Partnership Units under Section 8.6.
(b) Any Limited Partner who shall transfer all of such
Limited Partner's Partnership Units in a transfer permitted
pursuant to this Article 11 where such transferee was admitted as
a Substituted Limited Partner or pursuant to a Redemption or
exchange for REIT Shares of all of such Limited Partner's
Partnership Units under Section 8.6 shall cease to be a Limited
Partner.
(c) Transfers pursuant to this Article 11 may only be
made on the first day of a fiscal quarter of the Partnership,
unless the General Partner otherwise agrees.
(d) If any Partnership Interest is transferred or
assigned during any quarterly segment of the Partnership's fiscal
year in compliance with the provisions of this Article 11 or
transferred or redeemed pursuant to Section 8.6, on any day other
than the first day of a Partnership Year, then Net Income, Net
Losses, each item thereof and all other items attributable to
such Partnership Interest for such fiscal year shall be divided
and allocated between the transferor Partner and the transferee
Partner by taking into account their varying interests during the
fiscal year in accordance with Section 706(d) of the Code, using
the pro-ration of items method. Except as otherwise required by
Section 706(d) of the Code, solely for purposes of making such
allocations, each of such items for the calendar quarter in which
the transfer, assignment or redemption occurs shall be allocated
to the Person who is a Partner as of midnight on the Partnership
Record Date and none of such items for the calendar quarter in
which a redemption occurs will be allocated to the redeeming
Partner. All distributions of Available Cash with respect to
which the Partnership Record Date is before the date of such
transfer, assignment or redemption shall be made to the
transferor Partner, and all distributions of Available Cash
thereafter, in the case of a transfer or assignment other than a
redemption, shall be made to the transferee Partner.
(e) In addition to any other restrictions on transfer
herein contained, including without limitation the provisions of
this Article 11, in no event may any transfer or assignment of a
Partnership Interest by any Partner (including by way of a
Redemption) be made (i) to any person or entity who lacks the
legal right, power or capacity to own a Partnership Interest;
(ii) in violation of applicable law; (iii) of any component
portion of a Partnership Interest, such as the Capital Account,
or rights to distributions, separate and apart from all other
components of a Partnership Interest; (iv) if in the opinion of
legal counsel to the Partnership such transfer would cause a
termination of the Partnership for federal or state income tax
purposes (except as a result of the Redemption or exchange for
REIT Shares of all Partnership Units held by all Limited Partners
or pursuant to a Termination Transaction expressly permitted
under Section 11.2); (v) if in the opinion of counsel to the
Partnership such transfer would cause the Partnership to cease to
be classified as a partnership for federal or state income tax
purposes (except as a result of the Redemption or exchange for
REIT Shares of all Partnership Units held by all Limited
Partners); (vi) if such transfer requires the registration of
such Partnership Interest pursuant to any applicable federal or
state securities laws; (vii) if such transfer is effectuated
through an "established securities market" or a "secondary
market" (or the substantial equivalent thereof) within the
meaning of Section 7704 of the Code or such transfer causes the
Partnership to become a "Publicly Traded Partnership," as such
term is defined in Sections 469(k)(2) or 7704(b) of the Code;
(viii) if such transfer subjects the Partnership to be regulated
under the Investment Company Act of 1940, the Investment Advisors
Act of 1940 or the Employee Retirement Income Security Act of
1974, each as amended; (ix) if the transferee or assignee of such
Partnership Interest is unable to make the representations set
forth in Section 3.4(d) or such transfer could otherwise
adversely affect the ability of the Company to remain qualified
as a REIT; or (x) if in the opinion of legal counsel for the
Partnership such transfer would adversely affect the ability of
the Company to continue to qualify as a REIT or subject the
Company to any additional taxes under Section 857 or Section 4981
of the Code.
(f) The General Partner shall monitor the transfers of
interests in the Partnership to determine (i) if such interests
are being traded on an "established securities market" or a
"secondary market (or the substantial equivalent thereof)" within
the meaning of Section 7704 of the Code, and (ii) whether
additional transfers of interests would result in the Partnership
being unable to qualify for at least one of the "safe harbors"
set forth in regulations Section 1.7704-1 (or such other guidance
subsequently published by the IRS setting forth safe harbors
under which interests will not be treated as "readily tradable on
a secondary market (or the substantial equivalent thereof)"
within the meaning of Section 7704 of the Code) (the "Safe
Harbors"). The General Partner shall take all steps reasonably
necessary or appropriate to prevent any trading of interests or
any recognition by the Partnership of transfers made on such
markets and, except as otherwise provided herein, to insure that
at least one of the Safe Harbors is met.
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1 ADMISSION OF SUCCESSOR GENERAL PARTNER
A successor to all of the General Partner's General
Partner Interest pursuant to Section 11.2 hereof who is proposed
to be admitted as a successor General Partner shall be admitted
to the Partnership as the General Partner, effective upon such
transfer. Any such transferee shall carry on the business of the
Partnership without dissolution. In each case, the admission
shall be subject to the successor General Partner executing and
delivering to the Partnership an acceptance of all of the terms
and conditions of this Agreement and such other documents or
instruments as may be required to effect the admission. In the
case of such admission on any day other than the first day of a
Partnership Year, all items attributable to the General Partner's
Partnership Interest for such Partnership Year shall be allocated
between the transferring General Partner and such successor as
provided in Article 11 hereof.
Section 12.2 ADMISSION OF ADDITIONAL LIMITED PARTNERS
(a) After the admission to the Partnership of the
Limited Partner on the date hereof, a Person who makes a Capital
Contribution to the Partnership in accordance with this Agreement
shall be admitted to the Partnership as an Additional Limited
Partner only upon furnishing to the General Partner (i) evidence
of acceptance in form satisfactory to the General Partner of all
of the terms and conditions of this Agreement, including, without
limitation, the power of attorney granted in Section 2.4 hereof
and (ii) such other documents or instruments as may be required
in the discretion of the General Partner in order to effect such
Person's admission as an Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this
Section 12.2, no Person shall be admitted as an Additional
Limited Partner without the consent of the General Partner, which
consent may be given or withheld in the General Partner's sole
and absolute discretion. The admission of any Person as an
Additional Limited Partner shall become effective on the date
upon which the name of such Person is recorded on the books and
records of the Partnership, following the receipt of the Capital
Contribution in respect of such Limited Partner, the documents
and instruments described in Section 12.2(a) and the consent of
the General Partner to such admission. If any Additional Limited
Partner is admitted to the Partnership on any day other than the
first day of a Partnership Year, then Net Income, Net Losses,
each item thereof and all other items allocable among Partners
and Assignees for such Partnership Year shall be allocated among
such Additional Limited Partner and all other Partners and
Assignees by taking into account their varying interests during
the Partnership Year in accordance with Section 706(d) of the
Code, using the interim closing of the books method unless the
General Partner, in its sole and absolute discretion, elects to
adopt another reasonable method permitted by law. Solely for
purposes of making such allocations, each of such items for the
calendar month in which an admission of an Additional Limited
Partner occurs shall be allocated among all the Partners and
Assignees including such Additional Limited Partner. All
distributions of Available Cash with respect to which the
Partnership Record Date is before the date of such admission
shall be made solely to Partners and Assignees other than the
Additional Limited Partner (other than in its capacity as an
Assignee) and, except as otherwise agreed to by the Additional
Limited Partners and the General Partner, all distributions of
Available Cash thereafter shall be made to all Partners and
Assignees including such Additional Limited Partner.
Section 12.3 AMENDMENT OF AGREEMENT AND CERTIFICATE
OF LIMITED PARTNERSHIP
For the admission to the Partnership of any Partner,
the General Partner shall take all steps necessary and
appropriate under the Act to amend the records of the Partnership
and, if necessary, to prepare as soon as practical an amendment
of this Agreement (including an amendment of Exhibit A) and, if
required by law, shall prepare and file an amendment to the
Certificate and may for this purpose exercise the power of
attorney granted pursuant to Section 2.4 hereof.
ARTICLE 13
DISSOLUTION AND LIQUIDATION
Section 13.1 DISSOLUTION
The Partnership shall not be dissolved by the admission
of Substituted Limited Partners or Additional Limited Partners or
by the admission of a successor General Partner in accordance
with the terms of this Agreement. Upon the withdrawal of the
General Partner, any successor General Partner (selected as
described in Section 13.1(b) below) shall continue the business
of the Partnership. The Partnership shall dissolve, and its
affairs shall be wound up, upon the first to occur of any of the
following ("Liquidating Events"):
(a) the expiration of its term as provided in Section
2.5 hereof;
(b) an event of withdrawal of the General Partner, as
defined in the Act, unless, within 90 days after the withdrawal,
all of the remaining Partners agree in writing, in their sole and
absolute discretion, to continue the business of the Partnership
and to the appointment, effective as of the date of withdrawal,
of a successor General Partner;
(c) an election to dissolve the Partnership made by
the General Partner;
(d) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
(e) the sale of all or substantially all of the assets
and properties of the Partnership for cash or marketable
securities;
(f) the Incapacity of the General Partner, unless all
of the remaining Partners in their sole and absolute discretion
agree in writing to continue the business of the Partnership and
to the appointment, effective as of a date prior to the date of
such Incapacity, of a substitute General Partner; or
(g) the Redemption or exchange for REIT Shares of all
Partnership Units (other than those of the General Partner).
Section 13.2 WINDING UP
(a) Upon the occurrence of a Liquidating Event, the
Partnership shall continue solely for the purposes of winding up
its affairs in an orderly manner, liquidating its assets, and
satisfying the claims of its creditors and Partners. No Partner
shall take any action that is inconsistent with, or not necessary
to or appropriate for, the winding up of the Partnership's
business and affairs. The General Partner (or, in the event
there is no remaining General Partner, any Person elected by a
Majority in Interest of the Limited Partners) (the "Liquidator")
shall be responsible for overseeing the winding up and
dissolution of the Partnership and shall take full account of the
Partnership's liabilities and assets and the Partnership property
shall be liquidated as promptly as is consistent with obtaining
the fair value thereof, and the proceeds therefrom (which may, to
the extent determined by the General Partner, include shares of
stock of the General Partner) shall be applied and distributed in
the following order:
(i) First, to the payment and discharge of
all of the Partnership's debts and liabilities to creditors other
than the Partners;
(ii) Second, to the payment and discharge of
all of the Partnership's debts and liabilities to the General
Partner;
(iii) Third, to the payment and discharge of
all of the Partnership's debts and liabilities to the other
Partners; and
(iv) The balance, if any, to the General
Partner and Limited Partners in accordance with their positive
Capital Account balances, determined after taking into account
all Capital Account adjustments for the Partnership taxable year
during which the liquidation occurs (other than those made as a
result of the liquidating distribution set forth in this Section
13.2(a)(iv).
The General Partner shall not receive any additional
compensation for any services performed pursuant to this Article
13 other than reimbursement of its expenses as provided in
Section 7.4.
(b) Notwithstanding the provisions of Section 13.2(a)
hereof, but subject to the order of priorities set forth therein,
if prior to or upon dissolution of the Partnership the Liquidator
determines that an immediate sale of part or all of the
Partnership's assets would be impractical or would cause undue
loss to the Partners, the Liquidator may, in its sole and
absolute discretion, defer for a reasonable time the liquidation
of any assets except those necessary to satisfy liabilities of
the Partnership (including to those Partners as creditors) and/or
distribute to the Partners, in lieu of cash, as tenants in common
and in accordance with the provisions of Section 13.2(a) hereof,
undivided interests in such Partnership assets as the Liquidator
deems not suitable for liquidation. Any such distributions in
kind shall be made only if, in the good faith judgment of the
Liquidator, such distributions in kind are in the best interest
of the Partners, and shall be subject to such conditions relating
to the disposition and management of such properties as the
Liquidator deems reasonable and equitable and to any agreements
governing the operation of such properties at such time. The
Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as
it may adopt.
Section 13.3 COMPLIANCE WITH TIMING REQUIREMENTS OF
REGULATIONS
In the event the Partnership is "liquidated" within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g),
distributions shall be made pursuant to this Article 13 to the
General Partner and Limited Partners who have positive Capital
Accounts in compliance with Regulations Section
1.704-1(b)(2)(ii)(b)(2). If any Partner has a deficit balance in
his or her Capital Account (after giving effect to all
contributions, distributions and allocations for the taxable
years, including the year during which such liquidation occurs),
such Partner shall have no obligation to make any contribution to
the capital of the Partnership with respect to such deficit, and
such deficit shall not be considered a debt owed to the
Partnership or to any other Person for any purpose whatsoever.
In the discretion of the Liquidator, a pro rata portion of the
distributions that would otherwise be made to the General Partner
and Limited Partners pursuant to this Article 13 may be:
(a) distributed to a trust established for the benefit
of the Partners for the purposes of liquidating Partnership
assets, collecting amounts owed to the Partnership, and paying
any contingent or unforeseen liabilities or obligations of the
Partnership or of the General Partner arising out of or in
connection with the Partnership. The assets of any such trust
shall be distributed to the Partners from time to time, in the
reasonable discretion of the Liquidator, in the same proportions
and the amount distributed to such trust by the Partnership would
otherwise have been distributed to the General Partner and
Limited Partners pursuant to this Agreement; or
(b) withheld to provide a reasonable reserve for
Partnership liabilities (contingent or otherwise) and to reflect
the unrealized portion of any installment obligations owed to the
Partnership, PROVIDED THAT when the Liquidator determines that
the withheld amounts are no longer appropriate, such withheld
amounts shall be distributed to the Partners as soon as
practicable in the manner and order of priority set forth in
Section 13.2.
Section 13.4 RIGHTS OF LIMITED PARTNERS
Except as otherwise provided in this Agreement, each
Limited Partner shall look solely to the assets of the
Partnership for the return of such Limited Partner's Capital
Contribution and shall have no right or power to demand or
receive property from the General Partner. Except as otherwise
provided in this Agreement, no Limited Partner shall have
priority over any other Limited Partner as to the return of his
Capital Contributions, distributions or allocations.
Section 13.5 NOTICE OF DISSOLUTION
In the event a Liquidating Event occurs or an event
occurs that would, but for provisions of Section 13.1, result in
a dissolution of the Partnership, the General Partner shall,
within 30 days thereafter, provide written notice thereof to each
of the Partners and to all other parties with whom the
Partnership regularly conducts business (as determined in the
discretion of the General Partner) and shall publish notice
thereof in a newspaper of general circulation in each place in
which the Partnership regularly conducts business (as determined
in the discretion of the General Partner).
Section 13.6 CANCELLATION OF CERTIFICATE OF LIMITED
PARTNERSHIP
Upon the completion of the liquidation of the
Partnership cash and property as provided in Section 13.2 hereof,
the Partnership shall be terminated and the Certificate and all
qualifications of the Partnership as a foreign limited
partnership in jurisdictions other than the State of Delaware
shall be canceled and such other actions as may be necessary to
terminate the Partnership shall be taken.
Section 13.7 REASONABLE TIME FOR WINDING UP
A reasonable time shall be allowed for the orderly
winding up of the business and affairs of the Partnership and the
liquidation of its assets pursuant to Section 13.2 hereof, in
order to minimize any losses otherwise attendant upon such
winding up, and the provisions of this Agreement shall remain in
effect between the Partners during the period of liquidation.
Section 13.8 WAIVER OF PARTITION
Each Partner hereby waives any right to partition of
the Partnership property.
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS
Section 14.1 AMENDMENTS
(a) The actions requiring consent or approval of the
Partners or of the Limited Partners pursuant to this Agreement,
including Section 7.3, or otherwise pursuant to applicable law,
are subject to the procedures in this Article 14.
(b) Amendments to this Agreement requiring the consent
or approval of Limited Partners may be proposed by the General
Partner or by Limited Partners who hold 25% or more of the
Partnership Interests held by Limited Partners. Following such
proposal, the General Partner shall submit any proposed amendment
to the Partners or the Limited Partners, as applicable. The
General Partner shall seek the written consent or approval of the
Partners or Limited Partners on the proposed amendment or shall
call a meeting to vote thereon and to transact any other business
that it may deem appropriate. For purposes of obtaining a
written consent, the General Partner may require a response
within a reasonable specified time, but not less than 15 days,
and failure to respond in such time period shall constitute a
consent which is consistent with the General Partner's
recommendation (if so recommended) with respect to the proposal;
PROVIDED THAT, an action shall become effective at such time as
requisite consents are received even if prior to such specified
time.
Section 14.2 ACTION BY THE PARTNERS
(a) Meetings of the Partners may be called by the
General Partner and shall be called upon the receipt by the
General Partner of a written request by Limited Partners holding
twenty-five percent (25%) or more of the Partnership Interests
held by Limited Partners. The call shall state the nature of the
business to be transacted. Notice of any such meeting shall be
given to all Partners not less than seven days nor more than 30
days prior to the date of such meeting. Partners may vote in
person or by proxy at such meeting. Whenever the vote or consent
of the Limited Partners or of the Partners is permitted or
required under this Agreement, such vote or Consent may be given
at a meeting of Partners or may be given in accordance with the
procedure prescribed in Section 14.1 hereof.
(b) Any action required or permitted to be taken at a
meeting of the Partners may be taken without a meeting if a
written consent setting forth the action so taken is signed by
the percentage as is expressly required by this Agreement for the
action in question. Such consent may be in one instrument or in
several instruments, and shall have the same force and effect as
a vote of the Percentage Interests of the Partners (expressly
required by this Agreement). Such consent shall be filed with
the General Partner. An action so taken shall be deemed to have
been taken at a meeting held on the effective date so certified.
(c) Each Limited Partner may authorize any Person or
Persons to act for him by proxy on all matters in which a Limited
Partner is entitled to participate, including waiving notice of
any meeting, or voting or participating at a meeting. Every
proxy must be signed by the Limited Partner or his
attorney-in-fact. No proxy shall be valid after the expiration
of 11 months from the date thereof unless otherwise provided in
the proxy. Every proxy shall be revocable at the pleasure of the
Limited Partner executing it.
(d) Each meeting of Partners shall be conducted by the
General Partner or
such other Person as the General Partner may appoint pursuant to
such rules for the conduct of the meeting as the General Partner
or such other Person deems appropriate.
ARTICLE 15
GENERAL PROVISIONS
Section 15.1 ADDRESSES AND NOTICE
Any notice, demand, request or report required or
permitted to be given or made to a Partner or Assignee under this
Agreement shall be in writing and shall be deemed given or made
when delivered in person or when sent by certified first-class
United States mail, nationally recognized overnight delivery
service or facsimile transmission to the Partner or Assignee at
the address set forth in Exhibit A or such other address as the
Partners shall notify the General Partner in writing.
Section 15.2 TITLES AND CAPTIONS
All article or Section titles or captions in this
Agreement are for convenience only. They shall not be deemed
part of this Agreement and in no way define, limit, extend or
describe the scope or intent of any provisions hereof. Except as
specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
Section 15.3 PRONOUNS AND PLURALS
Whenever the context may require, any pronoun used in
this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns,
pronouns and verbs shall include the plural and vice versa.
Section 15.4 FURTHER ACTION
The parties shall execute and deliver all documents,
provide all information and take or refrain from taking action as
may be necessary or appropriate to achieve the purposes of this
Agreement.
Section 15.5 BINDING EFFECT
This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted
assigns.
Section 15.6 CREDITORS
Other than as expressly set forth herein with respect
to Indemnitees, none of the provisions of this Agreement shall be
for the benefit of, or shall be enforceable by, any creditor of
the Partnership.
Section 15.7 WAIVER
No failure or delay by any party to insist upon the
strict performance of any covenant, duty, agreement or condition
of this Agreement or to exercise any right or remedy consequent
upon any breach thereof shall constitute waiver of any such
breach or any other covenant, duty, agreement or condition.
Section 15.8 COUNTERPARTS
This Agreement may be executed in counterparts, all of
which together shall constitute one agreement binding on all the
parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart. Each party
shall become bound by this Agreement immediately upon affixing
its signature hereto.
Section 15.9 APPLICABLE LAW
This Agreement shall be construed in accordance with
and governed by the laws of the State of Delaware, without regard
to the principles of conflicts of law.
Section 15.10 INVALIDITY OF PROVISIONS
If any provision of this Agreement is or becomes
invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
Section 15.11 LIMITATION TO PRESERVE REIT STATUS
To the extent that any amount paid or credited to the
General Partner or its officers, directors, employees or agents
pursuant to Section 7.4 or Section 7.7 would constitute gross
income to the Company for purposes of Sections 856(c)(2) or
856(c)(3) of the Code (a "General Partner Payment") then,
notwithstanding any other provision of this Agreement, the amount
of such General Partner Payments for any fiscal year shall not
exceed the lesser of:
(a) an amount equal to the excess, if any, of (a)
5.00% of the General Partner's total gross income (but not
including the amount of any General Partner Payments) for the
fiscal year which is described in subsections (A) through (H) of
Section 856(c)(2) of the Code over (b) the amount of gross income
(within the meaning of Section 856(c)(2) of the Code) derived by
the General Partner from sources other than those described in
subsections (A) through (H) of Section 856(c)(2) of the Code (but
not including the amount of any General Partner Payments); or
(b) an amount equal to the excess, if any, of (a) 25%
of the General Partner's total gross income (but not including
the amount of any General Partner Payments) for the fiscal year
which is described in subsections (A) through (I) of Section
856(c)(3) of the Code over (b) the amount of gross income (within
the meaning of Section 856(c)(3) of the Code) derived by the
General Partner from sources other than those described in
subsections (A) through (I) of Section 856(c)(3) of the Code (but
not including the amount of any General Partner Payments);
PROVIDED, HOWEVER, that General Partner Payments in excess of the
amounts set forth in subparagraphs (i) and (ii) above may be made
if the General Partner, as a condition precedent, obtains an
opinion of tax counsel that the receipt of such excess amounts
would not adversely affect the Company's ability to qualify as a
REIT. To the extent General Partner Payments may not be made in
a year due to the foregoing limitations, such General Partner
Payments shall carry over and be treated as arising in the
following year, PROVIDED, HOWEVER, that such amounts shall not
carry over for more than five years, and if not paid within such
five-year period, shall expire; PROVIDED FURTHER, that (i) as
General Partner Payments are made, such payments shall be applied
first to carryover amounts outstanding, if any, and (ii) with
respect to carryover amounts for more than one Partnership Year,
such payments shall be applied to the earliest Partnership Year
first.
Section 15.12 ENTIRE AGREEMENT
This Agreement contains the entire understanding and
agreement among the Partners with respect to the subject matter
hereof and supersedes any other prior written or oral
understandings or agreements among them with respect thereto.
Section 15.13 NO RIGHTS AS STOCKHOLDERS
Nothing contained in this Agreement shall be construed
as conferring upon the holders of Partnership Units any rights
whatsoever as stockholders of the Company including without
limitation any right to receive dividends or other distributions
made to stockholders of the Company or to vote or to consent or
to receive notice as stockholders in respect of any meeting of
stockholders for the election of directors of the Company or any
other matter.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first written above.
PARKWAY PROPERTIES, INC.
BY:
Name:
Title:
PARKWAY PROPERTIES GENERAL PARTNERS, INC.
By:
Name:
Title:
306886
EXHIBIT A
Partners, Contributions and Partnership Interests
Partner
Initial Contribution
Partnership Interest
Parkway Properties,
Inc.
$9,900
99% Limited
Partnership Interest
consisting of
9,670,080 Units.
Parkway Properties
General Partners,
Inc.
$100
1% General
Partnership Interest
consisting of 97,678
Units.
EXHIBIT B
Notice of Redemption
The undersigned hereby irrevocably (i) redeems
Partnership Units in Parkway Properties LP in accordance with the
terms of the Amended and Restated Limited Partnership Agreement
of Parkway Properties LP and the Redemption Right referred to
therein, (ii) surrenders such Limited Partnership Units and all
right, title and interest therein, and (iii) directs that the
Cash Amount or REIT Shares Amount (as determined by the General
Partner and/or the Company) deliverable upon exercise of the
Redemption Right be delivered to the address specified below, and
if REIT Shares are to be delivered, such REIT Shares be
registered or placed in the name(s) and at the address(es)
specified below. The undersigned hereby represents, warrants,
and certifies, that the undersigned (a) has marketable, and
unencumbered title to the Partnership Units, free and clear of
the rights of or interests of any other person or entity; (b) has
the full right, power and authority to redeem and surrender such
Partnership Units as provided herein; and (c) has obtained the
consent or approval of all persons or entities, if any, having
the right to consult or approve such redemption and surrender.
Dated:
Name of Limited Partner:
(Signature of Limited Partner)
(Street Address)
(City) (State) (Zip Code)
Signature Guaranteed by:
If REIT Shares are to be issued, issue to:
Name:
Please insert social security or identifying number:
EXHIBIT C
Schedule of Partners' Ownership with Respect to Tenants
NONE
EXHIBIT D
Schedule of REIT Shares Actually or
Constructively Owned by Limited Partners Other
than those Acquired Pursuant to an Exchange
NONE
PARKWAY PROPERTIES LP
AMENDMENT TO EXHIBIT A
OF THE
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
Exhibit A of the Amended and Restated Agreement of Limited
Partnership of Parkway Properties LP, is hereby amended in its entirety
to read as follows:
Partner
Contribution
Partnership Interest
Parkway Properties, Inc.
$9,900 plus those
properties
contributed
subsequent to the
Effective Date
98.988108% Limited
Partnership Interest
consisting of
10,974,965 Class A
Common Limited
Partnership Units
Lane N. Meltzer
47.5% General
Partnership
Interest in and to
the 111 Capitol
Building Limited
Partnership
.0118876% Limited
Partnership Interest
consisting of 1318
Class A Common
Limited Partnership
Units
Parkway Properties General
Partners, Inc.
$100 plus those
properties
contributed
subsequent to the
Effective Date
1.0000044% General
Partnership Interest
consisting of
110,858 Class A
Common General
Partnership Units
Parkway Properties, Inc.
$63,631,250
2,650,000 units of
Series A Preferred
Limited Partnership
Interests
The following is a description of the preferences,
conversion and other rights, voting powers, restrictions, limitations
as to distribution, qualifications and terms and conditions of
redemption of the Series A Preferred Limited Partnership Interests of
the Limited Partnership:
1. Designation and Amount.
The designation of Series A Preferred Limited
Partnership Interests shall be 8.75% Series A Cumulative
Preferred Limited Partnership Interests, par value $.001 per
unit. The number of units of Series A Preferred Limited
Partnership Interests to be issued shall be 2,650,000.
2. Distribution Provisions.
(a) Subject to the rights of any series of
Partnership Interests which may from time to time come into
existence, holders of Series A Preferred Limited Partnership
Interests shall be entitled to receive, when and as declared by
the General Partner, out of funds legally available for the
payment of distributions, cumulative preferential cash
distributions at the rate of 8.75% per annum of the Liquidation
Preference (as herein defined) per unit (equivalent to a fixed
amount of $2.1875 per unit. Such distribution shall be
cumulative from the date of original issue and shall be payable
quarterly in arrears on the 15th day of each of January, April,
July and October or, if not a business day, the next succeeding
business day (each, a "Distribution Payment Date"). The first
distribution, which will be due on July 15, 1998, will be for
less than a full quarter. Such first distribution and any
distribution payable on Series A Preferred Limited Partnership
Interests for any partial distribution period will be computed on
the basis of a 360-day year consisting of twelve 30-day months.
Distributions will be payable to holders of record as they appear
in the records of the Partnership at the close of business on the
last business day of March, June, September and December,
respectively, or on such date designated by the General Partner
of the Partnership for the payment of distributions that is not
more than 30 nor less than 10 days prior to such Distribution
Payment Date (each a "Distribution Record Date").
(b) Distributions on Series A Preferred Limited
Partnership Interests will accrue whether or not the Partnership
has earnings, whether or not there are funds legally available
for the payment of such distributions and whether or not such
distributions are declared. No interest, or sum of money in lieu
of interest, shall be payable in respect of any distribution
payment or payments on Series A Preferred Limited Partnership
Interests which may be in arrears.
(c) Capital gains shall be allocable to holders
of Series A Preferred Limited Partnership Interests in the same
proportion that the total distributions paid or made available to
the holders of Series A Preferred Limited Partnership Interests
for the Fiscal Year bears to the total distributions paid or made
available for the Fiscal Year to holders of all classes of
Partnership Interests.
(d) Pursuant to section 6.2(b) of the Partnership
Agreement, income or gain for the Fiscal Year, if any, shall be
specially allocated to the holders of Series A Preferred Limited
Partnership Interests in proportion to and to the extent of the
excess, if any, of (i) the cumulative Distributions each has
received pursuant to this section 2 from the initial issuance of
the Series A Preferred Limited Partnership Interests to a date
thirty (30) days after the end of such Fiscal Year, over (ii) the
cumulative items of income and gain allocated to such holders
pursuant to this section 2(d) for all prior Fiscal Years.
(e) If any units of Series A Preferred Limited
Partnership Interests are outstanding, no full distributions
(other than in units of Common Partnership Interests or other
Partnership Interests ranking junior to Series A Preferred
Limited Partnership Interests as to distributions and upon
liquidation) shall be declared or paid or set apart for payment
on any units of series of Partnership Interests of the
Partnership ranking, as to distributions, on a parity with or
junior to Series A Preferred Limited Partnership Interest for any
period unless full cumulative distributions have been or
contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payments on
units of Series A Preferred Limited Partnership Interests for all
past distribution periods and the then current distribution
period. When distributions are not paid in full (or a sum
sufficient for such full payment is not set apart) upon the units
of Series A Preferred Limited Partnership Interests and the units
of any other series of Partnership Interests ranking on parity as
to distributions with units of Series A Preferred Limited
Partnership Interests, all distributions declared upon units of
Series A Preferred Limited Partnership Interests and any other
series of Partnership Interests ranking on a parity as to
distributions with Series A Preferred Limited Partnership
Interests shall be declared pro rata so that the amount of
distributions declared per unit on Series A Preferred Limited
Partnership Interests and such other series of Partnership
Interests shall in all cases bear to each other the same ratio
that accrued distributions per unit on Series A Preferred Limited
Partnership Interests and such other series of Partnership
Interests bear to each other.
(f) Except as provided in Section 2(e), unless
full cumulative distributions on units of Series A Preferred
Limited Partnership Interests have been or contemporaneously are
declared and paid or declared and a sum sufficient for the
payment thereof set apart for payment for all past distribution
periods and the then current distribution period, no
distributions (other than in shares of Common Partnership
Interests or other Partnership Interests ranking junior to Series
A Preferred Limited Partnership Interests as to distributions and
upon liquidation) shall be declared or paid or set aside for
payment or other distribution shall be declared or made upon the
units of Common Partnership Interests or any other Partnership
Interests of the Partnership ranking junior to or on a parity
with Series A Preferred Limited Partnership Interests as to
distributions or upon liquidation, not shall any units of Common
Partnership Interests or any other Partnership Interest of the
Partnership ranking junior to or on a parity with Series A
Preferred Limited Partnership Interest as to distributions or
upon liquidation be redeemed, purchased or otherwise acquired for
any consideration (or any moneys be paid to or made available for
a sinking fund for the redemption of any such Partnership
Interests) by the Partnership (except by conversion into or
exchange for other Partnership Interests of the Partnership
ranking junior to Series A Preferred Partnership Interests as to
distributions and amounts upon liquidation or redemption for the
purpose of preserving the Company's status as a REIT.
(g) Any distribution payment made on units of Series A
Preferred Limited Partnership Interests shall first be credited
against the earliest accrued but unpaid distribution due with
respect to units of Series A Preferred Limited Partnership
Interests which remains payable.
3. Liquidation Rights.
(a) Subject to the rights of series of
Partnership Interests which may from time to time come into
existence, upon any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Partnership,
then, before any distribution or payment shall be made to the
holders of any units of Common Partnership Interest or any other
class or series of Partnership Interests of the Partnership
ranking junior to Series A Preferred Limited Partnership
Interests in the distribution of assets upon any liquidation,
dissolution or winding up of the affairs of the Partnership, the
holders of units of Series A Preferred Limited Partnership
Interests shall be entitled to receive out of assets of the
Partnership legally available for distribution to partners,
liquidation distributions in the amount of the liquidation
preference of $25.00 per unit, plus an amount equal to all
distributions accrued and unpaid thereon (the "Liquidation
Preference"). Holders of Series A Preferred Limited Partnership
Interests will be entitled to written notice of any event
triggering the right to receive such Liquidation Preference.
After payment of the full amount of the liquidating distributions
to which they are entitled, the holders of units of Series A
Preferred Limited Partnership Interests will have no right or
claim to any of the remaining assets of the Partnership. In the
event that, upon any such voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Partnership, the
available assets of the Partnership are insufficient to pay the
amount of the liquidation distributions on all outstanding shares
of Series A Preferred Limited Partnership Interests and the
corresponding amounts payable on all shares of other classes or
series of Partnership Interests of the Partnership ranking on a
parity with Series A Preferred Limited Partnership Interests in
the distribution of assets upon any liquidation, dissolution or
winding up of the affairs of the Partnership ("Parity Units"),
then the holders of units of Series A Preferred Limited
Partnership Interests and Parity Units shall share ratably in any
such distribution of assets in proportion to the full liquidating
distributions to which they would otherwise be respectively
entitled.
4. Redemption.
(a) Units of Series A Preferred Limited
Partnership Interests are not redeemable prior to April 23, 2003
except that each unit of Series A Preferred Limited Partnership
Interest is redeemable to the same extent that shares of Series A
Preferred Stock of the Company is redeemable as provided in
Article V of the Charter of the Company. On and after April 23,
2003, the Partnership at its option upon not less than 30 nor
more than 60 days' written notice, may redeem outstanding units
of Series A Preferred Limited Partnership Interests, in whole or
in part, at any time or from time to time, for cash at a
redemption price of $25.00 per unit, plus an amount equal to all
distributions accrued and unpaid thereon to the date fixed for
redemption, without interest. The redemption price of units of
Series A Preferred Limited Partnership Interests (other than the
portion thereof consisting of accrued and unpaid distributions)
is payable solely out of proceeds from the sale of other capital
stock of the Company and contributed to the Partnership for
purposes of such redemption, which may include common stock,
preferred stock, depository shares, interests, participations or
other ownership interests in the Company however designated
(other than debt securities converted into or exchangeable for
capital stock) and any rights, warrants or options to purchase
any thereof. Holders of units of Series A Preferred Limited
Partnership Interests to be redeemed shall surrender such units
of Series A Preferred Limited Partnership Interests at the place
designated in such notice and shall be entitled to the redemption
price and any accrued and unpaid distributions payable upon such
redemption following such surrender. If fewer than all of the
outstanding units of Series A Preferred Limited Partnership
Interests are to be redeemed, the number of units to be redeemed
will be determined by the Partnership and such units may be
redeemed pro rata from the holders of record of such units in
proportion to the number of such units held by such holders (with
adjustments to avoid redemption of fractional units) or by lot in
a manner determined by the Partnership.
(b) Unless full cumulative distributions on all
units of Series A Preferred Limited Partnership Interests and
Parity Units shall have been or contemporaneously are declared
and paid or declared and a sum sufficient for the payment thereof
set apart for payment for all past distribution periods and the
then current distribution period, no units of Series A Preferred
Limited Partnership Interests or Parity Units shall be redeemed
unless all outstanding units of Series A Preferred Limited
Partnership Interests and Parity Units are simultaneously
redeemed; provided, however, that the foregoing shall not
prevent redemption to the same extent shares of Series A
Preferred stock of the Company are redeemable in accordance with
Article V of the Charter of the Company or the purchase or
acquisition of units of Series A Preferred Limited Partnership
Interests or Parity Units pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding units
of Series A Preferred Limited Partnership Interests or Parity
Stock, as the case may be. Furthermore, unless full cumulative
distributions on all outstanding units of Series A Preferred
Limited Partnership Interests and Parity Units have been or
contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for payment for all
past distribution periods and the then current distribution
period, the Partnership shall not purchase or otherwise acquire
directly or indirectly any units of Series A Preferred Limited
partnership Interests or Parity Units (except by conversion into
or exchange for units of Partnership Interests of the Partnership
ranking junior to Series A Preferred Limited Partnership
Interests and Parity Units as to distributions and upon
liquidation).
(c) Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to
each holder of record of units of Series A Preferred Limited
Partnership Interests at the address shown on the books of the
Partnership. Each notice shall state (i) the redemption date;
(ii) the number of units of Series A Preferred Limited
Partnership Interests to be redeemed; (iii) the redemption price
per share; (iv) the place or places for payment of the
redemption price; and (v) that distributions of units of Series
A Preferred Limited Partnership Interests will cease to accrue on
such redemption date. If fewer than all units of Series A
Preferred Limited Partnership Interests are to be redeemed, the
notice mailed to each such holder thereof shall also specify the
number of units of Series A Preferred Limited Partnership
Interests to be redeemed from each such holder. If notice of
redemption of any units of Series A Preferred Limited Partnership
Interests has been given and if the funds necessary for such
redemption have been set aside by the Partnership in trust for
the benefit of the holders of units of Series A Preferred Limited
Partnership Interests so called for redemption, then from and
after the redemption date, distributions will cease to accrue on
such units of Series A Preferred Limited Partnership Interests,
such units of Series A Limited Partnership Interests shall no
longer be deemed outstanding and all rights of the holders of
such units will terminate, except the right to receive the
redemption price.
(d) The holders of units of Series A Preferred
Limited Partnership Interests at the close of business on a
Distribution Record Date will be entitled to receive the
distribution payable with respect to such units of Series A
Preferred Limited Partnership Interests on the corresponding
Distribution Payment Date notwithstanding the redemption thereof
between such Distribution Record Date and the corresponding
Distribution Payment Date or the Partnership's default in the
payment of the distribution due. Except as provided above, the
Partnership will make no payment or allowance for unpaid
distributions, whether or not in arrears, on units of Series A
Preferred Limited Partnership Interests which have been called
for redemption.
(e) Series A Preferred Limited Partnership
Interests will not be subject to any sinking fund or mandatory
redemption, except to the same extent that Series A Preferred
Stock of the Company are subject to sinking fund or mandatory
redemption as provided in Article V of the Charter of the
Company.
5. Voting Rights.
(a) Except as otherwise from time to time
required by applicable law, the holders of units of Series A
Preferred Limited Partnership Interests will have no voting
rights.
(b) So long as any units of Series A Preferred
Limited Partnership Interests remain outstanding, the Partnership
will not, without the affirmative vote or consent of the holders
of at least two-thirds of units of the Series A Preferred Limited
Partnership Interests outstanding at the time, given in person or
by proxy, either in writing or at a meeting (voting separately as
a class), (a) authorize or create, or increase the authorized or
issued amount of any class or series or Partnership Interests
ranking senior to the Series A Preferred Limited partnership
Interests with respect to payment of distributions or the
distribution of assets upon liquidation, dissolution or winding
up or reclassify any existing Partnership Interests of the
Partnership into such units or create, authorize or issue any
obligation or security convertible into or evidencing the right
to purchase any such units; or (b) amend, alter or repeal the
provisions of the Partnership Agreement whether by merger,
consolidation or otherwise (an "Event"), so as to materially and
adversely affect any right, preference, privilege or voting power
of the Series A Preferred Limited Partnership Interests or the
holders thereof; provided, however, with respect to the
occurrence of any Event set forth in (b) above, so long as the
Series A Preferred Limited Partnership Interests remains
outstanding with the terms thereof materially unchanged taking
into account that upon the occurrence of an Event the partnership
may not be the surviving entity, the occurrence of any such Event
shall not be deemed to materially and adversely affect such
rights, preferences, privileges or voting power of holders of the
Series A Preferred Limited Partnership Interests and provided
further that (i) any increase in the amount of the authorized
Series A Preferred Limited Partnership Interests or the creation
or issuance of any other series of Preferred Partnership
Interests or (ii) any increase in the amount of authorized units
of such series in each case ranking on a parity with or junior to
the Series A Preferred Limited Partnership Interests with respect
to payment of distributions or the distribution of assets upon
liquidation, dissolution or winding up shall not been deemed to
materially and adversely affect such rights, preferences,
privileges or voting powers.
(c) Except as provided above and as required by
law, the holders of Series A Preferred Limited Partnership
Interests are not entitled to vote on any merger or consolidation
involving the Partnership, on any Partnership Interest exchange
or on a sale of all or substantially all of the assets of the
Partnership.
6. Conversion.
The units of Series A Preferred Limited
Partnership Interests are not convertible into or exchangeable
for any other property or securities of the Partnership.
Dated the 1st day of July, 1998.
PARKWAY PROPERTIES GENERAL
PARTNERS, INC.
By
316440
ADMISSION AGREEMENT
This Admission Agreement dated as of July 1, 1998
between PARKWAY PROPERTIES LP, a Delaware limited partnership
having its principal place of business in Jackson, Mississippi
("Partnership") and LANE N. MELTZER, 316 South Rampart Street,
New Orleans, Louisiana 70112 ("Meltzer").
RECITALS
1. Partnership and Meltzer, among others, executed a
certain contribution agreement dated April __, 1998,
("Contribution Agreement") providing for the contribution of all
partnership interests of the 111 Capitol Building Limited
Partnership ("Capitol") to Partnership and Parkway Jackson LLC,
a Mississippi limited liability company wholly owned by
Partnership.
2. Pursuant to Section 2.2 of the Contribution
Agreement, Meltzer has elected to receive units of partnership
interest in Partnership in exchange for the contribution of his
partnership interest in Capitol.
3. The parties desire to, pursuant to the
Contribution Agreement, admit Meltzer to the Partnership and
specify his rights and obligations with respect thereto;
NOW, THEREFORE, for good and valuable consideration,
the receipt of which is hereby acknowledged, the parties agree as
follows:
1. Partnership hereby issues to Meltzer ______
Class A Common Limited Partnership Units.
2. Meltzer agrees to be admitted as a Limited Partner
to the Partnership effective the date hereof, and hereby further
agrees to be bound by all the provisions of the Amended and
Restated Agreement of Limited Partnership of Parkway Properties
LP ("Partnership Agreement"), as amended and restated through the
date hereof.
3. Partnership through Parkway Properties General
Partners, Inc., its General Partner, hereby consents to the
admission of Meltzer as a Limited Partner in Partnership.
4. Restoration Obligation. Notwithstanding anything
contained in the Partnership Agreement, in the event Meltzer's
Capital Account is less than zero after giving effect to all
distributions, all contributions, and all allocations for all
periods, Meltzer shall contribute cash to the capital of the
Partnership in the amount necessary to restore his Capital
Account to zero in compliance with Treasury Regulation Section
1.704-1(b)(2)(ii)(b)(3), and the amount so contributed shall be
treated as proceeds from the liquidation of partnership assets
for purposes of, and shall be distributed pursuant to,
Section 13.2(a)(iv) of the Partnership Agreement. Meltzer waives
any rights he may have against Partnership, the General Partner
or any Limited Partner which might otherwise arise from the
restoration of such negative Capital Account.
Lane N. Meltzer
PARKWAY PROPERTIES LP
by: Parkway Properties General
Partners, Inc., its
General Partner
By
Sarah P. Clark,
Senior Vice President and
Chief Financial Officer
TIAA Appl. # FL-889; M-000441900
TIAA Appl. # NC-190; M-000448000
TIAA Appl. # SC-74; M-000442200
TIAA Appl. # TN-145; M-000442100
TIAA Appl. # TX-899; M-000440000
TIAA Appl. # VA-387; M-000442000
PROMISSORY NOTE
$97,000,000.00 New York, New York
Dated: June 30, 1998
FOR VALUE RECEIVED, Parkway Properties LP ("Borrower"),
a Delaware limited partnership having its principal place of
business at c/o Parkway Properties, Inc., 188 East Capitol
Street, Suite 1000, Jackson, Mississippi 39201-2195, promises to
pay to TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
("Lender"), a New York corporation, or order, at Lender's offices
at 730 Third Avenue, New York, New York 10017 or at such other
place as Lender designates in writing, the principal sum of
NINETY-SEVEN MILLION AND 00/100ths DOLLARS ($97,000,000) (the
principal sum or so much of the principal sum as may be advanced
and outstanding from time to time, the "Principal"), in lawful
money of the United States of America, with interest on the
Principal from the date of this Promissory Note (this "Note")
through and including July 1, 2008 (the "Maturity Date") at the
fixed rate of Six and Nine Hundred Forty-Five Thousandths percent
(6.945%) per annum (the "Fixed Interest Rate").
This Note is secured by, among other things, thirteen
(13) Mortgages and/or Deeds of Trust, Assignment of Leases and
Rents and Security Agreement, (each, a "Mortgage", collectively,
the "Mortgages") dated the date of this Note made by Borrower for
the benefit of Lender as security for the Loan. All capitalized
terms not expressly defined in this Note will have the
definitions set forth in the Mortgages.
Section 1. Payments of Principal and Fixed Interest.
(a) Borrower will make monthly installment payments ("Debt
Service Payments") as follows:
(i) On July 1, 1998, a payment of accrued interest on the
Principal at the Fixed Interest Rate; and
(ii) On August 1, 1998 and on the first day of each
succeeding calendar month through and including June 1,
2008, payments in the amount of Eight Hundred Sixty-Eight
Thousand Eight Hundred Eighty Three and 48/100ths Dollars
($868,883.48), each of which will be applied first to
interest on the Principal at the Fixed Interest Rate and
then to the Principal.
(b) On the Maturity Date, Borrower will pay the Principal
in full together with accrued interest at the Fixed Interest Rate
and all other amounts due under the Loan Documents.
Section 2. Prepayment Provisions.
(a) The following definitions apply:
"Discount Rate" means the yield on a U.S. Treasury issue selected
by Lender, as published in the Wall Street Journal, two weeks
prior to prepayment, having a maturity date corresponding (or
most closely corresponding, if not identical) to the Maturity
Date, and a coupon rate corresponding (or most closely
corresponding, if not identical) to the Fixed Interest Rate.
"Default Discount Rate" means the Discount Rate less 300 basis
points.
"Discounted Value" means the Discounted Value of a Note Payment
based on the following formula:
NP
(1 + R/12)n = Discounted Value
NP = Amount of Note Payment
R = Discount Rate or Default Discount Rate
as the case may be.
n = The number of months between the date of
prepayment and the scheduled date of the Note
Payment being discounted rounded to the nearest
integer.
"Note Payments" means (i) the scheduled Debt Service Payments for
the period from the date of prepayment through the Maturity Date
and (ii) the scheduled repayment of Principal, if any, on the
Maturity Date.
"Prepayment Date Principal" means the Principal on the date of
prepayment.
(b) This Note may not be prepaid in full or in part before
July 1, 2003. Commencing on July 1, 2003, provided there is no
Event of Default, Borrower may prepay this Note in full only, but
not in part (except to the extent expressly provided to the
contrary in any Loan Document), on the first day of any calendar
month, upon 90 days prior notice to Lender and upon payment in
full of the Debt which will include a payment (the "Prepayment
Premium") equal to the greater of (i) an amount equal to the
product of 1% times the Prepayment Date Principal and (ii) the
amount by which the sum of the Discounted Values of Note
Payments, calculated at the Discount Rate, exceeds the Prepayment
Date Principal. Provided there is no Event of Default, this Note
may be prepaid in full without payment of the Prepayment Premium
during the last 90 days of the Term. This Note may not be
prepaid without simultaneous prepayment in full of any other
notes secured by the Loan Documents. Notwithstanding anything
contained herein to the contrary, if Borrower is entitled to
Proceeds in accordance with the provisions of the Mortgages and
either Borrower or Lender elect not to apply the proceeds to
Restoration in accordance with the Loan Documents, the Loan may
be partially prepaid to the extent of the Proceeds without
payment of the Prepayment Premium.
(c) After an Acceleration or upon any other prepayment not
permitted by the Loan Documents, any tender of payment of the
amount necessary to satisfy the Debt accelerated, any decree of
foreclosure, any statement of the amount due at the time of
foreclosure (including foreclosure by power of sale) and any
tender of payment made during any redemption period after
foreclosure, will include a payment (the "Evasion Premium") equal
to the greater of (i) an amount equal to the product of 4% times
the Prepayment Date Principal, and (ii) the amount by which the
sum of the Discounted Values of the Note Payments, calculated at
the Default Discount Rate, exceeds the Prepayment Date Principal.
(d) Borrower acknowledges that:
(i) a prepayment will cause damage to Lender;
(ii) the Evasion Premium is intended to compensate Lender
for the loss of its investment and the expense incurred and
time and effort associated with making the Loan, which will
not be fully repaid if the Loan is prepaid;
(iii) it will be extremely difficult and impractical to
ascertain the extent of Lender's damages caused by a
prepayment after an Event of Default or any other prepayment
not permitted by the Loan Documents; and
(iv) the Evasion Premium represents Lender and Borrower's
reasonable estimate of Lender's damages for the prepayment
and is not a penalty.
Section 3. Events of Default:
(a) It is an "Event of Default" under this Note:
(i) if Borrower fails to pay any amount due, as and when
required, under this Note or any other Loan Document and the
failure continues for a period of 5 days; or
(ii) if an Event of Default occurs under any other Loan
Document.
(b) If an Event of Default occurs, Lender may declare all
or any portion of the Debt immediately due and payable
("Acceleration") and exercise any of the other Remedies.
Section 4. Default Rate. Interest on the Principal will
accrue at the Default Interest Rate from the date an Event of
Default occurs until such Event of Default is cured.
Section 5. Late Charges.
(a) If Borrower fails to pay any Debt Service Payment when
due and the failure continues for a period of 5 days or more or
fails to pay any amount due under the Loan Documents on the
Maturity Date, Borrower agrees to pay to Lender an amount (a
"Late Charge") equal to five cents ($.05) for each one dollar
($1.00) of the delinquent payment.
(b) Borrower acknowledges that:
(i) a delinquent payment will cause damage to Lender;
(ii) the Late Charge is intended to compensate Lender for
loss of use of the delinquent payment and the expense
incurred and time and effort associated with recovering the
delinquent payment;
(iii) it will be extremely difficult and impractical to
ascertain the extent of Lender's damages caused by the
delinquency; and
(iv) the Late Charge represents Lender and Borrower's
reasonable estimate of Lender's damages from the delinquency
and is not a penalty.
Section 6. Limitation of Liability. This Note is subject
to the limitations on liability set forth in the Article of the
Mortgage entitled "Limitation of Liability".
Section 7. WAIVERS. IN ADDITION TO THE WAIVERS SET FORTH
IN THE ARTICLE OF THE MORTGAGES ENTITLED "WAIVERS", BORROWER
WAIVES PRESENTMENT FOR PAYMENT, DEMAND, DISHONOR AND, EXCEPT AS
EXPRESSLY SET FORTH IN THE LOAN DOCUMENTS, NOTICE OF ANY OF THE
FOREGOING. BORROWER FURTHER WAIVES ANY PROTEST, LACK OF
DILIGENCE OR DELAY IN COLLECTION OF THE DEBT OR ENFORCEMENT OF
THE LOAN DOCUMENTS. BORROWER AND ALL INDORSERS, SURETIES AND
GUARANTORS OF THE OBLIGATIONS CONSENT TO ANY EXTENSIONS OF TIME,
RENEWALS, WAIVERS AND MODIFICATIONS THAT LENDER MAY GRANT WITH
RESPECT TO THE OBLIGATIONS AND TO THE RELEASE OF ANY SECURITY FOR
THIS NOTE AND AGREE THAT ADDITIONAL MAKERS MAY BECOME PARTIES TO
THIS NOTE AND ADDITIONAL INDORSERS, GUARANTORS OR SURETIES MAY BE
ADDED WITHOUT NOTICE AND WITHOUT AFFECTING THE LIABILITY OF THE
ORIGINAL MAKER OR ANY ORIGINAL INDORSER, SURETY OR GUARANTOR.
Section 8. Commercial Loan. The Loan is made for the
purpose of carrying on a business or commercial activity or
acquiring real or personal property as an investment or carrying
on an investment activity and not for personal or household
purposes.
Section 9. Usury Limitations. Borrower and Lender intend
to comply with all Laws with respect to the charging and
receiving of interest. Any amounts charged or received by Lender
for the use or forbearance of the Principal to the extent
permitted by Law, will be amortized and spread throughout the
Term until payment in full so that the rate or amount of interest
charged or received by Lender on account the Principal does not
exceed the Maximum Interest Rate. If any amount charged or
received under the Loan Documents that is deemed to be interest
is determined to be in excess of the amount permitted to be
charged or received at the Maximum Interest Rate, the excess will
be deemed to be a prepayment of Principal when paid, without
premium, and any portion of the excess not capable of being so
applied will be refunded to Borrower. If during the Term the
Maximum Interest Rate, if any, is eliminated, then for purposes
of the Loan, there will be no Maximum Interest Rate.
Section 10. Applicable Law. This Note was negotiated in
the State of New York, made by Borrower and accepted by Lender in
the State of New York, and the proceeds of this Note were
delivered and were disbursed from the State of New York. This
Note is governed by and will be construed in accordance with the
Laws of the State of New York including, without limitation,Code 5-
1401 of the New York General Obligations Law. To the fullest
extent permitted by law, Maker hereby unconditionally and
irrevocably waives any claim or right to assert that the law of
any other jurisdiction governs this Note.
Section 11. Time of the Essence. Time is of the essence
with respect to the payment and performance of the Obligations.
Section 12. Cross-Default. A default under any other note
now or hereafter secured by the Loan Documents or under any loan
document related to such other note constitutes a default under
this Note and under the other Loan Documents. When the default
under the other note constitutes an Event of Default under that
note or the related loan document, an Event of Default also will
exist under this Note and the other Loan Documents.
Section 13. Construction. Unless expressly provided
otherwise in this Note, this Note will be construed in accordance
with the Exhibit attached to the Mortgages entitled "Rules of
Construction".
Section 14. Mortgage Provisions Incorporated. To the
extent not otherwise set forth in this Note, the provisions of
the Articles of the Mortgages entitled "Expenses and Duty to
Defend", "Waivers", "Notices", "Miscellaneous" and "Jurisdicition
and Venue" are applicable to this Note and deemed incorporated by
reference as if set forth at length in this Note.
Section 15. Joint and Several Liability; Successors and
Assigns. If Maker consists of more than one entity, the
obligations and liabilities of each such entity will be joint and
several. This Note binds Borrower and successors, assigns,
heirs, administrators, executors, agents and representatives and
inures to the benefit of Lender and its successors, assigns,
heirs, administrators, executors, agents and representatives.
Section 16. Absolute Obligation. Except for the Section of
this Note entitled "Limitation of Liability", no reference in
this Note to the other Loan Documents and no other provision of
this Note or of the other Loan Documents will impair or alter the
obligation of Borrower, which is absolute and unconditional, to
pay the Principal, interest at the Fixed Interest Rate and any
other amounts due and payable under this Note, as and when
required.
balance of page is intentionally blank]
IN WITNESS WHEREOF, Borrower has executed and delivered this
Note as of the date first set forth above.
PARKWAY PROPERTIES LP, a Delaware
limited partnership
By: Parkway Properties General
Partners, Inc., its sole general
partner, a Delaware corporation
By:_______________________
Name: James M. Ingram
Title: Senior Vice
President
By:_______________________
Name: Sarah P. Clark
Title: Senior Vice President,
CFO, Treasurer &
Secretary
Completion Notes on "Promissory Note":
Signatures needed
Copies to be made after signature
Original on safety paper
Form Mortgage [Modify state-by-state]
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS
SECURITY AGREEMENT AND FIXTURE FILING STATEMENT
by
PARKWAY PROPERTIES LP,
as Borrower
for the benefit of
TEACHERS INSURANCE AND ANNUITY ASSOCIATION
OF AMERICA,
as Lender
Property Known As
****
This Mortgage Was Prepared By
And After Recordation This Mortgage Should Be Returned To:
Jack Edelbrock, Esq.
c/o Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603-3441
TABLE OF CONTENTS
Page
RECITALS 1
ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION 1
Section 1.1. Definitions 1
Section 1.2. Rules of Construction 2
ARTICLE II GRANTING CLAUSES 2
Section 2.1. Encumbered Property 2
Section 2.2. Habendum Clause 4
Section 2.3. Security Agreement 5
Section 2.4. Conditions to Grant 6
ARTICLE III OBLIGATIONS SECURED 6
Section 3.1. The Obligations 6
Section 3.2. Future Advances 6
ARTICLE IV TITLE AND AUTHORITY 6
Section 4.1. Title to the Property 6
Section 4.2. Authority 7
Section 4.3. No Foreign Person 7
Section 4.4. Litigation 7
ARTICLE V PROPERTY STATUS, MAINTENANCE AND LEASES 8
Section 5.1. Status of the Property 8
Section 5.2. Maintenance of the Property 8
Section 5.3. Change in Use 9
Section 5.4. Waste 9
Section 5.5. Inspection of the Property 9
Section 5.6. Leases and Rents 9
Section 5.7. Parking 10
Section 5.8. Separate Tax Lot 10
Section 5.9. Changes in Zoning or Restrictive
Covenants 10
Section 5.10. Lender's Right to Appear 10
ARTICLE VI IMPOSITIONS AND ACCUMULATIONS 10
Section 6.1. Impositions 10
Section 6.2. Accumulations 11
Section 6.3. Changes in Tax Laws 13
Section 6.4. Reserves 13
ARTICLE VII INSURANCE, CASUALTY, CONDEMNATION AND
RESTORATION 13
Section 7.1. Insurance Coverages 13
Section 7.2. Casualty and Condemnation 15
Section 7.3. Application of Proceeds 15
Section 7.4. Conditions to Availability of Proceeds for
Restoration 16
Section 7.5. Restoration 17
ARTICLE VIII COMPLIANCE WITH LAW AND AGREEMENTS 19
Section 8.1. Compliance with Law 19
Section 8.2. Compliance with Agreements 19
Section 8.3. ERISA Compliance 20
Section 8.4. Section 6045(e) Filing 20
ARTICLE IX ENVIRONMENTAL 21
Section 9.1. Environmental Representations and
Warranties 21
Section 9.2. Environmental Covenants 21
ARTICLE X FINANCIAL REPORTING 23
Section 10.1. Fiscal Year; Financial Statements;
Reports of Parkway Properties, Inc. (the
"Company") and Borrower; SEC and Other
Reports; Officer's Certificate 23
ARTICLE XI EXPENSES AND DUTY TO DEFEND 24
Section 11.1. Payment of Expenses 24
Section 11.2. Duty to Defend 24
ARTICLE XII TRANSFERS LIENS AND ENCUMBRANCES 25
Section 12.1. Prohibitions on Transfers, Liens and
Encumbrances 25
Section 12.2. Permitted Transfers 25
Section 12.3. Right to Contest Liens 26
Section 12.4. Release Rights 27
[Section 12.5. Substitution of Collateral. [For Loudoun
mortgage only][Additional Edits Needed] 28
ARTICLE XIII ADDITIONAL REPRESENTATIONS, WARRANTIES AND
COVENANTS 30
Section 13.1. Further Assurances 30
Section 13.2. Estoppel Certificates 30
ARTICLE XIV DEFAULTS AND REMEDIES 31
Section 14.1. Events of Default 31
Section 14.2. Remedies. 32
Section 14.3. General Provisions Pertaining to
Remedies 33
Section 14.4. Foreclosure by Power of Sale 34
Section 14.5. General Provisions Pertaining to
Mortgagee-in-Possession or Receiver 34
Section 14.6. General Provisions Pertaining to
Foreclosures and the Power of Sale 36
Section 14.7. Application of Proceeds 36
Section 14.8. Power of Attorney. 37
Section 14.9. Tenant at Sufferance 37
Section 14.10. State Laws Pertaining to Remedies 37
ARTICLE XV LIMITATION OF LIABILITY 37
Section 15.1. Limitation of Liability 37
ARTICLE XVI WAIVERS 39
SECTION 16.1 WAIVER OF NOTICE 39
SECTION 16.2. WAIVER OF MARSHALLING AND OTHER MATTERS 39
SECTION 16.3. WAIVER OF TRIAL BY JURY 40
SECTION 16.4. WAIVER OF JUDICIAL NOTICE AND HEARING 40
SECTION 16.5. WAIVER OF SUBROGATION 40
SECTION 16.6. GENERAL WAIVER 40
ARTICLE XVII NOTICES 40
Section 17.1. Notices 40
Section 17.2. Change in Borrower's Name or Place of
Business 42
ARTICLE XVIII MISCELLANEOUS 42
Section 18.1. Applicable Law 42
Section 18.2. Usury Limitations 42
Section 18.3. Lender's Discretion 42
Section 18.4. Unenforceable Provisions 42
Section 18.5. Survival of Borrower's Obligations 43
Section 18.6. Relationship Between Borrower and Lender;
No Third Party Beneficiaries 43
Section 18.7. Partial Releases; Extensions; Waivers 43
Section 18.8. Service of Process 44
Section 18.9. Entire Agreement 44
Section 18.10. No Oral Amendment 44
Section 18.11. Severability 44
Section 18.12. Covenants Run with the Land 44
Section 18.13. Time of the Essence 45
Section 18.14. Subrogation 45
Section 18.15. Joint and Several Liability 45
Section 18.16. Successors and Assigns 45
Section 18.17. Duplicates and Counterparts 45
ARTICLE XIX ADDITIONAL PROVISIONS PERTAINING TO STATE
LAWS 45
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS AND
SECURITY AGREEMENT made this 30th day of June, 1998, by PARKWAY
PROPERTIES LP ("Borrower"), a Delaware limited partnership,
having its principal place of business c/o Parkway Properties,
Inc., 188 East Capitol Street, Suite 1000, Jackson, Mississippi
39201-2195, Attn: Sarah P. Clark for the benefit of TEACHERS
INSURANCE AND ANNUITY ASSOCIATION OF AMERICA ("Lender"), a New
York corporation, having an address at 730 Third Avenue, New
York, New York 10017.
RECITALS:
A. Lender agreed to make and Borrower agreed to accept
a loan (the "Loan") in the maximum principal amount of
$97,000,000.00.
B. To evidence the Loan, Borrower executed and
delivered to Lender a promissory note (the "Note"), dated the
date of this Mortgage, in the principal amount of Ninety Seven
Million and 00/100ths Dollars ($97,000,000.00) (that amount or so
much as is outstanding from time to time is referred to as the
"Principal"), promising to pay the Principal with interest
thereon to the order of Lender as set forth in the Note and with
the balance, if any, of the Debt being due and payable on July 1,
2008 (the "Maturity Date").
****
C. To secure the Note, this Mortgage encumbers, among
other things, Borrower's fee interest in the real property
located in the City of _____________, County of ___________,
[State] [Commonwealth] of _________________, more particularly
described in Exhibit A (the "Land").
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1. Definitions. Capitalized terms used in this
Mortgage are defined in Exhibit B or in the text with a cross-
reference in Exhibit B.
Section 1.2. Rules of Construction. This Mortgage will be
interpreted in accordance with the rules of construction set
forth in Exhibit C.
ARTICLE II
GRANTING CLAUSES
Section 2.1. Encumbered Property. Borrower irrevocably
grants, mortgages, warrants, conveys, assigns and pledges to
Lender, and grants to Lender a security interest in, the
following property, rights, interests and estates now or in the
future owned or held by Borrower (the "Property") for the uses
and purposes set forth in this Mortgage forever:
(i) the Land;
(ii) all buildings and improvements located on the Land
(the "Improvements");
(iii) all easements; rights of way or use, including any
rights of ingress and egress; streets, roads, ways,
sidewalks, alleys and passages; strips and gores; sewer
rights; water, water rights, water courses, riparian rights
and drainage rights; air rights and development rights; oil
and mineral rights; and tenements, hereditaments and
appurtenances, in each instance adjoining or otherwise
appurtenant to or benefitting the Land or the Improvements;
(iv) all materials intended for construction, re-
construction, alteration or repair of the Improvements, such
materials to be deemed included in the Land and the
Improvements immediately on delivery to the Land; all
fixtures and personal property that are attached to,
contained in or used solely in connection with the Land or
the Improvements (excluding personal property owned by
tenants), including: furniture; furnishings; machinery;
motors; elevators; fittings; microwave ovens; refrigerators;
office systems and equipment; plumbing, heating, ventilating
and air conditioning systems and equipment; maintenance and
landscaping equipment; lighting, cooking, laundry, dry
cleaning, refrigerating, incinerating and sprinkler systems
and equipment; telecommunications systems and equipment;
computer or word processing systems and equipment; security
systems and equipment; the items listed on Schedule 1
hereto; and equipment leases for any of the property
described in this subsection (the "Fixtures and Personal
Property");
(v) all agreements, ground leases, grants of easements or
rights-of-way, permits, declarations of covenants,
conditions and restrictions, disposition and development
agreements, planned unit development agreements,
cooperative, condominium or similar ownership or conversion
plans, management, leasing, brokerage or parking agreements
or other material documents affecting the Land, Borrower's
interest in the Property, the Improvements or the Fixtures
and Personal Property, including the documents described on
Exhibit D but expressly excluding the Leases (the "Property
Documents");
(vi) all inventory (including all goods, merchandise, raw
materials, incidentals, office supplies and packaging
materials) held for sale, lease or resale or furnished or to
be furnished under contracts of service, or used or consumed
in the ownership, use or operation of the Land, the
Improvements or the Fixtures and Personal Property, all
documents of title evidencing any part of any of the
foregoing and all returned or repossessed goods arising from
or relating to any sale or disposition of such inventory;
(vii) all intangible personal property relating to the
Land, the Improvements or the Fixtures and Personal
Property, including choses in action and causes of action
(except those personal to Borrower), corporate and other
business records, inventions, designs, promotional
materials, blueprints, plans, specifications, patents,
patent applications, trademarks, trade names, trade secrets,
goodwill, copyrights, registrations, licenses, franchises,
claims for refunds or rebates of taxes, insurance surpluses,
refunds or rebates of taxes and any letter of credit,
guarantee, claim, security interest or other security held
by or granted to Borrower to secure payment by an account
debtor of any of the accounts of Borrower arising out of the
ownership, use or operation of the Land, the Improvements or
the Fixtures and Personal Property, and documents covering
all of the foregoing; all accounts, accounts receivable,
documents, instruments, money, deposit accounts, funds
deposited in accounts established with a bank, savings and
loan association, trust company or other financial
institution in connection with the ownership, use or
operation of the Land, the Improvements or the Fixtures and
Personal Property, including any reserve accounts or escrow
accounts, and all investments of the funds and all other
general intangibles;
(viii) all awards and other compensation paid after the
date of this Mortgage for any Condemnation (the
"Condemnation Awards");
(ix) all proceeds of and all unearned premiums on the
Policies (the "Insurance Proceeds");
(x) all licenses, certificates of occupancy, contracts,
management agreements, operating agreements, operating
covenants, franchise agreements, permits and variances
relating to the Land, the Improvements or the Fixtures and
Personal Property;
(xi) all books, records and other information, wherever
located, which are in Borrower's possession, custody or
control or to which Borrower is entitled at law or in equity
and which are related exclusively to the Property, including
all computer or other equipment used to record, store,
manage, manipulate or access the information;
(xii) all deposits held from time to time by the
Accumulations Depositary to provide reserves for Taxes and
Assessments together with interest thereon, if any (the
"Accumulations");
(xiii) all after-acquired title to or remainder or
reversion in any of the property described in this Section;
all additions, accessions and extensions to, improvements of
and substitutions or replacements for any of such property;
all products and all cash and non-cash proceeds, immediate
or remote, of any sale or other disposition of any of such
property, excluding sales or other dispositions of inventory
in the ordinary course of the business of operating the Land
and the Improvements; and all additional lands, estates,
interests, rights or other property acquired by Borrower
after the date of this Mortgage for use in connection with
the Land or the Improvements, all without the need for any
additional mortgage, assignment, pledge or conveyance to
Lender but Borrower will execute and deliver to Lender, upon
Lender's request, any documents reasonably requested by
Lender to further evidence the foregoing; and
(xiv) all deposits for reserves held from time to time by
an escrow holder in accordance with the Tax Agreement
described in the Section entitled "Reserves" and all
accounts established to maintain the deposits together with
investments thereof and interest thereon.
Section 2.2. Habendum Clause. The Property is conveyed to
Lender to have and to hold forever in fee simple.
Section 2.3. Security Agreement.
(a) The Property includes both real and personal property
and this Mortgage is a real property mortgage and also a
"security agreement" and a "financing statement" within the
meaning of the Uniform Commercial Code. By executing and
delivering this Mortgage, Borrower grants to Lender, as security
for the Obligations, a security interest in the Property to the
full extent that any of the Property may be subject to the
Uniform Commercial Code.
(b) This Mortgage constitutes a fixture financing statement
under the Laws of the state or commonwealth in which the Property
is located and/or the purpose, the following information is set
forth:
(a) Name and address of Debtor:
Parkway Properties L P
c/o Parkway Properties, Inc.
188 East Capitol Street, Suite 1000
Jackson, Mississippi 39201-2195
(b) Name and address of Secured Party:
Teachers Insurance and Annuity Association of America
730 Third Avenue
New York, New York 10017
Attn: Managing Director
Mortgage and Real Estate Division
Region: Northeast/South/International
(c) Description of the types (or items) of
property covered by this Financing Statement:
all of the property described in section ii-xiv of
the Section entitled "Encumbered Property" described or
referred to herein and included as part of the
Premises.
(d) Description of real estate to which collateral is
attached or upon which it is located: Described in
Exhibit A.
(e) Federal Taxpayer Identification Number of the Debtor:
72-1344324
Lender may file this Mortgage, or a reproduction thereof, in
the real estate records or other appropriate index, as a
financing statement for any of the items specified above as part
of the Property. Any reproduction of this Mortgage or of any
other security agreement or financing statement is sufficient as
a financing statement.
Section 2.4. Conditions to Grant. This Mortgage is made on
the express condition that if Borrower pays and performs the
Obligations in full in accordance with the Loan Documents, then,
unless expressly provided otherwise in the Loan Documents, the
Loan Documents will be released at Borrower's expense.
ARTICLE III
OBLIGATIONS SECURED
Section 3.1. The Obligations. This Mortgage secures the
Principal, the Interest, the Late Charges (as defined in the
Note), the Prepayment Premiums (as defined in the Note), the
Expenses, any additional advances made by Lender in connection
with the Property or the Loan and all other amounts payable under
the Loan Documents (the "Debt") and also secures both the timely
payment of the Debt as and when required and the timely
performance of all other obligations and covenants to be
performed under the Loan Documents (the "Obligations"), provided
that the foregoing does not limit, qualify or affect in any way
the present, absolute nature of the Assignment.
Section 3.2. Future Advances. It is agreed that this
Mortgage shall also secure such future or additional advances for
construction, improvements, preservation, maintenance and
operation of the Property and the security for the Obligations as
may be made by Lender, whether such future advances are
obligatory or are to be made at Lender's option to Borrower, or
its successor in title, for any purpose [add additional state -
specific provisions as required].
ARTICLE IV
TITLE AND AUTHORITY
Section 4.1. Title to the Property.
(a) Borrower has and will continue to have good and
marketable title in fee simple absolute to the Land and the
Improvements and good and marketable title to the Fixtures and
Personal Property, all free and clear of liens, encumbrances and
charges except the Permitted Exceptions. To Borrower's
knowledge, there are no facts or circumstances that might give
rise to a lien, encumbrance or charge on the Property.
(b) Borrower owns and will continue to own all of the other
Property free and clear of all liens, encumbrances and charges
except the Permitted Exceptions.
(c) This Mortgage is and will remain a valid and
enforceable first lien on and security interest in the Property,
subject only to the Permitted Exceptions.
Section 4.2. Authority.
(a) Borrower is and will continue to be (i) duly organized,
validly existing and in good standing under the Laws of the state
or commonwealth in which it was organized or incorporated and
(ii) duly qualified to conduct business, in good standing, in the
state or commonwealth where the Property is located.
(b) Borrower has and will continue to have all
approvals required by Law or otherwise and full right, power and
authority to (i) own and operate the Property and carry on
Borrower's business as now conducted or as proposed to be
conducted; (ii) execute and deliver the Loan Documents; (iii)
grant, mortgage, warrant the title to, convey, assign and pledge
the Property to Lender pursuant to the provisions of this
Mortgage; and (iv) perform the Obligations.
(c) The execution and delivery of the Loan Documents and
the performance of the Obligations do not and will not conflict
with or result in a default under any Laws or any Leases or
Property Documents and do not and will not conflict with or
result in a default under any agreement binding upon any party to
the Loan Documents.
(d) The Loan Documents constitute and will continue to
constitute legal, valid and binding obligations of all parties to
the Loan Documents enforceable in accordance with their
respective terms.
(e) Borrower and each of Borrower's constituent entities
executing this Mortgage on behalf of Borrower have the requisite
power and authority under their respective organizational
documents to execute and deliver this Mortgage, to perform
Borrower's obligations under this Mortgage and to consummate the
transaction contemplated by this Mortgage and have taken any
necessary action to authorize the execution and delivery of this
Mortgage, the performance of Borrower's obligations under this
Mortgage and the consummation of the transaction contemplated by
this Mortgage.
Section 4.3. No Foreign Person. Borrower is not a
"foreign person" within the meaning of Section 1445(f)(3) of the
Code.
Section 4.4. Litigation. There are no Proceedings or, to
Borrower's knowledge, investigations against or affecting
Borrower or the Property and, to Borrower's knowledge, there are
no facts or circumstances that might give rise to a Proceeding or
an investigation against or affecting Borrower or the Property
which could have a material adverse effect on the Borrower or the
Property or Lender's Security interest in the Property. Borrower
will give Lender prompt notice of the commencement of any
Proceeding or investigation against or affecting the Property or
Borrower which could have a material adverse effect on the
Property or on Lender's interests in the Property or under the
Loan Documents. Borrower also will deliver to Lender such
additional information relating to the Proceeding or
investigation as Lender may request from time to time.
ARTICLE V
PROPERTY STATUS, MAINTENANCE AND LEASES
Section 5.1. Status of the Property.
(a) Borrower has obtained and will maintain in full force
and effect all certificates, licenses, permits and approvals that
are issued or required by Law or by any entity having
jurisdiction over the Property or over Borrower or that are
necessary for the Permitted Use, for occupancy and operation of
the Property, for the granting of this Mortgage or for the
conduct of Borrower's business on the Property in accordance with
the Permitted Use.
(b) The Property is and will continue to be serviced by all
public utilities required for the Permitted Use of the Property.
(c) All roads and streets necessary for service of and
access to the Property for the current or contemplated use of the
Property have been completed and are serviceable, physically open
and dedicated to and accepted by the Government for use by the
public.
(d) The Property is free from damage caused by a Casualty.
(e) To Borrower's knowledge, all costs and expenses of
labor, materials, supplies and equipment used in the construction
of the Improvements have been paid in full.
Section 5.2. Maintenance of the Property. Borrower will
maintain the Property in thorough repair and good and safe
condition, suitable for the Permitted Use, including, to the
extent necessary, replacing the Fixtures and Personal Property
with property at least equal in quality and condition to that
being replaced. Borrower will not erect any new buildings,
building additions or other structures on the Land or, except for
tenant and common area improvements undertaken in the ordinary
course of business, otherwise materially alter the Improvements
(except for tenant improvements made in accordance with Leases
approved or not requiring approval of Lender) without Lender's
prior consent which may be withheld in Lender's sole discretion.
The Property will be managed by an Affiliate of Borrower or an
independent property manager, satisfactory to Lender pursuant to
a management agreement satisfactory to Lender and terminable by
Borrower upon 30 days notice to the property manager.
Section 5.3. Change in Use. Borrower will use and permit
the use of the Property for the Permitted Use and for no other
purpose.
Section 5.4. Waste. Borrower will not commit or permit any
waste (including economic and non-physical waste), impairment or
deterioration of the Property or, except for tenant and common
area improvements undertaken in the ordinary course of business,
any alteration, demolition or removal of any of the Property
without Lender's prior consent which may be withheld in Lender's
sole discretion.
Section 5.5. Inspection of the Property. Subject to the
rights of tenants under the Leases, Lender has the right to enter
and inspect the Property on reasonable prior notice, except
during the existence of an Event of Default, when no prior notice
is necessary. Lender has the right to engage an independent
expert to review and report on Borrower's compliance with
Borrower's obligations under this Mortgage to maintain the
Property, comply with Law and refrain from waste, impairment or
deterioration of the Property and the alteration, demolition or
removal of any of the Property except as may be permitted by the
provisions of this Mortgage. If the independent expert's report
discloses material failure to comply with such obligations or if
Lender engages the independent expert after the occurrence of an
Event of Default, then the independent experts review and report
will be at Borrower's expense, payable on demand.
Section 5.6. Leases and Rents.
(a) Borrower assigns the Leases and the Rents to Lender
absolutely and not merely as additional collateral or security
for the payment and performance of the Obligations, but subject
to a license back to Borrower of the right to collect the Rents
unless and until an Event of Default occurs at which time the
license will terminate automatically, all as more particularly
set forth in the Assignment, the provisions of which are
incorporated in this Mortgage by reference.
(b) Upon an Event of Default, Borrower appoints Lender as
Borrower's attorney-in-fact to execute unilaterally and record,
at Lender's election, a document subordinating this Mortgage to
the Leases, provided that the subordination will not affect (i)
the priority of Lender's entitlement to Insurance Proceeds or
Condemnation Awards or (ii) the priority of this Mortgage over
intervening liens or liens arising under or with respect to the
Leases.
Section 5.7. Parking. Borrower will provide, maintain and
light parking areas within the Property, including any sidewalks,
aisles, streets, driveways, sidewalk cuts and rights-of-way to
and from the adjacent public streets, in a manner consistent with
the Permitted Use and sufficient to accommodate the greatest of:
(i) the number of parking spaces required by Law; (ii) the number
of parking spaces required by the Leases and the Property
Documents; or (iii) ______ parking spaces. The parking areas
will be reserved and used exclusively for ingress, egress and
parking for Borrower and the tenants under the Leases and their
respective employees, customers and invitees and in accordance
with the Leases and the Property Documents.
Section 5.8. Separate Tax Lot. The Property is and will
remain assessed for real estate tax purposes as one or more
wholly independent tax lots, separate from any property that is
not part of the Property.
Section 5.9. Changes in Zoning or Restrictive Covenants.
Borrower will not (i) initiate, join in or consent to any change
in any Laws pertaining to zoning, any restrictive covenant or
other restriction which would restrict the Permitted Uses for the
Property; (ii) permit the Property to be used to fulfil any
requirements of Law for the construction or maintenance of any
improvements on property that is not part of the Property; (iii)
permit the Property to be used for any purpose not included in
the Permitted Use; or (iv) impair the integrity of the Property
as a single, legally subdivided zoning lot separate from all
other property.
Section 5.10. Lender's Right to Appear. Lender has the
right to appear in and defend any Proceeding brought regarding
the Property and to bring any Proceeding, in the name and on
behalf of Borrower or in Lender's name, which Lender, in its sole
discretion, determines should be brought to protect Lender's
interest in the Property.
ARTICLE VI
IMPOSITIONS AND ACCUMULATIONS
Section 6.1. Impositions.
(a) Borrower will pay or cause the Escrow Holder to pay
each Imposition at least 10 days before the date (the "Imposition
Penalty Date") that is the earlier of (i) the date on which the
Imposition becomes delinquent and (ii) the date on which any
penalty, interest or charge for non-payment of the Imposition
accrues.
(b) At least 10 days before each Imposition Penalty Date,
Borrower will deliver or cause Escrow Holder to deliver to Lender
a receipted bill or other evidence of payment.
(c) Borrower, at its own expense, may contest any Taxes or
Assessments, provided that the following conditions are met:
(i) not less than 30 days prior to the Imposition Penalty
Date, Borrower delivers to Lender notice of the proposed
contest;
(ii) the contest is by a Proceeding promptly initiated and
conducted diligently and in good faith;
(iii) there is no Event of Default;
(iv) the Proceeding suspends the collection of the
contested Taxes or Assessments or a bond is furnished by
Borrower to Lender, satisfactory to Lender in its sole
discretion;
(v) the Proceeding is permitted under and is conducted in
accordance with the Leases and the Property Documents;
(vi) the Proceeding precludes imposition of criminal or
civil penalties and sale or forfeiture of the Property and
Lender will not be subject to any civil suit; and
(vii) Borrower either deposits with the Accumulations
Depositary reserves or furnishes a bond or other security
satisfactory to Lender, in either case in an amount
sufficient to pay the contested Taxes or Assessments,
together with all interest and penalties or Borrower pays
all of the contested Taxes or Assessments under protest.
(d) Installment Payments. If any Assessment is payable in
installments, Borrower will nevertheless pay the Assessment in
its entirety on the day the first installment becomes due and
payable or a lien, unless Lender approves payment of the
Assessment in installments or such installment payments will not
result in a lien, or trigger any interest or penalty.
Section 6.2. Accumulations.
(a) Borrower made an initial deposit with either Lender or
a mortgage servicer or financial institution designated or
approved by Lender from time to time to receive, hold and
disburse the Accumulations in accordance with this Section (the
"Accumulations Depositary"). The initial Accumulation Depositary
is identified in the Tax Agreement. On the first day of each
calendar month during the Term Borrower will deposit with the
Accumulations Depositary an amount equal to one-twelfth (1/12) of
the annual Taxes and Assessments as determined by Lender or its
designee. At least 30 days before each Imposition Penalty Date,
or as soon thereafter as received by Borrower, Borrower will
deliver to the Accumulations Depositary any bills and other
documents that are necessary to pay the Taxes and Assessments.
(b) The Accumulations will be applied to the payment of
Taxes and Assessments. Any excess Accumulations after payment of
Taxes and Assessments will be returned to Borrower or credited
against future payments of the Accumulations, at Lender's
election or as required by Law. If the Accumulations are not
sufficient to pay Taxes and Assessments, Borrower will pay the
deficiency to the Accumulations Depositary within 5 days of
demand. At any time after an Event of Default occurs, Lender may
apply the Accumulations as a credit against any portion of the
Debt selected by Lender in its sole discretion.
(c) The Accumulations Depositary will hold the
Accumulations as additional security for the Obligations until
applied in accordance with the provisions of this Mortgage and
the Tax Agreement. If Lender is not the Accumulations
Depositary, the Accumulations Depositary will deliver the
Accumulations to Lender upon Lender's demand at any time after an
Event of Default.
(d) The Accumulations Depositary has deposited the initial
deposit and will deposit the monthly deposits into a separate
interest bearing account in the name of Lender as secured party,
all in accordance with the Tax Agreement.
(e) Lender has the right to pay, or to direct the
Accumulations Depositary to pay, any Taxes or Assessments unless
Borrower is contesting the Taxes or Assessments in accordance
with the provisions of this Mortgage, in which event any payment
of the contested Taxes or Assessments will be made under protest
in the manner prescribed by Law or, at Lender's election, will be
withheld.
(f) If Lender assigns this Mortgage, Lender will pay, or
cause the Accumulations Depositary to pay, the unapplied balance
of the Accumulations to or at the direction of the assignee in
accordance with the Tax Agreement. Simultaneously with the
payment, Lender and the Accumulations Depositary will be released
from all liability with respect to the Accumulations and Borrower
will look solely to the assignee with respect to the
Accumulations. When the Obligations have been fully satisfied,
any unapplied balance of the Accumulations will be returned to
Borrower.
Section 6.3. Changes in Tax Laws. If a Law requires the
deduction of the Debt from the value of the Property for the
purpose of taxation or imposes a tax, either directly or
indirectly, on the Debt, any Loan Document or Lender's interest
in the Property, Borrower will pay the tax with interest and
penalties, if any. If Lender determines that Borrower's payment
of the tax may be unlawful, unenforceable, usurious or taxable to
Lender, the Debt will become immediately due and payable on 60
days' prior notice unless the tax must be paid within the 60-day
period, in which case, the Debt will be due and payable within
the lesser period.
Section 6.4. Reserves. Borrower made an initial deposit
and will make monthly deposits into an account established as
additional security for the payment and performance of the
Obligations, to be held and disbursed in accordance with the Tax
Agreement.
ARTICLE VII
INSURANCE, CASUALTY, CONDEMNATION
AND RESTORATION
Section 7.1. Insurance Coverages.
(a) Borrower will maintain such insurance coverages and
endorsements in form and substance and in amounts as Lender may
require in its sole discretion, from time to time. Until Lender
notifies Borrower of changes in Lender's requirements, Borrower
will maintain not less than the insurance coverages and
endorsements Lender required for closing of the Loan.
(b) The insurance, including renewals, required under this
Section will be issued on valid and enforceable policies and
endorsements satisfactory to Lender (the "Policies"). Each
Policy will contain a standard waiver of subrogation and a
replacement cost endorsement and will provide that Lender will
receive not less than 30 days' prior written notice of any
cancellation, termination or non-renewal of a Policy or any
material change other than an increase in coverage and that
Lender will be named under a standard mortgage endorsement as
loss payee.
(c) The insurance companies issuing the Policies (the
"Insurers") must be authorized to do business in the State or
Commonwealth where the Property is located, must have been in
business for at least 5 years, must carry an A.M. Best Company,
Inc. policy holder rating of A or better and an A.M. Best
Company, Inc. financial category rating of Class X or better and
must be otherwise satisfactory to Lender. Lender may select an
alternative credit rating agency and may impose different credit
rating standards for the Insurers. Notwithstanding Lender's
right to approve the Insurers and to establish credit rating
standards for the Insurers, Lender will not be responsible for
the solvency of any Insurer.
(d) Notwithstanding Lender's rights under this Article,
Lender will not be liable for any loss, damage or injury
resulting from the inadequacy or lack of any insurance coverage.
(e) Borrower will comply with the provisions of the
Policies and with the requirements, notices and demands imposed
by the Insurers and applicable to Borrower or the Property.
(f) Borrower will pay the Insurance Premiums for each
Policy not less than 30 days before the expiration date of the
Policy being replaced or renewed and will deliver to Lender an
original or, if a blanket policy, a certificate evidencing
coverage under the Policies marked "Paid" not less than 15 days
prior to the expiration date of the Policy being replaced or
renewed. Borrower shall provide a certified copy of each Policy
promptly upon receipt thereof.
(g) Borrower will not carry separate insurance concurrent
in kind or form or contributing in the event of loss with any
other insurance carried by Borrower.
(h) Borrower will not carry any of the insurance required
under this Section on a blanket or umbrella policy without in
each instance Lender's prior approval which may be withheld in
Lender's sole discretion. If Lender approves, Borrower will
deliver to Lender a certified copy of the blanket policy which
will allocate to the Property the amount of coverage required
under this Section and otherwise will provide the same coverage
and protection as would a separate policy insuring only the
Property.
(i) If required by the Policy, Borrower will give the
Insurers prompt notice of any change in ownership or occupancy of
the Property. This subsection does not abrogate the prohibitions
on transfers set forth in this Mortgage.
Section 7.2. Casualty and Condemnation.
(a) Borrower will give Lender notice of any Casualty
immediately after it occurs and will give Lender notice of any
Proceeding in Condemnation immediately after Borrower receives
notice of commencement or notice that such a Proceeding will be
commencing. Borrower immediately will deliver to Lender copies
of all documents Borrower delivers or receives relating to the
Casualty or the Proceeding, as the case may be.
(b) Upon the occurrence and continuance of an Event of
Default, Borrower authorizes Lender, at Lender's option, to act
on Borrower's behalf to collect, adjust and compromise any claims
for loss, damage or destruction under the Policies on such terms
as Lender determines in Lender's sole discretion. Borrower
authorizes Lender to act, at Lender's option, on Borrower's
behalf in connection with any Condemnation Proceeding. Borrower
will execute and deliver to Lender all documents requested by
Lender and all documents as may be required by Law to confirm
such authorizations. Nothing in this Section will be construed
to limit or prevent Lender from joining with Borrower either as a
co-defendant or as a co-plaintiff in any Condemnation Proceeding.
(c) If Lender elects not to act on Borrower's behalf as
provided in this Section, then Borrower promptly will file and
prosecute all claims (including Lender's claims) relating to the
Casualty and will prosecute or defend (including defense of
Lender's interest) any Condemnation Proceeding. Borrower will
have the authority to settle or compromise the claims or
Proceeding, as the case may be, provided that Lender has approved
in Lender's sole discretion any compromise or settlement that
exceeds $750,000.00. Any check for Insurance Proceeds or
Condemnation Awards, as the case may be (the "Proceeds") will be
made payable to Lender and Borrower. Borrower will endorse the
check to Lender immediately upon Lender presenting the check to
Borrower for endorsement or if Borrower receives the check first,
will endorse the check immediately upon receipt and forward it to
Lender. If any Proceeds are paid to Borrower, Borrower
immediately will deposit the Proceeds with Lender, to be applied
or disbursed in accordance with the provisions of this Mortgage.
Lender will be responsible for only the Proceeds actually
received by Lender.
Section 7.3. Application of Proceeds. After deducting the
costs incurred by Lender in collecting the Proceeds, Lender may,
in its sole discretion, (i) apply the Proceeds as a credit
against any portion of the Debt selected by Lender in its sole
discretion; (ii) apply the Proceeds to restore the Improvements,
provided that Lender will not be obligated to see to the proper
application of the Proceeds and provided further that any amounts
released for Restoration will not be deemed a payment on the
Debt; or (iii) deliver the Proceeds to Borrower.
Section 7.4. Conditions to Availability of Proceeds for
Restoration. Notwithstanding the preceding Section, after a
Casualty or a Condemnation (a "Destruction Event"), Lender will
make the Proceeds (less any costs incurred by Lender in
collecting the Proceeds) available for Restoration in accordance
with the conditions for disbursements set forth in the Section
entitled "Restoration", provided that the following conditions
are met:
(i) Parkway Properties LP or the transferee under a
Permitted Transfer, if any, continues to be Borrower at the
time of the Destruction Event and at all times thereafter
until the Proceeds have been fully disbursed;
(ii) no default under the Loan Documents exists at the time
of the Destruction Event and no Event of Default has
occurred which remains uncured during the 12 months prior to
the Destruction Event;
(iii) all Major Leases in effect immediately prior to the
Destruction Event and all Property Documents in effect
immediately prior to the Destruction Event that are
essential to the use and operation of the Property continue
in full force and effect notwithstanding the Destruction
Event;
(iv) if the Destruction Event is a Condemnation, Borrower
delivers to Lender evidence satisfactory to Lender that the
Improvements can be restored to an economically and
architecturally viable unit;
(v) Borrower delivers to Lender evidence satisfactory to
Lender that the Proceeds are sufficient to complete
Restoration or if the Proceeds are insufficient to complete
Restoration, Borrower first deposits with Lender funds
("Additional Funds") that when added to the Proceeds will be
sufficient to complete Restoration;
(vi) if the Destruction Event is a Casualty, Borrower
delivers to Lender evidence satisfactory to Lender that the
Insurer under each affected Policy has not denied liability
under the Policy as to Borrower or the insured under the
Policy;
(vii) Lender is satisfied that the proceeds of any business
interruption insurance in effect together with other
available gross revenues from the Property are sufficient to
pay Debt Service Payments after paying the Impositions,
Insurance Premiums, reasonable and customary operating
expenses and capital expenditures until Restoration is
complete;
(viii) Lender is satisfied that Restoration will be
completed on or before the date (the "Restoration Completion
Date") that is the earliest of: (A) 12 months prior to the
Maturity Date; (B) 12 months after the Destruction Event;
(C) the earliest date required for completion of Restoration
under any Major Lease or any material Property Document; or
(D) any date required by Law; and
(ix) the annual Rents (excluding security deposits) under
Leases in effect on the date of the Destruction Event are
providing debt service coverage for the annual Debt Service
Payments of 1.15 after payment of annual Insurance Premiums,
Impositions and operating expenses of the Property
(including ground rent, if any), provided that if the Rents
do not provide such debt service coverage, then Borrower
expressly authorizes and directs Lender to apply an amount
from the Proceeds to reduction of Principal without
Prepayment Premium in order to reduce the annual Debt
Service Payments sufficiently for such debt service coverage
to be achieved. The reduced debt service payments will be
calculated using the Fixed Interest Rate and an amortization
schedule that will achieve the same proportionate
amortization of the reduced Principal over the then
remaining Term as would have been achieved if the Principal
and the originally scheduled Debt Service Payments had not
been reduced. Borrower will execute any documentation that
Lender deems reasonably necessary to evidence the reduced
Principal and debt service payments.
Section 7.5. Restoration.
(a) If the total Proceeds for any Destruction Event do not
exceed $750,000.00 and Lender elects or is obligated by Law or
under this Article to make the Proceeds available for
Restoration, Lender will disburse to Borrower the entire amount
received by Lender and Borrower will commence Restoration
promptly after the Destruction Event and complete Restoration not
later than the Restoration Completion Date.
(b) If the Proceeds for any Destruction Event exceed
$750,000.00 and Lender elects or is obligated by Law or under
this Article to make the Proceeds available for Restoration,
Lender will disburse the Proceeds and any Additional Funds (the
"Restoration Funds") upon Borrower's request as Restoration
progresses, generally in accordance with normal construction
lending practices for disbursing funds for construction costs and
provided that the following conditions are met:
(i) Borrower commences Restoration promptly after the
Destruction Event and completes Restoration on or
before the Restoration Completion Date;
(ii) if Lender requests, Borrower delivers to Lender
prior to commencing Restoration, for Lender's approval,
plans and specifications and detailed budget for the
Restoration;
(iii)Borrower delivers to Lender satisfactory evidence
of the costs of Restoration incurred prior to the date
of the request, and such other documents as Lender may
request including mechanic's liens, waivers and title
insurance endorsements;
(iv) Borrower pays all costs of Restoration whether or
not the Restoration Funds are sufficient and, if at any
time during Restoration, Lender determines that the
undisbursed balance of the Restoration Funds is
insufficient to complete Restoration, Borrower deposits
with Lender, as part of the Restoration Funds, an
amount equal to the deficiency within 30 days of
receiving notice of the deficiency from Lender; and
(v) there is no default under the Loan Documents at
the time Borrower requests funds or at the time Lender
disburses funds.
(c) If an Event of Default occurs at any time after the
Destruction Event, then Lender will have no further obligation to
make any remaining Proceeds available for Restoration and may
apply any remaining Proceeds as a credit against any portion of
the Debt selected by Lender in its sole discretion.
(d) Lender may elect at any time prior to commencement of
Restoration or while work is in progress to retain, at Borrower's
expense, an independent engineer or other consultant to review
any plans and specifications required by Lender, to inspect the
work as it progresses and to provide reports. If any matter
included in a report by the engineer or consultant is
unsatisfactory to Lender, Lender may suspend disbursement of the
Restoration Funds until the unsatisfactory matters contained in
the report are resolved to Lender's satisfaction.
(e) If Borrower fails to commence and complete Restoration
in accordance with the terms of this Article, then in addition to
the Remedies, Lender may elect to restore the Improvements on
Borrower's behalf and reimburse itself out of the Restoration
Funds for costs and expenses incurred by Lender in restoring the
Improvements, or Lender may apply the Restoration Funds as a
credit against any portion of the Debt selected by Lender in its
sole discretion.
(f) Lender shall deposit the Restoration Funds in escrow
with a duly licensed title insurance company as an escrow agent,
pursuant to an escrow agreement providing, among other things,
that such escrow account shall be an interest-bearing account for
the benefit of Borrower and otherwise shall be in form and
substance reasonably satisfactory to Lender.
(g) Borrower will pay all of Lender's expenses incurred in
connection with a Destruction Event or Restoration. If Borrower
fails to do so, then in addition to the Remedies, Lender may from
time to time reimburse itself out of the Restoration Funds.
(h) If any excess Proceeds remains after Restoration,
Lender may elect, in its sole discretion either to apply the
excess as a credit against any portion of the Debt, without
Prepayment Premium as selected by Lender in its sole discretion
or to deliver the excess to Borrower.
ARTICLE VIII
COMPLIANCE WITH LAW AND AGREEMENTS
Section 8.1. Compliance with Law. Borrower, the Property
and the use of the Property comply and will continue to comply
with Law and with all agreements and conditions necessary to
preserve and extend all rights, licenses, permits, privileges,
franchises and concessions (including zoning variances, special
exceptions and non-conforming uses) relating to the Property or
Borrower. Borrower will notify Lender of the commencement of any
investigation or Proceeding relating to a possible violation of
Law immediately after Borrower receives notice thereof and will
deliver promptly to Lender copies of all documents Borrower
receives or delivers in connection with the investigation or
Proceeding. Borrower will not alter the Property in any manner
that would increase Borrower's responsibilities for compliance
with Law.
Section 8.2. Compliance with Agreements. There are no
defaults, events of defaults or events which, with the passage of
time or the giving of notice, would constitute an event of
default under the Property Documents. Borrower will pay and
perform all of its obligations under the Property Documents as
and when required by the Property Documents. Borrower will cause
all other parties to the Property Documents to pay and perform
their obligations under the Property Documents as and when
required by the Property Documents. Borrower will not amend or
waive any provisions of the Property Documents; exercise any
options under the Property Documents; give any approval required
or permitted under the Property Documents that would adversely
affect the Property or Lender's rights and interests under the
Loan Documents; cancel or surrender any of the Property Documents
that would adversely affect the Property or Lender's rights and
interests under the Loan Documents; or release or discharge or
permit the release or discharge of any party to or entity bound
by any of the Property Documents, without, in each instance,
Lender's prior approval (excepting therefrom all service
contracts or other agreements entered into in the normal course
of business that are cancelable upon not more than 30 days
notice). Borrower promptly will deliver to Lender copies of any
notices of default or of termination that Borrower receives or
delivers relating to any Property Document.
Section 8.3. ERISA Compliance.
(a) Borrower is not and will continue not to be an
"employee benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974 ("ERISA") that is
subject to Title I of ERISA or a "plan" as defined in Section
4975(e)(1) of the Code that is subject to Section 4975 of the
Code, and Borrower's assets do not and will not constitute "plan
assets" of one or more such plans for purposes of Title I of
ERISA or Section 4975 of the Code.
(b) Borrower will not engage in any transaction which would
cause any obligation or any action under the Loan Documents,
including Lender's exercise of the Remedies, to be a non-exempt
prohibited transaction under ERISA.
Section 8.4. Section 6045(e) Filing. Borrower will supply
or cause to be supplied to Lender either (i) a copy of a
completed Form 1099-B, Statement for Recipients of Proceeds from
Real Estate, Broker and Barter Exchange Proceeds prepared by
Borrower's attorney or other person responsible for the
preparation of the form, together with a certificate from the
person who prepared the form to the effect that the form has, to
the best of the preparer's knowledge, been accurately prepared
and that the preparer will timely file the form; or (ii) a
certification from Borrower that the Loan is a refinancing of the
Property or is otherwise not required to be reported to the
Internal Revenue Service pursuant to Section 6045(e) of the Code.
Under no circumstances will Lender or Lender's counsel be
obligated to file the reports or returns.
ARTICLE IX
ENVIRONMENTAL
Section 9.1. Environmental Representations and Warranties.
Except as disclosed in the Environmental Report and to Borrower's
knowledge as of the date of this Mortgage:
(i) no Environmental Activity has occurred or is
occurring on the Property other than the use, storage,
and disposal of Hazardous Materials which (A) is in the
ordinary course of business consistent with the
Permitted Use; (B) is in compliance with all
Environmental Laws and (C) has not resulted in material
environmental contamination of the Property; and
(ii) no Environmental Activity has occurred or is
occurring on any property in the vicinity of the
Property which has resulted in material environmental
contamination of the Property.
Section 9.2. Environmental Covenants.
(a) Borrower will not cause or permit any Material
environmental contamination of the Property.
(b) No Environmental Activity will occur on the Property
other than the use, storage and disposal of Hazardous Materials
which (A) is in the ordinary course of business consistent with
the Permitted Use; (B) is in compliance with all Environmental
Laws; and (C) does not create a risk of material environmental
contamination of the Property.
(c) Borrower will notify Lender immediately upon Borrower
becoming aware of (i) any material environmental contamination of
the Property or (ii) any Environmental Activity with respect to
the Property that is not in accordance with the preceding
subsection (b). Borrower promptly will deliver to Lender copies
of all documents delivered to or received by Borrower regarding
the matters set forth in this subsection, including notices of
Proceedings or investigations concerning any material
environmental contamination of the Property or Environmental
Activity or concerning Borrower's status as a potentially
responsible party (as defined in the Environmental Laws).
Borrower's notification of Lender in accordance with the
provisions of this subsection will not be deemed to excuse any
default under the Loan Documents resulting from the violation of
Environmental Laws or the material environmental contamination of
the Property or Environmental Activity that is the subject of the
notice. If Borrower receives notice of a suspected violation of
Environmental Laws in the vicinity of the Property that poses a
risk of material environmental contamination of the Property,
Borrower will give Lender notice and copies of any documents
received relating to such suspected violation.
(d) From time to time at Lender's request, Borrower will
deliver to Lender any information known and documents available
to Borrower relating to the environmental condition of the
Property.
(e) Lender may perform or engage an independent consultant
to perform an assessment of the environmental condition of the
Property and of Borrower's compliance with this Section on an
annual basis or at any time for reasonable cause or after an
Event of Default. In connection with the assessment: (i) Lender
or consultant may enter and inspect the Property and perform
tests of the air, soil, ground water and building materials; (ii)
Borrower will cooperate and use commercially reasonable efforts
to cause tenants and other occupants of the Property to cooperate
with Lender or consultant; (iii) Borrower will receive a copy of
any final report prepared after the assessment, to be delivered
to Borrower not more than 10 days after Borrower requests a copy
and executes Lender's standard confidentiality and waiver of
liability letter; (iv) Borrower will accept custody of and
arrange for lawful disposal of any Hazardous Materials required
to be disposed of as a result of the tests; (v) Lender will not
have liability to Borrower with respect to the results of the
assessment; and (vi) Lender will not be responsible for any
damage to the Property resulting from the tests described in this
subsection and Borrower will look solely to the consultants to
reimburse Borrower for any such damage. Lender shall cause such
consultant to provide evidence of insurance satisfactory to
Borrower and, if available, name Borrower as an additional
insured on consultant's liability insurance at Borrower's
expense. The consultant's assessment and reports will be at
Borrower's expense (i) if the reports disclose any material
adverse change in the environmental condition of the Property
from that disclosed in the Environmental Report; (ii) if Lender
engaged the consultant when Lender had reasonable cause to
believe Borrower was not in compliance with the terms of this
Article and, after written notice from Lender, Borrower failed to
provide promptly reasonable evidence that Borrower is in
compliance; or (iii) if Lender engaged the consultant after the
occurrence of an Event of Default.
(f) If Lender has reasonable cause to believe that there is
Environmental Activity at the Property, Lender may elect in its
sole discretion to release from the lien of this Mortgage any
portion of the Property affected by the Environmental Activity
and Borrower will accept the release.
ARTICLE X
FINANCIAL REPORTING
Section 10.1. Fiscal Year; Financial Statements; Reports of
Parkway Properties, Inc. (the "Company") and Borrower; SEC and
Other Reports; Officer's Certificate. The Company and the
Borrower shall each maintain its fiscal year as a calendar year
at all times. Borrower shall deliver the following submissions
to Lender with respect to the Company, and the Borrower shall
make identical submissions for itself (except for those relating
to Securities and Exchange Commission requirements) at the times
required pursuant to clauses (a), (b), (d) and (e) below for the
appropriate period:
(a) Quarterly Statements -- within 45 days after the
end of each quarterly fiscal period in each fiscal year of
the Company (other than the last quarterly fiscal period of
each such fiscal year), duplicate copies of,
(A) a consolidated balance sheet of the Company
and its Consolidated Subsidiaries as at the end of such
quarter, and
(B) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and
its Consolidated Subsidiaries, for such quarter and (in
the case of the second and third quarters) for the
portion of the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures
for the corresponding periods in the previous fiscal year,
all in reasonable detail, prepared in accordance with GAAP
applicable to quarterly financial statements generally, and
certified by a financial officer of the Company as fairly
presenting, in all material respects, the financial position
of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from
year-end adjustments, provided that delivery within the time
period specified above of copies of the Company's Quarterly
Report on Form 10-Q prepared in compliance with the
requirements therefor and filed with the Securities and
Exchange Commission shall be deemed to satisfy the
requirements of this Section 10.1(a);
(b) Annual Statements -- within 90 days after the end
of each fiscal year of the Company, duplicate copies of,
(A) a consolidated balance sheet of the Company
and its Consolidated Subsidiaries, as at the end of
such year, and
(B) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and
its Consolidated Subsidiaries, for each such year,
setting forth in each case in comparative form the figures
for the previous fiscal year, all in reasonable detail,
prepared in accordance with GAAP, and accompanied by:
(1) an opinion thereon of independent certified
public accountants of recognized national standing,
which opinion shall state that such financial
statements present fairly, in all material respects,
the financial position of the companies being reported
upon and their results of operations and cash flows and
have been prepared in conformity with GAAP, and that
the examination of such accountants in connection with
such financial statements has been made in accordance
with generally accepted auditing standards, and that
such audit provides a reasonable basis for such opinion
in the circumstances, and
(2) upon request of Lender, but only if a default
shall exist or if the Unsecured Note (as defined in
that certain Note and Conversion Agreement [the "Note
Agreement"] of even date herewith among Borrower,
Lender and Existing Limited Partner) shall have a lower
rating than that specified in Section 2.01(b) of the
Note Agreement at the time of such request, a
certificate of such accountants stating that they have
reviewed this Agreement and the certificate of a
financial officer of the Company provided pursuant to
Section 10.1(d) in connection with such financial
statements, and stating further whether, in making
their audit, they have become aware of any condition or
event that then constitutes a breach of any covenant
contained in Article Four, and, if they are aware that
any such condition or event then exists, specifying the
nature and period of the existence thereof (it being
understood that such accountants shall not be liable,
directly or indirectly, for any failure to obtain
knowledge of any such breach unless such accountants
should have obtained knowledge thereof in making an
audit in accordance with generally accepted auditing
standards or did not make such an audit),
provided that the delivery within the time period specified
above of the Company's Annual Report on Form 10-K for such
fiscal year (together with the Company's annual report to
shareholders, if any, prepared pursuant to Rule 14a-3 under
the Exchange Act) prepared in accordance with the
requirements therefor and filed with the Securities and
Exchange Commission, together with the accountant's
certificate described in clause (2) above, shall be deemed
to satisfy the requirements of this Section 10.1(b);
(c) Promptly upon their becoming available, one copy
of (A) each financial statement, report, notice or proxy
statement sent by the Company or any of its Subsidiaries to
public securities holders generally, and (B) each regular or
periodic report, each registration statement (without
exhibits except as expressly requested by Lender), and each
prospectus and all amendments thereto filed by the Company
or any such Subsidiary with the Securities and Exchange
Commission and of all press releases and other statements
made available generally by the Company or any such
Subsidiary to the public concerning developments that are
material;
(d) Each set of financial statements delivered to
Lender pursuant to Section 10.1(a) or Section 10.1(b) hereof
shall be accompanied by a certificate of a financial officer
of the Company, in his or her capacity as such officer and
without personal liability other than for fraudulent
statements or omissions, setting forth:
(A) Covenant Compliance -- the information
(including detailed calculations) required in order to
establish whether the Company was in compliance with
the requirements of Section 4.01 Note and Conversion
Agreement and whether the Borrower was in compliance
with the requirements of Section 4.02 of the Note and
Conversion Agreement, during the quarterly or annual
period covered by the statements then being furnished
(including with respect to such Section, where
applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be,
permissible under the terms of such Sections, and the
calculation of the amount, ratio or percentage then in
existence), provided that the foregoing shall only be
required after the Conversion Option (as defined in the
Note Agreement) shall have been exercised; and
(B) Event of Default -- a statement that such
officer has reviewed the relevant terms hereof and has
made, or caused to be made, under his or her
supervision, a review of the transactions and
conditions of the Company, the Borrower, and the
Company's other Subsidiaries from the beginning of the
quarterly or annual period covered by the statements
then being furnished to the date of the certificate and
that such review shall not have disclosed the existence
during such period of any condition or event that
constitutes a Default or an Event of Default or, if any
such condition or event existed or exists, specifying
the nature and period of existence thereof and what
action the Company or Borrower (as applicable) shall
have taken or proposes to take with respect thereto;
(e) Promptly after Lender shall so request, such other
reports and information as Lender shall reasonably request
from time to time.
ARTICLE XI
EXPENSES AND DUTY TO DEFEND
Section 11.1. Payment of Expenses.
(a) Borrower is obligated to pay all fees and expenses (the
"Expenses") incurred by Lender or that are otherwise payable in
connection with the Loan or the Property, including attorneys'
fees and expenses and any fees and expenses relating to (i) the
preparation, execution, acknowledgment, delivery and recording or
filing of the Loan Documents; (ii) except as otherwise provided
herein, any Proceeding or other claim asserted against Lender;
(iii) except as otherwise provided herein, any inspection,
assessment, survey and test permitted under the Loan Documents;
(iv) any Destruction Event; (v) the preservation of Lender's
security and the exercise of any rights or remedies available at
Law, in equity or otherwise; and (vi) the Leases and the Property
Documents.
(b) Borrower will pay the Expenses immediately on demand,
together with any applicable interest, premiums or penalties. If
Lender pays any of the Expenses, Borrower will reimburse Lender
the amount paid by Lender immediately upon demand, together with
interest on such amount at the Default Interest Rate from the
date Lender paid the Expenses through and including the date
Borrower reimburses Lender. The Expenses together with any
applicable interest, premiums or penalties constitute a portion
of the Debt secured by this Mortgage.
Section 11.2. Duty to Defend. If Lender or any of its
trustees, officers, participants, employees or affiliates is a
party in any Proceeding relating to the Property, Borrower or the
Loan, Borrower will indemnify and hold harmless the party and
will defend the party with attorneys and other professionals
retained by Borrower and approved by Lender. Lender may elect to
engage its own attorneys and other professionals, at Borrower's
expense, to defend or to assist in the defense of the party. In
all events, case strategy will be determined by Lender if Lender
so elects and no Proceeding will be settled without Lender's
prior approval which may be withheld in Lender's reasonable
discretion.
ARTICLE XII
TRANSFERS LIENS AND ENCUMBRANCES
Section 12.1. Prohibitions on Transfers, Liens and
Encumbrances.
(a) Borrower acknowledges that in making the Loan, Lender
is relying to a material extent on the business expertise and net
worth of Borrower and Borrower's general partners, members or
principals and on the continuing interest that each of them has,
directly or indirectly, in the Property. Accordingly, except as
specifically set forth in this Mortgage, Borrower (i) will not,
and will not permit its partners, members or principals to,
effect a Transfer without Lender's prior approval, which may be
withheld in Lender's sole discretion and (ii) will keep the
Property free from all liens and encumbrances other than the lien
of this Mortgage and the Permitted Exceptions. A "Transfer" is
defined as any sale, grant, lease (other than bona fide third-
party space leases with tenants), conveyance, assignment or other
transfer of, or any encumbrance or pledge against, the Property,
any interest in the Property, or any change in Borrower's
composition, in each instance whether voluntary or involuntary,
direct or indirect, by operation of law or otherwise and
including the grant of an option or the execution of an agreement
relating to any of the foregoing matters.
(b) Borrower represents, warrants and covenants that
Borrower is a Delaware limited partnership whose sole general
partner is Parkway Properties General Partners, Inc., a Delaware
corporation ("Existing General Partner"). Existing General
Partner owns 1% of the partnership interests in Borrower and
Borrower's sole remaining limited partner is Parkway Properties,
Inc., a Delaware corporation ("Existing Limited Partner").
Existing Limited Partner owns 99% of the partnership interests in
Borrower, which interest may be reduced to not less than a fifty-
one percent (51%) in each class of limited partnership interests
in Borrower pursuant to one or more UPREIT Transactions (as
defined in the Note Agreement). The Existing General Partner is
a wholly owned subsidiary of the Existing Limited Partner.
Section 12.2. Permitted Transfers.
(a) Notwithstanding the prohibitions regarding Transfers,
there is no restriction on (i) transfers of stock in Existing
Limited Partner or (ii) transfers of limited partnership
interests in Borrower by limited partners in Borrower other than
Existing Limited Partner.
(b) Notwithstanding the prohibitions regarding Transfers, a
Permitted Transfer may occur without Lender's prior consent,
provided that the following conditions are met:
(i) at least 30 days prior to the proposed Permitted
Transfer, Borrower delivers to Lender a notice that is
sufficiently detailed to enable Lender to determine that the
proposed Permitted Transfer complies with the terms of this
Section;
(ii) there is no default under the Loan Documents either
when Lender receives the notice or when the proposed
Permitted Transfer occurs;
(iii) the proposed Permitted Transfer will not result in a
violation of any of the covenants contained in the Section
entitled, "ERISA Compliance" and Borrower will deliver to
Lender such documentation of compliance as Lender requests
in its sole discretion;
(iv) Borrower pays all of Lender's expenses relating to the
Transfer, including Lender's attorneys' fees; and
(v) Lender is satisfied that the Property will continue to
be managed by a property manager satisfactory to Lender.
(c) Upon compliance with the conditions set forth in the
preceding subsection, the following Transfers (the "Permitted
Transfers") may occur without Lender's prior consent:
(i) Transfers of limited partnership interests in Borrower
by the Existing Limited Partner provided that subsequent to
the Transfer, Existing General Partner remains as sole
general partner, Existing General Partner remains a wholly
owned subsidiary of Parkway Properties, Inc. and Existing
Limited Partner retains not less than 51% in each class of
limited partnership interests in Borrower (including its
interest in Existing General Partner); and
(ii) A pledge by Borrower of its ownership interest(s) in
any wholly-owned subsidiary of Borrower.
Section 12.3. Right to Contest Liens. Borrower, at its own
expense, may contest the amount, validity or application, in
whole or in part, of any mechanic's, materialmen's or
environmental liens in which event Lender will refrain from
exercising any of the Remedies, provided that the following
conditions are met:
(i) Borrower delivers to Lender notice of the proposed
contest not more than 30 days after the lien is filed;
(ii) the contest is by a Proceeding promptly initiated and
conducted in good faith and with due diligence;
(iii) there is no Event of Default other than the Event of
Default arising from the filing of the lien;
(iv) the Proceeding suspends enforcement of collection of
the lien, imposition of criminal or civil penalties and sale
or forfeiture of the Property or Borrower has posted a bond
with such effect satisfactory to Lender in its sole
discretion and Lender will not be subject to any civil suit;
(v) the Proceeding is permitted under and is conducted in
accordance with the Leases and the Property Documents;
(vi) Borrower sets aside reserves or furnishes a bond or
other security satisfactory to Lender, in either case in an
amount sufficient to pay the claim giving rise to the lien,
together with all interest and penalties, or Borrower pays
the contested lien under protest; and
(vii) with respect to an environmental lien, Borrower is
using reasonable efforts to mitigate or prevent any
deterioration of the Property resulting from the alleged
violation of any Environmental Laws or the alleged
Environmental Activity.
Section 12.4. Release Rights. Notwithstanding the
prohibitions regarding Transfers, Borrower may obtain the release
of the Property in whole, but not in part, provided that the
following conditions are met:
(i) no release shall occur before July 1, 2003;
(ii) the release is solely (A) for the purpose of a transfer
of the Property to an unaffiliated, bona fide, third party
purchaser or (B) for the purpose of subjecting the Property
to the lien of a first mortgage in favor of an unaffiliated,
bona fide, third party mortgagee in connection with a
refinancing of the Property;
(iii) not less than 90 days prior to the date of the
release, Borrower delivers to Lender a notice setting forth
(A) the date of the release; (B) the name of the proposed
transferee or mortgagee and (C) data necessary for Lender to
determine whether the proposed release satisfies the
criteria set forth in this Section;
(iv) on the date Borrower delivers to Lender notice of the
proposed release and on the date of the release, there is no
default under the Loan Documents;
(v) Borrower pays to Lender the entire sales proceeds or
refinancing proceeds less actual transaction costs actually
paid by Borrower to unaffiliated third parties in connection
with such transfer or refinance (provided that Borrower
shall not be entitled to deduct from such payment to Lender
Borrower's attorney's fees or, in the case of a refinance,
any loan fee or "points" paid to the new Lender) which shall
be applied by Lender in accordance with the Loan Documents;
(vi) Borrower pays to Lender a Prepayment Premium as to
such amount paid to Lender calculated in accordance with
Section 2 of the Note;
(vii) after giving effect to the release and the partial
repayment of the Loan, the Debt Service Coverage Ratio,
calculated for the Loan in the aggregate, for the 12 months
next ensuing (as evidenced by documentation satisfactory to
Lender in its sole discretion) will be equal to or greater
than 1.2 and the Loan to Value Ratio will not be greater
than 50%.
(viii) Borrower pays all expenses relating to the release,
including Lender's attorneys' fees;
(ix) Borrower delivers to Lender copies of the approved
final, executed and delivered documents evidencing the
transfer or refinancing of the Property; and
(x) Borrower delivers to Lender any other information,
approvals and documents reasonably required by Lender
relating to the release.
[Section 12.5. Substitution of Collateral. [For Loudoun
mortgage only]
Notwithstanding the prohibitions regarding Transfers,
Borrower may sell the Property to a bona fide, unaffiliated third
party, and Lender will release the Property from the lien of this
Mortgage and the Assignment provided that simultaneously with
such sale Borrower substitutes collateral property (the
"Substitute Collateral") and provided further that in each
instance the following conditions are met:
(i) there is no default under the Loan Documents or Event of
Default;
(ii) the Substitute Collateral is a Class A office
building(s), with at least the same number of rentable
square feet as the Property and is located in either the
States of Georgia, Florida, Virginia, North Carolina, South
Carolina, Tennessee, Mississippi or Texas;
(iii) the Substitute Collateral will have been built not
earlier than the date the Property shall have been built;
(iv) the appraised value (as determined by reference to an
appraisal satisfactorily performed on behalf of Lender, at
the expense of Borrower) of the Substitute Collateral will
be equal to or greater than the greater of (i) the appraised
value of the Property, determined at the time of the closing
of the Loan, or (ii) the appraised value of the Property at
the time of such substitution;
(v) after the substitution, the Debt Service Coverage Ratio
(computed for purposes of this provision by reference to the
Net Operating Income derived from the Substitute Collateral
and the Debt Service Payments associated with that portion
of the Debt reasonably allocated by Lender to the Substitute
Collateral) shall be greater than or equal to the Debt
Service Coverage Ratio computed with respect to the Property
immediately prior to the substitution, but in no event shall
such Debt Service Coverage Ratio be less than 1.20;
(vi) the Substitute Collateral shall satisfy each of the
Borrower's Covenants and Conditions to Closing set forth in
paragraphs 11 and 12 of the Commitment that would have been
applicable to the Substitute Collateral had such Substitute
Collateral been a property thereunder;
(vii) the Substitute Collateral shall be fully cross-
defaulted and cross-collateralized with all other property
securing the Debt, pursuant to documentation satisfactory to
Lender in its sole discretion;
(viii) the Substitute Collateral shall conform in all
respects to such underwriting standards and criteria as well
as such other appraisal, legal, business, environmental,
engineering, diversification, leasing and title
requirements, all as Lender may determine in its sole
discretion; and
(ix) Borrower shall have paid all costs and expenses of
Lender relating to the substitution, including Lender's
attorneys' fees.
ARTICLE XIII
ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 13.1. Further Assurances.
(a) Borrower will execute, acknowledge and deliver to
Lender, or to any other entity Lender designates, any additional
or replacement documents and perform any additional actions that
Lender determines are reasonably necessary to evidence, perfect
or protect Lender's first lien on and prior security interest in
the Property or to carry out the intent or facilitate the
performance of the provisions of the Loan Documents.
(b) Borrower appoints Lender as Borrower's attorney-in-fact
to perform, at Lender's election, any actions and to execute and
record any of the additional or replacement documents referred to
in this Section, in each instance only at Lender's election and
only to the extent Borrower has failed to comply with the terms
of this Section within 10 days after notice from Lender.
Section 13.2. Estoppel Certificates.
(a) Within 10 days of Lender's request, Borrower will
deliver to Lender, or to any entity Lender designates, a
certificate certifying (i) the original principal amount of the
Note; (ii) the unpaid principal amount of the Note; (iii) the
Fixed Interest Rate; (iv) the amount of the then current Debt
Service Payments; (v) the Maturity Date; (vi) the date a Debt
Service Payment was last made; (vii) that, except as may be
disclosed in the statement, there are no defaults or events
which, with the passage of time or the giving of notice, would
constitute an Event of Default; and (viii) there are no offsets
or defenses against any portion of the Obligations except as may
be disclosed in the statement.
(b) If Lender requests, Borrower promptly will deliver to
Lender or to any entity Lender designates a certificate from each
party to any Property Document excluding operating service
agreements, certifying that the Property Document is in full
force and effect with no defaults or events which, with the
passage of time or the giving of notice, would constitute an
event of default under the Property Document and that there are
no defenses or offsets against the performance of its obligations
under the Property Document.
(c) If Lender requests, Borrower promptly will deliver to
Lender, or to any entity Lender designates, a certificate from
each tenant under a Major Lease, and any the tenant under any
other Lease then affecting the Property if requested by Lender,
certifying to any facts regarding the Lease as Lender may
require, including that the Lease is in full force and effect
with no defaults or events which, with the passage of time or the
giving of notice, would constitute an event of default under the
Lease by any party, that the rent has not been paid more than one
month in advance and that the tenant claims no defense or offset
against the performance of its obligations under the Lease.
ARTICLE XIV
DEFAULTS AND REMEDIES
Section 14.1. Events of Default. The term "Event of
Default" means the occurrence of any of the following events:
(i) if Borrower fails to pay any amount due, as and when
required, under any Loan Document and the failure continues
for a period of 5 days;
(ii) if Borrower makes a general assignment for the benefit
of creditors or generally is not paying, or is unable to
pay, or admits in writing its inability to pay, its debts as
they become due; or if Borrower or any other party commences
any Proceeding (A) relating to bankruptcy, insolvency,
reorganization, conservatorship or relief of debtors, in
each instance with respect to Borrower; (B) seeking to have
an order for relief entered with respect to Borrower; (C)
seeking attachment, distraint or execution of a judgment
with respect to Borrower or the Property and having a
material adverse effect thereon; (D) seeking to adjudicate
Borrower as bankrupt or insolvent; (E) seeking
reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with
respect to Borrower or Borrower's debts; or (F) seeking
appointment of a Receiver, trustee, custodian, conservator
or other similar official for Borrower or for all or any
substantial part of Borrower's assets, provided that if the
Proceeding is commenced by a party other than Borrower or
any of Borrower's general partners or members, Borrower will
have 120 days to have the Proceeding dismissed or discharged
before an Event of Default occurs;
(iii) if Borrower is in default beyond any applicable grace
and cure period under any other mortgage, deed of trust,
deed to secure debt or other security agreement encumbering
the Property whether junior or senior to the lien of this
Mortgage;
(iv) if there is a default beyond any applicable grace and
cure period under any guaranty in favor of Lender delivered
to Lender in connection with the Loan or in connection with
any loan cross-collateralized with the Loan;
(v) if Borrower is in default beyond any applicable grace
and cure period under any other Loan Documents evidencing
and securing the Loan including those Mortgages and/or Deeds
of Trusts granted by Borrower to or for the benefit of
Lender, encumbering those certain properties identified on
Exhibit D hereto;
(vi) if a Transfer occurs except in accordance with the
provisions of this Mortgage or the other Loan Documents;
(vii) if Borrower abandons the Property or ceases to
conduct its business at the Property; or
(viii) if there is a default in the performance of any
other provision of any Loan Document or if there is any
inaccuracy or falsehood in any representation or warranty
contained in any Loan Document which is not remedied within
15 days after Borrower receives notice thereof, provided
that if the default, inaccuracy or falsehood is of a nature
that it cannot be cured within the 15-day period and during
that period Borrower commences to cure, and thereafter
diligently continues to cure, the default, inaccuracy or
falsehood, then the 15-day period will be extended for a
reasonable period not to exceed 120 days after the notice to
Borrower.
Section 14.2. Remedies.
(a) If an Event of Default occurs, Lender may take any of
the following actions (the "Remedies") without notice to
Borrower:
(i) declare all or any portion of the Debt immediately due
and payable ("Acceleration");
(ii) pay or perform any Obligation;
(iii) institute a Proceeding for the specific performance
of any Obligation;
(iv) apply for the appointment of a Receiver to be vested
with the fullest powers permitted by Law, without bond being
required, which appointment may be made ex parte, as a
matter of right and without regard to the value of the
Property, the amount of the Debt or the solvency of Borrower
or any other person liable for the payment or performance of
any portion of the Obligations;
(v) directly, by its agents or representatives or through a
Receiver appointed by a court of competent jurisdiction,
enter on the Land and Improvements, take possession of the
Property, dispossess Borrower and exercise Borrower's rights
with respect to the Property, either in Borrower's name or
otherwise;
(vi) institute a Proceeding for the foreclosure of this
Mortgage or, if applicable, sell by power of sale, all or
any portion of the Property;
(vii) institute proceedings for the partial foreclosure of
this Mortgage for the portion of the Debt then due and
payable, subject to the continuing lien of this Mortgage for
the balance of the Debt not then due;
(viii) exercise any and all rights and remedies granted to
a secured party under the Uniform Commercial Code; and
(ix) pursue any other right or remedy available to Lender
at Law, in equity or otherwise.
(b) If an Event of Default occurs, the license granted to
Borrower in the Loan Documents to collect Rents will terminate
automatically without any action required of Lender.
Section 14.3. General Provisions Pertaining to Remedies.
(a) The Remedies are cumulative and may be pursued
concurrently or otherwise, at such time and in such order as
Lender may determine in its sole discretion and without
presentment, demand, protest or further notice of any kind, all
of which are expressly waived by Borrower.
(b) The enumeration in the Loan Documents of specific rights
or powers will not be construed to limit any general rights or
powers or impair Lender's rights with respect to the Remedies.
(c) If Lender exercises any of the Remedies, Lender will
not be deemed a mortgagee-in-possession unless Lender has elected
affirmatively to be a mortgagee-in-possession.
(d) Lender will not be liable for any act or omission of
Lender in connection with the exercise of the Remedies.
(e) Lender's right to exercise any Remedy will not be
impaired by any delay in exercising or failure to exercise the
Remedy and the delay or failure will not be construed as
extending any cure period or constitute a waiver of the default
or Event of Default.
(f) If an Event of Default occurs, Lender's payment or
performance or acceptance of payment or performance will not be
deemed a waiver or cure of the Event of Default.
(g) Lender's acceptance of partial payment or receipt of
Rents will not: extend or affect any grace period, constitute a
waiver of a default or Event of Default or constitute a recision
of Acceleration.
Section 14.4. Foreclosure by Power of Sale.
Insert State Provisions
Section 14.5. General Provisions Pertaining to Mortgagee-
in-Possession or Receiver.
(a) If an Event of Default occurs, any court of competent
jurisdiction will, upon application by Lender, appoint a Receiver
as designated in the application and issue an injunction
prohibiting Borrower from interfering with the Receiver,
collecting Rents, disposing of any Rents or any part of the
Property, committing waste or doing any other act that will tend
to affect the preservation of the Leases, the Rents and the
Property and Borrower approves the appointment of the designated
Receiver or any other Receiver appointed by the court. Borrower
agrees that the appointment may be made ex parte and as a matter
of right to Lender, either before or after sale of the Property,
without further notice, and without regard to the solvency or
insolvency, at the time of application for the Receiver, of the
person or persons, if any, liable for the payment of any portion
of the Debt and the performance of any portion of the Obligations
and without regard to the value of the Property or whether the
Property is occupied as a homestead and without bond being
required of the applicant.
(b) The Receiver will be vested with the fullest powers
permitted by Law including all powers necessary or usual in
similar cases for the protection, possession and operation of the
Property and all the powers and duties of Lender as a mortgagee-
in-possession as provided in this Mortgage and may continue to
exercise all the usual powers and duties until the Receiver is
discharged by the court.
(c) In addition to the Remedies and all other available
rights, Lender or the Receiver may take any of the following
actions:
(i) take exclusive possession, custody and control of the
Property and manage the Property so as to prevent waste;
(ii) require Borrower to deliver to Lender or the Receiver
all keys, security deposits, operating accounts, prepaid
Rents, past due Rents, the Books and Records and all
original counterparts of the Leases and the Property
Documents;
(iii) collect, sue for and give receipts for the Rents and,
after paying all expenses of collection, including
reasonable receiver's, broker's and attorney's fees, apply
the net collections to any portion of the Debt selected by
Lender in its sole discretion;
(iv) enter into, modify, extend, enforce, terminate, renew
or accept surrender of Leases and evict tenants except that
in the case of a Receiver, such actions may be taken only
with the written consent of Lender as provided in this
Mortgage and in the Assignment;
(v) enter into, modify, extend, enforce, terminate or renew
Property Documents except that in the case of a Receiver,
such actions may be taken only with the written consent of
Lender as provided in this Mortgage and in the Assignment;
(vi) appear in and defend any Proceeding brought in
connection with the Property and bring any Proceeding to
protect the Property as well as Borrower's and Lender's
respective interests in the Property (unless any such
Proceeding has been assigned previously to Lender in the
Assignment, or if so assigned, Lender has not expressly
assigned such Proceeding to the Receiver and consented to
such appearance or defense by the Receiver); and
(vii) perform any act in the place of Borrower
that Lender or the Receiver deems necessary (A) to preserve
the value, marketability or rentability of the Property; (B)
upon consent by Lender, to increase the gross receipts from
the Property; or (C) otherwise to protect Borrower's and
Lender's respective interests in the Property.
(d) Borrower upon the occurrence of an Event of Default
appoints Lender as Borrower's attorney-in-fact, at Lender's
election, to perform any actions and to execute and record any
instruments necessary to effectuate the actions described in this
Section, in each instance only at Lender's election and only to
the extent Borrower has failed to comply with the provisions of
this Section.
Section 14.6. General Provisions Pertaining to Foreclosures
and the Power of Sale. The following provisions will apply to
any Proceeding to foreclose and to any sale of the Property by
power of sale or pursuant to a judgment of foreclosure and sale:
(i) Lender's right to institute a Proceeding to foreclose
or to sell by power of sale will not be exhausted by a
Proceeding or a sale that is defective or not completed;
(ii) a sale pursuant to a judgment of foreclosure and sale
may be postponed or adjourned by public announcement at the
time and place appointed for the sale without further
notice;
(iii) with respect to sale pursuant to a judgment of
foreclosure and sale, the Property may be sold as an
entirety or in parcels, at one or more sales, at the time
and place, on terms and in the order that Lender deems
expedient in its sole discretion;
(iv) if a portion of the Property is sold pursuant to this
Article, the Loan Documents will remain in full force and
effect with respect to any unmatured portion of the Debt and
this Mortgage will continue as a valid and enforceable first
lien on and security interest in the remaining portion of
the Property, subject only to the Permitted Exceptions,
without loss of priority and without impairment of any of
Lender's rights and remedies with respect to the unmatured
portion of the Debt;
(v) Lender may bid for and acquire the Property at a sale
and, in lieu of paying cash, may credit the amount of
Lender's bid against any portion of the Debt selected by
Lender in its sole discretion after deducting from the
amount of Lender's bid the expenses of the sale, costs of
enforcement and other amounts that Lender is authorized to
deduct at Law, in equity or otherwise; and
(vi) Lender's receipt of the proceeds of a sale will be
sufficient consideration for the portion of the Property
sold and Lender will apply the proceeds as set forth in this
Mortgage.
Section 14.7. Application of Proceeds. Lender may apply
the proceeds of any sale of the Property by power of sale or
pursuant to a judgment of foreclosure and sale and any other
amounts collected by Lender in connection with the exercise of
the Remedies to payment of the Debt in such priority and
proportions as Lender may determine in its sole discretion or in
such priority and proportions as required by Law.
Section 14.8. Power of Attorney. Borrower appoints Lender
as Borrower's attorney-in-fact to perform any actions necessary
and incidental to exercising the Remedies.
Section 14.9. Tenant at Sufferance. If Lender or a
Receiver enters the Property in the exercise of the Remedies and
Borrower is allowed to remain in occupancy of the Property,
Borrower will pay to Lender or the Receiver, as the case may be,
in advance, a reasonable rent for the Property occupied by
Borrower. If Borrower fails to pay the rent, Borrower may be
dispossessed by the usual Proceedings available against
defaulting tenants.
Section 14.10. State Laws Pertaining to Remedies.
ARTICLE XV
LIMITATION OF LIABILITY
Section 15.1. Limitation of Liability.
(a) Notwithstanding any provision in the Loan Documents to
the contrary, except as set forth in subsections (b) and (c), if
Lender seeks to enforce the collection of the Debt, Lender will
foreclose this Mortgage instead of instituting suit on the Note.
If a lesser sum is realized from a foreclosure of this Mortgage
and sale of the Property than the then outstanding Debt, Lender
will not institute any Proceeding against Borrower or Borrower's
general partners, if any, for or on account of the deficiency,
except as set forth in subsections (b) and (c).
(b) The limitation of liability in subsection (a) will not
affect or impair (i) the lien of this Mortgage or Lender's other
rights and Remedies under the Loan Documents, including Lender's
right as mortgagee or secured party to commence an action to
foreclose any lien or security interest Lender has under the Loan
Documents; (ii) the validity of the Loan Documents or the
Obligations; or (iii) Lender's right to present and collect on
any letter of credit or other credit enhancement document held by
Lender in connection with the Obligations.
(c) The following are excluded and excepted from the
limitation of liability in subsection (a) and Lender may recover
personally against Borrower and its general partners, if any, for
the following:
(i) all losses suffered and liabilities and expenses
incurred by Lender relating to any fraud or intentional
misrepresentation or intentional omission by Borrower or any
of Borrower's partners, members, officers, directors,
shareholders or principals in connection with (A) the
performance of any of the conditions to Lender making the
Loan; (B) any inducements to Lender to make the Loan; (C)
the execution and delivery of the Loan Documents; (D) any
certificates, representations or warranties given in
connection with the Loan; or (E) Borrower's performance of
the Obligations;
(ii) all Rents derived from the Property after a default
under the Loan Documents and all moneys that, on the date a
default occurs, are on deposit in one or more accounts used
by or on behalf of Borrower relating to the operation of the
Property, except to the extent properly applied to payment
of Debt Service Payments, Impositions, Insurance Premiums,
and any reasonable and customary expenses incurred by
Borrower in the operation, maintenance and leasing of the
Property or delivered to Lender;
(iii) the cost of remediation of any Environmental Activity
affecting the Property, any diminution in the value of the
Property arising from any Environmental Activity affecting
the Property (but only to the extent attributable to the
Environmental Activity) and any other losses suffered and
liabilities and expenses incurred by Lender relating to a
default under the Article entitled "Environmental";
(iv) all security deposits collected by Borrower or any of
Borrower's predecessors and not refunded to Tenants in
accordance with their respective Leases, applied in
accordance with the Leases or Law or delivered to Lender,
and all advance rents collected by Borrower or any of
Borrower's predecessors and not applied in accordance with
the Leases or delivered to Lender;
(v) the replacement cost of any Fixtures or Personal
Property removed from the Property after a default occurs;
(vi) all losses suffered and liabilities and expenses
incurred by Lender relating to any acts or omissions by
Borrower that result in waste (including economic and non-
physical waste) on the Property;
(vii) all protective advances and other payments made by
Lender pursuant to express provisions of the Loan Documents
to protect Lender's security interest in the Property or to
protect the assignment of the property described in and
effected by the Assignment, but only to the extent that the
Rents would have been sufficient to permit Borrower to make
the payment and Borrower failed to do so;
(viii) all mechanic's or similar liens relating to work
performed on or materials delivered to the Property prior to
a foreclosure sale of the Property, but only to the extent
Lender had advanced funds to pay for the work or materials;
(ix) all Proceeds that are not applied in accordance with
this Mortgage or not paid to Lender as required under this
Mortgage;
(x) all losses suffered and liabilities and expenses
incurred by Lender relating to a Transfer that is not
permitted under the Section entitled "Permitted Transfers".
(xi) all losses suffered and liabilities and expenses
incurred by Lender relating to forfeiture or threatened
forfeiture of the Property to the Government; and
(xii) all losses suffered and liabilities and expenses
incurred by Lender relating to any default by Borrower under
any of the provisions of this Mortgage relating to ERISA,
including the prohibition on any Transfer that results in a
violation of ERISA.
(d) Nothing under subparagraph (a) above will be deemed to
be a waiver of any right which Lender may have under Section
506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy
Code or under any other Law relating to bankruptcy or insolvency
to file a claim for the full amount of the Debt or to require
that all collateral will continue to secure all of the
Obligations in accordance with the Loan Documents.
ARTICLE XVI
WAIVERS
SECTION 16.1. WAIVER OF NOTICE. BORROWER WAIVES THE RIGHT
TO RECEIVE ANY NOTICE FROM LENDER WITH RESPECT TO THE LOAN
DOCUMENTS EXCEPT FOR THOSE NOTICES THAT LENDER IS EXPRESSLY
REQUIRED TO DELIVER PURSUANT TO THE LOAN DOCUMENTS.
SECTION 16.2. WAIVER OF MARSHALLING AND OTHER MATTERS.
BORROWER WAIVES THE BENEFIT OF ANY RIGHTS OF MARSHALLING OR ANY
OTHER RIGHT TO DIRECT THE ORDER IN WHICH ANY OF THE PROPERTY WILL
BE (i) SOLD; OR (ii) MADE AVAILABLE TO ANY ENTITY IF THE PROPERTY
IS SOLD BY POWER OF SALE OR PURSUANT TO A JUDGMENT OF FORECLOSURE
AND SALE. BORROWER ALSO WAIVES THE BENEFIT OF ANY LAWS RELATING
TO APPRAISEMENT, VALUATION, STAY, EXTENSION, REINSTATEMENT,
MORATORIUM, HOMESTEAD AND EXEMPTION RIGHTS OR A SALE IN INVERSE
ORDER OF ALIENATION.
SECTION 16.3. WAIVER OF TRIAL BY JURY. BORROWER WAIVES
TRIAL BY JURY IN ANY PROCEEDING BROUGHT BY OR AGAINST, OR
COUNTERCLAIM OR CROSS-COMPLAINT ASSERTED BY OR AGAINST, LENDER
RELATING TO THE LOAN, THE PROPERTY DOCUMENTS OR THE LEASES.
SECTION 16.4. WAIVER OF JUDICIAL NOTICE AND HEARING.
BORROWER WAIVES ANY RIGHT BORROWER MAY HAVE UNDER LAW TO NOTICE
OR TO A JUDICIAL HEARING PRIOR TO THE EXERCISE OF ANY RIGHT OR
REMEDY PROVIDED BY THE LOAN DOCUMENTS TO LENDER AND BORROWER
WAIVES THE RIGHTS, IF ANY, TO SET ASIDE OR INVALIDATE ANY SALE
DULY CONSUMMATED IN ACCORDANCE WITH THE PROVISIONS OF THE LOAN
DOCUMENTS ON THE GROUND (IF SUCH BE THE CASE) THAT THE SALE WAS
CONSUMMATED WITHOUT A PRIOR JUDICIAL HEARING.
SECTION 16.5. WAIVER OF SUBROGATION. BORROWER WAIVES ALL
RIGHTS OF SUBROGATION TO LENDER'S RIGHTS OR CLAIMS RELATED TO OR
AFFECTING THE PROPERTY OR ANY OTHER SECURITY FOR THE LOAN UNTIL
THE LOAN IS PAID IN FULL AND ALL FUNDING OBLIGATIONS UNDER THE
LOAN DOCUMENTS HAVE BEEN TERMINATED.
SECTION 16.6. GENERAL WAIVER. BORROWER ACKNOWLEDGES THAT
(A) BORROWER AND BORROWER'S PARTNERS, MEMBERS OR PRINCIPALS, AS
THE CASE MAY BE, ARE KNOWLEDGEABLE BORROWERS OF COMMERCIAL FUNDS
AND EXPERIENCED REAL ESTATE DEVELOPERS OR INVESTORS WHO
UNDERSTAND FULLY THE EFFECT OF THE ABOVE PROVISIONS; (B) LENDER
WOULD NOT MAKE THE LOAN WITHOUT THE PROVISIONS OF THIS ARTICLE;
(C) THE LOAN IS A COMMERCIAL OR BUSINESS LOAN UNDER THE LAWS OF
THE STATE OR COMMONWEALTH WHERE THE PROPERTY IS LOCATED,
NEGOTIATED BY LENDER AND BORROWER AND THEIR RESPECTIVE ATTORNEYS
AT ARMS LENGTH; AND (D) ALL WAIVERS BY BORROWER IN THIS ARTICLE
HAVE BEEN MADE VOLUNTARILY, INTELLIGENTLY AND KNOWINGLY, AFTER
BORROWER FIRST HAS BEEN INFORMED BY COUNSEL OF BORROWER'S OWN
CHOOSING AS TO POSSIBLE ALTERNATIVE RIGHTS, AND HAVE BEEN MADE AS
AN INTENTIONAL RELINQUISHMENT AND ABANDONMENT OF A KNOWN RIGHT
AND PRIVILEGE. THE FOREGOING ACKNOWLEDGMENT IS MADE WITH THE
INTENT THAT LENDER AND ANY SUBSEQUENT HOLDER OF THE NOTE WILL
RELY ON THE ACKNOWLEDGMENT.
I. ARTICLE XVII
NOTICES
Section 17.1. Notices. All acceptances, approvals,
consents, demands, notices, requests, waivers and other
communications (the "Notices") required or permitted to be given
under the Loan Documents must be in writing and (a) delivered
personally by a process server providing a sworn declaration
evidencing the date of service, the individual served, and the
address where the service was made; (b) sent by certified mail,
return receipt requested; or (c) delivered by nationally
recognized overnight delivery service providing evidence of the
date of delivery, with all charges prepaid, addressed to the
appropriate party at its address listed below:
If to Lender: Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, New York 10017
Attention: Director Portfolio
Management
Mortgage and
Real Estate
Region: Northeast/South/Int'L
Application # TX-899
Mortgage #000440000
with a courtesy
copy to: Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, New York 10017
Attention: Vice President and
Chief Counsel
Mortgage and
Real Estate Law
Application # TX-899
Mortgage #000440000
If to Borrower: Parkway Properties LP
c/o Parkway Properties, Inc.
188 East Capitol Street
Suite 1000
Jackson, Mississippi 39201
Attention: Sarah P. Clark
TIAA Appl. # TX-899
Mortgage #000440000
with a courtesy
copy to: Forman Perry Watkins
Krutz & Tardy, PLLC
188 East Capitol Street
Suite 1200
Jackson, Mississippi 39201
Attention: Steven M. Hendrix
Esquire
TIAA Appl. # TX-899
Mortgage #000440000
Lender and Borrower each may change from time to time the address
to which Notices must be sent, by notice given in accordance with
the provisions of this Section. All Notices given in accordance
with the provisions of this Section will be deemed to have been
given on the earliest of (i) actual receipt; (ii) Borrower's
rejection of delivery; or (iii) 3 Business Days after having been
deposited in any mail depository regularly maintained by the
United States postal service, if sent by certified mail, or 1
Business Day after having been deposited with a nationally
recognized overnight delivery service, if sent by overnight
delivery or on the date of personal service, if served by a
process server.
Section 17.2. Change in Borrower's Name or Place of
Business. Borrower will immediately notify Lender in writing of
any change in Borrower's name or the place of business set forth
in the beginning of this Mortgage.
ARTICLE XVIII
MISCELLANEOUS
Section 18.1. Applicable Law. This Mortgage is to be
governed by and to be construed in accordance with the Laws of
the State or Commonwealth in which the Property is located
without regard to conflict of law provisions.
Section 18.2. Usury Limitations. Borrower and Lender
intend to comply with all Laws with respect to the charging and
receiving of interest. Any amounts charged or received by Lender
for the use or forbearance of the Principal to the extent
permitted by Law, will be amortized and spread throughout the
Term until payment in full so that the rate or amount of interest
charged or received by Lender on account of the Principal does
not exceed the Maximum Interest Rate. If any amount charged or
received under the Loan Documents that is deemed to be interest
is determined to be in excess of the amount permitted to be
charged or received at the Maximum Interest Rate, the excess will
be deemed to be a prepayment of Principal when paid, without
premium, and any portion of the excess not capable of being so
applied will be refunded to Borrower. If during the Term the
Maximum Interest Rate, if any, is eliminated, then for the
purposes of the Loan, there will be no Maximum Interest Rate.
Section 18.3. Lender's Discretion. Wherever under the Loan
Documents any matter is required to be satisfactory to Lender,
Lender has the right to approve or determine any matter or Lender
has an election, Lender's approval, determination or election
will be made in Lender's reasonable discretion unless expressly
provided to the contrary.
Section 18.4. Unenforceable Provisions. If any provision
in the Loan Documents is found to be illegal or unenforceable or
would operate to invalidate any of the Loan Documents, then the
provision will be deemed expunged and the Loan Documents will be
construed as though the provision was not contained in the Loan
Documents and the remainder of the Loan Documents will remain in
full force and effect.
Section 18.5. Survival of Borrower's Obligations. Unless
expressly released by Lender, Borrower's representations,
warranties and covenants contained in the Loan Documents will
continue in full force and effect and survive (i) satisfaction of
the Obligations; (ii) release of the lien of this Mortgage; (iii)
assignment or other transfer of all or any portion of Lender's
interest in the Loan Documents or the Property; (iv) Lender's
exercise of any of the Remedies or any of Lender's other rights
under the Loan Documents; (v) a Transfer; (vi) amendments to the
Loan Documents; and (vii) any other act or omission that might
otherwise be construed as a release or discharge of Borrower.
Section 18.6. Relationship Between Borrower and Lender; No
Third Party Beneficiaries.
(a) Lender is not a partner of or joint venturer with
Borrower or any other entity as a result of the Loan or Lender's
rights under the Loan Documents; the relationship between Lender
and Borrower is strictly that of creditor and debtor. Each Loan
Document is an agreement between the parties to that Loan
Document for the mutual benefit of the parties and no entities
other than the parties to that Loan Document will be a third
party beneficiary or will have any claim against Lender or
Borrower by virtue of the Loan Document. As between Lender and
Borrower, any actions taken by Lender under the Loan Documents
will be taken for Lender's protection only, and Lender has not
and will not be deemed to have assumed any responsibility to
Borrower or to any other entity by virtue of Lender's actions.
(b) All conditions to Lender's performance of its
obligations under the Loan Documents are imposed solely for the
benefit of Lender. No entity other than Lender will have
standing to require satisfaction of the conditions in accordance
with their provisions or will be entitled to assume that Lender
will refuse to perform its obligations in the absence of strict
compliance with any of the conditions.
Section 18.7. Partial Releases; Extensions; Waivers.
Lender may: (i) release any part of the Property or any entity
obligated for any of the Obligations; (ii) extend the time for
payment or performance of any of the Obligations or otherwise
amend the provisions for payment or performance by agreement with
any entity that is obligated for the Obligations or that has an
interest in the Property; (iii) accept additional security for
the payment and performance of the Obligations; and (iv) waive
any entity's performance of an Obligation, release any entity or
individual now or in the future liable for the performance of the
Obligation or waive the exercise of any Remedy or option. Lender
may exercise any of the foregoing rights without notice, without
regard to the amount of any consideration given, without
affecting the priority of the Loan Documents, without releasing
any entity not specifically released from its obligations under
the Loan Documents, without releasing any guarantor(s) or
surety(ies) of any of the Obligations, without effecting a
novation of the Loan Documents and, with respect to a waiver,
without waiving future performance of the Obligation or exercise
of the Remedy waived.
Section 18.8. Service of Process. Borrower irrevocably
consents to service of process by registered or certified mail,
postage prepaid, return receipt requested, to Borrower at its
address set forth in the Article entitled "Notices".
Section 18.9. Entire Agreement. Oral agreements or
commitments between Borrower and Lender to lend money, to extend
credit or to forbear from enforcing repayment of a debt,
including promises to extend or renew the debt, are not
enforceable. Any agreements between Borrower and Lender relating
to the Loan are contained in the Loan Documents, which contain
the complete and exclusive statement of the agreements between
Borrower and Lender, except as Borrower and Lender may later
agree in writing to amend the Loan Documents. The language of
each Loan Document will be construed as a whole according to its
fair meaning and will not be construed against the draftsman.
Section 18.10. No Oral Amendment. The Loan Documents may
not be amended, waived or terminated orally or by any act or
omission made individually by Borrower or Lender but may be
amended, waived or terminated only by a written document signed
by the party against which enforcement of the amendment, waiver
or termination is sought.
Section 18.11. Severability. The invalidity, illegality or
unenforceability of any provision of any of the Loan Documents
will not affect any other provisions of the Loan Documents, which
will be construed as if the invalid, illegal or unenforceable
provision never had been included.
Section 18.12. Covenants Run with the Land. Subject to the
restrictions on transfer contained in the Article entitled
"TRANSFERS, LIENS AND ENCUMBRANCES", all of the covenants of this
Mortgage and the Assignment run with the Land, will bind all
parties hereto and all tenants and subtenants of the Land or the
Improvements and their respective heirs, executors,
administrators, successors and assigns, and all occupants and
subsequent owners of the Property, and will inure to the benefit
of Lender and all subsequent holders of the Note and this
Mortgage.
Section 18.13. Time of the Essence. Time is of the essence
with respect to Borrower's payment and performance of the
Obligations.
Section 18.14. Subrogation. If the Principal or any other
amount advanced by Lender is used directly or indirectly to pay
off, discharge or satisfy all or any part of an encumbrance
affecting the Property, then Lender is subrogated to the
encumbrance and to any security held by the holder of the
encumbrance, all of which will continue in full force and effect
in favor of Lender as additional security for the Obligations.
Section 18.15. Joint and Several Liability. If Borrower
consists of more than one person or entity, the obligations and
liabilities of each such person or entity under this Mortgage are
joint and several.
Section 18.16. Successors and Assigns. The Loan Documents
bind the parties to the Loan Documents and their respective
successors, assigns, heirs, administrators, executors, agents and
representatives and inure to the benefit of Lender and its
successors, assigns, heirs, administrators, executors, agents and
representatives.
Section 18.17. Duplicates and Counterparts. Duplicate
counterparts of any Loan Documents, other than the Note, may be
executed and together will constitute a single original document.
ARTICLE XIX
ADDITIONAL PROVISIONS PERTAINING TO STATE LAWS
IN WITNESS WHEREOF, Borrower has executed and delivered this
Mortgage as of the date first set forth above.
PARKWAY PROPERTIES LP, a Delaware limited partnership
By: Parkway Properties General Partners,
Inc. a Delaware corporation, its
sole general partner, a Delaware
corporation
By:
Name: James M. Ingram
Title: Senior Vice President
By:
Name: Sarah P. Clark
Title: Senior Vice President,
CFO, Treasurer &
Secretary
Appropriate witnesses
and acknowledgments to be attached
Exhibit A
LEGAL DESCRIPTION
Exhibit B
DEFINITIONS
"Acceleration" is defined in Section 14.2(a)(i).
"Accumulations" is defined in Section 2.1(xii).
"Accumulations Depositary" is defined in Section 6.2(a).
"Additional Funds" is defined in Section 7.4(v).
"Allocated Loan Value" is defined as that portion of the
Principal allocated by Lender to the Property, as set forth in
Exhibit E hereto, as the same may be modified from time to time
by Lender to reflect releases, substitutions and repayments.
"Assessments" is defined as all assessments now or hereafter
levied, assessed or imposed against the Property.
"Assignment" is defined as the Assignment of Leases and Rents
dated of even date with this Mortgage made by Borrower for the
benefit of Lender.
"Bankruptcy Code" means Title 11 of the United States Code.
"Borrower" is defined in the introductory paragraph.
"Business Days" is defined as any day on which commercial banks
are not authorized or required by Law to close in New York, New
York.
"Casualty" is defined as damage to or destruction of the Property
by fire or other casualty.
"Code" is defined as the Internal Revenue Code of 1986 and the
regulations promulgated thereunder.
"Commitment" is defined as that certain Loan Application and
Commitment Agreement between Borrower and Lender, as the same may
be amended in writing from time to time.
"Company" is defined in Section 10.1.
"Condemnation" is defined as the permanent or temporary taking of
all or any portion of the Property, or any interest therein or
right accruing thereto, by the exercise of the right of eminent
domain (including any transfer in lieu of or in anticipation of
the exercise of the right), inverse condemnation or any similar
injury or damage to or decrease in the value of the Property,
including severance and change in the grade of any streets
"Condemnation Awards" is defined in Section 2.1(viii).
"Condemnation Proceeding" is defined as a Proceeding that could
result in a Condemnation.
"Consolidated Subsidiary" of a Person shall mean, at any time,
any Subsidiary or other entity the accounts of which would in
accordance with GAAP be consolidated with those of such Person in
its consolidated financial statements as of such time
"CPA" is defined as an independent certified public accountant
satisfactory to Lender.
"Debt" is defined in Section 3.1.
"Debt Service Coverage Ratio" means the Net Operating Income of
the Property divided by the scheduled annual Debt Service
Payments.
"Debt Service Payments" is defined as that portion of the monthly
installments of principal and interest payable by Borrower to
Lender, as set forth in the Note, allocated to the Property based
upon the ratio of the Allocated Loan Value to the Principal.
"Default Interest Rate" is defined as the lower of 11.945% per
annum or the Maximum Interest Rate, if any.
"Destruction Event" is defined in Section 7.4.
"Environmental Activity" is defined as any actual, suspected or
threatened abatement, cleanup, disposal, generation, handling,
manufacture, possession, release, remediation, removal, storage,
transportation, treatment or use of any Hazardous Material. The
actual, suspected or threatened presence of any Hazardous
Material or the actual, suspected or threatened noncompliance
with any Environmental Laws, will be deemed Environmental
Activity.
"Environmental Laws" is defined as all Laws pertaining to health,
safety, protection of the environment, natural resources,
conservation, wildlife, waste management, Environmental
Activities and pollution.
"Environmental Report" is defined as the report prepared by
___________, dated __________, as amended.
"ERISA" is defined in Section 8.3(a).
"Event of Default" is defined in Section 14.1.
"Existing General Partner" is defined in Section 12.1(b).
"Existing Limited Partners" is defined in Section 12.1(b).
"Expenses" is defined in Section 11.1(a).
"Financial Books and Records" is defined as detailed accounts of
the income and expenses of the Property and of Borrower and all
other data, records and information that either are specifically
referred to in the Article entitled "FINANCIAL REPORTING" or are
necessary to the preparation of any of the statements, reports or
certificates required under such Article and includes all
supporting schedules prepared or used by the CPA in auditing the
financial statements required to be delivered pursuant to Article
10 hereof or in issuing its opinion.
"Fiscal Year" is defined as any calendar year or partial calendar
year during the Term.
"Fixed Interest Rate" is defined as 6.945% per annum.
"Fixtures and Personal Property" is defined in Section 2.1(iv).
"Government" is defined as any federal, state or municipal
governmental or quasi-governmental authority including any
executive, legislative or judicial branch and any division,
subdivision or agency of any of them and any entity to which any
of them has delegated authority.
"Hazardous Materials" is defined as any by-product, chemical,
compound, contaminant, pollutant, product, substance, waste or
other material (i) that is hazardous or toxic or (ii) the
abatement, cleanup, discharge, disposal, emission, exposure to,
generation, handling, manufacture, possession, presence, release,
removal, remediation, storage, transportation, treatment or use
of which is controlled, prohibited or regulated by any
Environmental Laws, including asbestos, petroleum and petroleum
products and polychlorinated biphenyls.
"Imposition Penalty Date" is defined in Section 6.1(a).
"Impositions" is defined as all Taxes, Assessments, ground rent,
if any, water and sewer rents, fees and charges, levies, permit,
inspection and license fees and other dues, charges or
impositions, including all charges and license fees for the use
of vaults, chutes and similar areas adjoining the Land,
maintenance and similar charges and charges for utility services,
in each instance whether now or in the future, directly or
indirectly, levied, assessed or imposed on the Property or
Borrower and whether levied, assessed or imposed as excise,
privilege or property taxes.
"Improvements" is defined in Section 2.1(ii).
"Insurance Premiums" is defined as all present and future
premiums and other charges due and payable on policies of fire,
rental value and other insurance covering the Property and
required pursuant to the provisions of this Mortgage.
"Insurance Proceeds" is defined in Section 2.1(ix).
"Insurers" is defined in Section 7.1(c).
"Institutional Investor" is defined as any bank, savings
institution, charitable foundation, insurance company, real
estate investment trust, pension fund or investment advisor
registered under the Investment Advisors Act of 1940, as amended,
and acting as trustee or agent.
"Interest" is defined as the fixed interest payable under the
Note at the Fixed Interest Rate and any other sums which are
deemed to be interest under Law, including, without limitation,
interest at the Default Interest Rate, to the extent applicable.
"Land" is defined in the Recitals.
"Law" is defined as all present and future codes, constitutions,
cases, opinions, rules, manuals, regulations, determinations,
laws, orders, ordinances, requirements and statutes, as amended,
of any Government that affect or that may be interpreted to
affect the Property, Borrower or the Loan, including amendments
and all guidance documents and publications promulgated
thereunder.
"Leases" is defined as all present and future leases, subleases,
licenses, and other agreements for the use and occupancy of the
Land and Improvements, any related guarantees and any use and
occupancy arrangements created pursuant to Section 365(h) of the
Bankruptcy Code or otherwise in connection with the commencement
or continuation of any bankruptcy, reorganization, arrangement,
insolvency, dissolution, receivership or similar Proceedings, or
any assignment for the benefit of creditors, in respect of any
tenant or other occupant of the Land and Improvements.
"Lender" is defined in the introductory paragraph.
"Loan" is defined in the Recitals.
"Loan Documents" is defined as the Note, this Mortgage, the
Assignment and all documents now or hereafter executed by
Borrower or held by Lender relating to the Loan, including all
amendments and including that certain Conversion and Note
Agreement of even date herewith between Borrower and Lender.
"Loan to Value Ratio" is defined as the ratio, expressed as a
decimal number, of the outstanding principal of the Loan at the
time of determination to the aggregate of the values of all real
property collateral securing the Loan at the time of
determination established by the appraisal (complying with the
Lender's appraisal requirements) most recently delivered to
Lender.
"Major Lease" is defined as: (i) a lease of any full floor in a
building; (ii) a lease to any one of the following Tenants:
___________; (iii) a lease demising, in the aggregate, 25,000
square feet or more of rentable square feet; (iv) a lease
representing 10% or more of rentable square feet of a building or
50% or more of the gross revenues of any building.
"Maturity Date" is defined in the Recitals.
"Maximum Interest Rate" is defined as the maximum rate of
interest, if any, permitted by Law as of the date of this
Mortgage to be charged with respect to the Loan.
"Mortgage" is defined as this Mortgage, Assignment of Leases and
Rents, Security Agreement and Fixture Filing Statement.
"Net Operating Income" means (a) the total annual gross rental
income as determined by the most recent rent roll of the
Property, plus other income received during the most recent 12
month period, less (b) actual operating expenses for the most
recent 12 month period, including a management fee not to exceed
3% of total annual gross revenue, and excluding depreciation and
capital expenditures.
"Note" is defined in the Recitals.
"Note Agreement" is defined in Section 10.1(b).
"Note Payments" is defined in the Note.
"Notices" is defined in Section 17.1.
"Obligations" is defined in Section 3.1.
"Permitted Exceptions" is defined as the matters shown in
Schedule B, Part 1 and 2 of the title insurance policy insuring
the lien of this Mortgage.
"Permitted Transfers" is defined in Section 12.2(b).
"Permitted Use" is defined as use as a first-class commercial
office building and uses incidentally and directly related to
such use.
"Person" shall mean natural persons, corporations, limited
partnerships, general partnerships, limited liability companies,
joint stock companies, joint ventures, associations, companies,
trusts, banks, trust companies, land trusts, business trusts or
other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof
"Policies" is defined in Section 7.1(b).
"Principal" is defined in the Recitals.
"Proceeding" is defined as a pending or threatened action, claim
or litigation before a legal, equitable or administrative
tribunal having proper jurisdiction.
"Proceeds" is defined in Section 7.2(c).
"Property" is defined in Section 2.1.
"Property Documents" is defined in Section 2.1(v).
"Receiver" is defined as a receiver, custodian, trustee,
liquidator or conservator of the Property.
"Remedies" is defined in Section 14.2(a).
"Rents" is defined as all rents, prepaid rents, percentage,
participation or contingent rents, issues, profits, proceeds,
revenues and other consideration accruing under the Leases or
otherwise derived from the use and occupancy of the Land or the
Improvements, including tenant contributions to expenses,
security deposits, royalties and contingent rent, if any, all
other fees or payments paid to or for the benefit of Borrower and
any payments received pursuant to Section 502(b) of the
Bankruptcy Code or otherwise in connection with the commencement
or continuance of any bankruptcy, reorganization, arrangement,
insolvency, dissolution, receivership or similar proceedings, or
any assignment for the benefit of creditors, in respect of any
tenant or other occupant of the Land or the Improvements and all
claims as a creditor in connection with any of the foregoing.
"Reserves" is defined in Section 2.1(xiv).
"Restoration" is defined as the restoration of the Property after
a Destruction Event to substantially its condition immediately
prior to the Destruction Event, in accordance with the plans and
specifications, in a first-class workmanlike manner using
materials substantially equivalent in quality and character to
those used for the original improvements, in accordance with Law
and free and clear of all liens, encumbrances or other charges
other than this Mortgage and the Permitted Exceptions.
"Restoration Completion Date" is defined in Section 7.4(viii).
"Subsidiary" shall mean, with respect to any Person, any
corporation, association or other business entity of which more
than 50% of the total voting power of shares of stock (or
equivalent ownership or controlling interest) entitled (without
regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by that Person
or one or more of the other Subsidiaries of that Person or a
combination thereof.
"Substitute Collateral" is defined in Section 12.5.
"Tax Agreement" is defined as that certain Real Estate Tax Escrow
and Security Agreement of even date herewith among Borrower,
Lender and Deposit Guaranty National Bank as "Escrowee".
"Taxes" is defined as all present and future real estate taxes
levied, assessed or imposed against the Property.
"Term" is defined as the scheduled term of this Mortgage
commencing on the date Lender makes the first disbursement of the
Loan and terminating on the Maturity Date.
"Transfer" is defined in Section 12.1(a).
"Uniform Commercial Code" is defined as the Uniform Commercial
Code in effect in the jurisdiction where the Land is located.
Exhibit C
RULES OF CONSTRUCTION
(a) References in any Loan Document to numbered Articles or
Sections are references to the Articles and Sections of that Loan
Document. References in any Loan Document to lettered Exhibits
are references to the Exhibits attached to that Loan Document,
all of which are incorporated in and constitute a part of that
Loan Document. Article, Section and Exhibit captions used in any
Loan Document are for reference only and do not describe or limit
the substance, scope or intent of that Loan Document or the
individual Articles, Sections or Exhibits of that Loan Document.
(b) The terms "include", "including" and similar terms are
construed as if followed by the phrase "without limitation".
(c) The terms "Land", "Improvements", "Fixtures and
Personal Property", "Condemnation Awards", "Insurance Proceeds"
and "Property" are construed as if followed by the phrase "or any
part thereof".
(d) Any agreement by or duty imposed on Borrower in any
Loan Document to perform any obligation or to refrain from any
act or omission constitutes a covenant running with the ownership
or occupancy of the Land and the Improvements, which will bind
all parties hereto and their respective successors and assigns,
and all lessees, subtenants and assigns of same, and all
occupants and subsequent owners of the Property, and will inure
to the benefit of Lender and all subsequent holders of the Note
and this Mortgage and includes a covenant by Borrower to cause
its partners, members, principals, agents, representatives and
employees to perform the obligation or to refrain from the act or
omission in accordance with the Loan Documents. Any statement or
disclosure contained in any Loan Document about facts or
circumstances relating to the Property, Borrower or the Loan
constitutes a representation and warranty by Borrower made as of
the date of the Loan Document in which the statement or
disclosure is contained.
(e) The term "to Borrower's knowledge" is construed as
meaning to the best of Borrower's knowledge after diligent
inquiry.
(f) The singular of any word includes the plural and the
plural includes the singular. The use of any gender includes all
genders.
(g) The terms "person", "party" and "entity" include
natural persons, firms, partnerships, limited liability companies
and partnerships, corporations and any other public or private
legal entity.
(h) The term "provisions" includes terms, covenants,
conditions, agreements and requirements.
(i) The term "amend" includes modify, supplement, renew,
extend, replace or substitute and the term "amendment" includes
modification, supplement, renewal, extension, replacement and
substitution.
(j) Reference to any specific Law or to any document or
agreement, including the Note, this Mortgage, any of the other
Loan Documents, the Leases and the Property Documents includes
any future amendments to the Law, document or agreement, as the
case may be.
(k) No inference in favor of or against a party with
respect to any provision in any Loan Document may be drawn from
the fact that the party drafted the Loan Document.
(l) The term "certificate" means the sworn, notarized
statement of the entity giving the certificate, made by a duly
authorized person satisfactory to Lender affirming the truth and
accuracy of every statement in the certificate. Any document
that is "certified" means the document has been appended to a
certificate of the entity certifying the document that affirms
the truth and accuracy of everything in the document being
certified. In all instances the entity issuing a certificate
must be satisfactory to Lender.
(m) Any appointment of Lender as Borrower's attorney-in-
fact is irrevocable and coupled with an interest. Lender may
appoint a substitute attorney-in-fact. Borrower ratifies all
actions taken by the attorney-in-fact but, nevertheless, if
Lender requests, Borrower will specifically ratify any action
taken by the attorney-in-fact by executing and delivering to the
attorney-in-fact or to any entity designated by the attorney-in-
fact all documents necessary to effect the ratification.
(n) Any document, instrument or agreement to be delivered
by Borrower will be in form and content satisfactory to Lender.
(o) All obligations, rights, remedies and waivers contained
in the Loan Documents will be construed as being limited only to
the extent required to be enforceable under the Law.
(p) The unmodified word "days" means calendar days.
Exhibit D
Property Documents
Those documents set forth within the policy of title
insurance for the Property issued to Lender in connection with
the granting of the Loan.
Management and leasing agreements between the Borrower and
various affiliates of Borrower, which may be canceled upon 30
days notice or less.
Exhibit E
Allocated Loan Values
Appl. #
Mortgage #
Property
Location
Allocated
Loan Amount
TX-899
000440000
One Sugar Creek Ctr.
One Commerce Green
Houston, TX
Houston, TX
$14,343,000
20,912,000
$35,255,000
FL-899
000441900
Hillsboro 5
Hillsboro 1-4
Ft. Lauderdale, FL
Ft. Lauderdale, FL
8,710,000
5,525,000
$14,235,000
VA-387
000442000
Glen Forest Building
Moorefield II
Moorefield III
Lynwood Plaza
Loudoun Plaza One
Greenbrier Towers I & II
Richmond, VA
Richmond, VA
Richmond, VA
Virginia Beach, VA
Sterling, VA
Greenbrier, VA
4,745,000
2,672,000
3,109,000
5,154,000
5,427,000
10,529,000
$31,636,000
TN-145
000442100
Executive Tower I
Knoxville, TN
5,384,000
SC-74
000442200
The Provident Building
Greenville, SC
2,885,000
NC-190
000448000
Charlotte Park Exec. Ctr.
Charlotte, NC
7,605,000
TOTAL PORTFOLIO
$97,000,000
Schedule 1
Personal Property
[See Attached]
TIAA Appl. # FL-889; M-000441900
TIAA Appl. # NC-190; M-000448000
TIAA Appl. # SC-74; M-000442200
TIAA Appl. # TN-145; M-000442100
TIAA Appl. # TX-899; M-000440000
TIAA Appl. # VA-387; M-000442000
CONVERSION AND NOTE AGREEMENT
This CONVERSION AND NOTE AGREEMENT (the "Agreement") dated
as of June 30, 1998, between PARKWAY PROPERTIES LP, a Delaware
limited partnership (the "Borrower"), PARKWAY PROPERTIES, INC., a
Maryland corporation (the "Company") and TEACHERS INSURANCE AND
ANNUITY ASSOCIATION OF AMERICA, a New York corporation
("Lender");
W I T N E S S E T H:
WHEREAS, pursuant to that certain Loan Application and
Commitment Agreement between Borrower, Company and Lender (as
amended from time to time, the "Commitment"), Lender has agreed
to make a loan to Borrower in the amount of $97,000,000 subject
to the terms and conditions set forth in the Commitment (the
"Loan");
WHEREAS, the Borrower has executed and delivered to Lender a
promissory note (the "Note"), dated the date hereof in the amount
of $97,000,000, which Note is secured by first priority liens on
those certain projects commonly known as; One Sugar Creek Center,
Sugar Land, TX, One Commerce Green, Houston, TX, Greenbrier I and
II, Chesapeake, VA, Charlotte Park Executive Center, Charlotte,
NC, Hillsboro 1-4, Deerfield Beach, FL, Hillsboro Center 5,
Deerfield Beach, FL, Glen Forest Building, Richmond, VA,
Moorefield II, Richmond, VA, Moorefield III, Richmond, VA,
Loudoun Plaza One, Sterling, VA, Executive Tower I, Knoxville,
TN, Healthsource Building, Greenville, SC, Lynnwood Plaza,
Virginia Beach, VA, (collectively, the "Properties");
WHEREAS, in order to secure the payment of the Note,
interest on the Note and all other indebtedness owed by Borrower
to Lender, as evidenced by the Note, Borrower has executed and
delivered to Lender certain mortgages, deeds of trust and deeds
to secure debt (collectively, the "Mortgages") encumbering the
Properties;
WHEREAS, pursuant to the Commitment and this Agreement,
Borrower has the one-time right, subject to certain terms and
conditions, to convert the Loan (or one-half of the Loan as
determined in accordance with Section 2.02 hereof) to an
unsecured obligation of Borrower (the "Conversion Option"); and
WHEREAS, Borrower and Lender desire to set forth the terms
and conditions of the Conversion Option and the Company and
Borrower are willing to make the representations, warranties and
covenants set forth herein and the Company, under the
circumstances specified in Section 10.01, is willing to become
liable, jointly and severally with Borrower, for the amounts
outstanding in respect of the Unsecured Note (as described in
Article Two hereof);
NOW THEREFORE, the parties hereto hereby agree as follows:
ARTICLE ONE
Section 1.01. Certain Defined Terms. The following terms used in
this Agreement shall have the following meanings:
(a) "Affiliate" shall mean, as to any Person, any
other Person (other than Lender): (a) directly or indirectly
controlling, controlled by, or under common control with, such
first Person; (b) directly or indirectly owning or holding ten
percent (10%) or more of any equity interest in such first
Person; or (c) ten percent (10%) or more of whose voting stock or
other equity interest is directly or indirectly owned or held by
such first Person. For purposes of this definition, "control"
(including with correlative meanings, the terms "controlling",
"controlled by" and "under common control with") means the
possession directly or indirectly of the power to direct or cause
the direction of the management and policies of a Person, whether
through the ownership of voting securities or by contract or
otherwise.
(a) "Business Day" means any day excluding Saturday,
Sunday and any day which is a legal holiday under the laws of the
State of New York, or is a day on which national banking
institutions located in such State are closed.
(a) "CADS" (Cash Available for Debt Service) of a
Person for any period shall be calculated based upon the
consolidated financial statements of such Person, prepared in
accordance with GAAP, and shall be equal to net income (loss)
before adjustment for minority interest and extraordinary items
of such Person for such period, adjusted by the following items
as reflected in such consolidated financial statements:
(i) Add interest expense as reflected
in such Person's consolidated financial
statements;
(ii) Add depreciation and amortization;
(iii) Add non-recurring losses and less
non-recurring gains, identified as such in such
Person's consolidated financial statements,
without duplication;
(iv) Less capital expenditures made to
existing properties (except capitalized capital
expenditures anticipated at the time of the
purchase of a Property) not funded from
reserves;
(v) Less cash deposits to required
reserves not otherwise expensed; and
(vi) Less net revenue from any
cancelable service contracts with third-parties.
(a) "Consolidated Net Worth" of a Person at any time
shall mean the aggregate of accumulated depreciation and
accumulated amortization and all amounts that would be included
under shareholders' or partners' equity and minority interests on
a consolidated balance sheet of such Person prepared in
accordance with GAAP.
(a) "Consolidated Subsidiary" of a Person shall mean,
at any time, any Subsidiary or other entity the accounts of which
would in accordance with GAAP be consolidated with those of such
Person in its consolidated financial statements as of such time.
(a) "Debt" of a Person at any time shall mean total
debt (not to include minority interests) shown on such Person's
consolidated financial statements as prepared and classified in
accordance with GAAP.
(a) "Debt Service" of a Person shall mean the maximum
amount of interest on, and required amortization of principal of,
Debt of such Person which, in accordance with the instruments
evidencing the same, is scheduled to become payable (not to
include interest payable from a reserve, the funding of which was
reflected in the calculation of CADS of such Person) in the
period of 12 consecutive calendar months following the date for
which it is being determined. For purposes of this calculation,
the applicable interest rates shall take into account any
interest rate swap, cap or other interest rate management
agreement in effect. Interest on floating rate debt shall be
calculated at its then current rate, increasing at the rate of
0.5% per quarter during the period for which the calculation of
Debt Service is being performed, not to exceed any interest rate
cap in place during the twelve-month period. The amounts payable
for amortization shall include the amount of any sinking fund or
other analogous fund for the retirement of Debt of such Person,
and the amount payable on account of principal on any such Debt
which matures serially other than at the final maturity of such
Debt.
(a) "Default" shall mean an event which, with notice
or lapse of time or both, would constitute an Event of Default if
that event or condition were not cured or removed within any
applicable grace period.
(a) "Encumbrance" means any mortgage, lien (excluding
ad valorem taxes that are not yet due and payable), charge,
pledge, encumbrance or security interest.
(a) "Environmental Law" means any present or future
federal, state or local law, rule, regulation or order relating
to pollution, waste, disposal or the protection of human health
or safety, plant life or animal life, natural resources or the
environment.
(a) "Event of Default" shall have the meaning provided
in Section 6.01.
(a) "Exchange Act" means the Securities and Exchange
Act of 1934, as amended.
(a) "GAAP" shall mean generally accepted accounting
principles, consistently applied, set forth in the opinions and
pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board that
are applicable to the circumstances as of the date of
determination.
(a) "Hazardous Material" means all or any of the
following: (a) substances that are defined or listed in, or
otherwise classified pursuant to, any Environmental Laws or
regulations as "hazardous substances," "hazardous materials,"
"hazardous wastes," "toxic substances" or any other formulation
intended to define, list or classify substances by reason of
deleterious properties such as ignitability, corrosivity,
reactivity, carcinogenicity, reproductive toxicity or "EP
toxicity"; (b) oil, petroleum or petroleum derived substances,
natural gas, natural gas liquids or synthetic gas and drilling
fluids, produced waters and other wastes associated with the
exploration, development or production of crude oil, natural gas
or geothermal resources; (c) any flammable substances or
explosives or any radioactive materials; and (d) asbestos in any
form or electrical equipment which contains any oil or dielectric
fluid containing levels of polychlorinated biphenyls in excess of
fifty parts per million.
(a) "Loan Documents" shall mean, the Note, the
Mortgages, the Assignments of Leases and Rents relating to the
Properties, and all other documents now or hereafter executed by
Borrower or held by Lender relating to the Loan, including all
amendments, but excluding this Agreement and the Unsecured Note
described in Article Two below.
(a) "Loan Parties" shall mean the Borrower and the
Company, and "Loan Party" shall mean the Borrower or the Company.
(a) "Material Adverse Effect" shall mean a material
adverse effect upon the ability of any Loan Party to perform its
obligations under this Agreement or the Unsecured Note or upon
the ability of Lender to enforce or collect any of the
Obligations.
(a) "Obligations" shall mean all obligations,
liabilities and indebtedness of every nature of each Loan Party
from time to time owed to Lender, including the principal amount
of all debts, claims and indebtedness, accrued and unpaid
interest and all fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore,
now and/or from time to time hereafter owing, due or payable,
under the Loan Documents, this Agreement and the Unsecured Note.
(b) "Person" shall mean natural persons, corporations,
limited partnerships, general partnerships, limited liability
companies, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof.
(a) "Secured Debt" of a Person at any time shall mean
any debt, liability or other obligation of such Person which is
included in Debt or Total Liabilities of such Person at such time
and is secured by any Encumbrance.
(a) "Subsidiary" shall mean, with respect to any
Person, any corporation, association or other business entity of
which more than 50% of the total voting power of shares of stock
(or equivalent ownership or controlling interest) entitled
(without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by that Person
or one or more of the other Subsidiaries of that Person or a
combination thereof.
(a) "Total Capitalization" of a Person at any time
shall mean the aggregate of such Person's Consolidated Net Worth
and Total Liabilities at such time.
(a) "Total Liabilities" of a Person at any time shall
mean, without duplication:
(1) Total liabilities (not to include minority
interests) as shown on such Person's consolidated
financial statements as prepared and classified in
accordance with GAAP;
(2) All obligations of such Person evidenced or
secured by debentures, notes, deeds of trust,
mortgages, liens, pledges, charges, encumbrances,
security interests or other similar instruments
(including Debt);
(3) All obligations of such Person to pay the deferred
purchase price of property or services;
(4) All obligations of such Person as lessee that are
required to be capitalized in accordance with
GAAP;
(5) All obligations of such Person incurred in
connection with acquisition of property, assets or
businesses;
(6) Every currently due reimbursement obligation of
such Person with respect to a letter of credit or
bankers' acceptance or similar facility issued for
the account of such Person;
(7) Any shares of stock (common or preferred), units,
minority interests or other beneficial ownership
interests of such Person which are convertible to
Debt of such Person or to an obligation of such
Person;
(8) Any obligation of such Person to be liable for, or
to pay, as obligor, guarantor or otherwise,
indebtedness or other liability of another Person
(other than Borrower or Company, as applicable, or
a Consolidated Subsidiary), which, in management's
opinion would be reportable as a liability in such
Person's financial statements in accordance with
GAAP (other than for purposes of collection in the
ordinary course of business), it being understood
that debt or a liability shall be deemed to be
incurred by such Person whenever such Person or
such Person's Consolidated Subsidiary shall
create, assume or guarantee such indebtedness or
liability or otherwise become liable in respect
thereof.
(a) "Unencumbered Assets" of a Person at any time
shall mean total undepreciated assets of such Person not subject
to any Encumbrance, excluding restricted cash, accounts
receivable and intangibles, as shown on such Person's
consolidated financial statements as prepared and classified in
accordance with GAAP.
(a) "Unsecured Debt" of a Person at any time shall
mean any obligation which is included in Debt of such Person at
such time which is not secured by any Encumbrance.
(a) "Unsecured Note" shall have the meaning provided
in Section 2.01.
(a) "Unsecured Note Base Rate" shall mean 7.095% per
annum.
Capitalized terms which are used in this Agreement but not
defined herein shall be defined as they are defined in the
Mortgage or other Loan Documents, and the rules of construction
stated in the Mortgage shall apply in this Agreement.
Section 1.02. Accounting Matters.
For purposes of this Agreement, all accounting terms not
otherwise defined herein shall have the meanings assigned to such
terms in conformity with GAAP. The terms "Consolidated Net
Worth," "Debt," "Debt Service," "Secured Debt," "Total
Liabilities," "Total Capitalization," "Unencumbered Assets" and
"Unsecured Debt" shall be calculated for the Company and its
Consolidated Subsidiaries and for the Borrower and its
Consolidated Subsidiaries in accordance with GAAP. Financial
statements and other information furnished to Lender pursuant to
Article Five shall be prepared in accordance with GAAP (as in
effect at the time of such preparation).
ARTICLE TWO
Section 2.01. Conversion Option.
If all of the conditions of Section 2.02 hereof are
fulfilled when required, Borrower may, at its option, exercisable
(a) only one time, (b) not later than two years from the date of
the Note and (c) upon not less than ninety (90) days' prior
written notice to Lender (the "Conversion Notice"), convert the
Loan into an unsecured obligation of Borrower to be evidenced by
a note substantially in the form of Exhibit A hereof and
satisfying all other requirements of this Article Two (the
"Unsecured Note") in the amount of the then outstanding principal
balance of the Note, or of half of that amount, as determined in
accordance with Section 2.02(a) below (the "Unsecured Note
Amount"). The date on which such conversion (the "Conversion")
shall become effective, which shall be the first day of a
calendar month, is hereinafter referred to as the "Conversion
Date."
Section 2.02. Conditions Precedent to Conversion.
The right of the Borrower to convert the entire Loan, or
half of the Loan, to the Unsecured Note in the Unsecured Note
Amount is subject to satisfaction of the following conditions
precedent:
(a) On or prior to the Conversion Date, in order to convert
the entire Loan, the proposed Unsecured Note shall have received
(based on the assumption that the lien of all or certain of the
Mortgages will be released in accordance with Section 2.06) two
of the following: (i) a rating of at least BBB from Standard &
Poor's Ratings Group ("S&P"), (ii) a rating of at least Baa2 from
Moody's Investors Service, Inc. ("Moody's") or (iii) a rating at
least equivalent to the aforesaid ratings from a nationally
recognized rating agency acceptable to Lender (a "Nationally
Recognized Rating Agency"). On or prior to the Conversion Date,
in order to convert one-half of the Loan, the proposed Unsecured
Note shall have received (based on the assumption that the lien
of certain of the Mortgages will be released in accordance with
Section 2.06) two of the following: (i) a rating of at least BBB-
from S&P, (ii) a rating of at least Baa3 from Moody's, or (iii) a
rating at least equivalent to the aforesaid from a Nationally
Recognized Rating Agency. If the proposed Unsecured Note shall
not have received at least two of the three ratings described
above, Borrower will not have any right to convert either the
Loan or one-half of the Loan. Such ratings shall be in effect on
the Conversion Date, and Lender shall have received evidence
satisfactory to it of such rating. The Unsecured Note shall be
subject to and comply with any covenants required by and
acceptable to any applicable rating agency for its ratings,
provided that in no event may those covenants be less restrictive
than or contravene the Financial Covenants contained in Article
Four.
(b) At the time of delivery of the Conversion Notice and at
all times thereafter to and including the Conversion Date, the
following statements shall be true and correct, and Lender shall
have received on the Conversion Date certificates as of that date
from an executive officer of the Company certifying on behalf of
the Company and of the general partner of Borrower certifying on
behalf of Borrower to that effect:
(i) The representations and warranties
contained in Section 3.01 and 3.02 hereof are
true and correct;
(ii) No default or Event of Default
under the Loan Documents or this Agreement has
occurred and is continuing;
(iii) Neither Borrower nor the
Company is in default under any of its Debt; and
(iv) After giving effect to the
Conversion, and without giving effect to any
otherwise applicable grace periods or notice
requirements, (i) the Company is in compliance
with the covenants set forth in Section 4.01,
and is in accordance with such covenants able to
incur at least $1.00 of Debt, (ii) Borrower is
in compliance with the covenants set forth in
Section 4.02, and is in accordance with such
covenants able to incur at least $1.00 of Debt
and (iii) each Loan Party is in compliance with
the covenants set forth in Article Five.
(c) On the Conversion Date, Lender shall have received a
favorable opinion of counsel for Borrower and Company in all
relevant jurisdictions reasonably satisfactory to Lender, in such
form as may be reasonably satisfactory to Lender and as to such
matters as are described in Exhibit B annexed hereto.
(d) On or prior to the Conversion Date, Borrower shall have
paid or caused to be paid (i) all principal of the Loan that
shall have become due and payable pursuant to the Loan Documents,
(ii) all unpaid interest on the Loan accrued to but not including
the Conversion Date, (iii) all accrued fees and expenses payable
to Lender pursuant to the Loan Documents and (iv) all reasonable
fees and expenses of outside counsel to Lender incurred in
connection with the preparation, execution and delivery of all
documents relating to the Conversion Option and in connection
with the exercise thereof, whether or not the Conversion is
effected.
(e) On the Conversion Date, Borrower shall have executed
and delivered to Lender the Unsecured Note either (i) in the
amount of the then outstanding principal balance of the Note or
(ii) in one-half of that amount, as determined in accordance with
Sections 2.02(a), substantially in the form of Exhibit A hereto,
appropriately completed.
(f) On or prior to the Conversion Date, a Private Placement
number issued by Standard & Poor's CUSIP Service Bureau (in
cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained
for the Unsecured Note.
(g) Unless previously approved by Lender, neither Borrower
nor Company shall after the date of this Agreement have been a
party to any consolidation or merger unless the Borrower or the
Company, as the case may be, is the surviving entity and at the
time of such consolidation or merger and after giving effect
thereto, no default or Event of Default shall exist under the
Loan Documents or this Agreement and the Borrower and the
Company, as the case may be, may without causing a default under
this Agreement incur at least $1 of Debt.
(h) On the Conversion Date the issuance to Lender of the
Unsecured Note shall (A) not violate any applicable law or
regulation, which law or regulation was not in effect as of the
date of this Agreement, and (B) not subject the Lender to any tax
under or pursuant to any applicable law or regulation, which law
or regulation was not in effect as of the date of this Agreement;
provided that, if Lender shall be subject to any such tax, the
condition specified in this clause (B) shall be deemed satisfied
if Borrower shall on or prior to the Conversion Date deliver a
written undertaking, satisfactory in form and substance to Lender
(which undertaking, if so delivered, shall for all purposes be
deemed an obligation of Borrower under this Agreement), (i) to
pay, before delinquency and before any penalty for non-payment
attaches thereto, all such taxes and any related interest; and
(ii) to deliver to Lender, at least ten (10) days before
delinquency, receipted bills evidencing such payment. If
requested by Lender, Lender shall have received a certification
from an officer of the Company, or an officer of a general
partner of the Borrower, as to such matters of fact as Lender may
reasonably specify to enable Lender to determine whether such
issuance of the Unsecured Note is so permitted.
(i) Subject to the provisions of this subparagraph (i),
Borrower shall have no right to convert any portion of the Loan
to an unsecured obligation unless and until the entire amount of
the Loan, as set forth in the first Recital of this Agreement,
shall have been disbursed by Lender pursuant to that certain
Holdback Agreement of even date herewith between Borrower and
Lender (the "Holdback Agreement"). Notwithstanding the
foregoing, if, through no fault of the Borrower or the Company,
the entire amount of the Loan is not funded pursuant to the
Holdback Agreement on or before September 30, 1998, the parties
hereto agree that they will enter into good faith negotiations to
modify this Agreement to effect a conversion to an unsecured
obligation of such lesser amount of the Loan as the parties shall
reasonably agree.
Section 2.03. Interest.
Borrower shall pay interest on the unpaid principal amount
of the Unsecured Note until the principal amount thereof shall be
paid in full, at a rate per annum equal to the Unsecured Note
Base Rate, subject to the terms of the Unsecured Note providing
for an increase in such rate after the occurrence of an Event of
Default.
Section 2.04. Repayment of Unsecured Note.
Borrower shall repay the principal and interest on the
Unsecured Note:
(a) Commencing on the first day of the calendar month
following the calendar month in which the Conversion Date occurs
and continuing on the first day of each month to, but excluding
July 1, 2008 (the "Maturity Date"), Borrower shall pay
installments of principal and interest in the amount shown on
Exhibit C, which amount shall be set forth in the Unsecured Note,
each of which installments shall be applied first to the payment
of interest on the outstanding principal and the balance to the
payment of principal. In the event the entire Loan is not
funded on or before July 31, 1998 pursuant to the Holdback
Agreement, the Lender shall revise Exhibit C to reflect a revised
amortization and payment schedule based upon the amount of
principal anticipated to be outstanding under the Note on the
Conversion Date.
(b) On the Maturity Date, Borrower shall pay the entire
unpaid principal balance of the Unsecured Note, together with all
accrued and unpaid interest on the Unsecured Note and all other
sums due thereunder.
Section 2.05. Prepayment.
Borrower shall have no right to prepay the principal balance
on the Unsecured Note in whole or in part, except as set forth in
this Section 2.05 and in the Unsecured Note.
(a) Prepayment Premium. Commencing on July 1, 2003,
Borrower may prepay the Unsecured Note on the first day of any
calendar month in whole but not in part, together with accrued
and unpaid interest on the principal being repaid, provided that
Borrower shall simultaneously pay to Lender a prepayment premium
(the "Prepayment Premium") in an amount equal to the greater of:
(i) one (1%) percent (the "Prepayment Percentage") multiplied by
the principal amount being prepaid and (ii) the amount by which
the sum of the Discounted Values (as hereinafter defined) of all
Note Payments (as hereinafter defined) with respect to the
Unsecured Note from the date of prepayment to and including the
Maturity Date, calculated at the Discount Rate (as hereinafter
defined), exceeds the principal amount being prepaid. Borrower
shall give Lender at least ninety (90) days' prior notice of its
intention to prepay the Unsecured Note.
(b) Evasion of Prepayment Premium. In the event that the
outstanding principal of the Unsecured Note shall, in accordance
with Section 6.02, have become due and payable prior to the
Maturity Date, or Lender shall receive any payment or tender of
payment of principal of the Unsecured Note in any manner not in
accordance with the terms of Section 2.04, 2.05(a) or 2.05(d),
then, in each case, to the extent permitted by applicable law,
there shall also be due and payable by Borrower to Lender a
premium (the "Evasion of Prepayment Premium") in an amount equal
to the greater of (i) an amount equal to the product of (A) the
sum of the Prepayment Percentage plus 300 basis points multiplied
by (B) the outstanding principal balance of the Unsecured Note
immediately prior to Lender's receipt of such payment (the
"Applicable Principal Amount") and (ii) the amount by which the
sum of the Discounted Values of Note Payments for the Unsecured
Note, calculated at the Default Discount Rate, exceeds the
Applicable Principal Amount.
(c) Definitions. As used in this Section 2.05, the
following terms shall have the respective meanings set forth
below:
(i) "Default Discount Rate" means the
Discount Rate less 300 basis points.
(ii) "Discount Rate" means the yield on
a U.S. Treasury issue selected by Lender, as
published in The Wall Street Journal two weeks
prior to prepayment, having a maturity date
corresponding (or most closely corresponding, if
not identical) to the scheduled maturity date of
the Unsecured Note, and a coupon rate
corresponding (or most closely corresponding, if
not identical) to the interest rate on the
Unsecured Note.
(iii) "Discounted Value" means the
Discounted Value of a Note Payment based on the
following formula:
NP
(1 + R/12)n = Discounted Value
NP = Amount of Note Payment
R = Discount Rate or Default
Discount Rate,
as the case may be
n = The number of months between
the date of prepayment and the
scheduled date of the Note
Payment in question rounded to
the nearest integer.
(iv) "Note Payments" means (A) the
scheduled payments of monthly debt service on
the Unsecured Note for the period between the
date of prepayment and the scheduled maturity
date of the Unsecured Note; and (B) the
scheduled repayment of the outstanding principal
balance of the Unsecured Note at the scheduled
maturity date.
(d) Prepayment During Final 90 Days of Term.
Notwithstanding anything herein to the contrary, (i) during the
ninety (90) day period immediately preceding the Maturity Date,
Borrower shall have the right to voluntarily prepay the Unsecured
Note in whole or in part, without any Prepayment Premium, Evasion
of Prepayment Premium or any other prepayment premium.
Section 2.06. Release of Lien.
Upon compliance with the conditions precedent set forth in
Section 2.02 and the effectiveness of the Conversion, Lender
shall, concurrently with the delivery of the Unsecured Note, (a)
if the Unsecured Note is in the entire amount of the outstanding
principal balance of the Loan, release the Properties from the
lien of the Mortgages on the Conversion Date and return to
Borrower the Note and any and all collateral held by Lender as
security for the Loan, and (b) if the Unsecured Note is in the
amount of one-half of the outstanding principal balance of the
Loan, then release Properties from the lien of the Mortgages on
the Conversion Date such that (i) the Properties remaining
subject to Mortgages shall have a Loan to Value Ratio and Debt
Service Coverage (as such terms are defined in the Mortgages) in
the same proportions as existed at the disbursement of the Loan,
and (ii) the number and identity of such Properties remaining
subject to Mortgages shall be approved by Lender in its sole
reasonable discretion.
ARTICLE THREE
Section 3.01. Representations and Warranties of the Borrower.
Borrower makes the following representations and warranties
to Lender. These representations and warranties shall be true
and correct as of the Conversion Date. These representations
shall also be true and correct, as a condition precedent to
Conversion under Section 2.02(b), at the time of the delivery of
the Conversion Notice and at all times thereafter to and
including the Conversion Date.
(a) Borrower is a limited partnership, duly and validly
organized and in good standing under the laws of Delaware, and
the sole general partner of Borrower is Parkway Properties
General Partners, Inc., a Delaware corporation ("GP"). GP holds
a one percent (1%) general partnership interest in Borrower. The
Company is a limited partner of Borrower, holding a ninety-nine
percent (99%) limited partnership interest in Borrower which may
be decreased (but to not less than a fifty-one percent (51%)
interest in each class of limited partnership interest in
Borrower) by one or more UPREIT transactions, as hereinafter
defined (an "UPREIT Transaction"). An UPREIT Transaction is a
transaction in which Borrower in acquiring a property from a
third party transferor provides as consideration to the
transferor partnership interests in Borrower convertible to
shares in the Company, and in which transferor may later convert
such partnership interests to shares or cash, provided that
Borrower shall comply with the provisions of Section 4.02(d).
Borrower is duly qualified to do business in each jurisdiction in
which the nature of its business or other ownership of its
property requires such qualification. Borrower has all requisite
power and authority to own and operate its properties and to
carry on its business as now conducted.
(b) Borrower has all necessary legal power and authority to
enter into this Agreement, the Unsecured Note and the Loan
Documents and the transactions contemplated hereby and thereby
and has taken all necessary action to authorize the execution,
delivery, and performance of this Agreement, the Unsecured Note
and the Loan Documents. This Agreement
and each of the Loan Documents have been duly and validly
executed and delivered by the Borrower, and this Agreement and
each of the Loan Documents constitute, and upon execution by the
Borrower, the Unsecured Note will constitute, the legal, valid,
and binding obligations of the Borrower enforceable against the
Borrower in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, or similar laws affecting the rights
of creditors generally and by equitable principles of general
application.
(c) The execution and delivery of this Agreement, the Loan
Documents and the Unsecured Note by the Borrower, and the
performance by Borrower of its obligations hereunder and under
the Loan Documents and the Unsecured Note, will not violate or
conflict with any law, rule, or regulation applicable to the
Borrower, any provision of the organizational documents of the
Borrower, any order, judgment, or decree of any court, arbitrator
or governmental agency applicable to the Borrower or any of its
assets, or any agreement binding on the Borrower, or result in
the creation or imposition of a lien on any properties or
revenues of the Borrower, except for liens created by the Loan
Documents.
(d) There is not presently pending, or to the knowledge of
the Borrower threatened, any action, claim, proceeding, or
investigation, at law or in equity or by or before any court or
arbitrator or any governmental, public, or regulatory authority,
against, affecting, or involving the Borrower or any employee
thereof which questions the right, power, legal capacity, or
permissibility of the Borrower to execute, deliver, and perform
its obligations under this Agreement or the Unsecured Note or the
Loan Documents, or wherein any unfavorable decision, ruling, or
finding could have a Material Adverse Effect. As of the date of
this Agreement, there is no existing matter of a character that
would require disclosure to Lender pursuant to Section 5.01(h).
(e) No consent or authorization of, filing with, or other
act by or in respect of, any governmental authority and no
consent of any party is required in connection with the
execution, delivery or performance by the Borrower of this
Agreement and the Loan Documents and the Unsecured Note or the
enforceability thereof against the Borrower, other than any such
consent, authorization, filing or other act which has been
identified in a notice to Lender, has been obtained or effected,
is in full force and effect, and is not the subject of any
pending or threatened attack by direct or collateral proceeding.
(f) The Borrower has filed all tax returns that are
required to have been filed in any jurisdiction, and has paid all
taxes shown to be due and payable on such returns and all other
taxes and assessments levied upon the Borrower or its properties,
assets, income and franchises, to the extent such taxes and
assessments have become due and payable and before they have
become delinquent, except for any taxes and assessments (i) the
amount of which is not individually or in the aggregate material
or (ii) the amount, applicability or validity of which is
currently being contested in good faith by appropriate
proceedings and with respect to which the Borrower has
established adequate reserves in accordance with GAAP.
(g) The Borrower is not in violation of any law, ordinance,
rule, regulation, order, policy, guideline or other requirement
of any domestic or foreign government or any instrumentality or
agency thereof, having jurisdiction over the conduct of its
business or the ownership of its properties, including, without
limitation, any violation relating to any use, release, storage,
transport or disposal of any Hazardous Material, which violation
would subject the Borrower or any of its Subsidiaries to criminal
liability or have a Material Adverse Effect, and, to the best
knowledge of the Borrower, no such violation has been alleged.
As of the date of this Agreement, there is no existing matter of
a character that would require disclosure to Lender pursuant to
Section 5.01(a).
(h) The Borrower does not have any knowledge of any claim,
and has not received any notice of any claim, and no proceeding
has been instituted raising any claim, against the Borrower or
any of its real properties or other assets now or formerly owned,
leased or operated by it, alleging any damage to the environment
or violation of any Environmental Laws, except, in each case,
such as could not reasonably be expected to have a Material
Adverse Effect.
(i) The Unsecured Note will constitute the senior unsecured
obligation of the Borrower, ranking equally with the Borrower's
existing and future senior unsecured and unsubordinated
indebtedness. Borrower shall use the proceeds of the Unsecured
Note for proper business purposes consistent with all applicable
laws, statutes, rules and regulations. No portion of the
proceeds of the Unsecured Note shall be used by Borrower in any
manner that might cause the borrowing or the application of such
proceeds to violate Regulation U, Regulation T or Regulation X or
any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Exchange Act.
(j) Borrower is not an "employee benefit plan" as defined
in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") that is subject to Title I of ERISA,
or a "plan" as defined in Section 4975(e)(1) of the Internal
Revenue Code of 1986, as amended (the "Code") that is subject to
Section 4975 of the Code, and Borrower's assets do not constitute
"plan assets" of one or more such plans for purposes of Title I
of ERISA or Section 4975 of the Code. Borrower is not a
"governmental plan" within the meaning of Section 3(3) of ERISA
and transactions by or with Borrower are not subject to any laws
regulating investments of and fiduciary obligations with respect
to governmental plans.
(k) Borrower is not, nor after giving effect to any loan
will be, subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act or the Investment
Company Act of 1940 or to any federal or state statute or
regulation limiting its ability to incur indebtedness for
borrowed money.
Section 3.02. Representations and Warranties of the Company.
The Company makes the following representations and
warranties to Lender. These representations and warranties shall
be true and correct as of the Conversion Date. These
representations shall also be true and correct, as a condition
precedent to Conversion under Section 2.02(b), at the time of the
delivery of the Conversion Notice and at all times thereafter to
and including the Conversion Date.
(a) The Company is a corporation duly and validly organized
and in good standing under the laws of Maryland. GP is a
corporation, duly and validly organized and in good standing
under the laws of Delaware. GP is duly qualified to do business
in each jurisdiction in which the nature of its business or the
ownership of its properties requires such qualification. The
Company holds, beneficially and of record, one hundred percent
(100%) of each class of the outstanding capital stock of GP. No
partnership interest in the Borrower held by the Company or GP is
subject to any Encumbrance.
(b) The Company has all necessary legal power and authority
to enter into this Agreement and the transactions contemplated
hereby and has taken all necessary action to authorize the
execution, delivery, and performance of this Agreement. This
Agreement has been duly and validly executed and delivered by the
Company, and this Agreement and, if applicable, the Unsecured
Note, constitutes the legal, valid, and binding obligation of the
Company enforceable against the Company in accordance with its
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, or similar laws affecting
the rights of creditors generally and by equitable principles of
general application. The Company has all requisite power and
authority to carry on its business as now conducted.
(c) The execution and delivery of this Agreement by the
Company, and the performance by the Company of its obligations
hereunder and, if applicable, under the Unsecured Note, will not
violate or conflict with any law, rule, or regulation applicable
to the Company, any provision of the organizational documents of
the Company, any order, judgment, or decree of any court,
arbitrator or governmental agency applicable to the Company or
any of its assets, or any agreement binding on the Company, or
result in the creation or imposition of a lien on any properties
or revenues of the Company.
(d) There is not presently pending, or to the knowledge of
the Company threatened, any action, claim, proceeding, or
investigation, at law or in equity or by or before any court or
arbitrator or any governmental, public, or regulatory authority,
against, affecting, or involving the Company or any employee
thereof which questions the right, power, legal capacity, or
permissibility of the Company to execute, deliver, and perform
its obligations under this Agreement or, to the extent
applicable, the Unsecured Note, or wherein any unfavorable
decision, ruling, or finding could have a Material Adverse
Effect. As of the date of this Agreement, there is no existing
matter of a character that would require disclosure to Lender
pursuant to Section 5.01(h).
(e) No consent or authorization of, filing with, or other
act by or in respect of, any governmental authority and no
consent of any party is required in connection with the
execution, delivery or performance by the Company of this
Agreement and, if applicable, the Unsecured Note or the
enforceability thereof against the Company, other than any such
consent, authorization, filing or other act which has been
identified in a notice to Lender, has been obtained or effected,
is in full force and effect, and is not the subject of any
pending or threatened attack by direct or collateral proceeding.
(f) The Company has filed all tax returns that are required
to have been filed in any jurisdiction, and has paid all taxes
shown to be due and payable on such returns and all other taxes
and assessments levied upon the Company or the Company's
properties, assets, income and franchises, to the extent such
taxes and assessments have become due and payable and before they
have become delinquent, except for any taxes and assessments (i)
the amount of which is not individually or in the aggregate
material or (ii) the amount, applicability or validity of which
is currently being contested in good faith by appropriate
proceedings and with respect to which the Company has established
adequate reserves in accordance with GAAP.
(g) The audited consolidated financial statements of the
Company for the years 1996 and 1997 delivered to Lender in
connection with the Loan are complete and correct in all material
respects and present fairly the combined financial condition and
results of operations of the Company on a consolidated basis, as
at the dates thereof and for the periods indicated. The most
recent financial statements of Company delivered to Lender
pursuant to the Loan Documents are complete and correct in all
material respects and present fairly the combined financial
condition and results of operations of Company on a consolidated
basis as at the dates thereof and for the periods indicated. As
of the current date, there has been no material adverse change
since the date of the 1997 audited consolidated financial
statements of the Company in the business, operations,
properties, assets, condition (financial or otherwise) or
prospects of the Company on a consolidated basis.
(h) The Company is not in violation of any law, ordinance,
rule, regulation, order, policy, guideline or other requirement
of any domestic or foreign government or any instrumentality or
agency thereof, having jurisdiction over the conduct of its
business or the ownership of its properties, which violation
would subject the Company or any of its Subsidiaries to criminal
liability or have a Material Adverse Effect, and, to the best
knowledge of the Company, no such violation has been alleged. As
of the date of this Agreement, there is no existing matter of a
character that would require disclosure to Lender pursuant to
Section 5.01(a).
(i) The Company does not have any knowledge of any claim,
and has not received any notice of any claim, and no proceeding
has been instituted raising any claim, against the Company or any
of its assets, except, in each case, such as could not reasonably
be expected to have a Material Adverse Effect.
ARTICLE FOUR
Section 4.01. Financial Covenants of the Company.
The Company covenants and agrees with Lender as follows.
Such covenants and agreements shall apply, as a condition
precedent to the Conversion, at the Conversion Date and shall
continue to apply at all times thereafter until payment in full
of all Obligations.
(a) Ratio of Total Liabilities to Total Capitalization.
The Company shall not, and shall not permit any of its
Consolidated Subsidiaries to, incur any debt or liability (which
if incurred would be included in the definition of Debt or Total
Liabilities) if, immediately after giving effect to the
incurrence of such debt or liability, the ratio of the Company's
Total Liabilities to the Company's Total Capitalization would
exceed sixty percent (60%).
(b) Ratio of CADS to Debt Service. The Company shall not,
and shall not permit any of its Consolidated Subsidiaries to,
incur any debt (which if incurred would be included in the
definition of Debt) if, for the four most recent consecutive
calendar quarters ended prior to the date on which such debt is
to be incurred (determined in accordance with the financial
statements of the Company provided pursuant to Section 5.01(g)
hereof), the ratio of CADS to Debt Service of the Company, on a
pro-forma basis (if the debt to be incurred is for the purchase
or development of a property, then CADS shall be adjusted to
reflect such property's projected contribution to CADS during the
same period for which Debt Service is being calculated; likewise,
such pro-forma calculation shall take into account reductions in
CADS resulting from sales of property occurring in the prior four
quarters) as if the debt were incurred, is less than 1.5 to 1.
(c) Minimum Consolidated Net Worth. The Company shall not
permit its Consolidated Net Worth at any time to be less than
$250,000,000.
(d) Restricted Payments. The Company shall not incur any
debt or liability (other than short-term borrowings in respect of
unsecured lines of credit used in the Company's normal and
ongoing cash management which will be repaid within ninety (90)
days) in order to declare, pay, make or distribute any dividend
or other distribution on account of any shares of stock (common
or preferred), units, minority interests or other beneficial
ownership interests in the Company. The Company shall not, and
shall not permit any of its Consolidated Subsidiaries to, incur
any debt or liability (other than short-term borrowings in
respect of unsecured lines of credit used in the Company's normal
and ongoing cash management which will be repaid within ninety
(90) days) to purchase, redeem, retire or acquire any shares of
stock (common or preferred), units, minority interests or other
beneficial ownership interests in the Company or in any of its
Affiliates. During the continuance of any Default or Event of
Default, the Company shall not (i) declare, pay, make or
distribute any dividend or other distribution on account of any
shares of stock (common or preferred), units, minority interests
or other beneficial ownership interests in the Company or (ii)
purchase, redeem, retire or acquire any shares of stock (common
or preferred), units, minority interests or other beneficial
ownership interests in the Company or in any of its Affiliates,
provided that this sentence shall not prohibit the Company (x)
after the exhaustion of other sources of funds from declaring or
paying any dividend or other distribution to the extent required
for the Company to satisfy the provisions of Section 857(a)(1) of
the Code or (y) from issuing stock in the Company to a third
party transferor as a result of transferor's election to convert
partnership interests in Borrower to stock in the Company in
connection with an UPREIT Transaction.
(e) Ratio of Secured Debt to Total Capitalization. The
Company shall not, and shall not permit any of its Consolidated
Subsidiaries to, incur any Secured Debt, if, immediately after
giving effect to the incurrence of such Secured Debt, the ratio
of the Secured Debt of the Company and its Consolidated
Subsidiaries to Total Capitalization of the Company would exceed
forty percent (40%).
(f) Unencumbered Assets. Unencumbered Assets of the
Company and its Consolidated Subsidiaries shall at all times be
equal to or greater than 150% of the aggregate outstanding
principal amount of Unsecured Debt of the Company and its
Consolidated Subsidiaries.
(g) Unsecured Debt by Subsidiaries of Company. The Company
shall not permit any of its Subsidiaries other than Borrower to
incur any Unsecured Debt at any time.
(h) Restricted Transactions. The Company shall not, and
shall not permit its Consolidated Subsidiaries to, enter into any
transaction with any unconsolidated Affiliate of the Company or
such Subsidiary unless such transaction is approved by a majority
of the Company's outside trustees or is on market terms and
otherwise on terms not more favorable to such Affiliate than
would have been obtained in a comparable arm's length transaction
between the Company or such Subsidiary and an unaffiliated third
party.
(i) Status of Company. The Company shall at all times
remain (1) a listed company on the New York Stock Exchange or
American Stock Exchange and (2) qualified as a real estate
investment trust (REIT) under the Code. The Company shall at all
times have as its sole business purpose to directly or indirectly
purchase, hold, lease, manage, develop, construct upon,
subdivide, finance and improve and sell or exchange, real
property and interests in real property and in entities owning
real property, and to conduct all activities incidental or
related thereto.
(j) Organizational Documents of Company. The Company shall
not make a material change to its organizational documents which
would have an adverse effect on the Lender without the prior
written consent of Lender.
(k) Assets of Company. The Company's only assets (other
than cash held for distribution) shall at all times remain its
limited partnership interest in Borrower and its existing 100%
ownership interest in GP, and GP's sole interest shall be its 1%
general partnership interest in Borrower. All assets acquired,
owned or held after the date of this Agreement shall be held by
Borrower, or by a wholly owned Subsidiary of Borrower. Each
Subsidiary of Borrower shall at all times remain a Consolidated
Subsidiary of the Company.
(l) Consolidation or Merger. Without the previous approval
of the Lender, the Company shall not be a party to any
consolidation or merger unless the Company is the surviving
entity, and at the time of such consolidation or merger and after
giving effect thereto no default or Event of Default shall exist
and the Company shall be able to incur in accordance with the
terms of this Agreement at least one dollar ($1.00) of Debt.
(m) Sale of Assets. During any twelve (12) month period
commencing on or after the Conversion Date, the Company shall
not, and shall not permit any of its Consolidated Subsidiaries
to, sell or transfer assets owned by the Company or any of its
Consolidated Subsidiaries which in total have an undepreciated
book value of more than fifteen percent (15%) of the
undepreciated book value of the sum of (i) all of the assets of
the Company and its Consolidated Subsidiaries prior to the first
such sale or transfer during the applicable twelve (12) month
period, plus (ii) all of the assets of the Company and its
Consolidated Subsidiaries acquired or developed during such
twelve (12) month period. The Company shall not, and shall not
permit any of its Consolidated Subsidiaries to, sell or transfer
any assets unless, at the time of such sale or transfer, and
after giving effect thereto, no Default or Event of Default shall
exist and the Company shall be able to incur in accordance with
the terms of this Agreement at least one dollar ($1.00) of Debt.
Section 4.02. Financial Covenants of Borrower.
The Borrower covenants and agrees with Lender as follows.
Such covenants and agreements shall apply as a condition
precedent to Conversion under Section 2.02(b), at the Conversion
Date and shall continue to apply at all times thereafter until
payment in full of all Obligations.
(a) Ratio of Total Liabilities to Total Capitalization.
The Borrower shall not incur, and shall not permit any of its
Consolidated Subsidiaries to incur, any debt or liability (which
if incurred would be included in the definition of Debt or Total
Liabilities) if, immediately after giving effect to the
incurrence of such debt or liability, the ratio of Borrower's
Total Liabilities to Borrower's Total Capitalization would exceed
sixty percent (60%).
(b) Ratio of CADS to Debt Service. The Borrower shall not
incur, and shall not permit any of its Consolidated Subsidiaries
to incur, any debt (which if incurred would be included in the
definition of Debt) if, for the four most recent consecutive
calendar quarters ended prior to the date on which such debt is
to be incurred (determined in accordance with the financial
statements provided pursuant to Section 5.01(j) hereof), the
ratio of CADS to Debt Service of Borrower, on a pro-forma basis
(if the debt to be incurred is for the purchase or development of
a property, then CADS shall be adjusted to reflect such
property's projected contribution to CADS during the same period
for which Debt Service is being calculated; likewise, such pro-
forma calculation shall take into account reductions in CADS
resulting from sales of property occurring in the prior four
quarters) as if the debt were incurred, is less than 1.5 to 1.
(c) Minimum Consolidated Net Worth. Borrower shall not
permit its Consolidated Net Worth at any time to be less than
$250,000,000.
(d) Restricted Payments. The Borrower shall not incur, and
shall not permit any of its Consolidated Subsidiaries to incur,
any debt or liability (other than short-term borrowings in
respect of unsecured lines of credit used in the Borrower's
normal and ongoing cash management which will be repaid within
ninety (90) days) in order to declare, pay, make or distribute
any dividend or other distribution on account of any partnership
or other beneficial ownership interests in the Borrower. The
Borrower shall not incur, and shall not permit any of its
Consolidated Subsidiaries to incur, any debt or liability (other
than short-term borrowings in respect of unsecured lines of
credit used in the Borrower's normal and ongoing cash management
which will be repaid within ninety (90) days) to purchase,
redeem, retire or acquire any partnership or other beneficial
ownership interests in the Borrower or in any of its Affiliates.
During the continuance of any Default or Event of Default, the
Borrower shall not (i) declare, pay, make or distribute any
dividend or other distribution on account of any shares of stock
(common or preferred), units, minority interests or other
beneficial ownership interests in the Borrower or (ii) purchase,
redeem, retire or acquire any shares of stock (common or
preferred), units, minority interests or other beneficial
ownership interests in the Borrower or in any of its Affiliates,
provided that this sentence shall not preclude the Borrower from
declaring or paying any distribution to the extent necessary to
permit the Company (after the exhaustion of other sources of
funds) to make such distributions as are required for the Company
to satisfy the provisions of Section 857(a)(1) of the Code.
(e) Ratio of Secured Debt to Total Capitalization. The
Borrower shall not incur, or permit any of its Consolidated
Subsidiaries to incur, any Secured Debt at any time if,
immediately after giving effect to the incurrence of such Secured
Debt, the ratio of the Secured Debt of Borrower and its
Consolidated Subsidiaries to Total Capitalization of Borrower
would exceed forty percent (40%).
(f) Unencumbered Assets. Unencumbered Assets of Borrower
and its Consolidated Subsidiaries shall at all times be equal to
or greater than 150% of the aggregate outstanding principal
amount of Unsecured Debt of the Borrower and its Consolidated
Subsidiaries.
(g) Unsecured Debt by Subsidiaries of Borrower. The
Borrower shall not permit any of its Subsidiaries to incur any
Unsecured Debt at any time.
(h) Restricted Transactions. The Borrower shall not enter
into, or permit any of its Subsidiaries to enter into, any
transaction with any unconsolidated Affiliate of the Borrower or
any of its Subsidiaries or the Company unless such transaction is
on market terms and otherwise on terms not more favorable to the
Affiliate than would be obtained in a comparable arm's length
transaction between the Borrower or such Subsidiary and an
unaffiliated third party.
(i) Borrower's Organizational Documents. The Borrower will
not make a material change to its partnership agreement or other
organizational documents which would have an adverse effect on
Lender, without the prior written consent of Lender.
(j) Consolidation or Merger. Neither Borrower, nor any of
its Consolidated Subsidiaries, shall be a party to any
consolidation or merger unless the Borrower or such Consolidated
Subsidiary is the surviving entity, and at the time of such
consolidation or merger and after giving effect thereto no
Default or Event of Default shall exist and the Borrower shall be
able to incur in accordance with the terms of this Agreement at
least at least one dollar ($1.00) of Debt.
(k) Sale of Assets. During any twelve (12) month period
commencing on or after the Conversion Date, the Borrower shall
not, and shall not permit any of its Consolidated Subsidiaries
to, sell or transfer assets owned by the Borrower or any of its
Consolidated Subsidiaries which in total have an undepreciated
book value of more than fifteen percent (15%) of the
undepreciated book value of the sum of (i) all of the assets of
the Borrower and its Consolidated Subsidiaries prior to the first
such sale or transfer during the applicable twelve (12) month
period, plus (ii) all of the assets of the Borrower and its
Consolidated Subsidiaries acquired or developed during such
twelve (12) month period. The Borrower shall not sell or
transfer, or permit any of its Consolidated Subsidiaries to sell
or transfer, any assets unless, at the time of such sale or
transfer, and after giving effect thereto, no Default or Event of
Default shall exist and Borrower shall be able to incur in
accordance with the terms of this Agreement at least one dollar
($1.00) of Debt.
ARTICLE FIVE
Section 5.01. Additional Affirmative Covenants.
Each Loan Party covenants and agrees with Lender as follows.
Such covenants and agreements shall apply as of the Conversion
Date and at all times thereafter. Such covenants and agreements
shall also apply as a condition precedent to Conversion under
Section 2.02(b), at the time of the delivery of the Conversion
Notice, to the extent applicable, and at all times thereafter to
and including the Conversion Date.
(a) Compliance with Laws. Each Loan Party shall, and shall
cause each of its Consolidated Subsidiaries to, comply with the
requirements of all applicable laws, rules, regulations and
orders of any governmental authority, including any Environmental
Law, as now in effect and which may be imposed in the future in
all jurisdictions in which such Loan Party is now doing business
or may hereafter be doing business, other than those applicable
laws, rules, regulations and orders of any governmental
authority, the noncompliance with which would not, individually
or in the aggregate, have a Material Adverse Effect. Each Loan
Party shall promptly notify Lender of any noncompliance with the
requirements of all applicable laws, rules, regulations and
orders of any governmental authority, including but not limited
to any Environmental Law, as now in effect and which may be
imposed in the future in all jurisdictions in which such Loan
Party is now doing business or may hereafter be doing business,
and provide such other information as may be reasonably available
to it to enable Lender and its counsel to evaluate such matter.
(b) Maintenance of Properties; Insurance. Each Loan Party
shall, and shall cause each of its Consolidated Subsidiaries to,
maintain or cause to be maintained in good repair, working order
and condition all material properties used in the business of
such Person and shall make or cause to be made all appropriate
repairs, renewals and replacements thereof. Each Loan Party
shall maintain, and shall cause each of its Consolidated
Subsidiaries to maintain, or cause to be maintained, with
financially sound and reputable insurers, public liability and
property damage insurance with respect to its business and
properties against loss or damage of the kinds customarily
carried or maintained by corporations of established reputation
engaged in similar businesses and in amounts acceptable to
Lender.
(c) Keeping of Books. Each Loan Party shall keep proper
books of record and account for itself and all of its
Consolidated Subsidiaries, in which full and correct entries
shall be made of all financial transactions and the assets and
business of such Person in conformity with GAAP.
(d) Corporate or Partnership Existence. Except as
permitted in Section 4.01 and 4.02, each Loan Party shall, and
shall cause each of its Consolidated Subsidiaries to, at all
times preserve and keep in full force and effect its corporate or
partnership existence (as the case may be) and all rights and
franchises material to its business. Each Loan Party will
promptly notify Lender of any change (i) in its or its
Consolidated Subsidiaries' corporate or partnership structure or
(ii) to its organizational documents.
(e) Inspection. Each Loan Party shall, at any reasonable
time and from time to time, upon reasonable prior notice, during
regular business hours permit Lender (and any authorized
representatives designated by Lender) to (1) examine and make
copies of and abstracts from the records (other than records
subject to attorney-client privilege or confidentiality
agreements) and books of account of such Loan Party, (2) to visit
and, subject to the rights of tenants, inspect any of the
properties of such Loan Party and its Subsidiaries, (3) discuss
the affairs, finances and accounts of such Loan Party and its
Subsidiaries with the executive officers of the Company, and (4)
communicate directly, in the presence of representatives of such
Loan Party, with such Loan Party's independent public
accountants at such reasonable times during normal business hours
and as often as may be reasonably requested. Lender's expenses
associated with such inspection, shall be paid by Lender, except
during the continuance of any Event of Default, in which event
the reasonable expenses of Lender associated with such inspection
shall be paid by such Loan Party.
(f) Payment of Taxes and Claims. Each Loan Party shall,
and shall cause its Consolidated Subsidiaries to, file all tax
returns required to be filed in any jurisdiction and to pay and
discharge all taxes shown to be due and payable on such returns
and all other taxes, assessments, governmental charges, or levies
imposed on such Person or its properties, assets, income or
franchises, provided that such Person need not pay any such tax
or assessment or claims if the amount, applicability or validity
thereof is contested by such Person on a timely basis in good
faith and in appropriate proceedings, and such Person has
established adequate reserves therefor on its books in accordance
with GAAP.
(g) Events of Default, Etc. Promptly, and in any event
within five (5) days after any Loan Party shall obtain knowledge
of any of the following events or conditions, such Loan Party
shall deliver copies of all notices given or received by such
Loan Party with respect to any such event or condition and a
certificate of an authorized party on behalf of such Loan Party
specifying the nature and period of existence of such event or
condition and what action of such Loan Party has taken, is taking
and proposes to take with respect thereto: (i) any condition or
event that constitutes a Default or an Event of Default; or (ii)
any event or condition that could reasonably be expected to
result in any Material Adverse Effect.
(h) Litigation. Promptly upon any officer of any Loan
Party obtaining knowledge of (1) the institution of any action,
suit, proceeding, governmental investigation or arbitration
against or affecting any Loan Party, (2) any material development
in any action, suit, proceeding, governmental investigation or
arbitration at any time pending against or affecting any Loan
Party or any property of any Loan Party, or (3) the assertion of
any claim, or the institution of any proceeding raising any
claim, against any Loan Party or any of its real properties now
or formerly owned, leased or operated by it or other assets of
it, alleging any damage to the environment or violation of any
Environmental Laws, that in any such case could reasonably be
expected to have a Material Adverse Effect or a material adverse
effect upon the business, operations, properties, assets,
condition (financial or otherwise) or prospects of any Loan Party
on an individual basis or taken as a whole, such Loan Party will
give notice thereof to Lender and provide such other information
as may be reasonably available to it to enable Lender and its
counsel to evaluate such matter.
(i) Other Indebtedness Notices. Each Loan Party shall
promptly deliver copies of all notices given or received by such
Loan Party with respect to noncompliance with any term or
condition related to any Debt in excess of $1,000,000 with
respect to a single item or $3,000,000 in the aggregate, and
shall promptly notify Lender of any potential or actual event of
default with respect to any such Debt.
(j) Fiscal Year; Financial Statements; Reports of the
Company and Borrower; SEC and Other Reports; Officer's
Certificate. Each Loan Party shall maintain its fiscal year as a
calendar year at all times. The Company shall deliver the
following submissions to Lender, and the Borrower shall make
identical submissions (except for those relating to Securities
and Exchange Commission requirements) at the times required for
submissions from Company pursuant to clauses (i), (ii), (iv) and
(v) below for the appropriate period:
(i) Quarterly Statements -- within 45 days after the
end of each quarterly fiscal period in each fiscal year of
the Company (other than the last quarterly fiscal period of
each such fiscal year), duplicate copies of,
(A) a consolidated balance sheet of the Company
and its Consolidated Subsidiaries as at the end of such
quarter, and
(B) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and
its Consolidated Subsidiaries, for such quarter and (in
the case of the second and third quarters) for the
portion of the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures
for the corresponding periods in the previous fiscal year,
all in reasonable detail, prepared in accordance with GAAP
applicable to quarterly financial statements generally, and
certified by a financial officer of the Company as fairly
presenting, in all material respects, the financial position
of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from
year-end adjustments, provided that delivery within the time
period specified above of copies of the Company's Quarterly
Report on Form 10-Q prepared in compliance with the
requirements therefor and filed with the Securities and
Exchange Commission shall be deemed to satisfy the
requirements of this Section 5.01(j)(i);
(ii) Annual Statements -- within 90 days after the end
of each fiscal year of the Company, duplicate copies of,
(A) a consolidated balance sheet of the Company
and its Consolidated Subsidiaries, as at the end of
such year, and
(B) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and
its Consolidated Subsidiaries, for each such year,
setting forth in each case in comparative form the figures
for the previous fiscal year, all in reasonable detail,
prepared in accordance with GAAP, and accompanied by:
(1) an opinion thereon of independent certified
public accountants of recognized national standing,
which opinion shall state that such financial
statements present fairly, in all material respects,
the financial position of the companies being reported
upon and their results of operations and cash flows and
have been prepared in conformity with GAAP, and that
the examination of such accountants in connection with
such financial statements has been made in accordance
with generally accepted auditing standards, and that
such audit provides a reasonable basis for such opinion
in the circumstances, and
(2) upon request of Lender, but only if a default
shall exist or if the Unsecured Note shall have a lower
rating than that specified in Section 2.01(b) hereof at
the time of such request, a certificate of such
accountants stating that they have reviewed this
Agreement and the certificate of a financial officer of
the Company provided pursuant to Section 5.01(j)(iv) in
connection with such financial statements, and stating
further whether, in making their audit, they have
become aware of any condition or event that then
constitutes a breach of any covenant contained in
Article Four, and, if they are aware that any such
condition or event then exists, specifying the nature
and period of the existence thereof (it being
understood that such accountants shall not be liable,
directly or indirectly, for any failure to obtain
knowledge of any such breach unless such accountants
should have obtained knowledge thereof in making an
audit in accordance with generally accepted auditing
standards or did not make such an audit),
provided that the delivery within the time period specified
above of the Company's Annual Report on Form 10-K for such
fiscal year (together with the Company's annual report to
shareholders, if any, prepared pursuant to Rule 14a-3 under
the Exchange Act) prepared in accordance with the
requirements therefor and filed with the Securities and
Exchange Commission, together with the accountant's
certificate described in clause (2) above, shall be deemed
to satisfy the requirements of this Section 5.01(j)(ii);
(iii) Promptly upon their becoming available, one copy
of (A) each financial statement, report, notice or proxy
statement sent by the Company or any of its Subsidiaries to
public securities holders generally, and (B) each regular or
periodic report, each registration statement (without
exhibits except as expressly requested by Lender), and each
prospectus and all amendments thereto filed by the Company
or any such Subsidiary with the Securities and Exchange
Commission and of all press releases and other statements
made available generally by the Company or any such
Subsidiary to the public concerning developments that are
material;
(iv) Each set of financial statements delivered to
Lender pursuant to Section 5.01(j)(i) or Section 5.01(j)(ii)
hereof shall be accompanied by a certificate of a financial
officer of the Company, in his or her capacity as such
officer and without personal liability other than for
fraudulent statements or omissions, setting forth:
(A) Covenant Compliance -- the information
(including detailed calculations) required in order to
establish whether the Company was in compliance with
the requirements of Section 4.01 hereof and whether the
Borrower was in compliance with the requirements of
Section 4.02 hereof, during the quarterly or annual
period covered by the statements then being furnished
(including with respect to such Section, where
applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be,
permissible under the terms of such Sections, and the
calculation of the amount, ratio or percentage then in
existence); and
(B) Event of Default -- a statement that such
officer has reviewed the relevant terms hereof and has
made, or caused to be made, under his or her
supervision, a review of the transactions and
conditions of the Company, the Borrower, and the
Company's other Subsidiaries from the beginning of the
quarterly or annual period covered by the statements
then being furnished to the date of the certificate and
that such review shall not have disclosed the existence
during such period of any condition or event that
constitutes a Default or an Event of Default or, if any
such condition or event existed or exists, specifying
the nature and period of existence thereof and what
action the Company or Borrower (as applicable) shall
have taken or proposes to take with respect thereto;
(v) Promptly after Lender shall so request, such other
reports and information as Lender shall reasonably request
from time to time.
ARTICLE SIX
Section 6.01. Events of Default.
(a) From and after the Conversion Date, each of the
following shall constitute an Event of Default for purposes of
this Agreement:
(i) Borrower shall fail to pay (A) any
installment or mandatory prepayment of principal
of or Prepayment Premium or the Evasion of
Prepayment Premium, if any, on the Unsecured
Note, (B) any interest on the Unsecured Note or
(C) any fee or other amount payable hereunder or
under the Unsecured Note, in each case when the
same becomes due and payable, whether at
maturity or otherwise, and such failure
continues for five (5) days after the same
becomes due and payable; or
(ii) Any representation or warranty made
by either Loan Party herein, or in any writing
furnished to Lender in connection with the
transactions contemplated by this Agreement,
shall prove to have been incorrect in any
material respect when made or deemed made; or
(iii) Borrower or the Company shall
fail to perform or observe any term, covenant or
agreement contained in this Agreement (other
than as specified in clause (i) above), and such
failure shall remain unremedied for forty-five
(45) days; or
(iv) Any recourse obligation of either
Loan Party or any of their respective
Consolidated Subsidiaries (other than the
Unsecured Note) shall have been declared (or one
or more Persons is entitled to declare any such
obligation) due and payable prior to its
scheduled maturity, or any payment in respect of
such obligations shall be past due beyond any
applicable grace period; or
(v) There shall be an Event of Default
under any of the Loan Documents; or
(vi) Either Loan Party, GP or any of
their respective Consolidated Subsidiaries shall
commence a voluntary case or other proceeding
seeking liquidation, reorganization or other
relief with respect to itself or its debts under
any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator,
custodian or other similar official of its or
any substantial part of its property, or shall
consent to any such relief or to the appointment
of or taking possession by any such official in
an involuntary case or other proceeding
commenced against it, or shall make a general
assignment for the benefit of creditors, or
shall fail generally to pay its debts as they
become due, or shall take any corporate action
to authorize any of the foregoing; or
(vii) an involuntary case or other
proceeding shall be commenced against either
Loan Party, GP or any of their respective
Consolidated Subsidiaries, seeking liquidation,
reorganization or other relief with respect to
it or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect
or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar
official of it or any substantial part of its
property, and such involuntary case or other
proceeding shall remain undismissed and unstayed
for a period of 90 days; or an order for relief
shall be entered against either Loan Party, GP
or any of their respective Consolidated
Subsidiaries, under the federal bankruptcy laws
as now or hereafter in effect; or
(viii) a final judgment or judgments
for the payment of money are rendered against
one or more of the Company, GP or any of their
respective Consolidated Subsidiaries, and which
judgments are not adequately covered by
insurance satisfactory to Lender in its sole
discretion, or within 60 days after entry
thereof, bonded, discharged or stayed pending
appeal, or are not discharged within 60 days
after the expiration of such stay.
Section 6.02. Remedies Upon Default.
Upon the occurrence of an Event of Default described in
Section 6.01(b)(vi) or (vii), the entire principal sum evidenced
by the Unsecured Note together with accrued interest and all
other amounts due under this Agreement and the Unsecured Note
(including the Evasion of Prepayment Premium) shall become
immediately due and payable without any declaration or other act
on the part of Lender. Upon the occurrence of any other Event of
Default, Lender may, upon notice to Borrower, in addition to such
other and further rights and remedies provided by law, the
Unsecured Note, or any other agreement entered into by Borrower
with respect to the Loan, declare the entire principal sum
evidenced by the Unsecured Note due and payable, together with
accrued interest thereon and all other amounts due under this
Agreement and the Unsecured Note, whereupon the Unsecured Note,
plus the applicable Evasion of Prepayment Premium, if any, and
all such interest and all such amounts shall become due and
payable without presentment, demand, protest or further notice of
any kind, all of which are hereby expressly waived by Borrower.
If an Event of Default has occurred and is continuing, and
irrespective of whether the Unsecured Note has become or has been
declared immediately due and payable under this Section 6.02, the
Lender may proceed to protect and enforce the rights of Lender by
an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained
herein or in the Unsecured Note, or for an injunction against a
violation of any of the terms hereof or thereof, or in aid of the
exercise of the power granted hereby or thereby or by law or
otherwise.
Section 6.03. No Waivers or Election of Remedies; Expenses, etc.
No delay on the part of Lender in exercising any right,
power or remedy following the occurrence of an Event of Default
and no course of dealing shall operate as a waiver thereof or
otherwise prejudice Lender's rights, powers or remedies. No
right, power or remedy conferred by this Agreement or the
Unsecured Note shall be exclusive of any other right, power or
remedy referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise, including
any right, power or remedy of Lender under any of the Loan
Documents. Without limiting the obligations of Borrower set
forth elsewhere herein, Borrower will pay to Lender on demand
such further amount as shall be sufficient to cover all costs and
expenses of Lender incurred in any enforcement or collection
under this Article 6, including attorneys' fees, expenses and
disbursements.
ARTICLE SEVEN
Section 7.01. Amendments and Waivers.
This Agreement may be amended, superseded, canceled, renewed
or extended, and the terms hereof may be waived, only by a
written instrument signed by the parties hereto or, in the case
of a waiver, by the party waiving compliance. Borrower shall pay
all costs and expenses (including attorneys' fees) incurred by
Lender in connection with any amendments, waivers or consents
requested by Borrower under or in respect of this Agreement or
the Unsecured Note (whether or not such amendment, waiver or
consent becomes effective).
Section 7.02. Notices. Unless otherwise specifically provided
herein, all notices shall be in writing addressed to the
respective party as set forth below and may be personally served,
sent by overnight courier service for next business day delivery
or United States mail and shall be deemed to have been given: (a)
if delivered in person, when delivered; (b) if delivered by
overnight courier, on the next succeeding Business Day after
delivery to such courier properly addressed; or (c) if by U.S.
Mail, four Business Days after depositing in the United States
mail, with postage prepaid and properly addressed:
If to Borrower Parkway Properties LP
or Company: c/o Parkway Properties, Inc.
188 East Capitol Street
Suite 1000
Jackson, MS 39201
Attn.: Sarah P. Clark
TIAA Appl. # FL-889; M-000441900
TIAA Appl. # NC-190; M-000448000
TIAA Appl. # SC-74; M-000442200
TIAA Appl. # TN-145; M-000442100 TIAA Appl. # TX-899; M-000440000
TIAA Appl. # VA-387; M-000442000
with a copy to: Forman Perry Watkins
Krutz & Tardy, PLLC
188 East Capitol Street
Suite 1200
Jackson, MS 39201
Attn.: Steven M. Hendrix, Esq.
TIAA Appl. # FL-889; M-000441900
TIAA Appl. # NC-190; M-000448000
TIAA Appl. # SC-74; M-000442200
TIAA Appl. # TN-145; M-000442100 TIAA Appl. # TX-899; M-000440000
TIAA Appl. # VA-387; M-000442000
If to Lender: Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, New York 10017
Attn: Managing Director
Mortgage and Real Estate Division
Region: Northeast/South/Int'l
TIAA Appl. # FL-889; M-000441900
TIAA Appl. # NC-190; M-000448000
TIAA Appl. # SC-74; M-000442200
TIAA Appl. # TN-145; M-000442100 TIAA Appl. # TX-899; M-000440000
TIAA Appl. # VA-387; M-000442000
with a copy to: Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, New York 10017
Attn: Vice President and Chief
Counsel in charge of Mortgage
and Real Estate Law
TIAA Appl. # FL-889; M-000441900
TIAA Appl. # NC-190; M-000448000
TIAA Appl. # SC-74; M-000442200
TIAA Appl. # TN-145; M-000442100 TIAA Appl. # TX-899; M-000440000
TIAA Appl. # VA-387; M-000442000
or to such other address as the party addressed shall have
previously designated by written notice to the serving party,
given in accordance with this subsection.
Section 7.03. Governing Law.
This Agreement shall be governed and construed in accordance
with, and the rights of the parties shall be governed by, the
laws of the State of New York excluding choice-of-law principles
of the law of such State that would require the application of
the laws of a jurisdiction other than such State.
Section 7.04. Execution in Counterparts.
This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument. Each
counterpart may consist of a number of copies hereof each signed
by less than all, but together signed by all, of the parties
hereto.
Section 7.05. Exhibits.
The Exhibits hereto shall constitute a part of this Agreement as
if fully set forth herein.
Section 7.06. Severability.
Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not
invalidate or render unenforceable such provision in any other
jurisdiction.
Section 7.07. Survival of Representations and Warranties.
All representations and warranties contained in this
Agreement or made in writing by or on behalf of Borrower or the
Company in connection with the transactions contemplated hereby
shall survive the execution and delivery of this Agreement and
the Unsecured Note and the sale of the Unsecured Note, regardless
of any investigation made at any time by or on behalf of Lender.
Section 7.08. Successors and Assigns.
All covenants and other agreements contained in this
Agreement by or on behalf of any of the parties hereto bind and
inure to the benefit of their respective successors and assigns
whether so expressed or not.
Section 7.09. The Meaning of "Including".
The word "including" or other forms of the word "include"
shall mean "without limitation".
ARTICLE EIGHT
Section 8.01. Payment on Unsecured Note.
(a) Each payment to be made by Borrower hereunder and under
the Unsecured Note shall be made not later than 12:00 noon (New
York City time) on the day when due, in U.S. dollars, to Lender
at its account address set forth below (or at such other account
address as Lender shall have previously designated by written
notice to Borrower) in immediately available funds without
set-off or counterclaim:
Chase Manhattan Bank
New York, NY
ABA #021000021
Account #910-2-766467
Credit to Teachers Insurance and Annuity
Association of America
TIAA Appl. # FL-889; M-000441900
TIAA Appl. # NC-190; M-000448000
TIAA Appl. # SC-74; M-000442200
TIAA Appl. # TN-145; M-000442100
TIAA Appl. # TX-899; M-000440000
TIAA Appl. # VA-387; M-000442000
(b) Whenever any payment hereunder or under the Unsecured
Note shall be stated to be due on a day other than a Business
Day, such payment shall be made on the next succeeding Business
Day, and such extension of time shall in such case be included in
the computation of payment of interest or fee, as the case may
be.
ARTICLE NINE
Section 9.01. Registration of the Unsecured Note.
The Borrower shall keep at its principal executive office,
and at its own expense, a register for the registration and
registration of transfer of the Unsecured Note. The names and
addresses of the holder of the Unsecured Note, the transfer
thereof and the names and addresses of the transferees of the
Unsecured Note shall be registered in such note register.
Borrower may deem and treat the person in whose name the
Unsecured Note is registered as the owner and holder thereof for
all purposes and shall not be affected by any notice to the
contrary, until due presentment of such Unsecured Note for
registration of transfer as provided in this Article Nine.
Neither Borrower nor Company may register or otherwise represent
the Unsecured Note as a public instrument.
Section 9.02. Transfer and Exchange of the Unsecured Note.
Upon surrender of the Unsecured Note at the principal
executive office of the Borrower for registration of transfer or
exchange, Borrower shall execute and deliver, at Borrower's
expense, a new Unsecured Note of the same series (as requested by
the holder thereof) in exchange therefor, in an aggregate
principal amount equal to the unpaid principal amount of the
surrendered Unsecured Note. Each such new Unsecured Note shall
be dated and bear interest from the date to which interest shall
have been paid on the surrendered Unsecured Note or dated the
date of the surrendered Unsecured Note if no interest shall have
been paid thereon.
Every Unsecured Note surrendered for registration of
transfer shall be duly endorsed, or be accompanied by a written
instrument of transfer duly executed, by the holder of such
Unsecured Note or by his or her attorney duly authorized in
writing. Borrower may condition its issuance of any new
Unsecured Note in connection with a transfer by any holder on the
receipt of customary representations from any transferee of any
Unsecured Note as to securities law matters and on payment to
Borrower of a sum sufficient to cover any stamp tax or other
governmental charge imposed in respect of such transfer.
Section 9.03. Lost, Stolen or Mutilated Notes.
Upon receipt by the Borrower of evidence reasonably
satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Unsecured Note (which evidence
shall be, in the case of Lender or other institutional investor,
notice from Lender or such other institutional investor, of such
ownership and such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of an
indemnity in such form or amount as shall be reasonably
satisfactory to Borrower (provided that if the holder of the
Unsecured Note is, or is a nominee for, Lender or another
institutional investor, such Person's unsecured agreement of
indemnity shall conclusively be deemed to be satisfactory so
long as such Person (other than Lender or any nominee of
Lender) has a net worth at least equal to the greater of the
outstanding principal amount of the lost, stolen or
destroyed Unsecured Note or $50,000,000), or
(b) in the case of mutilation, upon surrender and
cancellation thereof,
Borrower at its own expense shall execute and deliver, in lieu
thereof, a new Unsecured Note, dated and bearing interest from
the date to which interest shall have been paid on such lost,
stolen, destroyed or mutilated Unsecured Note or dated the date
of such lost, stolen, destroyed or mutilated Unsecured Note if no
interest shall have been paid thereon.
ARTICLE TEN
Section 10.01. Contingent Liability of the Company in Respect of
the Unsecured Note.
The Company shall have no liability whatsoever for the
Unsecured Note unless and until the Company shall fail to perform
or observe its obligations under Section 4.01(k), in which event
the Company shall become jointly and severally liable to Lender,
as fully as if the Company were named together with the Borrower
in the Unsecured Note, for the Obligations thereunder outstanding
as of the date of such failure by the Company or incurred
thereafter.
[balance of page is intentionally blank]
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first above written.
BORROWER:
PARKWAY PROPERTIES LP, a Delaware limited
partnership
By: Parkway Properties General
Partners, Inc.,its sole general partner,
a Delaware corporation
By:
Name: James M. Ingram
Title: Senior Vice President
By:
Name: Sarah P. Clark
Title: Senior Vice President,
CFO, Treasurer &
Secretary
COMPANY:
PARKWAY PROPERTIES, INC., a Maryland
corporation
By:
Name: James M. Ingram
Title: Senior Vice President
By:
Name: Sarah P. Clark
Title: Senior Vice President,
CFO, Treasurer &
Secretary
[Signatures Continued on Following Page]
[Signatures Continued From Previous Page]
LENDER:
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By:
Name: William A. Welcher
Title: Associate Director
and Assistant
Secretary
Exhibit A
UNSECURED NOTE
$_____________[ ] __________, _________
_______ __, ____
PPN [_________________]
FOR VALUE RECEIVED, the undersigned, PARKWAY PROPERTIES LP,
a Delaware limited partnership (herein, together with its
successors and assigns, "Maker"), having an address c/o Parkway
Properties, Inc., 188 East Capitol Street, Suite 1000, Jackson,
MS 39201, Attn.: Sarah P. Clark promises to pay to the order of
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA (herein,
together with its successors and assigns, "Holder") during
regular business hours at its offices at 730 Third Avenue, New
York, New York 10017, or at such other place as may be designated
from time to time in writing by Holder, the principal sum of
_________ MILLION ________________________ AND ____/100
($______________) DOLLARS, together with interest at the rate of
seven and 95/1000 (7.095%) percent per annum (the "Unsecured Note
Base Rate") thereon on so much thereof as is from time to time
outstanding and unpaid in the manner hereinafter more
specifically set forth, in lawful money of the United States of
America which will at that time be deemed to be legal tender in
payment of all debts and dues, public and private, such principal
and interest to be paid in installments as follows:
1. Principal and accrued interest in the amount of
$____________[ ] shall be due and payable on the first day of the
calendar month following the Conversion Date and on the first day
of each month thereafter but excluding August 1, 2008 (the
"Maturity Date").
2. On the Maturity Date, the entire unpaid principal
balance together with accrued and unpaid interest and all other
sums due hereunder and under the Conversion and Note Agreement
(as hereinafter defined) shall be due and payable.
Maker acknowledges that the monthly installments of
principal and interest provided in Paragraph [1] above will not
fully repay the principal of this Note and that a balloon payment
of the
entire unpaid principal balance, together with accrued and unpaid
interest thereon, will be due on the Maturity Date. Holder has
made no agreement to make financing available to Maker in
connection with such balloon payment.
The indebtedness evidenced by this Note may not be prepaid,
in whole or in part, except on the terms and conditions and in
the amounts and with the premiums, if any, set forth in the
Conversion and Note Agreement.
This Unsecured Note of the Maker in the aggregate principal
amount of $___________ is issued under and pursuant to the
Conversion and Note Agreement dated as of _________, 1998 (the
"Conversion and Note Agreement") and entered into by Maker,
Parkway Properties, Inc., a Maryland corporation (the "Company"),
and Holder, and the holder of this Note is entitled to all the
benefits provided for thereby or referred to therein, to which
Conversion and Note Agreement reference is hereby made for the
statement thereof.
Upon the occurrence of an Event of Default (as defined in
the Conversion and Note Agreement), the entire principal balance
of this Note together with accrued interest and all other sums
due under the Conversion and Note Agreement will become or may be
declared to be immediately due and payable, without any notice or
demand whatsoever, notice of exercise of such option being waived
by Maker. Holder's failure to exercise its option to accelerate
will not constitute a waiver of the right to exercise such option
at a later date (provided the Event of Default continues) or upon
the occurrence of a subsequent Event of Default.
Maker hereby waives and renounces for itself, and all its
successors and assigns, all right to the benefit of any
moratorium, reinstatement, forbearance, stay and extension now
provided, or which hereafter may be provided, by the Constitution
and laws of the United States of America and of any state
thereof, as to itself and in and to all of its property, real and
personal, against the enforcement and collection of the
obligations evidenced by this Note.
In the event of an Event of Default under the Conversion and
Note Agreement, interest will accrue thereafter on the unpaid
principal balance of this Note at the rate of five percent (5%)
per annum plus the Unsecured Note Base Rate.
In addition to the foregoing, if Maker shall fail to timely
make any payment of interest or principal beyond any grace period
provided in the Conversion and Note Agreement, time being of the
essence, including payments due on maturity, then a late charge
by way of damages will be immediately due and payable. Maker
recognizes that a default by Maker in making the payments under
this Note and under the Conversion and Note Agreement on or
before the due date thereof will result in Holder incurring
additional expense in servicing the loan evidenced by this
Unsecured Note outstanding under the Conversion and Note
Agreement, in a loss to Holder of the use of the money due and in
frustration to Holder in meeting its loan commitments. Maker
agrees that if, for any reason, Maker fails to pay the amounts
due under this Note or under the Conversion and Note Agreement on
or before the due date thereof and such failure continues beyond
any such grace period, Holder will be entitled to damages for the
detriment caused thereby, but that it is extremely
difficult and impractical to ascertain the extent of such
damages. Maker therefore agrees that a sum equal to five cents
($.05) for each dollar ($1.00) of each payment which becomes and
remains delinquent is a reasonable estimate of the damages to
Holder, which sum Maker agrees to pay on demand.
If any suit or action is instituted to collect this Note or
any part thereof, or if it is placed in the hands of an attorney
for collection, Maker promises and agrees to pay reasonable
attorneys' fees, court costs and fees of Holder or any agent of
Holder.
Maker and all endorsers or guarantors hereof and all others
who may become liable for all or any part of this obligation
agree hereby to be jointly and severally bound, and they jointly
and severally waive and renounce, to the extent permitted by law,
demand, protest, notice of nonpayment (other than for such
notices as are expressly set forth in the Conversion and Note
Agreement) and any and all lack of diligence or delays in
collection or enforcement thereof, and expressly consent to any
extension of time, release of any party liable for this
obligation, or any other indulgence or forbearance whatsoever.
Any such extension, release, indulgence or forbearance may be
made without notice to such party and without in any way
affecting the liability of such party.
Presentment for payment, demand, protest and notice of
demand, notice of dishonor and notice of non-payment, and all
other notices not expressly provided for herein or in the
Conversion and Note Agreement, are hereby waived by Maker.
No failure to accelerate the debt evidenced hereby by reason
of an Event of Default, acceptance of a past due installment, or
indulgence granted from time to time will be construed (i) as a
novation of this Note or as a reinstatement of the indebtedness
evidenced hereby or as a waiver of such right of acceleration or
of the right of Holder thereafter to insist upon strict
compliance with the terms of this Note, or (ii) to prevent the
exercise of such right of acceleration or of any other right
granted hereunder by the laws of the State of New York. Maker
hereby expressly waives the benefit of any statute or rule of law
or equity now provided, or which may hereafter be provided, which
would produce a result contrary to or in conflict with the
foregoing. No extension of time for the payment of this Note or
any installment due hereunder, made by agreement with any person
now or hereafter liable for the payment of this Note, will
operate to release, discharge, modify, change or affect the
original liability, if any, of Maker under this Note, either in
whole or in part. This Note may not be changed orally but only
by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification or discharge is
sought.
Notwithstanding any provision herein or in the Conversion
and Note Agreement to the contrary, it is not the intention of
Holder to charge or collect, nor shall there at any time be
charged or become due and payable hereunder any interest (whether
based on the Unsecured Note Base Rate or otherwise) which would
result in a rate of interest being charged which is in excess of
the maximum rate, if any, now permitted by law for this
transaction to be charged; and in the event that any sum in
excess of the maximum rate of interest is paid or charged, the
same shall be deemed to have been a prepayment of principal
(which prepayment shall be permitted, and be without Prepayment
Premium or penalty) when paid, and all payments made thereafter
shall be appropriately applied to interest and principal to give
such effect to the maximum rate permitted by law, and after such
application, any excess payment shall be immediately refunded to
Maker.
If during the term of this Note the maximum rate of
interest, if any, now permitted by law for this transaction to be
charged should be increased, then for so long as such increase is
in effect, the applicable maximum rate permitted to be charged as
referred to in the paragraph immediately preceding will be deemed
to be such increased rate. If such maximum rate of interest, if
any, now permitted by law to be charged for this transaction
should be deleted so that there would be no such maximum rate,
then for purposes of this Note there will thereafter be no
maximum rate limiting the amount that can be charged.
This Note is intended as a contract under, and will be
construed and enforced in accordance with, the laws of the State
of New York or the laws of the United States of America, when and
where applicable (including, without limitation, any federal
usury ceiling or other federal law preempting state usury laws,
which law, from time to time, may be applicable to the
indebtedness evidenced hereby), as Holder may elect.
As used herein, the terms "Maker" and "Holder" will be
deemed to include their respective successors, legal
representatives and assigns, whether by voluntary action by the
parties or by the operation of law.
Any and all notices, demands or requests provided for or
permitted to be given pursuant to this Note will be given in the
manner described in Section 7.02 of the Conversion and Note
Agreement.
* * * *
IN WITNESS WHEREOF, the undersigned has duly executed and
delivered this Note as of the date first above written.
MAKER:
PARKWAY PROPERTIES LP, a Delaware
limited partnership
II. By: Parkway Properties General
Partners, Inc., a Delaware
corporation, its sole
general partner
By:
Name: ____________________
Title: _____________________
By:
Name: ____________________
Title: ____________________
Exhibit B
FORM OF LEGAL OPINION
The opinion of Forman Perry Watkins Krutz & Tardy, PLLC and
other counsel, as counsel for the Loan Parties and GP, shall be
to the effect that:
1. The Borrower is a limited partnership, duly
incorporated and in good standing under the laws of
Delaware. The Borrower has all requisite power and
authority to own and operate its properties and to
carry on its business as now conducted and proposed
to be conducted.
2. The Company is a ____________________ duly
incorporated and in good standing under the laws of
________. The Company has all requisite power and
authority to carry on its business as now conducted
and proposed to be conducted. The Company holds,
beneficially and of record, one hundred percent
(100%) of each class of the outstanding capital stock
of GP, and owns a ____ limited partnership interest
in the Borrower.
3. GP is a corporation, duly incorporated and in good
standing under the laws of ____________.
4. GP is the sole general partner of Borrower.
5. The Borrower has all necessary legal power and
authority to enter into and to perform its
obligations under the Conversion and Note Agreement
and the Unsecured Note and has taken all necessary
action to authorize the execution and delivery of,
and the performance of its obligations under, the
Conversion and Note Agreement and the Unsecured Note.
The Conversion and Note Agreement and the Unsecured
Note have been duly and validly executed and
delivered by the Borrower, and constitute the legal,
valid, and binding joint and several obligations of
the Borrower enforceable against the Borrower in
accordance with their respective terms, except as
enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, or similar
laws affecting the rights of creditors generally and
by equitable principles of general application.
6. The Company has all necessary legal power and
authority to enter into and to perform its
obligations under the Conversion and Note Agreement
and has taken all necessary action to authorize the
execution and delivery of, and the performance of its
obligations under, the Conversion and Note Agreement.
The Conversion and Note Agreement has been duly and
validly executed and delivered by the Company, and
constitutes the legal, valid, and binding obligation
of the Company enforceable against the Company in
accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency,
reorganization, or similar laws affecting the rights
of creditors generally and by equitable principles of
general application.
7. The execution and delivery of the Conversion and Note
Agreement by the respective Loan Parties and of the
Unsecured Note by the Borrower, and the performance
by each Loan Party of its obligations under the
Conversion and Note Agreement and, in the case of the
Borrower and, if applicable the Company, under the
Unsecured Note, will not violate or conflict with any
law, rule, or regulation applicable to either Loan
Party, any provision of the organizational documents
of either Loan Party or, to such counsel's knowledge
after due inquiry, (i) any order, judgment, or decree
of any court, arbitrator or governmental agency
applicable to either Loan Party or any of its assets,
or (ii) any agreement binding on either Loan Party
or, to such counsel's knowledge after due inquiry,
result in the creation or imposition of a lien on any
properties or revenues of either Loan Party.
8. No consent or authorization of, filing with, or other
act by or in respect of, any governmental authority
and no consent of any party is required in connection
with the execution, delivery or performance by either
Loan Party of the Conversion and Note Agreement and
the Unsecured Note or the enforceability thereof
against each Loan Party.
9. To such counsel's knowledge after due inquiry, there
is not presently pending or threatened any action,
claim, proceeding, or investigation, at law or in
equity or by or before any court or arbitrator or any
governmental, public, or regulatory authority,
against, affecting, or involving either Loan Party or
any employee thereof which questions the right,
power, legal capacity, or permissibility of either
Loan Party to execute and deliver, and to perform its
obligations under, the Conversion and Note Agreement
or the Unsecured Note, or wherein any unfavorable
decision, ruling, or finding could have a Material
Adverse Effect.
10. Borrower is not an "employee benefit plan" as defined
in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") that is
subject to Title I of ERISA, or a "plan" as defined
in Section 4975(e)(1) of the Internal Revenue Code of
1986, as amended (the "Code") that is subject to
Section 4975 of the Code, and Borrower's assets do
not constitute "plan assets" of one or more such
plans for purposes of Title I of ERISA or Section
4975 of the Code. Borrower is not a "governmental
plan" within the meaning of Section 3(3) of ERISA and
transactions by or with Borrower are not subject to
any laws regulating investments of and fiduciary
obligations with respect to governmental plans.
11. Borrower is not, nor after giving effect to any loan
will be, subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal
Power Act or the Investment Company Act of 1940 or to
any federal or state statute or regulation limiting
its ability to incur indebtedness for borrowed money.
12. Neither the purchase of the Unsecured Note nor the
use by the Borrower of all or any portion of the
proceeds of the sale of the Unsecured Note will
violate Regulation U, Regulation T or Regulation X or
any other regulation of the Board of Governors of the
Federal Reserve System or the Securities Exchange Act
of 1934, as amended.
13. The issuance, delivery and sale of the Unsecured Note
do not require registration under the Securities Act
of 1933, as amended, or the qualification of an
indenture under the Trust Indenture Act of 1939, as
amended.
With respect to matters of fact on which such opinion is based,
such counsel shall be entitled to rely on appropriate
certificates of public officials and officers of either Loan
Party or GP, and with respect to matters governed by the laws of
any jurisdiction in which such counsel is not admitted to
practice, such counsel may rely upon the opinions of counsel
deemed (and stated in their opinion to be deemed) by them to be
competent and reliable, which counsel shall be reasonably
satisfactory to Lender
Exhibit C
Amo
rti
zat
ion
Paym
ent
Numb
er
Due Date
Outstanding
Principal Amt
of Secured
Loan (1)
Amount of
Unsecured loan
w/100%
Conversion
P & I
Payment
for
unsecured
Loan @
7.095%
Amount of
Unsecured
loan
w/50%
Conversion
P&I
Payment
for
unsecured
component
@7.095%
P&I payment
for secured
component
@6.945%
179
1
01-Aug-98
96,692,504.02
96,692,504.02
876,987.25
48,346,252.01
438,493.63
434,441.74
178
2
01-Sept-98
96,383,228.40
96,383,228.40
876,951.01
48,191,614.20
438,475.51
434,441.74
177
3
01-Oct-98
96,072,162.86
96,072,162.86
876,914.68
48,036,081.43
438,457.34
434,441.74
176
4
01-Nov-98
95,759,297.02
95,759,297.02
876,878.26
47,879,648.51
438,439.13
434,441.74
175
5
01-Dec-98
95,444,620.47
95,444,620.47
876,841.74
47,722,310.23
438,420.87
434,441.74
174
6
01-Jan-99
95,128,122.73
95,128,122.73
876,805.13
47,564,061.36
438,402.57
434,441.74
173
7
01-Feb-99
94,809,793.25
94,809,793.25
876,768.42
47,404,896.63
438,384.21
434,441.74
172
8
01-Mar-99
94,489,621.45
94,489,621.45
876,731.62
47,244,810.73
438,365.81
434,441.74
171
9
01-Apr-99
94,167,596.65
94,167,596.65
876,694.72
47,083,798.33
438,347.36
434,441.74
170
10
01-May-99
93,843,708.14
93,843,708.14
876,657.73
46,921,854.07
438,328.87
434,441.74
169
11
01-Jun-99
93,517,945.12
93,517,945.12
876,620.65
46,758,972.56
438,310.33
434,441.74
168
12
01-Jul-99
93,190,296.74
93,190,296.74
876,583.47
46,595,148.37
438,291.74
434,441.74
167
13
01-Aug-99
92,860,752.10
92,860,752.10
876,546.19
46,430,376.05
438,273.10
434,441.74
166
14
01-Sep-99
92,529,300.22
92,529,300.22
876,508.82
46,264,650.11
438,254.41
434,441.74
165
15
01-Oct-99
92,195,930.07
92,195,930.07
876,471.36
46,097,965.03
438,235.68
434,441.74
164
16
01-Nov-99
91,860,630.53
91,860,630.53
876,433.80
45,930,315.27
438,216.90
434,441.74
163
17
01-Dec-99
91,523,390.45
91,523,390.45
876,396.15
45,761,695.22
438,198.08
434,441.74
162
18
01-Jan-2000
91,184,198.59
91,184,198.59
876,358.40
45,592,099.30
438,179.20
434,441.74
161
19
01-Feb-2000
90,843,043.66
90,843,043.66
876,320.55
45,421,521.83
438,160.28
434,441.74
160
20
01-Mar-2000
90,499,914.29
90,499,914.29
876,282.61
45,249,957.15
438,141.31
434,441.74
159
21
01-Apr-2000
90,154,799.06
90,154,799.06
876,244.58
45,077,399.53
438,122.29
434,441.74
158
22
01-May-2000
89,807,686.48
89,807,686.48
876,206.45
44,903,843.24
438,103.23
434,441.74
157
23
01-Jun-2000
89,458,564.99
89,458,564.99
876,168.22
44,729,282.49
438,084.11
434,441.74
156
24
01-Jul-2000
89,107,422.95
89,107,422.95
876,129.90
44,553,711.47
438,064.95
434,441.74
(1) Assumes that no conversion has occurred and that all scheduled principal
and interest payments were made on the first day of the respective calendar
month
Completion Notes for Note and Conversion Agreement:
Attach Signature Pages
/ The amount of the Unsecured Note will be determined according to
Sections 2.01 and 2.02(a) of the
Conversion and Note Agreement.
/ This amount will be determined in accordance with Exhibit A.
