UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ___________)*
CROCKER REALTY TRUST, INC.
(Name of Issuer)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
226826 10 5
(CUSIP Number)
With A Copy To:
HIGHWOODS PROPERTIES, INC. SMITH HELMS MULLISS & MOORE, L.L.P.
3100 Smoketree Court, Suite 600 316 West Edenton Street
Raleigh, North Carolina 27604 Raleigh, North Carolina 27603
Attention: Ronald P. Gibson Attention: Brad S. Markoff
Tel: (919) 872-4924 Tel: (919) 755-8731
Fax: (919) 876-2448 Fax: (919) 828-7938
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 29, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [X]. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of _____ Pages
Exhibit Index on Page ____
<PAGE>
SCHEDULE 13D
CUSIP No. 431284 10 8 Page 2 of _____ Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Highwoods Properties, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
BK
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
[ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Maryland
7 SOLE VOTING POWER
None
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 22,372,617 (see Item 5)
OWNED BY EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH None
10 SHARED DISPOSITIVE POWER
None
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
22,372,617 (see Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
82.9% (see Item 5)
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE,
RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF
THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
CUSIP No. 431284 10 8 Page 2 of _____ Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Cedar Acquisition Corporation
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
BK
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
[ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Maryland
7 SOLE VOTING POWER
None
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 22,372,617 (see Item 5)
OWNED BY EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH None
10 SHARED DISPOSITIVE POWER
None
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
22,372,617 (see Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
82.9% (see Item 5)
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE,
RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF
THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
CUSIP NO. 431284 10 8
Item 1. Security and Issuer.
This Statement on Schedule 13D relates to shares of common
stock, par value $.01 per share (the "Common Stock"), of Crocker Realty Trust,
Inc., a Maryland corporation ("Crocker").
The principal executive offices of Crocker are located at 433
Plaza Real, Suite 335, Boca Raton, Florida 33432.
Item 2. Identity and Background.
This Schedule 13D is being filed by the following Reporting
Persons: Highwoods Properties, Inc. ("Highwoods"), a Maryland corporation, and
Cedar Acquisition Corporation ("Cedar"), a Maryland corporation.
The principal business of Highwoods is the ownership,
management, leasing, construction, development and acquisition of office and
industrial properties. Highwoods conducts substantially all of its operations
through Highwoods/Forsyth Limited Partnership (the "OP"), a limited partnership
in which Highwoods is the sole general partner. The address of Highwoods'
principal business and principal office is 3100 Smoketree Court, Suite 600,
Raleigh, North Carolina 27604.
The principal business of Cedar is to serve as the acquisition
vehicle through which Highwoods will effect the acquisition of Crocker (the
"Acquisition"). The address of Cedar's principal business and principal office
is 3100 Smoketree Court, Suite 600, Raleigh, North Carolina 27604.
None of the Reporting Persons have during the last five years
been (i) convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) a party of a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of which was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Highwoods and Cedar have entered into a Stock Purchase Agreement, dated
as of April 29, 1996, with AP CRTI Holdings, L.P., AEW Partners, L.P., Thomas J.
Crocker, Barbara F. Crocker, Richard S. Ackerman and Robert E. Onisko (the
"Sellers") to purchase 22,372,617 shares of Common Stock of Crocker (the
"Shares"). A copy of the Stock Purchase Agreement is filed as Exhibit A hereto
and is incorporated herein by reference. The price to be paid is $11.02 per
share, subject to adjustment as set forth in the Merger Agreement (defined and
incorporated into this Schedule 13D below).
Highwoods and Cedar have also entered into an Agreement and Plan of
Merger with Crocker, dated as of April 29, 1996 (the "Merger Agreement"). A copy
of the Merger Agreement is filed as Exhibit B hereto and is incorporated herein
by reference. The agreement provides that Cedar will be merged into Crocker,
with Crocker as the surviving entity (the "Merger"). At the effective time of
the Merger, each share of Crocker Common Stock held by Cedar or Highwoods
(including the Shares) will be canceled, each share of common stock of Cedar
will become a share of Common Stock of Crocker, and all other shares of Common
Stock of Crocker will be converted into and represent a right to receive $11.02
per share, subject to adjustment as set forth in Section 2.4 of the Merger
Agreement.
The acquisition of the Shares and subsequent cashing out of the
remaining shares of Common Stock of Crocker is expected to cost approximately
$247 million and $50 million, respectively, totaling approximately $297 million.
Highwoods expects to fund the Acquisition through bank loans. Highwoods has
obtained a commitment from NationsBank to increase Highwoods' unsecured credit
facility from $140 million to $250 million and for a $100 million interim
financing facility. A copy of the commitment letter to increase the current
credit facility and to provide the interim financing facility is filed as
Exhibit C hereto.
<PAGE>
Item 4. Purpose of Transaction.
Highwoods and Cedar have entered into the Stock Purchase
Agreement as part of their plan to effect the acquisition of Crocker by
Highwoods (the "Acquisition").
Highwoods and Cedar intend to cause the merger of Cedar into
Crocker with Highwoods becoming the sole shareholder of Crocker. Highwoods
intends to contribute the shares of common stock of Crocker to the OP in
exchange for limited partnership interests therein so that Crocker would be a
subsidiary of the OP. Highwoods intends to cause Crocker to issue additional
shares of common stock, representing a very small portion of the equity of
Crocker, in order to be able to continue to maintain the status of Crocker as a
real estate investment trust for tax purposes.
The Reporting Persons are evaluating the merits of seeking to
obtain additional shares Common Stock of Crocker from certain large holders
thereof. Currently, no such plan exists.
As set forth at Section 5.3 of the Merger Agreement, which is
incorporated herein by reference, Crocker will distribute to its shareholders
243 acres of undeveloped land prior to the Merger.
Upon consummation of the Merger, Highwoods plans to effect
numerous changes in Crocker, including the termination of the employment of its
three executive officers and the probable reduction in the size of the board of
directors of Crocker and replacement of its members with current officers or
directors of Highwoods. In addition, Highwoods intends to prepay certain
outstanding indebtedness of Crocker (expected to total approximately $100
million) and to amend its charter and bylaws.
During the period prior to completion of the Merger, it is
expected that Crocker will continue to pay its regular quarterly dividend.
After consummation of the Merger, the Common Stock will be
delisted from the American Stock Exchange and will become eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended (the "Act"). It is not yet known whether the
same will be true with respect to the outstanding warrants to purchase shares of
Common Stock of Crocker.
Item 5. Interest in Securities of the Issuer.
Pursuant to the Stock Purchase Agreement, the Reporting
Persons have contracted to purchase shares of Common Stock of Crocker from the
Sellers and to demand that the Sellers vote their shares of Common Stock in the
manner set forth in the Stock Purchase Agreement. Based on information made
available by Crocker, the Reporting Persons believe that they have the right to
demand the voting by and to acquire from the Sellers 22,372,617 shares of Common
Stock, or approximately 82.9% of the Common Stock outstanding. The Reporting
Persons are reporting this 82.9% figure solely for the purpose of establishing
how many shares of Common Stock the Reporting Persons may be deemed to have
shared voting power under the Stock Purchase Agreement, and such figure should
not be relied upon for any other purposes. The Reporting Persons do not have
sole power to vote or sole or shared power to dispose of any shares of Crocker.
Except as described herein, in the Merger Agreement or in the
Stock Purchase Agreement, none of the Reporting Persons have engaged in any
transaction involving any securities issued by Crocker within the 60-day period
immediately preceding the date of this Schedule 13D and, with the exception of
the shares of Common Stock described above which are subject to the Stock
Purchase Agreement, none of the Reporting Persons beneficially owns any
securities issued by Crocker.
Notwithstanding anything to the contrary contained in this
Schedule 13D, and in accordance with Rule 13d-4 promulgated under Act, the
filing of this Schedule 13D shall not be construed as an admission that the
Reporting Persons are the beneficial owners of such shares.
<PAGE>
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
The Reporting Persons have entered into the Stock Purchase
Agreement with the Sellers. The agreement provides for the transfer of the
Shares on or before August 15, 1996 and grants Cedar a proxy to vote with
respect to the Shares in connection with the Merger.
The Reporting Persons have also entered into the Merger
Agreement with Crocker. The Merger Agreement provides that Cedar will be merged
into Crocker, with the public shares of Common Stock of Crocker being converted
into the right to receive $11.02 per share, subject to adjustment.
Except as set forth in the Merger Agreement and the Stock
Purchase Agreement, both of which are incorporated by reference herein, none of
the Reporting Persons is a party to any contracts, arrangements, understandings
or relationships (legal or otherwise) with respect to any securities of Crocker.
JOINT FILING AGREEMENT AND POWER OF ATTORNEY
The undersigned signatories of this statement on Schedule 13D
hereby agree that this statement is, and any amendments thereto filed by any of
them will be, filed on behalf of each of them.
Item 7. Material to be Filed as Exhibits.
A. Stock Purchase Agreement among AP CRTI Holdings, L.P., AEW Partners,
L.P., Thomas J. Crocker, Barbara F. Crocker, Richard S. Ackerman and
Robert E. Onisko and Highwoods Properties, Inc. and Cedar Acquisition
Corporation, dated as of April 29, 1996.
B. Agreement and Plan of Merger by and among Highwoods Properties, Inc.,
Crocker Realty Trust, Inc. and Cedar Acquisition Corporation dated as of
April 29, 1996.
C. Amended and Restated Commitment Letter between NationsBank, N.A. and
Highwoods/Forsyth Limited Partnership dated as of May 7, 1996.
D. Joint Filing Agreement and Power of Attorney (included in Item 6 of
Schedule 13D).
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of its knowledge and
belief, the undersigned certify that the information set forth in this statement
is true, complete and correct.
DATE: May 9, 1996
CEDAR ACQUISITION CORPORATION
By: /s/ RONALD P. GIBSON
Ronald P. Gibson, President
HIGHWOODS PROPERTIES, INC.
By: /s/ RONALD P. GIBSON
Ronald P. Gibson, President
<PAGE>
EXHIBIT INDEX
Exhibit Item
A. Stock Purchase Agreement among AP CRTI Holdings, L.P., AEW Partners,
L.P., Thomas J. Crocker, Barbara F. Crocker, Richard S. Ackerman and
Robert E. Onisko and Highwoods Properties, Inc. and Cedar Acquisition
Corporation, dated as of April 29, 1996.
B. Agreement and Plan of Merger by and among Highwoods Properties, Inc.,
Crocker Realty Trust, Inc. and Cedar Acquisition Corporation dated as of
April 29, 1996.
C. Amended and Restated Commitment Letter between NationsBank, N.A. and
Highwoods/Forsyth Limited Partnership dated as of May 7, 1996.
D. Joint Filing Agreement and Power of Attorney (included in Item 6 of
Schedule 13D).
<PAGE>
EXHIBIT A
EXECUTION COPY
STOCK PURCHASE AGREEMENT
Among
AP CRTI HOLDINGS, L.P.,
AEW PARTNERS, L.P.,
THOMAS J. CROCKER,
BARBARA F. CROCKER,
RICHARD S. ACKERMAN and
ROBERT E. ONISKO
and
HIGHWOODS PROPERTIES, INC. and
CEDAR ACQUISITION CORPORATION
Dated as of April 29, 1996
<PAGE>
STOCK PURCHASE AGREEMENT dated as of April 29, 1996 among AP
CRTI HOLDINGS, L.P., a Delaware limited partnership ("AP") , AEW PARTNERS, L.P.,
a Delaware limited partnership ("AEW"), Thomas J. Crocker ("Mr. Crocker"),
Barbara F. Crocker ("Mrs. Crocker"), Richard S. Ackerman ("Ackerman") and Robert
E. Onisko ("Onisko") (collectively, the "Sellers") and HIGHWOODS PROPERTIES,
INC., a Maryland corporation ("Highwoods") and CEDAR ACQUISITION CORPORATION, a
Maryland corporation (the "Purchaser") and a subsidiary of Highwoods.
W I T N E S S E T H:
WHEREAS, each Seller owns (either beneficially or of record)
the number of shares of common stock, par value $.01 per share (the "Company
Common Stock"), of CROCKER REALTY TRUST, INC., a Maryland corporation (the
"Company"), set forth below such Shareholder's name on Exhibit A hereto (all
such shares, and together with all shares of the Company Common Stock
subsequently acquired or otherwise owned (either beneficially or of record) by
any Seller during the Term (as defined in Section 2.03) of this Agreement, being
referred to herein as the "Shares"); and
WHEREAS, Highwoods and the Company propose to enter into an
Agreement and Plan of Merger (as the same may be amended from time to time, the
"Merger Agreement"), which provides, upon the terms and subject to the
conditions thereof, for the merger of the Purchaser with and into the Company
(the "Merger"); and
WHEREAS, the Sellers wish to sell to the Purchaser, and the
Purchaser wishes to purchase from the Sellers, the Shares, upon the terms and
subject to the conditions set forth herein; and
WHEREAS, as a condition to the willingness of Highwoods to
enter into the Merger Agreement, Highwoods and the Purchaser requested that each
Seller agree, and in order to induce Highwoods to enter into the Merger
Agreement, each Seller has agreed, to enter into this Agreement; and
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements and covenants set forth herein and in the Merger Agreement,
the parties hereto agree as follows:
<PAGE>
2
ARTICLE I
PURCHASE AND SALE
SECTION 1.01. Purchase and Sale of the Shares. Upon the terms
and subject to the conditions of this Agreement, at the Closing (as defined in
Section 1.03), the Sellers shall sell to the Purchaser, and the Purchaser shall
purchase from the Sellers, the Shares.
SECTION 1.02. Purchase Price. The purchase price per share for
the Shares shall be $11.02 (in the aggregate, the "Purchase Price"). In the
event the Merger Consideration per share (as defined in the Merger Agreement) is
adjusted, the Purchase Price hereunder shall be adjusted in the same manner,
such that the Merger Consideration per share and the Purchase Price per share
are equal.
SECTION 1.03. Closing. Upon the terms and subject to the
conditions of this Agreement, the sale and purchase of the Shares contemplated
by this Agreement shall take place at a closing (the "Closing") to be held at
the offices of Smith Helms Mulliss & Moore, L.L.P., Raleigh, North Carolina at
10:00 a.m. local time at any time on or prior to August 15, 1996 on the fifth
business day following written notice delivered by the Purchaser to each of the
Sellers, or at such other place or at such other time or on such other date as
the Sellers and the Purchaser may mutually agree upon in writing (the day on
which the Closing takes place being the "Closing Date").
For purposes of this Agreement, "business day" means any day,
except a Saturday, Sunday or other day on which commercial banking institutions
in New York, New York are authorized or directed by law or executive order to
close.
SECTION 1.04. Closing Deliveries by the Sellers. At the
Closing, each Seller shall deliver or cause to be delivered to the Purchaser:
(a) stock certificates evidencing the Shares held by such
Seller duly endorsed in blank, or accompanied by stock powers duly executed in
blank, in form satisfactory to the Purchaser and with all required stock
transfer tax stamps affixed;
(b) a receipt for the Purchase Price and the Additional
Consideration (as defined in Section 3.03); and
(c) the certificates and other documents required to be
delivered pursuant to Section 6.01.
SECTION 1.05. Closing Deliveries by the Purchaser. At the
Closing, the Purchaser shall deliver to each of the Sellers the Purchase Price
with respect to such Seller's
<PAGE>
3
Shares and any Additional Consideration, if applicable, by wire transfer in
immediately available funds to the bank account of such Seller in the United
States to be designated by such Seller in a written notice to the Purchaser at
least three days before the Closing Date.
ARTICLE II
VOTING OF THE SHARES
SECTION 2.01. Agreement to Vote Shares. Each of the Sellers
hereby agrees that during the Term of this Agreement, at any meeting of the
stockholders of the Company however called, and in any action by written consent
of the stockholders of the Company, it shall (a) vote its Shares in favor of the
Merger or any other transaction contemplated by the Merger Agreement; (b) vote
its Shares against any action or agreement which would result in a breach in any
material respect of any covenant, representation or warranty or any other
obligation of the Company under the Merger Agreement; and (c) vote its Shares
against any action or agreement which would impede, interfere with or attempt to
discourage the Merger, including, but not limited to: (i) any extraordinary
corporate transaction, such as a merger, reorganization or liquidation involving
the Company or any of its subsidiaries; (ii) a sale or transfer of a material
amount of assets of the Company or any of its subsidiaries; (iii) any change in
the management or Board of Directors of the Company, except as otherwise agreed
to in writing by Highwoods; or (iv) any change in the present capitalization or
dividend policy of the Company or (v) any other material change in the Company's
corporate structure or business.
SECTION 2.02. Proxy. EACH SELLER HEREBY GRANTS TO THE
PURCHASER, OR ANY NOMINEE OF THE PURCHASER, THE SELLER'S PROXY AND
ATTORNEY-IN-FACT (WITH FULL POWER OF SUBSTITUTION) TO VOTE OR ACT BY WRITTEN
CONSENT WITH RESPECT TO ALL OF SUCH SELLER'S SHARES IN RESPECT OF ANY OF THE
MATTERS SET FORTH IN CLAUSES (a) THROUGH (c) OF SECTION 2.01. EACH SELLER
ACKNOWLEDGES THAT SUCH PROXY IS COUPLED WITH AN INTEREST, IS IRREVOCABLE AND
SHALL NOT BE TERMINATED BY OPERATION OF LAW UPON THE OCCURRENCE OF ANY EVENT.
ANY SUCH PROXY SHALL TERMINATE UPON TERMINATION OF THIS AGREEMENT.
SECTION 2.03. Term. For purposes of this Agreement, "Term"
shall mean the period commencing on the date hereof and continuing until the
earlier to occur of (i) the Closing Date or (ii) the termination of the Merger
Agreement in accordance with its own terms.
<PAGE>
4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller, severally and not jointly, hereby represents and
warrants to the Purchaser as follows:
SECTION 3.01. Due Organization, etc. Such Seller (if it is a
partnership) is duly organized and validly existing under the laws of the
jurisdiction of its incorporation or organization. Such Seller has full power
and authority (partnership or otherwise) to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary action (partnership or
otherwise) on the part of such Seller. This Agreement has been duly executed and
delivered by such Seller and, assuming this Agreement constitutes a legal, valid
and binding agreement of the Purchaser, it constitutes a legal, valid and
binding obligation of such Seller, enforceable against such Seller in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium or
similar laws relating to creditors' rights or general principles of equity.
SECTION 3.02. No Conflicts; Required Filings and Consents.
None of the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby or in the Merger Agreement or compliance by
such Seller with any of the provisions hereof will (i) violate any provision of
such Seller's organizational or governing documents (in the case of a Seller
that is a partnership), (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default, or give rise to
any right of termination, cancellation or acceleration or any right which
becomes effective upon the occurrence of a merger, consolidation or change in
control under, any of the terms, conditions or provisions of any notice, bond,
mortgage, indenture or other instrument of indebtedness for money borrowed to
which such Seller is a party, or by which any of its properties is bound, (iii)
result in a violation or breach of, or constitute (with or with due notice or
lapse of time or both) a default, or give rise to any right of termination,
cancellation or acceleration or any right which becomes effective upon the
occurrence of a merger, consolidation, or change in control under, any of the
terms, conditions or provisions of any license, franchise, permit or agreement
to which such Seller is a party, or by which such Seller or any of its
properties is bound, or (iv) violate any statute, rule, regulation, order, or
decree of any public body or authority by which such Seller or any of its
properties is bound, except (in the case of clauses (ii) and (iii) above) for
any such breaches, defaults or other occurrences that would not prevent or delay
the performance by such Seller of its obligations under this Agreement.
(b) The execution and delivery of this Agreement by such
Seller do not, and the performance of this Agreement by such Seller will not,
require any consent, approval,
<PAGE>
5
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, domestic or foreign, except where the failure to obtain
such consents, approvals, authorizations, or permits, or to make such filings or
notifications, would not prevent or delay the performance by such Seller of its
obligations under this Agreement.
SECTION 3.03. Title to Shares. As of the date of this
Agreement, each Seller is the record or beneficial owner of the number of
respective Shares set forth below the name of such Seller on Exhibit A hereto,
which shares constitute all of the shares of the Company Common Stock owned by
such Seller. Each Seller has good and valid title to its Shares free and clear
of any pledge, lien, security interest, charge, claim, equity, option, proxy,
voting restriction, right of first refusal or other limitation on disposition or
voting rights or encumbrance of any kind (an "Encumbrance"), other than pursuant
to the Stockholders Agreement by and among the Company, AP, AEW and CRT Leasing,
Inc. dated December 28, 1995 (the "Stockholders Agreement"), the legend relating
to transfer restrictions imposed by the Securities Act of 1933, as amended,
contained on the certificates representing the Shares (the "1933 Act
Restrictions"), or with respect to the Shares owned by AP, pursuant to the terms
of the Credit Agreement dated March 18, 1996 between CS First Boston
Corporation, as agent, and AP and the Pledge and Security Agreement dated as of
March 26, 1996 between Bankers Trust Company, as collateral agent, and AP
(collectively, the "AP Margin Agreement") or with respect to Shares owned by
Ackerman, 5,000 Shares are held in a broker's margin account (the "Ackerman
Margin Agreement and, together with the AP Margin Agreement, the "Margin
Agreement") (the Stockholders Agreement, the 1933 Act Restrictions and the
Margin Agreement are collectively referred to herein as the"Existing
Restrictions"), or pursuant to this Agreement. At Closing each Seller shall
deliver to the Purchaser good and valid title to the Shares free and clear of
all Encumbrances and Existing Restrictions (other than the continued application
of the 1933 Act Restrictions after the transfer of the Shares to the Purchaser).
Each Seller does not own, of record or beneficially, any warrants, options or
other rights to acquire any shares of Company Common Stock, except as set forth
on Schedule 3.03. If any Seller owns any such warrants, options or other rights
to acquire shares of Company Common Stock, such Seller agrees not to exercise
such warrants, options or other rights prior to the Closing. At Closing, the
Purchaser shall pay to each Seller the amount set forth opposite the name of
such Seller on Schedule 3.03 in exchange for such Seller releasing all rights of
such Seller in and to such warrants, options or other rights, all of which shall
automatically expire and be of no further force or effect as of the Closing Date
upon payment of such amount (the "Additional Consideration"); provided, however,
if it is determined that compliance with the provisions of this sentence may
cause any individual subject to Section 16 of the Securities Exchange Act of
1934, as amended, to become subject to the profit recovery provisions thereof,
any such options, warrants or other rights held by such individual may, if such
individual so agrees, be canceled or purchased, as the case may be, on the
Closing Date or at such later time as may be necessary to avoid application of
such profit recovery provisions and such individual will be entitled to receive
from the Purchaser the Additional Consideration allocated to such options,
warrants or other
<PAGE>
6
rights at the time of such cancellation or purchase. The parties hereto agree to
cooperate, including, if necessary, providing alternate arrangements in order to
achieve the intent of the foregoing sentence without giving rise to such profit
recovery. Each Seller has not appointed or granted any proxy, which appointment
or grant is still effective, with respect to the Shares.
SECTION 3.04. Merger Agreement. Each Seller acknowledges
receipt and review of a copy of the Merger Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to each Seller as
follows:
SECTION 4.01. Due Organization, etc. The Purchaser is duly
organized and validly existing under the laws of the jurisdiction of its
incorporation. The Purchaser has full power and authority (corporate or
otherwise) to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary action (corporate or otherwise) on the part of the
Purchaser. This Agreement has been duly executed and delivered by the Purchaser
and, assuming this Agreement constitutes a legal, valid and binding agreement of
each of the Sellers, it constitutes a legal, valid and binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium or similar laws
relating to creditors' rights or general principles of equity.
SECTION 4.02. No Conflicts; Required Filings and Consents.
None of the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby or in the Merger Agreement or compliance by the
Purchaser with any of the provisions hereof will (i) violate any provision of
the Purchaser's organizational or governing documents, (ii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default, or give rise to any right of termination, cancellation
or acceleration or any right which becomes effective upon the occurrence of a
merger, consolidation or change in control under, any of the terms, conditions
or provisions of any notice, bond, mortgage, indenture or other instrument of
indebtedness for money borrowed to which the Purchaser is a party, or by which
any of its properties is bound, (iii) result in a violation or breach of, or
constitute (with or with due notice or lapse of time or both) a default, or give
rise to any right of termination, cancellation or acceleration or any right
which becomes effective upon the occurrence of a merger, consolidation, or
change in control under, any of the terms, conditions or provisions of any
license, franchise, permit or agreement to which the Purchaser is a party, or by
which the Purchaser or any of its properties is bound, or (iv) violate any
statute, rule, regulation, order, or decree of any public
<PAGE>
7
body or authority by which the Purchaser or any of its properties is bound,
except (in the case of clauses (ii) and (iii) above) for any such breaches,
defaults or other occurrences that would not prevent or delay the performance by
the Purchaser of its obligations under this Agreement.
SECTION 4.03. Financing. The Purchaser has, or has commitments
from responsible financial institutions to enable it to borrow, sufficient funds
to permit the Purchaser to acquire all the outstanding Shares pursuant to this
Agreement.
ARTICLE V
COVENANTS
SECTION 5.01. Restrictions on Transfers and Other Actions.
Each Seller hereby agrees, during the Term, and except as contemplated hereby,
not to (i) sell, transfer record or beneficial ownership of, pledge, encumber,
assign or otherwise dispose of, enforce or permit the execution of the
provisions of any redemption agreement with the Company or enter into any
contract, option or other arrangement or understanding with respect to or
consent to the offer for sale, transfer record or beneficial ownership of,
pledge, encumbrance, assignment or other disposition of, any of its Shares or
any interest in any of the foregoing except to the Purchaser or Highwoods or
with respect to the Excluded Assets (as defined in the Merger Agreement), or to
purchase or otherwise acquire any additional shares of Company Common Stock or
securities or other rights exchangeable or convertible into Company Common
Stock, (ii) grant any proxies or powers of attorney, deposit any of its Shares
into a voting trust or enter into a voting agreement with respect to any of its
Shares in, or any interest in any of the foregoing, except to the Purchaser or
Highwoods, (iii) consent or otherwise agree to any amendment, waiver or other
modification of the Articles of Incorporation or Bylaws (or other applicable
organizational documents) of the Company or its subsidiaries without the prior
written consent of the Purchaser or Highwoods or (iv) take any action that would
make any representation or warranty of such Seller contained herein untrue or
incorrect or have the effect of preventing or disabling such Seller from
performing its or his obligations under this Agreement, or that would otherwise
hinder or delay the Purchaser or Highwoods from acquiring a majority of the
outstanding shares of Company Common Stock, determined on a fully diluted basis.
SECTION 5.02 Permitted Distributions. Notwithstanding anything
herein to the contrary, each Seller shall be entitled to receive its or his
proportionate interest in the Excluded Assets (as defined in the Merger
Agreement) in connection with the Company's distribution of such Excluded Assets
to its stockholders as contemplated by the Merger Agreement, whether such
distribution occurs before or after the Closing. Each Seller shall also be
entitled to receipt of the Company's regular quarterly dividend on the shares of
the
<PAGE>
8
Company's Common Stock that they respectively own in an amount not exceeding
$.15 per share (or a prorated portion of such amount in the case of any portion
of a quarterly period) for such period as Seller continues to own Shares; the
Purchaser shall be entitled to all such dividends from and after the date it
acquires the Shares hereunder. The parties hereto will cooperate with each other
to effectuate the terms of this Section 5.02.
SECTION 5.03. Ownership of Subsidiaries. Each Seller covenants
and agrees hereby, that to the extent such Seller or any of its affiliates owns
any equity or other interest in a subsidiary (as defined in the Merger
Agreement) of the Company at Closing, in consideration for payment of the
Purchase Price and the Additional Consideration, such Seller shall relinquish
and transfer such interest to such person or entity designated by Highwoods at
Closing, except for interests in any subsidiary that is a part of, or owner of,
the Excluded Assets (as defined in the Merger Agreement).
SECTION 5.04. Consent Under and Termination of Stockholders
Agreement. Each of AP and AEW covenants and hereby agrees and consents to the
transfer of their respective Shares to Purchaser and the consummation of the
transactions contemplated hereby as required under the Stockholders Agreement
and also hereby agrees that upon Purchaser's acquisition of the Shares owned by
AP and AEW hereunder, the Stockholders Agreement shall automatically terminate
and be of no further force or effect.
SECTION 5.05. Mr. Crocker Litigation. Mr. Crocker covenants
and hereby agrees on his behalf and on the behalf of Crocker and Company, for
which Mr. Crocker hereby represents that he is an authorized representative of
with full power and authority to bind Mr. Crocker and Company, to release any
claim he or Crocker and Company has for indemnification against the Company in
the case styled Patrick Jolivet v. Thomas J. Crocker and Crocker and Company,
Case No. 94-8669, U.S. District Court, Southern District of Florida; provided,
that this consent and release shall be valid only in the event that provision
has been made by the Company to transfer its obligation to indemnify Mr. Crocker
and Crocker and Company to another entity in connection with the distribution of
the Excluded Assets as contemplated by the Merger Agreement and that such
indemnity obligation has been assumed by the owner of such Excluded Assets upon
their distribution out of the Company.
SECTION 5.06. Further Assurances. Each Seller shall perform
such further acts and execute such further documents and instruments as may
reasonably be required to vest in Highwoods the power to carry out the
provisions of this Agreement. Each Seller further agrees that neither it nor its
representatives shall take any action which is intended to or which does prevent
or delay the transactions contemplated by this Agreement; provided, however,
that nothing in this Agreement shall restrict the action of any director of the
Company in his capacity as a director. In addition, both prior to and after the
Closing Date, AP agrees to reasonably cooperate with Purchaser and Highwoods in
connection with Purchaser's and Highwoods's review of the Company's status as a
REIT.
<PAGE>
9
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.01. Conditions to Closing. The obligations of the
Purchaser to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions:
(a) Representations, Warranties and Covenants Contained in
this Agreement. Each of the Sellers shall have performed in all material
respects its agreements contained in this Agreement required to be performed at
or prior to the Closing and the representations and warranties of each of the
Sellers contained in this Agreement shall be true when made and at and as of the
Closing as if made at and as of such time. The Purchaser shall have received a
certificate of each Seller or, in the case of a Seller which is a limited
partnership, an appropriate officer of the general partner of such Seller, as
the case may be, to that effect.
(b) Covenants Contained in the Merger Agreement. The Company
and its subsidiaries, if applicable, shall have performed in all material
respects its agreements contained in the Merger Agreement required to be
performed at or prior to the Closing, including taking all actions necessary to
allow the transactions contemplated hereby to be consummated, and that all
conditions to Highwoods's obligation to close the Merger (other than any
required consent of the Company's stockholders) shall have been satisfied or
waived including, but not limited to, (i) the distribution out of the Company of
the Excluded Assets, (ii) the continued qualification of the Company as a REIT
as of the Closing Date, unless the Company's failure to qualify as a REIT is the
result of any action or omission of (or an action or omission taken at the
direction of) Highwoods or the Purchaser or as a result of the inaccuracy of the
representation contained in Section 4.6 of the Merger Agreement, (iii) the
consent to the transfer of the Shares to Purchaser under the Stockholders
Agreement and the agreement to terminate the Stockholders Agreement upon the
Purchaser's acquisition of AP's and AEW's Shares pursuant to this Agreement,
(iv) the waiver of the transfer restrictions imposed by the 1933 Act
Restrictions in connection with the transfer of the Shares to the Purchaser (it
being understood that the Shares upon transfer to the Purchaser will continue to
be subject to the 1933 Act Restrictions) and (v) that the obligation to
indemnify Mr. Crocker and Crocker and Company with respect to the litigation
described in Section 5.05 herein shall have been assumed by the owner of the
Excluded Assets or that such owner has agreed to reimburse the Company for all
costs associated with the Company obtaining full insurance coverage for any
losses that may be suffered as a result of its indemnification of Mr. Crocker
and Crocker and Company in such litigation.
<PAGE>
10
(c) Consents. The applicable consents set forth in Schedule
3.4 of the Merger Agreement shall have been received.
(d) Company Actions. The Company shall have taken all actions
necessary, including actions necessary under its Articles of Amendment and
Restatement of Articles of Incorporation (the "Articles") and Bylaws, to duly
authorize and approve the transactions contemplated by this Agreement, including
exemption of Highwoods and the Purchaser from the Existing Holder Limits and
Ownership Limits (as such terms are defined in the Articles assuming the
accuracy of the representation contained in Section 4.6 of the Merger Agreement)
and notice requirements set forth in the Articles of the Company and waiving
application of the Maryland Control Share Acquisition Act to the transactions
contemplated by this Agreement and the Merger Agreement and approving and
consenting to the consummation of the transactions contemplated under this
Agreement as may be required under the Stock Purchase Agreement and the 1933 Act
Restrictions. All actions required under Maryland law to consummate the
transactions contemplated by this Agreement shall have been appropriately taken.
(e) Litigation. There shall have been no order or preliminary
or permanent injunction entered in any action or proceeding before any federal,
state or foreign court or governmental, administrative or regulatory authority
or agency by any federal, state or foreign legislative body, court, government
or governmental, administrative or regulatory authority or agency which shall
have remained in effect and which shall have had the effect of making illegal
the consummation of any of the transactions contemplated hereunder.
(f) Severance Agreements. Each of Mr. Crocker, Ackerman and
Onisko shall have entered into with the Company a Severance Agreement, in each
case substantially in the form attached hereto as Exhibit B (the "Severance
Agreement" and, collectively, the "Severance Agreements"), which Severance
Agreements shall be in full force and effect as of the Closing Date and
thereafter.
(g) Distribution of Excluded Assets. The Company shall have
completed the distribution of the Excluded Assets from the Company as
contemplated by Section 5.02 hereof and the Merger Agreement.
<PAGE>
11
ARTICLE XII
GENERAL PROVISIONS
SECTION 7.01. Expenses. The Purchaser shall not bear any
expenses incurred by the Sellers, nor shall any Seller bear any expenses
incurred by the Purchaser in connection with this Agreement and the transactions
contemplated hereby, whether or not the Closing shall have occurred. Each Seller
will bear its or his own expenses incurred directly in connection with the
transfer of its or their respective Shares pursuant to this Agreement.
SECTION 7.02. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by cable, by telecopy, by telegram, by
telex or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 7.02):
(a) if to any Seller:
at the address set forth below the name of such
Seller on Exhibit A hereto
(b) if to Highwoods or the Purchaser:
Highwoods 3100 Smoketree Court, Suite 700
Raleigh, North Carolina 27604-5001
Telecopier: (919) 876-2448
Attention: Carman Liuzzo, Chief Financial Officer
With a copy to:
Smith Helms Mulliss & Moore, L.L.P.
316 West Edenton Street
Post Office Box 27525
Raleigh, North Carolina 27611
Telecopier: (919) 755-8731
Attention: Brad Markoff, Esq.
<PAGE>
12
SECTION 7.03. Public Announcements. Subject to each party's
disclosure obligations imposed by law and any stock exchange or similar rules,
no party to this Agreement shall make, or cause to be made, any press release or
public announcement in respect of this Agreement or the transactions
contemplated hereby without prior notification to the other parties, and the
parties shall cooperate with each other in the development and distribution of
news releases and other public information disclosures with respect to this
Agreement and any of the transactions contemplated hereby.
SECTION 7.04. Headings. The descriptive headings contained in
this Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 7.05. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 7.06. Entire Agreement. This Agreement, the Merger
Agreement and the Severance Agreements constitute the entire agreement of the
parties hereto with respect to the subject matter hereof and thereof and
supersede all prior agreements and undertakings, both written and oral, among
the parties hereto with respect to the subject matter hereof and thereof.
SECTION 7.07. Assignment. This Agreement may not be assigned
by operation of law or otherwise; provided, however, that the Purchaser may
assign this Agreement to an affiliate of the Purchaser without the consent of
the Sellers.
SECTION 7.08. No Third Party Beneficiaries. This Agreement
shall be binding upon and inure solely to the benefit of the parties hereto and
their permitted assigns and nothing herein, express or implied, is intended to
or shall confer upon any other person or entity any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 7.09. Amendment. This Agreement may not be amended,
supplemented or modified, and no provisions hereof may be modified or waived,
except by an instrument in writing signed by the party against whom such
amendment is sought to be
<PAGE>
13
enforced. No waiver of any provisions hereof by any party shall be deemed a
waiver of any other provisions hereof by any such party, nor shall any such
waiver be deemed a continuing waiver of any provision hereof by such party.
SECTION 7.10. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Maryland,
applicable to contracts executed in and to be performed entirely within that
state.
SECTION 7.11. Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement, and
this Agreement shall become effective when one or more counterparts have been
signed by each party hereto and delivered to the other party. Copies of executed
counterparts transmitted by telecopy, telefax or other electronic transmission
service shall be considered original executed counterparts for purposes of this
Section, provided receipt of copies of such counterparts is confirmed..
SECTION 7.12. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or equity.
<PAGE>
14
IN WITNESS WHEREOF, the Sellers and Highwoods and the
Purchaser have caused this Agreement to be executed as of the date first written
above by their respective officers thereunto duly authorized.
HIGHWOODS PROPERTIES, INC.
By:
Name:
Title:
CEDAR ACQUISITION CORPORATION
By:
Name:
Title:
AP CRTI HOLDINGS, L.P.
By: APGP CRTI HOLDINGS L.P.,
its general partner
By: APGP CRTI HOLDINGS CORP.
its general partner
By:
Name:
Title:
AEW PARTNERS, L.P.
By: AEW/L.P., its general partner
By: AEW, Inc., its general partner
By:
Name:
Title:
<PAGE>
15
THOMAS J. CROCKER
BARBARA F. CROCKER
RICHARD S. ACKERMAN
ROBERT E. ONISKO
<PAGE>
EXHIBIT B
AGREEMENT AND PLAN OF MERGER
by and among
HIGHWOODS PROPERTIES, INC.,
CROCKER REALTY TRUST, INC.
and
CEDAR ACQUISITION CORPORATION
dated as of
April 29, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
The Merger
Section 1.1 The Merger 1
Section 1.2 Closing 1
Section 1.3 Effective Time of the Merger 1
Section 1.4 Effect of the Merger 2
ARTICLE 2
The Surviving Corporation and Conversion of Shares
Section 2.1 Articles of Incorporation 2
Section 2.2 By-laws 2
Section 2.3 Board of Directors; Officers 3
Section 2.4 Merger Consideration 3
Section 2.5 Payment 4
Section 2.6 Stock Options 5
Section 2.7 No Further Rights 6
Section 2.8 Closing of the Company's Transfer
Books 6
ARTICLE 3
Representations and Warranties of the Company
Section 3.1 Organization 6
Section 3.2 Capitalization 7
Section 3.3 Authority 7
Section 3.4 No Violations; Consents and Approvals 8
Section 3.5 SEC Documents; Financial Statements 9
Section 3.6 Absence of Certain Changes; No
Undisclosed Liabilities 10
Section 3.7 Litigation 11
Section 3.8 Compliance with Applicable Law 11
Section 3.9 Taxes 12
Section 3.10 Certain Employee Plans 13
Section 3.11 Properties 14
Section 3.12 Leases 14
Section 3.13 Environmental Matters 15
Section 3.14 Opinion of Financial Advisor 16
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<PAGE>
Section 3.15 Information 16
Section 3.16 Board Action 16
Section 3.17 Broker's Fees.......................... 17
ARTICLE 4
Representations and Warranties of Buyer
Section 4.1 Organization 17
Section 4.2 Authority 18
Section 4.3 No Violations; Consents and Approvals 18
Section 4.4 SEC Documents; Financial Statements 19
Section 4.5 Information 20
Section 4.6 REIT 21
ARTICLE 5
Covenants of the Parties
Section 5.1 Taking of Necessary Action 21
Section 5.2 Public Announcements; Confidentiality 23
Section 5.3 Conduct of the Business of the
Company 23
Section 5.4 No Solicitation of Transactions 27
Section 5.5 Information and Access 28
Section 5.6 Employee and Other Arrangements 28
Section 5.7 Indemnification 29
Section 5.8 Notification of Certain Matters 30
Section 5.9 Separation of Excluded Assets 31
Section 5.10 Newco Obligations 31
ARTICLE 6
Conditions to Closings
Section 6.1 Conditions to Each Party's
Obligation to Effect the Merger 32
Section 6.2 Conditions to Obligation of the
Company to Effect the Merger 32
Section 6.3 Conditions to Obligations of
Buyer to Effect the Merger 33
Section 6.4 Conditions to Obligations of the
Company and Buyer to Effect the
Merger Following Buyer's
Ownership of Shares 33
Section 6.5 Representations and Warranties 34
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<PAGE>
ARTICLE 7
Termination, Amendment and Waiver
Section 7.1 Termination 34
Section 7.2 Procedure and Effect of Termination 35
Section 7.3 Expenses 35
ARTICLE 8
Miscellaneous
Section 8.1 Counterparts 36
Section 8.2 Governing Law 36
Section 8.3 Entire Agreement 36
Section 8.4 Notices 36
Section 8.5 Successors and Assigns 37
Section 8.6 Headings 37
Section 8.7 Amendments and Waivers 37
Section 8.8 Certain Definitions; Interpretation;
Absence of Presumption 38
Section 8.9 Severability 38
Section 8.10 Confidentiality Agreement 39
Section 8.11 Further Assurances 39
Section 8.12 Specific Performance 39
Section 8.13 Third Party Beneficiaries 39
Section 8.14 Survival 40
-iii-
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
April 29, 1996, by and among HIGHWOODS PROPERTIES, INC., a Maryland corporation
("Buyer"), CROCKER REALTY TRUST, INC., a Maryland corporation (the "Company")
and CEDAR ACQUISITION CORPORATION, a Maryland corporation ("CAC").
WHEREAS, the respective Boards of Directors of Buyer, the
Company and CAC have approved the merger of CAC with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and
the representations, warranties and agreements contained herein the parties
hereto agree as follows:
ARTICLE 1
The Merger
Section 1.1 The Merger. Upon the terms and subject to the
conditions hereof, at the Effective Time (as defined in Section 1.3), CAC shall
be merged with and into the Company and the separate existence of CAC shall
thereupon cease, and the Company shall continue as the surviving corporation in
the Merger (the "Surviving Corporation") under the laws of the State of
Maryland.
Section 1.2 Closing. Unless this Merger Agreement shall have
been terminated and the transactions herein contemplated shall have been
abandoned pursuant to Section 7.1, and subject to the satisfaction or waiver of
the conditions set forth in Article 6, the closing of the Merger will take place
as promptly as practicable (and in any event within two business days) after
satisfaction or waiver of the conditions set forth in Sections 6.1, 6.2 and 6.3,
at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York,
New York 10019, unless another date, time or place is agreed to in writing by
the parties hereto (the "Closing Date"); provided, that Buyer may, at its
election, postpone the Closing Date until August 15, 1996.
Section 1.3 Effective Time of the Merger. The Merger shall
become effective upon the acceptance for record of the articles of merger by the
Department of Assessments and Taxation of the State of Maryland (the
"Department") in accordance with the provisions of the General Corporation Law
of Maryland (the
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<PAGE>
"GCLM"), and by making all other filings required under the GCLM to be made
prior to or concurrent with the effectiveness of the Merger, which filings shall
be made as soon as practicable on the Closing Date. When used in this Merger
Agreement, the term "Effective Time" shall mean the time at which such articles
are accepted for filing by the Department.
Section 1.4 Effect of the Merger. The Merger shall, from and
after the Effective Time, have all the effects provided by the GCLM. If at any
time after the Effective Time the Surviving Corporation shall consider or be
advised that any further deeds, conveyances, assignments or assurances in law or
any other acts are necessary, desirable or proper to vest, perfect or confirm,
of record or otherwise, in the Surviving Corporation, the title to any property
or rights of the Company to be vested in the Surviving Corporation, by reason
of, or as a result of, the Merger, or otherwise to carry out the purposes of
this Agreement, the Company agrees that the Surviving Corporation and its proper
officers and directors shall execute and deliver all such deeds, conveyances,
assignments and assurances in law and do all things necessary, desirable or
proper to vest, perfect or confirm title to such property or rights in the
Surviving Corporation and otherwise to carry out the purposes of this Agreement,
and that the proper officers and directors of the Surviving Corporation are
fully authorized in the name of the Company or otherwise to take any and all
such action.
ARTICLE 2
The Surviving Corporation and Conversion of Shares
Section 2.1 Articles of Incorporation. The Articles of
Incorporation of CAC as in effect immediately prior to the Effective Time shall
be the Articles of Incorporation of the Surviving Corporation after the
Effective Time, until thereafter changed or amended as provided therein or by
applicable law; provided, that the provisions contained in the Articles (as
hereinafter defined) relating to indemnification of officers and directors shall
be incorporated into the Articles of Incorporation of CAC.
Section 2.2 By-laws. The By-laws of CAC as in effect
immediately prior to the Effective Time shall be the By-laws of the Surviving
Corporation, until, subject to Section 5.8, thereafter changed or amended as
provided therein or by applicable law; provided, that the provisions contained
in the By-laws of the Company relating to indemnification of officers and
directors shall be incorporated into the By-laws of CAC.
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<PAGE>
Section 2.3 Board of Directors; Officers. The directors of CAC
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation and the officers of CAC immediately prior to the Effective Time
shall be the officers of the Surviving Corporation, in each case, until the
earlier of their respective resignations or the time that their respective
successors are duly elected or appointed and qualified.
Section 2.4 Merger Consideration. (a) As of the
Effective Time, by virtue of the Merger and without any action on
the part of any stockholder of the Company,
(i) all shares of common stock, $0.01 par value, of the
Company (the "Company Common Stock"), which are held by Buyer, the
Company or any wholly-owned subsidiary of Buyer or the Company shall be
cancelled and retired and shall cease to exist, and no consideration
shall be delivered in the exchange therefor;
(ii) each outstanding share of Company Common Stock,
other than those to which clause (i) of this Section
2.4(a) applies, shall be converted into and represent the
right to receive $11.02 in cash (or, if there is Excess
Cash, $11.02 plus the Per Share Excess Cash Amount in
cash, or, if there is Deficient Cash, $11.02 minus the Per
Share Deficient Cash Amount) (such amount of cash being
referred to herein as the "Merger Consideration"). "Excess
Cash" shall equal (x) the amount, if any, by which the sum
of cash, cash equivalents and restricted cash reflected on
the Company's consolidated balance sheet as of the date
hereof exceeds the sum of cash, cash equivalents and
restricted cash reflected on the Company's consolidated
balance sheet as of March 31, 1996 minus (y) the amount,
if any, by which the principal amount of the Company's
indebtedness for borrowed money outstanding as of the date
hereof exceeds the sum of $5 million, and the principal
amount of the Company's indebtedness for borrowed money
outstanding as of March 31, 1996. The "Per Share Excess
Cash Amount" shall equal the quotient obtained by dividing
the Excess Cash by the number of shares of Company Common
Stock outstanding on the date hereof, assuming the
exercise of all currently outstanding options and warrants
(the "Fully Diluted Shares"). "Deficient Cash" shall equal
(x) the amount, if any, by which the sum of cash, cash
equivalents and restricted cash reflected on the Company's
consolidated balance sheet as of March 31,
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<PAGE>
1996 exceeds the sum of cash, cash equivalents and
restricted cash reflected on the Company's consolidated
balance sheet as of the date hereof plus (y) the amount,
if any, by which the principal amount of the Company's
indebtedness for borrowed money outstanding as of the date
hereof exceeds the sum of $5 million and the principal
amount of the Company's indebtedness for borrowed money
outstanding as of March 31, 1996. The "Per Share Deficient
Cash Amount" shall equal the quotient obtained by dividing
the Deficient Cash by the Fully Diluted Shares; and
(iii) each share of common stock of CAC shall be converted into
one share of common stock of the Surviving Corporation.
Section 2.5 Payment. (a) Promptly after the Effective Time,
Buyer shall deposit (or cause to be deposited) with a bank or trust company to
be designated by Buyer and reasonably acceptable to the Company (the "Exchange
Agent"), for the benefit of the holders of shares of Company Common Stock, for
exchange in accordance with this Article 2, cash in the amount sufficient to pay
the aggregate Merger Consideration.
(b) As soon as reasonably practicable after the Effective
Time, the Exchange Agent shall mail to each holder of record of Company Common
Stock immediately prior to the Effective Time (A) a letter of transmittal (the
"Company Letter of Transmittal") (which shall specify that delivery shall be
effected, and risk of loss and title to the Company Certificates shall pass,
only upon delivery of such Company Certificates to the Exchange Agent and shall
be in such form and have such other provisions as Buyer shall specify) and (B)
instructions for use in effecting the surrender of certificates representing
Company Common Stock ("Company Certificates") in exchange for the Merger
Consideration with respect to the shares of Company Common Stock formerly
represented thereby.
(c) Upon surrender of a Company Certificate for cancellation
to the Exchange Agent, together with the Company Letter of Transmittal, duly
executed, and such other documents as Buyer or the Exchange Agent shall
reasonably request, the holder of such Company Certificate shall be entitled to
receive in exchange therefor (A) a certified or bank cashier's check in the
amount equal to the cash which such holder has the right to receive pursuant to
the provisions of this Article 2, and the Company Certificate so surrendered
shall forthwith be cancelled. Until surrendered as contemplated by this Section
2.5, each Company
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Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration with respect to the shares of
Company Common Stock formerly represented thereby.
(d) If the Merger Consideration is to be delivered to a person
other than the person in whose name the certificates surrendered in exchange
therefor are registered, it shall be a condition to the payment of such Merger
Consideration that the certificates so surrendered shall be properly endorsed or
accompanied by appropriate stock powers and otherwise in proper form for
transfer, that such transfer otherwise be proper and that the person requesting
such transfer pay to the Exchange Agent any transfer or other taxes payable by
reason of the foregoing or establish to the satisfaction of the Exchange Agent
that such taxes have been paid or are not required to be paid.
(e) Unless required otherwise by applicable law, any portion
of the aggregate Merger Consideration which remains undistributed to holders of
shares of Company Common Stock two years after the Effective Time shall be
delivered to Buyer and any holders of shares of Company Common Stock who have
not theretofore complied with the provisions of this Article 2 shall thereafter
look only to Buyer for payment of any Merger Consideration to which they are
entitled pursuant to this Article 2. Neither Buyer nor the Exchange Agent shall
be liable to any holder of shares of Company Common Stock for any cash held by
Buyer or the Exchange Agent for payment pursuant to this Article 2 delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
Section 2.6 Stock Options. The Company and Buyer shall take
all actions necessary to provide that, at the Effective Time, (i) each Company
Stock Option (as hereinafter defined) as set forth on Schedule 3.2, whether or
not then exercisable or vested, shall become fully exercisable and vested, (ii)
each such Company Stock Option shall be cancelled, and (iii) in consideration of
such cancellation, the Company shall pay to each such holder of Company Stock
Options an amount in cash in respect thereof equal to the product of (1) the
excess, if any, of the Merger Consideration over the exercise price of such
Common Stock Option as reflected on Schedule 3.2 and (2) the number of shares of
Company Common Stock subject thereto. Notwithstanding anything to the contrary
herein, if it is determined that compliance with any of the foregoing may cause
any individual subject to Section 16 of the Securities Exchange Act of 1934, as
amended, to become subject to the profit recovery provisions thereof, any
Company Stock Options held by such individual may, if such individual so agrees,
subject to the proviso to this
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sentence, be cancelled or purchased, as the case may be, at the Effective Time
or at such later time as may be necessary to avoid application of such profit
recovery provisions and such individual will be entitled to receive from the
Company or the Surviving Corporation an amount in cash in respect thereof equal
to the product of (1) the excess, if any, of the Merger Consideration over the
exercise price of such Common Stock Option and (2) the number of shares of
Company Common Stock subject thereto immediately prior to the Effective Time;
provided, that the parties hereto will cooperate, including by providing
alternate arrangements, so as to achieve the intent of the foregoing without
giving rise to such profit recovery.
Section 2.7 No Further Rights. From and after the Effective
Time, holders of certificates theretofore evidencing shares of Company Common
Stock shall cease to have any rights as stockholders of the Company, except as
provided herein or by law.
Section 2.8 Closing of the Company's Transfer Books. At the
Effective Time, the stock transfer books of the Company shall be closed and no
transfer of shares of Company Common Stock shall be made thereafter. In the
event that, after the Effective Time, certificates for shares of Company Common
Stock are presented to Buyer or the Surviving Corporation, they shall be
cancelled and exchanged for Merger Consideration for each share of Company
Common Stock represented as provided in Section 2.4.
ARTICLE 3
Representations and Warranties of the Company
The Company hereby represents and warrants to Buyer as
follows:
Section 3.1 Organization. The Company and each of its
Subsidiaries (as defined in Section 8.8(a)(iii)), all of which are set forth in
Schedule 3.1, is a corporation or partnership duly organized, validly existing
and in good standing under the laws of their respective jurisdictions of
incorporation or organization, as applicable, and the Company and each of its
Subsidiaries has all requisite corporate or partnership power and authority to
own, lease and operate their respective properties and to carry on their
respective businesses as now being conducted. The Company and each of its
Subsidiaries is duly qualified or licensed and in good standing to do business
in each jurisdiction listed on Schedule 3.1, which are all of the jurisdictions
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such
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qualification necessary, except in such jurisdictions where the failure to be so
duly qualified or licensed and in good standing would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect (as
defined in Section 8.8(a)(i)). Except as set forth on Schedule 3.1, the Company
owns directly all of the outstanding capital stock or other equity interests of
each of its Subsidiaries.
Section 3.2 Capitalization. The authorized capital stock of
the Company consists of 50,000,000 shares of Company Common Stock, 10,000,000
shares of preferred stock, par value $0.01, 50,000,000 shares of excess common
stock, par value $0.01, and 10,000,000 shares of excess preferred stock, par
value $0.01. As of April 26, 1996, there were 26,981,087 shares of Company
Common Stock, no shares of preferred stock, no shares of excess common stock and
no shares of excess preferred stock issued and outstanding, and there were no
shares of Company Common Stock, no shares of preferred stock, no shares of
excess common stock and no shares of excess preferred stock held in the
Company's treasury. As of the date hereof, there were outstanding options (the
"Company Stock Options") to purchase 1,347,000 shares of Company Common Stock
under the 1995 Stock Option Plan of the Company (the "Company Option Plan").
Schedule 3.2 sets forth all outstanding options, warrants and other securities
or rights to purchase shares of Company Common Stock or securities convertible
into or exchangeable for Company Common Stock as of the date hereof and, with
respect to each such option, warrant, security or other right, (i) the holder of
such option, warrant, security or other right, (ii) the number of shares of
Company Common Stock or securities convertible into or exchangeable for Company
Common Stock for which such option, warrant, security or other right is
exercisable, and (iii) the price at which such option, warrant, security or
other right is exercisable. Except as set forth on Schedule 3.2, there were not
as of the date hereof, and at all times thereafter through the Effective Time,
there will not be, any existing options, warrants, calls, subscriptions, or
other rights or other agreements or commitments obligating the Company or any of
its Subsidiaries to issue, transfer or sell any shares of capital stock or other
equity interests of the Company or any of its Subsidiaries or any other
securities convertible into or evidencing the right to subscribe for any such
shares or other equity interests. All issued and outstanding shares of Company
Common Stock are duly authorized and validly issued, fully paid, non-assessable
(other than general partnership interests in Subsidiaries that are partnerships)
and free of preemptive rights with respect thereto.
Section 3.3 Authority. The Company has full corporate power
and authority to execute and deliver this Agreement and,
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subject to the approval of its stockholders, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized and approved by the Board of Directors of the Company, and, other
than the approval by its stockholders, no other corporate proceedings are
necessary to authorize this Agreement or the consummation of the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Company, and, assuming this Agreement constitutes a legal,
valid and binding agreement of Buyer, it constitutes a legal, valid and binding
agreement of the Company, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights or general principles of equity.
Section 3.4 No Violations; Consents and Approvals. (a) None of
the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby or compliance by the Company with any of the
provisions hereof will (i) violate any provision of its or any of its
Subsidiaries' Articles of Incorporation or by-laws, partnership agreement or
other organizational document, as applicable, (ii) except for the indebtedness
of the Company described under the caption "Use of Proceeds" in the Company's
Registration Statement on Form S-11 filed with the Securities and Exchange
Commission (the "SEC") on March 18, 1996 or as set forth in Schedule 3.4, result
in a violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default, or give rise to any right of termination,
cancellation or acceleration or any right which becomes effective upon the
occurrence of a merger, consolidation or change in control under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture or other
instrument of indebtedness for money borrowed to which the Company or any of its
Subsidiaries is a party, or by which the Company or any of its Subsidiaries or
any of their respective properties is bound, (iii) except as set forth in
Schedule 3.4, require any consent, waiver or approval by any other party or
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default, or give rise to any right of termination,
cancellation or acceleration or any right which becomes effective upon the
occurrence of a merger, consolidation or change in control under, any of the
terms, conditions or provisions of any license, franchise, permit or agreement
to which the Company or any of its Subsidiaries is a party, or by which the
Company or any of its Subsidiaries or any of their respective properties is
bound, or (iv) violate any statute, rule, regulation, order or decree of any
public body or authority by which the Company or any of its Subsidiaries or any
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of their respective properties is bound, excluding from the foregoing clauses
(iii) and (iv) of this Section 3.4(a) violations, breaches, defaults or rights
which, either individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect or for which the Company has received or,
prior to the Closing Date, shall have received appropriate consents or waivers.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any governmental entity is required in
connection with the execution and delivery of this Agreement by the Company, or
the consummation by the Company of the transactions contemplated hereby, except
(i) expiration of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), if a filing under the HSR
Act is required, (ii) in connection, or in compliance, with the provisions of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (iii) the
filing of articles of merger with the Department, (iv) such filings and consents
as may be required under any environmental law pertaining to any notification,
disclosure or required approval triggered by the Merger or the transactions
contemplated hereby, (v) filing with, and approval of, the American Stock
Exchange and the SEC with respect to the Merger and the delisting and
deregistration of the shares of Company Common Stock, (vi) such consents,
approvals, orders, authorizations, notifications, registrations, declarations
and filings as may be required under the corporation, takeover or blue sky laws
of various states and (vii) such other consents, approvals, orders,
authorizations, notifications, registrations, declarations and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
Section 3.5 SEC Documents; Financial Statements. (a) The
Company has made available to Buyer copies of each registration statement,
report, proxy statement, information statement or schedule filed with the SEC by
the Company or its predecessor since March 31, 1994 (the "Company SEC
Documents"). As of their respective dates, the Company SEC Documents complied in
all material respects with the applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the Exchange Act, as the case may
be, and none of such Company SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(b) None of the Company, any of its Subsidiaries, or
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any of their respective assets, businesses, or operations, is as of the date of
this Agreement a party to, or is bound or affected by, or receives benefits
under any contract or agreement or amendment thereto, that, in each case, would
be required to be filed as an exhibit to a Form 10-K as of the date of this
Agreement that has not been filed as an exhibit to a Company SEC Document filed
prior to the date of this Agreement.
(c) As of their respective dates, the consolidated financial
statements included in the Company SEC Documents complied as to form in all
material respects with then applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis during the periods involved (except as may be indicated therein
or in the notes thereto) and fairly presented the Company's consolidated
financial position and that of its consolidated subsidiaries as at the dates
thereof and the consolidated results of their operations and statements of cash
flows for the periods then ended (subject, in the case of unaudited statements,
to the lack of footnotes thereto, to normal year-end audit adjustments and to
any other adjustments described therein).
Section 3.6 Absence of Certain Changes; No Undisclosed
Liabilities. (a) Except as disclosed in the Company SEC Documents filed on or
prior to the date hereof or as set forth on Schedule 3.6, since December 31,
1995, the Company has not (i) incurred any liability, whether or not accrued,
contingent or otherwise, or suffered any event or occurrence which, individually
or in the aggregate, would reasonably be expected to have a Material Adverse
Effect, (ii) made any changes in accounting methods, principles or practices or
(iii) declared, set aside or paid any dividend or other distribution with
respect to its capital stock, other than a special dividend of $.03 per share of
Company Common Stock paid in March 1996 and its regular quarterly dividend in an
amount not exceeding $.15 per share of Company Common Stock (or a prorated
portion of such amount in the case of any portion of a quarterly period). Since
December 31, 1995 to the date of this Agreement, each of the Company and its
Subsidiaries has conducted its operations according to its ordinary course of
business consistent with past practice.
(b) Except as and to the extent disclosed in the Company SEC
Documents filed on or prior to the date hereof, as of December 31, 1995, neither
the Company nor any of its Subsidiaries had any liabilities or obligations of
any nature, whether or not accrued, contingent or otherwise, that would be
required by GAAP to be reflected on a consolidated balance sheet
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of the Company and its Subsidiaries (including the notes thereto) or which would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
Section 3.7 Litigation. Except as disclosed in the Company SEC
Reports filed on or prior to the date hereof, there is no suit, claim, action,
proceeding or investigation pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries or any of their
respective properties or assets before any governmental entity which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect. Except as disclosed in the Company SEC Documents filed
on or prior to the date hereof, neither the Company nor any of its Subsidiaries
is subject to any outstanding order, writ, injunction or decree which, insofar
as can be reasonably foreseen in the future would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Schedule
3.7 sets forth a list of all litigation as of the date hereof in which the
Company or any of its Subsidiaries is a defendant and there is a claim in excess
of $100,000.
Section 3.8 Compliance with Applicable Law. Except as
disclosed in the Company SEC Documents filed on or prior to the date hereof, the
Company and its Subsidiaries hold all permits, licenses, variances, exemptions,
orders and approvals of all governmental entities necessary for the lawful
ownership and operation of the Company Properties (as defined in Section 3.11)
or the lawful conduct of their respective businesses (the "Company Permits"),
except for failures to hold such permits, licenses, variances, exemptions,
orders and approvals which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Except as disclosed in
the Company SEC Documents filed on or prior to the date hereof, the Company and
its Subsidiaries and the Company Properties are in compliance with the terms of
the Company Permits, except where the failure so to comply would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Except as disclosed in the Company SEC Documents filed on or
prior to the date hereof, the businesses of the Company and its Subsidiaries and
the operation of the Company Properties are not being conducted in violation of
any law, ordinance or regulation of any governmental entity except for
violations or possible violations which, individually or in the aggregate, would
not, and, insofar as reasonably can be foreseen, in the future will not,
reasonably be expected to have a Material Adverse Effect. Except as disclosed in
the Company SEC Documents filed on or prior to the date hereof, no investigation
or review by any governmental entity with respect to the Company or any of
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its Subsidiaries or any Company Property is pending or, to the knowledge of the
Company, threatened nor, to the knowledge of the Company, has any governmental
entity indicated an intention to conduct the same, other than, in each case,
those which the Company reasonably believes will not reasonably be expected to
have a Material Adverse Effect.
Section 3.9 Taxes. Except as set forth in Schedule 3.9, each
of the Company and its Subsidiaries has filed, or caused to be filed, all
federal, state, local and foreign income and other material tax returns required
to be filed by it, including all returns required to be filed for the Company
Plans, as defined below, has paid or withheld, or caused to be paid or withheld,
all taxes of any nature whatsoever, with any related penalties, interest and
liabilities (any of the foregoing being referred to herein as a "Company Tax"),
that are shown on such tax returns as due and payable, or otherwise required to
be paid, other than such Company Taxes as are being contested in good faith and
for which adequate reserves have been established and other than where the
failure to so file, pay or withhold would not reasonably be expected to have a
Material Adverse Effect. Except as set forth in Schedule 3.9, there are no
material claims or assessments pending against the Company or its Subsidiaries
for any alleged deficiency in any Company Tax, and the Company does not know of
any threatened Company Tax claims or assessments against the Company or any of
its Subsidiaries which if upheld would reasonably be expected to have a Material
Adverse Effect or adversely affect the REIT qualification of the Company. None
of the Company or any of its Subsidiaries has made an election to be treated as
a "consenting corporation" under Section 341(f) of the Internal Revenue Code of
1986, as amended (the "Code"). There is no material deferred inter-company gain
within the meaning of the Treasury Regulations promulgated under Section 1502 of
the Code. There are no waivers or extension of any applicable statute of
limitations to assess any Company Taxes. All returns filed with respect to
Company Taxes are true and correct in all material respects. There are no
outstanding requests for any extension of time within which to file any return
or within which to pay any Company Taxes shown to be due on any return. The
Company (a) has elected to be taxed as a real estate investment trust (a "REIT")
within the meaning of Sections 856 through 860 of the Code and for all periods
beginning with the period of such election has qualified as, and complied with
all applicable laws, rules and regulations, including the Code, relating to, a
REIT, (b) subject to the accuracy of the representation contained in Section
4.6, has operated, and intends to continue to operate, in such a manner as to
qualify as a REIT for 1996, and (c) except as set forth on Schedule 3.9, subject
to the accuracy of the representation contained in Section 4.6, has not taken or
omitted
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to take, nor has any predecessor REIT of the Company not taken or omitted to
take, any action which could result in, and the Company has no actual knowledge
of, a challenge to its status as a REIT. The Company represents that each of its
Subsidiaries of which all the outstanding capital stock is owned solely by the
Company is a "Qualified REIT Subsidiary" as defined in Section 856(i) of the
Code.
Section 3.10 Certain Employee Plans. The Company and its
Subsidiaries have complied, and are now in compliance, in all material respects
with all provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), the Code and all laws and regulations applicable to the
"employee benefit plans," as defined in Section 3(3) of ERISA, of the Company or
any of its Subsidiaries (the "Company Plans"). No Company Plan is intended to be
a "qualified plan" within the meaning of Section 401(a) of the Code, nor is any
Company Plan subject to Title IV or Section 302 of ERISA or Section 412 or 4971
of the Code. None of the Company, the Subsidiaries of the Company and their
respective ERISA Affiliates (as defined in the next sentence) contributes to or
is obligated to contribute to, or has, at any time within the last six years,
contributed to or been obligated to contribute to, any "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA (a "Multiemployer Plan") or
any plan with two or more contributing sponsors at least two of whom are not
under common control, within the meaning of Section 4063 of ERISA (a "Multiple
Employer Plan"). The term "ERISA Affiliate" means, with respect to any entity,
trade or business, any other entity, trade or business that is a member of a
group described in Section 414(b) or (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA that includes the first entity, trade or business, or that
is a member of the same "controlled group" as the first entity, trade or
business pursuant to Section 4001(a)(14) of ERISA. There does not now exist, nor
do any circumstances exist that could result in, any liability on the part of
the Company or any Subsidiary of the Company under (a) Title IV of ERISA, (b)
Section 302 of ERISA, (c) Sections 412 and 4971 of the Code or (iv) the
continuation coverage requirements of Section 601 et seq. of ERISA and section
4980B of the Code, other than such liabilities that arise solely out of, or
relate solely to, the Company Plans. Neither the Company and its Subsidiaries,
nor any of their respective directors, officers, employees or agents has, with
respect to any Company Plan, engaged in any "prohibited transaction" (as such
term is defined in Section 4975 of the Code or Section 406 of ERISA)) nor has
any Company Plan engaged in any such prohibited transaction which could result
in any taxes or penalties or prohibited transactions under Section 4975 of the
Code or under Section 502(i) of ERISA, which, in the aggregate, would
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reasonably be expected to result in material liability on the part of the
Company or any of its Subsidiaries. Copies of all of the Company Plans and any
related trusts and summary plan descriptions have been made available to Buyer,
and a list of all of the Company Plans is set forth on Schedule 3.10. Except as
set forth on Schedule 3.10 or as specifically contemplated by this Agreement,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in, cause the accelerated vesting
or delivery of, or increase the amount or value of, any payment or benefit to
any employee or former employee of the Company, or any of its Subsidiaries,
either alone or in conjunction with any other event such as termination of
employment.
Section 3.11 Properties. The Company and its Subsidiaries have
fee simple or leasehold title to each of the real properties identified in the
Company SEC Documents (the "Company Properties"), which are all of the real
estate properties owned or leased by them. Except as disclosed in the Company
SEC Documents, each Company Property is owned or leased by the Company or a
Subsidiary of the Company free and clear of liens, claims against title, rights
of way, written agreements, laws, ordinances or regulations affecting building
use or occupancy, other encumbrances on title or defects in title except for
such matters which would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect (collectively, the "Company
Permitted Encumbrances"). Valid policies of title insurance have been issued
insuring the Company's or any of its Subsidiaries' title to the Company
Properties in amounts at least equal to the purchase price thereof, subject only
to the Company Permitted Encumbrances or other matters disclosed in the Company
SEC Documents, and such policies are, at the date hereof, in full force and
effect and no claim has been made against any such policy. To the best knowledge
of the Company, the Company SEC Documents disclose all adverse matters with
respect to or in connection with the Company Properties (including, without
limitation, structural defects, legal noncompliance, threatened or pending
condemnation, constraints on present or future use, operation or development,
title defects or problems, deferred maintenance, deficient building systems,
absence of any necessary permits, environmental liabilities, tenant defaults or
other adverse matters with respect to tenants) which could reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
Section 3.12 Leases. (a) Schedule 3.12 sets forth a complete
and correct list of all of the lessees of the Company Properties in excess of
25,000 rentable square feet in effect as
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of the date hereof (the "Leases"), setting forth for each lessee any exceptional
clauses relating thereto including without limitation, any "kick-out" clauses,
co-tenancy requirements or exclusions, "go-dark" clauses or clauses requiring
any unfunded tenant improvements.
(b) Except as set forth in Schedule 3.12, as of the last day
of the calendar month immediately preceding the date hereof, (i) each of the
Leases is valid and subsisting and in full force and effect, and has not been
amended, modified or supplemented; (ii) the tenant under each of the Leases is
in actual possession of the leased premises; (iii) no tenants under the Leases
are in arrears for the payment of rent for any month preceding the month of the
date hereof; and (iv) neither the Company nor any of its Subsidiaries has
received any written notice from any tenant under the Leases of any intention to
vacate. Except as set forth in Schedule 3.12, neither the Company nor any of its
Subsidiaries has collected payment of rent (other than security deposits)
accruing for a period which is more than one month beyond the date of
collection.
(c) The Company has previously delivered or made available to
Buyer a true and correct copy of all Leases.
(d) Except as set forth in Schedule 3.12, as of the last day
of the calendar month immediately preceding the date hereof, no tenant under any
of the Leases has asserted any claim of which the Company or any of its
Subsidiaries has received written notice which would materially affect the
collection of rent from such tenant and neither the Company nor any of its
Subsidiaries has received written notice of any material default or breach on
the part of the Company or any of its Subsidiaries under any of the Leases which
has not been cured.
(e) Schedule 3.12 sets forth all space leases under which the
Company or any of its Subsidiaries is a lessee (except where the underlying real
property is owned by the Company). True and correct copies of such leases have
been delivered or made available to Buyer.
Section 3.13 Environmental Matters. Except as set forth on
Schedule 3.13, none of the Company, any of its Subsidiaries or, to the knowledge
of the Company, any other person has caused or permitted (a) the unlawful
presence of any hazardous substances, hazardous materials, toxic substances or
waste materials (collectively, "Hazardous Materials") on any of the Company
Properties, or (b) any unlawful spills, releases, discharges or disposal of
Hazardous Materials to have occurred or be presently occurring on or from the
Company Properties as a
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result of any construction on or operation and use of such properties, which
presence or occurrence would reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect; and, in connection with the
construction on or operation and use of the Company Properties, the Company and
its Subsidiaries have not failed to comply, in any material respect, with all
applicable local, state and federal environmental laws, regulations, ordinances,
and administrative and judicial orders relating to the generation, recycling,
reuse, sale, storage, handling, transport and disposal of any Hazardous
Materials.
Section 3.14 Opinion of Financial Advisor. The Company has
received the written opinion of Merrill Lynch & Co. ("Merrill Lynch") to the
effect that the consideration to be received in the Merger by the holders of
Company Common Stock is fair to such holders from a financial point of view. A
copy of such opinion has been made available to Buyer.
Section 3.15 Information. None of the Proxy Statement (as
defined in Section 5.1(b)) or any other document filed or to be filed by or on
behalf of the Company with the SEC or any other governmental entity in
connection with the transactions contemplated hereby contained when filed, or
will, at the respective times filed with the SEC or other governmental entity,
and, in addition, in the case of the Proxy Statement at the date it or any
amendment or supplement thereto is mailed to stockholders of the Company and at
the time of the meeting of stockholders of the Company to vote on the Merger,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading; provided that the foregoing shall not apply to information supplied
by Buyer specifically for inclusion or incorporation by reference in any such
document. The Proxy Statement will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder. None of the information supplied by the Company specifically for
inclusion or incorporation by reference in any document filed or to be filed by
or on behalf of Buyer with the SEC or any other governmental entity in
connection with the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
Section 3.16 Board Action. The Board of Directors of the
Company has taken all action required by the Articles of Amendment and
Restatement of Articles of Incorporation of the
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Company (the "Articles") to permit the consummation of the transactions
contemplated hereby and by the Stock Purchase Agreement (as hereinafter defined)
(assuming the accuracy of the representation contained in Section 4.6). The
Company hereby consents to the transfer of shares of Company Common Stock
pursuant to the Stock Purchase Agreement.
Section 3.17 Broker's Fees. Except for Merrill Lynch, none of
the Company, any of its Subsidiaries or any of its directors or officers has
incurred any liability for any broker's fees, commissions, or financial advisory
or finder's fees in connection with any of the transactions contemplated hereby,
and none of the Company, any of its Subsidiaries or any of their respective
directors or officers has employed any other broker, finder or financial advisor
in connection with any of the transactions contemplated hereby.
Notwithstanding any contrary provision contained in this
Agreement, none of the representations or warranties contained in this Article 3
shall apply to the Excluded Assets (as defined in Section 5.3(a)); provided,
however, that the representations and warranties contained in this Article 3
shall apply to liabilities or other obligations arising from or relating to the
Excluded Assets and for which the Company, as the Surviving Corporation, or
Buyer will be liable or otherwise responsible following the consummation of the
Merger.
ARTICLE 4
Representations and Warranties of Buyer
Buyer hereby represents and warrants to the Company as
follows:
Section 4.1 Organization. Buyer, the Highwoods/Forsyth Limited
Partnership, a North Carolina partnership (the "Operating Partnership"), and
each of their respective Subsidiaries is a corporation or partnership duly
organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation or organization, as applicable, and
Buyer, the Operating Partnership and each of their respective Subsidiaries has
all requisite corporate or partnership power and authority to own, lease and
operate their respective properties and to carry on their respective businesses
as now being conducted. Buyer, the Operating Partnership and each of their
respective Subsidiaries is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the property owned, leased or
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operated by it or the nature of the business conducted by it makes such
qualification necessary, except in such jurisdictions where the failure to be so
duly qualified or licensed and in good standing would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. Except
as disclosed in the Buyer SEC Documents (as hereinafter defined) filed on or
prior to the date hereof, Buyer and the Operating Partnership each own directly
all of the outstanding capital stock or other equity interests of each of their
respective Subsidiaries.
Section 4.2 Authority. Buyer has full corporate power and
authority to execute and deliver this Agreement and, subject to the approval of
its stockholders, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized and
approved by the Board of Directors of Buyer, and other than the approval by its
stockholders, no other corporate proceedings are necessary to authorize this
Agreement or the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Buyer and,
assuming this Agreement constitutes a legal, valid and binding agreement of the
Company, it constitutes a legal, valid and binding agreement of Buyer,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights or general principles of equity.
Section 4.3 No Violations; Consents and Approvals. (a) None of
the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby or compliance by Buyer with any of the
provisions hereof will (i) violate any provision of its Articles of
Incorporation or by-laws, (ii) except as set forth in Schedule 4.3, result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default, or give rise to any right of termination, cancellation
or acceleration or any right which becomes effective upon the occurrence of a
merger, consolidation or change in control, under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture or other instrument of
indebtedness for money borrowed to which Buyer, the Operating Partnership or any
of their respective Subsidiaries is a party, or by which Buyer, the Operating
Partnership or any of their respective Subsidiaries or any of their respective
properties is bound, or (iii) except as set forth in Schedule 4.3, result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default, or give rise to any right of termination, cancellation
or acceleration or
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any right which becomes effective upon the occurrence of a merger, consolidation
or change in control, under, any of the terms, conditions or provisions of any
license, franchise, permit or agreement to which Buyer, the Operating
Partnership or any of their respective Subsidiaries is a party, or by which
Buyer, the Operating Partnership or any of their respective Subsidiaries or any
of their respective properties is bound, or (iv) violate any statute, rule,
regulation, order or decree of any public body or authority by which Buyer, the
Operating Partnership or any of their respective Subsidiaries or any of their
respective properties is bound, excluding from the foregoing clauses (iii) and
(iv) violations, breaches, defaults or rights which, either individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect or for which Buyer has received or, prior to the Closing Date, shall have
received appropriate consents or waivers.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any governmental entity is required in
connection with the execution and delivery of this Agreement by Buyer, or the
consummation by Buyer of the transactions contemplated hereby, except (i)
expiration of the waiting period under the HSR Act, if a filing under the HSR
Act is required, (ii) in connection, or in compliance, with the provisions of
the Exchange Act, (iii) the filing of articles of merger with the Department,
(iv) such filings and consents as may be required under any environmental law
pertaining to any notification, disclosure or required approval triggered by the
Merger or the transactions contemplated hereby, (v) filings with, and approval
of, the New York Stock Exchange, Inc. and the SEC with respect to the Merger,
(vi) such consents, approvals, orders, authorizations, notifications,
registrations, declarations and filings as may be required under the
corporation, takeover or blue sky laws of various states and (vii) such other
consents, approvals, orders, authorizations, notifications, registrations,
declarations and filings the failure of which to be obtained or made would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
Section 4.4 SEC Documents; Financial Statements. (a) Buyer has
made available to the Company copies of each registration statement, report,
proxy statement, information statement or schedule filed with the SEC by Buyer
since its initial public offering (the "Buyer SEC Documents"). As of their
respective dates, the Buyer SEC Documents complied in all material respects with
the applicable requirements of the Secu- rities Act and the Exchange Act, as the
case may be, and none of such SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
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therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) None of Buyer, any of its Subsidiaries or any of their
respective assets, businesses, or operations, is as of the date of this
Agreement a party to, or is bound or affected by, or receives benefits under any
contract or agreement or amendment thereto, that in each case would be required
to be filed as an exhibit to a Form 10-K as of the date of this Agreement that
has not been filed as an exhibit to a Buyer SEC Document filed prior to the date
of this Agreement.
(c) As of their respective dates, the consolidated financial
statements included in the Buyer SEC Documents complied as to form in all
material respects with then applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with GAAP applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto) and fairly
presented Buyer's consolidated financial position and that of its consolidated
subsidiaries as at the dates thereof and the consolidated results of their
operations and statements of cash flows for the periods then ended (subject, in
the case of unaudited statements, to the lack of footnotes thereto, to normal
year-end audit adjustments and to any other adjustments described therein).
Section 4.5 Information. None of the Proxy Statement or any
other document filed or to be filed by or on behalf of the Company with the SEC
or any other governmental entity in connection with the transactions
contemplated by this Agreement contained when filed or will, at the respective
times filed with the SEC or other governmental entity and, in addition, in the
case of the Proxy Statement, at the date it or any amendment or supplement
thereto is mailed to stockholders and at the time of the meeting of stockholders
of the Company to vote on the Merger, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading; provided that the
foregoing shall not apply to information supplied by the Company specifically
for inclusion or incorporation by reference in any such document. The Proxy
Statement will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations thereunder. None of the
information supplied by Buyer specifically for inclusion or incorporation by
reference in any document filed or to be filed by or on behalf of the Company
with the SEC or any other governmental entity in connection with the
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transactions contemplated by this Agreement contains any untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
Section 4.6 REIT. Immediately following the purchase
by CAC of the shares of Company Common Stock owned by AP CRT
Holdings, L.P. ("AP"), AEW Partners, L.P. ("AEW"), Thomas J.
Crocker ("Mr. Crocker"), Richard S. Ackerman ("Mr. Ackerman") and
Robert E. Onisko ("Mr. Onisko") pursuant to the Stock Purchase
Agreement of even date herewith, by and among AP, AEW, Messrs.
Crocker, Ackerman and Onisko and CAC (the "Stock Purchase
Agreement"), immediately following the execution of the Stock
Purchase Agreement and immediately following the Merger, the
Company will not meet the test of being "closely held" within the
meaning of ss. 856(a)(6) of the Code.
ARTICLE 5
Covenants of the Parties
Section 5.1 Taking of Necessary Action. (a) Each party hereto
agrees to use its commercially reasonable best efforts promptly to take or cause
to be taken all action and promptly to do or cause to be done all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated hereby, subject to
the terms and conditions hereof, including all actions and things necessary to
cause all conditions precedent set forth in Article 6 to be satisfied and
including Buyer's incorporation in Maryland of CAC as promptly as practicable
following the date hereof.
(b) As promptly as practicable after the date hereof, the
Company shall prepare and file with the SEC a preliminary proxy statement by
which the stockholders of the Company will be asked to approve the Merger
(together with all amendments and supplements thereto, the "Proxy Statement").
The Company shall use its commercially reasonable best efforts to respond to any
comments of the SEC, and to cause the Proxy Statement to be mailed to the
stockholders of the Company at the earliest practicable time. As promptly as
practicable after the date hereof, the Company and Buyer shall prepare and file
any other filings required of the Company or Buyer under the Exchange Act, the
Securities Act or any other federal, state or local laws relating to this
Agreement and the transactions contemplated hereby, including under the HSR Act,
if required, and state
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takeover laws (the "Other Filings"). The Company and Buyer will notify each
other promptly of the receipt of any comments from the SEC or its staff and of
any request by the SEC or its staff or any other government officials for
amendments or supplements to the Proxy Statement or any Other Filing or for
additional information and will supply each other with copies of all
correspondence between each of them or any of their respective representatives,
on the one hand, and the SEC, or its staff or any other government officials, on
the other hand, with respect to the Proxy Statement or any Other Filing. The
Proxy Statement and any Other Filing shall comply in all material respects with
all applicable requirements of law. Whenever any event occurs which is required
to be set forth in an amendment or supplement to the Proxy Statement or any
Other Filing, the Company or Buyer, as the case may be, shall promptly inform
the other party of such occurrence and cooperate in filing with the SEC or its
staff or any other government officials, and/or mailing to stockholders of the
Company and of Buyer, such amendment or supplement. The Proxy Statement shall
include the recommendation of the Board of Directors of the Company that the
stockholders of the Company vote in favor of and approve the Merger, unless
otherwise required by applicable fiduciary duties of the directors of the
Company, as determined by such directors in good faith after consultation with
independent legal counsel (which may include the Company's regularly engaged
legal counsel).
(c) If required in order to effect the Merger, the Company
shall call a meeting of its stockholders to be held as promptly as practicable
for the purpose of voting upon the Merger.
(d) If a meeting of stockholders of the Company is required in
order to effect the Merger, Buyer shall, and shall use its best efforts to cause
any of its subsidiaries and affiliates, to vote any shares of Company Common
Stock of which Buyer, or any of its subsidiaries or affiliates, hold voting
control in favor of approval and adoption of the Merger.
(e) The Company shall use its commercially reasonable best
efforts to obtain the consents set forth in Schedule 3.4.
(f) In furtherance and not in limitation of the foregoing,
Buyer shall use its best efforts to resolve such objections, if any, as may be
asserted with respect to the transactions contemplated by this Agreement under
any antitrust, competition or trade regulatory laws, rules or regulations of any
governmental entity.
Section 5.2 Public Announcements; Confidentiality.
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(a) Subject to each party's disclosure obligations imposed by law and any stock
exchange or similar rules and the confidentiality provisions contained in clause
(b) of this Section 5.2, the Company and Buyer will cooperate with each other in
the development and distribution of all news releases and other public
information disclosures with respect to this Agreement and any of the
transactions contemplated hereby.
(b) Each of the Company and Buyer agrees that all information
provided to it or any of its representatives pursuant to this Agreement shall be
kept confidential, and each of the Company and Buyer shall not (i) disclose such
information to any persons other than the directors, officers, employees,
financial advisors, legal advisors, accountants, consultants and affiliates of
the Company or Buyer, as applicable, who reasonably need to have access to the
confidential information and who are advised of the confidential nature of such
information or (ii) use such information in a manner which would be detrimental
to the Company; provided, however, the foregoing obligation of each of the
Company and Buyer shall not (A) relate to any information that (1) is or becomes
generally available other than as a result of unauthorized disclosure by the
Company or Buyer, as applicable, or by persons to whom the Company or Buyer, as
applicable, has made such information available, (2) is or becomes available to
the Company or Buyer, as applicable, on a non-confidential basis from a third
party that is not, to the knowledge of the Company or Buyer, as applicable,
bound by any other confidentiality agreement with the other party hereto, or (B)
prohibit disclosure of any information if required by law, rule, regulation,
court order or other legal or governmental process.
Section 5.3 Conduct of the Business of the Company. The
Company covenants and agrees that, between the date of this Agreement and the
Effective Time, except as contemplated by the Company's budget heretofore made
available to Buyer (the "Company Budget") and except for the matters set forth
in Schedule 5.3 or unless Buyer shall otherwise agree in writing, the businesses
of the Company and its Subsidiaries shall only be conducted in, and the Company
and its Subsidiaries shall not take any action except in the usual, regular and
ordinary course and in substantially the same manner as heretofore conducted,
and the Company shall, and shall cause its Subsidiaries to, use its best efforts
to comply with all material applicable laws, maintain their respective good
standing in the jurisdiction of their respective formation, maintain all
material Company Permits, comply with all state and federal securities laws and
timely file all required filings under the Exchange Act, preserve intact their
present business organizations, keep available the services of their
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respective current officers, employees and consultants and preserve their
respective current relationships with customers, suppliers, tenants and others
having business dealings with the Company and its Subsidiaries. By way of
amplification and without limiting the generality of the foregoing, except as
contemplated by this Agreement or by the Company Budget and except for the
matters set forth in Schedule 5.3, neither the Company nor any Subsidiary shall,
between the date of this Agreement and the Effective Time, directly or
indirectly, do, or propose to do, any of the following without the prior written
consent of Buyer:
(i) (x) declare, set aside, or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, other
than (1) the Company's regular quarterly dividend on the shares of
Company Common Stock in an amount not exceeding $.15 per share (or a
prorated portion of such amount in the case of any portion of a
quarterly period), (2) dividends and distributions by any direct or
indirect Subsidiary of the Company to its parent(s) and (3)
distribution by the Company to its stockholders of the assets described
in Schedule 5.3(i) (collectively, the "Excluded Assets"), (y) split,
combine or reclassify any of its capital stock or issue or, other than
pursuant to the exercise of options to purchase Company Common Stock,
authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, or (z) purchase,
redeem or otherwise acquire, directly or indirectly, other than
pursuant to the exercise of outstanding options to purchase Company
Common Stock, any shares of capital stock of the Company or any of its
Subsidiaries or any other equity securities thereof or any rights,
warrants, or options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge, dispose of, grant,
encumber, or authorize the issuance, sale, pledge, disposition, grant
or encumbrance of, (i) any shares of capital stock of any class of the
Company or any Subsidiary or any securities convertible into, or any
rights, warrants or options to acquire, any such shares of such capital
stock, or any other ownership interest (including, without limitation,
any phantom interest), of the Company or any Subsidiary (except for the
issuance of Company Common Stock pursuant to warrants or issuable
pursuant to employee stock options outstanding on the date hereof and
set forth on Schedule 3.2) or (ii) any assets of the Company or any
Subsidiary, except (in the case of clause (ii)) for the distribution of
the Excluded Assets and except for sales in
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the ordinary course of business and in a manner consistent with past
practice in an amount not to exceed $5,000 individually, or in any
related series of transactions;
(iii) amend its Articles of Incorporation, by-laws or
other comparable organizational documents;
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing the stock or assets of, or by any other manner,
any business or any corporation, partnership, joint venture,
association or other business organization or division thereof, or any
real property or buildings or any assets in excess of $5,000
individually or in any related series of transactions;
(v) subject to liens, mortgages, deeds of trust, deeds to
secure debt, security interests, pledges, claims, charges, easements
and other encumbrances of any nature whatsoever (collectively, "Liens")
or sell, lease or otherwise dispose of any of its properties or assets,
except in the ordinary course of business consistent with past practice
with respect to assets in an amount less than $5,000 individually or in
any related series of transactions and except for the distribution of
the Excluded Assets;
(vi) lease, in one transaction or a series of transactions,
any of its assets or properties, except for the leases made in the
ordinary course of business consistent with capital expenditures,
rental rates, expense stops and other terms consistent with the Company
Budget; provided, however, that no leases shall be for a period of
longer than five years or with respect to properties with greater than
5,000 rentable square feet;
(vii) (a) incur any indebtedness for borrowed money or issue
or sell any debt securities of the Company or any of its Subsidiaries,
or guarantee, assume or endorse, or otherwise as an accommodation
become responsible for, the obligations of any person, or make any
loans or advances, except, in any such case, for borrowings or other
transactions incurred in the ordinary course of business and consistent
with past practice in an amount less than $5,000 individually or in the
aggregate; (b) except in the ordinary course of business, make any
loans, advances or capital contributions to, or investments in, any
other person but in no event to exceed $5,000; (c) enter into any
contract or agreement other than in the ordinary course of business,
consistent with past practice but in no case greater than $5,000; or
(d) authorize any single capital expenditure
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which is in excess of $5,000 or capital expenditures which are, in the
aggregate, in excess of $5,000 for the Company and the Subsidiaries
taken as a whole;
(viii) increase the compensation payable or to become payable to
its officers or employees, or grant any severance or termination pay
to, or enter into any employment or severance agreement with any
director, officer or other employee of the Company or any Subsidiary,
or establish, adopt, enter into or amend any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee;
(ix) take any action, other than reasonable and usual actions
in the ordinary course of business and consistent with past practice,
with respect to accounting policies or procedures (including, without
limitation, procedures with respect to the payment of accounts payable
and collection of accounts receivable);
(x) make any tax election or settle or compromise any
material federal, state, local or foreign income tax
liability;
(xi) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business and consistent with past practice, of
liabilities reflected or reserved against in the balance sheet as of
March 31, 1996 or subsequently incurred in the ordinary course of
business and consistent with past practice and as permitted by this
Section 5.3;
(xii) enter into any transactions or agreements with any
directors, officers, employees, stockholders or affiliates of the
Company or any of its Subsidiaries, except for transactions or
agreements relating to or arising out of the Excluded Assets or as
disclosed on Schedule 5.3; or
(xiii) take any action or fail to take any action if such action
or failure to act would reasonably be expected to materially impair the
value of its material assets or properties; or
(xiv) authorize or enter into or amend any contract,
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agreement, commitment or arrangement with respect to any
action prohibited by this Section 5.3.
The Company may request consent from Buyer to take any action
otherwise prohibited by this Section 5.3, and such consent shall be deemed to be
granted if Buyer does not give notice to the Company of its refusal to grant
such consent within five business days of Buyer's receipt of such request for
consent. For purposes of this Section 5.3, expenditures by the Company will be
deemed to be as contemplated by the Company Budget if (i) the actual
expenditures within a given region in the aggregate do not exceed the aggregate
amount of expenditures budgeted for such region and (ii) the expenditures are
made no earlier than the month in which they are budgeted.
Section 5.4 No Solicitation of Transactions. Except as
otherwise consented to in writing by Buyer, neither the Company nor any of its
Subsidiaries shall, directly or indirectly, through any officer, director,
employee, agent, representative or otherwise, initiate, solicit or encourage
(including by way of furnishing information or assistance), or take any other
action to facilitate, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, (i) any acquisition in
any manner, directly or indirectly (including through any option, right to
acquire or other beneficial ownership) or more than 10% of any class of equity
securities of the Company, or assets representing a material portion of the
assets of the Company (other than any Excluded Asset), other than any of the
transactions contemplated by this Agreement, (ii) any merger, consolidation,
sale of assets (other than any Excluded Asset), share exchange,
recapitalization, other business combination, liquidation, or other action out
of the ordinary course of business of the Company, other than any of the
transactions contemplated by this Agreement, or (iii) any public announcement of
a proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing (any of the foregoing, a "Competing
Transaction"), or enter into or maintain or continue discussions or negotiate
with any person or entity in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to or endorse any Competing Transaction, or
authorize or permit any of the officers, directors or employees of the Company
or any of its Subsidiaries or any investment banker, financial advisor,
attorney, accountant or other representative retained by the Company or any of
the Company's Subsidiaries to take any such action. The Company shall
immediately notify Buyer of all the relevant details relating to all inquiries
and proposals which it or any of its Subsidiaries or any such officer, director,
employee, investment banker,
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financial advisor, attorney, accountant or other representative may receive
relating to any of such matters, and, if such inquiry or proposal is in writing,
the Company shall as promptly as practicable deliver to Buyer a copy of such
inquiry or proposal. Nothing contained in this Section 5.4 shall prohibit the
Company from complying with Rule 14e-2 promulgated under the Exchange Act with
regard to a Competing Transaction.
Section 5.5 Information and Access. (a) Subject to the
Confidentiality Agreement, dated as of April 8, 1996, by and between the Company
and Buyer (the "Confidentiality Agreement"), from the date hereof until the
Closing Date, (i) each party hereto and its respective Subsidiaries shall afford
to the other party and such other party's accountants, counsel and other
representatives full and reasonable access during normal business hours (and at
such other times as the parties may mutually agree) to its properties, books,
contracts, commitments, records and personnel and, during such period, shall
furnish promptly to such other party (1) a copy of each report, schedule and
other document filed or received by it pursuant to the requirements of the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder, and (2) all other information concerning their businesses, personnel
and the Company Properties or Buyer Properties, as applicable, as such other
party may reasonably request. Such other party and its accountants, counsel and
other representatives shall, in the exercise of the rights described in this
Section, not unduly interfere with the operation of the businesses of the party
providing the access and information.
(b) The Company will cooperate with Buyer to the extent
reasonably necessary to enable Buyer to make appropriate filings with the SEC
with respect to the Merger, including assistance in preparing pro forma
financial statements of Buyer reflecting the Merger.
5.6 Employee and Other Arrangements. (a) From and after the
Effective Time, Buyer will cause the Surviving Corporation to honor, in
accordance with their terms, all employment and consulting agreements and other
contracts to which the Company or any of its Subsidiaries are parties relating
to (i) the employment of or rendition of personal services by any individual
and/or (ii) the compensation and/or benefits payable in connection with such
employment or services.
(b) Buyer will cause the Surviving Corporation to take such
actions as are necessary so that, for a period of at least one year from and
after the Effective Time, persons who are employes of the Company and its
Subsidiaries as of the Effective
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Time (the "Company Employees") will be provided cash compensation, employee
benefits and incentive compensation and similar plans and programs as will
provide compensation and benefits which, in the aggregate and in all material
respects, are no less favorable than those provided to Company Employees as of
the date hereof; provided, however, that it is understood that after the
Effective Time Buyer will have no obligation to issue shares of capital stock of
any entity pursuant to any such plan or program. In addition, from and after the
Effective Time, Buyer shall, and shall cause the Surviving Corporation to, (i)
provide all Company Employees with service credit for all periods of employment
with the Company and its Subsidiaries prior to the Effective Time for purposes
of eligibility and vesting under any employee benefit plan program, policy or
arrangement of Buyer, the Surviving Corporation or any of their affiliates, (ii)
waive any pre-existing condition of any Company Employee and any dependent
thereof for purposes of determining eligibility for, and the terms upon which
they participate in, any employee benefit plan, program, policy or arrangement
of Buyer, the Surviving Corporation or any of their affiliates and (iii) provide
each Company Employee, upon the involuntary termination of such Employee's
employment with the Surviving Corporation and any of its Subsidiaries and
affiliates, within one year after the Effective Time, with a severance benefit
determined pursuant to Schedule 3.10.
(c) Buyer agrees that no constraints shall be imposed on any
stockholder or officer of the Company regarding the use or operation of the
Excluded Assets to compete with the Surviving Corporation.
5.7 Indemnification. (a) Buyer agrees that all rights to
indemnification existing in favor of any director, officer, employee or agent of
the Company and its Subsidiaries (the "Indemnified Parties") as provided in
their respective Articles of Incorporation, by-laws or comparable organizational
documents or in indemnification agreements with the Company or any of its
Subsidiaries, or otherwise in effect as of the date hereof, shall survive the
Merger and shall continue in full force and effect for a period of not less than
six years from the Effective Time; provided that, in the event any claim or
claims are asserted or made within such six-year period, all rights to
indemnification in respect of any such claim or claims shall continue until
final disposition of any and all such claims. Buyer also agrees to indemnify all
Indemnified Parties to the fullest extent permitted by applicable law with
respect to all acts and omissions arising out of such individuals' services as
officers, directors, employees or agents of the Company or any of its
Subsidiaries or as trustees or fiduciaries of any plan for the benefit of
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employees or directors of, or otherwise on behalf of, the Company or any of its
Subsidiaries, occurring prior to the Effective Time including, without
limitation, the transactions contemplated by this Agreement. Without limiting
the generality of the foregoing, in the event any such Indemnified Party is or
becomes involved in any capacity in any action, proceeding or investigation in
connection with any matter, including, without limitation, the transactions
contemplated by this Agreement, occurring prior to or at the Effective Time,
Buyer will pay as incurred such Indemnified Party's legal and other expenses
(including the cost of any investigation and preparation) incurred in connection
therewith. From and after the Effective Time, Buyer will pay all expenses,
including attorneys' fees, that may be incurred by any Indemnified Party in
enforcing the indemnity and other obligations provided for in this Section 5.8.
(b) Buyer agrees that it shall (i) cooperate with the Company
to obtain prior to the Effective Time directors' and officers' insurance
coverage for a six-year period following the Effective Time for current and
former directors and officers of the Company covering any actions taken on or
prior to the Effective Time, such coverage to be at least as comprehensive as
the Company's current directors' and officers' liability insurance coverage or
(ii) from and after the Effective Time, cause the Surviving Corporation to cause
to be maintained in effect for not less than six years from the Effective Time
the current policies of the directors' and officers' liability insurance
maintained by the Company; provided, that the Surviving Corporation may
substitute therefor policies of at least the same coverage containing terms and
conditions which are no less advantageous and provided that such substitution
shall not result in any gaps or lapses in coverage with respect to matters
occurring prior to the Effective Time; provided, further, that the Surviving
Corporation shall not be required to pay an annual premium in excess of 200% of
the last annual premium paid by the Company prior to the date hereof and if the
Surviving Corporation is unable to obtain the insurance required by this Section
5.7 it shall obtain as much comparable insurance as possible for an annual
premium equal to such maximum amount.
Section 5.8 Notification of Certain Matters. Each of Buyer and
the Company shall use its good faith efforts to notify the other party in
writing of its discovery of any matter that would render any of such party's or
the other party's representations and warranties contained herein untrue or
incorrect in any material respect, but the failure of either party to so notify
the other party shall not be deemed a breach of this Agreement.
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Section 5.9 Separation of Excluded Assets. Both prior to and
after the Effective Time, (i) Buyer shall cooperate in effecting the transfer of
ownership of the Excluded Assets in accordance with arrangements entered into by
the Company prior to the Effective Time and (ii) the Company shall notify Buyer
of any such arrangements. The Company shall cause Newco (as hereinafter defined)
to agree to reimburse Buyer at the Effective Time for expenses or costs,
including any local, state or federal income or transfer tax liability, incurred
by the Company in effecting the transfer of ownership of the Excluded Assets.
Section 5.10 Newco Obligations. (a) At the Effective Time, an
entity that will obtain direct or indirect ownership of some or all of the
Excluded Assets ("Newco") shall enter into a master lease agreement with Buyer
covering all of the Company- owned properties, which master lease agreement
shall obligate Newco to pay to Buyer $1,200,000 at the Effective Time and
$600,000 on January 1, 1997, as additional rent on the Company- owned properties
and as compensation to Buyer for rent shortfalls and vacancies at such
properties.
(b) At or before the Effective Time, the Company shall have
caused Newco to elect to either (i) assume the liability of the Company to
indemnify Thomas J. Crocker and Crocker and Company in the case styled Patrick
Jolivet v. Thomas J. Crocker and Crocker and Company, Case No. 94-8669 or (ii)
pay the costs of insurance to cover such indemnification.
(c) At or before the Effective Time, the Company shall cause
Newco to enter into an agreement with the Company, which agreement shall remain
in effect after the Effective Time, providing that (i) Newco shall reimburse the
Company for the excess, if any, of the Designated Transaction Expenses (as
hereinafter defined) over $9,150,000 and (ii) the Company shall pay to Newco 50%
of the excess, if any, of $8,600,000 over the Designated Transaction Expenses
The amount of the Designated Transaction Expenses shall be determined on the
20th business day following the Effective Time, and any amount required to be
paid pursuant to this paragraph shall be paid within five business days
thereafter. Buyer and the Company will jointly prepare a good faith estimate of
the Designated Transaction Expenses two business days prior to the Effective
Time. "Designated Transaction Expenses" shall mean expenses incurred by the
Company in connection with its pending proposed public offering or in connection
with this Agreement and the Merger only in the following categories: (i) fees
and expenses of legal counsel; (ii) fees and expenses of accountants; (iii) fees
and expenses of investment bankers and appraisers; (iv) printing expenses; (v)
severance payments to employees (including officers) generally as
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set forth on Schedule 3.10 or pursuant to the Severance Agreements (as defined
in the Stock Purchase Agreement); (vi) payments to the Company's three senior
executives pursuant to Section 2.6 of this Agreement; and (vii) amounts due, if
any, to any solicitation agent in connection with the exercise of the Company's
outstanding warrants.
ARTICLE 6
Conditions to Closings
Section 6.1 Conditions to Each Party's Obligation to Effect
the Merger. Subject to the provisions of Section 6.4, the respective obligations
of each party to effect the Merger shall be subject to the fulfillment at or
prior to the Effective Time of the following conditions:
(a) if required, the Merger shall have been approved
and adopted by the requisite vote of the holders of the
Company Common Stock;
(b) any waiting period applicable to the consummation of the
Merger under the HSR Act, if applicable, shall have expired or been
terminated or the Company and Buyer shall have mutually concluded that
no filing under the HSR Act is required with respect to the
transactions contemplated hereby; and
(c) the consummation of the Merger shall not be restrained,
enjoined or prohibited by any order, judgment, decree, injunction or
ruling of a court of competent jurisdiction.
Section 6.2 Conditions to Obligation of the Company to Effect
the Merger. Subject to the provisions of Section 6.4, the obligation of the
Company to effect the Merger shall be subject to the fulfillment at or prior to
the Effective Time of the additional following conditions, unless waived by the
Company:
(a) that the representations and warranties of Buyer contained
in the first two sentences of Section 4.1 (with respect to Buyer only)
and in Section 4.2 shall be true when made and at and as of the
Effective Time as if made at and as of such time, and that Buyer shall
have performed in all material respects its agreements contained in
this Agreement required to be performed at or prior to the Effective
Time; and the Company shall have received a certificate of the Chief
Executive Officer or the Chief Financial Officer of
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Buyer to that effect.
Section 6.3 Conditions to Obligations of Buyer to Effect the
Merger. Subject to the provisions of Section 6.4 the obligations of Buyer to
effect the Merger shall be subject to the fulfillment at or prior to the
Effective Time of the additional following conditions, unless waived by Buyer:
(a) that the representations and warranties of the Company
contained in the first two sentences of Section 3.1 (with respect to
the Company only) and in Section 3.3 shall be true when made and at and
as of the Effective Time as if made at and as of such time, and that
the Company shall have performed in all material respects its
agreements contained in this Agreement required to be performed at or
prior to the Effective Time; and Buyer shall have received a
certificate of the Chief Executive Officer or the Chief Financial
Officer of the Company to that effect;
(b) the consents set forth in Schedule 6.3 shall have been
received, or the Company shall have refinanced the indebtedness
described in Schedule 6.3 with new indebtedness which is in all
respects at least as favorable to the Company as the indebtedness
described in Schedule 6.3 (but under the terms of which no lender
consent is required (or any required consent has been obtained) to
effect the transactions contemplated by this Agreement); and
(c) the Company shall meet the requirements for qualification
as a REIT under Sections 856-860 of the Code; provided, that if the
Company does not meet such requirements for qualification as a result
of any action or omission of (or any action or omission taken at the
direction of) Buyer or due to the inaccuracy of the representation
contained in Section 4.6, the condition set forth in this Section
6.3(c) shall be deemed to be satisfied.
Section 6.4 Conditions to Obligations of the Company and Buyer
to Effect the Merger Following Buyer's Ownership of Shares. If Buyer becomes the
beneficial owner of a majority of the outstanding shares of Company Common Stock
prior to the Effective Time, the respective obligations of each party to effect
the Merger shall be subject only to the fulfillment at or prior to the Effective
Time of the following conditions:
(a) if required, the Merger shall have been approved
and adopted by the requisite vote of the holders of the
Company Common Stock; and
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(b) the consummation of the Merger shall not be restrained,
enjoined or prohibited by any order, judgment, decree, injunction or
ruling of a court of competent jurisdiction.
Section 6.5 Representations and Warranties. Except as set
forth in Sections 6.2 and 6.3, that the representations and warranties contained
in Article 3 hereof were true and correct when and as made shall not be a
condition to the obligation of either the Company or Buyer to effect the Merger.
ARTICLE 7
Termination, Amendment and Waiver
Section 7.1 Termination. This Agreement may be terminated at
any time prior to the earlier of (i) such time as Buyer becomes the owner,
directly or indirectly, of a majority of the Company Common Stock and (ii) the
Effective Time, whether before or after approval by the stockholders of the
Company of the Merger:
(a) by mutual written consent of Buyer and the Com-
pany;
(b) by Buyer, upon a breach of any covenant or agreement on
the part of the Company set forth in this Agreement, such that the
condition set forth in Section 6.3(a) would not be satisfied (a
"Terminating Company Breach"), provided that, if such Terminating
Company Breach is curable by the Company through the exercise of its
reasonable best efforts and for so long as the Company continues to
exercise such reasonable best efforts, Buyer may not terminate this
Agreement under this Section 7.1(b);
(c) by the Company, upon breach of any covenant or agreement
on the part of Buyer set forth in this Agreement such that the
condition set forth in Section 6.2(a) would not be satisfied
("Terminating Buyer Breach"), provided that, if such Terminating Buyer
Breach is curable by Buyer through the exercise of its reasonable best
efforts and for so long as Buyer continues to exercise such reasonable
best efforts, the Company may not terminate this Agreement under this
Section 7.1(c);
(d) by Buyer if the Company does not meet the require- ments
for qualification as a REIT under Sections 856-860 of the Code;
provided that if the Company does not meet such
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<PAGE>
requirements for qualification as a result of any action or omission of
(or any action or omission taken at the direction of) Buyer or due to
the inaccuracy of the representation contained in Section 4.6, Buyer
shall not have the right to terminate this Agreement pursuant to this
Section 7.1(d).
(e) by Buyer or the Company if any court of competent
jurisdiction shall have issued, enacted, entered, promulgated or
enforced any order, judgment, decree, injunction or ruling which
restrains, enjoins or otherwise prohibits the Merger and such order,
judgment, decree, injunction or ruling shall have become final and
nonappealable; provided, however, that the party seeking to terminate
this Agreement pursuant to this Section 7.1(e) shall have used
commercially reasonable best efforts to remove such injunction or
overturn such action; or
(f) by either Buyer or the Company if the meeting of the
stockholders of the Company to approve the Merger (including as such
meeting may be adjourned from time to time), if required, shall have
concluded without the Company having obtained the required stockholder
approval.
Section 7.2 Procedure and Effect of Termination. In the event
of termination of this Agreement by either or both of the Company and Buyer
pursuant to Section 7.1, written notice thereof shall forthwith be given by the
terminating party to the other party hereto, and this Agreement shall thereupon
terminate and become void and have no effect, and the transactions contemplated
hereby shall be abandoned without further action by the parties hereto, except
that the provisions of Sections 5.2 (Public Announcements; Confidentiality), 7.3
(Expenses), 8.2 (Governing Law), and 8.4 (Notices) shall survive the termination
of this Agreement; provided, however, that such termination shall not relieve
any party hereto of any liability for any breach of this Agreement.
Section 7.3 Expenses. Except as set forth in this Agreement,
whether or not the Merger is consummated, all legal and other costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such costs and expenses.
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ARTICLE 8
Miscellaneous
Section 8.1 Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have been
signed by each party hereto and delivered to the other party. Copies of executed
counterparts transmitted by telecopy, telefax or other electronic transmission
service shall be considered original executed counterparts for purposes of this
Section, provided receipt of copies of such counterparts is confirmed.
Section 8.2 Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF MARYLAND WITHOUT REFERENCE TO THE CHOICE OF LAW PRIN-
CIPLES THEREOF.
Section 8.3 Entire Agreement. This Agreement (including
agreements incorporated herein) and the Schedules, Annexes and Exhibits hereto,
the Stock Purchase Agreement and the exhibits thereto, the Severance Agreements
and the Confidentiality Agreement contain the entire agreement between the
parties with respect to the subject matter hereof and there are no agreements,
understandings, representations or warranties between the parties other than
those set forth or referred to herein. Except as set forth in Section 8.13, this
Agreement is not intended to confer upon any person not a party hereto (and
their successors and assigns) any rights or remedies hereunder.
Section 8.4 Notices. All notices and other communications
hereunder shall be sufficiently given for all purposes hereunder if in writing
and delivered personally, sent by documented overnight delivery service or, to
the extent receipt is confirmed, telecopy, telefax or other electronic
transmission service to the appropriate address or number as set forth below.
Notices to the Company shall be addressed to:
Crocker Realty Trust, Inc.
433 Plaza Real, Suite 335
Boca Raton, Florida 33432
Attention: Thomas J. Crocker, Chairman and Chief
Executive Officer
Telecopy Number: (407) 447-1820
with a copy to:
Wachtell, Lipton, Rosen & Katz
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<PAGE>
51 West 52nd Street
New York, New York 10019
Attention: Elliott V. Stein, Esq.
Telecopy Number: (212) 403-2000
or at such other address and to the attention of such other person as the
Company may designate by written notice to Buyer.
Notices to Buyer shall be addressed to:
Highwoods Properties, Inc.
3100 Smoketree Court, Suite 700
Raleigh, North Carolina 27604-5001
Attention: Carmen Liuzzo, Chief Financial Officer
Telecopy Number: (919) 876-2448
with a copy to:
Smith, Helms, Mullis and Moore L.L.P.
316 West Edentown Street
Raleigh, North Carolina
Attention: Brad Markoff, Esq.
Telecopy Number: (919) 755-8731
Section 8.5 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors; provided, however, that this Agreement may not be assigned or
transferred by either of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other party.
Section 8.6 Headings. The Section, Article and other headings
contained in this Agreement are inserted for convenience of reference only and
will not affect the meaning or interpretation of this Agreement. All references
to Sections or Articles contained herein mean Sections or Articles of this
Agreement unless otherwise stated.
Section 8.7 Amendments and Waivers. This Agreement may not be
modified or amended except by an instrument or instruments in writing signed by
the party against whom enforcement of any such modification or amendment is
sought. Either party hereto may, only by an instrument in writing, waive
compliance by the other party hereto with any term or provision hereof on the
part of such other party hereto to be performed or complied with. The waiver by
any party hereto of a breach of any term or provision hereof shall not be
construed as a waiver of any subsequent breach. In the event that, prior to the
Effective Time, Buyer becomes the owner of a majority of the outstanding shares
of Company Common Stock, any amendment to this Agreement
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affecting the Merger Consideration, the timing of the Merger, or Buyer's
obligation to complete the Merger shall require that (i) a majority of the
directors of the Company are Continuing Directors and (ii) such amendment is
approved by a majority of the Continuing Directors then serving. "Continuing
Directors" shall mean individuals who, as of the date hereof, constitute the
Board of Directors of the Company; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or nomination
for election by the Company's stockholders, was approved by a vote of at least a
majority of the Continuing Directors shall be considered as though such
individual were a Continuing Director.
Section 8.8 Certain Definitions; Interpretation; Absence of
Presumption. (a) For the purposes hereof, (i) "Material Adverse Effect" shall
mean with respect to either party hereto, a material adverse effect on the
financial condition, results of operations or business of such party and its
Subsidiaries (to the extent of such party's interest therein) taken as a whole,
or, if applicable, on the ability of such party to consummate the Merger and the
other transactions contemplated hereby, (ii) "person" shall mean any individual,
corporation, partnership, limited liability company, joint venture, trust,
unincorporated organization or other form of business or legal entity or
governmental entity and (iii) "Subsidiaries" shall mean with respect to any
person, any corporation, partnership, joint venture, business trust or other
entity, of which such person, directly or indirectly, owns or controls at least
50% of the securities or other interests entitled to vote in the election of
directors or others performing similar functions with respect to such
corporation or other organization, or to otherwise control such corporation,
partnership, joint venture, business trust or other entity. Without limiting the
generality of the foregoing, Material Adverse Effect with respect to the Company
shall include the Company not meeting the requirements for qualification as a
REIT under Sections 856-860 of the Code, except to the extent that the Company
does not meet such requirements for qualifiaction as a result of any action or
omission of (or any action or omission taken at the direction of) Buyer or due
to the inaccuracy of the representation contained in Section 4.6. Without
limiting the generality of the foregoing, (a) the Company's Subsidiaries shall
include CRT Leasing, Inc. and (b) Buyer's Subsidiaries shall (i) include
Highwoods Services, Inc. and Forsyth Properties Services, Inc., and (ii) the
Operating Partnership and any entity that is a Subsidiary of the Operating
Partnership. For purposes hereof, (i) words in the singular shall be held to
include the plural and VICE VERSA and words of one gender shall be held to
include the other gender as the context requires, (ii) the terms "hereof",
"herein", and
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"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole (including all of the Schedules,
Annexes and Exhibits hereto) and not to any particular provision of this
Agreement, and Article, Section, paragraph, Exhibit, Annex and Schedule
references are to the Articles, Sections, paragraphs, Exhibits, Annexes and
Schedules to this Agreement unless otherwise specified, (iii) the word
"including" and words of similar import when used in this Agreement shall mean
"including, without limitation," unless the context otherwise requires or unless
otherwise specified, (iv) the word "or" shall not be exclusive, and (v)
provisions shall apply, when appropriate, to successive events and transactions.
(b) This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted.
Section 8.9 Severability. Any provision hereof which is
invalid or unenforceable shall be ineffective to the extent of such invalidity
or unenforceability, without affecting in any way the remaining provisions
hereof.
Section 8.10 Confidentiality Agreement. The Confi-
dentiality Agreement shall remain in full force and effect.
Section 8.11 Further Assurances. The Company and Buyer agree
that, from time to time, whether before, at or after any Closing Date, each of
them will execute and deliver such further instruments of conveyance and
transfer and take such other action as may be necessary to carry out the
purposes and intents hereof.
Section 8.12 Specific Performance. Buyer and the Company each
acknowledge that, in view of the uniqueness of the parties hereto, the parties
hereto would not have an adequate remedy at law for money damages in the event
that this Agreement were not performed in accordance with its terms, and
therefore agree that the parties hereto shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which the
parties hereto may be entitled at law or in equity.
Section 8.13 Third Party Beneficiaries. Nothing in this
Agreement, except for (i) the provisions of Sections 2.1, 2.2 and 5.7 to the
extent they apply to directors and officers of the Company and (ii) the
provisions of Sections 5.9 and 5.10 to the extent they apply to Newco, is
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder; provided, however, that if Buyer becomes the bene-
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ficial owner of a majority of the outstanding shares of Company Common Stock and
the Effective Time shall not have occurred within 90 days thereafter, each
beneficial owner of Company Common Stock shall be deemed to be a third-party
beneficiary of this Agreement and may enforce all rights with respect thereto.
Section 8.14 Survival. Any covenants or agreements of the
parties hereto (including the Surviving Corporation) which contemplate actions
to occur following the Effective Time shall survive the Effective Time.
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IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the parties hereto as of the day first above written.
CROCKER REALTY TRUST, INC.
By:
Name:
Title:
HIGHWOODS PROPERTIES, INC.
By:
Name:
Title:
CEDAR ACQUISITION CORPORATION
By:
Name:
Title:
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EXHIBIT C
May 9, 1996
Highwoods/Forsyth Limited Partnership
3100 Smoketree Court, Suite 600
Raleigh, North Carolina 27604
Attn: Mr. Carman Liuzzo
Chief Financial Officer
Re: Highwoods REIT -- $250,000,000 Line of Credit
----------------- ---------------------------
$100,000,000 Bridge Loan
------------------------
Gentlemen:
This letter constitutes the amended and restated commitment of NationsBank, N.A.
(the "Bank") to make a credit facility available to the entity described below
as the borrower. This letter amends and restates the Bank's commitment to the
Borrower dated as of April 26, 1996. The terms and conditions of this Commitment
are as follows:
1. BORROWER: Highwoods/Forsyth Limited Partnership, a North Carolina
limited partnership (the "Borrower") whose general partner is Highwoods
Properties, Inc., a Maryland corporation (the "Company" or the "Guarantor"). The
Company must remain the sole general partner in the Borrower. Any changes in the
limited partnership agreement defining the relationship between the Company and
the Borrower shall be subject to the prior written approval of the Bank.
2. PRINCIPAL AMOUNT OF LOANS:
2.1 The Bank will provide a revolving credit facility (the
"Revolving Loan") of up to $250,000,000 (the "Committed Amount"). The Revolving
Loan shall be evidenced by a promissory note in the original principal amount of
the Committed Amount (the "Revolving Note").
2.2 In addition, the Bank will provide, at the Borrower's
election, a bridge loan (the "Bridge Loan") to the Borrower of up to
$100,000,000. The Bridge Loan shall be evidenced by a promissory note in the
original principal amount of $100,000,000 (the "Bridge Note") (the Revolving
Loan and the Bridge Loan are sometimes hereinafter referred to collectively as
the "Loans" and the Revolving Note and the Bridge Note are sometimes hereinafter
collectively referred to as the "Notes").
<PAGE>
Highwoods/Forsyth Limited Partnership
May 9, 1996
Page 2
3. USE OF LOAN PROCEEDS:
3.1 The proceeds of the Revolving Loan shall be used (i) to
repay the amount outstanding under that certain promissory note dated as of
March 26, 1996, in the original principal amount of $140,000,000 owed to the
Bank, First Union National Bank of North Carolina, and Wachovia Bank of North
Carolina, N.A.; (ii) to finance the acquisition of Crocker Realty Trust, Inc.;
and (iii) to provide working capital for the Borrower.
(a) $25,000,000 Sublimit: No more than $25,000,000 of
the Revolving Loan shall be used as working capital for speculative land
acquisition, dividend payments, and Capital Expenditures incurred in the
refurbishment and reletting of space previously leased by the Borrower. (For
purposes of this Section 3.1(a), "speculative" means land acquired for purposes
other than development within twelve months of the date of acquisition.)
3.2 The proceeds of the Bridge Loan shall be used to finance
the acquisition of Crocker Realty Trust, Inc.
3.3 Notwithstanding anything herein to the contrary, the
Bank's obligation to fund the Loans is expressly conditioned upon the closing of
the acquisition of the assets of Crocker Realty Trust, Inc.
4. REVOLVING LOAN PHASES: Nine months after the Closing Date (the
"Initial Revolving Loan Phase"), and provided there exists no uncured event of
default, the Revolving Loan shall convert either to a secured credit facility
(the "Secured Revolving Loan Phase") or to an unsecured credit facility (the
"Unsecured Revolving Loan Phase"). Determination of which phase shall be used
after the Initial Revolving Loan Phase shall be based upon a review of the
Borrower's financial status at the conclusion of the Initial Revolving Loan
Phase by the Bank. In the event the Borrower is able to comply with each of the
financial covenants required for the Unsecured Revolving Loan Phase provided in
Section 22 and has received not less than $300,000,000 in net proceeds from one
or more offerings of shares of the Company's capital stock subsequent to the
date hereof, the Revolving Loan shall convert to the Unsecured Revolving Loan
Phase. In the event the Borrower is unable to comply with such financial
covenants for the Unsecured Revolving Loan Phase, but does satisfy each of the
requirements for the Secured Revolving Loan Phase provided in Section 21, and
has received not less than $120,000,000 in net proceeds from one or more
offerings of shares of the Company's capital stock subsequent to the date
hereof, the Borrower shall immediately grant a first priority lien on a
sufficient number of its properties to satisfy such requirements, and shall
satisfy each of the other requirements of Section 17 as soon as practicable, and
the Revolving Loan shall convert to the Secured Revolving Loan Phase. The
Borrower's failure to satisfy the requirements for either of the Unsecured
Revolving Loan Phase or the Secured Revolving Loan Phase shall constitute an
event of default under the Revolving Loan. The Borrower may, at its election,
convert the
<PAGE>
Highwoods/Forsyth Limited Partnership
May 9, 1996
Page 3
Revolving Loan prior to the termination of the Initial Revolving Loan Phase
provided all conditions for such conversion are satisfied and the Bridge Loan
has been repaid.
5. MATURITY DATES:
5.1 Revolving Loan. In the event the Revolving Loan converts
to the Unsecured Revolving Loan Phase, the maturity date for the Revolving Loan
shall be July 31, 1999. In the event the Revolving Loan converts to the Secured
Revolving Loan Phase after the Initial Revolving Loan Phase, the maturity date
shall be the date two years after the Closing Date.
5.2 Bridge Loan. The maturity date for the Bridge Loan shall
be six months from the Closing Date.
6. INTEREST RATE:
6.1 Revolving Loan.
(a) The interest rate during the Initial Revolving
Loan Phase shall be a variable rate equal to the Adjusted 30-day LIBOR Rate, as
defined on Exhibit A attached hereto ("LIBOR"), plus 150 basis points ("bps").
(b) In the event the Revolving Loan converts to the
Secured Revolving Loan Phase, the interest rate during the Secured Revolving
Loan Phase shall be the Adjusted 30-day LIBOR Rate plus 175 bps.
(c) In the event the Revolving Loan converts to the
Unsecured Revolving Loan Phase, the interest rate during the Unsecured Revolving
Loan Phase shall be based upon the rating of the Company's unsecured debt in
accordance with the following chart:
==============================================================================
Rating Rate
- - - ------------------------------------------------------------------------------
no rating or rating less than LIBOR plus 175 bps
investment grade
- - - ------------------------------------------------------------------------------
Baa3/BBB- or equivalent LIBOR plus 150 bps
- - - ------------------------------------------------------------------------------
Baa2/BBB or equivalent LIBOR plus 135 bps
- - - ------------------------------------------------------------------------------
Baa1/BBB+ or equivalent LIBOR plus 120 bps
- - - ------------------------------------------------------------------------------
A 3/A- or better or equivalent LIBOR plus 100 bps
==============================================================================
<PAGE>
Highwoods/Forsyth Limited Partnership
May 9, 1996
Page 4
Provided, however, in the event a rating of the Borrower's unsecured debt has
not been obtained as of the date of the Revolving Loan converts to the Unsecured
Revolving Loan Phase, the interest rate shall be LIBOR plus 150 bps for a period
of 120 days after such conversion. Thereafter, determination of the applicable
interest rate shall be based on the average rating obtained using all ratings
obtained (two of which must be Standard & Poors and Moody's). In the event the
average of the ratings is between two of the ratings cited in the chart set
forth above, the average shall be deemed to be the lower of the two ratings. The
determination of equivalent ratings by agencies other than Standard & Poors and
Moody's shall be made by the Bank. The ratings assigned by Standard & Poors and
Moody's shall be weighted three times as heavily as the ratings from other
agencies in the determination of the average rating.
6.2 Bridge Loan. The interest rate for the Bridge Loan shall be LIBOR
plus 150 bps.
6.3 Adjustment to Definition of LIBOR. The definition of LIBOR as used
herein shall be subject to adjustment in accordance with the terms of Section 26
hereof.
7. INTEREST RATE PROTECTION:
7.1 The Borrower shall obtain at its expense interest rate
protection such that not less than $80,000,000 of the Revolving Loan shall be
subject to a cap or a swap fixing or capping LIBOR at not more than six and
one-half percent (6.5%).
7.2 The Borrower shall also be required to obtain interest
rate caps with respect to all floating rate debt of the Borrower with a term of
more than twelve months (other than the Revolving Loan) unless otherwise
approved by the Bank. While not a requirement of this Commitment, the Borrower
agrees to give the Bank the opportunity to bid for interest rate protection
services.
8. INTEREST PAYMENTS: Payments of interest only shall be due on the
15th day of each month (for the preceding calendar month).
9. LOAN COMMITMENT FEE: In consideration of the issuance of this
Commitment and the reserving of sufficient funds by the Bank from which to make
the Bridge Loan and Revolving Loan disbursements, the Bank has earned a
non-refundable loan commitment fee in the amount of $1,227,500, receipt of which
is hereby acknowledged. An additional fee equal to three-eighths of one percent
of the sum of the amount of the Bridge Loan actually funded plus the Committed
Amount, shall be payable on the Closing Date.
10. UNUSED FACILITY FEE: In consideration of the reserving of
sufficient funds by the Bank from which to make Revolving Loan disbursements,
the Borrower shall pay to the Bank an unused facility fee to be determined as
follows:
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Highwoods/Forsyth Limited Partnership
May 9, 1996
Page 5
10.1 No unused facility fee shall be due during the Initial
Revolving Loan Phase.
10.2 In the event the Revolving Loan converts to the Secured
Revolving Loan Phase, an unused facility fee of 0.25% per annum shall be due and
payable on a quarterly basis, with the first such payment being computed as of
the date three months from the end of the Initial Revolving Loan Phase.
10.3 In the event the Revolving Loan converts to the Unsecured
Revolving Loan Phase, an unused facility fee shall be due and payable as
follows: (i) 0.15% per annum of the average daily unused Committed Amount
calculated for a three-month period if the unused capacity is equal to or less
than thirty-three percent (33%) of the Committed Amount; (ii) 0.20% per annum of
the average daily unused Committed Amount calculated for the preceding
three-month period if the unused capacity is greater than thirty-three percent
(33%) but less than or equal to sixty-six percent (66%) of the Committed Amount;
and (iii) 0.25% per annum of the average daily unused Committed Amount
calculated for the preceding three-month period if the unused capacity is
greater than sixty-six percent (66%) of the Committed Amount. (All percentages
of the unused Committed Amount shall be rounded to the nearest one percent.) The
first such payment shall be computed as of the date twelve months from the
Closing Date.
11. COMMITMENT EXPIRATION: This Commitment expires, at the Bank's
option, on May 10, 1996, and the closing of the Loans must occur on or before
August 15, 1996.
12. GUARANTOR: Highwoods Properties, Inc.
13. GUARANTY: The Guarantor shall provide a direct and unconditional
guaranty of payment of all outstanding amounts under the Loans.
14. THE BANK'S COUNSEL: The Bank's legal counsel is the law firm of
Moore & Van Allen, PLLC, One Hannover Square, Suite 1700, Raleigh, North
Carolina 27602; (919) 828-4481. The cost of the Bank's legal counsel shall be
charged to, and be paid by, the Borrower.
15. QUALITY OF DOCUMENTS AND ITEMS: Each document and item required to
be submitted to the Bank pursuant to this Commitment shall be in form and
substance reasonably satisfactory to the Bank and its counsel.
16. LOAN DOCUMENTS AND ITEMS REQUIRED FOR INITIAL LOAN PHASE
DISBURSEMENT: Prior to any disbursement under the Loans, the Borrower shall
submit to the Bank those documents and items typically required by the Bank,
including, but not limited to, the following:
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Highwoods/Forsyth Limited Partnership
May 9, 1996
Page 6
16.1 loan agreement, including the covenants set forth
herein;
16.2 the Notes, which provide for a default interest rate
equal to stated rate plus four percent (4%), and a late charge of four percent
(4%) of the amount of any late payment;
16.3 guaranty agreement;
16.4 borrower's affidavit executed by a principal of the
Borrower as to various matters requested by the Bank;
16.5 borrowing authority and capacity instruments of each of
the Borrower and the Guarantor;
16.6 attorney's opinion;
16.7 certified financial statements of the Borrower and the
Guarantor;
16.8 certified copy of the Borrower's limited partnership
agreement (and any amendments thereto), together with any agreements by and
between the Company and the Borrower;
17. ITEMS REQUIRED FOR SECURED REVOLVING LOAN PHASE: In the event the
Revolving Loan converts to the Secured Revolving Loan Phase, the Bank shall
require, in addition to the items provided in Section 16, items typically
required by the Bank in connection with loans secured by real estate, including,
but not limited to the following: (i) a first priority deed of trust and
security agreement (the "Deed of Trust"); (ii) an assignment of rents and
leases; (iii) title insurance coverage insuring the Bank's first lien, subject
only to such matters as are reasonably acceptable to the Bank; (iv) evidence of
adequate extended coverage casualty and liability insurance; (iv) MAI
appraisals; (v) as-built surveys, (vi) tenant estoppel certificates and
subordination, nondisturbance and attornment agreements with respect to tenants;
(vii) UCC fixture filings; and (viii) financial information with respect to
tenants and operating statements for each property subject to the Deed of Trust.
18. DIVIDENDS:
18.1 Except to the extent necessary to comply with regulations
governing real estate investment trust ("REIT"), the Company shall not declare
or pay any dividends or distributions, or purchase, redeem or retire any shares
of its capital stock that would create or cause an event of default;
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Highwoods/Forsyth Limited Partnership
May 9, 1996
Page 7
18.2 Except to the extent necessary to comply with REIT rules
requiring payment of not less than ninety-five percent (95%) of earnings as
dividends, the Company will limit declaration and payment of dividends to one
hundred percent (100%) of Cash Available for Distribution. For purposes hereof,
"Cash Available for Distribution means all Funds from Operations (as defined by
the Board of Governors of the National Association of Real Estate Investment
Trusts) less Capital Expenditures and principal payments on debt, (other than
principal payments arising from the refinancing of existing debt). Any changes
in the definition of Funds From Operation shall require the Bank' approval
before being utilized in connection with the Revolving Loan.
19. LOAN COVENANTS: During the entire term of any of the Loans, the
Borrower and/or the Company, as indicated, shall adhere to the following
covenants:
19.1 The Company shall maintain its status as a REIT, as
defined in Sections 856-860 of the Internal Revenue Code and shall be in
compliance with all applicable laws during the term of the Loans.
19.2 The Company will retain its general partnership interest
in the Borrower, and shall not incur any direct liabilities except as provided
in the Guaranty.
19.3 All net proceeds from any public offering of securities
issued by the Company shall be applied (i) first to the repayment of the Bridge
Loan, and (ii) second, to the repayment or reduction of the Revolving Loan .
19.4 Each of O. Temple Sloan, Ronald P. Gibson, and Carman
Liuzzo shall remain in their current management roles with respect to the
Borrower. In the event that either of the above-referenced individuals ceases to
be actively involved as a result of death, disability or any other reason, the
Borrower shall have a period of six (6) months in which to provide substitute
personnel reasonably satisfactory to the Bank.
19.5 Each of the Company and the Borrower shall maintain its
principal offices in Raleigh, North Carolina.
19.6 The Company will not merge or consolidate unless
thereafter: (a) the Company is the surviving entity under any such transaction;
and (b) no default exists under the Revolving Loan.
19.7 Neither the Borrower nor the Company will enter into any
transaction with any affiliate, except in the ordinary course of business and on
terms and conditions fair and reasonable and no less favorable to the Borrower
or the Company than would be obtained with a non-affiliate.
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Highwoods/Forsyth Limited Partnership
May 9, 1996
Page 8
19.8 The Borrower will not engage in any form of lending
activity except with respect to joint ventures or other activities where the
Borrower will also have a majority or controlling ownership or management
interest. Notwithstanding anything herein to the contrary, the Borrower may lend
money to tenants for tenant improvements to be repaid during the course of the
leases with such tenants; provided, however, loans to tenants (other than
existing loans) shall not exceed in the aggregate two-tenths of one percent
(.20%) of the Borrower's total assets as reflected on its most recent financial
statement.
19.9 The Borrower will not incur any secured recourse
indebtedness without the Bank's prior written approval other than the secured
recourse indebtedness existing as of the date hereof.
20. FINANCIAL COVENANTS DURING INITIAL REVOLVING LOAN PHASE: The
Borrower shall comply with each of the following financial covenants during the
Initial Revolving Loan Phase:
20.1 The Borrower's Total Liabilities shall not exceed
fifty-seven percent (57%) of Market Capitalization.
20.2 The Borrower shall at all times maintain a Tangible Net
Worth of not less than $450 million, which amount shall be increased by not less
than eighty-five percent (85%) of the net proceeds of any future offerings of
the Company's capital stock.
20.3 The Borrower shall at all times maintain a ratio of Total
Liabilities to Total Assets At Cost of no more than .69 to 1.0.
20.4 The Borrower shall at all times maintain a ratio of
Earnings Before Interest, Income Tax, Depreciation and Amortization to Interest
Expense plus Capital Expenditures of not less than 1.75 to 1.0
20.5 The Borrower shall not incur any indebtedness other than
the Revolving Loan during the Initial Revolving Loan Phase other than the Bridge
Loan and indebtedness assumed in connection with the acquisition of Crocker
Realty Trust, Inc.
20.6 The Borrower shall not grant or permit any lien, deed of
trust, or other encumbrance on any of its Unencumbered Assets.
20.7 Speculative land purchases shall be limited to two
percent (2%) of the aggregate value of the Borrower's income producing assets.
For purposes of this calculation, land included in the Borrower's September 30,
1995 balance sheet and land purchased for development within three months of the
date of purchase shall be excluded. The Borrower shall provide the Bank with an
inventory of all unimproved land prior to the Closing Date.
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Highwoods/Forsyth Limited Partnership
May 9, 1996
Page 9
21. FINANCIAL COVENANTS DURING SECURED REVOLVING LOAN PHASE: In the
event the Revolving Loan converts to the Secured Revolving Loan Phase, the
Borrower shall comply with each of the covenants applicable to the Initial
Revolving Loan Phase, as modified in this Section 21, as well as the following
additional financial covenants:
21.1 The amount outstanding under the Revolving Loan shall not
exceed sixty percent (60%) of the aggregate current appraised value of the
properties subject to the lien of the Deed of Trust.
21.2 The aggregate Adjusted NOI of the properties subject to
the Deed of Trust shall not be less than sixteen and one-half percent (16.5%) of
the Borrower's Total Liabilities.
21.3 The Borrower shall at all times maintain a Tangible Net
Worth of not less than $550 million, which amount shall be increased by not less
than eighty-five percent (85%) of the net proceeds of any future offerings of
the Company's capital stock.
21.4 The Borrower shall at all times maintain a ratio of Total
Liabilities to Total Assets At Cost of no more than .60 to 1.0.
21.5 The Borrower shall at all times maintain a ratio of
Earnings Before Interest, Income Tax, Depreciation and Amortization to Interest
Expense plus Capital Expenditures of not less than 2.0 to 1.0
22. FINANCIAL COVENANTS DURING UNSECURED REVOLVING LOAN PHASE: In the
event the Revolving Loan converts to the Unsecured Revolving Loan Phase, the
Borrower shall comply with each of the following financial covenants:
22.1 Adjusted Net Operating Income of the Borrower, divided by
Total Liabilities of the Borrower, shall not be less than sixteen and one-half
percent (16.5%).
22.2 The Borrower's Total Liabilities shall not exceed
forty-five percent (45%) of Market Capitalization. In the event that this
covenant is not maintained, but the covenant set forth in Section 22.1 above is
maintained, such failure will not be considered a default under the Revolving
Loan; provided, however, in such event the Bank shall not be obligated to make
any further disbursements until such time as the Borrower is in compliance with
the covenant set forth in this paragraph.
22.3 The Borrower shall at all times maintain a Tangible Net
Worth of not less than $700 million, which amount shall be increased by not less
than eighty-five percent (85%) of the net proceeds of any future offerings of
the Company's capital stock.
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Highwoods/Forsyth Limited Partnership
May 9, 1996
Page 10
22.4 The Borrower shall at all times maintain a ratio of Total
Liabilities to Total Assets At Cost of no more than .50 to 1.0.
22.5 The Borrower shall at all times maintain a ratio of
Earnings Before Interest, Income Tax, Depreciation and Amortization to Interest
Expense plus Capital Expenditures of not less than 2.5 to 1.0
22.6 The Borrower shall at all times maintain a ratio of
Unencumbered Assets to Unsecured Debt of not less than 2.25 to 1.0.
22.7 The Borrower shall at all times maintain a ratio of
secured debt to Total Assets of not more than .30 to 1.0.
22.8 The Borrower shall at all times maintain a ratio of
Adjusted NOI as derived from Unencumbered Assets to interest expense paid on
Unsecured Debt of not less than 2.25 to 1.0.
22.9 The Borrower shall at all times maintain a ratio of
Adjusted NOI derived from Unencumbered Assets to Unsecured Debt of not less than
.18 to 1.0.
23. DEFINITIONS USED IN FINANCIAL COVENANTS: For purposes of
determining compliance with the financial covenants, the following definitions
shall apply:
23.1 "Adjusted NOI" means net operating income as defined by
generally accepted accounting principles before deducting debt service and
non-cash items, less actual Capital Expenditures;
23.2 "Capital Expenditures" means all expenditures required
for the leasing of space within assets owned and previously leased by the
Borrower, including upfit expenses and leasing commissions, together with
expenses for renovation or improvement of existing properties that are
classified as capital expenditures under generally accepted accounting
principles. Leasing and tenant improvements expenditures with respect to space
not previously leased shall not be included in any calculation of Capital
Expenditures, but must be reported to the Bank on a quarterly basis. The Bank
reserves the right to approve the Borrower's Capital Expenditures budget on an
annual basis.
23.3 "Market Capitalization" means the market value of issued
and outstanding common stock of the Company based on an average of the last
twenty trading days, plus the value of limited partnership units of the Borrower
if each such unit were converted to a share of common stock of the Company, plus
Total Debt of the Borrower.
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Highwoods/Forsyth Limited Partnership
May 9, 1996
Page 11
23.4 "Tangible Net Worth" means tangible net worth determined
in accordance with generally accepted accounting principles, including the value
of limited partnership units in the Borrower as if each such unit were converted
to a share of the Company's capital stock;
23.5 "Total Assets at Cost" means the undepreciated book value
of real estate assets. Assets that are acquired after the Closing Date shall be
valued at actual cost not to exceed the actual purchase price on Adjusted NOI
divided by ten percent (10%);
23.6 "Total Debt" means all indebtedness of the Borrower, less
trade payables;
23.7 "Total Liabilities" means total liabilities as determined
in accordance with generally accepted accounting principles, including
contingent liabilities and unfunded debt;
23.8 "Unencumbered Assets" means all assets of the Borrower
represented to the Bank as of the date hereof not to be subject to any lien,
pledge or encumbrance of any kind, as well as any assets acquired hereafter free
and clear of any lien, pledge or encumbrance;
23.9 "Unsecured Debt" is the amount of unsecured debt of the
Borrower actually outstanding and shall not include unfunded debt.
24. DEFAULTS: The following, among other things, shall be Events of
Default under the Loans: (a) non-payment of any installment of principal or
interest within five days when due; (b) failure to meet any financial covenant
for fifteen (15) days after the financial report demonstrating such failure is
delivered to the Bank; (c) failure to meet any other covenant or condition in
the loan agreement for 30 days; (d) default under the terms of any indebtedness
in excess of $3,000,000 (other than arising from one or both of the Loans); (e)
the filing of any bankruptcy, insolvency or reorganization petition by or
against the Borrower or the Company; (f) final judgment in excess of $1,000,000
that continues unsatisfied or unstayed for 60 days; (g) failure to comply with
ERISA; (h) failure of the Company to maintain its status as a REIT within the
meaning of Section 856 of the Internal Revenue Code of 1986; and (i) other
customary events of default. The bank shall provide notice and a reasonable cure
period, not to exceed five (5) days for a monetary and fifteen (15) days for
nonmonetary default; provided, however, the events of default set forth in
subsections (e), (g), and (h) of this Section 24 shall not be subject to any
cure period, nor shall such events be subject to the thirty-day period specified
in subsection (c) of this Section 24.
25. CROSS-DEFAULT: Notwithstanding any other provision herein to the
contrary, any default under either of the Bridge Loan or the Revolving Loan
shall constitute an immediate default under the other Loan.
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Highwoods/Forsyth Limited Partnership
May 9, 1996
Page 12
26. SYNDICATION OF LOANS: The Borrower acknowledges that the Bank may
elect to sell assignments or participation interests in the Loans to other
lenders, and, in connection therewith, the Borrower agrees to execute and
deliver to the Bank the letter from NationsBanc Capital Markets, Inc. dated May
2, 1996, and attached hereto as Exhibit B. The Borrower consents to the sharing
of information regarding the Borrower and its properties with prospective
participants, and the Borrower further agrees to cooperate with the Bank's
efforts to sell participation interests, including, but not limited to,
conferring with prospective participants at reasonable times and on reasonable
notice from the Bank. In addition, in the event the Bank determines in its
discretion that it is necessary in order to facilitate the sale or assignments
or participations in the Loans, the Borrower agrees that the definition of LIBOR
used herein may be modified such that the interest rate hereunder is fixed for
thirty-day periods rather than being subject to adjustment on a daily basis.
27. GENERAL CONDITIONS:
27.1 Assignments: Neither this Commitment nor any interest in
it may be assigned by Borrower without both of the Bank' prior written approval.
27.2 Expenses: The Borrower shall pay for and shall hold the
Bank harmless from all reasonable costs and expenses incurred in connection with
the Revolving Loan (pre-and post-closing). Borrower shall reimburse the Bank for
all such costs and expenses paid by the Bank.
27.3 Arbitration: The loan agreement, guaranty agreement, note
and other loan documents that the Bank deems appropriate shall contain the
Bank's standard arbitration provisions.
27.4 Determination of Compliance with Financial Covenants: The
Borrower's compliance with the applicable financial covenants shall be monitored
no less frequently than quarterly by calculating the percentages on an
annualized basis based upon the last four (4) trailing quarterly financial
statements. The Bank and the Borrower shall agree upon a format for reports to
be submitted to the Bank, which reports shall be certified as true and accurate
by the Borrower's chief financial officer.
27.5 Financial Statements: The Company shall submit
consolidated annual (and when so requested, consolidating) financial statements
to the Bank. Such statements shall include, at a minimum: a balance sheet; an
income and expense statement; and a statement showing contingent liabilities.
Annual statements of the Company shall be signed by an officer of the Company,
attesting to the accuracy of the statement. Annual statements
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Highwoods/Forsyth Limited Partnership
May 9, 1996
Page 13
shall be audited and bear the unqualified opinion of an acceptable certified
public accountant and must be submitted to the Bank within one hundred twenty
(120) days of each such entity's fiscal year-end.
27.6 Other Reporting Requirements:
(a) Within forty-five (45) days of the end of each
fiscal quarter, the Company shall provide a certified copy of its 10Q report for
the previous quarter.
(b) Within one hundred twenty (120) days following
the end of each fiscal year, the Company shall provide a certified copy of its
10K report for the previous year.
(c) Within forty-five (45) days of the end of each
fiscal quarter, the Company shall provide quarterly operating statements showing
Adjusted NOI over the prior twelve-month period, as well as any other reports
required hereunder.
(d) Within forty-five (45) days of the end of each
fiscal quarter, the Company shall provide a listing of properties under
development showing the total capital obligation of the Company and funds
expended to date.
(e) Within forty-five (45) days of the end of each
fiscal quarter, the Company shall provide information with respect to compliance
with the financial covenants provided herein.
27.7 Representations: The issuance of this Commitment is based
upon the accuracy of your representations and statements, any loan application
and all additional information, representations, exhibits and other matters
submitted to the Bank for its consideration. The Bank shall have the option to
declare this Commitment to be breached if there shall have been any material
misrepresentation or misstatement or any material error in anything submitted to
the Bank, or, if prior to the initial Revolving Loan disbursement, there shall
have been a material adverse change in the state of facts submitted to the Bank,
including any threatened or pending litigation affecting the Borrower or Crocker
Realty Trust, Inc., or Borrower or the Company has become insolvent or bankrupt.
27.8 Entire Agreement: This Commitment, when accepted, shall
constitute the entire agreement between Borrower and the Bank, and it may not be
altered or amended unless agreed to in writing by the Bank and Borrower.
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Highwoods/Forsyth Limited Partnership
May 9, 1996
Page 14
28. ACCEPTANCE: Please indicate your acceptance of this Commitment by
signing two copies of this Commitment letter and returning one to the attention
of Jack M. Wiser. The Bank acknowledges receipt of your check in the amount of
$1,227,500.
Very truly yours,
NATIONSBANK, N.A.
Jack M. Wiser
Vice President
919/829-6899
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Highwoods/Forsyth Limited Partnership
May 9, 1996
Page 15
The undersigned, duly authorized on behalf of the Borrower, accepts the terms
and conditions of the foregoing Commitment:
HIGHWOODS/FORSYTH LIMITED PARTNERSHIP,
a North Carolina limited partnership
By: Highwoods Properties, Inc., a
Maryland corporation, its
sole general partner
By:______________________________
Title:___________________________
Date:___________________________________
<PAGE>
