Exhibit 10.1
EXECUTION VERSION
     
 
MASTER TRANSACTION AGREEMENT
by and among
PARKWAY PROPERTIES, INC.;
PARKWAY PROPERTIES LP;
EOLA OFFICE PARTNERS LLC (“EOP”);
EOLA CAPITAL LLC (“EOC”);
and
THE INDIVIDUALS LISTED ON THE SIGNATURE PAGE HERETO
April 10, 2011
     
 

 

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TABLE OF CONTENTS

              Page  
ARTICLE 1 DEFINITIONS
    1  
1.1 Definitions
    1  
 
       
ARTICLE 2 EXECUTIVE EMPLOYMENT WITH PARENT
    1  
2.1 Appointment of Officers
    1  
2.2 Compensation
    2  
 
       
ARTICLE 3 ADDITIONAL COVENANTS
    5  
3.1 Residual Obligations
    5  
3.2 Employment Locations of Officers and Management
    5  
3.3 Severance of Employees
    5  
 
       
ARTICLE 4 HEADQUARTERS
    6  
4.1 Headquarters
    6  
 
       
ARTICLE 5 RIGHT OF FIRST OFFER
    6  
5.1 Touzet Option Property
    6  
5.2 Property Management Option
    8  
5.3 Confidentiality
    9  
5.4 Definitions
    9  
 
       
ARTICLE 6 MISCELLANEOUS PROVISIONS
    10  
6.1 Notices
    10  
6.2 Entire Agreement
    10  
6.3 Amendments and Waivers
    10  
6.4 No Assignments
    10  
6.5 Governing Law
    10  
6.6 Jurisdiction and Venue
    10  
6.7 WAIVER OF TRIAL BY JURY
    11  
6.8 Binding Effect
    11  
6.9 Severability
    11  
6.10 Counterparts
    12  
6.11 Third Parties
    12  
6.12 Exhibits
    12  
6.13 Time Periods
    12  

 

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Exhibits

         
Purchase and Sale Agreement Transactions
    A  
Initial Salaries, Cash Bonus and Equity Incentives
    B  
Change In Control Agreement
    C  
Form of Indemnification Agreement
    D  
Employment Locations
    E  
Non-Officer Employees Subject to Severance
    F-1  
Form of Release
    F-2  

 

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MASTER TRANSACTION AGREEMENT
     This Master Transaction Agreement (this “Agreement”), dated as of April 10,
2011, is by and among Eola Office Partners LLC, a Florida limited liability
company (“EOP”), EOLA Capital LLC, a Florida limited liability company (“EOC”),
Parkway Properties, Inc., a Maryland corporation (“Parent”), Parkway Properties
LP, a Delaware limited partnership (“Partnership”), and each of the individuals
listed on the signature page to this Agreement (each, an “Executive” and
collectively, the “Executives”). EOP, EOC, Parent, Partnership, and the
Executives are sometimes referred to herein as the “Parties” and each, a
“Party.”
     WHEREAS, simultaneously with the execution and delivery of this Agreement,
the Parties and certain of their respective Affiliates are entering into the
following other transaction agreements (the “Related Agreements”): (i) a
contribution agreement (the “Contribution Agreement”), pursuant to which, among
other things, (x) all of the membership interests of EOP will be contributed to
the Partnership, and (y) all of the membership interests of EOC owned by Banyan
Street Office Holdings LLC, a Florida limited liability company, will be
contributed to the Partnership (collectively, the “Contributions”); and
(ii) purchase and sale agreements, pursuant to which, among other things,
Affiliates of Parent shall directly or indirectly purchase interests in certain
real property and improvements as listed on Exhibit A hereto (collectively, the
“Property Acquisitions” and, together with the Contributions, the
“Transactions”); and
     WHEREAS, the Parties desire to enter into this Agreement to agree to
certain terms and conditions relating to the Transactions, which are not
addressed in the Related Agreements.
     NOW THEREFORE, the Parties acknowledge the adequacy and receipt of the
consideration provided to each through their respective representations,
warranties, conditions, rights and promises contained in this Agreement, and
other good and valuable consideration, and intending to be legally bound hereby,
agree as provided below.
ARTICLE 1
DEFINITIONS
     1.1 Definitions. Capitalized terms used herein but not otherwise defined
shall have the meanings ascribed to such terms in the Contribution Agreement.
ARTICLE 2
EXECUTIVE EMPLOYMENT WITH PARENT
     2.1 Appointment of Officers.
     2.1.1 Effective the later of (x) June 1, 2011 or (y) the Closing, Parent
hereby agrees that James R. Heistand shall be appointed as Executive Chairman of
the Board of Parent and Mr. Heistand hereby agrees to accept such appointment
and to serve in such capacity at the direction of the Board of Directors of
Parent. As the Executive Chairman of the Board of Parent, Mr. Heistand shall be
entitled to observe all meetings of the investment committee of the Board.

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          2.1.2 Effective immediately following the Closing, Parent hereby
agrees that Henry F. Pratt, III shall be appointed as Executive Vice President
and Head of Asset Management and Third Party Services and Mr. Pratt agrees to
accept such appointment and to serve in such capacity at the direction of the
Board of Directors of Parent.
          2.1.3 The name and title of each other person that will serve as a
member of Parent’s senior management team upon Closing are set forth on
Exhibit B hereto.
     2.2 Compensation.
          2.2.1 Salary. The initial annual base salaries, target cash bonuses
and target equity incentive compensation for Mr. Heistand and Mr. Pratt and all
other persons that will be serving as a member of Parent’s senior management
team following the Closing are set forth on Exhibit B hereto. Each of
Mr. Heistand and Mr. Pratt understand and agree that any future annual
adjustments to the amounts set forth on Exhibit B and the amount of any actual
bonuses and equity or other compensation payable to such Executive will be
determined by the Compensation Committee of the Board of Directors of Parent
(the “Compensation Committee”), in its sole discretion; provided however that
(i) the base salaries for Mr. Heistand and Mr. Pratt shall not be reduced below
the initial base salary amounts listed on Exhibit B for periods of employment
from the Closing Date through December 31, 2012 and (ii) with respect to the
cash bonuses payable to Mr. Heistand and Mr. Pratt with respect to the fiscal
year ended December 31, 2011 only, such Executive shall be entitled to the full
amount of the target cash bonus amounts listed in Exhibit B without regard to
the achievement of any particular performance criteria, prorated for the period
from the Closing Date through December 31, 2011. Annual cash bonuses for future
years will be subject to such conditions as may be determined by the
Compensation Committee. The annual base salaries will be paid in equal bi-weekly
amounts and will be prorated from the Closing Date through December 31, 2011.
The base salaries shall be payable on Parent’s regularly scheduled payroll
dates, after such deductions and withholdings as may be required by applicable
law. The payment of annual cash bonuses for each of Mr. Heistand and Mr. Pratt
shall be contingent upon the Executive remaining employed by Parent on the bonus
payment date, which bonus payment date shall be paid concurrent with the bonus
payment date for Parent’s other executive officers who receive bonuses. The
bonus payment date for 2011 bonuses is currently expected to be in
February 2012. The initial equity incentive compensation grants to each of
Mr. Heistand and Mr. Pratt shall be granted under individual grant award
agreements which shall contain terms that are consistent with the terms and
conditions of Parent’s 2010 Omnibus Equity Incentive Plan.
          2.2.2 Benefits. During the period of their employment by Parent,
Mr. Heistand and Mr. Pratt will be entitled to paid time off and holiday pay in
accordance with Parent’s policies in effect from time to time and will be
eligible to participate in such employee benefit plans currently, or hereafter
made, available to executive officers of Parent, in accordance with and subject
to the terms and conditions of such plans; provided that, during the period from
the Closing Date through December 31, 2011, Mr. Heistand and Mr. Pratt may, at
Parent’s election, continue to be eligible to participate in the employee
benefit plans, programs and policies of EOC or EOP, rather than of Parent, on a
basis consistent with past practices. A summary of such benefits currently in
effect is set forth in Parent’s Employee Handbook, a copy of which has been
provided to each of Mr. Heistand and Mr. Pratt.

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          2.2.3 Change In Control Agreement; Indemnification Agreement.

  (a)   At Closing, Parent shall enter into a Change In Control Agreement with
each of Mr. Heistand and Mr. Pratt in the form attached as Exhibit C hereto.    
(b)   At Closing, Parent shall enter into an Indemnification Agreement with each
of the Executives in the form attached as Exhibit D hereto.

          2.2.4 Appointment of Directors. Effective the later of (x) June 1,
2011 or (y) the Closing, Mr. Heistand and Mr. Touzet shall be appointed as
directors of Parent to fill two (2) newly created directorships of Parent and to
serve as directors of Parent until the annual meeting of stockholders of Parent
to be held in May, 2012 (the “2012 Annual Meeting”). The Nominating and
Corporate Governance Committee of the Board of Directors of Parent, and the full
Board of Directors of Parent, have approved Mr. Heistand as a nominee for
re-election as a director of Parent at the 2012 Annual Meeting and Parent agrees
to nominate Mr. Heistand for election as a director at the 2012 Annual Meeting.
Each of Mr. Heistand and Mr. Touzet agrees to serve as a director of Parent
effective as of the time described above, and Mr. Heistand agrees to stand for
election as a director of Parent at the 2012 Annual Meeting and further agrees
to provide to Parent all information required by the rules and regulations of
the Securities and Exchange Commission for inclusion in Parent’s proxy statement
with respect to the 2012 Annual Meeting. The Parties understand and acknowledge
that upon their appointment neither Mr. Heistand nor Mr. Touzet will be
considered independent directors of Parent. Each of Mr. Heistand and Mr. Touzet
agree that he will recuse himself from any discussion or action by the Board of
Directors of Parent, or any committee thereof, which involves a property in
which either Mr. Heistand or Mr. Touzet holds a direct or indirect ownership or
other interest (other than discussions or decisions that relate to property
management matters generally) or any other matter in which Mr. Heistand or
Mr. Touzet has a conflict of interest, consistent with Parent’s Code of Business
Conduct and Ethics, as in effect from time to time.
          2.2.5 No Employment Agreement: At-Will Employment. The Executives
understand and agree that no employee or officer of Parent has an employment
agreement with Parent and this Agreement is not intended to be, and shall not be
construed as, an employment agreement as between any Executive and Parent or any
of Parent’s affiliates, or as otherwise conferring upon any Executive any right
to continued employment or any continuing monetary or other benefit, except to
the extent expressly provided in this Agreement. Parent’s employment of
Mr. Heistand and Mr. Pratt is at will. Either Parent, Mr. Heistand or Mr. Pratt
may terminate such Executive’s employment at any time for any or no reason, with
or without Cause (as defined below) or notice.
          2.2.6 Touzet Severance. The Parties acknowledge and agree that in
connection with the Transactions, Mr. Touzet shall be terminated as an employee
of EOP and/or EOC effective as of the Closing Date and will not be employed by
Parent or any of its Affiliates; provided that Mr. Touzet shall be entitled to
severance pay in the aggregate amount of $1,892,502.13. Such severance pay shall
be paid, subject to applicable federal, state, and local taxes and withholding,
in one lump sum within thirty days following the Closing Date. For purposes
hereof, termination of employment shall mean a “separation from service” within
the

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meaning of Internal Revenue Code section 409A. Parent’s obligations under this
Section 2.2.6 shall be contingent upon receipt at Closing of a Release (as
defined below) from Mr. Touzet.
          2.2.7 Breach and Exclusive Remedy. In the event (i) of a breach of
Sections 2.1.1, 2.2.1, 2.2.4 or 2.2.6 (as such obligations relate to
Mr. Heistand or Mr. Touzet), which breach Parent fails to cure within ninety
(90) days following notice of such breach to Parent, or (ii) that the employment
of Mr. Heistand with Parent is terminated by Parent for any reason other than
Cause, as defined below, (a “Lock-up Breach”), the sole and exclusive remedy of
either Mr. Heistand or Mr. Touzet shall be: (A) such event shall constitute a
Principal Termination Event (as defined in the Contribution Agreement) and
Parent and Partnership shall be required to perform all obligations set forth in
each of Sections 3.6.1(f) and 3.6.2(f) of the Contribution Agreement, and
(B) each of Mr. Heistand and Mr. Touzet shall be fully released from his
obligations under Article I of that certain Lock Up and Voting Agreement dated
April 10, 2011 (the “Voting Agreement”) by and among Parent, the Partnership and
the Executives (“Lock-up Release”). In the event of a breach of Sections 2.1.2
or 2.2.1 of this Agreement by Parent, as such obligations relate to Mr. Pratt,
which breach Parent fails to cure within ninety (90) days following notice of
such breach to Parent, Mr. Pratt shall be fully released from his obligations
under Article I of the Voting Agreement (“Additional Lock-up Release”). Any
Lock-up Release or Additional Lock-up Release shall be effective as of the
calendar day following the cure period permitted under this Section 2.2.7, or
with respect to a termination for any reason other than for Cause, as of the
effective date of such termination. For purposes of this Agreement “Cause” shall
mean (i) the continued failure by the Executive to perform material
responsibilities and duties toward Parent (other than any such failure resulting
from the Executive’s incapacity due to physical or mental illness), (ii) the
engaging by the Executive in willful or reckless conduct that is demonstrably
injurious to Parent monetarily or otherwise, (iii) the conviction of the
Executive of a felony, (iv) the commission or omission of any act by the
Executive that is materially inimical to the best interests of Parent and that
constitutes on the part of the Executive common law fraud or malfeasance,
misfeasance or nonfeasance of duty, (v) the failure of the Executive to comply
with the post-Closing covenants contained in Section 11.8.8 or the payment
obligations under Article 12 of the Contribution Agreement (unless the parties
are engaged in a bona fide dispute under such provisions), or (vi) the breach by
the Executive of any material term of this Agreement or the Voting Agreement,
which continues after thirty (30) days’ notice by Parent to Executive as to such
breach; provided, however, that Cause shall not include the Executive’s lack of
professional qualifications. For purposes of this Agreement, an act, or failure
to act, on the Executive’s part shall be considered “willful” or “reckless” only
if done, or omitted, by the Executive not in good faith and without reasonable
belief that the action or omission was in the best interest of Parent. The
Executive’s employment shall not be deemed to have been terminated for Cause
unless Parent shall have given or delivered to the Executive (A) reasonable
notice setting forth the reasons for Parent’s intention to terminate the
Executive’s employment for Cause, (B) a reasonable opportunity, at any time
during the thirty (30)-day period after the Executive’s receipt of such notice,
for the Executive, together with the Executive’s counsel, to be heard before the
Board, and (C) a Notice of Termination (as defined below) stating that, in the
good faith opinion of not less than a majority of the entire membership of the
Board, the Executive was guilty of the conduct set forth in clauses (i), (ii),
(iii), (iv) or (v) of the first sentence of this Section 2.2.7. For purposes of
this Agreement “Notice of Termination” means a written notice that (i) indicates
the specific termination provision in this Agreement relied upon, (ii) sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for

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termination of the Executive’s employment under the provision so indicated, and
(iii) if the date of termination is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than
fifteen (15) days after the giving of such notice).
ARTICLE 3
ADDITIONAL COVENANTS
     3.1 Residual Obligations. The Parties acknowledge that each of
Mr. Heistand, Mr. Touzet and Mr. Pratt will have continuing obligations to
perform asset management and other services and will continue to have other
responsibilities (the “Outside Activities”) with respect to and for the benefit
of certain EOP-managed properties and EOC-managed properties that will not be
acquired as part of the Transactions (the “Excluded Assets”). The Parties agree
that Mr. Heistand’s, Mr. Touzet’s and Mr. Pratt’s continuation of the Outside
Activities is permitted under the terms of this Agreement and that the
performance of such Outside Activities will provide certain benefits to the
Parent and the Partnership, as the property managers of the Excluded Assets.
Each of Mr. Heistand, Mr. Touzet and Mr. Pratt may continue to engage in such
Outside Activities so long as such responsibilities do not, materially and on a
continuing basis, interfere with the Executives’ employment or other obligations
to Parent. In addition, Parent acknowledges and agrees that the Board of
Directors of Parent has authorized and approved the Outside Activities to be
performed by each of Mr. Heistand and Mr. Touzet and determined that such
Outside Activities do not violate Parent’s Code of Business Conduct and Ethics,
Corporate Governance Guidelines or similar policy of Parent, as in effect from
time to time.
     3.2 Employment Locations of Officers and Management. Exhibit E hereto sets
forth the job title and location of employment with Parent for each of the
Persons listed therein.
     3.3 Severance of Employees.
          3.3.1 Each of the employees of EOP or EOC immediately prior to the
Closing who are terminated at or immediately prior to Closing as a result of the
Contributions, a list of each such affected persons being set forth on
Exhibit F-1 hereto (each, other than Mr. Touzet, an “Other Employee” and
collectively, the “Other Employees”) and who timely sign a release of claims in
the form attached as Exhibit F-2 hereto (a “Release”), will be entitled to
receive severance pay in the aggregate amount set forth opposite such person’s
name as set forth on Exhibit F-1 under the heading “Aggregate Severance Pay.”
          3.3.2 All severance pay to the Other Employees will be paid, subject
to applicable federal, state, and local taxes and withholding, in a single lump
sum within thirty (30) days following the Closing Date.
     3.3.3 Each employee of EOP or EOC immediately prior to the Closing (each,
an “Additional Terminated Employee” and, collectively, the “Additional
Terminated Employees”) who is terminated as a result of the Transactions within
six (6) months following the Closing Date, and who timely signs a Release, will
be eligible for severance pay in the aggregate amount of one month of base
salary as in effect immediately prior to such Person’s termination for every
year of service with EOP or EOC, as applicable; provided that,

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notwithstanding the foregoing, the maximum amount of severance payable to any
Additional Terminated Employee shall be twelve (12) months of base salary as in
effect immediately prior to such Person’s termination, and the minimum amount of
severance shall be three (3) months of such base salary. Such severance amount
shall be paid, subject to applicable federal, state, and local taxes and
withholding, in a single lump sum within thirty (30) days following the
Additional Terminated Employee’s termination.
          3.3.4 For purposes hereof, termination of employment shall mean a
“separation from service” within the meaning of Internal Revenue Code section
409A.
          3.3.5 For purposes of this Agreement, any Employee who is terminated
within six (6) months following the Closing Date for any reason other than for
Cause, shall be deemed to have been terminated as a result of the Transactions
and shall be eligible for the benefits set forth in this Section 3.3. Any
Employee who voluntarily resigns shall not be eligible for the benefits set
forth in this Section 3.3. Parent’s obligations with respect to any employee of
EOP or EOC under this Section 3.3 shall be contingent upon the timely receipt of
the Release from such terminated employee.
          3.3.6 Notwithstanding any other provision of this Agreement, any
Employee who is not listed on Exhibit F-1, who is offered a comparable job with
EOP, EOC or Parent following the Closing and who does not accept such job shall
not be eligible for severance pay or other benefits.
ARTICLE 4
HEADQUARTERS
     4.1 Headquarters. At Closing, the principal executive offices of Parent
shall remain in Jackson, Mississippi, and a co-headquarters shall be located in
Orlando, Florida.
ARTICLE 5
RIGHT OF FIRST OFFER
     5.1 Touzet Option Property. On the terms and subject to the conditions set
forth in this Section 5.1, Mr. Touzet hereby grants to Parent (or an Affiliate
of Parent designated by Parent in writing) a right of first offer with respect
to any Touzet Option Property in accordance with the terms and conditions set
forth in this Article 5, during the twenty four (24) month period beginning on
the Closing Date (the “Option Period”). For purposes of this Section 5.1, a
“Touzet Option Property” means any parcel of real property (i) that is an office
building containing no less than 100,000 rentable square feet, (ii) that is
located in a Parkway Market (as defined below), and (iii) with respect to which
a Touzet Purchaser has the authority to acquire, and controls decision-making
with respect to the acquisition of (including transfer of the right to acquire)
the fee simple interest in such parcel of real property; provided that, for
purposes of clarity, Touzet Option Property shall expressly exclude any Managed
Property. For purposes of this Section 5.1, “Touzet Purchaser” means any of
(x) Mr. Touzet, individually, (y) an entity wholly-owned by Mr. Touzet, and/or
(z) an entity partially-owned by Mr. Touzet together with any third Person who
is acting as a passive co-investor in connection with any proposed fee simple
acquisition of a Touzet Option Property.

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          5.1.1 In the event that any Touzet Purchaser desires to acquire fee
simple title to any Touzet Option Property at any time during the Option Period,
then, prior to the delivery of an offer by a Touzet Purchaser with respect to
the fee simple acquisition of such Touzet Option Property, Mr. Touzet shall
deliver to Parent a notice of the intent to send an offer to the property owner
of, or broker with respect to, such Touzet Option Property (an “Offer Notice”),
accompanied by a copy of such proposed offer.
          5.1.2 Within five (5) business days following the delivery of an Offer
Notice to Parent, Parent shall notify Mr. Touzet in writing if Parent desires to
make such offer to the property owner of, or broker with respect to, such Touzet
Option Property on the same terms and conditions as proposed to be made by the
applicable Touzet Purchaser by delivery of written notice of such election (an
“Election Notice”). If Parent timely delivers an Election Notice, then
Mr. Touzet shall use commercially reasonable efforts to assist Parent in
submitting such offer to the property owner. If Parent does not timely submit an
Election Notice or declines in writing to submit such offer, then Mr. Touzet
and/or the applicable Touzet Purchaser shall be deemed to have complied with the
obligations under Sections 5.1.1 and 5.1.2, and shall be entitled to submit such
offer to the property owner of, or broker with respect to, such Touzet Option
Property.
          5.1.3 In addition to complying with Sections 5.1.1 and 5.1.2, if
applicable, with respect to a Touzet Option Property, in the event that a Touzet
Purchaser desires to acquire fee simple title to a Touzet Option Property as to
which no Election Notice was delivered by Parent under Section 5.1.2 above or as
to which an Election Notice was timely delivered by Parent under Section 5.1.2
above but Parent subsequently determined to abandon the transaction, at any time
during the Option Period, then, prior to the execution of any letter of intent,
memorandum of understanding, purchase contract or similar document between any
Touzet Purchaser and any current property owner of a Touzet Option Property for
the fee simple acquisition of such Touzet Option Property (each, a “Purchase
Document”), Mr. Touzet shall deliver to Parent a notice of intent to enter into
a Purchase Document (a “Contract Notice”), together with a copy of such proposed
Purchase Document, including all available exhibits and schedules thereto, and
provide Parent with access to the offering and due diligence materials available
to Mr. Touzet (including, without limitation, title, survey, environmental
reports, loan information) with respect to the Touzet Option Property.
          5.1.4 Within five (5) business days following the delivery of a
Contract Notice to Parent, Parent shall notify Mr. Touzet in writing if Parent
desires to execute the applicable Purchase Document on the terms and conditions
set forth therein by delivery of written notice of such election (a “Purchase
Election Notice”). If Parent timely delivers a Purchase Election Notice, then
(i) Mr. Touzet shall use commercially reasonable efforts (but without the
requirement to make any payment) to arrange for the applicable property owner of
the Touzet Option Property to execute the Purchase Document with Parent, or
Parent’s designee, as substitute purchaser and otherwise take all actions
reasonably requested by Parent in connection therewith, and (ii) Parent shall
reimburse Mr. Touzet or the Touzet Purchaser for all reasonable and documented
out-of-pocket costs and expenses (including reasonable attorneys’ fees and
deposits) incurred by the Touzet Purchaser in connection with the potential
acquisition of the Touzet Option Property within five (5) business days of
Mr. Touzet’s submission of an invoice and reasonable supporting documentation of
such costs and expenses.

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          5.1.5 If Parent does not timely deliver a Purchase Election Notice in
accordance with Section 5.1.4 or declines in writing to execute the applicable
Purchase Document, then Mr. Touzet shall be deemed to have complied with his
obligations under this Section 5.1 with respect to such Touzet Option Property,
Parent’s rights with respect to such Touzet Option Property shall expire and
Parent shall have no further rights with respect to the purchase of such Touzet
Option Property (but Mr. Touzet shall have no obligation to refund any expenses
previously reimbursed by Parent pursuant to this Section 5.1) and a Touzet
Purchaser may consummate the proposed transaction; provided, however, that
(A) the terms of this Section 5.1 shall continue to apply to any other Touzet
Option Property during the Option Period; (B) Mr. Touzet must consummate the
proposed transaction with respect to such Touzet Option Property within one
hundred twenty (120) days following the date of delivery of the Contract Notice
on terms no more favorable in all material respects taken as a whole to the
buyer than those set forth in the Purchase Document (other than such
modifications to the transaction terms resulting from findings arising out of
the due diligence process) ; and (C) the provisions of Section 5.2 below,
relating to property management services shall apply with respect to such Touzet
Option Property in the event a Touzet Purchaser acquires such Touzet Option
Property.
          5.1.6 If Parent timely elects to execute the applicable Purchase
Document but subsequently determines (before or after executing such Purchase
Document) to abandon any negotiations with respect to the acquisition of a
Touzet Option Property, then Mr. Touzet shall be deemed to have complied with
his obligations under this Section 5.1 with respect to such Touzet Option
Property, Parent’s rights with respect to such Touzet Option Property shall
expire and Parent shall have no further rights with respect to the purchase of
such Touzet Option Property (but Mr. Touzet shall have no obligation to refund
any expenses previously reimbursed by Parent pursuant to this Section 5.1);
provided, however, that (A) the terms of this Section 5.1 shall continue to
apply to any other Touzet Option Property during the Option Period; (B) the
Touzet Purchaser must consummate the proposed transaction with respect to such
Touzet Option Property within one hundred twenty (120) days following the date
on which Parent notifies Mr. Touzet in writing that it has abandoned the
transaction, on terms no more favorable in all material respects taken as a
whole to the buyer than those set forth in the Purchase Document (other than
such modifications to the transaction terms resulting from findings arising out
of the due diligence process); and (C) the provisions of Section 5.2 below,
relating to property management services shall apply with respect to such Touzet
Option Property in the event a Touzet Purchaser acquires such Touzet Option
Property.
     5.2 Property Management Option. On the terms and subject to the conditions
of this Section 5.2, Mr. Touzet, on behalf of himself and any Touzet Purchaser,
hereby grants to Parent (or an Affiliate of Parent) a right of first offer with
respect to the provision of property management services to any Touzet Option
Property actually acquired by a Touzet Purchaser during the Option Period.
          5.2.1 Prior to entering into a property management agreement or
leasing agreement with respect to any Touzet Option Property acquired by any
Touzet Purchaser, Mr. Touzet shall make available to Parent the following
information with respect to such Touzet Option Property: a tenant list, rent
roll and loan documentation, together with the proposed terms of the property
management arrangement, including management fees, construction management fees
and leasing commissions. The Parties agree that the management agreement for any
Touzet

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Option Property subject to this Section 5.2 shall be in a form reasonably
satisfactory to any Person that holds an interest in the Touzet Option Property
and any lender with respect to the Touzet Option Property.
          5.2.2 Parent shall have five (5) business days after receipt of the
information identified in Section 5.2.1 above to notify Mr. Touzet in writing if
Parent elects to have an Affiliate of Parent enter into the proposed management
agreement, or to propose alternative terms for the management agreement by
delivery of written notice of such election (a “Management Election Notice”). If
Parent timely delivers a Management Election Notice, then Parent and Mr. Touzet
shall negotiate the terms of the proposed management agreement during the
fifteen (15) day period beginning on Mr. Touzet’s receipt of the Management
Election Notice, which terms shall be market based for the class and location of
the property. If Parent and Mr. Touzet cannot agree on the terms of the proposed
management agreement during such fifteen (15) day period, Mr. Touzet shall be
deemed to have complied with his obligations under this Section 5.2 with respect
to such Touzet Option Property and Mr. Touzet or his Affiliates may enter into a
management agreement with respect to such Touzet Option Property with a third
party on terms no more favorable in all material respects taken as a whole to
the third party management company than the terms originally proposed to Parent
pursuant to Section 5.2.1 above. If Parent does not timely deliver a Management
Election Notice or declines in writing to enter into the proposed management
agreement, or to propose alternative terms for the management agreement,
Mr. Touzet shall be deemed to have complied with his obligations under this
Section 5.2 with respect to such Touzet Option Property and Mr. Touzet or his
Affiliates may enter into a management agreement with respect to such Touzet
Option Property with a third party on terms no more favorable in all material
respects taken as a whole to the third party management company than the terms
originally proposed to Parent pursuant to Section 5.2.1 above.
          5.2.3 Notwithstanding anything to the contrary in this Section 5.2,
the obligation of Mr. Touzet to offer Parent the right to manage any Touzet
Option Property shall not apply to any Touzet Option Property in which
Mr. Touzet has a co-investor that (i) is actively engaged in office property
management; (ii) is seeking the right to control management services as part of
the acquisition; and (iii) undertakes the management of such Touzet Option
Property.
     5.3 Confidentiality. Parent hereby acknowledges and agrees, on behalf of
itself and each of its Affiliates and Representatives, that each such Person
(i) shall be bound by the terms and conditions of any confidentiality agreement
between Mr. Touzet or any other Touzet Purchaser and the property owner of any
Touzet Option Property (or any of its representatives) in connection with the
potential acquisition of any Touzet Option Property; provided that a copy of any
such confidentiality agreement is provided to Parent, and (ii) shall treat and
hold as confidential all information provided to any such Person in connection
with any Touzet Option Property or the rights and obligations under in this
Article 5.
     5.4 Definitions. For purposes of Sections 5.1 and 5.2, “Parkway Market”
means any metropolitan statistical area in which Parkway Properties, Inc., or
any of its subsidiaries, manages office properties as of the Closing Date.

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ARTICLE 6
MISCELLANEOUS PROVISIONS
     6.1 Notices. Any notice, request or other communication to be given
pursuant to this Agreement shall be given in writing (including electronic mail,
facsimile or similar writing) and delivered in accordance with Section 16.1 of
the Contribution Agreement.
     6.2 Entire Agreement. This Agreement, exhibits hereto, the Confidentiality
Agreement and the Contribution Agreement constitute the entire agreement among
the Parties concerning the subject matter hereof, and supersede all other prior
agreements, understandings and negotiations, oral or written, between the
Parties concerning such subject matter.
     6.3 Amendments and Waivers.
          6.3.1 No modification or waiver of this Agreement shall be enforceable
unless made in a written instrument signed by the Party against whom the
modification or waiver would apply.
          6.3.2 No failure or delay by any Party in exercising any right, power
or privilege under this Agreement shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. Except as
otherwise provided herein, no action taken pursuant to this Agreement, including
any investigation by or on behalf of any Party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. Any term,
covenant or condition of this Agreement may be waived at any time by the Party
that is entitled to the benefit thereof, but only by a written notice signed by
such Party expressly waiving such term or condition. No waiver by any Party
hereto of any default, misrepresentation or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent occurrence of such kind.
     6.4 No Assignments. No Party shall assign or delegate any of the rights or
obligations under this Agreement to a third party without the prior written
consent of the other Parties. Any such assignment which is not permitted under
this Agreement shall be null and void.
     6.5 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the Laws of the State of Delaware, regardless of the Laws that
might otherwise govern under applicable principles of conflict of laws thereof.
     6.6 Jurisdiction and Venue. Each of the Parties irrevocably and
unconditionally submits to the sole and exclusive personal jurisdiction of
(a) the state courts of the State of Delaware, and (b) the United States
District Court for the District of Delaware (and appropriate appellate courts
therefrom), for the purposes of any dispute, claim, controversy, suit, action or
other proceeding arising out of this Agreement or any transaction contemplated
hereby. Each of the Parties further agrees and covenants (i) to commence any
such action, suit or proceeding either in the United States District Court for
the District of Delaware or if such suit, action or

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other proceeding may not be brought in such court for jurisdictional reasons, in
any state court located in the City of Wilmington, Delaware and (ii) to not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court. Each of the Parties further agrees and covenants
that if subject matter jurisdiction over any action, suit, or proceeding in
connection with any dispute, claim, or controversy arising out of or relating to
this Agreement, the Related Agreements, or the Transactions exists in the Court
of Chancery of the State of Delaware by reason of Section 111 of the DGCL or if
there otherwise exists a good faith basis for concluding that the Court of
Chancery of the State of Delaware would have subject matter jurisdiction in
connection with any such action, suit, or proceeding, then any such action,
suit, or proceeding shall be brought exclusively in the Court of Chancery of the
State of Delaware, and each Party agrees that it shall not attempt to deny or
defeat subject matter jurisdiction over such action, suit, or proceeding in the
Court of Chancery of the State of Delaware. Each of the Parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the Transactions in (a) the
United States District Court for the District of Delaware, or (b) any state
court located in the City of Wilmington, Delaware, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum. Each of the Parties hereby agrees
that this Agreement involves at least $100,000 and that this Agreement has been
entered into in express reliance on 6 Del. C. § 2708.
     6.7 WAIVER OF TRIAL BY JURY. EACH PARTY HERETO HEREBY WAIVES, RELEASES AND
RELINQUISHES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO
ANY ACTIONS ARISING DIRECTLY OR INDIRECTLY AS A RESULT OR IN CONSEQUENCE OF THIS
AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY CLAIM OR ACTION TO REMEDY ANY
BREACH OR ALLEGED BREACH HEREOF, TO ENFORCE ANY TERM HEREOF, OR IN CONNECTION
WITH ANY RIGHT, BENEFIT OR OBLIGATION ACCORDED OR IMPOSED BY THIS AGREEMENT.
     6.8 Binding Effect. This Agreement shall be binding upon and shall inure to
the benefit of the Parties and their respective heirs, executors, personal
representatives, successors and permitted assigns.
     6.9 Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the invalid or unenforceable term or provision in
any other situation or in any other jurisdiction. If a final judgment of a court
of competent jurisdiction declares that any term or provision hereof is invalid
or unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified.

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     6.10 Counterparts. This Agreement may be executed and delivered in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument. It is the express intent
of the Parties to be bound by the exchange of signatures on this Agreement via
facsimile or electronic mail via the portable document format (PDF). A facsimile
or other copy of a signature shall be deemed an original.
     6.11 Third Parties. Except as otherwise expressly stated herein, no
provision of this Agreement is intended or shall confer on any Person, other
than the Parties (and their successors and permitted assignees), any rights
under this Agreement.
     6.12 Exhibits. The exhibits, if any, referenced in this Agreement
constitute an integral part of this Agreement and are incorporated herein by
reference and made a part hereof.
     6.13 Time Periods. Any action required hereunder to be taken within a
certain number of days shall, unless otherwise provided herein, be taken within
that number of calendar days; provided, however, that if the last day for taking
such action falls on a Saturday, a Sunday, or a legal holiday, the period during
which such action may be taken shall be extended to the next Business Day.
[Signature Page Follows.]

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     IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
set forth above.

                  EOP:    
 
                EOLA OFFICE PARTNERS LLC    
 
           
 
  By:   /s/ James R. Heistand    
 
     
 
Name: James R. Heistand    
 
      Title: Manager    
 
                EOC:    
 
                EOLA CAPITAL LLC    
 
           
 
  By:   /s/ Rodolfo Prio Touzet    
 
     
 
Name: Rodolfo Prio Touzet    
 
      Title: Chief Executive Officer    

Master Transaction Agreement

 

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                      PARENT:    
 
                    PARKWAY PROPERTIES, INC.    
 
               
 
  By:   /s/ Steven G. Rogers                           Name: Steven G. Rogers  
          Title: President and CEO    
 
               
 
  By:   /s/ Richard Hickson                           Name: Richard Hickson    
        Title: Executive Vice President and Chief Financial Officer    
 
                    PARTNERSHIP:

PARKWAY PROPERTIES LP    
 
                    By:   Parkway Properties General Partners, Inc., general
partner    
 
               
 
      By:  /s/ James M. Ingram  
 
       
 
Name: James M. Ingram    
 
        Title: Executive Vice President and Chief Investment Officer    
 
               
 
      By:  /s/ M. Jayson Lipsey  
 
       
 
Name: M. Jayson Lipsey    
 
        Title: Senior Vice President and Fund Manager    
 
                    EXECUTIVES:      
 
      /s/ James R. Heistand                           Name: James R. Heistand  
   
 
      /s/ Rodolfo Prio Touzet                           Name: Rodolfo Prio
Touzet      
 
      /s/ Henry F. Pratt, III                           Name: Henry F. Pratt,
III    

Master Transaction Agreement