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Exhibit 99(c) EXECUTION COPY
AGREEMENT AND WAIVER
AGREEMENT AND WAIVER (the "Waiver"), dated as of October 6,
2000, between Parkway Properties, Inc., a Maryland corporation (the
"Corporation" or the "Company"), and Five Arrows Realty Securities L.L.C., a
Delaware limited liability company (the "Investor"). Terms used herein and not
otherwise defined herein shall have the meanings set forth in the Corporation's
Articles of Incorporation, as amended through and on the date hereof (the
"Charter") and the Articles Supplementary (the "Series A Articles
Supplementary") classifying 2,760,000 shares of the Corporation's 8.75% Series A
Cumulative Redeemable Preferred Stock (the "Series A Preferred Shares") and the
Articles Supplementary (the "Series B Articles Supplementary") classifying
2,142,857 shares of Series B Convertible Cumulative Preferred Stock (the "Series
B Preferred Shares").
WHEREAS, the Corporation intends to issue and sell to the
Investor, and the Investor intends to purchase from the Corporation, up to
2,142,857 Series B Preferred Shares;
WHEREAS, the Charter and the Articles Supplementary set forth
certain restrictions with respect to the ownership of the Corporation's capital
stock;
WHEREAS, the Corporation desires to waive certain of those
restrictions on the terms and conditions set forth in this Waiver; and
WHEREAS, the Corporation's Board of Directors has approved the
provisions of this Waiver.
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The
Corporation hereby represents and warrants to the Investor as follows:
(a) Except as set forth on Schedule 1(a) hereto, no
individual (as determined for purposes of Section 856(h) of the Code
but including "qualified trusts" (as defined in Section 856(h)(3)(E) of
the Code)), Beneficially Owns more than 9.8% of the number of shares of
each class of the outstanding Equity Stock (as defined in the Charter)
and, to the knowledge of the Corporation, no such individual
Beneficially Owns more than 5% of each such class. The Corporation has
not granted any waiver of the Ownership Limit in the Charter or
Articles Supplementary.
(b) (i) Attached hereto as Exhibit A is a true and
complete list of the Tenants which have leases which provide for the
payment of annual "rents from real property" to the Company (as such
term is defined in Section 856(d) of the Code, and giving effect to the
provisions of Treasury Regulation Section 1.856-3(g)) in an amount,
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determined solely with reference to the amount required to be included
in the gross income of the Company for purposes of applying Section
856(c) of the Code, in excess of $250,000 (a "Major Lease") (it being
understood that at any time and from time to time the Corporation may,
subject to Section 3(b) hereof, notify the Investor that there has been
an addition to or a change in Tenants and supply to the Investor a
revised Exhibit A, which shall become Exhibit A hereto as of and after
the date of receipt by the Investor of such revised Exhibit A), (ii)
the Corporation does not own, directly or indirectly (after applying
the constructive ownership rules of Section 856(d)(5) of the Code) any
stock or other equity interests in any such Tenant (as determined for
purposes of applying Section 856(d)(2)(B) of the Code) and (iii) for
purposes of Section 856(c)(2) of the Code, at least 98% of the gross
income of the Corporation for the calendar year ending December 31,
1999, was derived from the sources specified in Section 856(c)(2) of
the Code ("Qualifying Income"). For purposes of this Agreement, the
term "Tenant" refers to any corporation, partnership, limited liability
company, joint venture, unincorporated organization, estate, trust, or
any other entity that pays or is expected to pay "rents from real
property" (as such term is defined in Section 856(d) of the Code) to
the Corporation or to any entity all or part of the income of which
would be attributed to the Company for purposes of applying Sections
856(c)(2) and 856(c)(3) of the Code.
(c) Under current law, the only basis upon which the
Investor could cause the Corporation to fail to qualify as a REIT
solely by reason of the ownership by the Investor of the Preferred
Shares or shares of Common Stock into which the Preferred Shares have
been converted (such Preferred Shares or shares of Common Stock,
hereinafter, the "Subject Shares") (it being understood that this
representation does not apply to any failure to qualify as a result of
any action, inaction or event, including but not limited to the
provision of any service or the institution of any legal proceeding, by
any person, including but not limited to the Investor, that could
affect the Company's status as a REIT), is by (i) the Investor owning,
actually or Beneficially, shares of Stock to the extent that such
actual or Beneficial Ownership of Stock would result in the Corporation
being "closely-held" within the meaning of Section 856(h) of the Code
or (ii) actual or constructive ownership of an interest in the Company
that, after application of the constructive ownership rules of Section
856(d)(5) of the Code, would result in the Corporation being deemed to
own, after application of such rules, an interest in a Tenant that
would cause the Corporation to own or be deemed to own, for purposes of
applying Section 856(d)(2)(B) of the Code, 10% or more of the voting
power or number of shares, or interests in assets or net profits, as
applicable, in such Tenant and the income derived by the Corporation
from such Tenants, when combined with other income that is both (i)
required to be taken into account by the Company for purposes of
applying Section 856(c) of the Code and (ii) not described in Sections
856(c)(2)(A) through (H) or Sections 856(c)(3)(A) through (I) of the
Code, as applicable, would cause the Corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code.
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2. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
(a) Relying upon and assuming the accuracy of the
representations and warranties given by the Corporation set forth in
Section 1, the ownership by the Investor and The Public Employees
Retirement System of Ohio ("OPERS") of the Subject Shares will not
result in the Corporation being "closely-held" within the meaning of
Section 856(h) of the Code and will not result in the Corporation
otherwise failing to qualify as a REIT.
(b) A true and complete list (the "Beneficial Owners
List") of the persons owning a capital or profits interest in the
Investor, the interest owned in the Investor by each such person, the
persons owning beneficial interests in the entities (other than OPERS)
owning a capital or profits interest in the Investor and the interest
owned by each such person, has been provided to the Corporation by the
Investor.
(c) OPERS is a "qualified trust" as that term is
defined in Section 856(h)(3)(E) of the Code except to the extent that
it not being a "qualified trust" would not result in the Corporation
being "closely-held" within the meaning of Section 856(h) of the Code
or would not result in the Corporation otherwise failing to qualify as
a REIT.
(d) The Investor and those persons owning a direct or
indirect interest in the Investor collectively own, directly or
indirectly, no more than 3% of the value of the Corporation, not
including the Subject Shares.
(e) No person has a beneficial interest in OPERS with
a value of more than 0.2% of the total value of all beneficial
interests in OPERS.
(f) (i) Except as notified to the Corporation by the
Investor pursuant to Section 4(b), the Investor directly owns no stock
or other equity interest in excess of 4.9% in a Tenant identified on
Exhibit A (as the same may be amended from time to time), and (ii)
except as notified to the Corporation by the Investor pursuant to
Section 4(b), no Person owns a stock or other equity interest (as
determined for purposes of applying Section 856(d)(2)(B) of the Code)
in a Tenant identified on Exhibit A (as the same may be amended from
time to time) that would both (A) be attributable to Investor by
operation of Section 318 of the Code, as modified by Section 856(d)(5)
of the Code and (B) result in the Investor being deemed to own,
pursuant to such section as so modified, in excess of 4.9% of such
stock or other equity interests in such Tenant.
(g) For purposes of applying Section 856(h) of the
Code, no individual (as determined for purposes of applying Section
856(h) but including "qualified trusts" other than OPERS) is or will be
deemed to own more than 0.2% of either the value or number of shares of
the outstanding Stock by virtue of the Investor's or OPERS' ownership
of the Subject Shares, except for the direct or indirect individual
members of Rothschild Realty Investors III L.L.C., no one of whom,
following such acquisition, will be deemed to own directly or
indirectly (for purposes of applying such section), more than 9.8% of
either the value or number of shares of the outstanding Stock.
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3. UNDERTAKINGS OF THE CORPORATION.
(a) Other than the waiver provided pursuant to this
Waiver, the Corporation will not grant any waiver of the Ownership
Limit in the Charter or the Articles Supplementary if such waiver would
cause the Corporation to be "closely-held" or a "pension-held REIT,"
both within the meaning of Section 856(h) of the Code.
(b) Before the Corporation, or any entity, all or
part of the income of which would be attributed to the Company for
purposes of applying Sections 856(c)(2) and 856(c)(3) of the Code,
enters into a Major Lease, the Corporation will provide the name of the
proposed Tenant to the Investor. Investor shall inform (or be treated
as informing pursuant to Section 4(b) hereof) the Corporation if the
Investor owns or is deemed to own, for purposes of Section 856(d)(2)(B)
of the Code, more than a 4.9% interest in the proposed tenant.
(c) Except as provided in this Waiver, the
Corporation will not take any action or fail to take any reasonable
action that it knows (or reasonably should know) would reasonably be
expected to result in (other than (i) any action or failure to take
action required to preserve the Corporation's status as a REIT or (ii)
any action or failure to take action in reliance upon the
representations and warranties of the Investor in Section 2 or the
undertakings of the Investor in Section 4), (x) the Investor owning,
actually or Beneficially, shares of Stock to the extent that such
actual or Beneficial Ownership of Stock would result in the Corporation
being "closely-held" within the meaning of Section 856(h) of the Code
or would result in the Corporation otherwise failing to qualify as a
REIT, in either case solely by reason of the actual or Beneficial
Ownership of the Subject Shares by the Investor and OPERS, or (y) less
than 96% of the gross income of the Corporation for any year (for
purposes of Section 856(c)(2) of the Code) being Qualifying Income (it
being understood that unless the Company has failed to comply with
Section 1(b) and 3(b) hereof, the Company shall be entitled to assume
for this purpose that it does not own and is not deemed to own any
interest in a Tenant described in Section 856(d)(2)(B) of the Code by
reason of the ownership of the Subject Shares by the Investor, any
person owning a capital or profits interest in the Investor, OPERS, any
person having a beneficial interest in OPERS, or any transferee that
executes a Successor Waiver Agreement (as defined in Section 6),
despite the receipt of any notice to the contrary pursuant to Section
4(b)).
4. UNDERTAKINGS OF THE INVESTOR.
(a) The Investor and those persons identified on the
Beneficial Owners List or who, following the date hereof, acquire a
direct or indirect capital or profits interest in the Investor (the
"Investor Group") will not take any action or fail to take any
reasonable action that the Investor or any such Person knows (or
reasonably should know) would reasonably be expected to cause: (i) the
Investor to be an individual for purposes of Section 542(a)(2) of the
Code as modified by Section 856(h) of the Code, (ii) OPERS to fail to
qualify as a "qualified trust" as that term is defined in Section
856(h)(3)(E) of the Code, (iii) any individual (as determined for
purposes of applying Section 856(h) but
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including "qualified trusts" other than OPERS), except for the direct
or indirect individual members of Rothschild Realty Investors III
L.L.C., to be deemed to own more than 0.2% of either the value or
number of shares of the outstanding Stock by virtue of the Investor's
or OPERS' ownership of the Subject Shares, (iv) a direct or indirect
individual member of Rothschild Realty Investors III L.L.C. to be
deemed to own (for purposes of applying such section), more than 9.8%
of either the value or number of shares of the outstanding Stock, (v)
any person to have a beneficial interest in OPERS with a value of more
than 0.2% of the total value of all beneficial interests in OPERS, (vi)
except as notified to the Corporation by the Investor pursuant to
Section 4(b), Investor to directly acquire a stock or other equity
interest in a Tenant identified on Exhibit A (as the same may be
amended from time to time) following the date hereof in excess of 4.9%
of such stock or other equity interests in such Tenant and (vii) except
as notified to the Corporation by the Investor pursuant to Section
4(b), any Person to acquire a stock or other equity interest (as
determined for purposes of applying Section 856(d)(2)(B) of the Code)
in a Tenant identified on Exhibit A, following the receipt of such
Exhibit A (as the same may be amended from time to time), that would
both (A) result in the Investor and the Corporation being deemed to
own, by operation of Section 318 of the Code, as modified by Section
856(d)(5) of the Code, in excess of 4.9% of such stock or other equity
interests in such Tenant, and (B) result in the Corporation having
gross income for any year which is not Qualifying Income in excess of
1% of the gross income of the Corporation (as determined for purposes
of Section 856(c)(2) of the Code.
(b) The Investor shall inform the Corporation (i)
within 10 business days of receiving any notice from the Corporation
set forth in Section 3(b) hereof, if the Investor or any person having
a direct or indirect ownership interest in the Investor owns or is
deemed to own, for purposes of applying Section 856(d)(2)(B) of the
Code, more than a 4.9% ownership interest in such proposed Tenant and
the nature of such ownership (any such failure to notify the
Corporation within such 10 business day period will for all purposes be
deemed to be an affirmative statement by the Investor to the
Corporation that neither the Investor nor any person having a direct or
indirect ownership interest in the Investor owns or is deemed to own,
for purposes of applying such section, more than a 4.9% ownership
interest in such proposed Tenant), (ii) within 10 business days of the
end of each quarter of the Corporation's fiscal year, if the Investor
or any person having a direct or indirect ownership interest in the
Investor owns or is deemed to own, for purposes of applying Section
856(d)(2)(B) of the Code, more than a 4.9% ownership interest in any
Tenant provided on Exhibit A (as the same may be amended from time to
time) and (iii) within 10 business days of any reasonable request from
the Corporation concerning the level of ownership in any such Tenant.
5. WAIVER. On the basis of the accuracy of the representations
and warranties of the Investor contained in Section 2 and the undertakings in
Section 4, the Corporation, pursuant to subparagraph (2)(f)(ii), and subject to
subparagraph (2)(b)(i), of Article V of the Charter, hereby exempts the Investor
from the restrictions on ownership of Equity Stock set forth in the Charter (the
"Ownership Restrictions"), including subparagraph 2(b)(i) of Article V of the
Charter; such exemption to be effective only to the extent it does not result in
any
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Agreement and Waiver
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individual (as determined for purposes of Section 856(h) of the Code but
excluding OPERS and any qualified trusts as defined in Section 856(h)(3)(E) of
the Code) Beneficially Owning more than 9.8% of either the value or number of
shares of the outstanding Equity Stock of the Corporation or the Corporation
otherwise failing to qualify as a real estate investment trust under Section
856(a) of the Code.
6. TRANSFER OF SUBJECT SHARES. The provisions of this Section
6 apply in the event a holder of Subject Shares seeks to transfer Subject Shares
in a manner that, but for this Section 6, would result in a violation of the
Ownership Restrictions.
(a) Subject to the provisions of this Section 6, the
Corporation hereby waives the Ownership Restrictions to the extent
necessary to enable any holder of Subject Shares to transfer ownership
of such Subject Shares to another Person (the "Intended Transferee")
subsequent to the 12 month period beginning on the date hereof.
(b) The waiver described in paragraph (a) shall be
conditioned on obtaining from the Intended Transferee representations
and undertakings reasonably requested by the Corporation in order to
ensure that no individual (as determined for purposes of Section 856(h)
of the Code but excluding "qualified trusts" as defined in Section
856(h)(3)(E) of the Code) will Beneficially Own more than 9.8% of
either the value or number of shares of the outstanding Stock following
the Intended Transferee's acquisition of the Subject Shares. The
parties agree that the phrase "representations and undertakings
reasonably requested" includes, but is not limited to, representations
and undertakings similar to those set forth in Section 2 and 4 hereof
(but as modified by this Section 6). Such representations and
undertakings shall be included in an agreement between the Corporation
and the Intended Transferee consistent with the terms of this Waiver (a
"Successor Waiver Agreement").
(c) Each Intended Transferee that becomes a party to
a Successor Waiver Agreement shall be a beneficiary of the waiver
described in paragraph (a), subject to compliance by any successor
Intended Transferee with the provisions of this Section 6.
7. VIOLATION.
(a) In the event of any breach of a representation or
warranty given by the Investor in Section 2 or a violation of any of
the undertakings set forth in Section 4 (other than as a result of a
breach by the Corporation of any of the representations or warranties
of the Corporation set forth in Section 1 or a violation by the
Corporation of any of the undertakings of the Corporation set forth in
Section 3), in addition to all rights provided in this Waiver, in the
Charter or the Articles Supplementary, or granted by law (including
recovery of damages), the Waiver set forth in Section 5 hereof shall,
to the extent reasonably determined by the Board to be necessary in
order for the Corporation to qualify for taxation as a REIT, be void ab
initio and shall result in a conversion of such portion (as reasonably
determined by the Board to be necessary) of the Subject Shares into
Excess Stock (as defined in the Charter) to the same extent as if the
Waiver in
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Section 5 hereof had never been granted, and to be subject to the
ownership limits and related provisions set forth in the Charter and
the Articles Supplementary.
(b) In addition to and not in limitation of the
provisions of paragraph (a), to the extent the Investor or OPERS
attempts to acquire Beneficial Ownership of Stock that would result in
any individual (other than OPERS or any other "qualified trust")
Beneficially Owning in excess of 9.8% of either the value or number of
shares of the outstanding Stock, such purported acquisition shall be
void ab initio and shall result in a conversion of such excess Stock
into Excess Stock, or if an IRS Ruling Satisfactory to the Corporation
has not been obtained, shall cause the issuance or acquisition of such
Excess Stock to be void ab initio.
(c) In the event the Corporation breaches any of the
representations and warranties given by the Corporation in Section 1 or
any of the undertakings in Section 3 and such breach results in shares
of Common Stock issued upon conversion of the Preferred Shares or
Preferred Shares being exchanged for Excess Stock or automatic
repurchase in accordance with subparagraph 2(c) or (d) of Article V of
the Charter, the Investor shall be entitled to exercise all rights
provided herein or granted by law (including recovery of damages) or in
equity.
8. CHANGE IN LAW. In the event that there is a change in law
or in the interpretation of the law of which the Corporation or the Investor has
knowledge that may cause or has caused any Subject Shares held by the Investor
to be exchanged for Excess Stock or to be void ab initio, the Corporation and
the Investor shall communicate such knowledge to the other party and shall use
reasonable efforts (a) to prevent such occurrence or circumstance, (b) to amend
the documents and instruments with respect to the Subject Shares held by the
Investor to mitigate the effect of such change (provided, however, that in
effecting such amendment, the Corporation shall in no event be required to (i)
materially disproportionately disadvantage any other security holder of the
Corporation, (ii) provide the Investor as a holder of the Subject Shares with
better terms, on a whole, than existed with respect to such Preferred Shares or
Common Stock prior to such amendment or (iii) repurchase any securities of the
Corporation owned, directly or indirectly, by the Investor), and (c) unless
required by the Charter or the Articles Supplementary or in order to preserve
the Corporation's status as a REIT, to not disproportionately disadvantage the
Investor with respect to other security holders of the Corporation in
determining, if the Corporation is permitted to make such a determination, which
shares of the Corporation's Stock shall be void ab initio or exchanged for
Excess Stock or repurchased.
9. ASSIGNMENT. Except to the extent provided herein, no party
hereto may assign (by operation of law or otherwise) either this Waiver or any
if its rights, interests, or obligations hereunder without the prior written
consent of the other party in its sole and absolute discretion.
10. AMENDMENTS. The provisions of this Waiver, including the
provisions of this sentence (but excluding Exhibit A, which may be amended in
accordance with Section 1), may not be amended, modified or supplemented, and
waivers or consents to departures from the
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provisions hereof may not be given, unless each of the parties hereto consents
in writing to such amendment, modification, supplement or waiver. Each such
consent or waiver shall be effective only in the specific instance and for the
specific purpose for which given.
11. NOTICE. All notices hereunder shall be in writing and
shall be given: (a) if to the Company, at One Jackson Place Suite 1000, 188 East
Capitol Street, Jackson, Mississippi 39201-2195, Attention: President, or such
other address or addresses of which the Investor shall have been given notice,
with copies to Jaeckle Fleischmann & Mugel, LLP, Twelve Fountain Plaza, Buffalo,
New York 14202, Attention: Joseph P. Kubarek, Esq., or such other address of
which the Investor shall have been given notice; and (b) if to the Investor, at
Rothschild Realty Inc., 1251 Avenue of the Americas, New York, New York 10020,
Attn: Matthew Kaplan, or such other address of which the Company shall have been
given notice, with copies to Schulte Roth & Zabel LLP, 900 Third Avenue, New
York, New York 10022, Attn: Andre Weiss, Esq., or such other address of which
the Company shall have been given notice. Any notice shall be deemed to have
been given if personally delivered or sent by United States mail or by
commercial courier or delivery service or by telegram or telex and shall be
deemed received, unless earlier received, (i) if sent by certified or registered
mail, return receipt requested, three business days after deposit in the mail,
postage prepaid, (ii) if sent by United States Express Mail or by commercial
courier or delivery service, one Business Day after delivery to a United States
Post Office of delivery service, postage prepaid, (iii) if sent by telegram,
telex or facsimile transmission, when receipt is acknowledged by answerback, and
(iv) if delivered by hand, on the date of receipt.
12. SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
13. HEADINGS. The headings in this Waiver are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
14. GOVERNING LAW. This Waiver shall be governed by and
construed in accordance with the laws of the State of Maryland as applied
between residents of that State entering into contracts wholly to be performed
in that State.
15. COUNTERPARTS. This Waiver may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Waiver as of the date first written above.
PARKWAY PROPERTIES, INC.,
a Maryland corporation
By: /s/ Steven G. Rogers
--------------------------------------------
Name: Steven G. Rogers
Title: President and Chief Executive Officer
By: /s/ Sarah P. Clark
--------------------------------------------
Name: Sarah P. Clark
Title: Chief Financial Officer and Secretary
FIVE ARROWS REALTY SECURITIES III L.L.C.,
a Delaware limited liability company
By: /s/ D. Pike Aloian
--------------------------------------------
Name: D. Pike Aloian
Title: Manager
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Exhibit 99(c) EXECUTION COPY
SCHEDULE 1(a)
Pursuant to disclosures made on Amendment No. 2 to Schedule
13G, dated April 10, 2000, by T. Rowe Price Associates, Inc. ("Associates") and
T. Rowe Price Small cap-Stock Fund, Inc. ("Small Cap"), Associates reported that
it beneficially owned 1,003,800, or 10.1% of the common shares of the
corporation. 702,800 shares of this amount were reported as being owned by
Small-Cap (representing 7.1% of the Corporation's common shares).
Schedule 14A of Associate's Proxy Statement filed March 6,
2000 reports that Associates had no knowledge of any individual or entity
owning, beneficially or otherwise, 5% or more of its outstanding common stock.
