<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For the Fiscal Year Ended DECEMBER 31, 1995
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
-------------------
MURRAY INCOME PROPERTIES II, LTD.
(Exact Name of Registrant as Specified in its Charter)
TEXAS 75-2085586
(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)
(214) 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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
<PAGE> 2
TABLE OF CONTENTS
Page
PART I
Item 1. Business 1
Item 2. Properties 3
Item 3. Legal Proceedings 3
Item 4. Submission of Matters to a Vote of Security Holders 3
PART II
Item 5. Market for the Partnership's Limited Partnership
Interests and Related Security Holder Matters 4
Item 6. Selected Financial Data 5
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
Item 8. Financial Statements and Supplementary Data 10
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 21
PART III
Item 10. Directors and Executive Officers of the Partnership 22
Item 11. Executive Compensation 23
Item 12. Security Ownership of Certain Beneficial Owners
and Management 23
Item 13. Certain Relationships and Related Transactions 24
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 25
Signatures 31
Index to Exhibits 32
<PAGE> 3
PART I
ITEM 1. BUSINESS.
General. Murray Income Properties II, Ltd. (the "Partnership") was formed
December 23, 1985 under the Texas Uniform Limited Partnership Act to acquire
recently constructed income-producing shopping centers located in growth
markets. As of November, 1989, the Partnership became governed by the Texas
Revised Limited Partnership Act. The General Partners of the Partnership are
Murray Realty Investors IX, Inc., a Texas corporation, and Crozier Partners IX,
Ltd., a Texas limited partnership.
In September 1986, the Partnership acquired a 15% interest in Tower Place
Joint Venture, which owns Tower Place Festival Shopping Center ("Tower Place").
The remaining 85% interest in the joint venture is owned by Murray Income
Properties I, Ltd., a publicly-registered real estate limited partnership, the
general partners of which are affiliates of the General Partners. The
Partnership also acquired Paddock Place Shopping Center ("Paddock Place") on
December 17, 1986, Germantown Collection Shopping Center ("Germantown") on
February 9, 1988, and 1202 Industrial Place (an office/warehouse facility) on
February 26, 1988. All acquisitions were paid for in cash. For a more detailed
description of the joint venture interest and the properties acquired by the
Partnership, see "Item 2. Properties".
The Partnership is in competition for tenants for its properties with other real
estate limited partnerships as well as with individuals, corporations, real
estate investment trusts, pension funds and other entities engaged in the
ownership and operation of retail real estate. When evaluating a particular
location to lease, a tenant may consider many factors, including, but not
limited to, space availability, rental rates, lease terms, access, parking,
quality of construction, and quality of management. While the General Partners
believe that the Partnership's properties are generally competitive with regard
to these factors, there can be no assurance that, in the view of a prospective
tenant, other retail properties will not be more attractive.
Tower Place Festival Shopping Center. At December 31, 1995, Tower Place
Festival Shopping Center was 99% leased. One tenant, General Cinema, leases
27.8% of the total rentable space of the property and another, J&K Cafeterias,
leases 10.6% of the total rentable space. The General Cinema lease expires on
September 30, 2006, with the tenant having the option to extend the term of the
lease for two successive terms of five years each. The J&K Cafeteria lease
expires on April 30, 2004, and the tenant has the option to renew for two
periods of five years each. At December 31, 1994, Tower Place was 97% leased.
Tower Place is subject to competition from similar types of properties in
the vicinity in which it is located. The following information on such
competitors has been obtained from sources believed reliable by the Partnership.
The accuracy of this information was not independently verified by the
Partnership.
<TABLE>
<CAPTION>
Rentable Percent Leased at
Property Square Feet December 31, 1995
-------- ----------- -----------------
<S> <C> <C>
1 248,700 89%
2 40,800 91%
3 65,800 89%
</TABLE>
1
<PAGE> 4
Paddock Place Shopping Center. At December 31, 1995, Paddock Place was
94% leased. One tenant, Rafferty's, leases 11.6% of the total rentable space
of the property. J. Alexander's, a full service restaurant, is occupying the
space under a sub-lease. The Rafferty's lease expires on December 31, 2001 and
the tenant has an option to extend the term of the lease for two successive
periods of five years each. At December 31, 1994, Paddock Place was 100%
leased.
Paddock Place is subject to competition from similar types of properties
in the vicinity in which it is located. The following information on such
competitors has been obtained from sources believed reliable by the
Partnership. The accuracy of this information was not independently verified
by the Partnership.
<TABLE>
<CAPTION>
Rentable Percent Leased at
Property Square Feet December 31, 1995
-------- ----------- -----------------
<S> <C> <C>
1 178,491 98%
2 108,000 93%
3 15,753 100%
</TABLE>
Germantown Collection Shopping Center. At December 31, 1995, Germantown
was 98% leased. One tenant, Chili's, leases 11% of the total rentable space.
The Chili's lease expires on December 31, 2004, and the tenant has the option to
extend the term of the lease for three consecutive terms of five years each.
Another tenant, Sofa Connection, leases 16% of the total rentable space. This
lease expires on December 31, 1997. At December 31, 1994, Germantown was 100%
leased.
Germantown is subject to competition from similar types of properties in
the vicinity in which it is located. The following information on such
competitors has been obtained from sources believed reliable by the Partnership.
The accuracy of this information was not independently verified by the
Partnership.
<TABLE>
<CAPTION>
Rentable Percent Leased at
Property Square Feet December 31, 1995
-------- ----------- -----------------
<S> <C> <C>
1 88,500 95%
2 84,000 100%
3 38,000 100%
</TABLE>
1202 Industrial Place. At December 31, 1995 and December 31, 1994, 1202
Industrial Place was 100% leased. The Pierce Family Partnership lease expires
on October 31, 2002 and the tenant has an option to renew the lease for one
additional term of five years. The Calidad Foods, Inc. lease expires on
November 30, 1997. Calidad Foods has subleased its space to Care Management
Enterprises. Care Management has signed a three year lease which commences
December 1, 1997. Pierce Family Partnership leases 69% of the total rentable
space of the property and Calidad Foods, Inc. leases 31% of the total rentable
space.
1202 Industrial Place is subject to competition from similar types of
properties in the vicinity in which it is located. The following information on
such competitors has been obtained from sources believed reliable by the
Partnership. The accuracy of this information was not independently verified by
the Partnership.
<TABLE>
<CAPTION>
Rentable Percent Leased at
Property Square Feet December 31, 1995
-------- ----------- -----------------
<S> <C> <C>
1 100,000 100%
2 80,000 100%
3 100,000 100%
</TABLE>
The Partnership is reimbursed for 47% of the costs of four employees by
Murray Income Properties I, Ltd., an affiliate of the Partnership.
2
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For a definition of the terms used herein and elsewhere in this Form 10-K,
see "Glossary" incorporated by reference herein as contained in the Prospectus
dated February 20, 1986 filed as part of Amendment No. 1 to Registrant's Form
S-11 Registration Statement (File No. 33-2394) attached hereto as Exhibit 28a.
ITEM 2. PROPERTIES.
The Partnership owns a 15% interest in Tower Place Joint Venture which owns the
property described below:
Location Description of Property
Pineville (Charlotte), Tower Place Festival Shopping Center
North Carolina A 114,562 square foot shopping center situated
on 10.777 acres. At December 31, 1995, Tower
Place was 99% leased at an average annual lease
rate of $12.59. Lease rates range from $10.00
to $16.00 per square foot.
The Partnership also owns the properties described below:
Nashville, Tennessee Paddock Place Shopping Center
A 69,260 square foot shopping center situated
on 4.66 acres. At December 31, 1995, Paddock
Place was 94% leased at an average annual lease
rate of $13.11. Lease rates range from $9.72
to $18.00 per square foot.
Germantown (Memphis), Germantown Collection Shopping Center
Tennessee A 55,730 square foot shopping center situated
on 11.4 acres. At December 31, 1995,
Germantown Shopping Center was 98% leased at
an average annual lease rate of $14.87. Lease
rates range from $11.00 to $19.79 per square
foot.
Grand Prairie, Texas 1202 Industrial Place
An office/warehouse facility containing 14,040
square feet of office space and 158,760 square
feet of warehouse space situated on 8.6 acres.
At December 31, 1995, 1202 Industrial Place was
100% leased at an average annual lease rate of
$2.13. Lease rates range from $2.10 to $2.20
per square foot.
ITEM 3. LEGAL PROCEEDINGS.
There are no material legal proceedings to which the General Partners or
the Partnership is a party or to which any of the Partnership's properties are
subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the fourth
quarter of the year covered by this report through the solicitation of proxies
or otherwise.
3
<PAGE> 6
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS AND
RELATED SECURITY HOLDER MATTERS.
A public market for Interests does not exist and is not likely to develop.
Consequently, a Limited Partner may not be able to liquidate its investment in
the event of emergency or for any other reason, and Interests may not be readily
accepted as collateral for a loan. Further, the transfer of Interests is
subject to certain limitations. For a description of such limitations, see
Article XIII of the Agreement of Limited Partnership as contained in the
Prospectus dated February 20, 1986 filed as part of Amendment No. 1 to
Registrant's Form S-11 Registration Statement (File No. 33-2394) attached hereto
as Exhibit 28b.
As of December 31, 1995, there were 2,335 record holders, owning an
aggregate of 314,687 Interests.
The Partnership made its initial Cash Distribution from Operations
following the quarter ended November 30, 1986, the first complete quarter
subsequent to the acceptance of subscriptions for the minimum number of
Interests offered, and has continued to make distributions after each subsequent
quarter. See "Item 6. Selected Financial Data" for the cash distributions per
Interest during the years ended December 31, 1991 through December 31, 1995. The
Partnership intends to continue making Cash Distributions from Operations on a
quarterly basis.
The Partnership Agreement provides that under certain circumstances, the
General Partners may, in their sole discretion and upon the request of a Limited
Partner, repurchase the Interests held by such Limited Partner. Murray Realty
Investors IX, Inc. is obligated to set aside 25% of its share of Cash
Distributions from Operations and Crozier Partners IX, Ltd. is obligated to set
aside 25% of its 5% share of Cash Distributions from Operations that is
subordinated to the prior receipt by the Limited Partners of a non-cumulative 7%
annual return from Cash Distributions from Operations for this purpose. Any
such repurchase shall be subject to the availability of funds set aside and the
other terms and conditions set forth in the Partnership Agreement. For
information on such terms and conditions, see Section 10.17 of the Agreement of
Limited Partnership as contained in amendment number nine to the Agreement of
Limited Partnership contained in the Proxy Statement dated October 11, 1989
attached hereto as Exhibit 99c. As of December 31, 1995, no funds were
available for this purpose.
4
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ITEM 6. SELECTED FINANCIAL DATA.
<TABLE>
<CAPTION>
Year Ended
December 31
-------------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Income $ 2,794,261 $ 2,743,911 $ 2,638,865 $ 2,512,659 $ 2,605,811
Net Earnings 1,121,097 1,064,413 861,425 827,225 818,607
Earnings per Limited
Partnership Interest* 3.44 3.26 2.63 2.52 2.49
Distributions per Limited
Partnership Interest* 6.00 5.63 5.00 4.25 6.19
Total Assets at
Year End $20,934,041 $21,767,471 $22,519,206 $23,301,484 $23,750,179
</TABLE>
* Based on limited partnership interests outstanding at year-end and net
earnings or distributions allocated to the Limited Partners.
The above selected financial data should be read in conjunction with the
financial statements and related notes appearing in Item 8 of this report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Liquidity and Capital Resources
As of December 31, 1995, the Partnership had cash, cash equivalents and
certificates of deposit of $1,816,646 which included $1,790,853 invested in
certificates of deposit and other money market instruments. Such amounts
represent cash generated from operations and working capital reserves. The
increase in cash and cash equivalents from December 31, 1994 to December 31,
1995 is primarily due to an increase in the net cash flow generated from the
operations of the Partnership's properties.
Rental income from leases is accrued using the straight line method over
the related lease terms. At December 31, 1995 and December 31, 1994, there were
$239,622 and $232,922, respectively, of accounts receivable related to such
accruals. Accounts receivable also consist of tenant receivables, receivables
for rents collected (but not yet remitted to the Partnership by the property
management companies managing the properties), and interest receivable on
short-term investments. Accounts receivable (exclusive of bad debts/recoveries)
remained flat from December 31, 1994 to December 31, 1995 with increases in
receivables for rents collected (but not yet remitted to the Partnership by
property management companies) and receivables related to the accruals described
above at 1202 Industrial Place offset by decreases in tenant receivables at
Germantown and Paddock Place.
Other assets consist primarily of deferred leasing costs. The increase in
other assets of $23,263 is primarily due to an increase (exclusive of
amortization) in leasing commissions.
During the year ended December 31, 1995, the Partnership made Cash
Distributions from Operations totaling $1,926,638. Subsequent to December 31,
1995, the Partnership made a Cash Distribution from Operations of $461,590,
which related to the three months ended December 31, 1995. 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.
5
<PAGE> 8
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 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.
Market conditions continued improvement during 1995, as average occupancy
remained 100% at two of the Partnership's properties and increased at a third
property. The fourth property, Paddock Place, experienced a slight decrease in
rental income and average occupancy. Like most markets, Nashville and Memphis
have experienced an increase in shopping center construction. However, in both
markets the lack of available land and restrictive zoning has prevented much
development near Paddock Place and the Germantown Collection. Charlotte
continued its trend of the construction of large anchored shopping centers.
These properties, commonly known as "power centers", may not compete for the
same size and type of tenants as Tower Place Festival, but they do provide
competition for retail sales customers. The Dallas-Fort Worth industrial market
has improved over the past year, as both occupancy levels and rental rates have
increased. As demand for warehouse space has risen, construction of industrial
properties has also increased.
Results of Operations
Rental income increased $19,420 (1%) for the year ended December 31, 1995
as compared to the year ended December 31, 1994. Rental income increased
$101,756 (4%) for the year ended December 31, 1994 as compared to the year ended
December 31, 1993. The following information details the rental income
generated, bad debt expense incurred, and average occupancy for the years ended
December 31, 1995, 1994, and 1993.
<TABLE>
<CAPTION>
For the years ended
December 31,
-------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Paddock Place Shopping Center
Rental income $1,059,154 $1,083,004 $981,253
Bad debt expense (recovery) $ (5,845) $ (5,652) $ 14,814
Average occupancy 95% 97% 95%
Germantown Collection Shopping Center
Rental income $1,044,327 $1,022,073 $988,320
Bad debt expense $ -0- $ -0- $ 924
Average occupancy 100% 100% 97%
1202 Industrial Place
Rental income $ 476,701 $ 455,685 $489,433
Bad debt expense $ -0- $ -0- $ -0-
Average occupancy 100% 100% 100%
</TABLE>
Rental income at Paddock Place decreased $23,850 (2%) for the year ended
December 31, 1995 as compared to the year ended December 31, 1994, primarily due
to a decrease in the reimbursement of real estate taxes partially offset by an
increase in percentage rent received from J. Alexander's Restaurant. Rental
income at Paddock Place increased $101,751 (10%) for the year ended December 31,
1994 as compared to the year ended December 31, 1993, primarily due to an
increase in occupancy and an increase in the reimbursement of real estate taxes
and insurance costs along with an increase in percentage rent received from J.
Alexander's Restaurant.
Paddock Place Shopping Center in Nashville, Tennessee averaged 95%
occupancy for the year ended December 31, 1995, a two percent decrease from the
previous year. One tenant occupying 5,222 square feet renewed its lease for one
year and one tenant occupying 1,354 square feet renewed its lease for three
years. One tenant who occupied 1,254 square feet vacated its space prior to the
expiration of its lease. This tenant continued to pay rent until a replacement
tenant was
6
<PAGE> 9
found. One tenant who occupied 1,935 square feet vacated its space upon
expiration of its lease. As of December 31, 1995, Paddock Place was 94%
occupied.
Rental income at Germantown increased $22,254 (2%) for the year ended
December 31, 1995 as compared to the year ended December 31, 1994 due to an
increase in percentage rents received from two tenants and an increase in the
reimbursement of insurance costs. Rental income at Germantown increased $33,753
(3%) for the year ended December 31, 1994 as compared to the year ended December
31, 1993 due to an increase in occupancy and an increase in the reimbursement of
common area maintenance costs and real estate taxes.
Occupancy at the Germantown Collection in Germantown (Memphis), Tennessee
averaged 100% for the year ended December 31, 1995, unchanged from the previous
year. One tenant who occupies 1,502 square feet renewed its lease for three
years and one tenant who occupies 4,003 square feet renewed its lease for two
years. One tenant who occupied 1,024 square feet vacated its space upon
expiration of its lease. This space was subsequently re-leased and the new
tenant took occupancy during the first quarter of 1996. As of December 31,
1995, The Germantown Collection was 98% occupied.
Rental income at 1202 Industrial Place increased $21,016 (5%) for the year
ended December 31, 1995 as compared to the year ended December 31, 1994
primarily due to an increase in the reimbursement of real estate taxes and
common area maintenance costs. Rental income at 1202 Industrial Place decreased
$33,748 (7%) for the year ended December 31, 1994 as compared to the year ended
December 31, 1993 primarily due to a decrease in the reimbursement of real
estate taxes and common area maintenance costs.
Occupancy at 1202 Industrial Place in Grand Prairie (Dallas), Texas
averaged 100% for the year ended December 31, 1995, unchanged from the year
ended December 31, 1994. One tenant who occupies 54,000 square feet subleased
its space to another tenant. This sublessee also signed a three year lease
which will commence when this sublease expires. As of December 31, 1995, 1202
Industrial Place was 100% occupied.
Interest income increased $25,230 (34%) for the year ended December 31,
1995 as compared to the year ended December 31, 1994 due to a higher average
yield on invested funds and higher average monthly cash balances invested in
interest bearing accounts during 1995 as compared to 1994.
"Equity in earnings of joint venture" represents the Partnership's 15%
interest in the earnings of Tower Place Joint Venture. Rental income at Tower
Place increased $71,160 (5%) for the year ended December 31, 1995 as compared to
the year ended December 31, 1994 with increases in rental income and increases
in reimbursements for real estate taxes and insurance costs. Rental income at
Tower Place decreased slightly for the year ended December 31, 1994 as compared
to the year ended December 31, 1993 with decreases in rental income being offset
by increased reimbursements for real estate taxes and insurance costs. Lease
termination fee income for Tower Place Joint Venture decreased $89,170 for the
year ended December 31, 1994 as compared to the prior year. In 1993 the joint
venture received a $108,000 lease termination fee from a drug store as
consideration for terminating its lease, and in 1994 the joint venture received
$18,830 from a pet store as consideration for terminating its lease. This
reduction in lease termination fee income resulted in the joint venture's net
income for the year ended December 31, 1994 decreasing by $61,488 (8%) as
compared to the year ended December 31, 1993. The following information
details the rental income generated, bad debt expense incurred, and average
occupancy for the years ended December 31, 1995, 1994, and 1993:
7
<PAGE> 10
<TABLE>
<CAPTION>
For the years ended
December 31,
--------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Tower Place Festival Shopping Center
Rental income $1,617,902 $1,546,742 $1,547,374
Bad debt expense (recovery) $ (5,521) $ 8,029 $ 1,628
Average occupancy 96% 92% 95%
</TABLE>
The Partnership's share of income from the joint venture increased $5,700
(5%) for the year ended December 31, 1995 as compared to the year ended December
31, 1994 for the reasons stated above. The Partnership's share of income from
the joint venture decreased $9,223 (8%) for the year ended December 31, 1994 as
compared to the year ended December 31, 1993 for the reasons stated above.
Occupancy at Tower Place Festival in Pineville (Charlotte), North Carolina
averaged 96% in 1995, a four percent increase over the previous year. Four
tenants totalling 5,461 square feet renewed their leases for three years. One
tenant occupying 3,220 square feet renewed its lease for five years and one
tenant who occupies 2,100 square feet renewed its lease for one year. Two
tenants who occupied 2,654 square feet vacated their space upon expiration of
their leases. Eight leases totalling 13,268 square feet were signed with the
tenants taking occupancy in 1995. Two leases totalling 4,980 square feet were
executed and these tenants will take occupancy during the first quarter of 1996.
One tenant who occupied 2,670 square feet moved to a space containing 1,260
square feet. As of December 31, 1995, Tower Place Festival was 98% occupied.
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 $8,646
(1%) for the year ended December 31, 1995 as compared to the year ended December
31, 1994. The increase was due to higher repair and maintenance costs and
insurance costs. These increases were offset by lower utility costs, landscaping
costs, legal fees and real estate taxes. Property operating expenses at
Germantown increased $2,135 (1%) due primarily to increases in repair and
maintenance costs. These increases were offset by decreases in utilities,
landscaping costs and legal fees. Property operating expenses at Paddock Place
increased $4,728 (2%) with increases in repair and maintenance costs,
landscaping costs and trash removal costs offset by decreases in legal fees,
insurance costs and property management fees. Property operating expenses at
1202 Industrial Place increased $1,783 (1%) with increases in insurance costs
offset by decreases in repair and maintenance costs and real estate taxes.
Property operating expenses decreased $8,029 (1%) for the year ended
December 31, 1994 as compared to the year ended December 31, 1993. The decrease
was due to lower repair and maintenance costs, leasing and promotion costs and
real estate taxes. These decreases were offset by increases in property
management fees and higher utilities and trash removal costs.
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 decreased $8,389 (3%) for the year ended December
31, 1995 as compared to the year ended December 31, 1994, primarily as a result
of lower amortization of organization costs. General and administrative
expenses increased $5,443 (2%) for the year ended December 31, 1994 as compared
to the year ended December 31, 1993 with increases in travel and education
expenses and employee insurance costs being offset by decreases in office
supplies and amortization of organization costs.
Bad debt expense (recoveries), remained flat for the year ended December
31, 1995 as compared to the year ended December 31, 1994 with each of the
Partnership's properties experiencing fewer collection problems. Also, the
Partnership has been able to recover $5,845 in
8
<PAGE> 11
previously reserved tenant receivables at Paddock Place. Bad debt expense
decreased $21,390 for the year ended December 31, 1994 as compared to the year
ended December 31, 1993 with each of the Partnership's properties experiencing
fewer collection problems. The reduction is primarily due to intensive efforts
by Partnership management and the property managers for each of the properties
to recognize and resolve potential tenant problems as rapidly as possible,
thereby reducing an accumulation of outstanding rent receivables.
The effect of inflation on the results of operations for the years ended
December 31, 1995, 1994 and 1993 was not significant.
In March 1995, the Financial Accounting Standards Board issued 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. Management
of the Partnership does not expect the implementation of SFAS 121 to have a
material effect on the financial condition or results of operations of the
Partnership. SFAS 121 is required to be implemented in 1996.
9
<PAGE> 12
`ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The following financial statements are filed as a part of this report:
Page
Number
------
Independent Auditors' Report 11
Balance Sheets - December 31, 1995 and 1994 12
Statements of Earnings - Years ended December 31, 1995, 1994, and 1993 13
Statements of Changes in Partners' Equity - Years ended 14
December 31, 1995, 1994, and 1993
Statements of Cash Flows - Years ended December 31, 1995, 1994, and 1993 15
Notes to Financial Statements 16-20
10
<PAGE> 13
INDEPENDENT AUDITORS' REPORT
The Partners
Murray Income Properties II, Ltd.:
We have audited the accompanying balance sheets of Murray Income Properties II,
Ltd. (a limited partnership) as of December 31, 1995 and 1994, and the related
statements of earnings, changes in partners' equity and cash flows for each of
the years in the three-year period ended December 31, 1995. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Murray Income Properties II,
Ltd. as of December 31, 1995 and 1994, and the results of its operations and its
cash flows for each of the years in the three-year period ended December 31,
1995, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Dallas, Texas
February 27, 1996
11
<PAGE> 14
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
ASSETS
Investment properties, at cost (note 3):
Land $ 5,789,291 $ 5,789,291
Buildings and improvements 17,392,710 17,389,603
------------ ------------
23,182,001 23,178,894
Less accumulated depreciation 6,257,762 5,515,370
------------ ------------
Net investment properties 16,924,239 17,663,524
Investment in joint venture,
at equity (note 4) 1,535,208 1,602,538
Cash and cash equivalents 921,646 919,644
Certificates of deposit 895,000 888,000
Accounts and notes receivable,
net of allowance of $14,034 and $19,879
in 1995 and 1994, respectively (note 1) 439,157 432,684
Other assets, at cost, net of accumulated
amortization of $346,707 and $281,154 in
1995 and 1994, respectively 218,791 261,081
------------ ------------
$ 20,934,041 $ 21,767,471
============ ============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 8,808 $ 11,005
Accrued property taxes 267,722 268,290
Security deposits and other liabilities 91,468 95,778
Deferred income (note 3) 42,162 62,976
------------ ------------
Total liabilities 410,160 438,049
------------ ------------
Partners' equity:
General Partners:
Capital contributions 1,000 1,000
Cumulative net earnings 526,381 487,641
Cumulative cash distributions (530,515) (491,982)
------------ ------------
(3,134) (3,341)
------------ ------------
Limited Partners (314,687 Interests):
Capital contributions, net of offering costs 27,029,395 27,029,395
Cumulative net earnings 9,702,625 8,620,268
Cumulative cash distributions (16,205,005) (14,316,900)
------------ ------------
20,527,015 21,332,763
------------ ------------
Total partners' equity 20,523,881 21,329,422
------------ ------------
$ 20,934,041 $ 21,767,471
============ ============
</TABLE>
See accompanying notes to financial statements.
12
<PAGE> 15
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
Years Ended
December 31
-------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Income:
Rental (notes 3 and 7) $2,580,182 $2,560,762 $2,459,006
Interest 98,859 73,629 61,116
Equity in earnings of joint
venture (note 4) 115,220 109,520 118,743
---------- ---------- ----------
2,794,261 2,743,911 2,638,865
---------- ---------- ----------
Expenses:
Depreciation 742,392 748,790 822,756
Property operating 660,832 652,186 660,215
General and administrative 275,785 284,174 278,731
Bad debts (recoveries), net (5,845) (5,652) 15,738
---------- ---------- ----------
1,673,164 1,679,498 1,777,440
---------- ---------- ----------
Net earnings $1,121,097 $1,064,413 $ 861,425
========== ========== ==========
Earnings per limited partnership
interest $ 3.44 $ 3.26 $ 2.63
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
13
<PAGE> 16
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
-------- -------- -----
<S> <C> <C> <C>
Year ended December 31, 1993:
Balance at December 31, 1992 $ (7,960) $22,823,300 $22,815,340
Net earnings 35,126 826,299 861,425
Cash distributions ($5.00 per limited
partnership interest) (32,110) (1,573,416) (1,605,526)
-------- ----------- -----------
Balance at December 31, 1993 $ (4,944) $22,076,183 $22,071,239
-------- ----------- -----------
Year ended December 31, 1994:
Net earnings 37,728 1,026,685 1,064,413
Cash distributions ($5.63 per limited
partnership interest) (36,125) (1,770,105) (1,806,230)
-------- ----------- -----------
Balance at December 31, 1994 $ (3,341) $21,332,763 $21,329,422
-------- ----------- -----------
Year ended December 31, 1995:
Net earnings 38,740 1,082,357 1,121,097
Cash distributions ($6.00 per limited
partnership interest) (38,533) (1,888,105) (1,926,638)
-------- ----------- -----------
Balance at December 31, 1995 $ (3,134) $20,527,015 $20,523,881
======== =========== ===========
</TABLE>
See accompanying notes to financial statements.
14
<PAGE> 17
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended
December 31
-----------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,121,097 $ 1,064,413 $ 861,425
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Bad debts (recoveries), net (5,845) (5,652) 15,738
Depreciation 742,392 748,790 822,756
Equity in earnings of joint venture (115,220) (109,520) (118,743)
Amortization of other assets 65,553 76,724 75,687
Amortization of deferred income (6,498) (6,498) (6,498)
Change in assets and liabilities:
Accounts and notes receivable (628) (21,933) (165,808)
Other assets (23,263) (28,483) (35,408)
Accounts payable (2,197) 4,572 (120,726)
Accrued property taxes, security deposits
and other liabilities and deferred income (19,194) (7,992) 89,047
----------- ----------- -----------
Net cash provided by operating activities 1,756,197 1,714,421 1,417,470
----------- ----------- -----------
Cash flows from investing activities:
Additions to investment properties (3,107) (27,598) (76,593)
Purchases of certificates of deposit (796,000) (590,000) (789,000)
Proceeds from redemptions of certificates of deposit 789,000 590,000 792,000
Distributions from joint venture 182,550 174,600 162,750
----------- ----------- -----------
Net cash provided by investing activities 172,443 147,002 89,157
----------- ----------- -----------
Cash flows from financing activities - cash distributions (1,926,638) (1,806,230) (1,605,526)
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents 2,002 55,193 (98,899)
Cash and cash equivalents at beginning of year 919,644 864,451 963,350
----------- ----------- -----------
Cash and cash equivalents at end of year $ 921,646 $ 919,644 $ 864,451
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
15
<PAGE> 18
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE YEARS ENDED DECEMBER 31, 1995
1. ORGANIZATION AND BASIS OF ACCOUNTING
The Partnership was formed December 23, 1985 by filing a Certificate and
Agreement of Limited Partnership with the Secretary of State of the State of
Texas. The Partnership Agreement authorized the issuance of up to 500,000
limited partnership interests at a price of $100 each, of which 314,687 limited
partnership interests were issued. Proceeds from the sale of limited partnership
interests, net of related selling commissions, dealer-manager fees and other
offering costs, are recorded as contributed capital.
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.
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 December 31, 1995 and 1994,
there were $239,622 and $232,922, respectively, of accounts receivable related
to such accruals.
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.
In March 1995, the Financial Accounting Standards Board issued 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.
16 (Continued)
<PAGE> 19
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
Earnings and cash distributions per limited partnership interest are based
upon the limited partnership interests outstanding at year-end and the net
earnings and cash distributions 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 December 31, 1995 and 1994. 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.
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.
17 (Continued)
<PAGE> 20
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
3. INVESTMENT PROPERTIES
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.
Operating leases with tenants range in terms from thirty-three months to
fifteen years. Fixed minimum future rentals under existing leases at December
31, 1995 are as follows:
<TABLE>
<S> <C>
1996 $2,023,147
1997 1,749,202
1998 1,125,121
1999 971,785
2000 918,093
Thereafter 1,387,178
----------
$8,174,526
==========
</TABLE>
Rental income includes $475,490, $472,225, and $433,915 in 1995, 1994, and
1993, respectively, related to reimbursements from tenants for common area
maintenance costs, real estate taxes and insurance costs.
During 1990, the Partnership reached a settlement with a tenant which
provided for the receipt of $245,000 in settlement of all past due rent and a
modification of future rental obligations. In connection with this settlement,
$38,989 and $45,487 at December 31, 1995 and 1994, respectively, is classified
as deferred income and recognized on a straight line basis over the remaining
term of the lease.
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 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.
18 (Continued)
<PAGE> 21
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
Summarized financial information for the joint venture is as follows:
<TABLE>
<CAPTION>
December 31,
--------------------------
1995 1994
---- ----
<S> <C> <C>
Total assets, principally investment property $10,477,771 $10,881,496
=========== ===========
Total liabilities 243,053 197,913
Venturers' capital 10,234,718 10,683,583
----------- -----------
$10,477,771 $10,881,496
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
Years ended
December 31
----------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Income $1,643,520 $1,581,981 $1,667,503
Expenses 875,385 851,847 875,881
---------- ---------- ----------
Net earnings $ 768,135 $ 730,134 $ 791,622
========== ========== ==========
</TABLE>
5. TRANSACTIONS WITH AFFILIATES
During 1993, the Partnership and MIP I paid $17,968 for office rent to
Shearson-Murray Real Estate Fund II, Ltd., an affiliated partnership. No such
amounts were paid in 1995 or 1994.
19 (Continued)
<PAGE> 22
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
6. RECONCILIATION OF FINANCIAL STATEMENT NET EARNINGS AND PARTNERS' EQUITY TO
FEDERAL INCOME TAX BASIS NET EARNINGS AND PARTNERS' EQUITY
Reconciliation of financial statement net earnings to Federal income tax
basis net earnings is as follows:
<TABLE>
<CAPTION>
Years Ended
December 31
-----------------------------------------
1995 1994 1993
---------- ---------- --------
<S> <C> <C> <C>
Net earnings - financial statement basis $1,121,097 $1,064,413 $861,425
---------- ---------- --------
Financial statement basis depreciation/amortization
over tax basis depreciation/amortization 112,371 108,816 184,737
Financial statement basis joint venture earnings
under (over) tax basis joint venture earnings 7,527 (865) (1,739)
Tax basis rental income under
financial statement basis rental income (27,067) (55,960) (54,904)
---------- ---------- --------
Sub-total 92,831 51,991 128,094
---------- ---------- --------
Net earnings - Federal income tax basis $1,213,928 $1,116,404 $989,519
========== ========== ========
</TABLE>
Reconciliation of financial statement partners' equity to Federal income
tax basis partners' equity is as follows:
<TABLE>
<CAPTION>
December 31
------------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Total partners' equity - financial statement basis $20,523,881 $21,329,422 $22,071,239
Current year tax basis net earnings over
financial statement basis net earnings 92,831 51,991 128,094
Cumulative prior years tax basis net earnings over
financial statement basis net earnings 933,272 881,281 753,187
----------- ----------- -----------
Total partners' equity - Federal income tax basis $21,549,984 $22,262,694 $22,952,520
=========== =========== ===========
</TABLE>
Because many types of transactions are susceptible to varying
interpretations under Federal and state income tax laws and regulations, the
amounts reported above may be subject to change at a later date upon final
determination by the taxing authorities.
7. BUSINESS AND CREDIT CONCENTRATION
As previously noted, the Partnership's properties are located in Nashville
and Memphis, Tennessee, and Grand Prairie, Texas.
The Partnership had no outstanding receivable balances at December 31, 1995
or 1994, which, individually, exceeded 5% of the Partnership's total assets.
Rental income from a major customer was approximately $257,000 for each of
the years ended 1995, 1994, and 1993, respectively.
20
<PAGE> 23
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable
21
<PAGE> 24
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP.
Murray Realty Investors IX, Inc., a Texas corporation, and Crozier Partners
IX, Ltd., a Texas limited partnership, are the General Partners of the
Partnership. The Limited Partners voting a majority of the Interests may,
without the consent of the General Partners, remove a General Partner and elect
a successor General Partner.
The Partnership Agreement provides that the Partnership will have an
Investment Committee consisting initially of three members, appointed by Murray
Realty Investors IX, Inc. (the "Corporate General Partner"). A person appointed
to the Investment Committee may be removed by the Corporate General Partner, but
the Corporate General Partner must name a replacement. The acquisition, sale,
financing or refinancing of a Partnership property must be approved by a
majority of the members of the Investment Committee. The members of the
Investment Committee currently are Messrs. Jack E. Crozier, Mitchell L.
Armstrong and W. Brent Buck. Murray Realty Investors IX, Inc. is owned 60% by
Mr. Armstrong and 40% by Mr. Buck. The following is a brief description of Jack
E. Crozier, a general partner of Crozier Partners IX, Ltd., a General Partner,
and the directors and executive officers of the Corporate General Partner:
Crozier Partners IX, Ltd, General Partner
Jack E. Crozier, 67, General Partner. From 1954 through July 1989, Mr.
Crozier was affiliated with Murray Financial Corporation and various of its
affiliates. From 1977 through 1988, he was President of Murray Financial
Corporation, and from 1982 until June 1989, he also served as President of
Murray Savings Association, a principal affiliate of Murray Financial
Corporation. He served as President or Director of various other subsidiaries
of Murray Financial Corporation which were engaged in real estate finance,
development and management. He also served as the general partner in a number of
publicly registered limited partnerships, and a number of non-registered limited
partnerships, all of which had real estate as their principal assets. Since June
1989, he has remained as a partner or limited partner in several real estate
oriented limited partnerships. He is a consultant to several companies.
Murray Realty Investors IX, Inc., Corporate General Partner
The directors and executive officers of Murray Realty Investors IX, Inc.,
are:
Mitchell L. Armstrong, 45, President and Director. Mr. Armstrong became
President of Murray Realty Investors IX, Inc. on November 15, 1989. From
September 1984 to that date, he was Senior Vice President - Product Development
of Murray Realty Investors, Inc., and Murray Property Investors and Vice
President - Tax for Murray Properties Company. From November 1988 to November
15, 1989, he also served as Secretary to these companies. From August 1983 to
September 1984, he was Executive Vice President of Dover Realty Investors. From
September 1980 to August 1983, he was with Murray Properties Company, in charge
of tax planning and reporting. From July 1972 to August 1980, he was with the
international accounting firm of Deloitte Haskins & Sells (now Deloitte &
Touche). Mr. Armstrong is a Certified Public Accountant and a Certified
Financial Planner and holds a Bachelor of Business Administration degree with
high honors in Accounting from Texas Tech University. He is a member of the
American Institute of Certified Public Accountants, and a member of the
Institute of Certified Financial Planners.
W. Brent Buck, 40, Executive Vice President and Director. Mr. Buck became
Executive Vice President of Murray Realty Investors IX, Inc., on November 15,
1989. From September 1981 to November 15, 1989, Mr. Buck served in various
capacities for Murray Properties Company and
22
<PAGE> 25
certain subsidiaries. His primary responsibilities included property
acquisitions and asset management. He was responsible for initially identifying
and negotiating the purchase of all properties in the Partnership. Since their
acquisitions to the present time, he has continued to oversee the management of
all properties of the Partnership. Mr. Buck holds a Master of Business
Administration degree in Finance and a Bachelor of Public Administration degree
in Urban Administration from the University of Mississippi. He also holds a
Texas real estate salesman license and is a member of the International Council
of Shopping Centers.
ITEM 11. EXECUTIVE COMPENSATION.
Pursuant to an amendment to the Partnership Agreement effective November
15, 1989, Murray Income Properties II, Ltd. is reimbursed by Murray Income
Properties I, Ltd. for forty-seven percent (47%) of executive compensation
incurred in the management of the two partnerships. Murray Income Properties I,
Ltd. is a real estate limited partnership the general partners of which are
affiliates of the General Partners. The following table presents Murray Income
Properties II, Ltd.'s share of executive compensation.
SUMMARY COMPENSATION TABLE
Annual Compensation
<TABLE>
<CAPTION>
All Other
Name and Principal Position Year Salary Compensation
- --------------------------- ---- ------ ------------
<S> <C> <C> <C>
Mitchell L Armstrong, 1995 $61,868 $329**
President* 1994 60,241 329**
1993 58,658 329**
W. Brent Buck, 1995 $46,072 $176**
Executive Vice President* 1994 44,861 176**
1993 43,681 176**
</TABLE>
* Offices held in Murray Realty Investors IX, Inc., the Corporate General
Partner.
** The amounts reflected under the heading "All Other Compensation" represents
the Partnership's share of the full premium cost of term insurance that will
benefit the executive.
The Partnership has not paid and does not propose to pay any bonuses or
deferred compensation, compensation pursuant to retirement or other plans, or
other compensation to the officers, directors or partners of the General
Partners other than described in the above table. In addition, there are no
restricted stock awards, options or stock appreciation rights, or any other long
term incentive payouts.
During the operational and liquidation stages of this Partnership, the
General Partners and their affiliates receive various fees and distributions.
For information on these types of remuneration, reference is made to the section
entitled "Management Compensation" as contained in the Prospectus dated February
20, 1986 filed as part of Amendment No. 1 to Registrant's Form S-11 Registration
Statement (File No. 33-2394) attached hereto as Exhibit 99d. See "Item 13.
Certain Relationships and Related Transactions" for information on the fees and
other compensation or reimbursements paid to the General Partners or their
Affiliates during the year ended December 31, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
23
<PAGE> 26
No person (including any "group" as that term is used in Section 13 (d)(3)
of the Securities Exchange Act of 1934) is known to the Partnership to be the
beneficial owner of more than five percent of the outstanding voting Interests
as of December 31, 1995.
The following table presents certain information regarding the number of
Interests owned, directly or indirectly, by (i) a general partner of a General
Partner and executive officers and directors of a General Partner and (ii) a
general partner of a General Partner and executive officers and directors of a
General Partner as a group as of December 31, 1995:
<TABLE>
<CAPTION>
Amount and
Title Nature of Percent
of Beneficial of
Class Beneficial Owner Ownership Class
- ------ ---------------- ---------- -------
<S> <C> <C> <C>
Limited
Partnership
Interests, Mitchell L. Armstrong 377 (1) .12%
$100 per W. Brent Buck 251 (2) .08%
Interest Jack E. Crozier 736 (3) .23%
Limited
Partnership
Interests,
$100 per
Interest All General Partners as a group 1,057 .34%
</TABLE>
(1) The total of 377 Interests listed above includes 126 Interests owned
beneficially and of record by First Trust Corporation, Trustee for the
benefit of Mitchell L. Armstrong IRA; 195 Interests owned by Murray Realty
Investors IX, Inc., a corporation in which Mr. Armstrong is an officer,
director, and substantial owner; and 56 Interests owned by Crozier Partners
IX, Ltd., a partnership in which Mr. Armstrong is a limited partner.
(2) The total of 251 Interests listed above includes 195 Interests owned by
Murray Realty Investors IX, Inc., a corporation in which Mr. Buck is an
officer, director and substantial owner; and 56 Interests owned by Crozier
Partners IX, Ltd., a partnership in which Mr. Buck is a limited partner.
(3) The total of 736 interests listed above includes 272 Interests owned by
Crozier Partners IX, Ltd., a partnership in which Mr. Crozier is a general
partner and 464 Interests owned by Mrs. Irma Crozier as her separate
property.
No arrangements are known to the Partnership which may result in a change
of control of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
During the year ended December 31, 1995 the Partnership was reimbursed by
Murray Income Properties I, Ltd., ("MIP I") for forty seven percent (47%) of the
costs associated with the management of the Partnership and MIP I. MIP I is a
publicly-registered real estate limited partnership, the general partners of
which are affiliates of the General Partners. The reimbursement has been
accounted for as a reduction of general and administrative expenses.
24
<PAGE> 27
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) 1. Financial Statements - See Index to Financial Statements in Item 8
of this Form 10-K.
2. Financial Statement Schedules with Independent Auditors' Report
Thereon:
(i) Valuation and Qualifying Accounts (Schedule II) - Years
ended December 31, 1995, 1994, and 1993.
(ii) Real Estate and Accumulated Depreciation (Schedule III) -
December 31, 1995.
All other schedules have been omitted because they are not
required or the required information is shown in the financial
statements or notes thereto.
(b) Reports on Form 8-K filed during the last quarter of the year:
None
(c) 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 Form of Joint Venture Agreement between the Partnership and Murray
Income Properties II, Ltd. Reference is made to Exhibit 10h to
Post-Effective Amendment No. 1 to Partnership's Form S-11
Registration Statements, filed with the Securities and Exchange
Commission on July 29, 1989. (File No. 33-2394)
10b Lease Agreement with General Cinema to lease certain premises as
described within the Lease Agreement dated July 23, 1985 at Tower
Place Festival Shopping Center. Reference is made to Exhibit 10q
to the 1989 Annual Report on Form 10-K filed with the Securities
and Exchange Commission on March 31, 1989. (File No. 0-17183)
10c Lease Agreement with Rafferty's Inc. to lease certain premises as
described within the Lease Agreement dated August 12, 1985 at
Paddock Place Shopping Center. Reference is made to Exhibit 10r to
the 1989 Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 31, 1989. (File No. 0-17183)
25
<PAGE> 28
10d Lease Agreement with Chili's Inc. to lease certain premises as
described within the Lease Agreement dated May 19, 1988 at
Germantown Collection Shopping Center. Reference is made to Exhibit
10t to the 1989 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 31, 1989. (File No.
0-17183)
10e Settlement and Release Agreement with Rafferty's Inc. and Mid-South
Management Group, Inc., dated December 1, 1990. Reference is made
to Exhibit 10u to the 1990 Annual Report on Form 10-K filed with
the Securities and Exchange Commission on March 31, 1991. (File
No. 0-17183)
10f Management Agreement with JPI Partners, Inc. for management and
operation services described in the Management Agreement dated
February 14, 1994 (and assigned to Fuller Macfarlan Real Estate
Services, Ltd. pursuant to a Consent to Assignment agreement
effective May 4, 1994) at 1202 Industrial Place. Reference is made
to Exhibit 10f to the 1994 Annual Report on Form 10-K filed with
the Securities and Exchange Commission on March 21, 1995. (File
No. 0-17183)
10g Data Processing System Use Agreement between Murray Income
Properties II, Ltd. and The Mavricc Management Systems, Inc., dated
September 1, 1993. Reference is made to Exhibit 10p to the Form
10-Q for the Quarter ended September 30, 1993 filed with the
Securities and Exchange Commission on November 10, 1993. (File No.
0-17183)
10h Management Agreement with CK Retail Charlotte Overhead Limited
Partnership for management and operation services described in the
Management Agreement dated December 12, 1994 at Tower Place
Festival Shopping Center. Reference is made to Exhibit 10h to the
1994 Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 21, 1995. (File No. 0-17183)
10i Management Agreement with Trammell Crow SE, Inc. for management and
operation services described in the Management Agreement dated
August 8, 1990 (as extended pursuant to the Modification to
Management Agreement dated January 1, 1995) at Germantown
Collection Shopping Center. Filed herewith.
10j Management Agreement with Brookside Commercial Services for
management and operation services described in the Management
Agreement dated March 1, 1991 (as extended pursuant to the
Extension of Property Management Agreement dated February 21, 1995
at Paddock Place Shopping Center. Filed herewith.
10k Lease Agreement with Calidad Foods, Inc. to lease certain premises
as described within the Lease Agreement dated October 19, 1992, at
1202 Industrial Place (an office/warehouse facility). Reference is
made to Exhibit 10v to the Form 10-Q for the Quarter ended
September 30, 1992 filed with the Securities and Exchange
Commission on November 13, 1992. (File No. 0-17183)
10l Lease Agreement with Pierce Family Partnership to lease certain
premises as described within the Lease Agreement dated October 23,
1992, at 1202 Industrial Place (an office/warehouse facility).
Reference is made to Exhibit 10x to the Form 10-Q for the Quarter
ended September 30, 1992 filed with the Securities and Exchange
Commission on November 13, 1992. (File No. 0-17183)
10m Amendment to Lease Agreement with Calidad Foods, Inc. dated
December 28, 1992 at 1202 Industrial Place (an office/warehouse
facility). Reference is made to Exhibit 10n to the 1992 Annual
Report on Form 10-K filed with the Securities and Exchange
Commission on March 19, 1993. (File No. 0-17183)
26
<PAGE> 29
10n Lease Termination Agreement between Tower Place Joint Venture and
Kerr Drug Stores, Inc. dated November 12, 1993, at Tower Place
Festival Shopping Center. Reference is made to Exhibit 10p to the
1993 Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 21, 1994. (File No. 0-17183)
10o Lease Agreement with Brown Group Retail, Inc. to lease certain
premises as described within the Lease Agreement dated November 9,
1993 at Tower Place Festival Shopping Center. Reference is made to
Exhibit 10p to the 1993 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 21, 1994. (File No.
0-17183)
10p Lease Agreement with Care Management Enterprises, Inc. to lease
certain premises as described within the Lease Agreement dated
November 16, 1995 at 1202 Industrial Place (an office/warehouse
facility). 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.
(d) Financial Statement Schedules with Independent Auditors' Report Thereon:
(i) Valuation and Qualifying Accounts (Schedule II) - Years ended
December 31, 1995, 1994, and 1993.
(ii) Real Estate and Accumulated Depreciation (Schedule III) - December
31, 1995.
All other schedules have been omitted because they are not required or
the required information is shown in the financial statements or notes
thereto.
27
<PAGE> 30
INDEPENDENT AUDITORS' REPORT
The Partners
Murray Income Properties II, Ltd.:
Under date of February 27, 1996, we reported on the balance sheets of Murray
Income Properties II, Ltd. (a limited partnership) as of December 31, 1995 and
1994, and the related statements of earnings, changes in partners' equity, and
cash flows for each of the years in the three-year period ended December 31,
1995, as contained in Item 8 of this annual report on Form 10-K. In connection
with our audits of the aforementioned financial statements, we also audited the
related financial statement schedules as listed in Item 14(a)2 of this annual
report on Form 10-K. These financial statement schedules are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in relation
to the basic financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.
KPMG Peat Marwick LLP
Dallas, Texas
February 27, 1996
28
<PAGE> 31
Schedule II
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<TABLE>
<CAPTION>
Balance at Charged to Balance at
beginning costs and end of
Description of period expenses Deductions period
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended December 31, 1993 $34,687 15,738 17,722 32,703
======= ====== ====== ======
Year ended December 31, 1994 $32,703 (5,652) 7,172 19,879
======= ====== ====== ======
Year ended December 31, 1995 $19,879 (5,845) -0- 14,034
======= ====== ====== ======
</TABLE>
Deductions are primarily for writeoffs of accounts receivable deemed
uncollectible by management.
29
<PAGE> 32
Real Estate and Accumulated Depreciation
Schedule III
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
COSTS CAPITALIZED
INITIAL COST SUBSEQUENT
TO PARTNERSHIP(A) TO ACQUISITION
----------------- -----------------
BUILDINGS AND
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS IMPROVEMENTS
----------- ------------ ---- ------------- ------------
<S> <C> <C> <C> <C>
Shopping Center
Nashville, Tennessee $0 $3,153,285 $ 6,615,549 $ 353,508
Shopping Center
Germantown (Memphis)
Tennessee $0 $1,751,518 $ 6,395,078 $1,024,117
Office/Warehouse
Grand Prairie,
Texas $0 $ 884,488 $ 2,895,376 $ 109,082
-- ---------- ----------- ----------
$0 $5,789,291 $15,906,003 $1,486,707
== ========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
GROSS AMOUNT
AT WHICH CARRIED AT
CLOSE OF PERIOD(D)
------------------------------------------------
BUILDINGS AND ACCUMULATED YEAR OF
DESCRIPTION LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION
----------- ---- ------------ ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
Shopping Center
Nashville, Tennessee $3,153,285 $ 6,969,057 $10,122,342 $2,703,399 1985/86
Shopping Center
Germantown (Memphis)
Tennessee $1,751,518 $ 7,419,195 $ 9,170,713 $2,560,923 1987
Office/Warehouse
Grand Prairie,
Texas $ 884,488 $ 3,004,458 $ 3,888,946 $ 993,440 1980
---------- ----------- ----------- ----------
$5,789,291 $17,392,710 $23,182,001 $6,257,762
========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
LIFE ON WHICH
DEPRECIATION IN
FISCAL LATEST STATEMENT
YEAR OF EARNINGS
DESCRIPTION ACQUIRED IS COMPUTED
----------- -------- ----------------
<S> <C> <C>
Shopping Center 1986 3-25 YEARS
Nashville, Tennessee
Shopping Center
Germantown (Memphis) 1988 3-25 YEARS
Tennessee
Office/Warehouse
Grand Prairie, 1988 3-25 YEARS
Texas
</TABLE>
NOTES:
(A) The initial cost to the Partnership represents the original purchase price
of the properties.
(B) Reconciliation of real estate owned for 1995, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Balance at beginning of period $23,178,894 $23,151,296 $23,074,703
Additions during period $ 3,107 $ 27,598 $ 76,593
Retirements during period $ 0 $ 0 $ 0
----------- ----------- -----------
Balance at close of period $23,182,001 $23,178,894 $23,151,296
=========== =========== ===========
</TABLE>
(C) Reconciliation of accumulated depreciation for 1995, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Balance at beginning of period $5,515,370 $4,766,580 $3,943,824
Depreciation expense $ 742,392 $ 748,790 $ 822,756
Retirements during period $ 0 $ 0 $ 0
---------- ---------- ----------
Balance at close of period $6,257,762 $5,515,370 $4,766,580
========== ========== ==========
</TABLE>
(D) The aggregate cost of real estate at December 31, 1995 for Federal income
tax purposes is $24,003,378.
30
<PAGE> 33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on behalf by the undersigned, thereunto duly authorized.
MURRAY INCOME PROPERTIES II, LTD.
By: Crozier Partners IX, Ltd.
A General Partner
Dated: March 21, 1996 By: /s/ Jack E. Crozier
Jack E. Crozier
A General Partner
By: Murray Realty Investors IX, Inc.
a General Partner
Dated: March 21, 1996 By: /s/ Mitchell Armstrong
Mitchell Armstrong
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Murray Realty Investors IX, Inc.
A General Partner
Dated: March 21, 1996 By: /s/ Brent Buck
Brent Buck
Executive Vice President
Director
Dated: March 21, 1996 By: /s/ Mitchell Armstrong
Mitchell Armstrong
Chief Executive Officer
Chief Financial Officer
Director
31
<PAGE> 34
INDEX TO EXHIBITS
Document Sequentially
Number Description Numbered Page
- -------- ----------- -------------
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 Form of Joint Venture Agreement between the
Partnership and Murray Income Properties II,
Ltd. Reference is made to Exhibit 10h to
Post-Effective Amendment No. 1 to
Partnership's Form S-11 Registration
Statements, filed with the Securities and
Exchange Commission on July 29, 1989. (File
No. 33-2394)
10b Lease Agreement with General Cinema to lease
certain premises as described within the
Lease Agreement dated July 23, 1985 at Tower
Place Festival Shopping Center. Reference is
made to Exhibit 10q to the 1989 Annual Report
on Form 10-K filed with the Securities and
Exchange Commission on March 31, 1989. (File
No. 0-17183)
10c Lease Agreement with Rafferty's Inc. to lease
certain premises as described within the
Lease Agreement dated August 12, 1985 at
Paddock Place Shopping Center. Reference is
made to Exhibit 10r to the 1989 Annual Report
on Form 10-K filed with the Securities and
Exchange Commission on March 31, 1989. (File
No. 0-17183)
10d Lease Agreement with Chili's Inc. to lease
certain premises as described within the
Lease Agreement dated May 19, 1988 at
Germantown Collection Shopping Center.
Reference is made to Exhibit 10t to the 1989
Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March
31, 1989. (File No. 0-17183)
32
<PAGE> 35
10e Settlement and Release Agreement with
Rafferty's Inc. and Mid-South Management
Group, Inc., dated December 1, 1990.
Reference is made to Exhibit 10u to the 1990
Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March
31, 1991. (File No. 0-17183)
10f Management Agreement with JPI Partners, Inc.
for management and operation services
described in the Management Agreement dated
February 14, 1994 (and assigned to Fuller
Macfarlan Real Estate Services, Ltd. pursuant
to a Consent to Assignment agreement
effective May 4, 1994) at 1202 Industrial
Place. Reference is made to Exhibit 10f to
the 1994 Annual Report on Form 10-K filed
with the Securities and Exchange Commission
on March 21, 1995. (File No. 0-17183)
10g Data Processing System Use Agreement between
Murray Income Properties II, Ltd. and The
Mavricc Management Systems, Inc., dated
September 1, 1993. Reference is made to
Exhibit 10p to the Form 10-Q for the Quarter
ended September 30, 1993 filed with the
Securities and Exchange Commission on
November 10, 1993. (File No. 0-17183)
10h Management Agreement with CK Retail Charlotte
Overhead Limited Partnership for management
and operation services described in the
Management Agreement dated December 12, 1994
at Tower Place Festival Shopping Center.
Reference is made to Exhibit 10h to the 1994
Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March
21, 1995. (File No. 0-17183)
10i Management Agreement with Trammell Crow SE,
Inc. for management and operation services
described in the Management Agreement dated
August 8, 1990 (as extended pursuant to the
Modification to Management Agreement dated
January 1, 1995) at Germantown Collection
Shopping Center. Reference is made to
Exhibit 10i to the 1994 Annual Report on Form
10-K filed with the Securities and Exchange
Commission on March 21, 1995. (File No.
0-17183)
10j Management Agreement with Brookside
Commercial Services for management and
operation services described in the
Management Agreement dated March 1, 1991 (as
extended pursuant to the Extension of
Property Management Agreement dated February
21, 1995) at Paddock Place Shopping Center.
Filed herewith.
10k Lease Agreement with Calidad Foods, Inc. to
lease certain premises as described within
the Lease Agreement dated October 19, 1992,
at 1202 Industrial Place (an office/warehouse
facility). Reference is made to Exhibit 10v
to the Form 10-Q for the Quarter ended
September 30, 1992 filed with the Securities
and Exchange Commission on November 13, 1992.
(File No. 0-17183)
33
<PAGE> 36
10l Lease Agreement with Pierce Family
Partnership to lease certain premises as
described within the Lease Agreement dated
October 23, 1992, at 1202 Industrial Place
(an office/warehouse facility). Reference is
made to Exhibit 10x to the Form 10-Q for the
Quarter ended September 30, 1992 filed with
the Securities and Exchange Commission on
November 13, 1992. (File No. 0-17183)
10m Amendment to Lease Agreement with Calidad
Foods, Inc. dated December 28, 1992 at 1202
Industrial Place (an office/warehouse
facility). Reference is made to Exhibit 10n
to the 1992 Annual Report on Form 10-K filed
with the Securities and Exchange Commission
on March 19, 1993. (File No. 0-17183)
10n Lease Termination Agreement between Tower
Place Joint Venture and Kerr Drug Stores,
Inc. dated November 12, 1993, at Tower Place
Festival Shopping Center. Reference is made
to Exhibit 10p to the 1993 Annual Report on
Form 10-K filed with the Securities and
Exchange Commission on March 21, 1994. (File
No. 0-17183)
10o Lease Agreement with Brown Group Retail, Inc.
to lease certain premises as described within
the Lease Agreement dated November 9, 1993 at
Tower Place Festival Shopping Center.
Reference is made to Exhibit 10q to the 1993
Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March
21, 1994. (File No. 0-17183)
10p Lease Agreement with Care Management
Enterprises, Inc. to lease certain premises
as described within the Lease Agreement dated
November 16, 1995 at 1202 Industrial Place
(an office/warehouse facility). Filed
herewith.
27 Financial Data Schedule
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.
34
<PAGE> 1
STATE OF TENNESSEE
COUNTY OF SHELBY
MODIFICATION TO MANAGEMENT AGREEMENT
This Modification to Management Agreement is made and entered into this
1st day of January 1995, by and between Murray Income Properties, II, LTD a
Texas limited Partnership ("Owner") and Trammell Crow SE, Inc., a Delaware
Corporation ("Operator").
W I T N E S S E T H :
Whereas, Owner and Operator entered into that certain Management
Agreement for the managing and operating of certain improved real property,
("Project") commonly known as Germantown Collection, dated August 8, 1990 and
extended December 30th, 1993.
Whereas, the Owner and Operator desire to modify and amend the
Management Agreement;
Now, therefore, for and in consideration of the Modification to
Management Agreement, the sum of Ten and 00/100 Dollars ($10.00) in hand paid
by Owner to Operator, the mutual agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do agree as follows:
1. Owner and Operator acknowledge and agree the Management
Agreement shall be extended for a period of twelve (12)
months, such extension shall commence on January 1, 1995
and expire on December 31, 1995.
2. All other terms and conditions of the Management Agreement
not specifically amended by this Modification to Management
Agreement, are hereby deemed to remain in full force and
effect.
IN WITNESS WHEREOF, the parties have executed the foregoing Modification
as of the day and year written above.
Owner: Operator:
Murray Income Trammell Crow SE, Inc.
Properties, II, LTD
BY: Murray Realty Investors, IX, Inc.
BY: /s/ Brent Buck BY: /s/ Phil Fawcett
Title: Executive Vice President Title: Vice President
Brent Buck Phil Fawcett
<PAGE> 1
EXTENSION OF PROPERTY MANAGEMENT AGREEMENT
The Extension of Property Management Agreement entered into this 21st
day of February, 1995 by and between Murray Income Properties II, Ltd., a Texas
limited partnership (hereinafter called the "Owner") and Brookside Management
Group, Inc., (hereinafter referred to as "Agent").
R E C I T A L S:
1. Ownership and Agent are parties to that certain Property
Management Agreement dated March 1, 1991 covering the Paddock
Place Shopping Center located at the southwest corner of White
Bridge Road and Brookwood Terrace, Nashville, Tennessee.
2. The term of the aforesaid Property Management Agreement expired
on February 28, 1994, and the Agreement was extended with an
expiration date of February 28, 1995. The parties thereto are
mutually desirous of extending the term of the Property
Management Agreement.
NOW, THEREFORE, it is hereby agreed as follows:
1. The expiration date of the Property Management Agreement shall
be midnight, February 29, 1996.
2. All other terms and conditions of the Property Management
Agreement shall remain unchanged and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this document the day and
year first above written.
WITNESS: Brookside Management Group, Inc.
/s/ Charles H. Warfield, Jr. /s/ W. Miles Warfield
Charles H. Warfield, Jr. By: W. Miles Warfield
WITNESS: Murray Income Properties II, Ltd.,
a Texas limited partnership by
Murray Realty Investors IX, Inc.,
a Texas Corporation, its general
partners (Owners)
/s/ Mitchell Armstrong /s/ Brent Buck
Mitchell Armstrong Brent Buck
By: Executive Vice President
<PAGE> 1
[R Realtor(R) Logo] [Equal Housing Opportunity Logo]
GREATER DALLAS ASSOCIATION OF REALTORS(R), INC.
NET COMMERCIAL LEASE AGREEMENT
STATE OF TEXAS
COUNTY OF DALLAS
THIS LEASE AGREEMENT made and entered into by and between
MURRAY INCOME PROPERTIES II, LTD.
hereinafter referred to as "Landlord," and CARE MANAGEMENT ENTERPRISES, INC.;
a Texas corporation
hereinafter referred to as "Tenant;"
WITNESSETH:
Landlord hereby leases to Tenant, and Tenant hereby takes from
Landlord the following described premises (hereinafter referred to as the
"demised premises" or "premises") situated within the County of Tarrant, State
of Texas.
Being an approximate 54,000 square foot portion of an approximate
172,000 square foot office/warehouse building situated on an 8.66-Acre
tract of land described a Site 3 of Block 7, of the Great Southwest
Industrial District, and being locally known as 1248 Avenue R,
Grand Prairie, Texas; and being more particularly described on Exhibit A
attached hereto.
together with all rights, privileges, easements and appurtenances belonging to
or in any way pertaining to the demised premises and together with the building
and other improvements now situated or to be erected upon the demised premises.
TO HAVE AND TO HOLD the same for a term of thirty-six months,
beginning on December 1, 1997 and expiring on November 30, 2000, upon
the following terms, conditions and covenants:
See Contingency, Special Conditions, Paragraph 32A attached hereto.
1. RENT: Tenant agrees to pay the Landlord herein, without offset or
deduction, for the account of Landlord rent for the demised premises at the rate
of See Rent Schedule, Special Conditions, Paragraph 32 B attached hereto
Dollars ($ ) per month in advance. One such monthly installment shall
be due and payable on or before the beginning date of this lease, and a like
monthly installment shall be due and payable on or before the first day of each
succeeding calendar month during the term hereof; provided that, in the event
the term hereof shall commence or end during a calendar month, the rent for any
fractional calendar month following the commencement or preceding the end of the
term of this lease shall be pro rated by days. (If percentage rent is to be
payable to Landlord, refer to Exhibit A attached to this lease, In such case
Exhibit A shall be incorporated into and become a part of this lease when
physically attached hereto.)
Tenant will deposit with Landlord, upon commencement of this lease,
Twenty nine thousand seven hundred and 00/100 Dollars ($29,700.00) to be
applied as follows:
(a) $14,175.00 for base rent for December 1, 1997 through December 31,
1997.
(b) $15,525.00 as a security deposit. Such security deposit shall be
held by Landlord without interest as security for the performance
by
<PAGE> 2
Tenant of Tenant's covenants and obligations under this . The security
deposit is not an advance payment of rental the full measure of liquidated
damages in case of default by Tenant. Upon the occurrence of any event of
default, Landlord may, from time to time, without prejudice to any other remedy
provided herein or provided by law, use the security deposit to the extent
necessary to make good any arrears of rent and any other damage, injury,
expense or liability caused to Landlord by such event of default. Following any
such application of the security deposit. Tenant shall pay to Landlord, on
demand, the amount so applied in order to restore the security deposit to its
original amount. If Tenant is not in default, hereunder, any remaining balance
of such deposit shall be returned by Landlord to Tenant upon expiration or
termination of this lease.
2. ACCEPTANCE OF PREMISES:
Tenant acknowledges that it has fully inspected the demised premises and
accepts the demised premises, and any buildings and improvements situated
thereon, as suitable for the purposes for which the same are leased in their
present condition, except
NONE
3. USE OF PREMISES:
The demised premises shall be used and occupied only for the purpose of
General offices, storage and distribution of medical products,
excluding drugs and narcotics.
See Special Conditions, Paragraph 32C, attached hereto.
and not otherwise. Tenant shall at its own expense obtain any and all
governmental licenses and permits necessary for such use.
4. COMPLIANCE WITH LAW:
Tenant shall comply with all governmental laws, ordinances and regulations
applicable to the use of the demised premises, and shall promptly comply with
all governmental orders and directives for the correction, prevention and
abatement of nuisances in or upon, or connected with the demised premises, all
at Tenant's sole expense.
5. REAL ESTATE TAXES:
(a) Tenant agrees to pay before they become delinquent all taxes (both
general and special), assessments or governmental charges of any kind and
nature whatsoever (hereinafter collectively referred to as the "taxes"), levied
or assessed against the premises or any part thereof. Tenant shall furnish to
Landlord not later than twenty (20) days before the date any such taxes become
delinquent, official receipts of the appropriate taxing authority or other
evidence satisfactory to Landlord evidencing payment thereof. If Tenant shall
fail to pay any taxes, assessments, or governmental charges required to be
paid by Tenant hereunder, in addition to any other remedies provided herein,
Landlord may if it so elects pay such taxes, assessments, and governmental
charges. Any sums so paid by Landlord shall be deemed to be so much additional
rental owing by Tenant to Landlord and due and payable on written demand by
Landlord together with interest thereon at the rate of ten percent (10%) per
annum from date paid by Landlord to date of repayment by Tenant.
(b) All real estate taxes and assessments on the demised premises owned by
Landlord shall be prorated between Landlord and Tenant with respect to the tax
years in which this lease commences or terminates. Tenant shall pay that part
of the real estate taxes attributable to the portion of the tax year covered by
this lease.
(c) In the event the premises constitute a portion of a multiple occupancy
building, in lieu of Tenant paying the "taxes" as above provided, Landlord
agrees to pay before they become delinquent all "taxes" lawfully levied or
assessed against such building and the grounds, parking areas, driveways and
alleys around the said building, and during each month of the term of this
Lease, Tenant shall make a monthly escrow deposit with Landlord equal to 1/12 of
its proportionate share of the taxes on the building which will be due and
payable for that year. Tenant's "proportionate share" as used throughout this
lease, shall mean a fraction, the numerator of which is the space occupied by
Tenant and the denominator of which is the entire gross space contained in the
building. The current taxes are approximately $.55 per square foot on the
building. In the event Landlord does not dispute and contest the taxes, then.
(d) Tenant may, alone or along with any other tenants of said building, at
its or their sole cost and expense, in its or their own name(s) and/or in the
name of the Landlord, dispute and contest any "taxes" by appropriate
proceedings diligently conducted in good faith, but only after Tenant and all
other tenants, if any, joining with Tenant in such contest have deposited with
Landlord the amount so contested and unpaid, or their proportionate shares
thereof as the case may be, which shall be held by Landlord without obligations
for interest until the termination of the proceedings, at which time the
amount(s) deposited shall be applied by Landlord toward the payment of the
items held valid (plus any court costs, interest, penalties and other
liabilities associated with the proceedings), and Tenant's share of any excess
shall be returned to Tenant. Tenant further agrees to pay Landlord upon demand
Tenant's share (as among all tenants who participated in the contest) of all
court costs, interest, penalties and other liabilities relating to such
proceedings. Tenant hereby indemnifies and agrees to hold harmless the
Landlord from and against any cost, damage or expense, including attorney's
fees, in connection with any such proceedings.
(e) If at any time during the term of this Lease, the present method of
taxation shall be changed so that in lieu of the whole or any part of any taxes,
assessments, levies or charges levied, assessed or imposed on real estate and
the improvements thereon there shall be levied, assessed or imposed on Landlord
a capital levy or other tax directly on the rents received therefrom and/or a
franchise tax, assessment, levy or charge measured by or based, in whole or in
part, upon such rents or the present or any future building or buildings on the
premises, then all such taxes, assessments, levies or charges, or the part
thereof so measured or based, shall be declined to be included within the term
"taxes" for the purpose hereof.
6. REPAIRS AND MAINTENANCE:
(a) Tenant shall at its own cost and expense keep, maintain and take good
care of the premises and make all necessary repairs thereto, interior and
exterior, non-structural, ordinary and extraordinary, and shall suffer no waste
or nuisances; provided, however, that the cost of maintenance and repair of any
common party wall (any wall, divider, partition or any other structure
separating the premises from any adjacent premises occupied by other tenants)
shall be shared equally by Tenant and the Tenant occupying adjacent premises.
Tenant shall not damage any party wall or disturb the integrity and support
provided by any party wall and shall, at its cost and expense, promptly repair
any damage or injury to any party wall caused by Tenant or its employees,
agents or invitees. At the end of the term or other termination of this lease,
Tenant shall deliver the premises with all improvements thereon in good repair
and condition, reasonable wear and tear only excepted. Landlord shall be
responsible for maintaining the roof, exterior walls and foundation throughout
lease term.
(b) Tenant shall at its own cost and expense care for the grounds around
the buildings on the premises, including the regular mowing of grass, care of
shrubs and general landscaping, and maintenance of the parking areas,
driveways, alleys and shall maintain the whole of the premises in a clean and
sanitary condition.
(c) In the event the premises constitute a portion of a multiple occupancy
building, Tenant and its employees, customers, and licensees shall have the
nonexclusive right to use, in common with the other parties occupying said
building, the parking areas, driveways and alleys adjacent to said building,
subject to such reasonable rules and regulations as Landlord may from time to
time prescribe, and Tenant shall, in lieu of their obligations set forth under
subparagraph (b) above, be liable for its proportionate share of the cost and
expense of the care for the grounds around the said building, including but not
limited to, the mowing of grass, care of shrubs, general landscaping, and
maintenance of parking areas, driveways and alleys. Tenant shall reimburse
Landlord monthly for the amount of its proportionate share of such costs and
expenses in the event Landlord elects to perform or cause to be performed
such work.
(d) In the event Tenant shall fail to maintain the demised premises or any
paving, landscaping or milroad siding in accordance with this paragraph 6,
Landlord shall have the right (but not the obligation) to cause all repairs or
other maintenance to be made and the reasonable costs therefor expended by
Landlord shall be paid by Tenant on written demand.
7. ALTERATIONS, ADDITIONS AND IMPROVEMENTS
Tenant shall not create any openings in the roof or exterior walls, or
make any alterations, additions or improvements to the demised premises without
prior written
<PAGE> 3
consent of Landlord. Consent for non-structural alterations, additions or
improvements shall not be unreasonably withheld by Landlord. Tenant shall have
the right to erect or install shelves, bins, machinery, air conditioning or
heating equipment and trade fixtures, provided that Tenant complies with all
applicable governmental laws, ordinances and regulations. At the expiration or
termination of this lease, Tenant shall have the right to remove such items so
installed, provided Tenant is not in default at the time of such removal and
provided further that Tenant shall, at the time of removal of such items,
repair in a good and workmanlike manner any damage caused by installation or
removal thereof.
Tenant shall pay for all costs incurred or arising out of alterations,
additions or improvements in or to the demised premises and shall not permit a
mechanic's or materialman's lien to be asserted against the demised premises.
Upon request by Landlord, Tenant shall deliver to Landlord proof of payment
reasonably satisfactory to Landlord of all costs incurred or arising out of any
such alterations, additions or improvements.
All alterations, additions or improvements in or to the demised
premises shall become the property of Landlord at the expiration or termination
of this lease; however, Landlord may direct the removal of alterations,
additions or improvements by giving written notice to Tenant prior to the
expiration or termination of this lease. At the direction of Landlord, Tenant
shall promptly remove all alterations, additions and improvements and any other
property placed in the demised premises by Tenant, and Tenant shall repair in a
good and workmanlike manner any damage caused by such removal.
8. SIGNS:
Tenants shall not place or affix any signs or other objects upon or to
the roof or exterior walls of the demised premises or paint or otherwise deface
the exterior walls of the demised premises without the prior written consent of
Landlord. Any signs installed by Tenant shall conform with applicable laws and
deed and other restrictions. Tenant shall remove all signs at the termination
of this lease and shall repair any damage and close any holes caused or
revealed by such removal.
9. INSURANCE, FIRE AND CASUALTY DAMAGE:
(a) Landlord agrees to maintain insurance covering the building of
which the demised premises are a part in an amount not less than 90% (or such
greater percentage as may be necessary to comply with the provisions of any
co-insurance clauses of the policy) of the "replacement cost" thereof as such
term is defined in the Replacement Cost Endorsement to be attached thereto,
insuring against the perils of Fire, Lightning, Extended Coverage, Vandalism
and Malicious Mischief, extended by Special Extended Coverage Endorsement to
insure against all other Risks of Direct Physical Loss, such coverages and
endorsements to be as defined, provided and limited in the standard bureau
forms prescribed by the insurance regulatory authority for the State in which
the demised premises are situated for use by insurance companies admitted in
such state for the writing of such insurance on risks located within such
state. Subject to the provisions of subparagraphs 9(b) and 9(c) below, such
insurance shall be for the sole benefit of Landlord and under its sole control.
Tenant agrees to pay Landlord's cost of maintaining such insurance on said
building (or, in the event the premises constitute a portion of a multiple
occupancy building, Tenant's full proportionate share of such cost). Said
payments shall be made to Landlord within ten days after presentation to Tenant
of Landlord's statement setting forth the amount due. Any payment to be made
pursuant to this subparagraph (a) with respect to the year in which this lease
commences or terminates shall bear the same ratio to the payment which would be
required to be made for the full year as that part of such year covered by the
terms of this lease bears to a full year. During each month of the term of this
lease, Tenant shall make a monthly escrow deposit with Landlord equal to 1/12
of its proportionate share of the insurance on the building which will be due
and payable for that year.
(b) If the buildings situated upon the premises should be damaged or
destroyed by any peril covered by the insurance to be provided by Landlord
under subparagraph 9(a) above, Tenant shall give immediate notice thereof to
Landlord, and Landlord shall at its sole cost and expense thereupon proceed
with reasonable diligence to rebuild and repair such buildings to substantially
the condition in which they existed prior to such damage or destruction, except
that Landlord shall not be required to rebuild, repair or replace any part of
the partitions, fixtures, additions or other improvements which may have been
placed in, on or about the premises by Tenant and except that Tenant shall pay
to Landlord upon demand any applicable deductible amounts specified under
Landlord's insurance. The rent payable hereunder shall in no event abate by
reason of any damage or destruction.
(c) If the buildings situated upon the premises should be damaged or
destroyed by a casualty other than a peril covered by the insurance to be
provided by Landlord under subparagraph 9(a) above, or if any other
improvements situated on the demised premises should be in any manner damaged
or destroyed, Tenant shall at its sole cost and expense thereupon proceed with
reasonable diligence to rebuild and repair such buildings and/or improvements
to substantially the condition in which they existed prior to such damage or
destruction, subject to Landlord's approval of the plans and specifications for
such rebuilding and repairing, which approval shall not be unreasonably
withheld. Tenant's obligation hereunder shall not include destruction of the
premises by war, riot, civil disobedience, or flood.
(d) Tenant covenants and agrees to maintain insurance on all
alterations, additions, partitions and improvements erected by, or on behalf
of, Tenant in, on or about the demised premises in an amount not less than 90%
(or such greater percentage as may be necessary to comply with the provisions
of any co-insurance clause of the policy) of the "replacement cost" thereof as
such term is defined in the Replacement Cost Endorsement to be attached
thereto. Such insurance shall insure against the perils and be in form,
including stipulated endorsements, as provided in subparagraph 9(b) hereof.
Such insurance shall be for the sole benefit of Tenant and under its sole
control. All such policies shall be procured by Tenant from responsible
insurance companies satisfactory to Landlord. Certified copies of policies of
such insurance, together with receipt evidencing payment of premiums therefor
shall be delivered to Landlord prior to the commencement date of this lease.
Not less than fifteen (15) days prior to the expiration date of any such
policies, certified copies of renewals thereof (bearing notations evidencing
the payment of renewal premiums) shall be delivered to Landlord. Such policies
shall further provide that not less than thirty (30) days written notice shall
be given to Landlord before such policy may be cancelled or changed to reduce
insurance provided thereby.
(e) Notwithstanding anything herein to the contrary, in the event the
holder of any indebtedness secured by a mortgage or deed of trust covering the
premises required that the insurance proceeds be applied to such indebtedness
then the Landlord shall have the right to terminate this lease by delivering
written notice of termination to Tenant within fifteen (15) days after such
requirement is made by any such holder, whereupon all rights and obligations
hereunder shall cease and terminate.
10. WAIVER OF SUBROGATION:
Each party hereto waives any and every claim which arises or may arise
in its favor against the other party hereto during the term of this lease or
any renewal or extension thereof for any and all loss of, or damage to, any of
its property located within or upon, or constituting a part, the demised
premises, which loss or damage is covered by valid and collectible fire and
extended coverage insurance policies, to the extent that such loss or damage is
recoverable under such insurance policies. Such mutual waivers shall be in
addition to, and not in limitation or derogation of, any other waiver or
release contained in this lease with respect to any loss of, or damage to,
property of the parties hereto. Inasmuch as such mutual waivers will preclude
the assignment of any aforesaid claim by way of subrogation or otherwise to an
insurance company (or any other person), each party hereby agrees immediately
to give to each insurance company which has issued to its policies of fire and
extended coverage insurance, written notice of the terms of such mutual
waivers, and to cause such insurance policies to be properly endorsed, if
necessary, to prevent the invalidation of such insurance coverages by reason of
such waivers.
Landlord and its authorized agents shall have the right, during normal
business hours, to enter the demised premises (i) to inspect the general
condition and state of repair thereof, (ii) to make repairs required or
permitted under this lease, (iii) to show the premises to any prospective
tenant or purchaser or (iv) for any other reasonable purpose.
During the final 150 days of the lease term, Landlord and its
authorized agents shall have the right to erect and maintain on or about the
demised premises customary signs advertising the property for lease or for sale.
11. UTILITY SERVICES:
Tenant shall pay the cost of all utility services, including but not
limited to initial connection charges, all charges for gas, water and
electricity used on the demised premises, and for all electric lights, lamps
and tubes.
12. ASSIGNMENT AND SUBLEASING:
Tenant shall not, without the prior written consent of Landlord, assign
this lease or sublet the demised premises or any portion thereof. Any
assignment or subletting shall be expressly subject to all terms and provisions
of this lease, including the provisions of paragraph 3 pertaining to the use of
the demised premises. In the event of any assignment or subletting, Tenant
shall remain fully liable for the full performance of all Tenant's obligations
under this lease. Tenant shall not assign his rights hereunder or sublet the
premises without first obtaining a written agreement from assignee or sublessee
whereby assignee or sublessee agrees to be bound by the terms of this lease. No
such assignment or subletting shall constitute a novation. In the event of the
occurrence of an event of default while the demised premises are assigned or
sublet, Landlord, in addition to any other remedies provided herein or by law,
may at Landlord's option, collect directly from such assignee or subtenant all
rents becoming due under such assignment of subletting and apply such rent
against any sums due to Landlord hereunder. No direct collection by Landlord
from any such assignee or subtenant shall release Tenant from the performance
of its obligations hereunder.
<PAGE> 4
13. INDEMNITY AND PUBLIC LIABILITY INSURANCE:
(a) Landlord shall not be liable to Tenant or Tenant's employees,
agents, patrons or visitors, or to any other person whomsoever, for any injury
to person or damage to property on or about the premises, caused by the
negligence or misconduct of Tenant, its agents, servants or employees, or any
other person entering upon the premises under express or implied invitation of
Tenant, or caused by the buildings and improvements located on the premises
becoming out of repair, or caused by leakage of gas, oil, water or steam or by
electricity emanating from the premises, or due to any cause whatsoever, and
Tenant agrees to indemnify Landlord and hold it harmless from any loss,
expenses or claims including attorney's fees, arising out of any such damage or
injury, except injury to persons or damage to property the sole cause of which
is the negligence of the Landlord. See Special Conditions, Paragraph 32D,
attached hereto.
(b) Tenant shall procure and maintain throughout the term of this
lease a policy or policies of insurance, said insurance policy shall name
Landlord as an additional insured, at its sole cost and expense, insuring both
Landlord and Tenant against all claims, demands, or actions arising out of or
in connection with: (i) the premises; (ii) the condition of the premises, the
limits of such policy or policies to be in the amount of not less than $300,000
per person and $1,000,000 per occurrence in respect of injury to persons
(including death), and in the amount of not less than $50,000 per occurrence in
respect to property damage or destruction, including loss of use thereof. All
such policies, shall be procured by Tenant from responsible insurance companies
satisfactory to Landlord. Certified copies of such policies, together with
receipt evidencing of premiums therefor, shall be delivered to Landlord prior
to the commencement date of this lease. Not less than fifteen (15) days prior
to the expiration date of any such policies, certified copies of the renewals
thereof (bearing notations evidencing the payment of renewal premiums) shall be
delivered to Landlord. Such policies shall further provide that not less than
thirty (30) days written notice shall be given to Landlord before such policy
may be cancelled or changed to reduce insurance provided thereby.
(c) If Tenant should fail to comply with the foregoing requirements
relating to insurance, Landlord may obtain such insurance, and Tenant shall pay
to Landlord on demand, as additional rental hereunder, the premium cost thereof
plus interest at the rate of ten per cent (10%) per annum from the date of
payment by Landlord until repaid by Tenant.
14. CONDEMNATION:
(a) If, during the term of this lease or any extension or renewal
thereof, all or a substantial part of the demised premises should be taken for
any public or quasi-public use under any governmental law, ordinance regulation
or by right of eminent domain, or should be sold to the condemnity authority
under threat of condemnation, this lease shall terminate and the rent shall be
abated during the unexpired portion of this lease, effective from the date of
taking of the demised premises by the condemnity authority.
(b) If less than a substantial part of the demised premises is taken
for public or quasi-public use under any governmental law, ordinance or
regulation, or by right of eminent domain, or is sold to the condemnity
authority under threat of condemnation, Landlord, at its option, may be written
notice terminate this lease or shall forthwith at its sole expense restore and
reconstruct the buildings and improvements (other than leasehold improvements
made by Tenant or any assignee, subtenant or other occupant of the demised
premises) situated on the demised premises in order to make the same reasonably
tenantable and suitable for the uses for which the demised premises are leased
as defined in paragraph 3. The rent payable hereunder during the unexpired
portion of this lease shall be adjusted equitably.
(c) All compensation awarded for any taking (or the proceeds from
private sale in lieu thereof) of the demised premises or common area shall be
the property of landlord and Tenant hereby assigns its interest in any such
award to Landlord; provided however, Landlord shall have no interest in any
award made to Tenant for loss of business or for the taking of Tenant's fixtures
and other property if a separate award for such items is made to Tenant.
15. HOLDING OVER:
Should Tenant, or any of its successors in interest fail to surrender
the demised premises, or any part thereof, on the expiration of the term of
this lease, such holding over shall constitute a tenancy from month to month,
at a monthly rental equal to 150% of the rent paid for the last month of the
term of this lease unless otherwise agreed in writing.
16. DEFAULT OF TENANT:
The following events shall be deemed to be events of default under this
lease:
(a) Failure of Tenant to pay any installment of the rent or other sum
payable to Landlord hereunder on the date that same is due and such failure
shall continue for a period of 10 days.
(b) Failure of Tenant to comply with any term, condition or covenant
of this lease, other than the payment of rent or other sum of money, and such
failure shall not be cured within 30 days after written notice thereof to
Tenant.
(c) Insolvency, the making of a transfer in fraud of creditors, or the
making of an assignment for the benefit of creditors by Tenant or any guarantor
of Tenant's obligations.
(d) Filing of a petition under an section or chapter of the United
States Bankruptcy Code, as amended, or under any similar law or statute of the
United States or any State thereof by Tenant or any guarantor of Tenant's
obligations or adjudication as a bankrupt or insolvent in proceedings filed
against Tenant or such guarantor.
(e) Appointment of a receiver or trustee for all or substantially all
of the assets of Tenant or any guarantor of Tenant's obligation hereunder.
(f) Abandonment by Tenant of any substantial portion of the demised
premises or cessation of the use of the use of the demised premises for the
purpose leased.
17. REMEDIES OF LANDLORD:
Upon the occurrence of any of the events of default listed in Section
18, Landlord shall have the option to pursue any one or more of the following
remedies without any notice or demand whatsoever:
(a) Terminate this lease, in which event Tenant shall immediately
surrender the demised premises to Landlord. If Tenant fails to so surrender
such premises, Landlord may, without prejudice to any other remedy which it may
have for possession of the demised premises or arrearages in rent, enter upon
and take possession of the demised premises and expel or remove Tenant and any
other person who may be occupying such premises or any part thereof, by force
if necessary, without being liable for prosecution or any claim for damages
therefor. Tenant shall pay to Landlord on demand the amount of all loss and
damage which Landlord may suffer by reason of such termination, whether through
inability to relet the demised premises on satisfactory terms or otherwise.
(b) Enter upon and take possession of the demised premises, by force
if necessary, without terminating this lease and without being liable for
prosecution or for any claim for damages therefor, and expel or remove Tenant
and any other person who may be occupying such premises or any part thereof.
Landlord may relet the demised premises and receive the rent therefor. Tenant
agrees to pay Landlord monthly or on demand from time to time any deficiency
that may arise by reason of any such reletting. In determining the amount of
such deficiency, the brokerage commission, attorney's fees, remodeling expenses
and other costs of reletting shall be subtracted from the amount of rent
received under such reletting.
(c) Enter upon the demised premises, by force, if necessary, without
terminating this lease and without being liable for any prosecution or for any
claim for damages therefor, and do whatever Tenant is obligated to do under
the terms of this lease. Tenant agrees to pay Landlord on demand for expenses
which Landlord may incur in this effecting compliance with Tenant's obligations
under this lease, together with interest thereon at the rate of 10% per annum
from the date expended until paid. Landlord shall not be liable for any damages
resulting to the Tenant from such action, whether caused by negligence of
Landlord or otherwise.
Pursuit of any of the foregoing remedies shall not preclude pursuit of
any of the other remedies herein provided or any other remedies provided by
law, nor shall pursuit of any remedy herein provided constitute a forfeiture or
waiver of any rent due to Landlord hereunder or of any damages accruing to
Landlord by reason of the violation of any of the terms, conditions and
covenants herein contained.
18. LANDLORD'S LIEN:
In addition to the statutory Landlord's lien, Tenant hereby grants to
Landlord a security interest to accrue payment of all rent an other sums of
money becoming due hereunder from Tenant, upon all goods, wares, equipment,
fixtures, furniture and other personal property of Tenant situated in or upon
the demised premises, together with the proceeds from the sale or lease thereof.
Such property shall not be removed without the consent of Landlord until all
arrearages in rent and other sums of money then due to Landlord hereunder shall
first have been paid and discharged. Upon the occurrence of any event of
default, Landlord may, in addition to any other remedies provided
<PAGE> 5
herein or by law, enter upon the demised premises and take possession of any
and all goods, wares, equipment, fixtures, furniture and other personal
property of Tenant situated on the premises without liability for trespass or
conversion, and sell the same at public or private sale, with or without having
such property at the sale, after giving Tenant reasonable notice of the time
and place of any such sale. Unless otherwise required by law, notice to Tenant
of such sale shall be deemed sufficient if given in the manner prescribed in
this lease at least 10 days before the time of the sale. Any public sale made
under this paragraph shall be deemed to have been conducted in a commercially
reasonable manner if held in the demised premises or where the property is
located, after the time, place and method of sale and a general description of
the types of property to be sold have been advertised in a daily newspaper
published in Dallas and/or Tarrant County, Texas, for five consecutive days
before the date of the sale. Landlord or its assigns may purchase at a public
sale and, unless prohibited by law, at a private sale. The proceeds from any
disposition dealt with in this paragraph, less any and all expenses connected
with the taking of possession, holding and selling of the property (including
reasonable attorneys' fees and legal expenses), shall be applied as a credit
against the indebtedness secured by the security interest and granted herein.
Any surplus shall be paid to Tenant or as otherwise required by law; Tenant
shall pay any deficiencies forthwith. Upon request by Landlord, Tenant agrees
to execute and deliver to Landlord a financing statement in form sufficient to
perfect the security interest of Landlord in the aforementioned property and
proceeds thereof under the provisions of the Business and Commerce Code in
force in the State of Texas. The statutory lien for rent is expressly
reserved; the security interest herein granted is in addition and supplementary
thereto.
19. ATTORNEYS' FEES:
If, on account of any breach or default by Landlord or Tenant of their
respective obligations under this lease, it shall become necessary for the
other to employ an attorney to enforce or defend any of its rights or remedies
hereunder, and should such party prevail, it shall be entitled to any
reasonable attorneys' fees incurred in such connection.
20. QUIET ENJOYMENT:
Landlord warrants that it has full right and power to execute and
perform this lease and to grant the estate demised herein and that Tenant, on
payment of rent and performing the covenants herein contained, shall peaceably
and quietly have, hold and enjoy the demised premises during the full term of
this lease and any extension or renewal hereof; provided, however, that Tenant
accepts this lease subject and subordinate to any recorded mortgage, deed of
trust or other lien presently existing upon the demised premises. Landlord is
hereby irrevocably vested with full power and authority to subordinate Tenant's
interest hereunder to any mortgage, deed of trust or other lien hereafter
placed on the demised premises, and Tenant agrees upon demand to execute such
further instruments subordinating this lease as Landlord may request, provided
such further subordination shall be upon the express condition that this lease
shall be recognized by the mortgagee and that the rights of Tenant shall remain
in full force and effect during the terms of this lease so long as Tenant shall
continue to perform all of the covenants of this lease.
21. WAIVER OF DEFAULT:
No waiver by the parties hereto of any default or breach of any term,
condition or covenant of this lease shall be deemed to be waiver of any
subsequent default or breach of the same or any other term, condition or
covenant contained herein.
22. PROFESSIONAL SERVICE FEES:
Professional service fees due to the undersigned Principal Broker shall
be calculated and paid in accordance with paragraph (a) below:
(a) Landlord agrees to pay to the undersigned Principal Broker a
professional service fee for negotiating this lease equal to: Six percent (6%)
of the total lease consideration to be split four percent (4%) to Mohr
Partners, Inc. and two percent (2%) to Ken Wood Company.
(b) All professional service fees shall be payable in Dallas County,
Texas. If during the term of this lease (as the same may be renewed or
extended) or within 10 years from the date hereof, whichever shall be the
greater period of time, Tenant, its successors or assigns, shall (i) exercise
any right or option to renew or extend the term of this lease (whether
contained in this lease or in any amendment, supplement or other agreement
pertaining hereto) or enter into a new lease or rental agreement with Landlord
covering demised premises, or (ii) enter into any lease, extension, renewal,
expansion or other rental agreement with Landlord demising to Tenant any
premises located on or constituting all or part of any tract or parcel of real
property adjoining, adjacent to or contiguous to the demised premises owned by
Landlord on the date of this lease, Landlord shall pay to the Principal Broker
provided Realtors are actively involved in the negotiations, an additional
professional service fee covering the full period of such renewal, extension,
lease, expansion or other rental agreement which shall be due on the date of
exercise, in the case of the exercise of an option, or the execution, in the
case of a lease or other agreement. Such professional service fees shall be
computed under paragraph (a) above as if a new lease had been made for such
period of time, In the event Tenant, its successors or assigns, should purchase
the demised premises at any time, pursuant to a purchase option contained in
this lease (or any lease, extension, renewal, expansion or other rental
agreement upon which an additional professional service fee would be due under
the above provisions) or, in the absence of any purchase option or exercise
thereof, should purchase the demised premises within 10 years from the date
hereof, Landlord shall pay to the undersigned Principal Broker a sales
professional service fee in cash equal to Six percent (6%) of the first
$500,000.00 and three percent (3%) of the balance of the purchase price, payable
at closing. Upon closing of the sale, all lease professional service fees shall
terminate if the lease professional service fees are payable monthly.
(c) Tenant expressly acknowledges and agrees that if Tenant enters into
any new lease, extension, renewal, expansion or other agreement to rent, occupy
or purchase any property described in the preceding paragraph within the time
period specified in the preceding paragraph, such agreement must be handled by
and through the undersigned Principal Broker; otherwise, Tenant shall be
jointly liable for any professional service fee due or to become due to
Principal Broker.
(d) In the event of a sale of the demised premises, or the assignment
of this lease by Landlord, Landlord shall obtain from the purchaser an
Assumption Agreement in recordable form whereby such assignee or purchaser
agrees to pay the undersigned Principal Broker all professional service fees
payable under this lease to deliver a fully executed counterpart thereof to
Principal Broker on the date of closing of the sale of the demised premises or
assignment of this lease, whereupon Landlord shall be released from all
personal liability for subsequent payments of professional service fees.
Landlord expressly agrees that it will not transfer, convey or sell the demised
premises or assign this lease without first obtaining from the purchaser or
assignee such Assumption Agreement. The form of such Assumption Agreement shall
be furnished to the Principal Broker at the time Landlord enters into any
contract for the sale of the demised premises or assignment of this lease.
(e) If on account of any breach or default by any party hereto in his
or its obligations to Principal Broker, it shall become necessary for Principal
Broker to employ an attorney to enforce or defend any of Principal Broker's
rights or remedies hereunder and should Principal Broker prevail, such parties
agree to pay Principal Broker reasonable attorney's fees in connection
therewith.
23. CERTIFICATE OF OCCUPANCY:
Tenant may, prior to the commencement of the term of this lease, apply
for a Certificate of Occupancy to be issued by the municipality in which the
demised premises are located, but this lease shall not be contingent upon
issuance thereof. Nothing herein contained shall obligate Landlord to install
any additional electrical wiring, plumbing or plumbing fixtures which are not
presently existing in the demised premises, or which have not been expressly
agreed upon by Landlord in writing.
24. FORCE MAJEURE:
In the event performance by Landlord of any term, condition or covenant
in this lease is delayed or prevented by any Act of God, strike, lockout,
shortage of material or labor restriction by any governmental authority, civil
riot, flood, and any other cause not within the control of Landlord, the period
for performance of such term, condition or covenant shall be extended for a
period equal to the period Landlord is so delayed or hindered.
25. EXHIBITS:
All exhibits, attachments, annexed instruments and addenda referred to
herein shall be considered in part hereof for all purposes with the same force
and effect as if copied at full length herein.
<PAGE> 6
26. USE OF LANGUAGE:
Words of any gender used in this lease shall be held and construed to
include any other gender, and words in the singular shall be held to include
the plural unless the context otherwise requires.
27. CAPTIONS:
The captions or headings of paragraphs in this lease are inserted for
convenience only and shall not be considered in construing the provisions
hereof if any question of intent should arise.
28. SUCCESSORS:
The terms, conditions and covenants contained in this lease shall apply
to, inure to the benefit of, and be binding upon the parties hereto and their
respective successors in interest and legal representatives except as otherwise
herein expressly provided. All rights, powers, privileges, immunities and
duties of Landlord under this lease, including, but not limited to, any notices
required or permitted to be delivered by Landlord to Tenant hereunder, may, at
Landlord's option, be exercised or performed by Landlord's agent or attorney.
29. SUBLEASE:
If this lease is in fact a sublease, Tenant accepts this lease subject
to all of the terms and conditions of the lease under which Landlord holds the
demised premises as lessee. Tenant covenants that it will do no act or thing
which would constitute a violation by Landlord of its obligation under such
lease.
30. SEVERABILITY:
If any provision in this lease should be held to be invalid or
unenforceable, the validity and enforceability of the remaining provisions of
this lease shall not be affected thereby.
31. NOTICES:
Any notice or document required or permitted to be delivered hereunder
may be delivered in person or shall be deemed to be delivered, whether
actually received or not, when deposited in the United States mail, postage
prepaid, registered or certified mail, return receipt requested, addressed to
the parties at the addresses indicated below, or at such other addresses as may
have theretofore been specified by written notice delivered in accordance
herewith.
LANDLORD: MURRAY INCOME PROPERTIES II, LTD.
-----------------------------------
5550 LBJ FREEWAY, SUITE 675
-----------------------------------
L8 #6
DALLAS, TX 75240
-----------------------------------
PRINCIPAL BROKER: KEN WOOD COMPANY
-------------------------------
5580 LBJ Freeway, Suite 270
-------------------------------
Dallas, Texas 75240-6265
TENANT: CARE MANAGEMENT ENTERPRISES, INC.
-----------------------------------
1248 AVENUE R
-----------------------------------
GRAND PRAIRIE, TX 75050
-----------------------------------
32. SPECIAL CONDITIONS:
See Special Conditions attached hereto and made a part hereof.
EXECUTED the 16th day of November , 1995
------------- -------------------------- ------.
ATTEST:
LANDLORD: MURRAY INCOME PROPERTIES II, LTD.
- ------------------------------ -----------------------------------
By Murray Realty Investors, IX, Inc.
------------------------------------
/s/ Brent Buck
------------------------------------
Title Brent Buck
Executive Vice President
ATTEST:
TENANT: CARE MANAGEMENT ENTERPRISES, INC.
- ------------------------------ ------------------------------------
/s/ Ronald G. Bays
------------------------------------
By VICE PRESIDENT
------------------------------------
Title Ronald G. Bays
BROKERS
MOHR PARTNERS, INC. KEN WOOD COMPANY
- ------------------------------ ------------------------------------
Cooperating Broker Principal Broker, Member of the
Greater Dallas Association of
REALTORS(R), Inc.
/s/ Huck Neuberry /s/ Ken Wood, President
- ------------------------------ ------------------------------------
By By Ken Wood
NOTE: If this Lease Agreement is negotiated by Principal Broker in cooperation
with another Broker, Landlord shall be liable for payment of all professional
service fees to Principal Broker only, whereupon Landlord shall be protected
from any claims from said Cooperating Broker.
<PAGE> 7
SPECIAL CONDITIONS
TO THE LEASE AGREEMENT
BY AND BETWEEN
MURRAY INCOME PROPERTIES II, LTD., LANDLORD
AND
CARE MANAGEMENT ENTERPRISES, INC., TENANT
32. A. CONTINGENCY
The commencement date of this Lease shall be subject to and
contingent upon Tenant not being in default of any term,
condition, or covenant contained in the Sublease which precedes
this Lease, and attached hereto as Exhibit C. In the event
Tenant is in default under said Sublease, then this Lease shall,
as Landlord's sole option, be deemed to be null and void.
B. RENT SCHEDULE:
Rent, pursuant to Paragraph 1 of the Lease, shall be paid as
follows:
December 1, 1997 - November 30, 1998 at the rate of
$14,175.00 per month;
December 1, 1998 - November 30, 1999 at the rate of
$14,850.00 per month;
December 1, 1999 - November 30, 2000 at the rate of
$15,525.00 per month.
C. HAZARDOUS WASTE:
The term "Hazardous Substances," as used in this lease shall
mean pollutants, contaminants, toxic or hazardous wastes, or
any other substances, the use and/or the removal of which is
required or the use of which is restricted, prohibited or
penalized by an "Environmental Law," which term shall mean any
federal, state, or local law, ordinance or other statute of
a governmental or quasi-governmental authority relating to
pollution or protection of the environment. Tenant hereby
agrees that (i) no activity will be conducted on the Premises
that will produce any Hazardous Substance; (ii) the Premises
will not be used in any manner for the storage of any
Hazardous Substances; (iii) no portion of the Premises will be
used as a landfill or a dump; (iv) Tenant will not install any
underground tanks of any type; (v) Tenant will not allow any
surface or subsurface conditions to exist or come into
existence that constitute, or with the passage of time may
constitute a public or private nuisance; (vi) Tenant will not
permit any Hazardous Substances to be brought onto the
Premises, and if so brought thereon, then the same shall be
immediately removed with proper disposal, and all required
cleanup procedures shall be diligently undertaken pursuant
to all environmental laws. Landlord or Landlord's representative
shall have the right but not the obligation to enter the
Premises for the purpose of ensuring compliance with all
Environmental Laws. If Tenant so contaminates the Premises,
then Tenant shall diligently institute proper and thorough
cleanup procedures at Tenant's sole cost,
See Exhibit B-1
<PAGE> 8
and Tenant agrees to indemnify and hold Landlord harmless from
all claims, demands, actions, liabilities, costs, expenses,
damages and obligations of any nature arising from or as a
result of Tenant's failure to comply with this Paragraph 32
and/or the presence of Hazardous Substances in or on the
Premises. The foregoing indemnification and the responsibilities
of Tenant shall survive the termination or expiration of this
Lease.
D. LIABILITY
In addition to the provisions in Paragraph 13 of the Lease,
Tenant shall look solely to Landlord's interest in the Property
for the satisfaction of any judgements or decrees requiring
the payment of money by Landlord based upon any defaults
hereunder, and no other property or asset of Landlord shall be
subject to levy, execution or other enforcement procedure for
the satisfaction of such judgement or decree. This provision
shall apply as well to assignees or purchasers of Landlord.
It is specifically agreed and understood between the parties
hereto that there shall be absolutely no personal liability
on the part of the Landlord, its successors, assignees,
nominees, or designees, with respect to any of the terms,
covenants and conditions of this Lease, and Tenant or any
other party claiming by, through or under the Tenant shall
look solely to the interests of the Landlord in the Property
for the collection of any claim, demand, cost expense,
judgement or other judicial process requiring the payment
of money for any default or breach of Landlord of any of its
obligations under this Lease.
E. FINANCIAL STATEMENTS:
Tenant has attached as Exhibit B to this Lease, copies of its
current financial statements. Tenant certifies that to the best
of Tenant's knowledge, these financial statements are true and
correct.
F. INSURANCE:
Tenant shall not commit, or permit to be committed, any action
or circumstance in, upon or about the Premises or the building
which, directly or indirectly, would or might justify any
insurance carrier in canceling or increasing the premium on
any insurance policy covering the Premises, the building or
the contents of either; and if any such action or circumstance
is undertaken with Landlord's consent which results in an
increase in any such insurance premium, Tenant shall reimburse
Landlord for such increase upon demand.
G. TENANT FINISH ALLOWANCE:
Landlord shall pay to Tenant an allowance of up to $3,900.00
for reimbursement of the cost of constructing dock ramp at the
dock door on the southeast corner of the premises. The
allowance will be paid within twenty (20) days of Tenant
furnishing Landlord with paid invoices and lien releases from
all contractors and subcontractors. Landlord shall have the
right to approve Tenant's contractor, approval not to be
unreasonably withheld.
<PAGE> 9
EXHIBIT A
LEGAL DESCRIPTION
BEING all of that certain lot, tract or parcel of land situated in Block 7,
THIRD INSTALLMENT, INDUSTRIAL COMMUNITY NO. 5, GREAT SOUTHWEST INDUSTRIAL
DISTRICT, an addition to the City of Grand Prairie, Tarrant County, Texas, as
recorded in volume 388-78, page 58, of the Plat Records of Tarrant County,
Texas, and Block 2, FOURTH INSTALLMENT, INDUSTRIAL COMMUNITY NO. 5, GREAT
SOUTHWEST INDUSTRIAL DISTRICT, an addition to the City of Grand Prairie, Tarrant
County, Texas, as recorded in volume 388-130, page 94 of the Plat Records of
Tarrant County, Texas, and being more particularly described as follows:
BEGINNING at the northwest corner of Site 1, Block 2 of the Fourth Installment
of Industrial Community No. 5, Great Southwest Industrial District, an Addition
to the City of Grand Prairie, Tarrant County, Texas, as recorded in volume
388-115, page 33, of the Plat Records of Tarrant County, Texas; said point also
being on the south right-of-way line of Avenue R (a 60 foot right-of-way);
THENCE South, 418.98 feet along the west line of Site 1 to an iron rod for
corner;
THENCE North 89 degrees 53 minutes 56 seconds West, 900.00 feet to an iron rod
for corner on the east right-of-way line of Great Southwest Parkway (a 100.00
foot right-of-way);
THENCE North, 392.39 feet with the east line of Great Southwest Parkway to an
iron rod for corner at the beginning of a curve to the right having a central
angle of 90 degrees 00 minutes 00 seconds and a radius of 25.00 feet;
THENCE around said curve, a distance of 39.27 feet to an iron rod for corner on
the south line of Avenue R;
THENCE East, 875.00 feet with the south line of Avenue R to the PLACE OF
BEGINNING and CONTAINING 376,231.59 square feet or 3.6371 acres of land, more or
less.
<PAGE> 10
EXHIBIT B
FINANCIAL STATEMENTS
<PAGE> 11
CARE MANAGEMENT ENTERPRISES, INC. AND SUBSIDIARIES
BALANCE SHEET
FOR THE PERIOD ENDING SEP-95
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Cash 165,808.19
A/R 1,431,757.09
Notes 54,296.67
Allowance (14,303.16)
Inventory 569,712.50
---------------------------
Total Current Assets 2,207,271.29
FIXED ASSETS
Furniture and Fixtures 132,496.11
Vehicles 210,380.51
Accumulated Depr. (124,428.24)
---------------------------
Total Fixed Assets 218,448.38
OTHER ASSETS
Deposits/Prepaid 9,315.11
Notes Receivable-LT 316,166.31
Investments 36,850.00
Intercompany 137,680.95
---------------------------
Total Other Assets 500,012.37
Total Assets 2,925,732.04
</TABLE>
<PAGE> 12
Exhibit B-1
(Murray Income Properties II, Ltd. and Care Management Enterprises)
Tenant shall have no responsibility for any abatement, cleanup, or other
remedial work with respect to Hazardous Substances, unless Tenant or its agents
or invitees placed such substances on the premises, in which case, Tenant shall
be responsible for all remedial work required under Environmental Laws in
connection therewith and shall indemnify and hold Landlord harmless from all
claims, demands, actions, liabilities, cost, expenses, damages and obligations
of any nature arising from or as a result of Tenant's failure to comply with
this paragraph 20. The foregoing indemnification and the responsibilities of
Tenant shall survive the termination or expiration of the lease.
<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-K FOR THE YEAR ENDED
DECEMBER 31, 1995.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 921,646
<SECURITIES> 895,000
<RECEIVABLES> 453,191
<ALLOWANCES> 14,034
<INVENTORY> 0
<CURRENT-ASSETS> 2255,803
<PP&E> 23182,001
<DEPRECIATION> 6257,762
<TOTAL-ASSETS> 20934,041
<CURRENT-LIABILITIES> 276,530
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 20523,881
<TOTAL-LIABILITY-AND-EQUITY> 20934,041
<SALES> 0
<TOTAL-REVENUES> 2794,261
<CGS> 0
<TOTAL-COSTS> 1403,224
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (5845)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1121,097
<INCOME-TAX> 0
<INCOME-CONTINUING> 1121,097
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1121,097
<EPS-PRIMARY> 3.44
<EPS-DILUTED> 3.44
</TABLE>
<PAGE> 1
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
"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
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
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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