<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 10-Q
------------------
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996 . . . . . . . . . .
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ------ EXCHANGE ACT OF 1934
For the transition period from to
-------------- --------------
COMMISSION FILE NO.
0-17183
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MURRAY INCOME PROPERTIES II, LTD.
(Exact Name of Registrant as Specified in its Charter)
TEXAS 085586
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5550 LBJ FREEWAY, SUITE 675, DALLAS, TEXAS 75240
(Address of principal executive offices) (Zip Code)
(972) 991-9090
(Registrant's Telephone Number, including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------- -------
<PAGE> 2
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
---------------- -----------------
(unaudited)
<S> <C> <C>
Assets
Investment properties, at cost:
Land $ 5,789,291 $ 5,789,291
Buildings and improvements 17,457,605 17,392,710
------------ ------------
23,246,896 23,182,001
Less accumulated depreciation 6,808,602 6,257,762
------------ ------------
Net investment properties 16,438,294 16,924,239
Investment in joint venture, at equity 1,486,837 1,535,208
Cash and cash equivalents 859,452 921,646
Certificates of deposit 895,000 895,000
Accounts and notes receivable, net of allowance
of $10,673 and $14,034 in 1996 and 1995,
respectively 423,625 439,157
Other assets, at cost, net of accumulated
amortization of $396,634 and $346,707 in
1996 and 1995, respectively 248,820 218,791
------------ ------------
$ 20,352,028 $ 20,934,041
============ ============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 16,916 $ 8,808
Accrued property taxes 203,769 267,722
Security deposits and other liabilities 90,675 91,468
Deferred income 37,285 42,162
------------ ------------
Total liabilities 348,645 410,160
------------ ------------
Partners' equity:
General Partners:
Capital contributions 1,000 1,000
Cumulative net earnings 555,770 526,381
Cumulative cash distributions (558,210) (530,515)
------------ ------------
(1,440) (3,134)
------------ ------------
Limited Partners (314,687 interests):
Capital contributions, net of offering costs 27,029,395 27,029,395
Cumulative net earnings 10,537,506 9,702,625
Cumulative cash distributions (17,562,078) (16,205,005)
------------ ------------
20,004,823 20,527,015
------------ ------------
Total partners' equity 20,003,383 20,523,881
------------ ------------
$ 20,352,028 $ 20,934,041
============ ============
</TABLE>
See accompanying notes to financial statements.
2
<PAGE> 3
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF EARNINGS
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ----------------------------
1996 1995 1996 1995
--------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Income:
Rental $ 689,200 $ 659,901 $ 2,061,959 $ 1,951,389
Interest 25,039 25,149 74,344 71,941
Equity in earnings of joint
venture 33,097 30,243 99,679 88,001
--------- --------- ----------- -----------
747,336 715,293 2,235,982 2,111,331
--------- --------- ----------- -----------
Expenses:
Depreciation 183,568 185,247 550,840 557,895
Property operating 212,144 159,381 568,332 488,450
General and administrative 79,763 57,647 255,901 214,716
Bad debts (recoveries), net ( 1,289) ( 2,067) ( 3,361) ( 4,313)
--------- --------- ----------- -----------
474,186 400,208 1,371,712 1,256,748
--------- --------- ----------- -----------
Net Earnings $ 273,150 $ 315,085 $ 864,270 $ 854,583
========= ========= =========== ===========
Earnings per limited
partnership interest $ .84 $ .97 $2.65 $2.62
========= ========= =========== ===========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
----------- ----------- -----------
<S> <C> <C> <C>
Nine months ended September 30, 1995:
Balance at December 31, 1994 $( 3,341) $21,332,763 $21,329,422
Net earnings 29,346 825,237 854,583
Cash distributions ( 27,695) ( 1,357,075) ( 1,384,770)
----------- ----------- -----------
Balance at September 30, 1995 $( 1,690) $20,800,925 $20,799,235
=========== =========== ===========
Nine months ended September 30, 1996:
Balance at December 31, 1995 $ ( 3,134) $20,527,015 $20,523,881
Net earnings 29,389 834,881 864,270
Cash distributions ( 27,695) ( 1,357,073) ( 1,384,768)
----------- ----------- -----------
Balance at September 30, 1996 $ ( 1,440) $20,004,823 $20,003,383
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 5
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------------------
1996 1995
--------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 864,270 $ 854,583
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Bad debts (recoveries), net (3,361) (4,313)
Depreciation 550,840 557,895
Amortization of other assets 49,927 49,902
Equity in earnings of joint venture (99,679) (88,001)
Amortization of deferred income (4,877) (4,874)
Change in assets and liabilities:
Accounts receivable 18,893 (25,742)
Other assets (79,956) (22,446)
Accounts payable 8,108 (3,178)
Accrued property taxes, security deposits
and other liabilities and deferred income (64,746) (69,244)
----------- -----------
Net cash provided by operating activities 1,239,419 1,244,582
----------- -----------
Cash flows from investing activities:
Additions to investment properties (64,895) (2,367)
Purchases of certificates of deposit (696,000) (597,000)
Proceeds from redemptions of certificates of deposit 696,000 595,000
Distributions from joint venture 148,050 132,450
----------- -----------
Net cash provided by investing activities 83,155 128,083
----------- -----------
Cash flows from financing activities - cash distributions (1,384,768) (1,384,770)
----------- -----------
Net decrease in cash and cash equivalents (62,194) (12,105)
Cash and cash equivalents at beginning of period 921,646 919,644
----------- -----------
Cash and cash equivalents at end of period $ 859,452 $ 907,539
=========== ===========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. BASIS OF ACCOUNTING
Rental income is recognized as earned under the leases. Accordingly, the
Partnership accrues rental income for the full period of occupancy using the
straight line method over the related terms. At September 30, 1996 and
December 31, 1995, $217,387 and $239,622, respectively, of accounts receivable
related to such accruals.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
Other assets consist primarily of deferred leasing costs which are
amortized using the straight line method over the lives of the related leases.
Depreciation is provided over the estimated useful lives of the respective
assets using the straight line method. The estimated useful lives of the
buildings and improvements range from three to twenty-five years.
Effective January 1, 1995, the Partnership implemented Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," (SFAS 121)
which establishes the method of accounting for rental property when
circumstances indicate that the carrying amount of an asset may not be
recoverable. The Partnership periodically reevaluates the propriety of the
carrying amounts of investment properties to determine whether current events
and circumstances warrant an adjustment to such carrying amounts. Such
evaluations are performed utilizing annual appraisals performed by independent
appraisers as well as internally developed estimates of expected undiscounted
future cash flows. In the event the carrying value of an individual property
exceeds expected future undiscounted cash flows, the property is written down
to the most recently appraised value. Since inception of the Partnership, none
of the Partnership's properties have required write downs.
No provision for income taxes has been made as the liabilities for such
taxes are those of the individual Partners rather than the Partnership. The
Partnership files its tax return on the accrual basis used for Federal income
tax purposes.
Earnings per limited partnership interest are based upon the limited
partnership interests outstanding at period-end and the net earnings allocated
to the Limited Partners in accordance with the terms of the Partnership
Agreement, as amended.
Certificates of deposit are held at commercial banks and are stated at
cost, which approximates market. For purposes of reporting cash flows, the
Partnership considers all certificates of deposit and highly liquid debt
instruments with original maturities of three months or less to be cash
equivalents.
The following information relates to estimated fair values of the
Partnership's financial instruments as of September 30, 1996 and December 31,
1995. For cash and cash equivalents, certificates of deposit, accounts and
notes receivable, accounts payable, accrued property taxes payable, and
security deposits, the carrying amounts approximate fair value because of the
short maturity of these instruments.
6
<PAGE> 7
- --------------------------------------------------------------------------------
2. PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, net profits or losses
of the Partnership and cash distributions are generally allocated 98% to the
Limited Partners and 2% to the General Partners, except that all depreciation
shall be allocated to those Limited Partners subject to Federal income taxes.
Cash distributions from the sale or refinancing of a property are allocated as
follows:
(a) First, all Cash Distributions from Sales or Refinancings shall be allocated
99% to the Limited Partners and 1% to the Non-corporate General Partner
until the Limited Partners have been returned their Original Invested
Capital from Cash Distributions from Sales or Refinancings, plus their
Preferred Return from either Cash Distributions from Operations or Cash
Distributions from Sales or Refinancings.
(b) Next, all Cash Distributions from Sales or Refinancings shall be allocated
99% to the General Partners and 1% to the Non-corporate General Partner in
an amount equal to any unpaid Cash Distributions from Operations
subordinated to the Limited Partners' 7% non-cumulative annual return.
Such 99% shall be allocated 62 1/2% to the Non-corporate General Partner
and 37 1/2% to the Corporate General Partner.
(c) Next, all Cash Distributions from Sales or Refinancings shall be allocated
1% to the Non-corporate General Partner and 99% to the Limited Partners and
the General Partners. Such 99% will be allocated 85% to the Limited
Partners and 15% to the General Partners. Such 15% shall be allocated
62 1/2% to the Non-corporate General Partner and 37 1/2% to the Corporate
General Partner.
3. INVESTMENT PROPERTY
The Partnership owns and operates Paddock Place Shopping Center in
Nashville, Tennessee, Germantown Collection Shopping Center located in
Germantown (Memphis), Tennessee and 1202 Industrial Place (an office/warehouse
facility) located in Grand Prairie, Texas.
4. INVESTMENT IN JOINT VENTURE
The Partnership owns a 15% interest in Tower Place Joint Venture, a joint
venture that owns and operates Tower Place Festival Shopping Center located in
Pineville (Charlotte), North Carolina. The Partnership accounts for the joint
venture by using the equity method. The remaining 85% interest in the joint
venture is owned by Murray Income Properties I, Ltd. ("MIP I"), an affiliated
real estate limited partnership. The Tower Place Joint Venture Agreement
provides that the Partnership will share profits, losses, and cash
distributions according to the Partnership's 15% ownership interest in the
joint venture.
5. TRANSACTIONS WITH AFFILIATES
Murray Realty Investors IX, Inc. ("MRI IX"), the Corporate General Partner,
entered into a property management agreement with the Partnership for the
management of 1202 Industrial Place, effective January 1, 1996. Pursuant to
this agreement, MRI IX earned property management fees in the amount of $10,683
during the nine months ended September 30, 1996.
7
<PAGE> 8
- --------------------------------------------------------------------------------
6. OTHER
Information furnished in this interim report reflects all adjustments
consisting of normal recurring adjustments which, in the opinion of management,
are necessary to reflect a fair presentation of the results for the periods
presented.
The financial information included in this interim report as of September
30, 1996 and for the three and nine months ended September 30, 1996 and 1995
has been prepared by management without audit by independent public accountants
who do not express an opinion thereon. The Partnership's annual report
contains audited financial statements. The notes to the financial statements
in the Partnership's 1995 annual report are an integral part of the financial
statements presented herein.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1996, the Partnership had cash, cash equivalents and
certificates of deposit of $1,754,452. Such amounts represent cash generated
from operations and working capital reserves.
Rental income from leases is accrued using the straight line method over
the related lease terms. At September 30, 1996 and December 31, 1995, $217,387
and $239,622, respectively, of accounts receivable related to such accruals.
Accounts receivable also consist of tenant receivables, receivables for rent
collected (but not yet remitted by the property management companies managing
the properties), and interest receivable on short-term investments. The
decrease in accounts receivable of $18,893 (exclusive of bad debts and
recoveries) from December 31, 1995 to September 30, 1996 is primarily due to
decreases in receivables for rent collected (but not yet remitted by the
property management companies) at Germantown and receivables related to the
accruals described above at Germantown and Paddock Place. As of September 30,
1996 and December 31, 1995, the Partnership had allowances of $10,673 and
$14,034, respectively, for uncollectible accounts receivable.
The decrease in accrued property taxes of $63,953 from December 31, 1995
to September 30, 1996 is primarily due to payments of 1995 property taxes for
the Partnership's properties.
During the three months ended September 30, 1996, the Partnership made
Cash Distributions from Operations of $461,589 relating to the three-month
period ended June 30, 1996. Subsequent to September 30, 1996, the Partnership
made the regular Quarterly Cash Distributions from Operations of $461,589,
relating to the three months ended September 30, 1996. The funds distributed
were derived from the net cash flow generated from operations of the
Partnership's properties and from interest earned, net of administrative
expenses, on funds invested in short-term money market instruments and
certificates of deposit. In addition to the regular quarterly distribution,
the Partnership made a special distribution from operations totalling $82,277.
Funds for this special distribution came from, among other sources, percentage
rents (additional rents that are based upon a percentage of the tenant's sales
in excess of a base amount) and the recovery of delinquent rents from former
tenants. Due to the uncertain nature of income from these sources, the General
Partners believe it to be in the best interest of the Partnership to maintain
the regular distribution at its current level and to make special
distributions, if any, only as they are warranted.
Future liquidity is currently expected to result from cash generated from
the operations of the Partnership's properties (which could be affected
negatively in the event of weakened occupancies and/or effective rental rates),
interest earned on funds invested in short-term money market instruments and
certificates of deposit, and ultimately through the sale of the Partnership's
properties.
9
<PAGE> 10
RESULTS OF OPERATIONS
Rental income increased $110,570 for the nine months ended September 30,
1996 as compared to the same period in 1995. The following information details
the rental income generated, bad debt expense incurred, and average occupancy
for the periods shown for the Partnership's properties.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
PADDOCK PLACE SHOPPING CENTER
Rental income $286,505 $274,068 $906,000 $811,056
Bad debt expense (recovery) $ (1,289) $ (2,067) $ (3,361) $ (4,313)
Average occupancy 96% 94% 96% 95%
GERMANTOWN SHOPPING CENTER
Rental income $278,010 $264,353 $797,308 $785,112
Bad debt expense (recovery) $ -0- $ -0- $ -0- $ -0-
Average occupancy 100% 100% 100% 100%
1202 INDUSTRIAL PLACE
Rental income $124,685 $121,480 $358,651 $355,221
Average occupancy 100% 100% 100% 100%
</TABLE>
Rental income at Paddock Place Shopping Center in Nashville, Tennessee
increased $94,944 for the nine months ended September 30, 1996 as compared to
the same period in 1995 primarily due to an increase in rental rates, an
increase in percentage rent received from J. Alexander's Restaurant and the
receipt of a $40,000 fee as consideration for the termination of the
Waldenbooks' lease.
Occupancy at Paddock Place averaged 96% for the third quarter, unchanged
from the previous quarter. At the end of September one new tenant who signed a
lease for 1,871 square feet took occupancy of its space. One tenant who
occupies 4,600 square feet renewed its lease for three years. In August,
portions of the shopping center were painted. As of September 30, Paddock
Place was 99% occupied.
Rental income at Germantown Collection in Germantown (Memphis), Tennessee
increased $12,196 for the nine months ended September 30, 1996 as compared to
the same period in 1995 due to an increase in rental rates and an increase in
tenant reimbursements for common area maintenance costs.
Occupancy at the Germantown averaged 100% during the third quarter,
unchanged from the previous quarter. Two tenants who occupy 2,484 square feet
renewed their leases for three years. Repairs to the irrigation system and
parking lot were completed during the quarter.
Rental income at 1202 Industrial Place in Grand Prairie (Dallas), Texas
increased $3,430 for the nine months ended September 30, 1996 as compared to
the same period in 1995 primarily due to an increase in tenant reimbursements
for insurance costs.
Occupancy at 1202 Industrial Place remained 100% during the third quarter,
unchanged from the previous quarter. Repairs to the parking lot were completed
in July.
"Equity in earnings of joint venture", as reflected in the Statement of
Earnings, represents the Partnership's 15% interest in the earnings of Tower
Place Joint Venture. Rental income at Tower Place Festival Shopping Center in
Pineville (Charlotte), N.C. increased $86,581 for the nine months ended
10
<PAGE> 11
September 30, 1996 as compared to the same period in 1995 primarily due to an
increase in rental rates along with an increase in percentage rent received
from J&K Cafeterias and an increase in tenant reimbursements for common area
maintenance costs, offset by lower tenant reimbursements for real estate taxes
and insurance costs. Tower Place's total operating expenses increased with
increases in repair and maintenance costs and landscaping costs offset by
decreases in leasing and promotion costs, insurance and real estate taxes. The
following information details the rental income generated, bad debt expense
incurred, and average occupancy for the periods shown for Tower Place.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
TOWER PLACE SHOPPING CENTER
Rental income $429,591 $401,903 $1,301,558 $1,214,977
Bad debt expense (recovery) $(2,325) $(2,182) $(3,016) $(4,319)
Average occupancy 97% 96% 97% 96%
</TABLE>
The Partnership's share of income from the joint venture increased $11,678
for the nine months ended September 30, 1996 as compared to the same period in
1995 for the reasons stated above.
Occupancy at Tower Place averaged 97% during the third quarter, a one
percent decrease from the previous quarter. One tenant who occupied 1,260
square feet vacated its space prior to the expiration of its lease. Subsequent
to the end of the quarter, a lease for 2,700 square feet was signed and this
tenant will take occupancy during the fourth quarter. In September, minor roof
repairs were completed and portions of the shopping center were painted. As of
September 30, Tower Place was 99% leased.
Depreciation is provided over the estimated useful lives of the respective
assets using the straight line method. The estimated useful lives of the
building and improvements range from three to twenty-five years.
Property operating expenses consist primarily of utility costs, repair and
maintenance costs, leasing and promotion costs, real estate taxes, insurance,
and property management fees. Total property operating expenses increased
$79,882 for the nine months ended September 30, 1996 as compared to the same
period in 1995. The increase is due to higher repair and maintenance costs,
utilities costs, snow removal costs, landscaping costs, property management
fees, insurance costs, and real estate taxes. Property operating expenses at
Germantown increased primarily because of increases in repair and maintenance
costs, landscaping costs and utilities. Property operating expenses at Paddock
Place increased primarily because of increases in utilities, snow removal costs
and property management fees. Property operating expenses at 1202 Industrial
Place increased primarily because of increases in utilities, repair and
maintenance costs, insurance and real estate taxes.
General and administrative expenses incurred are related to legal and
accounting costs, rent, investor services costs, salaries and benefits and
various other costs required for the administration of the Partnership.
General and administrative expenses increased $41,185 for the nine months ended
September 30, 1996 as compared to the same period in 1995. The Partnership
became subject to electronic filing requirements with the Securities and
Exchange Commission during the year ended December 31, 1995. Costs associated
with filing the 1995 Form 10-K and quarterly Form 10-Q's for 1996 caused the
Partnership's compliance costs to increase. Also, legal costs increased
because of due diligence performed on and negotiations held with limited
partners who wanted to acquire the Partnership's investor list in order to
solicit the partners to purchase their interests. The Partnership also
incurred additional printing and postage costs to respond to all limited
partners regarding these solicitations.
11
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
3a Agreement of Limited Partnership of Murray
Income Properties II, Ltd. Reference is made to
Exhibit A of the Prospectus dated February 20,
1986 contained in Amendment No. 1 to
Partnership's Form S-11 Registration Statements
filed with the Securities and Exchange
Commission on February 13, 1986. (File No.
33-2294)
3b Amended and Restated Certificate and Agreement
of Limited Partnership dated as of November 15,
1989. Reference is made to Exhibit 3b to the
1989 Annual Report on Form 10- K filed with the
Securities and Exchange Commission on March 31,
1989. (File No. 0- 17183)
3c Amended and Restated Certificate and Agreement
of Limited Partnership dated as of January 10,
1990. Reference is made to Exhibit 3c to the
1989 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 31,
1989. (File No. 0-17183)
10a Severance Agreement by and among Murray Income
Properties I, Ltd. and Murray Income Properties
II, Ltd. and Mitchell L. Armstrong dated
September 16, 1996. Filed herewith.
10b Severance Agreement by and among Murray Income
Properties I, Ltd. and Murray Income Properties
II, Ltd. and W. Brent Buck dated September 16,
1996. Filed herewith.
27 Financial Data Schedule. Filed herewith.
99a Glossary as contained in the Prospectus dated
February 20, 1986 filed as part of Amendment No.
2 to Registrant's Form S-11 Registration
Statement (File No. 33-2394). Filed herewith.
99b Article XIII of the Agreement of Limited
Partnership as contained in the Prospectus dated
February 20, 1986 filed as part of Amendment No.
2 to Registrant's Form S-11. Registration
Statement (File No. 33-2394). Filed herewith.
99c Amendment number nine to the Agreement of
Limited Partnership contained in the Proxy
Statement dated October 11, 1989. Filed
herewith.
99d Management Compensation as contained in the
Prospectus dated February 20, 1986 filed as part
of Amendment No. 2 to Registrant's Form S-11
Registration Statement (File No. 33- 2394).
Filed herewith.
(b) Reports on Form 8-K filed during the quarter ended
September 30, 1996:
None
12
<PAGE> 13
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, thereunto duly authorized.
Murray Income Properties II, Ltd.
By: Murray Realty Investors IX, Inc.
A General Partner
Date: November 8, 1996 By: /s/ Mitchell Armstrong
---------------------------------
Mitchell Armstrong
President
Chief Financial Officer
13
<PAGE> 14
INDEX TO EXHIBITS
DESCRIPTION
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S> <C>
3a Agreement of Limited Partnership of Murray
Income Properties II, Ltd. Reference is made to
Exhibit A of the Prospectus dated February 20,
1986 contained in Amendment No. 1 to
Partnership's Form S-11 Registration Statements
filed with the Securities and Exchange
Commission on February 13, 1986. (File No.
33-2294)
3b Amended and Restated Certificate and Agreement
of Limited Partnership dated as of November 15,
1989. Reference is made to Exhibit 3b to the
1989 Annual Report on Form 10- K filed with the
Securities and Exchange Commission on March 31,
1989. (File No. 0- 17183)
3c Amended and Restated Certificate and Agreement
of Limited Partnership dated as of January 10,
1990. Reference is made to Exhibit 3c to the
1989 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 31,
1989. (File No. 0-17183)
10a Severance Agreement by and among Murray Income
Properties I, Ltd. and Murray Income Properties
II, Ltd. and Mitchell L. Armstrong dated
September 16, 1996. Filed herewith.
10b Severance Agreement by and among Murray Income
Properties I, Ltd. and Murray Income Properties
II, Ltd. and W. Brent Buck dated September 16,
1996. Filed herewith.
27 Financial Data Schedule. Filed herewith.
99a Glossary as contained in the Prospectus dated
February 20, 1986 filed as part of Amendment No.
2 to Registrant's Form S-11 Registration
Statement (File No. 33-2394). Filed herewith.
99b Article XIII of the Agreement of Limited
Partnership as contained in the Prospectus dated
February 20, 1986 filed as part of Amendment No.
2 to Registrant's Form S-11. Registration
Statement (File No. 33-2394). Filed herewith.
99c Amendment number nine to the Agreement of
Limited Partnership contained in the Proxy
Statement dated October 11, 1989. Filed
herewith.
99d Management Compensation as contained in the
Prospectus dated February 20, 1986 filed as part
of Amendment No. 2 to Registrant's Form S-11
Registration Statement (File No. 33- 2394).
Filed herewith.
</TABLE>
14
<PAGE> 1
EXHIBIT 10a
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this "Agreement") is made and entered into
as of the 16th day of September, 1996, by and among Murray Income Properties I,
Ltd., a Texas limited partnership ("MIP I"), Murray Income Properties II, Ltd.,
a Texas limited partnership ("MIP II"), and Mitchell L. Armstrong ("Employee").
MIP I and MIP II are individually referred to herein as a "Partnership" and
collectively as the "Partnerships."
Employee is currently employed by MIP II and provides services to both
MIP I and MIP II pursuant to an expense sharing arrangement as further
described in Section 2 of this Agreement. Employee has been employed by, or
provided services to, the Partnerships since November 15, 1989. The General
Partners (as defined below) of the Partnerships each acknowledge that both
Partnerships will in the future terminate through merger, sale of assets or
other action of the limited partners and that given the structure of the
business operations of the Partnerships and the duties and experience of
Employee, the loss of Employee's services prior to final Termination (as
defined below) of each Partnership could cause a serious disruption of the
Partnerships' business activities and may cause a material adverse effect upon
the value of the Partnerships' assets. In order to encourage Employee to
remain employed by or provide services to, as applicable, the Partnerships
through their respective Termination, and in order to maximize the value of the
Partnerships' assets, the General Partners, on behalf of the Partnerships, and
Employee desire to enter into this Agreement providing severance benefits to
Employee. For and in consideration of the foregoing and the mutual promises
hereinafter contained, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. SEVERANCE BENEFITS. (a) Subject to Section 2 below, upon
termination of Employee's Full Time (as defined below) duties to a Partnership
involuntarily as a direct result of the Termination of such Partnership, except
by reason of Employee's death, permanent disability or for Cause (as defined
below), such Partnership shall pay to Employee an amount equal to the value of
the aggregate of one month of Employee's highest monthly salary paid to
Employee by MIP II at any time during the twelve months prior to Employee's
termination (the "Termination Date") multiplied by fifteen (15), plus the
current monthly cost of such health, disability and life benefits (including
spousal or similar coverage and coverage for children) which Employee was
receiving or entitled to receive immediately prior to the Termination Date
multiplied by eighteen (18), which shall be in addition to and not in
substitution for any health, disability and life benefits or coverage to which
Employee may be otherwise entitled under applicable state and federal law (the
"Severance Payment"). Any Severance Payment due and owing to Employee as
calculated above shall be payable in cash in one lump sum payment within 30
days of the Termination Date. In the event of a Change in Control (as defined
below), such Partnership shall pay to Employee one-half of the Severance
Payment as calculated above. If within one year following a Change in Control
Employee's Full Time duties are terminated for any reason, whether voluntarily
or involuntarily, such Partnership shall pay to Employee the remaining one-half
of the Severance Payment. Any Severance Payment due and owing to Employee as
calculated above shall be payable in cash in one lump sum payment within 30
days of the date of the Change in Control or the Termination Date, as
applicable.
<PAGE> 2
(b) The Partnerships shall have a right of set-off in respect of
any claim, debt or obligation against any payment to or benefit for Employee
provided for in this Agreement.
(c) The Partnerships agree to make a good faith effort to maintain
Employee's monthly base salary and health, disability and life benefits
applicable as of the date of this Agreement, subject to prevailing market
conditions and the financial status of the Partnerships and/or the termination
of Employee's Full Time duties for Cause.
(d) Notwithstanding any other provision hereof, the parties'
respective rights and obligations under this Section 1 and under Section 5
shall survive any termination or expiration of this Agreement following
Termination of either or both of the Partnerships or the termination of
Employee's Full Time duties following a Change in Control for any reason
whatsoever.
2. SHARED EXPENSES. The parties hereto acknowledge that Employee
is employed by MIP II and provides services to both MIP I and MIP II pursuant
to an expense sharing arrangement between the Partnerships whereby MIP I
reimburses MIP II for certain administrative costs, and acknowledge that MIP I
and MIP II are entitled to share expenses relating to the Severance Payment in
the proportions of forty-seven percent (47%) by MIP I and fifty-three percent
(53%) by MIP II. The parties further acknowledge that the Partnerships may be
Terminated at different times and that MIP I and MIP II have agreed to enter
this Agreement acting severally and not jointly with respect to their
respective pro rata obligation to pay severance benefits to Employee. MIP I
and MIP II shall each be liable only for their proportionate share of the
Severance Payment as set forth above (which shall be calculated and fixed once
upon the first Termination or Change in Control event to occur), and only if
and when such Partnership has Terminated or undergone a Change in Control. If
Employee's Full Time duties to MIP II are terminated prior to the termination
of Full Time duties to MIP I, the parties contemplate that Employee will
continue to provide services to MIP I as an employee of MIP I.
3. LIABILITY FOR TAXES. The Partnerships shall have no
responsibility or obligation for any tax liability of Employee attributable to
any Severance Payment made under this Agreement. The Partnerships may withhold
from any such payment such amounts as may be required by applicable provisions
of the Internal Revenue Code, other tax laws, and the rules and regulations of
the Internal Revenue Service and other tax agencies, as in effect at the time
of any such payment.
4. EMPLOYMENT RIGHTS; TERMINATION PRIOR TO LIQUIDATION OR CHANGE
IN CONTROL. Nothing expressed or implied in this Agreement will create any
right or duty on the part of the Partnerships or the Employee to have Employee
remain in the employ of, or provide services to, the Partnerships prior to or
following the commencement of Termination of the Partnerships or any Change in
Control. Any involuntary termination of the Full Time duties of Employee
within 90 calendar days prior to the Termination of a Partnership or a Change
in Control, except by reason of Employee's death, disability or for Cause, will
be deemed to be a termination as a direct result of the Termination of such
Partnership or a Change in Control, as applicable, for purposes of this
Agreement.
- 2 -
<PAGE> 3
5. LEGAL FEES AND EXPENSES; SECURITY. It is the intent of the
Partnerships that Employee not be required to incur legal fees and the related
expenses associated with the interpretation, enforcement or defense of
Employee's rights to compensation upon a Change in Control by litigation or
otherwise because the cost and expense thereof would substantially detract from
the benefits intended to be extended to Employee hereunder. Accordingly, if it
should appear to Employee that a Partnership has failed to comply with any of
its obligations under this Agreement following a Change in Control or in the
event that a Partnership or any other person takes or threatens to take any
action to declare the agreement to pay Employee compensation upon a Change in
Control void or unenforceable, or institutes any litigation or other action or
proceeding designed to deny, or to recover from, Employee the benefits provided
or intended to be provided to the Employee hereunder, each Partnership which
has undergone a Change in Control irrevocably authorizes Employee from time to
time to retain counsel of Employee's choice, at the expense of such Partnership
as hereinafter provided, to advise and represent Employee in connection with
any such interpretation, enforcement or defense, including without limitation
the initiation or defense of any litigation or other legal action, whether by
or against such Partnership or any partner, officer, or other person affiliated
with such Partnership, in any jurisdiction. Notwithstanding any existing or
prior attorney-client relationship between such Partnership and such counsel,
such Partnership irrevocably consents to Employee's entering into an
attorney-client relationship with such counsel, and in that connection such
Partnership and Employee agree that a confidential relationship will exist
between Employee and such counsel. Without regard to whether Employee
prevails, in whole or in part, in connection with any litigation or other
action or proceeding initiated against Employee in connection with a Change in
Control, such Partnership will pay and be solely financially responsible for
any and all Expenses (as defined below) incurred by Employee. In connection
with any litigation, action or proceeding initiated by Employee against the
Partnership or any partner, officer, or other person affiliated with such
Partnership, such Partnership will pay and be solely financially responsible
for any and all Expenses incurred by Employee only if Employee is the
prevailing party. Such payment of Expenses upon conclusion of such proceedings
shall be made by such Partnership as soon as practicable but in any event no
later than 14 days after written demand supported by reasonable documentation
is presented to the Partnership. If so requested by Employee, the Partnership
shall advance (within two business days of written request supported by
reasonable documentation) any and all Expenses to Employee; provided, however,
advancement of expenses in connection with any litigation, action or proceeding
initiated by Employee will be provided only upon receipt of a written
undertaking by or on behalf of Employee to repay such amount if Employee is not
the prevailing party. As used in this Agreement, "prevailing party" shall mean
the party entitled to recover his, her or its cost of such action, suit or
proceeding. If both Partnerships have undergone a Change in Control prior to
the initiation of any such proceedings, the Partnerships shall be entitled to
share pro rata, in accordance with Section 2, the advancement of Expenses.
6. CERTAIN DEFINED TERMS. In addition to terms defined elsewhere
herein, the following terms have the following meanings when used herein with
initial capital letters:
(a) "Change in Control" means the occurrence during the term of
this Agreement of any of the following events:
- 3 -
<PAGE> 4
(i) any person or entity is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), directly or indirectly, of
securities of a Partnership representing 50% or more of the combined
voting power of the then outstanding partnership interests of such
Partnership;
(ii) the incumbent Non-Corporate General Partner (as
defined below), as of the date of this Agreement, ceases for any
reason to be a general partner of a Partnership; provided, however, if
Employee approves of a substitute non-corporate General Partner
elected by the limited partners to replace the incumbent Non-Corporate
General Partner, Employee may waive such event as a Change in Control,
after which this Agreement shall continue in full force and effect;
(iii) a public announcement is made of a tender or exchange
offer by any person or entity for 50% or more of the outstanding
partnership interests of a Partnership, and the General Partners of
such Partnership approve or fail to oppose that tender or exchange
offer in their statements in Schedule 14D-9 under the Exchange Act; or
(iv) the limited partners of a Partnership approve a
merger or consolidation of such Partnership with any other partnership
or other legal entity (or, if no such approval is required, the
consummation of such a merger or consolidation of such Partnership),
other than a merger or consolidation that would result in the
partnership interests of such Partnership outstanding immediately
prior to the consummation thereof continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity or of a parent of the surviving entity) a
majority of the combined voting power of the voting securities of the
surviving entity (or its parent) outstanding immediately after that
merger or consolidation.
(b) "Cause" means the following grounds for termination:
(i) any act by Employee of fraud, dishonesty or sexual
harassment with respect to any aspect of the Partnerships' business;
(ii) drug or alcohol abuse;
(iii) failure by Employee to perform Employee's Full Time
job-related duties after notice of such failure and explanation of
such failure of performance, which is reasonably determined by the
General Partners to be materially injurious to the business or
interests of a Partnership or any of its affiliates;
(iv) misappropriation of funds or any corporate
opportunity;
(v) conviction of Employee of a crime of moral turpitude
(or a plea of nolo contendere thereto);
- 4 -
<PAGE> 5
(vi) acts by Employee attempting to secure or securing any
personal profit not fully disclosed to and approved by the General
Partners in connection with any transaction entered into on behalf of
or involving a Partnership;
(vii) gross, willful or wanton negligence or misconduct or
conduct which constitutes a breach of any fiduciary duty owed to a
Partnership by Employee; or
(viii) conduct on the part of Employee, even if not in
connection with the performance of Employee's Full Time job-related
duties that would result in serious prejudice to the interests of a
Partnership or any of its affiliates and the failure to cease such
conduct within 30 days of receipt of notice to cease such conduct.
(c) "Expenses" means all costs, expenses (including attorneys'
fees) and obligations paid or incurred in connection with investigating,
defending or participating in (including on appeal) any litigation, action or
proceeding pursuant to Section 5 of this Agreement, which is supported by
reasonable documentation and which reasonably relates, in the good faith
judgment of the Non-Corporate General Partner, to such litigation, action or
proceeding.
(d) "Full Time" means the amount of time devoted to partnership
business as necessary, in the opinion of the Non-Corporate General Partner, to
the management of the Partnerships' affairs.
(e) "General Partners" (i) with respect to MIP I, means Murray
Realty Investors VIII, Inc. and Crozier Partners VIII, Ltd., and (ii) with
respect to MIP II, means Murray Realty Investors IX, Inc. and Crozier Partners
IX, Ltd.
(f) "Non-Corporate General Partner" (i) with respect to MIP I,
means Crozier Partners VIII, Ltd., and (ii) with respect to MIP II, means
Crozier Partners IX, Ltd.
(g) "Termination" or "Terminated" with respect to a Partnership
means when, in the opinion of the Non- Corporate General Partner, all
partnership business has been concluded and a final tax return filed.
7. TERMINATION. Except with respect to the provisions of this
Agreement that provide for payments to be made to Employee after termination of
Full Time duties as a result of the Termination or Change in Control of a
Partnership, this Agreement shall terminate automatically without further
action by the parties hereto upon the death or permanent disability of Employee
or the termination of Employee's Full Time duties to the Partnerships for any
reason or no reason, in accordance with Employee's status as an employee at
will with MIP II. As used herein, the term "permanent disability" means
physical or mental disability or both that is determined by the General
Partners, in good faith, to substantially impair the ability of Employee to
perform the day-to-day functions normally performed by Employee if the
disability is suffered (or is reasonably expected to be suffered) by Employee
for a period of not less than six consecutive calendar months.
8. REPRESENTATION AND COVENANT BY EMPLOYEE. Employee hereby
represents and warrants to the Partnerships that there are no agreements or
understandings that would make
- 5 -
<PAGE> 6
unlawful Employee's execution or delivery of this Agreement. Employee further
represents and warrants to the Partnerships that Employee has not entered into
any employment contract with either Partnership and that Employee's employment
relationship with MIP II remains at-will.
9. SEVERABILITY AND REFORMATION. If any provision of this
Agreement is held to be illegal, invalid or unenforceable under any present or
future law, such provision shall be fully severable, and this Agreement shall
be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part thereof, the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by
the illegal, invalid or unenforceable provision or by its severance herefrom,
and in lieu of such illegal, invalid or unenforceable provision, there shall be
added automatically as a part of this Agreement a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible, and the Partnerships and Employee hereby request
the court or any arbitrator to whom disputes relating to this Agreement are
submitted to reform the otherwise unenforceable covenant in accordance with
this Section 9.
10. NOTICES. Any notice necessary under this Agreement shall be
in writing and shall be considered delivered three business days after mailing
if sent certified mail, return receipt requested, or when received, if sent by
telecopy, prepaid courier, express mail or personal delivery to the following
addresses:
If to MIP I: Murray Income Properties I, Ltd.
5550 LBJ Freeway, Suite 675
Dallas, Texas 75240
Telecopy: (214) 991-9086
Attention: Jack E. Crozier
If to MIP II: Murray Income Properties II, Ltd.
5550 LBJ Freeway, Suite 675
Dallas, Texas 75240
Telecopy: (214) 991-9086
Attention: Jack E. Crozier
If to Employee: At the address set forth on the
signature page hereto.
11. ATTORNEY'S FEES. Except as otherwise expressly provided in
Section 5 above, the prevailing party in any legal or arbitration proceedings
brought by or against the other party to enforce any provision of this
Agreement shall be entitled to recover against the non-prevailing party the
reasonable attorney's fees, court costs and other expenses incurred by the
prevailing party.
12. ENTIRE AGREEMENT. This Agreement embodies the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein and supersedes all prior conflicting or
inconsistent agreements, consents and understandings relating to such subject
matter. Employee acknowledges and agrees that there is no oral or other
agreement between the Partnerships and Employee which has not been incorporated
in this Agreement.
- 6 -
<PAGE> 7
13. ASSIGNMENT AND DELEGATION. All rights, covenants and
agreements of the Partnerships set forth in this Agreement shall, unless
otherwise provided herein, be binding upon and inure to the benefit of the
Partnerships' respective successors and assigns. All rights, covenants and
agreements of Employee set forth in this Agreement shall, unless otherwise
provided herein, not be assignable by Employee, and shall be considered
personal to Employee for all purposes.
14. MODIFICATION. This Agreement may be modified only by a
written agreement signed by all parties.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original instrument, and
all of which together shall constitute one and the same Agreement. In making
proof of this Agreement, it shall not be necessary to produce or account for
more than one counterpart executed by the party sought to be charged with
performance hereunder.
16. HEADINGS, GENDER, ETC. The headings used in this Agreement
have been inserted for convenience and do not constitute matter to be construed
or interpreted in connection with this Agreement. Unless the context of this
Agreement otherwise requires, (i) words of any gender shall be deemed to
include each other gender; (ii) words using the singular or plural number shall
also include the plural or singular number, respectively; and (iii) the terms
"hereof," "herein," "hereby," "hereto," and derivative or similar words shall
refer to this entire Agreement.
17. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED UNDER AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF
THE STATE OF TEXAS.
18. LIMITATION OF DAMAGES AND ACTIONS. IN NO EVENT WHATSOEVER
SHALL THE PARTNERSHIPS BE LIABLE TO EMPLOYEE FOR ANY INDIRECT, SPECIAL,
PUNITIVE OR CONSEQUENTIAL DAMAGES RELATING TO ANY ACTION TAKEN BY OR ANY
INACTION OF THE PARTNERSHIPS RELATING TO OR ARISING OUT OF THE SUBJECT MATTER
OF THIS AGREEMENT. IN THE EVENT THIS PROVISION FAILS OF ITS ESSENTIAL PURPOSE
OR WITH RESPECT TO CLAIMS FOR ACTUAL AND DIRECT DAMAGES BROUGHT IN CONNECTION
WITH ANY ACT OR OMISSION HEREUNDER, OR ANY ACT OR OMISSION BY THE PARTNERSHIPS'
AGENTS RELATED TO THIS AGREEMENT, THE PARTNERSHIPS' MAXIMUM LIABILITY HEREUNDER
IS EXPRESSLY LIMITED TO THE SEVERANCE COMPENSATION PAYABLE UNDER THIS AGREEMENT
BY THE PARTNERSHIPS TO EMPLOYEE, AND EACH PARTNERSHIP'S LIABILITY IS FURTHER
EXPRESSLY LIMITED TO SUCH PARTNERSHIP'S PROPORTIONATE SHARE OF EXPENSES AS SET
FORTH IN SECTION 2. ANY ACTION OR ARBITRATION ARISING FROM OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER ACT OR OMISSION BY EITHER PARTY HERETO,
INCLUDING ITS RESPECTIVE AGENTS, MUST BE BROUGHT WITHIN (2) YEARS AFTER THE
CAUSE OF ACTION ARISES AND MUST BE BROUGHT IN DALLAS COUNTY, TEXAS.
- 7 -
<PAGE> 8
19. INTENTIONAL RISK ALLOCATION. The Partnerships and Employee
each acknowledge that the provisions of this Agreement are negotiated to
reflect an informed voluntary allocation between them of all risks (both known
and unknown) associated with the transactions contemplated by this Agreement.
The warranty disclaimers and limitations contained in this Agreement are
intended to limit the circumstances of liability. The remedy limitations, and
the limitations of liability, are separately intended to limit the forms of
relief available to the parties hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered on the day and year first above written.
MURRAY INCOME PROPERTIES I, LTD.
By: Murray Realty Investors VIII, Inc.,
a General Partner
By: /s/ MITCHELL L. ARMSTRONG
------------------------------------
Mitchell L. Armstrong, President
By: Crozier Partners VIII, Ltd.,
a General Partner
By: /s/ JACK E. CROZIER
------------------------------------
Jack E. Crozier, General Partner
MURRAY INCOME PROPERTIES II, LTD.
By: Murray Realty Investors IX, Inc.
a General Partner
By: /s/ MITCHELL L. ARMSTRONG
-------------------------------------
Mitchell L. Armstrong, President
- 8 -
<PAGE> 9
By: Crozier Partners IX, Ltd.,
a General Partner
By: /s/ JACK E. CROZIER
-----------------------------------
Jack E. Crozier, General Partner
EMPLOYEE
/s/ MITCHELL L. ARMSTRONG
-----------------------------------------
Mitchell L. Armstrong
Address: 2409 DIAMOND OAKS
---------------------------------
GARLAND, TX 75044
-----------------------------------------
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<PAGE> 1
EXHIBIT 10b
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this "Agreement") is made and entered into
as of the 16th day of September, 1996, by and among Murray Income Properties I,
Ltd., a Texas limited partnership ("MIP I"), Murray Income Properties II, Ltd.,
a Texas limited partnership ("MIP II"), and W. Brent Buck ("Employee"). MIP I
and MIP II are individually referred to herein as a "Partnership" and
collectively as the "Partnerships."
Employee is currently employed by MIP II and provides services to both
MIP I and MIP II pursuant to an expense sharing arrangement as further
described in Section 2 of this Agreement. Employee has been employed by, or
provided services to, the Partnerships since November 15, 1989. The General
Partners (as defined below) of the Partnerships each acknowledge that both
Partnerships will in the future terminate through merger, sale of assets or
other action of the limited partners and that given the structure of the
business operations of the Partnerships and the duties and experience of
Employee, the loss of Employee's services prior to final Termination (as
defined below) of each Partnership could cause a serious disruption of the
Partnerships' business activities and may cause a material adverse effect upon
the value of the Partnerships' assets. In order to encourage Employee to
remain employed by or provide services to, as applicable, the Partnerships
through their respective Termination, and in order to maximize the value of the
Partnerships' assets, the General Partners, on behalf of the Partnerships, and
Employee desire to enter into this Agreement providing severance benefits to
Employee. For and in consideration of the foregoing and the mutual promises
hereinafter contained, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. SEVERANCE BENEFITS. (a) Subject to Section 2 below, upon
termination of Employee's Full Time (as defined below) duties to a Partnership
involuntarily as a direct result of the Termination of such Partnership, except
by reason of Employee's death, permanent disability or for Cause (as defined
below), such Partnership shall pay to Employee an amount equal to the value of
the aggregate of one month of Employee's highest monthly salary paid to
Employee by MIP II at any time during the twelve months prior to Employee's
termination (the "Termination Date") multiplied by twelve (12), plus the
current monthly cost of such health, disability and life benefits (including
spousal or similar coverage and coverage for children) which Employee was
receiving or entitled to receive immediately prior to the Termination Date
multiplied by fourteen (14), which shall be in addition to and not in
substitution for any health, disability and life benefits or coverage to which
Employee may be otherwise entitled under applicable state and federal law (the
"Severance Payment"). Any Severance Payment due and owing to Employee as
calculated above shall be payable in cash in one lump sum payment within 30
days of the Termination Date. In the event of a Change in Control (as defined
below), such Partnership shall pay to Employee one-half of the Severance
Payment as calculated above. If within one year following a Change in Control
Employee's Full Time duties are terminated for any reason, whether voluntarily
or involuntarily, such Partnership shall pay to Employee the remaining one-half
of the Severance Payment. Any Severance Payment due and owing to Employee as
calculated above shall be payable in cash in one lump sum payment within 30
days of the date of the Change in Control or the Termination Date, as
applicable.
<PAGE> 2
(b) The Partnerships shall have a right of set-off in respect of
any claim, debt or obligation against any payment to or benefit for Employee
provided for in this Agreement.
(c) The Partnerships agree to make a good faith effort to maintain
Employee's monthly base salary and health, disability and life benefits
applicable as of the date of this Agreement, subject to prevailing market
conditions and the financial status of the Partnerships and/or the termination
of Employee's Full Time duties for Cause.
(d) Notwithstanding any other provision hereof, the parties'
respective rights and obligations under this Section 1 and under Section 5
shall survive any termination or expiration of this Agreement following
Termination of either or both of the Partnerships or the termination of
Employee's Full Time duties following a Change in Control for any reason
whatsoever.
2. SHARED EXPENSES. The parties hereto acknowledge that Employee
is employed by MIP II and provides services to both MIP I and MIP II pursuant
to an expense sharing arrangement between the Partnerships whereby MIP I
reimburses MIP II for certain administrative costs, and acknowledge that MIP I
and MIP II are entitled to share expenses relating to the Severance Payment in
the proportions of forty-seven percent (47%) by MIP I and fifty-three percent
(53%) by MIP II. The parties further acknowledge that the Partnerships may be
Terminated at different times and that MIP I and MIP II have agreed to enter
this Agreement acting severally and not jointly with respect to their
respective pro rata obligation to pay severance benefits to Employee. MIP I
and MIP II shall each be liable only for their proportionate share of the
Severance Payment as set forth above (which shall be calculated and fixed once
upon the first Termination or Change in Control event to occur), and only if
and when such Partnership has Terminated or undergone a Change in Control. If
Employee's Full Time duties to MIP II are terminated prior to the termination
of Full Time duties to MIP I, the parties contemplate that Employee will
continue to provide services to MIP I as an employee of MIP I.
3. LIABILITY FOR TAXES. The Partnerships shall have no
responsibility or obligation for any tax liability of Employee attributable to
any Severance Payment made under this Agreement. The Partnerships may withhold
from any such payment such amounts as may be required by applicable provisions
of the Internal Revenue Code, other tax laws, and the rules and regulations of
the Internal Revenue Service and other tax agencies, as in effect at the time
of any such payment.
4. EMPLOYMENT RIGHTS; TERMINATION PRIOR TO LIQUIDATION OR CHANGE
IN CONTROL. Nothing expressed or implied in this Agreement will create any
right or duty on the part of the Partnerships or the Employee to have Employee
remain in the employ of, or provide services to, the Partnerships prior to or
following the commencement of Termination of the Partnerships or any Change in
Control. Any involuntary termination of the Full Time duties of Employee
within 90 calendar days prior to the Termination of a Partnership or a Change
in Control, except by reason of Employee's death, disability or for Cause, will
be deemed to be a termination as a direct result of the Termination of such
Partnership or a Change in Control, as applicable, for purposes of this
Agreement.
- 2 -
<PAGE> 3
5. LEGAL FEES AND EXPENSES; SECURITY. It is the intent of the
Partnerships that Employee not be required to incur legal fees and the related
expenses associated with the interpretation, enforcement or defense of
Employee's rights to compensation upon a Change in Control by litigation or
otherwise because the cost and expense thereof would substantially detract from
the benefits intended to be extended to Employee hereunder. Accordingly, if it
should appear to Employee that a Partnership has failed to comply with any of
its obligations under this Agreement following a Change in Control or in the
event that a Partnership or any other person takes or threatens to take any
action to declare the agreement to pay Employee compensation upon a Change in
Control void or unenforceable, or institutes any litigation or other action or
proceeding designed to deny, or to recover from, Employee the benefits provided
or intended to be provided to the Employee hereunder, each Partnership which
has undergone a Change in Control irrevocably authorizes Employee from time to
time to retain counsel of Employee's choice, at the expense of such Partnership
as hereinafter provided, to advise and represent Employee in connection with
any such interpretation, enforcement or defense, including without limitation
the initiation or defense of any litigation or other legal action, whether by
or against such Partnership or any partner, officer, or other person affiliated
with such Partnership, in any jurisdiction. Notwithstanding any existing or
prior attorney-client relationship between such Partnership and such counsel,
such Partnership irrevocably consents to Employee's entering into an
attorney-client relationship with such counsel, and in that connection such
Partnership and Employee agree that a confidential relationship will exist
between Employee and such counsel. Without regard to whether Employee
prevails, in whole or in part, in connection with any litigation or other
action or proceeding initiated against Employee in connection with a Change in
Control, such Partnership will pay and be solely financially responsible for
any and all Expenses (as defined below) incurred by Employee. In connection
with any litigation, action or proceeding initiated by Employee against the
Partnership or any partner, officer, or other person affiliated with such
Partnership, such Partnership will pay and be solely financially responsible
for any and all Expenses incurred by Employee only if Employee is the
prevailing party. Such payment of Expenses upon conclusion of such proceedings
shall be made by such Partnership as soon as practicable but in any event no
later than 14 days after written demand supported by reasonable documentation
is presented to the Partnership. If so requested by Employee, the Partnership
shall advance (within two business days of written request supported by
reasonable documentation) any and all Expenses to Employee; provided, however,
advancement of expenses in connection with any litigation, action or proceeding
initiated by Employee will be provided only upon receipt of a written
undertaking by or on behalf of Employee to repay such amount if Employee is not
the prevailing party. As used in this Agreement, "prevailing party" shall mean
the party entitled to recover his, her or its cost of such action, suit or
proceeding. If both Partnerships have undergone a Change in Control prior to
the initiation of any such proceedings, the Partnerships shall be entitled to
share pro rata, in accordance with Section 2, the advancement of Expenses.
6. CERTAIN DEFINED TERMS. In addition to terms defined elsewhere
herein, the following terms have the following meanings when used herein with
initial capital letters:
(a) "Change in Control" means the occurrence during the term of
this Agreement of any of the following events:
- 3 -
<PAGE> 4
(i) any person or entity is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), directly or indirectly, of
securities of a Partnership representing 50% or more of the combined
voting power of the then outstanding partnership interests of such
Partnership;
(ii) the incumbent Non-Corporate General Partner (as
defined below), as of the date of this Agreement, ceases for any
reason to be a general partner of a Partnership; provided, however, if
Employee approves of a substitute non-corporate General Partner
elected by the limited partners to replace the incumbent Non-Corporate
General Partner, Employee may waive such event as a Change in Control,
after which this Agreement shall continue in full force and effect;
(iii) a public announcement is made of a tender or exchange
offer by any person or entity for 50% or more of the outstanding
partnership interests of a Partnership, and the General Partners of
such Partnership approve or fail to oppose that tender or exchange
offer in their statements in Schedule 14D-9 under the Exchange Act; or
(iv) the limited partners of a Partnership approve a
merger or consolidation of such Partnership with any other partnership
or other legal entity (or, if no such approval is required, the
consummation of such a merger or consolidation of such Partnership),
other than a merger or consolidation that would result in the
partnership interests of such Partnership outstanding immediately
prior to the consummation thereof continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity or of a parent of the surviving entity) a
majority of the combined voting power of the voting securities of the
surviving entity (or its parent) outstanding immediately after that
merger or consolidation.
(b) "Cause" means the following grounds for termination:
(i) any act by Employee of fraud, dishonesty or sexual
harassment with respect to any aspect of the Partnerships' business;
(ii) drug or alcohol abuse;
(iii) failure by Employee to perform Employee's Full Time
job-related duties after notice of such failure and explanation of
such failure of performance, which is reasonably determined by the
General Partners to be materially injurious to the business or
interests of a Partnership or any of its affiliates;
(iv) misappropriation of funds or any corporate
opportunity;
(v) conviction of Employee of a crime of moral turpitude
(or a plea of nolo contendere thereto);
- 4 -
<PAGE> 5
(vi) acts by Employee attempting to secure or securing any
personal profit not fully disclosed to and approved by the General
Partners in connection with any transaction entered into on behalf of
or involving a Partnership;
(vii) gross, willful or wanton negligence or misconduct or
conduct which constitutes a breach of any fiduciary duty owed to a
Partnership by Employee; or
(viii) conduct on the part of Employee, even if not in
connection with the performance of Employee's Full Time job-related
duties that would result in serious prejudice to the interests of a
Partnership or any of its affiliates and the failure to cease such
conduct within 30 days of receipt of notice to cease such conduct.
(c) "Expenses" means all costs, expenses (including attorneys'
fees) and obligations paid or incurred in connection with investigating,
defending or participating in (including on appeal) any litigation, action or
proceeding pursuant to Section 5 of this Agreement, which is supported by
reasonable documentation and which reasonably relates, in the good faith
judgment of the Non-Corporate General Partner, to such litigation, action or
proceeding.
(d) "Full Time" means the amount of time devoted to partnership
business as necessary, in the opinion of the Non-Corporate General Partner, to
the management of the Partnerships' affairs.
(e) "General Partners" (i) with respect to MIP I, means Murray
Realty Investors VIII, Inc. and Crozier Partners VIII, Ltd., and (ii) with
respect to MIP II, means Murray Realty Investors IX, Inc. and Crozier Partners
IX, Ltd.
(f) "Non-Corporate General Partner" (i) with respect to MIP I,
means Crozier Partners VIII, Ltd., and (ii) with respect to MIP II, means
Crozier Partners IX, Ltd.
(g) "Termination" or "Terminated" with respect to a Partnership
means when, in the opinion of the Non- Corporate General Partner, all
partnership business has been concluded and a final tax return filed.
7. TERMINATION. Except with respect to the provisions of this
Agreement that provide for payments to be made to Employee after termination of
Full Time duties as a result of the Termination or Change in Control of a
Partnership, this Agreement shall terminate automatically without further
action by the parties hereto upon the death or permanent disability of Employee
or the termination of Employee's Full Time duties to the Partnerships for any
reason or no reason, in accordance with Employee's status as an employee at
will with MIP II. As used herein, the term "permanent disability" means
physical or mental disability or both that is determined by the General
Partners, in good faith, to substantially impair the ability of Employee to
perform the day-to-day functions normally performed by Employee if the
disability is suffered (or is reasonably expected to be suffered) by Employee
for a period of not less than six consecutive calendar months.
8. REPRESENTATION AND COVENANT BY EMPLOYEE. Employee hereby
represents and warrants to the Partnerships that there are no agreements or
understandings that would make
- 5 -
<PAGE> 6
unlawful Employee's execution or delivery of this Agreement. Employee further
represents and warrants to the Partnerships that Employee has not entered into
any employment contract with either Partnership and that Employee's employment
relationship with MIP II remains at-will.
9. SEVERABILITY AND REFORMATION. If any provision of this
Agreement is held to be illegal, invalid or unenforceable under any present or
future law, such provision shall be fully severable, and this Agreement shall
be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part thereof, the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by
the illegal, invalid or unenforceable provision or by its severance herefrom,
and in lieu of such illegal, invalid or unenforceable provision, there shall be
added automatically as a part of this Agreement a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible, and the Partnerships and Employee hereby request
the court or any arbitrator to whom disputes relating to this Agreement are
submitted to reform the otherwise unenforceable covenant in accordance with
this Section 9.
10. NOTICES. Any notice necessary under this Agreement shall be
in writing and shall be considered delivered three business days after mailing
if sent certified mail, return receipt requested, or when received, if sent by
telecopy, prepaid courier, express mail or personal delivery to the following
addresses:
If to MIP I: Murray Income Properties I, Ltd.
5550 LBJ Freeway, Suite 675
Dallas, Texas 75240
Telecopy: (214) 991-9086
Attention: Jack E. Crozier
If to MIP II: Murray Income Properties II, Ltd.
5550 LBJ Freeway, Suite 675
Dallas, Texas 75240
Telecopy: (214) 991-9086
Attention: Jack E. Crozier
If to Employee: At the address set forth on the
signature page hereto.
11. ATTORNEY'S FEES. Except as otherwise expressly provided in
Section 5 above, the prevailing party in any legal or arbitration proceedings
brought by or against the other party to enforce any provision of this
Agreement shall be entitled to recover against the non-prevailing party the
reasonable attorney's fees, court costs and other expenses incurred by the
prevailing party.
12. ENTIRE AGREEMENT. This Agreement embodies the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein and supersedes all prior conflicting or
inconsistent agreements, consents and understandings relating to such subject
matter. Employee acknowledges and agrees that there is no oral or other
agreement between the Partnerships and Employee which has not been incorporated
in this Agreement.
- 6 -
<PAGE> 7
13. ASSIGNMENT AND DELEGATION. All rights, covenants and
agreements of the Partnerships set forth in this Agreement shall, unless
otherwise provided herein, be binding upon and inure to the benefit of the
Partnerships' respective successors and assigns. All rights, covenants and
agreements of Employee set forth in this Agreement shall, unless otherwise
provided herein, not be assignable by Employee, and shall be considered
personal to Employee for all purposes.
14. MODIFICATION. This Agreement may be modified only by a
written agreement signed by all parties.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original instrument, and
all of which together shall constitute one and the same Agreement. In making
proof of this Agreement, it shall not be necessary to produce or account for
more than one counterpart executed by the party sought to be charged with
performance hereunder.
16. HEADINGS, GENDER, ETC. The headings used in this Agreement
have been inserted for convenience and do not constitute matter to be construed
or interpreted in connection with this Agreement. Unless the context of this
Agreement otherwise requires, (i) words of any gender shall be deemed to
include each other gender; (ii) words using the singular or plural number shall
also include the plural or singular number, respectively; and (iii) the terms
"hereof," "herein," "hereby," "hereto," and derivative or similar words shall
refer to this entire Agreement.
17. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED UNDER AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF
THE STATE OF TEXAS.
18. LIMITATION OF DAMAGES AND ACTIONS. IN NO EVENT WHATSOEVER
SHALL THE PARTNERSHIPS BE LIABLE TO EMPLOYEE FOR ANY INDIRECT, SPECIAL,
PUNITIVE OR CONSEQUENTIAL DAMAGES RELATING TO ANY ACTION TAKEN BY OR ANY
INACTION OF THE PARTNERSHIPS RELATING TO OR ARISING OUT OF THE SUBJECT MATTER
OF THIS AGREEMENT. IN THE EVENT THIS PROVISION FAILS OF ITS ESSENTIAL PURPOSE
OR WITH RESPECT TO CLAIMS FOR ACTUAL AND DIRECT DAMAGES BROUGHT IN CONNECTION
WITH ANY ACT OR OMISSION HEREUNDER, OR ANY ACT OR OMISSION BY THE PARTNERSHIPS'
AGENTS RELATED TO THIS AGREEMENT, THE PARTNERSHIPS' MAXIMUM LIABILITY HEREUNDER
IS EXPRESSLY LIMITED TO THE SEVERANCE COMPENSATION PAYABLE UNDER THIS AGREEMENT
BY THE PARTNERSHIPS TO EMPLOYEE, AND EACH PARTNERSHIP'S LIABILITY IS FURTHER
EXPRESSLY LIMITED TO SUCH PARTNERSHIP'S PROPORTIONATE SHARE OF EXPENSES AS SET
FORTH IN SECTION 2. ANY ACTION OR ARBITRATION ARISING FROM OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER ACT OR OMISSION BY EITHER PARTY HERETO,
INCLUDING ITS RESPECTIVE AGENTS, MUST BE BROUGHT WITHIN (2) YEARS AFTER THE
CAUSE OF ACTION ARISES AND MUST BE BROUGHT IN DALLAS COUNTY, TEXAS.
- 7 -
<PAGE> 8
19. INTENTIONAL RISK ALLOCATION. The Partnerships and Employee
each acknowledge that the provisions of this Agreement are negotiated to
reflect an informed voluntary allocation between them of all risks (both known
and unknown) associated with the transactions contemplated by this Agreement.
The warranty disclaimers and limitations contained in this Agreement are
intended to limit the circumstances of liability. The remedy limitations, and
the limitations of liability, are separately intended to limit the forms of
relief available to the parties hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered on the day and year first above written.
MURRAY INCOME PROPERTIES I, LTD.
By: Murray Realty Investors VIII, Inc.,
a General Partner
By:/s/ MITCHELL L. ARMSTRONG
------------------------------------
Mitchell L. Armstrong, President
By: Crozier Partners VIII, Ltd.,
a General Partner
By:/s/ JACK E. CROZIER
------------------------------------
Jack E. Crozier, General Partner
MURRAY INCOME PROPERTIES II, LTD.
By: Murray Realty Investors IX, Inc.
a General Partner
By:/s/ MITCHELL L. ARMSTRONG
-------------------------------------
Mitchell L. Armstrong, President
- 8 -
<PAGE> 9
By: Crozier Partners IX, Ltd.,
a General Partner
By:/s/ JACK E. CROZIER
-----------------------------------
Jack E. Crozier, General Partner
EMPLOYEE
/s/ W. BRENT BUCK
-----------------------------------------
W. Brent Buck
Address:87 Meadowlake Cove
---------------------------------
Oxford, MS 38655
-----------------------------------------
- 9 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) MURRAY
INCOME PROPERTIES II, LTD. BALANCE SHEET AND STATEMENT OF EARNINGS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FORM 10-Q FOR THE
QUARTER ENDED SEPTEMBER 30, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 859,452
<SECURITIES> 895,000
<RECEIVABLES> 434,298
<ALLOWANCES> 10,673
<INVENTORY> 0
<CURRENT-ASSETS> 2,178,077
<PP&E> 23,246,896
<DEPRECIATION> 6,808,602
<TOTAL-ASSETS> 20,352,028
<CURRENT-LIABILITIES> 220,685
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 20,003,383
<TOTAL-LIABILITY-AND-EQUITY> 20,352,028
<SALES> 0
<TOTAL-REVENUES> 747,336
<CGS> 0
<TOTAL-COSTS> 395,712
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (1,289)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 273,150
<INCOME-TAX> 0
<INCOME-CONTINUING> 273,150
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 273,150
<EPS-PRIMARY> .84
<EPS-DILUTED> .84
</TABLE>
<PAGE> 1
EXHIBIT 99.A
above are not met, the General Partners may repurchase a portion of such
Interests or defer the repurchase of all such Interests. If the General
Partners determine to defer all or a portion of the repurchase of certain
Interests, the affected Limited Partners will be deemed to have priority over
subsequent requests for repurchases. Investors should be aware that the General
Partners have no obligation to repurchase Interests. If Interests are
repurchased, the General Partner then owning such Interests shall in all
respects be treated as a Limited Partner with respect to those Interests
repurchased.
Special Power of Attorney
Under the Partnership Agreement and Subscription Agreement each Limited
Partner irrevocably appoints the General Partners his attorneys-in-fact to
make, execute, sign, acknowledge, swear to, deliver, record and file any
document or instrument which may be considered necessary or desirable by the
General Partners executing the same to carry out fully the provisions of the
Partnership Agreement.
Dissolution and Liquidation
Article XV of the Partnership Agreement provides that the Partnership
shall be dissolved and its business wound up upon the earliest to occur of (a)
180 days from the date of this Prospectus, unless subscriptions for 30,000
Interests are accepted by such date, (b) the date of disposition of all assets
of the Partnership, (c) the date of the removal, resignation, adjudication of
bankruptcy, insolvency or dissolution of a General Partner, unless the Limited
Partners elect to continue the business of the Partnership, (d) that date on
which Limited Partners holding a majority of Interests vote in favor of
dissolution and termination, or (e) January 31, 2025.
Upon the election by the Limited Partners to continue the business of
the Partnership after an event specified in (c) above, the Partnership shall be
required to purchase the General Partners' general partnership interest
pursuant to Section 12.2 and Section 12.3 of the Partnership Agreement.
Upon the completion of the liquidation of the Partnership, the General
Partners have the authority to execute and record a certificate of cancellation
of the Partnership, as well as any and all other documents required to
effectuate the dissolution and termination of the Partnership.
GLOSSARY
As used in this Prospectus, the following definitions of terms are
applicable:
"Affiliate": (i) any person directly or indirectly controlling,
controlled by, or under common control with, another person, (ii) a person
owning or controlling 10% or more of the outstanding voting securities or
beneficial interests of such other person, (iii) any officer, director,
partner, general trustee, or any other person acting in a substantially
similar capacity of such person, and (iv) if such other person is an
officer, director, partner, trustee or holder of 10% or more of the voting
securities or beneficial interests of such person, any other entity for
which such person acts in any capacity.
"Average Annual Unreturned Invested Capital": The total of all the
Limited Partners' Original Invested Capital reduced by the total of all Cash
Distributions from Sales or Refinancings (excluding Cash Distributions from
Sales or Refinancings applied to the Limited Partners' Preferred Return) to
Limited Partners (but not below zero), as reflected on the partnership's
books and records, weighted on a daily average basis for the period.
"Cash Distributions from Operations": Distributions of cash receipts
from Gross Revenues after (i) operating expenses (without deduction for
depreciation), (ii) amounts set aside for reasonable reserves, and (iii)
payments on the Partnership's other current obligations.
"Cash Distributions from Sales or Refinancings": Distributions of cash
receipts from Net Proceeds from Sales or Refinancings realized by the
Partnership from sales or refinancings of the
68
<PAGE> 2
Partnership's properties after (i) amounts set aside for reasonable
reserves, and (ii) payments on the Partnership's other current obligations.
"Closing Date": Such date as designated by the General Partners as the
date when the last Interest has been sold by the Partnership, but in no
event later than 18 months after the Registration Statement first became
effective.
"Crozier Partners": Crozier Partners IX, Ltd.
"Escrow Agent": MBank Dallas, N.A., Dallas, Texas, or its successor.
"General Partners": Murray Realty Investors IX, Inc. and Crozier
Partners IX, Ltd.
"Gross Revenues": All Partnership revenues from whatever source derived,
exclusive of revenues from the sale or refinancing of Partnership
properties.
"Initial Closing Date": The date on which subscriptions for the minimum
of 30,000 Interests have been accepted by the General Partners.
"Initial Limited Partner": Richard H. Shaw.
"Interest": The limited partnership interest in the Partnership acquired
by the payment of $100 to the Partnership.
"Limited Partners": All subscribers for Interests who are admitted to
the Partnership as limited partners and listed on Schedule A to the
Partnership Agreement.
"Minimum Deadline": The date that is 180 days after the date of this
Prospectus.
"MRI": Murray Realty Investors IX, Inc.
"NASAA Guidelines": The guidelines for real estate programs as adopted
by the North American Securities Administrators Association as they exist on
the date the Partnership's Registration Statement is declared effective by
the Securities and Exchange Commission.
"Net Proceeds from Sales or Refinancings": The net cash realized by the
Partnership from sales, refinancings or other dispositions of Partnership
properties after the payment of all debts and expenses related to the
transactions.
"Organizational and Offering Expenses": Expenses incurred in connection
with the organization of the Partnership and the offering of the Interests
(excluding selling commissions and the dealer manager fee), including legal
fees, accounting fees, printing costs, filing and qualification fees,
reimbursement of expenses (excluding salaries and related salary expenses
incurred during the organization of the Partnership) incurred by the General
Partners or their Affiliates and other disbursements in connection with the
sale and distribution of Interests.
"Original Invested Capital": An amount equal to $100 per Interest.
"Partner": Any General Partner, Limited Partner or, until the Initial
Closing Date, the Initial Limited Partner.
"Partnership": The partnership created under the Amended and Restated
Certificate and Agreement of Limited Partnership attached as Exhibit A.
"Partnership Agreement": The Amended and Restated Certificate and
Agreement of Limited Partnership attached as Exhibit A.
"Preferred Return": The cumulative preferred return to each Limited
Partner equal to 10% per annum on his Average Annual Unreturned Invested
Capital from either Cash Distributions from Operations or Cash Distributions
from Sales or Refinancings. Such cumulative preferred return shall be
calculated from the beginning of the first full fiscal quarter after such
Limited Partner purchased such Interest. A Limited Partner shall be deemed
to have purchased an Interest as of
69
<PAGE> 3
the date on which the purchase of such Interest is reflected on the
certificate of limited partnership filed with the Secretary of State of
Texas.
"Property Management Fee": The fee payable for property management
services.
"Prospectus": The prospectus contained in the Registration Statement, as
amended or supplemented.
"Registration Statement": The Partnership's Registration Statement on
Form S-11 filed with the Securities and Exchange Commission and as amended
from time to time.
"Repurchase Fund": 25% of MRI's share of Cash Distributions from
Operations to be used to repurchase Limited Partner Interests under certain
circumstances.
"Subordinated Amount": MRI's unpaid Cash Distributions from Operations
subordinated to the Limited Partners' 7% noncumulative annual return.
THE OFFERING
Subject to the conditions set forth in this Prospectus and in
accordance with the terms and conditions of the Partnership Agreement, the
Partnership offers through the Dealer Manager 300,000 Interests at $100 per
Interest, subject to the right of the Dealer Manager to increase the offering
by up to an additional 200,000 Interests. Except for investors in certain
states that have imposed higher purchase requirements as set forth in the
Subscription Agreement, a form of which is included as Exhibit B, the minimum
subscription for an Individual Retirement Account or a Keogh Plan is 20
Interests. The minimum subscription for other investors is 50 Interests.
The Interests are being offered on a "best efforts" basis through
Murray Securities Corporation (the "Dealer Manager"), an Affiliate of the
General Partners. As compensation for their services in soliciting and
obtaining subscribers for the purchase of the Interests, the Partnership has
agreed to pay the Dealer Manager a commission of up to a maximum of 8% of the
gross proceeds on all sales made directly by it or by other dealers in
accordance with the following schedule:
<TABLE>
<CAPTION>
Amount of Investment
-------------------- Commission
From To Rate
---------- -------- ----------
<S> <C> <C>
$ 2,000 $ 99,999 8%
100,000 249,999 7%
250,000 499,999 6%
500,000 749,999 5%
750,000 999,999 4%
1,000,000 and over 2%
</TABLE>
Subscriptions may be combined for the purpose of determining the total
commissions payable in the case of subscriptions made by any investor who,
subsequent to his initial purchase of Interests, subscribes for the purchase of
additional Interests. To be eligible for combination, subscriptions must be
identical for all of the following: registration, type of ownership and tax
identification or social security number. Any request to combine subscriptions
will be subject to verification by the General Partners that all of such
subscriptions were made by a single investor. In such an event, the commission
payable with respect to the initial purchase of Interests will be computed
using the commission schedule set forth above. The commission payable with
respect to any subsequent purchase of Interests will equal the commission that
would have been payable in accordance with the commission schedule set forth
above if all purchases had been made simultaneously, less the commissions that
previously have been paid with respect to all prior purchases of Interests by
such an investor. The difference between 8% of the gross proceeds from the sale
of Interests and the amount payable to the Dealer Manager with respect to such
sale will be reimbursed to the Limited Partner as soon as possible after his
admission to the Partnership or, at the option of such Limited Partner, as
evidenced on his executed subscription agreement in the form of Exhibit B
hereto, will be applied to
70
<PAGE> 1
EXHIBIT 99.B
"Terminated General Partner") shall be purchased by the Partnership for a
purchase price determined according to the provisions of Section 12.3 hereof.
The last to remain of MRI and Crozier Partners, and the successors thereof,
shall not resign or withdraw from the Partnership without the concurrence of a
majority in interest of the Limited Partners. If such retirement or resignation
is voluntary, the purchase price shall be paid in the form of a non-interest
bearing unsecured promissory note with principal payable, if at all, from
distributions which the Terminated General Partner otherwise would have
received had the Terminated General Partner not resigned or retired. If such
termination is involuntary, the Partnership shall have the option to pay the
purchase price of such interest to the Terminated General Partner either in
cash or by a promissory note of the Partnership, payable to such Terminated
General Partner in a face amount equal to said purchase price and containing
provisions as would be usual and customary in a commercial promissory note,
including provisions for interest, at a rate equal to the prime rate of
interest from time to time charged by MBank Dallas, N.A. to its best commercial
customers (but in no event to exceed the maximum rate permitted by law to be
paid to the Terminated General Partners by the Partnership), such interest to
be payable at the time of each installment of principal, which shall be payable
as the Terminated General Partner and the Partnership may agree, or if they
cannot so agree, then annually over a period of five years from the date of the
Terminated General Partner's removal, adjudication of bankruptcy, insolvency or
dissolution. No prepayment penalty shall be charged to the Partnership for the
early payment of its note.
12.3 The fair market value of the Terminated General Partner's
interest to be purchased by the Partnership according to the provisions of
Section 12.2 above shall be determined by agreement between the Terminated
General Partner and the Partnership. If the Terminated General Partner and the
Partnership cannot agree upon the fair market value of such Partnership
interest within 90 days after the date of the Terminated General Partner's
resignation, removal, adjudication of bankruptcy, insolvency or dissolution,
then the Terminated General Partner and the Partnership shall each select an
independent appraiser within the next thirty days. If such appraisers fail to
agree on the fair market value of the Terminated General Partner's interest
within the next 90 days, then the two appraisers shall jointly appoint a third
appraiser whose determination shall be final and binding. The Terminated
General Partner and the Partnership shall each compensate their respective
appraisers, and the compensation of the third appraiser, if necessary, shall be
borne equally by each party. If the Partnership or the Terminated General
Partner fails to appoint an independent appraiser within the thirty day period
provided for in this paragraph, then the fair market value of the Terminated
General Partner's interest will be determined in accordance with the then
current rules of the American Arbitration Association, and the expense of such
arbitration shall be borne equally by the Terminated General Partner and the
Partnership.
12.4 Within 90 days after the resignation, removal, adjudication of
bankruptcy, insolvency or dissolution of a General Partner (except that a
General Partner shall not voluntarily withdraw from the Partnership without
complying with the terms of Section 12.2 and without at least 90 days' prior
written notice to the other General Partner and the Limited Partners of
intention to withdraw, and in such event, within the period from the date of
the notice of intention to withdraw to the date of withdrawal specified in the
notice of intention), Limited Partners holding a majority of the Interests may
elect to continue the business of the Partnership and, if they desire to do so,
may elect a successor General Partner or continue the business of the
Partnership with the remaining General Partner.
ARTICLE XIII
TRANSFER OF A PARTNERSHIP INTEREST
13.1 The General Partners may, pursuant to this Article XIII, admit as
a substituted Limited Partner any successor in interest to a Limited Partner
who is either deceased or under legal disability or who is an assignee of a
Limited Partner.
<PAGE> 2
13.2 Subject to the provisions of this Article XIII, compliance with the
suitability standards imposed by the Partnership, applicable "blue sky" laws
and the applicable rules of any other governmental authority, a Limited Partner
shall have the right to assign the whole or any portion of his Interests (but
not less than 50 Interests unless to an Individual Retirement Account or Keogh
Plan and then not less than 20 Interests) by a written assignment, the terms of
which are not in contravention of any of the provisions of this Agreement.
Any assignment in contravention of any of the provisions of this Article XIII
shall be of no force and effect and shall not be binding upon or recognized by
the Partnership.
(a) Except as provided in (b) below, an assignee of a Limited
Partner's Interest who is not admitted as a substituted Limited
Partner shall have no right to require any information or account of
the Partnership's transactions or to inspect the Partnership's books;
he shall only be entitled to receive distributions from the Partnership
and the share of income, gain, loss, deduction and credit attributable
to the Interests acquired by reason of such assignment from the first
day of the month following the month in which the written instrument
of assignment, executed by the assignor and in form and substance
reasonably satisfactory to the General Partners, and other documents
reasonably deemed necessary or appropriate by the General Partners
(as, for example, evidence that the assignee meets investor suitability
standards) shall have been received by the Partnership.
(b) Anything herein to the contrary notwithstanding, both the
Partnership and the General Partners shall be entitled to (i) treat
the assignor of such Interests as the absolute owner thereof in all
respects, and shall incur no liability for allocations of income, gain,
loss, deduction or credit or for distributions or for transmittal of
reports and notices required to be given to holders of Interests,
until the last day of the month in which the Partnership shall have
received the written assignment executed by the assignor in form and
substance reasonably satisfactory to the General Partners and other
documents reasonably deemed necessary or appropriate by the General
Partners (including evidence of the assignee's compliance with
standards imposed by applicable "blue sky" laws) or (ii) treat the
assignee as a substituted Limited Partner in the place of his assignor,
should the General Partners deem, in their absolute discretion, that
such treatment is in the best interests of the Partnership for any of
its purposes or for any of the purposes of this Agreement.
13.3 No assignee shall have the right to become a substituted Limited
Partner in place of his assignor unless all of the following conditions are
satisfied:
(a) The written consent of the General Partners to such
substitution shall be obtained, the granting of which shall not be
unreasonably withheld;
(b) A duly executed written instrument of assignment setting forth
the intention of the assignor that the assignee shall become a
substituted Limited Partner in his place shall have been filed with
the Partnership;
(c) The Interests being acquired by the assignee shall consist of
at least 20 Interests if such assignee is an Individual Retirement
Account or Keogh Plan and at least 50 Interests if such assignee is not
an Individual Retirement Account or Keogh Plan and, if the assignor
shall retain any Interests, such retention shall consist of at least
20 Interests if such assignor is an Individual Retirement Account or
Keogh Plan and at least 50 Interests if such assignor is not an
Individual Retirement Account or Keogh Plan;
(d) The assignor and assignee shall execute and acknowledge such
other instruments as the General Partners reasonably deem necessary
or desirable to effect such assignment and admission, including,
but not limited to, evidence of the assignee's compliance with
standards imposed by any applicable "blue sky" laws, the written
acceptance and adoption by the assignee of the provisions of this
Agreement and his execution, acknowledgement and delivery to the
General
A-21
<PAGE> 3
Partners of a special power of attorney, the form and content of which
are more fully described in Article XXI hereof; and
(e) The Partnership shall have received from the assignor or
assignee a transfer fee to cover all reasonable expenses of the
transfer, not to exceed $500 per transaction, but such transfer fee
may be waived by the General Partners, in their discretion.
13.4 Any person admitted to the Partnership as a substituted Limited
Partner shall be subject to all of the provisions of this Agreement as if an
original party to it.
13.5 The General Partners shall amend the certificate of limited
partnership at least once each quarter to add assignees as substituted Limited
Partners.
13.6 Upon the death or legal disability of an individual who is a
Limited Partner, his personal representative shall have all of the rights of
a Limited Partner for the purpose of settling or managing his estate, and such
power as the decedent or incompetent possessed to constitute a successor as an
assignee of his Interests and to join with such assignee in making application
to substitute such assignee as a Limited Partner. However, such personal
representative shall not have the right to become a substituted Limited
Partner in the place of his predecessor in interest unless the conditions of
this Article XIII (other than the requirement that the assignor execute and
acknowledge instruments) are first satisfied.
13.7 Upon the adjudication of bankruptcy or insolvency, dissolution
or other cessation of existence as a legal entity of a Limited Partner which
is not an individual, the authorized representative of such entity shall have
all of the rights of a Limited Partner for the purpose of effecting the orderly
winding up and disposition of the business of such entity and such power as
such entity possessed to constitute a successor as an assignee of its
Interests and to join with such assignee in making application to substitute
such assignee as a Limited Partner. However, such representative shall not
have the right to become a substituted Limited Partner in the place of his
predecessor in interest unless the conditions of this Article XIII (other
than the requirement that the assignor execute and acknowledge instruments) are
first satisfied.
13.8 A General Partner may not assign his or its interest as a General
Partner to anyone other than the Partnership as provided in Article XII of
this Agreement.
13.9 No assignment of any Interests may be made if the Interests
sought to be assigned, when added to the total of all other Interests assigned
within the period of 12 consecutive months prior to the proposed date of
assignment, would, in the opinion of counsel for the Partnership, result in
the termination of the Partnership under Section 708 of the Internal Revenue
Code of 1954, as amended.
13.10 Any assignment, sale, exchange or other transfer in contravention
of any of the provisions of this Article XIII shall be void and ineffectual,
and shall not bind or be recognized by the Partnership.
ARTICLE XIV
INDEMNIFICATION
14.1 No General Partner and no officer, director, partner or Affiliate
of a General Partner shall be liable to the Partnership or any Limited Partner
for any loss or damage suffered by the Partnership or any Limited Partner which
arises out of any error in judgment or other action or inaction not
constituting negligence (gross or ordinary), fraud or breach of fiduciary duty
which was taken in good faith, in accordance with the exercise of reasonable
business judgment and pursuant to a determination that such course of conduct
was in the best interest of the Partnership. The Partnership or its receiver
or trustee shall indemnify, save harmless and pay all judgments and claims
against the General Partners (and each of them) or their officers, directors,
partners and Affiliates from any liability, loss or damage incurred by them
or by the Partnership by reason of any act performed or omitted to be
A-22
<PAGE> 1
EXHIBIT 99.C
for this purpose include only the price of goods and materials paid to
independent third parties and direct costs incurred by the General Partners or
their Affiliates in the transaction, including overhead directly attributable
to the transaction but excluding general and administrative overhead. Further,
all such transactions between the Partnership and a General Partner or an
Affiliate of a General Partner must be pursuant to the terms of a written
contract between the Partnership and such General Partner or Affiliate which
precisely described the services to be rendered or the goods or materials
to be provided and the compensation therefor.
These provisions are inconsistent with the direct management by the
Partnership of its business, operations and affairs and the proposed
restructuring wherein the Partnership and Murray Income Properties, Ltd.-84
will employ their own executive and managerial personnel, secretaries,
accountants and other staff, rent office space, pay their own utility bills,
and in general run their own business, operations and affairs and share
expenses. Murray Income Properties, Ltd.-84 is an Affiliate of the Partnership.
Consequently, this amendment proposes to create an exception to the scope of
Section 10.9 that would allow the Partnership, in conjunction with Murray
Income Properties, Ltd.-84, to manage its own business and affairs and
conduct its own operations through its own staff out of its own office and
to share personnel, office and other general and administrative overhead
expenses with Murray Income Properties, Ltd.-84. Further, the amendment
allows the salaried personnel to be persons who are Affiliates of the
General Partners so long as their compensation and benefits are comparable
to the amounts that would be paid for their services if they were not
Affiliates of a General Partner.
The Amendment. A new paragraph is hereby added to the end of
Section 10.9 that reads as follows:
"Notwithstanding anything contained in this Section 10.9 or
elsewhere in this Agreement, the Partnership may directly conduct,
operate and manage its business and affairs. The Partnership may
employ, either alone or in association with Murray Income Properties,
Ltd.-84, managerial and executive personnel, secretaries, accountants
and other support staff in the conduct of the business, operations
and affairs of the Partnership. If any person employed by the
Partnership is an Affiliate of a General Partner (or if an Affiliate
of a General Partner is employed by Murray Income Properties, Ltd.-84
and the Partnership is to reimburse Murray Income Properties, Ltd.-84
for a portion of the compensation and benefits paid to such person),
the compensation and benefits paid by the Partnership (or by Murray
Income Properties, Ltd.-84 as appropriate) for the services of such
person shall be comparable to the amount that would be paid to such
person if such person was not an Affiliate of a General Partner.
The Partnership may reimburse Murray Income Properties, Ltd.-84 for
that proportion of any expenditure made by Murray Income Properties,
Ltd.-84 which the General Partners deem to be the fair, just and
equitable share that should be borne by the Partnership and,
conversely, the Partnership may pay, and seek reimbursement from,
Murray Income Properties, Ltd.-84 for that proportion of any
expenditure made by the Partnership which the General Partners
deem to be the fair, just and equitable share that should be borne
by Murray Income Properties, Ltd.-84."
Amendment No. 9
Explanation of Amendment. Section 10.17 requires MRI to allocate
25% of its share of Cash Distributions from Operations to a "Repurchase
Fund" for the purchase of Interests upon the request of a Limited Partner.
MRI is permitted to commingle the amount allocated to the "Repurchase Fund"
with other assets of MRI. To the present time, however, MRI has not been
paid any Cash Distributions from Operations since the allocation and payment
of Cash Distributions to MRI is subordinated to the prior receipt by the
Limited Partners of a noncumulative 7% annual return from either Cash
Distributions from Operations or Cash Distributions from Sales or
Refinancings, or both, on their Average Annual Unreturned Invested Capital.
(vi)
<PAGE> 2
Since the amendments herein will reduce the allocation of Cash
Distributions from Operations to MRI from 8% to 3% and will reallocate 5% of
such 8% to Crozier Partners (subordinate, of course, in each instance to the
prior receipt by the Limited Partners of a noncumulative 7% annual return
from either Cash Distributions from Operations or Cash Distributions from
Sales or Refinancings, or both), this amendment will require both MRI and
Crozier Partners, in the proportions of 3/8ths for MRI and 5/8ths for Crozier
Partners, respectively, to allocate 25% of their respective shares of any
such subordinated Cash Distributions from Operations to a "Repurchase Fund"
to be established by each of them, respectively.
The Amendment. The third and fourth sentences in Section 10.17 are
hereby deleted and there is hereby substituted in lieu thereof the following
three sentences:
"MRI will allocate 25% of its share of Cash Distributions from
Operations to a "Repurchase Fund" and Crozier Partners will allocate
to a "Repurchase Fund" 25% of its 5% share of Cash Distributions
from Operations that is subordinated to the prior receipt by the
Limited Partners of a noncumulative 7% annual return from either
Cash Distributions from Operations or Cash Distributions from Sales or
Refinancings, or both, on their Average Annual Unreturned Invested
Capital. MRI's share of Cash Distributions from Operations allocated
to the Repurchase Fund will be commingled with other assets of MRI and
Crozier Partners' share of Cash Distributions from Operations
allocated to the Repurchase Fund will be commingled with other
assets of Crozier Partners. Any repurchase of Interests pursuant to
this Section 10.15 shall be in the proportions of 3/8ths by MRI
and 5/8ths by Crozier Partners, respectively."
Amendment No.10
Explanation of Amendment. Section 11.3 provides in respect of voting on
any matter on which the Limited Partners are entitled to vote that each Limited
Partner will be deemed to be "...the holder of only those Interests shown on
Exhibit A, as amended by the last-filed certificate of limited partnership." The
Texas Uniform Limited Partnership Act requires the filing of a certificate of
limited partnership that lists the name and address of each limited partner of a
limited partnership and the amount of the contribution of each limited partner
to the partnership. The certificate of limited partnership filed in the office
of the Secretary of State is authoritative as to the identity of limited
partners. The Texas Uniform Limited Partnership also does not permit an owner of
a limited partnership interest to be considered a "limited partner," with the
voting and other rights appurtenant to that status, unless the owner is named in
the certificate of limited partnership. The Texas Revised Limited Partnership
Act that will be adopted by these amendments no longer requires that the
identity of the limited partners be disclosed in the certificate of limited
partnership filed in the office of the Secretary of State, which filing was
often burdensome on limited partnerships and considered by some people to be an
invasion of their financial privacy. Instead, the Texas Revised Limited
Partnership Act requires the limited partnership to maintain records showing the
name and mailing address of each partner and a written statement of the date on
which each partner in a limited partnership became a partner. This amendment
makes the records of the Partnership authoritative as to the identity of the
holders of Interests entitled to vote on any particular matter that is submitted
to a vote of the Limited Partners.
The Amendment. The Last sentence of Section 11.3 is hereby amended
to read as follows:
"For purposes of determining the number of votes which he is entitled
to cast, a Limited Partner shall be deemed to be the holder of only
those Interests which are reflected as owned by him by the records
of the Partnership."
(vii)
<PAGE> 1
EXHIBIT 99.D
MANAGEMENT COMPENSATION
The following table sets forth the types and estimates of the
amounts of all fees, compensation, income, distributions and other payments
that the General Partners and their Affiliates will or may receive in
connection with the operations of the Partnership. SUCH FEES, COMPENSATION,
INCOME, DISTRIBUTIONS AND OTHER PAYMENTS WERE NOT DETERMINED BY ARM'S-
LENGTH BARGAINING. See "Conflicts of Interest."
<TABLE>
<CAPTION>
Entity Receiving Method of Determination
Form of Compensation Compensation and Estimated Dollar Amount
- -------------------- ---------------- ---------------------------
Offering Stage
<S> <C> <C>
Selling Commissions Murray Securities Up to $8 per Interest sold,
Corporation(1) reduced for purchases by one
investor of more than 1,000
Interests and for purchases
by officers, directors,
partners, employees or
Affiliates of the General
Partners or their Affiliates.
Actual amount depends upon
number of Interests sold but
could be $2,400,000 if 300,000
Interests are sold or
$4,000,000 if 500,000 Interests
are sold.(2)
Dealer Manager Fee Murray Securities Up to $2 per Interest sold,
Corporation(1) reduced for purchases by
officers, directors, partners,
employees or Affiliates of the
General Partners or their
Affiliates. Actual amount
depends upon number of
Interests sold but could be
$600,000 if 300,000 Interests
are sold or $1,000,000 if
500,000 Interests are sold.(2)
Reimbursement of MRI or its Affiliates Actual out-of-pocket
Organizational Organizational and Offering
Offering Expenses(3) Expenses, including accounting,
legal, printing, registration
fees, etc.
<CAPTION>
Acquisition Stage
<S> <C> <C>
Reimbursement of Murray Properties Actual costs incurred in
Acquisition and Company or its acquiring and holding
Holding Costs(4) Affiliates properties prior to their
acquisition by the Partnership.
Dollar amount is not
determinable at this time.(5)
Title Insurance Dallas Title Company A portion of the premium paid for
Commissions(6) or Texas Title title insurance upon acquisition
Company(7) of a property. The premium in
Texas is fixed by the State.
Dollar amount is not determinable
at this time.(5)
</TABLE>
10
<PAGE> 2
<TABLE>
<CAPTION>
Entity Receiving Method of Determination
Form of Compensation Compensation and Estimated Dollar Amount
- -------------------- ---------------- ---------------------------
Operational Stage
<S> <C> <C>
Property Management Murray Management For its management services,
Fees Corporation(8) an amount not to exceed the
lesser of (i) in the case of
apartment complexes, 5% of
gross revenues, in the case
of shopping centers, office
buildings and office/showroom
centers, 6% of gross revenues
(or 3% if leasing performed
by third parties) and in the
case of shopping centers,
office buildings and office/
showroom centers which are
leased on a long-term (ten or
more years) net (or similar)
basis, 1% of gross revenues
or (ii) the amount customarily
charged in arm's-length
transactions by others
rendering comparable services
in the locality where the
property is located, considering
the size and type of each such
property. In addition, Murray
Management Corporation will be
reimbursed for the actual
costs of on-site personnel
engaged in the management,
leasing and maintenance of the
property of the Partnership.
Dollar amount is not
determinable at this time.(5)
Reimbursement of MRI or its Affiliates Actual cost of goods and
Partnership materials used for and by the
Operational Partnership and obtained from
Expenses(9) an entity not affiliated with
a General Partner or an
Affiliate of the General
Partners and certain
administrative services. Dollar
amount is not determinable
at this time.(5)
Casualty Insurance Murray General A portion of the premiums paid
Commissions Agency, Inc.(10) for casualty insurance. The
cost of the insurance cannot
exceed the lower quote for
comparable terms and
coverage from two independent
brokers. Dollar amount is not
determinable at this time.(5)
Partnership Murray Savings The excess of Murray Savings
Administrative Association(11) Association's rate of return
Account and on the Partnership funds in
Property Operating such accounts over the interest
Accounts rate paid to the Partnership
on such accounts. Dollar
amount is not determinable at
this time.(5)
</TABLE>
11
<PAGE> 3
<TABLE>
<CAPTION>
Entity Receiving Method of Determination
Form of Compensation Compensation and Estimated Dollar Amount
- -------------------- ---------------- ---------------------------
<S> <C> <C>
Interest and Other A General Partner or An amount not in excess of the
Financing Charges an Affiliate of the amounts that would be charged
or Fees General Partners(12) by unrelated lending
institutions on comparable
loans for the same purpose and
in the same locality but never
in excess of 2% over the prime
rate of MBank Dallas, N.A.,
Dallas, Texas. Dollar amount is
not determinable at this
time.(5)
Distributive Share of Crozier Partners and Crozier Partners will receive
Cash Distributions MRI(14) 2% of all Cash Distributions
from Operations(13) from Operations. MRI will
receive 8% of all Cash
Distributions from Operations,
subject to the Limited Partners
having received a noncumulative
annual cash return equal to
7% of their Average Annual
Unreturned Invested Capital,
calculated from the Initial
Closing Date. Dollar amount
is not determinable at this
time.(5)
<CAPTION>
Liquidation Stage
<S> <C> <C>
Real Estate Crozier Partners or An amount not to exceed the
Commissions its Affiliates; lesser of (i) 50% of the
MRI or its competitive real estate
Affiliates(14)(15) commission or (ii) 3% of the
sales price of the property,
provided that all real estate
commissions or similar fees
paid to all persons shall not
exceed the lesser of the
competitive real estate
commission or 6% of the sales
price of the property. Such
commissions will be payable
only after Limited Partners
have been returned their
Original Invested Capital from
Cash Distributions from Sales
or Refinancings, plus their
Preferred Return from either
Cash Distributions from
Operations or Cash Distributions
from Sales or Refinancings.
Dollar amount is not
determinable at this time.(5)
Title Insurance Dallas Title Company A portion of the premiums paid
Commissions or Texas Title for title insurance upon sale,
Company(7) financing or refinancing of a
property if such title
insurance is provided by Dallas
Title Company or Texas Title
Company. The premium in Texas
is fixed by the State. Dollar
amount is not determinable
at this time.(5)
</TABLE>
12
<PAGE> 4
<TABLE>
<CAPTION>
Entity Receiving Method of Determination
Form of Compensation Compensation and Estimated Dollar Amount
- -------------------- ---------------- ---------------------------
<S> <C> <C>
Distributive Share Crozier Partners Crozier Partners will receive
of Cash and MRI(14) 1% of all Cash Distributions
Distributions from from Sales or Refinancings.
Sales or The remaining 99% shall be
Refinancings(13)(16) allocated (a) first, to the
Limited Partners until they
have been returned their
Original Invested Capital
from Cash Distributions from
Sales or Refinancings, plus
their Preferred Return from
either Cash Distributions
from Operations or Cash
Distributions from Sales or
Refinancings, (b) then, to
MRI in an amount equal to any
unpaid Cash Distributions
from Operations subordinated
to the Limited Partners' 7%
noncumulative annual return
and (c) thereafter, the
remainder shall be allocated
85% to the Limited Partners
and 15% to the General Partners.
See "Income and Losses and
Cash Distributions." Dollar
amount is not determinable
at this time.(5)
</TABLE>
- --------------------
(1) The Dealer Manager may authorize certain other broker-dealers who are
members of the National Association of Securities Dealers, Inc., to
sell Interests on a "best efforts" basis. In the event of sales by
such other broker-dealers, the Dealer Manager has advised the
Partnership that the Dealer Manager will reallow to such other broker-
dealers all or a portion of the selling commissions with respect to
such sales. Such other broker-dealers, together with the Dealer
Manager, may also be reimbursed up to an additional 1/2% of gross
offering proceeds in connection with their due diligence activities.
(2) See "The Offering" for a discussion of the rebate of selling commissions
payable with respect to sales to one purchaser of more than 1,000
Interests and the rebate of selling commissions and the dealer manager
fee with respect to sales to officers, directors, partners, employees
or Affiliates of the General Partners or their Affiliates.
(3) For nonleveraged programs such as the Partnership, the NASAA
Guidelines require that, at a minimum, 82% of the Limited Partners'
capital contributions be committed to investment in properties.
Investment in properties, as defined under the NASAA Guidelines,
is the amount of capital contributions actually paid or allocated to
the purchase, development, construction or improvement of properties
acquired by the Partnership (including the purchase of properties,
working capital reserves not in excess of 5% of gross offering proceeds
and other cash payments such as interest and taxes but excluding front-
end fees, defined as fees and expenses paid by any party for any
services rendered during the Partnership's organizational or
acquisition phase including organization and offering expenses,
acquisition fees, acquisition expenses and any other similar fees,
however designated). The remaining capital contributions not invested
in properties are available for the payment of Organizational and
Offering Expenses, selling commissions, acquisition fees and
acquisition expenses. Acquisition fees for this purpose shall be the
total of all fees and commissions paid by any party in connection
with the purchase or development of property by the Partnership,
including real estate commissions, acquisition fees, selection fees,
development fees, nonrecurring management fees, or any fees of a
similar nature,
13
<PAGE> 5
however designated, but excluding a development fee paid to a person not
affiliated with the General Partners or their Affiliates in connection
with actual development of property after acquisition by the
Partnership. Acquisition expenses for this purpose include, but are not
limited to, legal fees and expenses, travel and communication expenses,
costs of appraisals, loan commitment and loan fees ("points"),
nonrefundable option payments on properties not acquired, accounting
fees and expenses, title insurance, and miscellaneous expenses related
to selection and acquisition of properties, whether or not acquired. The
Partnership will acquire its properties on an unleveraged basis. In
addition, the Partnership will not pay any acquisition fees to the
General Partners or their Affiliates and the total of acquisition fees
to unaffiliated parties and acquisition expenses will not exceed 1% of
the Limited Partners' capital contributions. Based on those assumptions
and assuming the sale of 300,000 Interests with Organizational and
Offering Expenses, selling commissions and the dealer manager fee equal
to 13.0% of the Limited Partners' capital contributions, the amount that
would be invested in properties would be equal to 86.0% of such
contributions. The amount invested in Partnership properties will comply
with the NASAA Guidelines limitations set forth above.
(4) An Affiliate of the General Partners may purchase property in its own
name and temporarily hold title thereto for the purpose of facilitating
the acquisition of such property or any other purpose related to the
business of the Partnership. In such event, such Affiliate may be
reimbursed for its costs incurred in acquiring and holding such real
property prior to the acquisition of such property by the Partnership.
Such costs will consist of the price paid by such Affiliate for
such property, plus the amount of any net cash flow deficit or minus the
amount of any net cash flow surplus incurred by such Affiliate during
its ownership and operation of such property.
(5) Any prediction of such dollar amount would necessarily involve
assumptions of future events that cannot be determined at this time.
(6) To the extent a seller of property to the Partnership sets the sales
price at a level sufficient to cover the premium for title insurance,
the Partnership, if effect, will pay the premium in the purchase price
of the property.
(7) The Partnership has entered into nonexclusive contracts with Dallas
Title Company and Texas Title Company, Affiliates of the General
Partners, pursuant to which each has agreed that, upon the request of
the Partnership, it will handle the closing of purchases, sales,
financings or refinancings by the Partnership of properties situated in
Texas and will cause to be issued title insurance policies on such
properties. Either of such title insurance agencies may receive a
portion of the commission on premiums paid for title insurance by the
Partnership or by a seller of real property to the Partnership. In
Texas, title insurance premiums and the policy forms are prescribed by
the State. Each contract provides that if such title insurance agency
does not derive, in any calendar year, at least 75% if its gross income
from persons or entities not affiliated with a General Partner, that
agency's contract will terminate upon the earlier of 60 days after the
end of the calendar year or as soon as the Partnership can arrange for
another person or entity to perform such services. Each contract also
provides that it may be terminated by either party, without penalty, on
60 days' prior written notice and that such title insurance agency shall
not render services or receive title insurance commissions in connection
with the reinvestment of any proceeds from a sale or refinancing of
Partnership properties.
(8) The Partnership has entered into an agreement with Murray Management
Corporation, an Affiliate of the General Partners, pursuant to which
Murray Management Corporation will be responsible for the management
of each property and the collection of its rental income, for which
services it will receive a monthly Property Management Fee. This
Property Management Fee is payable for professional supervisory
management services undertaken in connection with the operation of
the Partnership's properties. In the case of apartment complexes,
such fee shall include all leasing and releasing fees and bonuses,
and leasing-related services. In the case of shopping centers, office
buildings and office/showroom centers, where Murray Management
Corporation is not responsible for leasing, re-leasing and leasing-
related services with respect to
14
<PAGE> 6
the property, its fee shall not exceed 3% of gross revenues.
Notwithstanding the foregoing, a separate competitive fee may be paid
for the one-time initial lease-up of a newly constructed property if
such service is not included in the purchase price of the property,
provided that such fee shall not exceed the lesser of cost or 90%
of the competitive price that would be charged by unaffiliated persons
rendering similar services in the same or comparable geographic
location. In the case of shopping centers, office buildings and office/
showroom centers which are leased on a long-term net (or similar)
basis, a one-time initial leasing fee of 3% of gross revenues may be
taken on each lease payable over the first five full years of the
original term of the lease. Murray Management Corporation shall pay
from the Property Management Fee, and not as an expense of the
Partnership, the expenses of rendering supervisory property management
services; provided, however, that the wages and expenses of on-site
personnel engaged in the management, leasing and maintenance of the
Partnership's properties and personnel, supplies, repairs, furniture
and equipment costs and other costs directly attributable to the
Partnership's property operations shall be deemed to be property
operating expenses and as such shall be borne by the Partnership by
reimbursement to Murray Management Corporation. Wages and other actual
expenses of personnel may be allocated between properties of the
Partnership and other properties managed by Murray Management
Corporation if such properties are owned by (i) a public or private
program sponsored by the General Partners or their Affiliates or any
joint venture in which a General Partner or an Affiliate is a party
or (ii) an unaffiliated third party. Murray Management Corporation
has the right to subcontract to third parties a portion or all of the
management services to be rendered by it with respect to any particular
property, provided that (a) Murray Management Corporation shall at all
times remain responsible for the management of such property, (b)
the Partnership shall not be required to pay for duplicative services
and (c) the aggregate cost to the Partnership will not exceed the
amount which would be customarily charged in arm's-length transactions
by others rendering similar services in the locality where the
property is located, considering the size and type of each such
property, if only one entity had provided all such services. The
agreement between the Partnership and Murray Management Corporation
may be terminated by either party, without penalty, on 60 days' prior
written notice.
(9) Except as set forth below, reimbursements to a General Partner or an
Affiliate of a General Partner shall not be allowed. A General Partner
or an Affiliate of a General Partner may be reimbursed for: (a) the
actual cost of goods and materials used for or by the Partnership and
obtained from an entity not affiliated with a General Partner or an
Affiliate of a General Partner; and (b) the lesser of the cost or
90% of the competitive price charged by unaffiliated parties for (i)
salaries and related salary expenses for services that could be
performed directly for the Partnership by independent parties, including
legal, accounting, transfer agent, data processing, duplicating
and administration of investor accounts and (ii) Partnership reports
and communications to investors. All such transactions shall be
pursuant to the terms of a written contract between the Partnership
and such General Partner or Affiliate which precisely describes the
services to be rendered or the goods or materials to be provided and
the compensation therefor. No reimbursement shall be permitted for
services for which the General Partners or Affiliates receive a
separate fee or for (i) salaries, related salary expenses, traveling
expenses, and other administrative items which are incurred by any
Controlling Person or which are not directly attributable to the
rendering of reimbursable services to the Partnership and (ii) any
indirect expenses incurred in performing services for the Partnership,
such as rent or depreciation, utilities, capital equipment, and other
administrative items. "Controlling Person" for this purpose shall
mean any person, regardless of title, who performs executive or senior
management functions for the General Partners or Affiliates similar
to those of directors, executive management and senior management, or
any person who either holds 5% or more equity interest in the General
Partners or Affiliates or has the power to direct or cause the
direction of the General Partners or Affiliates, whether through the
ownership of voting securities, by contract, or otherwise, or, in the
absence of a specific role or title, any person having the power to
direct or cause the direction of the management level employees and
policies of the General Partners or
15
<PAGE> 7
Affiliates. It is not intended that every person who carries a title
such as vice president, senior vice president, secretary or treasurer
be included in the definition of Controlling Person. In no event shall
any amount charged to the Partnership as a reimbursable expense by the
General Partners exceed the lesser of the actual cost of such services
or 90% of the amount which the Partnership would be required to pay to
independent parties for comparable services. "Costs" for purposes of
this paragraph shall include the price of goods and materials paid
to independent third parties, and direct costs incurred by the General
Partners or their Affiliates in the transactions including overhead
directly attributable to the transaction but excluding general or
administrative overhead. Notwithstanding the foregoing, reimbursements
are also allowable for certain organizational and offering expenses
and for the actual costs of on-site personnel engaged in the
management, leasing and maintenance of the property of the Partnership
as provided in note (8) above.
(10) The Partnership has entered into a nonexclusive contract with Murray
Insurance Agency, Inc., an Affiliate of the General Partners, pursuant
to which, upon the request of the Partnership, such agency will endeavor
to obtain fire, casualty, or similar insurance on the properties of
the Partnership. Any commission on any casualty insurance brokered by
it will not exceed the amount customarily received by it from the
brokerage of comparable policies for unaffiliated persons. Before such
agency brokers any fire, casualty or similar insurance on any property
of the Partnership, quotes must have been received from two unaffiliated
insurance brokers for coverage and terms comparable to that proposed
to be provided by such agency. No insurance will be brokered by the
Partnership through such agency unless the cost of such insurance will
be no greater than the lower quote of the two unaffiliated insurance
agencies. The contract with Murray Insurance Agency, Inc., provides
that if such agency does not derive at least 75% of its gross income
from business done with persons or entities not affiliated with a
General Partner, that agency's contract will terminate upon the earlier
of 60 days after the end of the calendar year or as soon as the
Partnership can arrange for another person or entity to perform such
services. The contract also provides that it may be terminated by
either party, without penalty, on 60 days' prior written notice.
Murray General Agency, Inc., an Affiliate of the General Partners,
will receive commissions on insurance premiums paid through Murray
Insurance Agency, Inc., by virtue of contractual arrangements between
it and Murray Insurance Agency, Inc.
(11) The General Partners may open and maintain an interest-bearing
Partnership administrative account and property operating accounts at
Murray Savings Association, a stock association organized under the
Texas Savings and Loan Act. Murray Savings Association is a wholly-
owned subsidiary of Murray Financial Corporation, an Affiliate of the
General Partners. Such accounts are insured up to a maximum of
$100,000 in the aggregate by the Federal Savings and Loan Insurance
Corporation ("FSLIC"). The General Partners will not permit the balance
of such accounts to exceed the maximum amount insured by the FSLIC.
Murray Savings Association may receive indirect compensation to the
extent that Murray Savings Association's rate of return on the
Partnership funds in such accounts exceeds the interest rate paid to the
Partnership on such accounts. The Partnership will receive an interest
rate competitive with similar accounts at unrelated institutions and
will not be charged any servicing fees on the accounts.
(12) It is not contemplated that a General Partner or any Affiliate of a
General Partner will make a loan to the Partnership, but the Partnership
Agreement permits a General Partner or any Affiliate of a General
Partner to make a loan to the Partnership if the interest and other
financing charges or fees on any such loan are not in excess of the
amounts which would be charged by unaffiliated lending institutions
on comparable loans for the same purpose in the same locality but not
in excess of 2% over the prime rate of MBank Dallas, N.A. Any
financing charges or fees on any loan to the Partnership by a General
Partner or an Affiliate of a General Partner will be only those
incurred by such General Partner or Affiliate in connection with the
making of such loan. Neither a General Partner nor an Affiliate of
a General Partner will make a profit from the Partnership's payment
of financing charges or fees. No property of the Partnership shall
secure
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any loan made to the Partnership by a General Partner or an Affiliate
of a General Partner if, at the inception of the loan, any payment of
principal or interest is to be made more than two years after the
date of the loan. No loans, secured or unsecured, may be made to the
Partnership by a General Partner or an Affiliate of a General Partner
if at the inception of the loan any payment of principal or interest
is to be made more than three years after the date of the loan.
(13) For a discussion of Cash Distributions from Operations and Cash
Distributions from Sales or Refinancings, see "Income and Losses and
Cash Distributions."
(14) Crozier Partners was formed as of December 19, 1985, under The Texas
Uniform Limited Partnership Act with Jack E. Crozier as the general
partner and Fulton Murray, individually, Fulton Murray in his capacity
as Trustee of the Beverly Murray Wilson Trust and Fulton Murray and
RepublicBank Dallas, N.A., in their capacities as Trustees of a trust
created under the Will of Owen M. Murray, Deceased, as the limited
partners.
(15) Real estate commissions are payable to the General Partners or their
Affiliates only if such General Partner or Affiliate provides a
substantial amount of the services in the sales effort. All real estate
commissions payable to the General Partners or their Affiliates for
services in connection with sales of properties of the Partnership shall
be cumulative but shall be paid only after the Limited Partners have
been returned their Original Invested Capital from Cash Distributions
from Sales or Refinancings, plus their Preferred Return. If an
unaffiliated broker participates in the sale of a Partnership property,
the subordination requirement will apply only to the commission, if any,
earned by the General Partners or their Affiliates. The total of all
real estate commissions payable to all parties in connection with the
sale of a Partnership property shall not exceed the lesser of a
competitive real estate commission wihch is reasonable, customary and
competitive in light of the size, type and location of the property or
6% of the sales price of the property. Real estate commissions payable
to the General Partners or their Affiliates will be allocated one-third
to Crozier Partners or its Affiliates and two-thirds to MRI or its
Affiliates.
(16) Cash Distributions from Sales or Refinancings payable to the General
Partners (other than the 1% of Cash Distributions from Sales or
Refinancings payable to Crozier Partners) will be allocated one-third
to Crozier Partners and two-thirds to MRI.
CONFLICTS OF INTEREST
The General Partners are subject to various conflicts of interest
because of other activities and entities in which they have a direct or
indirect financial interest. This Prospectus attempts to highlight those
conflicts of interest but a potential investor should be aware that because of
future activities or circumstances not now foreseen, the listing herein may not
be complete. The General Partners, having the exclusive authority to manage the
operations and affairs of the Partnership and to make all decisions regarding
the business of the Partnership, will seek to resolve any matter involving a
conflict of interest in a manner which, in their best judgment, is fair and
reasonable to the Partnership.
Murray Realty Investors IX, Inc., a General Partner, is a wholly-owned
subsidiary of Murray Realty Investors, Inc., which is a wholly-owned subsidiary
of Murray Properties Company. Murray Properties Company is a wholly-owned
subsidiary of Murray Financial Corporation. The general partner of Crozier
Partners IX, Ltd., a General Partner, is Jack E. Crozier, and the limited
partners are Fulton Murray, individually, Fulton Murray in his capacity as
Trustee of the Beverly Murray Wilson Trust and Fulton Murray and RepublicBank
Dallas, N.A. in their capacities as Trustees of a trust created under the Will
of Owen M. Murray, Deceased. Jack E. Crozier owns approximately 11% of the
outstanding stock and is the President of Murray Financial Corporation and is
an officer and director of substantially all Affiliates of Murray Financial
Corporation. Fulton Murray, members of his family and trusts for their
benefit own the remaining outstanding stock of Murray Financial Corporation.
Mr. Murray is the Chairman of the Board and Chief Executive Officer and a
director of Murray Financial Corporation and is an officer and director of
substantially all Affiliates of Murray Financial Corporation. Murray Financial
Corporation is engaged, directly or through subsidiaries, in various real
estate
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