SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 9, 1997
HIGHWOODS/FORSYTH LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
North Carolina 333-3890-01 56-1869557
(State of Formation) (Commission File Number) (IRS Employer
Identification No.)
3100 Smoketree Court, Suite 600, Raleigh, North Carolina 27604
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (919) 872-4924
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Item 2. Acquisition or Disposition of Assets
General
On January 9, 1997, Highwoods/Forsyth Limited Partnership (the
"Partnership") announced two significant transactions in suburban Atlanta,
Georgia. The Partnership has agreed to enter into a business
combination with Anderson Properties, Inc. ("Anderson Properties") and acquire a
portfolio of industrial, office and undeveloped properties from affiliates of
Anderson Properties (the "Anderson Transaction"). The Partnership also closed
the acquisition of Century Center Office Park and an affiliated property
portfolio (the "Century Acquisition"). As part of the transactions, the
Partnership formed an Atlanta Division, Highwoods Anderson, headed by Gene
Anderson. Mr. Anderson is supported by 65 employees, each of whom managed,
leased or performed other services for the properties involved in the Anderson
Transaction and the Century Acquisition prior to joining Highwoods Anderson.
The portfolios include 32 in-service industrial properties totaling 2.3
million square feet, 23 in-service office properties totaling 1.3 million square
feet, three industrial development projects totaling 402,000 square feet and 315
acres of development land. As of December 31, 1996, the office properties and
the in-service industrial properties involved in the Anderson Transaction and
the Century Acquisition were 98% and 96% leased, respectively.
The aggregate cost of the portfolios (assuming the completion of the
three development projects) is expected to be $230.1 million. The purchase price
consists of $108.3 million in cash, $28.1 million in debt assumption and $93.7
million in Units in the Partnership (valued at $29.25 per Unit, the
market value of a share of Common Stock at the time of the signing of letters of
intent relating to the transactions). Approximately $14.4 million of the Units
are newly created Class B Units, which differ from other Units in that they are
not eligible for cash distributions. The Class B Units will convert to regular
Units in 25% annual installments commencing one year from issuance. Prior to
such conversion, such Units will not be redeemable for cash or Common Stock. All
other Units issued in the transactions are also subject to restrictions on
transfer or redemption. Such lock-up restrictions are lifted over a three-year
period in equal annual installments commencing with the first anniversary of the
date of issuance.
Anderson Transaction
The Anderson Transaction involves six office properties and 28
industrial properties totaling 1.9 million rentable square feet, three
industrial development projects totaling 402,000 square feet and 295 acres of
development land. The master agreement relating to the Anderson Transaction
calls for a closing no later than February 15, 1997; however, the transaction is
contingent on the completion of due diligence and other customary closing
conditions. No assurance can be given that all or part of the transaction will
close. The purchase price of the Anderson Transaction is expected to consist of
the issuance of $38.1 million of Units, the assumption of $8.7 million of debt
and a cash payment of $55.2 million. The cash amount includes $14.4 million
expected to be paid to complete the three development projects. The Units
include $14.4 million of Class B Units.
The in-service properties were 95% leased to 175 tenants as of December
31, 1996, and are primarily located in business park settings in North Atlanta
or near Hartsfield International Airport. The in-service industrial properties
are warehouse and bulk distribution facilities that are generally leased on a
multi-tenant basis. The development projects have a cost-to-date of $5.2 million
and are expected to be completed during 1997.
The undeveloped land expected to be acquired in the Anderson
Transaction is located in four business parks. The majority of the undeveloped
land includes the Atlanta Tradeport complex (108 acres) ("Atlanta Tradeport")
and Bluegrass Business Center (158 acres) ("Bluegrass"). Atlanta Tradeport is a
260-acre, integrated, mixed-use domestic and international business complex
designed as Atlanta's only general purpose Foreign Trade Zone. Located nine
miles south of downtown, Atlanta Tradeport is directly east of and contiguous to
Hartsfield International Airport. Bluegrass is approximately 15 miles north of
Interstate-285 and approximately two miles south of the planned outer loop.
Currently, 19 companies have chosen to locate in Bluegrass including
Lockheed/Martin, Amoco, Siemens and UPS. The balance of the undeveloped land is
located in Chastain Place (10 acres) and Newpoint (19 acres). Both locations are
close to interstate highways and major area malls.
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As part of the Anderson Transaction, the Partnership established an
Atlanta Division, Highwoods Anderson, which is headed by Anderson Properties'
president, Gene Anderson. Mr. Anderson has over 25 years of commercial
real estate experience in the Atlanta area. All 25 employees of Anderson
Properties have joined Highwoods Anderson, including the four other
members of Anderson Properties' management, each of whom have at least
12 years of commercial real estate experience. Assuming consummation of the
Anderson Transaction, Mr. Anderson would one of the Partnership's largest
equity holders with 1,046,000 Units and would become a member of the Board of
Directors of Highwoods Properties, Inc.
Century Center Transaction
On January 9, 1996, the Partnership acquired the 17-building Century
Center Office Park, four affiliated industrial properties and 20 acres of
development land located in suburban Atlanta, Georgia. The properties total
1.6 million rentable square feet and as of December 31, 1996, were 99% leased.
The cost of the transaction was $55.6 million in Units, the assumption of $19.4
million of secured debt and a cash payment of $53.1 million drawn from the
Partnership's $280 million credit facility. All Units issued in the transaction
are subject to restrictions on transfer and redemption. Such restrictions
are scheduled to expire over a three-year period in equal annual installments
commencing one year from the date of issuance. Prior to their acquisition
by the Partnership, the acquired properties were leased and managed by White
& Associates Management Group, 40 employees of which have been retained
by Highwoods Anderson to continue the lease administration, property
management, development, engineering and maintenance of the properties.
The 1.2-million square foot, 17-building Century Center Office Park is
adjacent to Interstate-85 in north central Atlanta. Century Center Office Park
is located on approximately 77 acres and was 99% leased at December 31, 1996.
Its tenants include AT&T, BellSouth, the Federal government (four agencies),
MBNA, Egleston Hospitals and Arkwright. The four industrial properties acquired
in the transaction are located in two business parks and were 100% leased at
December 31, 1996. The Partnership's acquisition also includes three
development parcels totaling 20 acres in Century Center Office Park. The master
plan for the office park envisions an additional 800,000 square feet of office
space on such parcels.
Sixty-one acres of the Century Center Office Park are controlled under
long-term fixed rental ground leases that expire in 2058. The rent under the
lease is approximately $180,000 per year with scheduled 10% increases in 1999
and 2009. The leases do not contain a right to purchase the subject land.
Disclosure Regarding Forward-Looking Statements
Certain matters discussed herein are forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Act of 1934, as amended. Those statements are
identified by words such as "expect," "should" and words of similar import.
Forward-looking statements are inherently subject to risks and uncertainties,
many of which cannot be predicted with accuracy and some of which might not even
be anticipated. Although the Partnership believes that the expectations
reflected in such forward-looking statements are based upon reasonable
assumptions, it can give no assurance that its expectations will be
achieved. Factors that could cause actual results to differ materially
from the Partnership's current expectations include general economic
conditions; risks associated with the development and acquisition of
properties, including risks that the development or acquisitions may not be
completed on schedule; and risks associated with the consummation of the
Anderson and Century Center transactions, including risks
that the parties fail to secure required consents or that the transactions
otherwise fail to close.
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired
It is impracticable to provide the required financial
statements at the time of the filing of this report. The
required financial statements will be filed as soon as
practicable, but not later than March 25, 1997.
(b) Pro forma financial statements
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See text at Item 7(a).
(c) Exhibits
2.1 Contribution and Exchange Agreement by and among
Century Center group, Highwoods/Forsyth Limited
Partnership and Highwoods Properties, Inc. dated
December 31, 1996. (Exhibit includes list of omitted
schedules, together with an agreement to furnish
supplementally a copy of any omitted schedule to the
Commission upon request.)
2.2 Master Agreement of Merger and Acquisition by and
among Highwoods Properties, Inc., Highwoods/Forsyth
Limited Partnership, Anderson Properties, Inc., Gene
Anderson, and the partnerships and limited liability
companies listed therein dated January 9, 1997.
(Exhibit includes list of omitted schedules, together
with an agreement to furnish supplementally a copy of
any omitted schedule to the Commission upon request.)
10.1* Employment Agreement between Highwoods Properties,
Inc. and Gene Anderson dated January __, 1997.
- ----------------------
*To be filed by amendment following execution of the agreement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HIGHWOODS/FORSYTH LIMITED PARTNERSHIP
By: Highwoods Properties Inc., its
general partnership
Date: January 24, 1997 /s/ Carman J. Liuzzo
--------------------
Carman J. Liuzzo
Vice President and Chief Financial Officer
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CONTRIBUTION AND EXCHANGE AGREEMENT
By and Among
CENTURY CENTERGROUP, a California general partnership,
HIGHWOODS/FORSYTH LIMITED PARTNERSHIP, a
North Carolina limited partnership
and
HIGHWOODS PROPERTIES, INC., a Maryland corporation
December 31, 1996
In making an investment decision, investors must rely on their own
examination of the issuer and the terms of the offering, including the merits
and risks involved. These securities have not been recommended by any federal or
state securities commission or regulatory authority. Furthermore, the foregoing
authorities have not confirmed the accuracy or determined the adequacy of any
document used in connection with the offering and any representation to the
contrary is a criminal offense.
These securities are subject to restrictions on transferability and
resale and may not be transferred or resold except as permitted under the
Securities Act of 1933, as amended, registration or exemption therefrom.
Investors should be aware that they may be required to bear the financial risk
of this investment for an indefinite period of time.
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page No.
<S> <C>
Agreement to Contribute Property for Units........................................................................1
Description of the Property.......................................................................................1
Earnest Money.....................................................................................................3
Amount of Consideration for Contribution of Property to Highwoods.................................................4
Actions Pending Closing...........................................................................................7
Survey and Plans.........................................................................................7
Initial Delivery of Documentation........................................................................8
Access to, and Examination of, Records...................................................................9
Access to the Property...................................................................................9
Environmental Assessments................................................................................9
Application for New York Stock Exchange Approval.........................................................9
Additional Agreements of the Parties.............................................................................10
Title to the Property...................................................................................10
Representations and Warranties of Owner.................................................................11
Representations and Warranties of Highwoods.............................................................19
Representations and Warranties of the REIT..............................................................22
Due Diligence Period.............................................................................................26
Conditions Precedent to Highwoods' and Owner's Obligations at Closing............................................26
Maintenance and Operation of the Property........................................................................29
Closing Date.....................................................................................................31
Documents Required to be Delivered at Closing....................................................................32
Documents Required to be Delivered by Owner at Closing.................................................32
Documents Required to be Delivered by Highwoods and the REIT at Closing.................................34
Closing Adjustments..............................................................................................36
Taxes ...............................................................................................36
Utilities...............................................................................................37
Rents ...............................................................................................37
Estimated Reimbursable Income...........................................................................37
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Real Estate Commissions.................................................................................38
Tenant Improvements.....................................................................................38
Tenant Security Deposits................................................................................39
Service Agreement Payments..............................................................................39
Miscellaneous Items.....................................................................................40
Settlement After Closing................................................................................40
Highwoods' Distributions................................................................................40
Equitable Adjustments...................................................................................40
Property Income.........................................................................................41
Operating Expenses......................................................................................41
Management and Leasing Agreements, Service Contracts.............................................................41
Amendment to the Partnership Agreement...........................................................................41
Default ........................................................................................................41
Notice of Developments...........................................................................................42
Indemnification..................................................................................................42
Other Provisions.................................................................................................44
Counterparts............................................................................................44
Entire Agreement........................................................................................44
Construction............................................................................................44
Applicable Law..........................................................................................45
Severability............................................................................................45
Waiver of Covenants, Conditions and Remedies............................................................45
Exhibit ...............................................................................................45
Amendment and Assignment................................................................................45
Relationship of Parties.................................................................................45
Further Acts............................................................................................45
Confidentiality.........................................................................................45
Broker Commissions......................................................................................46
Notice ...............................................................................................46
Press Releases..........................................................................................47
Sale of Property and 1031 Exchange Obligations..........................................................48
Limitations on Amendment to REIT's Articles of Incorporation............................................48
Owner's Indemnification to the REIT.....................................................................48
Allocations.............................................................................................48
List of Exhibits.................................................................................................50
</TABLE>
<PAGE>
STATE OF GEORGIA
CONTRIBUTION AND
EXCHANGE AGREEMENT
COUNTY OF DeKALB
THIS AGREEMENT (the "Agreement") made and entered into this the _____
day of _________________, 199___, by and among CENTURY CENTERGROUP, a California
general partnership (being hereinafter called "Owner"), HIGHWOODS/FORSYTH
LIMITED PARTNERSHIP, a North Carolina limited partnership ("Highwoods"), and
HIGHWOODS PROPERTIES, INC., a Maryland corporation (the "REIT");
W I T N E S S E T H:
WHEREAS, Highwoods is a North Carolina limited partnership having as
its sole general partner the REIT. The REIT has elected to be qualified as a
real estate investment trust under the Internal Revenue Code of 1986, as
amended, including the regulations and published interpretations thereunder (the
"Code"); and
WHEREAS, Owner is the owner of fee simple title and a leasehold title
in the Property described in Section 2 below and has agreed to contribute the
Property to Highwoods in exchange for the issuance by Highwoods of limited
partnership interests therein (the "Partnership Units"); and Highwoods has
agreed to accept the contribution of the Property, assume certain obligations
with respect thereto and to issue to Owner Partnership Units; and
WHEREAS, the REIT and Owner also desire that, contemporaneously with
the admission of Owner as a limited partner of Highwoods, the REIT and Owner
enter into a registration rights and lock up agreement substantially in the same
form as the Registration Rights and Lock Up Agreement attached hereto as Exhibit
A which agreement shall include a "lock up" period expiring three (3) years
following the date of Closing (the "Registration Rights Agreement");
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants and conditions herein set forth, and other good and valuable
consideration, in hand paid, the receipt and sufficiency of which is
acknowledged, the parties do hereby agree as follows:
1. Agreement to Contribute Property for Units. Owner agrees to
contribute the Property defined and described in Section 2 hereof to Highwoods
and Highwoods agrees to accept such contribution in return for the assumption
and payment by Highwoods of certain indebtedness of Owner and the issuance to
Owner of Partnership Units as hereinafter described.
2. Description of the Property. The Property owned by Owner
which is the subject of this Agreement is as follows:
2.01. A fee simple interest in those certain lots or parcels of land
(the "Fee Parcels") in DeKalb County, Georgia, containing approximately 16 acres
as more particularly described on
<PAGE>
Exhibit B attached hereto and a leasehold interest (the "Leasehold Interest") in
approximately 61 acres as more particularly described on Exhibit B-1
(hereinafter collectively called the "Land").
2.02. All of Owner's right, title and interest in and to all rights,
privileges, and easements appurtenant to the Land, including all of Owner's
water rights, rights-of-way, roadways, parking areas, roadbeds, alleyways and
reversions or other appurtenances used in connection with the beneficial use of
the Land.
2.03. All improvements and fixtures located on the Land owned by Owner
including, without limitation, (i) all buildings located thereon containing an
aggregate of approximately 1,200,000 square feet (hereinafter referred to as
"Buildings"), if owned by Owner; (ii) any and all other structures and amenities
currently located on the Land, if owned by Owner; and, (iii) all fixtures,
apparatus, equipment, vaults, machinery and built-in appliances used in
connection with the operation and occupancy of the Land such as heating and air
conditioning systems, electrical systems, plumbing systems, sprinkler and other
fire protection and life safety systems, refrigeration, ventilation, or other
facilities or services on the Land, if owned by Owner (all of which are together
hereinafter called the "Improvements"). It is specifically understood that such
Improvements shall include all tenant alterations in the Buildings as of the
Closing to the extent such alterations are or become the property of the
landlord under the leases in effect with respect to the Buildings.
2.04. All personal property located on or in or used exclusively in
connection with the Land, Buildings and Improvements and owned by Owner and used
or usable in the operation of the Property (as defined below) including, without
limitation, fittings, appliances, shades, wall-to-wall carpet, draperies,
screens and screening, awnings, plants, shrubbery, landscaping, furniture,
furnishings, office equipment, lawn care and building maintenance equipment,
furniture, computers, wall decorations, art work and other furnishings or items
of personal property used or usable in connection with the ownership and
operation of the Improvements, including the computers which operate the
Buildings' HVAC systems, but excluding all personal property located on the Land
or in the Buildings owned by tenants of such Buildings or contractors who
provide service to such Buildings or which is not otherwise owned by Owner
(hereinafter called the "Personal Property"). A schedule of the Personal
Property shall be specifically identified pursuant to an inventory supplied by
Owner at the time of the execution hereof and attached hereto as Exhibit C.
After the date of this Agreement and, except as otherwise set forth herein,
Owner shall not remove any Personal Property from the Buildings or Land without
the prior written consent of Highwoods.
2.05. All of Owner's interest, if any, in the intangible property now
or hereafter owned by Owner and used or usable in connection with the Property
including, without limitation, the rights to use the trade name now used in
connection with such property, all leases, subleases, prepaid rent and all
security deposits, any other contract or lease rights, escrow deposits, utility
agreements, guaranties, warranties or other rights related to the ownership of
or use and operation of the Property. A list of all leases of space within the
Buildings and subleases and other occupancy agreements to be specifically
assigned to Highwoods (the "Leases") are set forth on Exhibits D and D-1 and
attached hereto. A list of all service, maintenance and/or contracts affecting
or relating to the
2
<PAGE>
Property and to be specifically assigned to and assumed by Highwoods (the
"Service Contracts") and all guaranties and warranties relating to the Property
together with a description of all pertinent terms and provisions of such
Service Contracts, guaranties and warranties are set forth in Exhibit E and
attached hereto.
2.06. All of Owner's right, title and interest in and to an approximate
$600,000.00 escrow deposit with NationsBank, N.A. (including accrued interest
thereon), pursuant to the terms of an agreement between Owner and The Prudential
Insurance Company of America, which sums are being held to pay for certain
tenant improvement obligations of Owner to AT&T Corporation upon a renewal of
its lease for a portion of the Property (the "AT&T Escrow"). The Consideration
shall be increased by the amount of the AT&T Escrow.
All of the items of property described in Subsections 2.01, 2.02, 2.03,
2.04, 2.05 and 2.06 above are hereinafter collectively called the "Property."
3. Earnest Money. Upon the execution of this Agreement, Highwoods will
deliver to Investors Title Insurance Company (hereinafter referred to as the
"Escrow Agent") the sum of One Hundred Thousand and no/100 Dollars ($100,000.00)
(hereinafter the "Earnest Money"). The Earnest Money shall be deposited by the
Escrow Agent into an interest bearing account at the direction of Highwoods, and
shall be paid to Owner or Highwoods according to the provisions set forth below.
Upon Closing, the Escrow Agent shall deliver all Earnest Money, plus
interest which has accrued thereon, to Highwoods.
In the event the transaction contemplated by this Agreement is not
closed solely because of any default on the part of Owner, or if any of the
conditions precedent set forth in Section 8.01 fail to be satisfied at Closing,
or if Highwoods terminates its obligations set forth herein pursuant to any
other provision of this Agreement, then the Escrow Agent shall pay to Highwoods
all Earnest Money, including interest which has accrued thereon, but such return
shall not affect any other remedies available to Highwoods in the event of a
breach of this Agreement by Owner.
In the event the transaction contemplated by this Agreement is not
closed solely because of any default on the part of Highwoods, then the Escrow
Agent shall pay to Owner all Earnest Money, including interest which has accrued
thereon, and such payment, when added to the $1,900,000.00 payment due from
Highwoods to Owner (in the event of Highwoods' default hereunder) pursuant to
Section 15 hereof, shall be and represent liquidated damages arising out of
Highwoods' default, which liquidated damages shall be the full extent of
Highwoods' liability with respect to such default and Owner shall have no
further right or claim against Highwoods.
Upon the filing of a written demand for the Earnest Money by Highwoods
or Owner, pursuant to this Section 3, the Escrow Agent shall promptly mail a
copy thereof to the other party. The other party shall have the right to object
to the delivery of the Earnest Money by filing written
3
<PAGE>
notice of such objection with the Escrow Agent such that it is actually received
by the Escrow Agent at any time within ten (10) days after the mailing by the
Escrow Agent of such copy to it, but not thereafter. Such notice shall set forth
the basis for objecting to the delivery of the Earnest Money. Upon receipt of
such notice, the Escrow Agent shall promptly mail a copy thereof to the party
who filed the written demand. If the Escrow Agent does not receive a notice of
objection as set forth above, it shall pay the Earnest Money, plus interest
which has accrued thereon, to the party requesting payment of same.
In the event the Escrow Agent shall have received the notice of
objection provided for above and within the time therein prescribed, the Escrow
Agent shall continue to hold the Earnest Money until (i) the Escrow Agent
receives written notice from Owner and Highwoods directing the disbursement of
said Earnest Money, in which case the Escrow Agent shall then disburse said
Earnest Money in accordance with said direction; or (ii) in the event of
litigation between Owner and Highwoods, the Escrow Agent shall deliver the
Earnest Money to the Clerk of the Court in which said litigation is pending; or
(iii) the Escrow Agent takes such affirmative steps as the Escrow Agent may, in
the Escrow Agent's reasonable opinion, elect in order to terminate the Escrow
Agent's duties, including but not limited to, deposit in the Court of
appropriate jurisdiction in connection with an action for interpleader, the
costs thereof to be borne by whichever of Owner or Highwoods is the losing
party.
The Escrow Agent may act upon any instrument or other writing believed
by it in good faith to be genuine and to be signed and presented by the proper
person, and shall not be liable in connection with the performance of any duties
imposed upon the Escrow Agent by the provisions of this Agreement, except for
the Escrow Agent's own negligence or willful default. The Escrow Agent shall
have no duties or responsibilities except those set forth herein. The Escrow
Agent shall not be bound by any modification of this Agreement, unless the same
is in writing and signed by Highwoods and Owner, and, if the Escrow Agent's
duties hereunder are affected, unless Escrow Agent shall have given prior
written consent thereto. In the event that the Escrow Agent shall be uncertain
as to the Escrow Agent's duties or rights hereunder, or shall receive
instructions from Highwoods or Owner which, in the Escrow Agent's opinion, are
in conflict with any of the provisions hereof, the Escrow Agent shall be
entitled to hold and apply the Earnest Money pursuant to the preceding paragraph
and may decline to take any other action. The Escrow Agent shall not charge a
fee for its services as escrow agent. Upon the execution hereof, the Escrow
Agent agrees to be bound by all of the terms and conditions set forth in this
Section 3.
4. Amount of Consideration for Contribution of Property to Highwoods.
4.01. Subject to the terms and conditions of this Agreement, the total
amount of consideration to be delivered by Highwoods to Owner at Closing in
consideration for the contribution of the Property to Highwoods shall be One
Hundred Thirteen Million Six Hundred Fifty Thousand and no/100 Dollars
($113,650,000.00) (the "Consideration")subject to the adjustments set forth
herein.
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4.02. The Consideration shall consist of the following:
(a) Approximately Sixty-Two Million and no/100 Dollars
($62,000,000.00) by Highwoods' assumption of the unpaid principal
balance of those promissory notes from Owner to those lenders (the
"Lenders") identified, and in the approximate amounts set forth on,
Exhibit F-1, attached hereto and incorporated herein by reference (the
"Promissory Notes"). It is anticipated that Highwoods may prepay in
full the Promissory Notes concurrent with the Closing. In the event any
Promissory Note requires the payment of a prepayment penalty in
connection with the payment thereof prior to maturity, Highwoods shall
be responsible for the payment of such prepayment penalty. In the event
Highwoods determines that it will not prepay any Promissory Note
concurrent with the Closing, but rather that it would prefer to assume
the obligations thereunder and pay the sums due thereon as they become
due, then in such event, Owner agrees to cooperate with Highwoods in
procuring the consent of the Lenders to the assumption by Highwoods of
the obligations set forth in the Promissory Note(s) and other loan
documents related thereto. If such consent is obtained, Highwoods shall
be responsible for the payment of any loan transfer or assumption fee
charged in connection with Highwoods' assumption of the obligations set
forth in the Promissory Note(s), and Highwoods and Lender shall execute
an assumption agreement in form reasonably acceptable to Owner and
Highwoods. In the event the Property is conveyed subject to any of the
liens of the instruments securing the obligations under any of the
Promissory Note(s) with the intent that Highwoods continue paying the
sums due thereunder as they fall due (rather than prepaying the unpaid
balance in full immediately after Closing), then Owner will use a good
faith effort to procure for the benefit of Highwoods the execution of a
Mortgagee Estoppel Certificate and Consent Agreement executed by the
Lender(s) who own(s) the Promissory Notes which will not be paid
concurrent with the Closing by Highwoods, in the form attached hereto
as Exhibit F-2.
The amounts shown on Exhibit F-1 evidencing the
unpaid principal balance of the Promissory Notes as of the date hereof
shall be adjusted, as appropriate at Closing, to reflect a reduction in
the principal balance thereof resulting from payments on the Promissory
Notes, if any, subsequent to the date hereof. Thereafter, the balance
of the Consideration due under Section 4.02(b) below shall be adjusted
accordingly. Highwoods is authorized to contact the Lenders for the
purpose of obtaining statements setting forth the principal balances of
each of the Promissory Notes on the date hereof, and at Closing, and
any other information relative to the loans evidenced by the Promissory
Notes. If necessary, Owner will authorize the Lenders in writing to
disclose all information requested by Highwoods related to the loans
evidenced by the Promissory Notes.
(b) Approximately Fifty One Million Six Hundred Fifty Thousand
and no/100 Dollars ($51,650,000.00), (before taking into account
adjustments to the Consideration for certain of the prorated items set
forth in Section 12 below, an increase for the actual amount of the
AT&T Escrow, a decrease for the amount of the transfer tax referenced
in Section 6.01 below, any decrease required pursuant to Section
11.01(f) and adjustments made to the
5
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unpaid principal balance of the Promissory Notes as set forth in
Section 4.02(a) above) shall be delivered by the issuance by Highwoods
to Owner at Closing of that number of Partnership Units determined by
dividing the amount due Owner under this Section 4.02(b) by the lower
of the following divisors: (i) $29.225; (ii) the average of the closing
prices of the common stock of the REIT as listed on the New York Stock
Exchange on the ten (10) business days before and the ten (10) business
days after the day on which the Inspection Period (as defined in
Section 7 hereof) expires; or (iii) if the Closing occurs prior to the
tenth (10th) business day after the expiration of the Inspection
Period, the average of the closing prices of the common stock of the
REIT as listed on the New York Stock Exchange on the twenty (20)
business days before the date of the Closing.
(c) Upon the issuance of the Partnership Units, Owner agrees
to execute Highwoods' limited partnership agreement, as amended and in
existence on the date hereof, and Owner agrees to be bound by all of
the terms and conditions thereof from and after such execution.
Highwoods' Limited Partnership Agreement, as amended and in existence
on the date hereof, (the "Partnership Agreement") is attached hereto as
Exhibit G.
Owner agrees that it will not distribute, sell or otherwise
transfer the Partnership Units to any person, firm or corporation for a
period of one (1) year after Closing unless Owner first receives the
written consent of Highwoods, which consent may be withheld in the sole
discretion of Highwoods for any reason, including a determination by
Highwoods or its legal counsel that the Partnership Units may not be
distributed because such a distribution would violate a rule or
regulation of the Securities and Exchange Commission or any other rule,
law or regulation affecting the transfer of the Partnership Units. This
provision shall survive Closing, and Owner and its partners hereby
agree to indemnify and hold harmless Highwoods and the REIT for any
loss, cost, damage, penalty or liability incurred by them as the result
of a breach or violation of this provision. Notwithstanding the above,
Owner may distribute the Partnership Units to its partners, but only
if:
(1) Each such partner of Owner is an "accredited
investor" as such term is defined in Regulation D promulgated in the
Code of Federal Regulations ss. 230-501(a) at the time of such
distribution; and,
(2) At the time of such distribution, each such
partner of Owner agrees to become bound by the terms of the
Registration Rights Agreement by executing any document reasonably
requested by Highwoods to ensure that such of Owner's partners are
bound by the terms thereof.
Partnership Units may be exchanged for common shares of the
REIT (the "Shares"), but not until a period of one (1) year after the
Closing, and any transfer of Partnership Units or Shares shall be
subject to the transfer provisions contained in the Registration Rights
Agreement.
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Owner agrees that upon the issuance of the Partnership Units,
it will sign the Registration Rights Agreement. This provision shall
survive Closing and Owner and its partners hereby agree to indemnify
and hold harmless Highwoods and the REIT for any loss, cost, damage,
penalty or liability incurred by them as the result of a breach or
violation of this provision.
4.03. Notwithstanding the foregoing, in the event (i) Owner is a
"Foreign Person" (as defined in Section 1445 of the Code); (ii) Owner fails or
refuses to deliver the certificates and affidavit of non-foreign status
described in Section 11.01(l) hereof, or (iii) Highwoods receives notice from
any transferor's agent or transferee's agent (as each of such terms are defined
in the Code) that, or Highwoods has actual knowledge that, such certificate and
affidavit is false, Highwoods shall deduct and withhold from the the
Consideration a tax equal to ten percent (10%) of the Consideration, as required
by Section 1445 of the Code. Highwoods shall remit such amount to, and file the
required form with, the Internal Revenue Service, and Highwoods shall receive a
credit against the Consideration for the amount so withheld.
5. Actions Pending Closing.
5.01. Survey and Plans. Highwoods may, at Highwoods' election, cause to
be secured current physical and boundary surveys (the "Surveys") of the Land,
Buildings and other Improvements prepared by a Georgia registered land surveyor
or licensed engineer which shall be certified to Highwoods and the Title Company
[as defined in Subsection 6.01 below] and shall contain such other documentation
and certifications as Highwoods or the Title Company may require. The cost of
such Surveys shall be borne by Highwoods. In addition, at the time of the
execution of this Agreement, Owner shall supply to Highwoods (i) copies of any
existing survey(s) of the Land reasonably available to Owner (the "Existing
Surveys"), and (ii) to the extent reasonably available to Owner, a complete set
of the plans from which the Improvements were constructed (the "Plans"). If the
legal descriptions shown on the Existing Surveys are not the same as the legal
descriptions set forth in title insurance policies currently insuring the Land
issued in connection with the Owner's acquisition of the Land (the "Owner's
Title Insurance Policies"), Owner will convey to Highwoods by quitclaim deed or
a quitclaim assignment of lease, as the case may be, the Land described by the
metes and bounds shown on the Existing Surveys. However, the deed(s) of
conveyance and assignment of Leasehold Interests referenced in 11.01(c) and (g)
shall contain the legal descriptions set forth in the Owner's Title Insurance
Policies. In the event the Surveys (or the Existing Surveys delivered to
Highwoods by Owner) reveal anything which materially and adversely affect the
Property, Highwoods shall give notice to Owner of those matters objected to by
Highwoods in the Surveys or Existing Surveys by January 5, 1997. Owner shall
then have the right, but not the obligation, for a period of ten (10) business
days to cure any defects or objectionable matters specified by Highwoods, so
long as such objections can be cured at a cost of One Million and no/100 Dollars
($1,000,000.00) or less. In the event that Owner fails or is unwilling to cure
such defects to the reasonable satisfaction of Highwoods' counsel, Highwoods may
proceed to a Closing subject to the defect, without liability to Owner, or by
written notice to Owner, terminate this Agreement or otherwise allow this
Agreement to expire.
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5.02. Initial Delivery of Documentation. At the time of the execution
of this Agreement and to the extent that the information is in Owner's
possession, Owner shall provide or make available to Highwoods the following:
(i) a list of all the personal property described in Section 2 above which shall
be attached hereto as Exhibit C; (ii) a current rent roll (the "Rent Roll") of
the Property setting forth with respect to each Lease listed on Exhibit D, the
date of the commencement of the Lease, the name of the tenant, the approximate
area of the demised premises subject to each Lease, the monthly rental and some
of the other charges payable by the tenant and the Lease expiration date,
together with the schedule of any renewal options or purchase options set forth
in any Lease as set forth on Exhibit I-5, together with a schedule of rental
delinquencies and other breaches and a schedule of security deposits held as set
forth on Exhibit I-4; (iii) true, correct and complete copies of all service,
maintenance, utility and other contracts related to the Property, including any
warranties or guaranties, which shall be listed on Exhibit E; (iv) copies of
financial and operating statements of the Property for calendar years 1994,
1995, and year to date operating statements for calendar year 1996, and the
proposed budget for fiscal operations of the Property for 1997, if already
prepared by Owner; (v) all title information in Owner's possession or in the
possession of Owner's attorneys related to the Land, including, but not limited
to, title insurance policies, attorney's opinions on title, surveys, deeds,
etc.; (vi) true, correct and complete copies of all the Promissory Notes, deeds
to secure debt or mortgages, loan agreements, and related documents concerning
the Property; (vii) copies of all plans (original or otherwise), specifications,
drawings, studies, space audits, and programs for upgrading and improving,
concerning or relating to the Buildings or any of the Improvements; (viii) true,
correct and complete copies of the Leases and subleases and any amendments
thereto covering any space within the Buildings or Improvements; (ix) all
environmental, engineering or similar reports relating to the Property; (x)
copies of all notices of any environmental, building code or other violation
relating to the Property, which is uncorrected, if any, and a description of any
building code or other violation of which Owner is aware; (xi) the names and
addresses of all contractors who, within the last twenty-four (24) months, have
performed substantial ($50,000.00 or more) capital repairs or the correction of
any material building code or other code violation, together with copies of all
studies, estimates, plans and specifications in Owner's possession for such
capital repairs or code violations; and, (xii) a listing of all liens or
security interests of others with respect thereto; and Owner will disclose to
Highwoods, to the extent reasonably available to Owner, all capital repair work
performed on the Buildings, the component parts thereof (including the systems
referenced above) during the twelve month period immediately preceding the
execution date hereof. Furthermore, Owner will disclose to Highwoods any
recurring problems related to those matters which are the subject of this
5.02(x)(xi), even if such problems existed prior to the one year period
immediately preceding the execution hereof.
If Highwoods, in its sole and absolute discretion, is dissatisfied in
any respect with the information supplied pursuant to this Subsection 5.02, and
if Highwoods notifies Owner in writing of such determination within forty (40)
days of the final execution hereof, but in all events prior to the Closing, then
this Agreement shall terminate, and neither Highwoods nor Owner shall have any
further liability to the other except as otherwise provided herein.
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5.03. Access to, and Examination of, Records. Owner will permit
Highwoods and Highwoods' accountants to examine the financial records and other
books and records of Owner concerning or relating to the Property in order that
Highwoods' accountants can prepare audited financial statements for the Property
for Owner's most recent fiscal year ending 1996 (if requested by Highwoods), and
an unaudited financial statement for the Property for the year prior thereto and
for the current fiscal year to date.
5.04. Access to the Property. Subject to the rights of existing
tenants, Owner shall give Highwoods and its agents, engineers and other
representatives, full access to the Property during normal business hours upon
reasonable notice, during the period prior to the date of Closing. In addition
to any other requirement hereunder and in connection with such access, Owner
shall endeavor to furnish or make available to Highwoods all information
concerning the Property and its operations which Highwoods may reasonably
request. Highwoods may, at its expense, make such engineering and other studies
of the Property prior to the Closing as it may deem necessary. Highwoods agrees
to indemnify, defend and hold Owner harmless of and from any and all liability,
damages, claims, causes of action, costs and expenses (including reasonable
counsel fees and expenses of Owner) arising out of or with respect to any act or
omission of Highwoods or his agents, engineers, and other representatives in
connection with such access as aforesaid unless and except to the extent caused
by the negligence or wilful misconduct of Owner or his agents or tenants of any
of the Property. Notwithstanding the foregoing, Highwoods shall not contact or
meet with any tenant of the Property or with any ground lessor of any part of
the Property unless a representative of Owner is present. The terms of this
Section 5.04 shall survive the Closing or earlier termination of this Agreement.
5.05. Environmental Assessments. Prior to Closing, Highwoods at its
expense may cause to be undertaken and completed current Phase I Environmental
Site Assessments, and as necessary, Phase II Assessments, of the Land and
Buildings (the "Environmental Assessments"). Such Environmental Assessments
shall be performed by environmental inspection and engineering firms selected by
Highwoods. Highwoods shall determine from such Environmental Assessments and
from such other information available to Highwoods, in its sole discretion,
whether the Land and Buildings are contaminated by hazardous or toxic wastes,
substances or materials (including, but not limited to, asbestos, PCB's or
petroleum products) as defined under any applicable federal, state or local
laws, statutes, orders, rules, regulations, permits or approvals. In the event
that Highwoods determines that contamination or any other adverse environmental
condition is found on or under the Land or any Building, Highwoods shall have
the right to terminate this Agreement prior to the expiration of the Inspection
Period, or at any time thereafter prior to Closing if Highwoods discovers
contamination on the Land that was not present thereon at the end of the
Inspection Period.
5.06. Application for New York Stock Exchange Approval. Highwoods
agrees to make an application (the "Subsequent Listing Application") with the
New York Stock Exchange (the "Exchange") for the approval from the Exchange to
list the Shares that may be issued upon a redemption of the Partnership Units as
provided in the Partnership Agreement. Highwoods agrees to make a reasonable
effort to have the Subsequent Listing Application approved prior to the
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Closing. Owner agrees to cooperate with Highwoods, if necessary, to have the
Subsequent Listing Application approved.
6. Additional Agreements of the Parties.
6.01. Title to the Property. At the Closing, Owner shall deliver to
Highwoods a limited warranty deed in form and content reasonably satisfactory to
Highwoods' counsel with transfer tax paid by Highwoods (subject however to a
reduction in the amount of Consideration in the amount of such transfer tax)
conveying to Highwoods a fee simple, and insurable title to the Fee Parcels and
an Assignment of Ground Leases (in the form of Exhibit N-1) said title to the
Fee Parcels and Leasehold Interest to be insurable at regular rates by a title
insurance company of Highwoods' choice (the "Title Company"), subject only to
those matters which shall be specifically enumerated in Exhibit H or otherwise
constitute Permitted Exceptions hereunder ("Permitted Exceptions"). Within
fourteen (14) days of the date hereof, Highwoods shall obtain a current title
insurance commitment for the Land issued by the Title Company showing the
condition of title of the Land (the "Title Report"). If Highwoods disapproves of
any matter of title contained in the Title Report, Highwoods shall provide
written notice of Highwoods' disapproval of the same to Owner (those disapproved
title matters as so identified by Highwoods are hereafter called the
"Disapproved Exceptions") within twenty-one (21) days from the date hereof, but
in all events, prior to Closing. For the term of this Agreement, Owner may, but
is not obligated, to remove any Disapproved Exception, provided the cost thereof
does not exceed One Million and no/100 Dollars ($1,000,000.00). However, in the
event that Highwoods proceeds to and consummates a Closing subject to a
Disapproved Exception, such Disapproved Exception shall then be deemed to be a
Permitted Exception. Owner shall have no obligation to make a payment to cause
the removal of a Disapproved Exception. Any reasonable expenses incurred in
obtaining such title insurance commitment (including, without limitation, those
incurred by an attorney in conducting the necessary title search) shall be borne
by Highwoods. The title insurance premium shall also be borne by Highwoods. Any
matter affecting title to the Property which exists as of the date of the Title
Report which is not a Permitted Exception and which is not a Disapproved
Exception shall be an additional Permitted Exception.
The Land, its appurtenances and the Improvements shall be
conveyed or assigned (as applicable) by Owner to Highwoods free and clear of all
liens, encumbrances, claims, rights-of-way, easements, leases, restrictions and
restrictive covenants, except the Permitted Exceptions and the following
additional Permitted Exceptions:
(a) Rights-of-way of streets, so long as they do not interfere
with the use of the Property for office and related commercial
purposes;
(b) Public utility easements and rights-of-way in customary
form, so long as they do not interfere with the use of the Property for
office and related commercial purposes;
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(c) Rights and claims of tenants under recorded and unrecorded
leases, so long as (i) all of same have been fully disclosed by Owner
to Highwoods on Exhibit D or Exhibit I attached hereto; (ii) all of the
same contain no tenant cancellation rights, right of rent abatement, or
right of option or first refusal for the purchase of the Property
except as set forth in the leases provided to Highwoods; (iii) there
shall have been no modifications or amendments to the same from the
date hereof, except as provided in Section 9.04;
(d) Zoning and building laws or ordinances, provided they do
not prohibit the use of the Property for office and related commercial
purposes, and so long as the Property is in compliance with same;
(e) Ad valorem taxes for any year in which they are not yet
due and payable; and
(f) The security title, security interest and lien of the
deeds to secure debt and other collateral documents securing the
Promissory Notes (the "Loan Documents").
If, in the opinion of Highwoods' counsel, Highwoods is not able to
obtain an owner's title insurance commitment from the Title Company complying
with the requirements of this Subsection 6.01, with such endorsements and
coverages as Highwoods requires, Highwoods shall have the option of taking title
"as is" and consummating the Closing, or terminating this Agreement at any time
prior to the expiration of the Inspection Period. Notwithstanding any other
provision contained herein to the contrary, if the title defect(s), which may
include, without limitation, a Disapproved Exception, is a mortgage, lien,
judgment, assessment, unpaid taxes or tax which can be cured by a monetary
payment (except for the Loan Documents) (and with respect to which affirmative
title insurance coverage is not available at the Title Company's standard rates)
Highwoods has, and shall have, the absolute right of making such payment not to
exceed One Hundred Thousand and no/100 Dollars ($100,000.00) and reducing by a
like amount the Consideration due to Owner at Closing.
6.02. Representations and Warranties of Owner. Owner hereby makes the
following representations and warranties to Highwoods to Owner's actual
knowledge (which actual knowledge shall be without inquiry except with respect
to a reasonable inquiry of the employee's of White & Associates Management
Group, Inc., referenced below in this Section 6.02) which shall be limited to
the actual knowledge of Roderick White, Robert Goldman, Jerome Janger and Ted
Jacobson, as well as the following employees of White & Associates Management
Group, Inc., but only if the knowledge of such employees has been imparted to
Owner after a reasonable inquiry by Owner with respect to the matters set forth
in this Section 6.02, which inquiry Owner is obligated to make:
Sharon Williams, Carter Simmons and Scott Clark.
(a) Exhibits D and I-5 set forth with respect to each Lease
(i) the commencement date thereof, (ii) the name of the tenant, (iii)
the approximate area of the demised premises, (iv) the monthly rental
and other charges payable by the tenant, (v) the Lease expiration date;
and (vi) any Lease renewal options or purchase options set forth in
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such Lease; and with respect to the Leases as the same may be modified
in accordance with Section 9.04:
(1) The Leases are in full force and effect, have
been validly executed by the landlord and tenant, and have not been
amended or modified as to the items set forth in (a)(i-vi) immediately
above in any manner whatsoever, except as noted on the Rent Roll;
(2) The summary of the Leases set forth in Exhibit D
is accurate in all material respects and, there are no subleases except
as noted in Exhibits D and D-1;
(3) The Leases will be free and clear of all liens
and encumbrances on the date of the Closing contemplated hereby, except
for any assignment of leases executed to secure the obligations set
forth in the Promissory Notes and the Permitted Exceptions;
(4) INTENTIONALLY OMITTED
(5) Owner has taken no action, by act or omission,
which constitutes the waiver of a default by a tenant under a Lease,
except as herein specifically provided;
(6) Owner has fulfilled all of the landlord's duties
and obligations including the completion of all upfittings,
construction, decoration and alteration work which Owner is obligated
to perform under any Lease except as set forth on Exhibits I-2 and T
(attached hereto and incorporated herein by this reference). Highwoods
shall agree (by delivering the Assumption of Tenant Improvement Work
Agreement in the form of Exhibit U hereto) to complete such upfittings,
construction, decoration and/or alteration work as set forth on
Exhibits I-2 and T, in which event the amount of Consideration due
Owner under Section 4 will be reduced by the cost of the work
identified as Owner's responsibility on Exhibit T and the cost of the
work on Exhibit I-2.
(7) Owner has fulfilled all of the landlord's duties
and obligations with respect to any leasing commissions or other
compensation due arising out of any leasing, agency, brokerage or
management agreements relating to the Leases except as set forth on
Exhibits I-3 and S (attached hereto and incorporated herein by
reference). Highwoods shall agree (by delivering the Assumption of
Commissions Agreement in the form of Exhibit S-1 hereto) to pay any
such unpaid leasing commissions or other compensation due with respect
to the Leases as set forth on Exhibits I-3 and S, in which event the
amount of Consideration due Owner under Section 4 will be reduced by
the cost of such commissions and other compensation identified as
Owner's responsibility on Exhibit S, and increased by the amount of
commission previously paid by Owner indicated on Exhibit S to be
reimbursed to Owner by Highwoods;
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(8) Except as set forth on Exhibit I-4, Owner and
each tenant under the Leases is not in default under any of the
terms and provisions of said Leases, and Owner has received no notice,
of any alleged default in connection with said Leases;
(9) Except as set forth on the Rent Roll and Exhibit
I-4, there are no prepaid rentals under the Leases of more than thirty
(30) days and there are no other rent concessions or set-offs against
rent, nor has any tenant asserted any defense, set-off, or counterclaim
in connection with said Leases;
(10) Except as set forth on the Rent Roll and Exhibit
I-4, Owner has not collected any of the rent or other sums arising or
accruing under any of the Leases in excess of thirty (30) days in
advance of the time when the same shall become due;
(11) Except as set forth on the Rent Roll, Exhibit
I-4 and Exhibit R, the tenants under the Leases currently occupy all of
the space described in the Leases, and the tenants under such Leases
have no unwritten rights with respect to the Property not otherwise set
forth on the Rent Roll.
(b) No service, maintenance, property management or other
contracts (excluding Leases, Permitted Exceptions and Contracts
disclosed in Exhibit I-3 and Exhibit K) affecting the Property will be
in existence as of the Closing except as set forth on Exhibit E
attached hereto, all of which can be terminated without cost or payment
on not more than thirty (30) days' notice except as otherwise noted on
said Exhibit E, and in no event shall there be in existence as of the
Closing any contracts relating to management or leasing of the
Buildings or Improvements (except as set forth on Exhibit I-3). The
copies of the Service Contracts to be delivered pursuant to Section
5.02 hereof are true, correct and complete in all respects and contain
all amendments;
(c) No notices or requests have been received by Owner from
any insurance company issuing any policies of insurance related to the
Property which have not been complied with by Owner, and such insurance
is now in full force and effect. Any notices or requests from any such
insurance company received prior to the Closing may be complied with by
Owner prior to Closing; or, if Owner elects not to comply with such
notices or requests, Highwoods may terminate this Agreement.
(d) The Land and the roofs of all Buildings drain adequately,
and no portion of the Land lies within an area designated as
"wetlands";
(e) Except as otherwise set forth herein, all equipment,
fixtures and personal property as listed on Exhibit C attached hereto
shall remain present on the Land or in the Improvements at the Closing,
and shall be in the same condition and working order at Closing as of
the date hereof, ordinary wear and tear excepted;
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(f) Owner owns the Property free and clear from all liens and
encumbrances, except the Permitted Exceptions;
(g) Owner has entered into no agreement currently in effect,
oral or written, other than the Permitted Exceptions, an agreement of
cooperation with the Prudential Life Insurance Company and other than
as set forth on Exhibits E, I-3 and K attached hereto, which affects
title to the Property or the operation thereof, and has entered into no
agreement, oral or written, currently in effect not otherwise
referenced or disclosed herein or furnished or made available to
Highwoods. Furthermore, neither Owner nor the Property is subject to
any claim, demand, suit, unfiled lien, proceeding or litigation of any
kind, pending or outstanding, threatened or likely to be made or
instituted which would in any way be binding upon Highwoods or its
successors or assigns or materially affect or materially limit
Highwoods' or its successors' or assigns' full use and enjoyment of the
Property or which would limit or restrict in any way Owner's right or
ability to enter into this Agreement and consummate the transaction
contemplated hereby except as set forth on Exhibit R attached hereto
and incorporated herein by this reference;
(h) The use and operation of the Property (including parking
relating thereto) now is, and at Closing will be, in full compliance
with applicable building codes, zoning, subdivision and land use laws
and other local, state or federal laws and regulations; and there is no
proposed change in any such code, law or regulation which would
interfere with the intended use of the Property. All licenses and
permits required by any governmental authority having jurisdiction over
the Property have been validly issued and are in full force and effect;
(i) Copies of the Leases, Service Contracts, and warranties
previously supplied by Owner to Highwoods are true, correct and
complete;
(j) Owner owns and will own at the date of Closing a fee
simple title to the Fee Parcels subject only to Permitted Exceptions;
(k) All water, sewer, electric, telephone and drainage
facilities and other utilities required by law or by the normal use and
operation of Property at the time of Closing are installed and
operating with respect to the Property under valid permits or
agreements;
(l) There are no taxes, charges or assessments of any nature
or description arising out of the conduct of Owner's business or the
operation of the Property which would constitute a lien against the
Property that will be unpaid at the date of Closing except the lien of
the City/County ad valorem property taxes for the year in which Closing
occurs and except for charges and expenses incurred by Owner in the
ordinary course of business;
(m) Except as set forth on Exhibit X or in the engineering
reports of Law Engineering procured by Highwoods in connection with
this transaction, all functional
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systems and structural components of the Buildings including, without
limitation, the roofs, roof curbs, floors, heating, air conditioning
and ventilating mechanical systems, compressors, electrical systems,
plumbing systems, sprinklers and other fire protection and life safety
systems, refrigeration systems, vaults, equipment and appliances are
currently in good condition and working order. Subject to the
provisions of Section 5.04 hereof, Highwoods shall be permitted to
enter the Property at any time and from time to time upon reasonable
notice in order to satisfy itself that such condition has not
materially diminished.
(n) Owner and its corporate general partner have full power
and authority to enter into this Agreement and to assume and perform
all of its obligations hereunder; the execution and delivery of this
Agreement and the performance by Owner of its obligations hereunder
have been duly authorized by such partnership action as may be required
(including, without limitation, proper approval by the partners
thereof) and no further action or approval is required in order to
constitute this Agreement as a binding and enforceable obligation of
Owner; the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereunder on the part of
Owner do not and will not violate the agreement of partnership of
Owner, and do not and will not conflict with or result in the breach of
any condition or provision of, or constitute a default under, or result
in the creation or imposition of any lien, charge or encumbrance upon
any of the property or assets of Owner (including the Property) by
reason of the terms of any contract, mortgage, lien, lease, agreement,
indenture, instrument or judgment to which Owner is a party or which is
or purports to be binding upon Owner or which affects Owner except as
may be set forth in the ground leases respecting the Leasehold
Interests (the "Ground Leases") and in the various security instruments
securing the Promissory Notes; and no action by any federal, state or
municipal or other governmental department, commission, board, bureau
or instrumentality is necessary to make this Agreement a valid
instrument binding upon Owner in accordance with its terms;
(o) Owner is a general partnership duly organized, validly
existing and in good standing under the laws of the State of
California. Owner has full power and authority to carry on its business
as now conducted and to own or lease and to operate its properties and
assets now owned or leased and operated by Owner;
(p) The Property is not the subject of any outstanding
agreements with any party other than Highwoods pursuant to which any
such party may acquire any interest in the Property, except for (i)
certain mortgage loans against the Property (which will be discharged
and paid in full at Closing or assumed by Highwoods as set forth
herein), and (ii) the Leases;
(q) Owner is not a "foreign person" within the meaning of
Section 1445 of the Internal Revenue Code of 1986, as amended;
(r) As of the date of this Agreement and as of the Closing
Date (but nevertheless subject to the findings of any Environmental
Assessments obtained pursuant to Highwoods'
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inspection right pursuant to Sections 5.04 and 5.05 above), and except
as set forth in those environmental reports delivered or made available
to Highwoods prior to the execution hereof, Owner has not received any
notice that the Property (for purposes of this Subsection, the use of
the term "Property" shall include all leased and vacant space, land
surface water, groundwater, and any Improvements) contains any
contamination, including, without limitation (i) any "hazardous waste,"
"underground storage tanks," "petroleum," "regulated substance," or
"used oil" as defined by the Resource Conservation and Recovery Act of
1976 (42 U.S.C. ss. 6901, et seq.) as amended, or by any regulations
promulgated thereunder; (ii) any "hazardous substance" as defined by
the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (42 U.S.C. ss. 9601, et seq.) as amended, or by any
regulations promulgated thereunder (including, but to limited to,
asbestos and radon); (iii) any "oil" or other "hazardous substances" as
defined by the Oil and Hazardous Substances Control Act of 1976; (iv)
any substance the presence of which on, in, or under the Property, is
prohibited or regulated by any law similar to those set forth above;
and (v) any other substance which by law, regulation, ordinance or
guidance (whether published or unpublished) requires special handling
in its collection, storage, treatment, or disposal;
(s) As of the date of this Agreement and as of the Closing
Date (but nevertheless subject to the findings of any Environmental
Assessments obtained pursuant to Highwoods' inspection right under
Sections 5.04 and 5.05), and except as set forth in those environmental
reports delivered or made available to Highwoods prior to the execution
hereof, Owner has not received any notice (i) that the Property (for
purposes of this Subsection, the use of the term "Property" shall
include all leased and vacant space, land surface water, groundwater,
and any Improvements), contains any asbestos or any asbestos related
products (including, without limitation, the presence of any asbestos
in the insulation or other material used comprising any part of the
Improvements, except that one or more of the Buildings has contained
asbestos which has been either abated or encapsulated according to
environmental laws and regulations) except Owner believes that soffits
and parapet walls in Buildings 1740, 1750, 1760, 1770, 1780 and 1790
Century Circle contain suspect material which may consist of asbestos;
or (ii) that the Property has any underground storage tanks located
thereunder; or that it has ever been used as a sanitary landfill, waste
dump site or for the treatment, storage or disposal of hazardous waste
as defined in the Resource Conservation Recovery Act. Furthermore,
Owner has not received any notice (i) that the Property is the subject
of a notice of violation or other written communication from a
governmental agency or any other entity or person alleging or
suggesting an environmental law violation on the Property or (ii) that
Owner or any of Owner's employees, agents, tenants, licensees or
invitees have placed or permitted the placement of any hazardous or
toxic substances, wastes or material in, on or over the Property in
violation of any environmental law. Owner has not received any notice
that the Property is subject to any federal, state or local lien
(including any "Superfund" lien), proceedings, claim, liability or
action, or the threat or likelihood thereof, relating to the clean-up,
removal or remediation of any such hazardous substance from the
Property and Owner has received no request for information from the
United States Environmental Protection Agency, or the appropriate state
environmental agency within
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which the Property is located, or any public, governmental or
quasi-governmental agency or authority relating thereto;
(t) There are no employees of Owner engaged in the operation
and maintenance of the Property to which Highwoods shall, at or after
Closing, have any obligation whatsoever because of any action taken or
promises made by Owner;
(u) Owner has received no notice of any outstanding
requirements or recommendations by the fire insurance underwriters or
rating boards, or any insurance companies, requiring or recommending
any repairs or work to be done with reference to the improvements
located on the Property;
(v) The only portions of the Land designated as flood plain
areas are designated on the Existing Surveys provided to Highwoods;
(w) The books and records relating to the Property which have
been made or will be made available to Highwoods are materially correct
and fairly reflect the operation of the Property and all income
received and expenses incurred by Owner in connection therewith;
(x) No federal, state or local taxing authority has asserted
any tax deficiency, lien, interest or penalty or other assessment
against the Property or Owner which has not been paid and there is no
pending audit or inquiry from any federal, state or local tax authority
relating to the Property or Owner which reasonably may be expected to
result in a tax deficiency, lien, interest, penalty or other assessment
against the Property, Owner or Highwoods;
(y) The Property has operated in accordance with all
applicable laws, ordinances, rules and regulations and Owner has
received no notice that all approvals regarding zoning, land use,
subdivision, environmental and building and construction laws,
ordinances, rules and regulations have not been obtained.
Notwithstanding the foregoing, Owner has received notice that in the
future environmental laws will require modifications to the air
conditioning systems as they relate to the refrigerants currently
utilized;
(z) With respect to the Ground Leases:
(1) the Ground Leases are in full force and effect,
have been validly executed by the landlord and tenant
thereunder and have not been amended or modified except as set
forth in the documents evidencing the Ground Leases (and all
amendments thereto) delivered from Owner to Highwoods;
(2) the Ground Leases will be free and clear of all
liens and encumbrances on the date of the Closing contemplated
hereby except for any assignment executed to secure the
obligations set forth in the Promissory Note(s) and the
Permitted Exceptions;
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(3) Owner has fulfilled all of the Lessees' duties
and obligations set forth in the Ground Leases and is not in
default thereunder as of the date hereof, nor shall Owner be
in default thereunder at Closing.
(aa) Securities Representations.
(1) Owner and each of its partners (in the event of a
distribution of the Partnership Units by Owner to its Partners) will
acquire the Partnership Units and the common stock of the REIT issued
pursuant to Section 8.6A of the Partnership Agreement (the "Underlying
Shares" or "Shares") for its or his own account and not with a view to
or for sale in connection with any public distributions thereof within
the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), except that, upon exchange of Partnership Units for Underlying
Shares, such Underlying Shares may be sold pursuant to the terms of the
Registration Rights Agreement.
(2) Owner and its partners believe they have
sufficient knowledge and experience in financial and business matters
to enable them to evaluate the merits and risks of investment in the
Partnership Units and the Underlying Shares. Owner and each of its
partners have the ability to bear the economic risk of acquiring the
Partnership Units and the Underlying Shares.
(3) Owner and each of its partners have been
furnished with, or had access to, information to which a reasonable
investor would attach significance in making investment decisions, and
Owner and each of its partners have been furnished with copies of all
other materials which they have requested and Owner and its partners
have had a full opportunity to ask questions of and receive answers
from Highwoods and the REIT or any person or persons acting on behalf
of Highwoods or the REIT concerning terms and conditions of the
acquisition of the Partnership Units and the Underlying Shares.
(4) Owner and each of its partners hereby acknowledge
that the Partnership Units and the Underlying Shares are not registered
under the Securities Act or any state securities laws and cannot be
resold without registration thereunder or exemption therefrom. Owner
and its partners agree that they will not transfer all or any portion
of the Partnership Units or the Underlying Shares unless such transfer
has been registered or is exempt from registration under the Securities
Act and any applicable state securities laws. Documents and/or
certificates evidencing the Partnership Units and the Underlying Shares
may, unless otherwise registered, contain a prominent legend with
respect to the restrictions on transfer under the Securities Act and
under applicable state securities laws.
(5) Owner and each partner thereof is an "accredited
investor," as such term is defined in Regulation D promulgated under
the Securities Act.
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None of the representations in this subparagraph (aa)
shall prevent Owner or its partners from exchanging Partnership Units
for Shares or selling Shares pursuant to an effective registration or a
valid exemption therefrom, except as may be limited by the Registration
Rights Agreement.
All representations and warranties of Owner contained in this Agreement
shall be true, accurate and correct to Owner's actual knowledge as of the date
hereof and Owner shall deliver to Highwoods at Closing a certificate certifying
that they are still true, accurate and correct to the Owner's actual knowledge
as of the date of Closing; provided, if any such representations or warranties
are not true, accurate and correct to Owner's actual knowledge as of the date of
Closing, Owner shall so state in said certificate and shall disclose the facts
or circumstances which have caused such representation or warranty to no longer
be true, accurate and correct.
Except with respect to (and limited by) instances of Owner's fraud
related to the procurement of this Agreement, the representations and warranties
set forth in this Section 6.02 shall expire on that date which is twelve (12)
months after the date of Closing unless (and only to the extent), on or before
such date, Highwoods files a claim against Owner for breach of a representation
or warranty in a court of competent jurisdiction. In the case of fraud,
Highwoods shall have the right to bring a claim within any time allowed by any
statute of limitations applicable to such fraud. Any such claim shall be limited
to actual damages (including attorneys' fees and expenses and court costs)
suffered by Highwoods. Notwithstanding the foregoing, Highwoods shall have no
claim against Owner (i) for any representation or warranty which was untrue,
inaccurate or incorrect when made by Owner if the facts or circumstances which
caused such representation or warranty to be untrue, inaccurate or incorrect
were disclosed to Highwoods or were discovered or became known to Highwoods
prior to Closing and Highwoods nevertheless closed the acquisition of the
Property and paid the Consideration to Owner; or (ii) unless said damages
suffered by Highwoods because of such untrue, inaccurate or incorrect
representation or warranty exceeds One Hundred Thousand and no/100 Dollars
($100,000.00), in which case Highwoods shall be entitled to file a claim for all
actual damages suffered by Highwoods including the said $100,000.00 threshold
amount.
6.03. Representations and Warranties of Highwoods. Highwoods hereby
represents and warrants to Owner as follows:
(a) Highwoods has been duly formed and is validly existing as
a North Carolina limited partnership and is duly qualified to do
business and is in good standing in all jurisdictions where such
qualification is necessary to carry on its business as now conducted
and is duly qualified or in the process of becoming duly qualified in
all jurisdictions where the ownership of its property would necessitate
such qualification. Highwoods has all partnership power and authority
under its partnership agreement and its certificate of limited
partnership to enter into this Agreement and to enter into and deliver
all of the documents and instruments required to be executed and
delivered by Highwoods and to perform its obligations hereunder and
thereunder. Highwoods is treated as a partnership as defined in the
Internal Revenue Code of 1986, as amended, Code Sections 7701(a)(2) and
761(a).
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(b) Highwoods has full power and authority to enter into this
Agreement and to assume and perform all of its obligations hereunder;
the execution and delivery of this Agreement and the performance by
Highwoods of its obligations hereunder have been duly authorized by
such partnership action as may be required (including, without
limitation, proper approval by the partners thereof) and no further
action or approval is required in order to constitute this Agreement as
a binding and enforceable obligation of Highwoods; the execution and
delivery of this Agreement and the consummation of the transactions
contem plated hereunder on the part of Highwoods do not and will not
violate the agreement of partnership of Highwoods, and do not and will
not conflict with or result in the breach of any condition or provision
of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the property
or assets of Highwoods (including the Property) by reason of the terms
of any contract, mortgage, lien, lease, agreement, indenture,
instrument or judgment to which Highwoods is a party or which is or
purports to be binding upon Highwoods or which affects Highwoods; and
no action by any federal, state or municipal or other governmental
department, commission, board, bureau or instrumentality is necessary
to make this Agreement a valid instrument binding upon Highwoods in
accordance with its terms;
(c) To the actual knowledge of Highwoods, Highwoods is not (i)
in violation of any of its organizational documents; (ii) in default in
any material respect, and no event has occurred which, with notice or
lapse of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained
in any material indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which it is a party or by which it is
bound or to which any of its properties or assets is subject or by
which it or any of them may be affected; or (iii) in violation in any
material respect of any law, ordinance, governmental rules, regulation
or court decree to which it or its properties or assets may be subject.
(d) To the actual knowledge of Highwoods, there is no existing
or threatened legal action or governmental proceedings of any kind
involving Highwoods, any of its assets or the operation of any of the
foregoing, which if determined adversely to Highwoods or its assets,
would have a material adverse effect on the financial condition,
business or prospects of Highwoods or its assets or which would
interfere with Highwoods' ability to execute or deliver, or perform its
obligations under this Agreement or any of the documents required to be
executed by it.
(e) Highwoods has no actual knowledge of any existing
violation of any federal, state, county or municipal law, ordinance,
order, code, regulation or requirements affecting Highwoods or any of
its assets that would have a material adverse effect on the financial
condition, business or prospects of Highwoods or any of its assets.
(f) The Partnership Agreement attached hereto as Exhibit G is
a true, complete and correct copy of the limited partnership agreement
of Highwoods, as amended. The
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Partnership Agreement is in full force and effect and has not been
further amended, modified or terminated.
(g) Assuming the accuracy of Owner's representations and
warranties in paragraph 6.02(aa) hereof, to the best of Highwoods'
knowledge neither the Partnership Units nor the Underlying Shares are
required to be registered under any federal or state securities law,
rule or regulation, but must be registered to be freely tradeable.
(h) To the actual knowledge of Highwoods, neither this
Agreement nor any schedule hereto, nor any report, certificate or
instrument furnished to Owner in connection with the transactions
contemplated by this Agreement, when read or interpreted together or in
conjunction with other materials and information, both written and
oral, provided to Owner by Highwoods, contains any material
misstatement of fact or omits to state a material fact necessary to
make the statements contained herein or therein not misleading.
Highwoods knows of no information or fact which has or would have a
material adverse effect on the financial condition, business or
prospects of Highwoods or its assets or the REIT or its assets.
(i) Highwoods is, and at all times prior to the Closing date
will be, solvent. As used herein, "solvent" means that Highwoods (i)
does not have debts greater than the fair market value of its assets;
(ii) is paying and anticipates that it will continue to pay its debts
as they mature and become due; and (iii) has sufficient capital to
operate its businesses as they are operated on the date of this
Agreement.
(j) Highwoods carries, or is covered by, and will maintain,
insurance in such amounts and covering such risks as is adequate for
the conduct of its business and the value of its properties and assets
and as is customary for companies engaged in similar businesses in
similar markets, including, without limitation, "all risks" casualty
insurance, flood insurance (when necessary), general commercial
liability insurance and business interruption insurance. Highwoods has
not received from any insurance company notice of any material defects
or deficiencies affecting the insurability of any such properties and
assets and operations.
(k) As of the date hereof and on the date of Closing, the
Partnership Agreement of Highwoods does not and on the date of Closing
will not, authorize the issuance of any limited partnership interest
therein which provide any limited partner of Highwoods with rights (as
a partner) which are dissimilar in any respect to the rights (as a
partner) which will be afforded by the Units to Owner upon their
issuance.
(l) As of the date hereof, the Original Limited Partners of
Highwoods (as defined in the Partnership Agreement) own less than 5%of
all of the issued and outstanding Partnership Units of Highwoods.
SHMM:
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Except with respect to (and limited by) instances of the Highwoods'
fraud related to the procurement of this Agreement, the representations and
warranties set forth in this Section 6.03 shall expire on that date which is
twelve (12) months after the date of Closing unless (and only to the extent) on
or before such date, Owner files a claim against the Highwoods for breach of a
representation or warranty in a court of competent jurisdiction. In the case of
fraud, Owner shall have the right to bring a claim within any time allowed by
any statute of limitations applicable to such fraud. Any such claim shall be
limited to actual damages (including attorneys' fees and expenses and court
costs) suffered by Owner. Notwithstanding the foregoing, Owner shall have no
claim against Highwoods (i) for any representation or warranty which was untrue,
inaccurate or incorrect when made by Highwoods if the facts or circumstances
which caused such representation or warranty to be untrue, inaccurate or
incorrect were disclosed to Owner or were discovered or became known to Owner
prior to Closing and Owner nevertheless closed the transaction contemplated
hereby; or (ii) unless said damages suffered by Owner because of such untrue,
inaccurate or incorrect representation or warranty exceeds One Hundred Thousand
and no/100 Dollars ($100,000.00), in which case Owner shall be entitled to file
a claim for all actual damages suffered by Owner including the said $100,000.00
threshold amount.
6.04. Representations and Warranties of the REIT. The REIT hereby
represents and warrants to Owner as follows:
(a) The REIT has been duly formed and is validly existing as a
Maryland corporation and has elected under the Code to be treated as a
real estate investment trust, and is duly qualified to do business in
all jurisdictions where such qualification is necessary to carry on its
business as now conducted and is duly qualified or in the process of
becoming duly qualified in all jurisdictions in which its properties or
Highwoods' properties are located. The REIT has all power and authority
under its organizational documents to enter into this Agreement and the
documents required to be executed by it.
(b) The execution and delivery of this Agreement and the
documents executed by it, and the performance of its obligations under
this Agreement and the documents executed by it, have been duly
authorized by all requisite action, and this Agreement has been, and
the documents required to be executed by it will on the date of Closing
have been, duly executed and delivered by the REIT, including the
Registration Rights Agreement. To the actual knowledge of the REIT, and
except for the requirement of the approval of the New York Stock
Exchange of the Subsequent Listing Application as set forth in Section
5.06 above, none of the foregoing requires any action by or in respect
of, or filing with, any governmental body, agency or official or
contravenes or constitutes a default under any provision of applicable
law or regulation, any organizational document of the REIT or any
agreement, judgment, injunction, order, decree or other instrument
binding upon the REIT. This Agreement does and will, and the documents
required to be executed by it will, constitute the valid and binding
obligations of the REIT enforceable in accordance with their respective
terms, subject to bankruptcy and similar laws affecting the remedies or
resources of creditors generally.
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(c) To the actual knowledge of the REIT, the REIT is not (i)
in violation if its charter or by-laws; (ii) in default in any material
respect, and no event has occurred which, with notice or lapse of time
or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which it is a party or by which it is bound or to
which any of its properties or assets is subject or by which it or any
of them may be affected; or (iii) in violation in any material respect
of any law, ordinance, governmental rule, regulation or court decree to
which it or its properties or assets may be subject. To its actual
knowledge, the REIT has not failed to obtain any material license,
permit, certificate, franchise or other governmental authorization or
permit necessary to the ownership of any of its assets or to the
conduct of its businesses.
(d) To the actual knowledge of the REIT, there is no existing
or threatened legal action or governmental proceedings of any kind
involving the REIT, any of its assets or the operation of any of the
foregoing, which, if determined adversely to the REIT or its assets,
would have a material adverse effect on the consolidated financial
position, stockholders' equity, results of operations, business or
prospects of the REIT or its assets or which would interfere with the
REIT's ability to execute or deliver, or perform its obligations under
this Agreement or any of the documents required to be executed by it.
(e) As of the date of this Agreement, the authorized
capitalization of the REIT consists of 100,000,000 shares of common
stock (the "Common Shares"), of which 35,258,143 Common Shares are
issued and outstanding as of the date hereof and of which 4,254,528
Common Shares are reserved for exchange for issued and outstanding
Partnership Units in Highwoods and 10,000,000 shares of preferred stock
which are authorized, but none of which have been issued. All of the
outstanding Common Shares have been duly authorized and validly issued,
are fully paid, nonassessable and free of any preemptive or similar
rights and were issued in accordance with the Securities Act.
(f) The REIT is in compliance with the listing rules
promulgated by the New York Stock Exchange provided, however, the
Subsequent Listing Application must be approved by the New York Stock
Exchange.
(g) The REIT's Registration Statement filed in connection with
its $200,000,000.00 debt offering dated November 15, 1996, (the
"November Registration Statement), its Prospectus dated December 5,
1996, utilized in connection with a private placement of 2,250,000 of
its Common Stock (the "December Prospectus"), and its most recently
filed Form 10-Q for the period ended September 30, 1996, and Form-K
filed by the REIT with the Securities and Exchange Commission (the
"Commission") (when required to be filed) under the Securities Act of
1933 (the "Securities Act") or the Securities and Exchange Act of 1934
(the "Exchange Act") when they became effective or were filed with the
Commission (as applicable), as the case may be, conformed in all
material respects to the requirements of the Securities Act or the
Exchange Act, as applicable, and the rules and
23
<PAGE>
regulations of the Commission thereunder, and none of such documents
(as amended through the date hereof) contained an 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 not misleading; and
any further documents so filed and incorporated by reference in any
registration statement filed with respect to the Common Shares or the
Underlying Shares, when such documents become effective or are filed
with the Commission, as the case maybe, will conform in all material
respects to the requirements of the Securities Act or the Exchange Act,
as applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material fact
or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. Since the
dates of the November Registration Statement and the December
Prospectus (i) except as set forth on Exhibit W, there has been no
material adverse change in or affecting, or any event which, with the
passing of time or the giving of notice, would affect, the financial
condition, results of operation or business of the REIT, whether or not
arising in the ordinary course of business; (ii) there has been no
material casualty loss or material condemnation or other material
adverse event with respect to any of the properties or assets of the
REIT; (iii) there has been no material change in the capital stock of
the REIT. There are certain acquisition transactions pending between
Highwoods and unaffiliated third parties under contracts now being
negotiated. The REIT has advised Owner in writing of the same and the
existence thereof at the date of Closing (or the prior closing of any
such transaction) shall not constitute a breach of warranty or
representation by the REIT or Highwoods.
(h) The REIT has not received written notice of any existing
violation of any federal, state, county or municipal law, ordinance,
order, code, regulation or requirement affecting the REIT or any of its
assets that would have a material adverse effect on the financial
condition, business or prospects of the REIT or any of its assets.
(i) To the best of the REIT's knowledge, the REIT is in
compliance in all material respects with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations
thereunder ("ERISA"). No "reportable event" (as defined in ERISA) has
occurred with respect to any "pension plan" (as defined in ERISA) for
which the REIT would have any liability. The REIT has not incurred and
does not expect to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan" or
(ii) Sections 412 or 4971 of the Code. Each "pension plan" for which
the REIT would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to
act, which would cause the loss or such qualification. None of the
assets of the REIT constitute, nor will such assets, as of the date of
Closing constitute, "plan assets" under ERISA.
(j) The REIT has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof and
has paid all taxes due thereon, and no tax deficiency has been
determined adversely to the REIT which has had (nor does the
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REIT have any knowledge of any tax deficiency which, if determined
adversely to the REIT might have) a material adverse effect on the
consolidated financial position, stockholders' equity, results or
operations, business or prospects of the REIT. The REIT has paid all
property taxes and other assessments, including betterment assessments,
assessed against its real properties to the extent such taxes and
assessments were due and payable prior to the date hereof.
(k) The REIT is not an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined under
the Investment Company Act of 1940 and the rules and regulations of the
Commission thereunder.
(l) The REIT is organized and operates and will continue to
operate, in a manner so as to qualify as a "real estate investment
trust" under Sections 856 through 860 of the Code. The REIT will elect,
and continue to elect, to be taxed as a "real estate investment trust"
under the Code.
(m) Assuming the accuracy of Owner's representations and
warranties in paragraph 6.02(aa) hereof, to the best of the REIT's
knowledge, neither the Partnership Units nor the Underlying Shares are
required to be registered or qualified under any federal or state
securities law, rule or regulation at this time.
(n) The REIT is, and at all times prior to the Closing will
be, solvent. As used herein, "solvent" means that the REIT (i) does not
have debts greater than the fair market value of its assets; (ii) is
paying and anticipates that it will continue to pay its debts as they
mature and become due; and (iii) has sufficient capital to operate its
businesses as they are operated on the date of this Agreement.
(o) To the actual knowledge of the REIT, neither this
Agreement nor any exhibit hereto, nor any report, certificate or
instrument furnished to Owner in connection with the transaction
contemplated by this Agreement, when read or interpreted together and
in conjunction with other materials and information, both written or
oral, provided to Owner by the REIT, contain any materials and
information, either written and oral, which contain any material
misstatement of facts or omits to state a material fact necessary to
make the statements contained herein or therein not misleading. The
REIT knows of no information or fact which has or would have a material
adverse effect on the financial condition, business or prospects of
Highwoods or its assets and the REIT or its assets which has not been
disclosed by the REIT to Owner.
(p) The REIT is eligible to utilize Form S-3 promulgated by
the Commission for purposes of registering the Shares.
(q) The REIT does not own any real property.
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Except with respect to (and limited by) instances of the REIT's fraud
related to the procurement of this Agreement, the representations and warranties
set forth in this Section 6.04 shall expire on that date which is twelve (12)
months after the Date of Closing unless (and only to the extent) on or before
such date, Owner files a claim against the REIT for breach of a representation
or warranty in a court of competent jurisdiction. In the case of fraud, Owner
shall have the right to bring a claim within any time allowed by any statute of
limitations applicable to such fraud. Any such claim shall be limited to actual
damages (including attorneys' fees and expenses and court costs) suffered by
Owner. Notwithstanding the foregoing, Owner shall have no claim against the REIT
(i) for any representation or warranty which was untrue, inaccurate or incorrect
when made by the REIT if the facts or circumstances which caused such
representation or warranty to be untrue, inaccurate or incorrect were disclosed
to Owner or were discovered or became known to Owner prior to Closing and Owner
nevertheless closed the transaction contemplated hereby; or (ii) unless said
damages suffered by Owner because of such untrue, inaccurate or incorrect
representation or warranty exceeds One Hundred Thousand and no/100 Dollars
($100,000.00), in which case Owner shall be entitled to file a claim for all
actual damages suffered by Owner including the said $100,000.00 threshold
amount.
7. Due Diligence Period. Highwoods shall have the right for a period of
forty (40) days from the date of execution hereof by all parties hereto (but
only up to the Closing) (the "Inspection Period") to inspect the Property
including, without limitation, the physical condition of such Property,
financial records and Leases to determine if it desires to accept a contribution
of the Property from Owner as herein set forth. If Highwoods determines for any
reason that it does not desire to accept a contribution of the Property, it must
give notice of this fact to Owner on or before the end of the Inspection Period,
and upon the giving of such notice, this Agreement shall terminate and be of no
further force or effect except as otherwise provided herein. If Highwoods does
not give such notice, then the Closing shall take place at the time and place
set forth in this Agreement. During the Inspection Period, Highwoods shall have
the right of access to the Property and Owner's financial records and other
records and documents related thereto as set forth in Sections 5.03 and 5.04,
and agrees to indemnify Owner for loss to Owner arising out of such access as
set forth in Section 5.04. All physical inspections and entry onto the Property
shall be subject to the rights of tenants in possession or occupying portions of
the Property under the Leases. During the Inspection Period, Highwoods shall
have the right to interview tenants under the Leases concerning their tenancies
with a representative of Owner present in accordance with Section 5.04 hereof.
In the event Highwoods terminates the Agreement in accordance with this Section
7, Highwoods shall provide Owner with full copies of all surveys, reports,
studies and the like obtained by Highwoods in connection with its due diligence
investigations.
8. Conditions Precedent to Highwoods' and Owner's Obligations at
Closing.
8.01. The obligations of Highwoods to accept the contribution of the
Property from Owner and meet its other obligations hereunder shall be subject to
the following conditions precedent, any of which may be waived by Highwoods in
writing at the Closing:
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(a) All of the representations and warranties of Owner made
herein shall be true and correct in all material respects as of the
Closing, subject to modifications permitted hereunder.
(b) Owner's obligations with respect to the Property as set
forth herein shall have been performed in all material respects.
(c) The Property must be in the same condition as of the date
of this Agreement, subject to ordinary war and tear and to the specific
provisions set forth herein related to condemnation, casualty or
otherwise.
(d) Owner shall have delivered to Highwoods tenant estoppel
certificates in the form attached hereto as Exhibit L dated not earlier
than December 1, 1996, from the ten (10) largest tenants of the
Buildings other than agencies of the U. S. government, and will make
all reasonable efforts to obtain tenant estoppel certificates from all
other tenants of the Buildings, with the intent of delivering tenant
estoppel certificates from tenants occupying eighty-percent (80%) of
the net rentable square feet of the Buildings. To the extent Owner has
not delivered tenant estoppel certificates by Closing from tenants
occupying 80% of the net rentable space of the Buildings (exclusive of
tenants who are agencies of the United States government), Owner will
execute a sufficient number of certificates (certifying the same
matters set forth in the tenant estoppel certificates submitted to
tenants which were not received) related to tenants leasing that number
of net rentable square feet in the Buildings, which when added to the
net rentable square feet in the Buildings leased by tenants whose
tenant estoppel certificates have been received, will equal 80% or more
of the net rentable square feet in the Buildings (exclusive of tenants
who are agencies of the United States government). Owner will agree to
indemnify Highwoods from loss or damage incurred by Highwoods resulting
from the inaccuracy of any matter contained in such Owner certificates.
Notwithstanding the representations and warranties of Owner to its
actual knowledge related to the Leases as set forth in 6.02(a) above,
Owner's estoppel certificates shall not be limited to Owner's actual
knowledge, but rather shall contain unconditional representations;
provided, however, Owner's liability with respect thereto shall be
limited to a maximum of $3,000,000.00. In the event Owner provides
Owner's estoppel certificates pursuant to the terms hereof, Owner may,
after the Closing, substitute tenant estoppel certificates therefor,
and thereafter, Owner shall be relieved from any liability to Highwoods
with respect to any Owner's estoppel certificate substituted by a
tenant estoppel certificate. Owner will agree to submit to the
jurisdiction of the courts of the State of North Carolina in the event
Highwoods is required to bring an action for damages related to this
indemnity arising out of the inaccuracy of the information contained in
the certificates executed by Owner. Owner agrees to send estoppel
certificates to all tenants of the Property and request
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that the same be completed and returned to Owner for delivery to
Highwoods. If Highwoods has not received estoppel certificates in
accordance with the foregoing on or before Closing, then Highwoods may
terminate this Agreement.
(e) INTENTIONALLY OMITTED.
(f) No tenant of 5% or more of the leasable space in the
Buildings shall have become a debtor in a proceeding under Title 11 of
the United States Bankruptcy Code or, the subject of any other
insolvency proceeding, including state receivership proceedings or a
proceeding for the assignment for the benefit of creditors under any
state law.
(g) Consent to the assignment of the Leasehold Interest must
have been obtained from the lessor(s) under the Ground Leases creating
the Leasehold Interest, which consent must be substantially in the form
set forth on Exhibit N-2, subject to Highwoods' compliance with any
requirements for such assignment and consent as set forth in such
Ground Leases.
(h) In the event Highwoods assumes the obligations set forth
in any of the Promissory Note(s), then in such event the holder of such
Promissory Note(s) must have consented to the assumption thereof by
Highwoods and must have executed a mortgagee estoppel certificate in
the form hereto as Exhibit F-2, subject to Highwoods' compliance with
any requirements for such consent contained in any document executed in
connection with the loan evidenced by the Promissory Note(s).
(i) From the date of the execution of this Agreement until
Closing no event described in Section 9.09 shall have occurred.
(j) The New York Stock Exchange must have approved the
Subsequent Listing Application.
In the event any of the aforesaid conditions precedent are not
fulfilled, Highwoods may only (i) terminate its obligations hereunder
(other than those obligations which survive termination), (ii) waive
any such failure and close in accordance with the terms hereof, or
(iii) (except for matters that are not in Owner's "actual knowledge" on
the date hereof, but which Owner acquires actual knowledge after the
date hereof and prior to Closing) require Owner to perform its
obligations as elsewhere set forth herein and as limited by other
provisions of this Agreement.
8.02. The obligations of Owner to contribute the Property to Highwoods
and meet its other obligations hereunder shall be subject to the following
conditions precedent, any of which may be waived by Owner in writing at the
Closing:
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(a) All of the representations and warranties of Highwoods
made herein shall be true and correct in all material respects as of
the Closing.
(b) Highwoods' obligations with respect to the Property as set
forth herein shall have been performed in all material respects.
(c) Consent to the assignment of the Leasehold Interest must
have been obtained from the lessor(s) under the Ground Leases creating
the Leasehold Interest, which consent must be substantially in the form
set forth on Exhibit N-2.
(d) In the event Highwoods assumes the obligations set forth
in any of the Promissory Note(s), then in such event the holder of such
Promissory Note(s) must have consented to the assumption thereof by
Highwoods, released Owner from the obligation set forth thereunder and
must have executed a mortgagee estoppel certificate in the form hereto
as Exhibit F-2.
(e) From the date of the execution of this Agreement until
Closing there shall have been no material adverse change in the
financial condition of Highwoods as set forth in those document(s)
described on Exhibit Y attached hereto and incorporated herein by
reference.
(f) The New York Stock Exchange must have approved the
Subsequent Listing Application.
In the event any of the aforesaid conditions precedent are not
fulfilled, Owner may only (i) terminate its obligations hereunder
(other than those obligations which survive termination), (ii) waive
any such failure and close in accordance with the terms hereof, or
(iii) (except for matters related to the representations and warranties
of the REIT and Highwoods which are limited to the REIT's and
Highwoods' "actual knowledge" on the date hereof, but which Highwoods
or the REIT acquire actual knowledge after the date hereof and prior to
Closing) require Highwoods and the REIT to perform their obligations as
elsewhere set forth herein and as limited by other provisions of this
Agreement.
9. Maintenance and Operation of the Property.
9.01. From and after the date of this Agreement through the Closing
with respect to the Property, Owner shall operate the Property in substantially
the same condition and manner in which it is now maintained and operated, normal
wear and tear and damage or destruction by casualty and condemnation excepted
and except as otherwise provided herein.
9.02. From and after the date of this Agreement and through the day of
Closing, with respect to the Property, Owner shall maintain on the Property such
insurance as is now in effect.
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9.03. Highwoods acknowledges that Owner shall have the right, from and
after the date of this Agreement through the Closing, to remove or replace items
of Personal Property from time to time in the normal course of business.
Highwoods agrees that Owner may remove items of Personal Property from the
Property if such items are obsolete or replaced by Personal Property of equal or
greater utility or value. Any such Personal Property removed shall cease to
constitute Personal Property for all purposes under this Agreement. Any Personal
Property replaced pursuant to this subparagraph 9.03 shall, to the extent not
thereafter removed, constitute Personal Property for all purposes under this
Agreement.
9.04. Except for those prospective new leases, and prospective Lease
amendments identified in Exhibit I attached hereto (the "New Leases"), which
Owner shall have the right to enter into on substantially the same terms set
forth on Exhibit I, prior to Closing, without the consent of Highwoods, Owner
shall not enter into any new lease with respect to the Buildings or any part
thereof, or the Property or any part thereof, nor shall Owner hereafter enter
into any amendment, modification or cancellation of any of the Leases, nor give
any rent concessions, or give any considerations other than possession to any
tenant without the prior written consent of Highwoods, provided, after Owner
notifies Highwoods of any other prospective new lease not identified on Exhibit
I or of any such proposed amendment, modification or cancellations of any of the
Leases, if Highwoods does not respond to Owner within ten (10) business days
after receipt of written notice from Owner, Highwoods will be deemed to have
accepted any such other prospective new lease or such Lease amendment,
modification, cancellation or prospective Lease and Highwoods shall be
responsible for third party leasing commissions tenant improvements and
concessions with respect thereto to the extent such are consistent with Owner's
past practices related to the Property. Such Leases will be in the form set
forth on Exhibit J attached hereto and incorporated herein by reference. For the
purposes of this Agreement, all leases, lease modifications and amendments to or
cancellations of Leases entered into pursuant to this Section 9.04 shall be
deemed included in the terms "Leases" and "Permitted Exceptions."
9.05. Highwoods acknowledges that Owner shall have the right, from and
after the date of this Agreement through the Closing with respect to the
Property, in the ordinary course of business, to enter into agreements
pertaining to the operation of the Property. All such agreements entered into
after the date hereof shall either be (i) approved in writing by Highwoods
("Approved New Agreements") and shall be thereupon be deemed to be disclosed on
Exhibit E; or (ii) terminable without penalty on no more than thirty (30) days'
notice ("Terminable New Agreements").
9.06. Owner shall promptly deliver to Highwoods written notice of any
casualty or condemnation involving the Property. If, prior to the Closing, all
or any part of a Building is damaged or destroyed by casualty or is taken by
condemnation, eminent domain or agreement in lieu thereof, such that (i) twenty
percent (20%) or more of the floor area of any Building or the parking area on
the Property is damaged or destroyed by such casualty (a "Major Casualty"); or
(ii) in the event of a taking, such taking is of twenty percent (20%) or more of
the floor area of any Building or of the parking area on the Property, or such
taking renders the Property unfit for use as an office facility (a "Major
Taking"), then either Highwoods or Owner may elect to terminate this Agreement.
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If any part of the Property is damaged, destroyed or taken by a casualty,
condemnation proceeding, eminent domain proceeding or agreement in lieu thereof
that does not constitute a Major Casualty or a Major Taking, or in the event of
a Major Casualty or Major Taking, neither party elects to terminate this
Agreement, then the Closing shall take place as set forth herein with Highwoods
to receive all insurance or condemnation proceeds and without reduction of the
Consideration.
9.07. Prior to the Closing Owner shall keep all debt service payments
due on the Promissory Notes current, including the making of the January 1997
payments due thereon.
9.08. Owner, prior to taking any enforcement action under any of the
Leases because of a default of a tenant thereunder other than as set forth on
Exhibit I-4, shall obtain the consent of Highwoods, which consent will not be
unreasonably withheld or delayed, provided, if Highwoods does not respond to
Owner within five (5) business days after receipt of written notice from Owner
of its intent to take such enforcement action, Owner may take such action
without Highwoods' actual consent.
9.09. In the event that Owner has knowledge after the execution of this
Agreement, but prior to Closing, that due to a change in circumstances in the
operation of the Property, the gross rental income payable under the Leases will
decrease by 3% or more for the year 1997 from the gross rental income paid under
the Leases for the year 1996, or that the cost of operating the Property during
the calendar year 1997 will increase by 3% or more from the cost of operating
the Property during 1996 Owner shall affirmatively disclose these facts to
Highwoods. In addition to the above, if prior to Closing, any tenant under a
Lease for 5% or more of the leasable space in the Buildings shall become a
debtor in a proceeding under Title 11 of the United States Code, or the subject
of any other insolvency proceeding, including state receivership proceedings or
a proceeding for the assignment for the benefit of creditors under State law,
and Owner has knowledge of such fact, then in such event, Owner shall disclose
such fact to Highwoods.
10. Closing Date. The parties have targeted January 9, 1997, as the
date on which they hope to close this transaction. However, the Closing shall
take place no later than the earlier of January 31, 1997, or five (5) business
days after Highwoods gives notice to Owner of the date on which it desires to
close this transaction; provided, the Closing will not occur until the
Subsequent Listing Application is approved by the Exchange. The Closing shall
occur at 10:00 a.m. in the offices of Owner in Atlanta, Georgia, unless another
time, place and date is designated by Highwoods. If Highwoods intends to prepay
any of the Promissory Notes in full and if Highwoods elects to close this
transaction on a date which would not allow for proper notice to the Lenders of
Highwoods' intention to prepay in full any of the Promissory Notes, Highwoods
shall give notice to the appropriate Lender(s) of its intention to prepay the
Note(s) in full within five (5) business days after the Closing and will make
any prepayment associated therewith within five (5) business days after the end
of the appropriate notice period. Highwoods shall make all payments due after
the January 1997 payment until such Promissory Notes are paid in full, and in
connection therewith, Highwoods shall indemnify, defend and hold Owner harmless
from and against any and all liability damages, claims, causes of action, costs
and expenses (including reasonable counsel fees and
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expenses of Owner) arising out of or with respect to the failure of Highwoods to
pay all sums due on the Promissory Note(s) (including any prepayment penalties)
from and after the making of the January 1997 payments due thereon (which shall
be made by Owner), or perform any other obligations arising after the Closing
under any loan document related thereto.
11. Documents Required to be Delivered at Closing:
11.01. Documents Required to be Delivered by Owner at Closing. At
Closing, Owner shall deliver to Highwoods the following:
(a) An executed amendment to the Partnership Agreement in a
form mutually satisfactory to the parties, evidencing the admission of
Owner as a limited partner(s) in Highwoods, the number of Partnership
Units which are delivered to Owner pursuant to 4.02(b) after all
adjustments are made to the amount of Consideration to be delivered and
containing Owner's agreement to be bound by all of the terms and
conditions of the Partnership Agreement thereof (the "Amendment");
(b) Registration Rights Agreement;
(c) A limited warranty deed and quitclaim deed (if necessary
as set forth in Section 5.01) in the form reasonably acceptable to
Highwoods conveying title to the Fee Parcels (free and clear of all
liens, encumbrances, easements and restrictions, except the Permitted
Exceptions);
(d) A bill of sale transferring all the Personal Property
subject to this Agreement which bill of sale will be in the form
attached hereto as Exhibit M;
(e) A affidavit in the form of Exhibit M-1, attached hereto;
(f) An assignment of all tenant security deposits held by
Owner under the terms of the Leases and transfer of such deposit
amounts to Highwoods, or in lieu thereof, an adjustment shall be made
in the amount of Consideration due Owner (it shall be reduced) and
Owner shall keep such deposits;
(g) With respect to the Leases and the Ground Lease(s)
creating the Leasehold Interests:
(1) An Assignment of the Leases in the form set forth
on Exhibit N;
(2) An Assignment of the Ground Leases in the form
set forth on Exhibit N-1; and,
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(3) A Consent to the Assignment of Ground Leases in
the form set forth on Exhibit N-2, for each Leasehold Interest.
(h) The original Leases set forth on Exhibit D, and all keys,
licenses and permits related to the Property and all tenant files and
such other books and records in Owner's possession as shall be
necessary for Highwoods to own and operate the Property commencing on
the date of Closing;
(i) A letter from Owner to tenants of the Property advising
them of the transfer of the Property to Highwoods and that all future
payments under the Leases are to be paid to Highwoods;
(j) A certificate of Owner as to the warranties and
representations referred to in Section 6.02 (as the same may be
modified or qualified in accordance with said Section 6.02) hereof
being true and correct to Owner's actual knowledge as of the Closing
Date;
(k) An updated Rent Roll of the Property certified by Owner to
be true and correct to Owner's actual knowledge;
(l) An affidavit as to "foreign persons" referred to in
Section 6.02(q) hereof;
(m) An assignment of all architectural and engineering plans
in possession of Owner relating to the Buildings or the Property
together with mylars or copies thereof in possession of Owner as
Highwoods may require;
(n) A blanket assignment and transfer of any and all Owner's
miscellaneous interests and all warranties and guarantees from
contractors, subcontractors, suppliers, manufacturers or distributors
relating to the Property, if any, and all of Owner's right, title,
interest and benefits in, to and under all licenses, permits, and
similar documents or authorizations pertaining to the ownership and
operation of the Property, if any, including the trade name of the
Property, in the form attached hereto as Exhibit O;
(o) Original copies of the certificate or certificates of
occupancy for the Property, if in Owner's possession;
(p) Duly executed originals of the tenant and/or Owner
estoppel certificates referenced in Section 8.01(d);
(q) The opinion of counsel for Owner in the form of Exhibit P
attached hereto;
(r) Originals or certified copies of all Service Contracts;
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(s) The original of the letters from Lenders setting forth the
outstanding balance of the Promissory Notes together with the amount of
interest accrued thereon as of the date of Closing;
(t) A certified copy of all appropriate partnership
resolutions (and corporate resolutions of the corporate general partner
of Owner) authorizing the execution, delivery and performance by such
Owner of this Agreement;
(u) A settlement statement setting forth the total amount of
Consideration to be delivered to Owner hereunder, the unpaid balances
of the Promissory Notes at Closing, the prorated items and other
adjustments required to be made to the Consideration hereunder and the
number of Partnership Units to be delivered to Owner in connection with
the Closing;
(v) Upon delivery of the Existing Surveys delivered to
Highwoods pursuant to Section 5.01 hereof, if the Title Company will
issue the Title Commitment and the final title policy to be issued in
connection therewith without exception to matters which would be shown
by a current survey, then Owner shall deliver to Highwoods at Closing
an affidavit in the form attached hereto as Exhibit V.
(w) An Assignment and Assumption of Service Contracts
concerning those Service Contracts which Highwoods does not disapprove
of during the Inspection Period pursuant to Section 13.01 below, in the
form of Exhibit O-1 attached hereto.
(x) Evidence reasonably satisfactory to Highwoods' counsel
that Owner (i) is organized and validly existing according to the laws
of the state in which it is organized and (ii) has the full right and
authority to enter into this Agreement and perform its obligations
hereunder and under the documents to be executed by them in accordance
with the terms of this Agreement.
(y) Such other documents and instruments as may be reasonably
necessary to consummate the transactions contemplated by this
Agreement.
11.02. Documents Required to be Delivered by Highwoods and the REIT at
Closing. Highwoods and/or the REIT, as appropriate, shall deliver to Owner at
the Closing, the following:
(a) Evidence reasonably satisfactory to Owner's counsel that
Highwoods and the REIT (i) are organized and validly existing according
to the respective laws of the states in which they are organized and
(ii) have the full right and authority to enter into this Agreement and
perform their obligations hereunder and under the documents to be
executed by them in accordance with the terms of this Agreement.
(b) An opinion of counsel to Highwoods and the REIT in form
and content reasonably acceptable to Owner in the form of Exhibit Q
attached hereto.
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(c) The Amendment.
(d) The Registration Rights Agreement.
(e) INTENTIONALLY OMITTED.
(f) A copy of the Partnership Agreement, duly certified by the
REIT as true, complete and correct and a certified copy of the
certificate of limited partnership in Highwoods.
(g) A certification by Highwoods and the REIT that all
representations and warranties made by them herein remain true and
correct in all material respects on the date of Closing, duly executed
by Highwoods and the REIT, or a statement as to any changes which have
occurred.
(h) A settlement statement as described in Section 11.01(u)
above.
(i) An Assumption of Commissions Agreement in the form of
Exhibit S-1 attached hereto in furtherance of Highwoods' obligations
under Section 12.05 hereof.
(j) An Assumption of Tenant Improvement Work Agreement in the
form of Exhibit U attached hereto in furtherance of Highwoods'
obligations under Section 12.06 hereof.
(k) An Assignment and Assumption of Service Contracts in the
form of Exhibit O-1.
(l) With respect to the Promissory Notes that Highwoods elects
to assume rather than pay in full at or after Closing, Assumption
Agreement(s) between the Lenders and Highwoods wherein Highwoods agrees
to assume all of Owner's obligations under the Promissory Notes and
other documents related thereto and the Lenders agree to release Owner
from its obligations under the Promissory Notes and other documents
related thereto in the form of Exhibit F-2 or otherwise as reasonably
acceptable to Owner.
(m) An Assignment of the Leases in the form set forth on
Exhibit N an Assignment of Ground Leases in the form set forth on
Exhibit N-1 for each Leasehold Interest and a Consent to Assignment of
Ground Lease in the form on Exhibit N-2 for each Leasehold Interest.
(n) Such other documents and instruments as may be reasonably
necessary to consummate the transactions with Owner under this
Agreement and in form reasonably acceptable to Owner.
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12. Closing Adjustments. Unless otherwise specified in this Agreement,
all income, expenses and costs related to the Property shall be prorated as of
12:01 a.m. Atlanta, Georgia, time on the date of the Closing as follows, with
any credits or debits to Owner as the result of such adjustments being added to
or subtracted from the amount of Consideration due Owner under Section 4.02(b)
or adjusted with the payment of cash, as provided below:
12.01. Taxes. Ad valorem property taxes due or to be levied against the
Property (the "Taxes") for the year of Closing shall be prorated with Owner
being responsible for all such Taxes from January 1st of the year of Closing
through the last day prior to the day of Closing. Highwoods shall be responsible
for paying the balance of the remaining Taxes due or to be levied against the
Property for the year of Closing. Owner shall be responsible for paying any
unpaid Taxes for any year prior to Closing. The proration of Taxes shall be made
in cash. In the event the Taxes are not determinable at the time of Closing, the
Taxes shall be prorated on the basis of the best available information (the
"Estimated Taxes"). In the event any of the Taxes are delinquent at the time of
Closing, the same shall be paid at Closing. If the Taxes are not paid at
Closing, Owner shall deliver to Highwoods the bills for the Taxes promptly upon
receipt thereof and Highwoods shall thereupon be responsible for the payment in
full of the Taxes within the time fixed for payment thereof and before the same
shall become delinquent. Notwithstanding the foregoing, in the event actual
Taxes for the year of Closing exceed the Estimated Taxes for the year of Closing
(the "Tax Excess") or Estimated Taxes for the year of Closing exceed the actual
Taxes for year of Closing (the "Tax Refund"), Owners and Highwoods shall prorate
and pay such Tax Excess or such Tax Refund as follows:
(a) Owner shall be responsible for a portion of the Tax Excess
or shall receive credit for the Tax Refund prorated from January 1st of
the year of Closing through the Closing Date based upon a 365 day
calendar year. If the year of Closing is 1996, the amount of the Tax
Excess on the Tax Refund shall be determined at Closing. If the year of
Closing is 1997, the amount of the Tax Excess of the Tax Refund shall
be determined when the 1997 tax bills are received by Highwoods, and
Highwoods shall notify Owner within thirty (30) days thereof of the
calculation of the amount due to Highwoods from Owner in the case of a
Tax Excess or the amount due to Owner from Highwoods in the case of a
Tax Refund. Owner shall have thirty (30) days from Owner's receipt of
such notification to pay its portion of the Tax Excess to Highwoods and
Highwoods shall have thirty (30) days from Highwoods's receipt of the
1997 tax bills to pay Owner its portion of the Tax Refund.
(b) Highwoods shall be responsible for a portion of the Tax
Excess or shall receive credit on the Tax Refund prorated from the
Closing Date through December 31st of the year of Closing based upon a
365 day calendar year. Highwoods shall assume responsibility for
payment of all actual taxes for the year of Closing (unless already
paid by Owner), and shall notify Owner of any Tax Excess or Tax Refund
pursuant to the terms of Section 12.01(a) hereof;
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12.02. Utilities. All utility charges and reimbursement for utility
charges for the Property (including, without limitation, telephone, water, storm
and sanitary sewer, electricity, gas, garbage and waste removal) (to the extent
not paid or payable by tenants under Leases) shall be prorated in cash. Transfer
fees required with respect to any such utility shall be paid by or charged to
Highwoods, and Owner shall receive a credit to the amount of Consideration to be
delivered pursuant to Section 4.02(b) hereof.
12.03. Rents. All paid rents, or unpaid rents not currently due,
together with any other sums paid by tenants (other than security deposits),
under the Leases, shall be prorated in cash. In the event that, at the time of
Closing, there are any past due or delinquent rents owing by any tenants of the
Property, Highwoods shall have the exclusive right to collect such past due or
delinquent rents and shall remit to Owner in cash to the extent, and only to the
extent, that the aggregate rents received by Highwoods from each such tenant
owing past due or delinquent rents exceed the sum of (A) the aggregate rents and
other sums payable by such tenant for periods from and after the Closing Date to
the date of receipt, and (B) any reasonable and necessary amounts expended by
Highwoods to collect such past due or delinquent rents. Highwoods shall have no
obligation to collect or enforce collection of any such past due or delinquent
rents from or against any tenant; provided, however, that if Highwoods has not
collected and remitted past due or delinquent rents within one hundred twenty
(120) days after Closing, or initiated litigation within such 120 day period
which is diligently pursued to completion, Owner shall be entitled to pursue the
same, and to retain all amounts which it is able to collect in connection
therewith. In the event that, after Closing, Owner receives any payments of rent
or other sums due from tenants under Leases that relate to periods from and
after Closing, Owner shall promptly forward to Highwoods' its portion of such
payments. It is agreed by Highwoods that the sums to be paid by tenants referred
to in this Section 12.03 shall include all property operation costs "pass
throughs" for the year 1996 not paid on a monthly basis but rather at the end of
a calendar year after being invoiced therefor. These sums shall be paid to Owner
in cash when paid by tenants. Highwoods shall use reasonable effort to invoice
tenants for "pass throughs" as promptly as is practicable after Closing. If
Highwoods has not collected and remitted such "pass throughs" within one hundred
twenty (120) days after the Closing, or initiated litigation within such one
hundred twenty (120) day period which is diligently pursued to completion, Owner
shall be entitled to pursue the same and to retain all amounts which it is able
to collect in connection therewith.
Additionally, all paid rents, or unpaid rents due under the
Ground Leases shall be prorated in cash.
12.04. Estimated Reimbursable Income. Notwithstanding anything to the
contrary contained herein, in the event estimated reimbursable income received
from tenants for taxes, insurance or common area maintenance expenses
(collectively the "Reimbursable TIC") for the year of Closing exceeds the actual
Reimbursable TIC for the year of Closing (the "TIC Excess") or the actual
Reimbursable TIC for the year of Closing exceeds the estimated Reimbursable TIC
received from tenants for the year of Closing (the "TIC Refund") Owner and
Highwoods shall prorate in cash any such TIC Excess or TIC Refund as follows:
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(a) Owner shall be responsible for a portion of the TIC Excess
or shall receive cash for the TIC Refund prorated from January 1st of
the year of Closing through the Closing Date based upon a 365 day
calendar year. Highwoods shall notify Owner of any TIC Excess or TIC
Refund on or before March 1 of the year following the year of Closing.
The notification shall include a calculation of the amount due to
Highwoods from Owner in the case of a TIC Excess or the amount due to
Owner from Highwoods in the case of a TIC Refund. Owner shall have
thirty (30) days from Owner's receipt of such notification to pay its
portion of the TIC Excess to Highwoods, and Highwoods shall have thirty
(30) days from Highwoods's delivery of such notification to pay to
Owner its portion of the TIC Refund;
(b) Highwoods shall be responsible for the portion of the TIC
Excess or the TIC Refund prorated from the Closing Date through
December 31st of the year of Closing based upon a 365 day calendar
year. Highwoods shall notify Owner of any TIC Excess or TIC Refund in
the manner and pursuant to the terms of Section 12.04(a) hereof;
12.05. Real Estate Commissions. Highwoods shall agree (by delivering
the Assumption of Commissions Agreement in the form of Exhibit S-1 hereto) to
pay any unpaid leasing commissions or other compensation due with respect to the
Leases as set forth on Exhibits I-3 or S, in which event the amount of
Consideration due Owner under Section 4 will be reduced by the cost of such
commissions and other compensation identified as Owner's responsibility on
Exhibit S, and increased by the amount of commission previously paid by Owner
indicated on Exhibit S to be reimbursed to Owner by Highwoods. All obligations
to pay leasing commissions due after the date of this Agreement because of the
renewal of a Lease, the extension of the term of a Lease, the relocation of a
tenant currently a party to a Lease, the expansion of the premises demised by a
Lease, the exercise of an option to lease additional space set forth in a Lease
or the exercise of an option to purchase any part of the Property as set forth
in a Lease (collectively "Future Commissions") owed or to be owed in connection
with Leases executed after the execution hereof with the approval of Highwoods,
or which are deemed approved by Highwoods pursuant to this Agreement; and
agreements to lease all or any part of the Land or the Improvements, which
agreements were reached prior to the date of Closing and approved by Highwoods,
or which are deemed approved by Highwoods pursuant to this Agreement, or which
are not evidenced by a written Lease prior to the date of Closing and all
commissions identified on Exhibit S as an obligation to be paid by Highwoods,
(collectively the "Commissions Assumed"), shall be assumed by Highwoods on the
Closing Date without adjustment to the Consideration.
12.06. Tenant Improvements. Except for the cost of tenant improvement
work identified on Exhibits I-2 and T as an obligation to be paid by Highwoods,
the cost of all tenant improvement work owed or to be owed in connection with
the Leases existing as of the date hereof (collectively "TI Work Payable") shall
be the responsibility of Owner. To the extent not completed prior to Closing,
Highwoods shall agree to complete such TI Work Payable set forth on Exhibits I-2
and T, as well as agreeing to pay the cost of tenant improvement work identified
on Exhibit T as an obligation of Highwoods (by delivering the Assumption of
Tenant Improvement Agreement) and
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the amount of Consideration due Owner under Section 4 shall be reduced by the
cost of such work identified on Exhibit T as an obligation to be paid by Owner
and the cost of such work set for on Exhibit I-2 ("Owner TI Work Payable").
In the event the costs of any portion of the Owner TI Work Payable is
not determinable as of the Closing date, the amount of Consideration otherwise
to be delivered pursuant to Section 4.02(b) shall be reduced by Highwoods and
Owner making a reasonable estimate of the costs of such Owner TI Work Payable
and dividing such reasonably estimated costs of such Owner TI Work Payable by
the same divisor utilized in Section 4.02(b) (the "Holdback"). To the extent the
final costs paid by Highwoods for such Owner TI Work Payable is more or less
than the Holdback, Highwoods and Owner shall execute an Amendment to the
Partnership Agreement of Highwoods (the "Second Amendment") increasing or
decreasing, as the case may be, the number of Partnership Units originally
delivered to Owner at Closing and as evidenced by the Amendment. This increase
or decrease in the number of Partnership Units shall be determined by
calculating the difference in the Holdback and the actual cost of the Owner TI
Work Payable not determined prior to Closing and dividing this difference by the
same divisor utilized in Section 4.02(b). If the actual costs of the Owner TI
Work Payable not determined prior to Closing exceeds the Holdback, the Second
Amendment will reflect a reduction in the number of Partnership Units originally
delivered to Owner as reflected in the Amendment. If the actual cost of the
Owner TI Work Payable not determined prior to Closing is less than the Holdback,
the Second Amendment will reflect an increase in the number of Partnership Units
originally delivered to Owner.
All obligations to pay tenant improvement work owed or to be owed in
connection with Leases executed after the execution hereof with the approval of
Highwoods; and agreements to lease all or any part of the Land or the
Improvements, which agreements were reached prior to the Closing and approved by
Highwoods or which are deemed approved by Highwoods pursuant to Section 9.04
above, or which are not evidenced by a written Lease prior to the Closing and
all tenant improvement work identified on Exhibit T as an obligation to be paid
by Highwoods (collectively the "TI Work Assumed"), shall be assumed by Highwoods
on the Closing date without an adjustment to the Consideration.
12.07. Tenant Security Deposits. All security deposits paid by tenants
under Leases, and any interest accrued thereon contingently payable to such
tenants for whose account they are maintained, shall be paid to Highwoods at
Closing, or at Owner's election, shall be retained by Owner after reducing the
amount of the Consideration due Owner by the amount of such deposits retained by
Owner. After Closing, Highwoods shall be responsible for maintaining such
security deposits in accordance with the provisions of the Leases relevant
thereto;
12.08. Service Agreement Payments. All amounts payable under any of the
Service Contracts (other than Service Contracts not assumed by Highwoods, which
shall be payable by Owner) shall be prorated in cash. Highwoods does not assume
any obligation under any Service Contracts for acts or omissions that occur
prior to Closing. Highwoods does not assume any obligation under any Service
Contracts not expressly assumed by Highwoods. Notwithstanding the
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<PAGE>
foregoing, all amounts payable with respect to periods after Closing under
Service Contracts requiring thirty (30) or fewer days notice of termination and
which are terminated by Owner at Closing shall be paid by Highwoods.
12.09. Miscellaneous Items. All other items of expense and income
regarding the operation and ownership of the Property shall be prorated in cash.
All other capital items to be prorated at Closing shall be accounted for by an
adjustment to the amount of Consideration due under Section 4.02(b).
12.10. Settlement After Closing. The parties acknowledge that not all
invoices for expenses incurred with respect to the Property prior to the Closing
will be received by the Closing and that a mechanism needs to be in place so
that such invoices can be paid as received. All of the Closing adjustments will
be done on an interim basis at the Closing and will be subject to final
adjustment in accordance with this Section 12.10. After Closing, upon receipt by
Highwoods of an invoice for the Property's operating expenses that are
attributable in whole or in part to a period prior to the Closing and that were
not apportioned at Closing, Highwoods shall submit to Owner a copy of such
invoice with such additional supporting information as Owner shall reasonably
request. Within ten (10) days of receipt of such copy, Owner shall pay to
Highwoods an amount equal to the portion of such invoice attributable to the
period ending on the date immediately preceding the Closing. Likewise, upon
receipt by Highwoods of such an invoice after Closing for the Property's
operating expenses which were paid in advance by Owner and are attributable in
whole or in part to a period on or after Closing that were not apportioned at
Closing, Highwoods shall submit to Owner a copy of such invoice together with an
amount equal to the portion of such invoice attributable to the period on or
after Closing, within ten (10) days after receipt of such invoice.
12.11. Highwoods' Distributions. For the first fiscal quarter of
Highwoods ending after the Closing, partnership distributions attributable to
such quarter payable by Highwoods to Owner pursuant to Section 12.2C of the
Partnership Agreement, shall be prorated to take into account the period of time
during such quarter that Owner was a limited partner in Highwoods. Owner shall
receive that portion of a full quarterly distribution otherwise attributable to
its Partnership Units determined by multiplying the amount of such full
distribution by a fraction the numerator of which is the number of days during
such quarter that Owner was a limited partner in Highwoods and the denominator
of which is the number of days in such quarter. In the event that Owner receives
a full cash distribution for such period, Owner shall reimburse Highwoods the
prorated portion of such distribution to which Owner is not entitled as provided
above within five (5) days of receipt.
12.12. Equitable Adjustments. In the event that any of the prorations
or adjustments described in this Section 12 are based upon estimated or
erroneous information, then the parties shall make between themselves any
equitable adjustment required by reason of any difference between such estimated
or erroneous amounts and the actual amounts of such sums. In making the
prorations required by this Section 12, the economic burdens and benefits of
ownership of the Property for the Closing shall be allocated to Highwoods.
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<PAGE>
12.13. Property Income. All other income of the Property (including
payments due under escalator clauses, tax stops, expense clauses and similar
rental adjustment clauses) accruing or relating to the period through the day
before Closing shall be paid to Owner. All other income of the Property
(including payments due under escalator clauses, tax stops, expense clauses and
similar rental adjustment clauses) accruing or relating to the period commencing
on the date of Closing and thereafter shall be the property of and paid to
Highwoods.
12.14. Operating Expenses. The Property operating expenses shall be
apportioned on a per diem basis as of midnight on the day immediately preceding
the Closing. All such expenses accruing prior to the Closing shall be deemed to
be expenses of Owner and all such expenses accruing as of such Closing and
thereafter shall be expenses of Highwoods. Amounts owed to Owner by Highwoods
and amounts owed to Highwoods by Owners, as the case may be, on account thereof,
shall be paid to the party to whom they are owed in cash.
13. Management and Leasing Agreements, Service Contracts
13.01. Unless otherwise specified by Highwoods in writing or otherwise
provided herein, all management or leasing contracts must be terminated as of
the effective date of Closing so that Highwoods or its designee shall have the
exclusive right to manage and lease the Property. With respect to any and all
Service Contracts, however, Highwoods shall have the absolute right to
disapprove in writing prior to or as of Closing any and all such Service
Contracts which Highwoods desires to be terminated. If Highwoods fails to
disapproves of any Service Contract, it shall be kept in full force and effect
by Owner through the Closing at which time it will be assigned to Highwoods by
execution and delivery of an Assignment and Assumption of Service Contracts in
the form of Exhibit O-1. If Highwoods disapproves any such Service Contracts,
such Service Contracts will be terminated at Closing, but subject however to
Highwoods' obligations to Section 12.08 above.
14. Amendment to the Partnership Agreement. At the Closing, Owner, the
REIT and any other necessary partners in Highwoods shall enter into an amendment
to the Partnership Agreement, as it exists prior to such Closing, admitting
Owner as a limited partner in Highwoods, evidencing the number of Partnership
Units to be delivered to Owner at Closing pursuant to 4.02(b) and which
otherwise shall be in the form and substance reasonably satisfactory to the
Owner and Highwoods.
15. Default. In the event of default by Highwoods under the terms
hereof, the Escrow Agent shall deliver the Earnest Money to Owner. Additionally,
Highwoods shall pay to Owner within three (3) days of Highwoods' default
hereunder, the sum of One Million Nine Hundred Thousand and no/100 Dollars
($1,900,000.00) by wire transfer of immediately available funds to the account
designated by Owner by notice to Highwoods. The $2,000,000.00 payment made to
Owner (by the Escrow Agent and Highwoods) in the event of Highwoods' default
shall be a payment of liquidated damages and not a penalty, as the actual damage
to Owner in the event of a default by Highwoods would be extremely difficult to
ascertain. Upon Owner's receipt of this $2,000,000.00 payment the parties will
have no further obligations to the other hereunder except for the obligations
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<PAGE>
of Highwoods which survive termination of this Agreement as provided herein.
Highwoods agrees to submit to the jurisdiction of the Courts of the State of
California in the event Owner is required to bring an action against Highwoods
for the liquidated damage payment required to be made by Highwoods under this
section.
In the event of a default by Owner of its obligations hereunder,
Highwoods shall have the right to bring an action against Owner for specific
performance to compel Owner to contribute the Property to Highwoods as
contemplated hereby. Furthermore, Highwoods shall have the right to bring an
action against Owner for damages to Highwoods arising from a breach of warranty
of Owner contained herein, a misrepresentation of Owner herein (provided any
such right shall be limited as set forth in Section 6.02 above), or a default
hereunder which is the result of intentional or willful acts of Owner (including
the encumbrance of the Property, or transfer thereof to a third party).
16. Notice of Developments. After the execution hereof and prior to
Closing, Owner will give prompt written notice to Highwoods of any material
adverse change in Owner's representations and warranties of which it acquires
actual knowledge affecting the Property. Highwoods and the REIT will give prompt
written notice to Owner of any material change in their representations and
warranties contained herein, or in the assets or properties of Highwoods and the
REIT and the operations and results of operations related to such assets or
properties. Each party hereto will given prompt written notice to the other
parties of any material development affecting the ability of such party to
consummate the transactions contemplated by this Agreement.
17. Indemnification.
17.01. Highwoods agrees that as between Owner and Highwoods, from and
after the Closing, Highwoods shall be liable for all liabilities, loss, cost
and/or damage (including attorney fees) which are asserted as claims by third
parties which relate to the Property, but only if such claims arise out of acts
or omissions of Highwoods, its agents or employees occurring after Closing which
are related to the Property (including acts or omissions relating to any Lease
or other contracts and breaches thereof or defaults thereunder, concerning such
Property or the operation thereof which occur after Closing), and then only if
such claims do not relate to: (i) obligations Owner had a duty to perform in the
period prior to Closing, (ii) liabilities for expenses incurred in the ordinary
course of business or any other money owed by Owner on the date of Closing,
subject to proration and adjustment as herein set forth, (iii) tort liabilities
resulting from acts or omissions related to the Property occurring prior to
Closing, and (iv) breaches of any contracts related to the Property if such
breaches occurred prior to Closing. The claims by third parties for loss or
damage for which Highwoods shall be responsible as set forth above are
hereinafter referred to as "Claims Against Highwoods."
In this regard, Highwoods agrees to indemnify, defend and hold harmless
Owner from and against all loss and damage (including costs and attorney fees)
incurred by Owner as the result of Claims Against Highwoods.
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<PAGE>
Highwoods is not assuming any obligation of the Owner related to the
Property which exists on the date of Closing except for executory obligations of
Owner which are specifically identified and set forth herein as being assumed by
Highwoods and except as provided in the documents executed at Closing by
Highwoods.
17.02. Owner agrees that as between Owner and Highwoods, Owner shall be
liable for all liabilities, loss, cost and/or damage (including attorney fees)
which are asserted as claims by third parties which relate to the Property, but
only if such claims arise out of acts or omissions of Owner, its agents or
employees, which occurred prior to Closing and are related to the Property
(including acts or omissions relating to any Lease or other contracts and
breaches thereof and defaults thereunder, concerning such Property or the
operation thereof which occurred prior to Closing), including but not limited
to: (i) obligations Owner had a duty to perform prior to Closing, (ii)
liabilities for expenses incurred in the ordinary course of business or any
other money owed by Owner on the day prior to date of Closing, subject to
proration and adjustment as herein set forth, (iii) tort liabilities resulting
from acts or omissions related to any of the Property occurring prior to
Closing, and (iv) breaches of any contracts by Owner related to the Property if
such breaches occurred prior to Closing, but not including (i) obligations Owner
has a duty to perform on or after Closing, but which were not required to be
performed before Closing, (ii) liabilities incurred for expenses incurred in the
ordinary course of business on or after Closing or any other money owed by Owner
after the Closing, the liability for which was incurred on or after Closing or
before Closing with consent of Highwoods, (iii) tort liabilities resulting from
acts or omissions related to the Property occurring on or after the Closing,
(iv) breaches of any contracts related to the Property if such breach occurred
on or after the Closing, and (v) obligations Highwoods had a duty to perform on
or after Closing. The claims by third parties for loss or damage for which Owner
shall be responsible as set forth above are hereinafter referred to as "Claims
Against Owner."
In this regard, Owner agrees to indemnify, defend and hold harmless
Highwoods from and against all loss and damage (including costs and attorney
fees) incurred by Highwoods as a result of Claims Against Owner.
Owner has informed Highwoods that certain real estate brokerage
commissions may be due in connection with the renewal of certain of the Leases
which occurred prior to the date hereof or as the result of the expansion by
certain tenants into larger tenant spaces on the Property prior to the date
hereof. However, such real estate brokerage commissions have never been claimed,
and may never be claimed. Therefore, in addition to Owner's indemnification of
Highwoods as set forth above, Owner agrees to indemnify and hold Highwoods
harmless from any claim by any real estate broker or brokerage firm for real
estate commissions due as the result of lease renewals or tenant expansions
which occurred prior to the date hereof which have not yet been claimed by such
broker or brokerage firm. Owner also agrees to indemnify Highwoods from any cost
or other expenses (including attorney fees) which Highwoods incurs as a result
of such claims.
17.03. Any party entitled to indemnification under this Agreement (the
"Indemnified Party") shall, within ten (10) days after the receipt of notice of
the assertion or imposition of any claim (but
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in no event later than ten (10) days prior to the date any response or answer is
due in any proceeding) in respect of which indemnity may be sought from the
party against whom an indemnity obligation is asserted pursuant to this
Agreement (the "Indemnifying Party"), notify the Indemnifying Party in writing
of the receipt of existence of such claim. The omission of the Indemnified Party
to notify the Indemnifying Party shall not relieve the Indemnifying Party from
any liability in respect of such claim which it may have to the Indemnified
Party on account of this Agreement, except, however, the Indemnifying Party
shall be relieved of liability to the extent that the failure to so notify (a)
shall have caused prejudice to the defense of such claim, or (b) shall have
increased the costs or liability of the Indemnifying Party by reason of the
inability or failure of the Indemnifying Party (because of the lack of prompt
notice from the Indemnified Party) to be involved in any investigations or
negotiations regarding any such claim, nor shall it relieve the Indemnifying
Party from any other liability which it may have to the Indemnified Party. In
case any such claim shall be asserted or commenced against an Indemnified Party
and it shall notify the Indemnifying Party thereof, the Indemnifying Party shall
assume the defense thereof with counsel free of conflict and otherwise
reasonably satisfactory to the Indemnified Party, and, after actually so
assuming the defense thereof, the Indemnifying Party will not be liable to the
Indemnified Party hereunder for any legal or other expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof other
than reasonable costs of investigation. In the event that the Indemnifying Party
does not assume the defense, or conduct settlement of any claim, the Indemnified
Party may settle such claim without the written consent of the Indemnifying
Party. Nothing in this Section 17 shall be construed to mean that Highwoods
shall be responsible for any obligations, acts or omissions of Owner prior to
Closing, except for those obligations and liabilities expressly assumed by
Highwoods pursuant to this Agreement, and nothing in this Agreement shall be
construed to mean that Owner shall be responsible for any obligations, acts or
omissions of Highwoods on or after Closing, except for those obligations and
liabilities arising on or after Closing expressly assumed by Owner pursuant to
this Agreement.
18. Other Provisions.
18.01. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which, taken together,
shall constitute one and the same instrument.
18.02. Entire Agreement. This Agreement contains the entire agreement
between the parties, and supersedes all prior and contemporaneous understandings
and agreements, whether oral or in writing, between the parties respecting the
subject matter hereof. There are no representations, agreements, arrangements or
understandings, oral or in writing, between or among the parties to this
Agreement relating to the subject matter of this Agreement which are not fully
expressed in this Agreement.
18.03. Construction. The provisions of this Agreement shall be
construed as to their fair meaning, and not for or against any party as the
source of the language in question. Headings used in this Agreement are for
convenience of reference only and shall not be used on construing this
Agreement.
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18.04. Applicable Law. This Agreement shall be governed by the laws of
the State of Georgia. Time is of the essence in the Closing of this transaction.
18.05. Severability. If any term, covenant, condition or provision of
this Agreement, or the application thereof to any person or circumstance, shall
to any extent be held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, covenants, conditions or
provisions of this Agreement, or the application thereof to any person or
circumstance, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby.
18.06. Waiver of Covenants, Conditions and Remedies. The waiver by one
party of the performance of any covenant, condition or promise under this
Agreement shall not invalidate this Agreement nor shall it be considered a
waiver by it of any other covenant, condition or promise under this Agreement.
The waiver by either or both parties of the time for performing any act under
this Agreement shall not constitute a waiver of the time for performing any
other act or an identical act required to be performed at a later time.
18.07. Exhibit. All Exhibits to which reference is made in this
Agreement are deemed incorporated into this Agreement and made a part hereof.
18.08. Amendment and Assignment. This Agreement may be amended at any
time by the written agreement of Highwoods, the REIT and Owner. All amendments,
changes, revisions and discharges of this Agreement, in whole or in part, and
from time to time, shall be binding upon the parties despite any lack of legal
consideration, so long as the same shall be in writing and executed by the
parties hereto. No party may assign this Agreement or any interest herein
without the prior written approval of all other parties which approval may be
withheld in the sole discretion of such other parties (or either one of them).
18.09. Relationship of Parties. The parties agree nothing contained
herein shall constitute either party the agent or legal representative of the
other for any purpose whatsoever, nor shall this Agreement be deemed to create
any form of business organization between the parties hereto, nor is either
party granted any right or authority to assume or create any obligations or
responsibility on behalf of the other party, nor shall either party be in any
way liable for any debt of the other.
18.10. Further Acts. Each party agrees to perform any further acts and
to execute, acknowledge and deliver any documents which may be reasonably
necessary to carry out the provisions of this Agreement.
18.11. Confidentiality. Notwithstanding anything to the contrary
contained elsewhere herein, Highwoods, the REIT and Owner each hereby
acknowledge that this transaction shall be treated as confidential. In
connection therewith, Highwoods, the REIT and Owner further acknowledge that
neither will disclose any of the contents or information contained in or
obtained as a result of any investigation, financial or otherwise, undertaken or
done pursuant to this
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Agreement, to the public or any third party (except advisors to Highwoods, the
REIT and Owner in this transaction on a need to know basis) without a bona fide
financial interest in any transaction contemplated by this Agreement on a need
to know basis. The obligation of confidentiality does not apply to information
which:
(a) Was in the public domain at the time of its communication
to Highwoods, the REIT or their representatives;
(b) Enters the public domain through no fault of Highwoods or
the REIT subsequent to the time of its communication to Highwoods or
the REIT;
(c) Was in the possession of Highwoods or the REIT free of any
obligation of confidence at the time of its communication to Highwoods,
the REIT or their representatives; and,
(d) Is rightfully communicated to Highwoods or the REIT by a
third party free of any obligation or confidence subsequent to the time
of its receipt from Owner.
If the transaction contemplated hereby is not consummated, all
documents and information given to Highwoods or the REIT or their
representatives by the Owner and its representatives, and all copies thereof,
shall be promptly returned to Owner.
18.12. Broker Commissions. Owner agrees to be responsible for the
payment of any fee due White and Associates, Inc., and White & Associates
Management Group, Inc., as the result of any relationship between Owner; White
and Associates, Inc.; and White & Associates Management Group, Inc., and will
agree to indemnify Highwoods for any loss or damage (including reasonable
attorney fees) incurred by Highwoods arising from a claim by White and
Associates, Inc., and White & Associates Management Group, Inc., for any such
fees allegedly due either. Except as set forth above, Owner represents to
Highwoods that it has not dealt with any other brokerage or investment banking
firm relating to this matter; and Highwoods represents to Owner that it has not
dealt with any brokerage or investment banking firm in connection with this
transaction. Each party agrees to indemnify and hold the other party harmless
from any loss or damage (including reasonable attorney fees) incurred by the
other party arising from a claim by any brokerage or investment banking firm
allegedly due it as the result of the transaction contemplated hereby. The
parties hereto acknowledge that Roderick T. White is a general partner of Owner
and is a real estate broker duly licensed under the laws of the State of Georgia
and is the principal broker and president of White and Associates, Inc., and of
White & Associates Management Group, Inc., and that Jerome Janger is a general
partner of Owner and is a real estate broker duly licensed by the State of
California.
18.13. Notice. All notices and demands which either party is required
or desires to give to the other shall be given in writing by personal delivery,
express commercial courier service, certified
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mail, return receipt requested, or by telecopy to the address or telecopy number
set forth below for the respective parties. All notices and demands so given
shall be effective upon the delivery of the same to the party to whom notice or
demand is given, if personally delivered, or upon confirmation by electronic
answer back if sent by telecopy, and on the third (3rd) business day following
the deposit in U.S. Mail or on the first (1st) business day after deposit with
an express commercial courier service or upon receipt, whichever is earlier, if
sent by express commercial courier service or certified mail, return receipt
requested.
<TABLE>
<CAPTION>
<S> <C> <C>
OWNERS: CENTURY CENTERGROUP and
9830 Wilshire Boulevard Suite 800
Beverly Hills, California 90212-1825 2200 Century Pkwy, N.E.
Atlanta, GA 30345-3203
Attention: Robert Goldman Att.: Roderick T. White
Telephone: 310/288-4734 Telephone: 404/321-6555
Telecopier: 310/288-4758 Telecopier: 404/325-4173
With a copy to: Michael Rubel
Del, Rubel, Shaw, Mason & Derin
2029 Century Park East, Suite 3910
Los Angeles, California 90067-3025
Telephone: 310/772-2000
Telecopier: 310/772-2777
HIGHWOODS and
REIT: Highwoods/Forsyth Limited Partnership
380 Knollwood St, Ste 430 & 3100 Smoketree Ct, Ste 700
Winston-Salem, NC 27103 Raleigh, NC 27604-5001
Attention: John Turner Attention: Carman Liuzzo
Telephone: 910/631-9000 Telephone: 910/872-4924
Telecopier: 910/725-1969 Telecopier: 910/876-2448
With a copy to: Terry Crumpler
Allman Spry Leggett & Crumpler
380 Knollwood Street, Suite 700
Winston-Salem, NC 27103
Telephone: 910/722-2300
Telecopier: 910/721-0414
</TABLE>
18.14. Press Releases. Owner, Highwoods and the REIT agree that they
will not make any public statement, including without limitation, any press
release, with respect to this Agreement and the transactions contemplated hereby
without first allowing the other party an opportunity to review such statement
and render an approval thereof. It is the intention of this subparagraph that
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Highwoods, the REIT and Owner must agree as to the timing and content of any
information contained in any public statement or press release regarding the
transaction contemplated hereby. The parties agree to exercise reasonableness
when asked to consent to the content of any such press release or other public
statement regarding this transaction.
18.15. Sale of Property and 1031 Exchange Obligations. If, subsequent
to Closing, Highwoods sells any portion of the Land, including any Building
located thereon, and, at the time of such sale [or within any allowable time
after such sale prescribed by Section 1031 of the Internal Revenue Code of 1986,
as amended ("Section 1031")], it has contracted for or is negotiating for, the
purchase of other real property (the "Exchange Property"), it will use
reasonable efforts to cause any taxable gain attributable to the sale of the
Land (or any portion thereof) to be deferred under the provisions of Section
1031 in effect at the time of such sale. Notwithstanding the above, in the event
Highwoods fails to close the acquisition of any Exchange Property contracted for
or being negotiated for at the time of the sale of the Land for any reason
consistent with Highwoods' normal business practices, Highwoods shall have no
liability to Owner for its failure to consummate the transaction and defer the
taxable gain attributable to the sale of the Land (or any portion thereof) as
set forth above.
18.16. Limitations on Amendment to REIT's Articles of Incorporation.
The REIT will not amend its Articles of Incorporation in a manner which would
change the definition of "Ownership Limit" [as set forth in Section 6.1(e)
thereof] from 9.8% to a lesser percentage that would prohibit Owner from
exercising its redemption rights set forth in Section 8.6A of the Partnership
Agreement with respect to any Shares issued upon the redemption of the
Partnership Units, so long as Owner does not acquire additional Shares of the
REIT, which when added to the Shares issued upon a redemption of the Partnership
Units, would equal 9.8% or more of the outstanding capital stock of the REIT.
Notwithstanding the above, the REIT shall have the right to amend its Articles
of Incorporation to change the definition of "Ownership Limit" from 9.8% to a
lesser percentage in the event such change is necessary to cause the REIT to
maintain its status as a real estate investment trust under the Internal Revenue
Code of 1986, as amended, or other applicable laws hereafter arising.
18.17. Owner's Indemnification to the REIT. Upon request of Owner made
at any time prior to Closing, the Amendment shall include provisions
satisfactory to Owner whereby Owner or any partner of Owner agrees to indemnify
the REIT as set forth in paragraph 7.7I of the Partnership Agreement in order to
increase Owner's share of allocable debt as a limited partner pursuant to
Section 1.752-2(a) of the Code, subject to the limitations on liability and
termination provisions set forth therein with respect to indemnifying Limited
Partners and subject to such further limitations as may be required by Owner.
18.18. Allocations. Owner and Highwoods agree that except to the extent
otherwise required by the Internal Revenue Code of 1986, as amended, the
"traditional method" provided for in the regulations interpreting the Internal
Revenue Code of 1986, as amended, set forth in Section 1.704- 3(b) shall apply
to all tax allocations made to Owner with respect to the Property, or otherwise.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement by
their hands and under seal affixed hereto as of the date and year first above
written.
CENTURY CENTER GROUP, a California
general partnership
By: __/s/ Robert Goldman__________(SEAL)
ROBERT GOLDMAN, General Partner
By: __/s/ Roderick T. White_______(SEAL)
RODERICK T. WHITE, General Partner
By: __/s/ Jerome Janger___________(SEAL)
JEROME JANGER, General Partner
BY: KENNINGTON, LTD., INC., a California
corporation, General Partner
Attest:
___/s/ Jerome Janger_____ By: ___/s/ Kathleen A. Hayes____________
_____ Secretary Executive Vice President
HIGHWOODS/FORSYTH LIMITED
PARTNERSHIP, a North Carolina limited
partnership
BY: HIGHWOODS PROPERTIES, INC., a
general partner
By: ___/s/ John L. Turner_______________
JOHN L. TURNER
Vice Chairman
HIGHWOODS PROPERTIES, INC., a Maryland
Attest: Corporation
_________________________ By: __/s/ John Turner___________________
___________ Secretary JOHN TURNER
Vice Chairman
Investor's Title Insurance Company executes this Agreement for the sole
purpose of agreeing to be bound by the terms and provisions set forth in Section
3 hereof.
INVESTORS TITLE INSURANCE COMPANY,
a North Carolina Corporation
By: ___/s/ Kerry Scordo____________
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<TABLE>
<CAPTION>
List of Exhibits
<S> <C>
A Registration Rights Agreement
B 16 Acre Tract Description (Fee Parcels)
B-1 61 Acre Tract Description (Leasehold Interest)
C Personal Property Schedule
D Rent Roll
D-1 Century Center Subleases
E Service Contracts, Guaranties and Warranties
F-1 Promissory Notes being Assumed by Highwoods from Owners to those Lenders,
Including Amounts Owed on Each
F-2 Form of Mortgagee Estoppel Certificates and Consent Agreements
G Highwoods' Limited Partnership Agreement
H Permitted Exceptions
I Prospective Lease Amendments and Leases
I-1 INTENTIONALLY OMITTED
I-2 Unfulfilled Landlord Obligations
I-3 Lease Brokerage Agreements and Leasing Commissions
I-4 Lease Defaults, Receivables and Security Deposits
I-5 Lease Options and Rights to Acquire Portions of the Property
J Form for Prospective New Leases
K Agreements Affecting Title of Property
L Form for Tenant Estoppels
M Form for Bill of Sale of Personal Property
M-1 Form of Owner's Affidavit
N Form for Assignment of Leases
N-1 Form of Assignment of Ground Lease(s)
N-2 Consent to Assignment of Ground Lease(s)
O Form for Assignment of Owner's Interests in all Warranties and Guarantees of
Contractors, Subcontractors, Suppliers and Manufacturers Agreements and
Miscellaneous Items
O-1 Assignment and Assumption of Service Contracts
P Owner's Counsel's Opinion
Q Highwoods' Counsel's Opinion
R Claims, Proceedings and Litigation
S Commissions to be Paid by Highwoods
S-1 Assumption of Commissions Agreement
T Tenant Improvement Work to be Paid by Highwoods
U Form of Assumption of Tenant Improvement Work Agreement
V Survey Affidavit
W Changes in REIT's Financial Condition
X Conditions Related to Systems and Structural Components of Buildings
Y Highwoods' and REIT's Disclosure Documents
</TABLE>
<PAGE>
January 24, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Highwoods/Forsyth Limited Partnership
Ladies and Gentlemen:
In connection with the Highwoods/Forsyth Limited Partnership
(the "Registrant") current report on Form 8-K (the "Report"),
the Registrant hereby agrees, pursuant to Item 601(b)(2) of Regulation
S-K, to furnish the Securities and Exchange Commission upon its
request copies of the schedules omitted from Exhibits 2.1 and
2.2 of the Report.
Very truly yours,
HIGHWOODS/FORSYTH LIMITED PARTNERSHIP
By: Highwoods Properties, Inc., its general partner
/s/ Carman J. Liuzzo
Chief Financial Officer
<PAGE>
MASTER AGREEMENT
OF
MERGER AND ACQUISITION
by and among
Highwoods Properties, Inc.,
Highwoods/Forsyth Limited Partnership,
Anderson Properties, Inc.,
Gene Anderson,
the partnerships
and limited liability companies
listed below
Dated January 9, 1997
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR
STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF ANY
DOCUMENT USED IN CONNECTION WITH THE OFFERING AND ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO THE REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE
THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISK OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
<PAGE>
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TABLE OF CONTENTS
Page
<S> <C>
ARTICLE I
DEFINITIONS..................................................................................................... 2
ARTICLE II
THE TRANSACTIONS................................................................................................ 6
2.1 General................................................................................... 6
2.2 Acquisition Agreements.................................................................... 7
2.3 Conditions of Loan Assumptions..............................................................7
2.4 Closing................................................................................... 7
2.5 Examination by Highwoods................................................................... 8
ARTICLE III
CONSIDERATION.................................................................................................... 9
3.1 Purchase Price Generally....................................................................9
3.2 Agreed Upon Consideration................................................................. 10
3.3 Closing Adjustments...................................................................... 11
(a) Generally........................................................................... 11
(b) Rent................................................................................. 11
(c) Preclosing Expenses and Liabilities.................................................. 12
3.4 Fluctuation............................................................................... 12
3.5 Partnership Distribution Adjustment...................................................... 13
3.6 Prepayment Penalties...................................................................... 13
ARTICLE IV
COVENANTS AND AGREEMENTS........................................................................................ 13
4.1 Operation of Business......................................................................13
4.2 Brokers................................................................................... 14
4.3 Employments Agreements.....................................................................14
4.4 Section 754 Elections......................................................................14
4.5 Employees; Benefit Plans...................................................................14
4.6 Termination of Contracts...................................................................14
4.7 Contribution of API Assets.................................................................14
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ANDERSON AND API...............................................................15
5.1 Consents...................................................................................15
5.2 Disclosure.................................................................................15
5.3 Absence of Conflicts...................................................................... 16
5.4 Certification of Anderson Financial Statements.............................................16
5.5 Power and Authority of Anderson Partnerships.............................................. 16
5.6 Power and Authority of API.................................................................17
5.7 Rent Roll and Leases...................................................................... 17
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<S> <C> <C>
5.8 No Contracts.............................................................................. 18
5.9 Title to Property and Partnership Interests............................................... 19
5.10 Liabilities; Indebtedness................................................................. 19
5.11 Insurance................................................................................ 20
5.12 Personal Property........................................................................ 20
5.13 Claims or Litigation...................................................................... 20
5.14 Hazardous Substances...................................................................... 20
5.15 Financial Condition of the Properties and
Anderson Partnerships......................................................................21
5.16 Compliance with Laws...................................................................... 21
5.17 Employees................................................................................ 22
5.18 Condemnation and Moratoria............................................................... 22
5.19 Condition of Improvements................................................................. 22
5.20 Taxes..................................................................................... 22
5.21 Management Agreements.................................................................... 23
5.22 Operating Agreements..................................................................... 23
5.23 ERISA; Employee Benefit Plans............................................................. 23
5.24 Absence of Certain Changes............................................................... 24
5.25 Tradename..................................................................................24
5.26 Operation of Business..................................................................... 25
5.27 Effect of Transactions on Title........................................................... 25
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF HIGHWOODS.................................................................... 25
6.1 Organization and Authority................................................................ 25
6.2 Binding Obligation....................................................................... 26
6.3 Partnership Agreement.................................................................... 26
6.4 Disclosure............................................................................... 26
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF HPI........................................................................... 26
7.1 Organization and Authority................................................................ 26
7.2 Binding Obligations....................................................................... 26
7.3 Securities Filings....................................................................... 27
7.4 REIT Status of HPI........................................................................ 27
ARTICLE VIII
CLOSING DELIVERIES...............................................................................................28
8.1 Anderson Closing Deliveries................................................................28
8.2 Anderson Deliveries........................................................................29
ARTICLE IX
CONDITIONS PRECEDENT TO HIGHWOOD'S PERFORMANCE...................................................................29
9.1 Representations, Warranties and Covenants................................................. 29
9.2 Consents...................................................................................30
9.3 Document Deliveries........................................................................30
ii
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<CAPTION>
<S> <C> <C>
9.4 No Adverse Proceedings.....................................................................30
9.5 Termination................................................................................30
9.6 Legal Opinion..............................................................................30
9.7 Other Assurances...........................................................................30
9.8 Review Period..............................................................................30
ARTICLE X
CONDITIONS PRECEDENT TO ANDERSON PARTIES' PERFORMANCE............................................................31
10.1 Representations and Warranties.............................................................31
10.2 Payment of Purchase Price..................................................................31
10.3 No Adverse Proceedings.....................................................................31
10.4 Legal Opinion............................................................................. 31
ARTICLE XI
INDEMNITY...................................................................................................... 31
11.1 Representations and Warranties of Anderson Partners...................................... 31
11.2 Scope of Anderson Indemnity............................................................... 32
11.3 Representations and Warranties of Highwoods............................................... 33
11.4 Notice to Indemnitors..................................................................... 33
11.5 Effect of Indemnity...................................................................... 33
ARTICLE XII
MISCELLANEOUS.................................................................................................. 33
12.1 Notices.................................................................................. 33
12.2 Counterparts.............................................................................. 35
12.3 Severability............................................................................. 35
12.4 Assigns.................................................................................. 35
12.5 Public Announcement...................................................................... 35
12.6 Remedies................................................................................. 35
12.7 Captions.................................................................................. 36
12.8 Exhibits and Schedules.................................................................... 36
12.9 Merger Clause............................................................................ 36
12.10 Amendments and Waiver.................................................................... 36
12.11 Governing Laws........................................................................... 36
LIST OF SCHEDULES AND EXHIBITS................................................................................. 39
</TABLE>
<PAGE>
MASTER AGREEMENT OF
MERGER AND ACQUISITION
This MASTER AGREEMENT OF MERGER AND ACQUISITION (the "Master
Agreement") is made as of the __th day of January, 1997, by and among HIGHWOODS
PROPERTIES, INC., a Maryland corporation ("HPI"), HIGHWOODS/FORSYTH LIMITED
PARTNERSHIP, a North Carolina limited partnership ("Highwoods"), the limited
partnerships and limited liability companies listed on Schedule 1 attached
hereto (the "Anderson Partnerships"), ANDERSON PROPERTIES, INC., a Georgia
corporation ("API"), and GENE ANDERSON, an individual resident of Atlanta,
Georgia ("Anderson").
WHEREAS, Highwoods is a North Carolina limited partnership having HPI
as its sole general partner and HPI has elected to be qualified as a real estate
investment trust under the Code; and
WHEREAS, Anderson and the Anderson Partnerships own certain real
properties in Atlanta, Georgia and environs;
WHEREAS, API is engaged in certain real estate-related activities in
Atlanta, Georgia including brokerage, leasing and management;
WHEREAS, Highwoods, Anderson, and the owners of the Anderson
Partnerships (the "Anderson Partners") will enter into the Acquisition
Agreements (as defined below), pursuant to which such Anderson Partners will
irrevocably agree to sell, transfer and assign their interests in the Anderson
Partnerships or the Properties (as defined below), as the case may be, and as
more particularly described therein, to Highwoods;
WHEREAS, pursuant to the terms hereof and the terms of the Acquisition
Agreements, Highwoods, Anderson, the Anderson Partnerships and API desire to
combine their respective businesses subject to the terms, conditions, provisions
and limitations of this Master Agreement;
NOW, THEREFORE, in consideration of the premises herein contained, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
<PAGE>
The following capitalized terms shall have the following meanings for
all purposes of this Master Agreement and such meanings are equally applicable
to the singular and plural forms of the terms defined. The terms "hereof",
"hereto", "herein", "hereunder" and comparable terms refer to the entire
agreement with respect to which such terms are used and not to any particular
section, subsection, paragraph or other subdivision thereof.
"Acquisition Agreements" means collectively the Purchase Option
Agreements (as defined below), the Exchange Option Agreements (as
defined below) and the Tradeport Agreement (as defined below).
"Actual Knowledge" for the purposes of this Master Agreement shall mean
information which is known to an individual or, as to any entity, to
the officers, general partners or managers of such entity without the
requirement of additional inquiry unless such persons are aware of
facts or circumstances which would lead reasonable persons to make or
conduct additional inquiry.
"Anderson Cash Recipients" means collectively those of the Anderson
Partners receiving cash pursuant to the transactions contemplated by
the Purchase Option Agreements.
"Anderson Financial Statements" means the periodic income statement and
balance sheets provided to Highwoods (including the schedules attached
thereto) for the Anderson Partnerships and API, and specifically
excludes any forecasts and projections.
"Anderson Parties" means collectively Anderson, the Anderson
Partnerships and API, without duplication.
"Anderson Partners" means collectively Anderson, the Anderson Cash
Recipients and the Anderson Unit Recipients (as defined below) as
listed on Schedule 3.2(a) attached hereto.
"Anderson Property Owners" means the Anderson Partnerships and
Anderson.
"Anderson Unit Recipients" means collectively those parties receiving
Units (as defined below) pursuant to the transactions contemplated by
the Exchange Option Agreements and the Tradeport Agreement.
"Anderson Units" means collectively the Units to be issued to the
Anderson Unit Recipients at Closing.
"Assumed Anderson Debt Financing" means the indebtedness described on
Schedule 1-1 attached hereto.
2
<PAGE>
"Assumed Anderson Mortgages" means the deeds to secure debt, mortgages
or other instruments that secure the Assumed Anderson Debt Financing.
"Closing Date" means the date upon which all the conditions for closing
and consummation of the transactions contemplated by this Master
Agreement shall have been satisfied, which date shall be no later than
February 15, 1997.
"Code" means the Internal Revenue Code of 1986, as amended.
"Environmental Law" means any and all federal, state and local laws,
regulations, ordinances and other requirements relating to pollution or
protection of the environment, including, without limitation, laws,
regulations and requirements relating to the ownership, possession,
storage and control of the Properties (as defined below) and to
emissions, discharges, releases or threatened releases of storm water,
pollutants, contaminants, toxic or hazardous substances, or solid or
hazardous wastes into the environment (including without limitation
ambient air, surface water, groundwater or land), or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, toxic or
hazardous substances, or solid or hazardous wastes. The Environmental
Laws include, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Option Agreements" means, collectively, those agreements
listed on Schedule 1-3 attached hereto, including the Tradeport
Agreement, between Highwoods, HPI and the parties more particularly
described therein and on Schedule 1-3 pursuant to which Units are to be
exchanged for certain ownership interests in the Anderson Partnerships
or in certain of the Properties.
"Highwoods Partnership Agreement" means the First Amended and Restated
Agreement of Limited Partnership of Highwoods/Forsyth Limited
Partnership dated as of June 14, 1994, as amended through the date of
Closing.
"Improvements" means all buildings, structures, streets, furnishings,
parking lots, landscaping, walls, ponds, culverts, fixtures, utilities,
fences, driveways, loading docks, security systems and other physical
features constructed or assembled on, at, upon or beneath any of the
Properties (whether finished or unfinished) and owned by the respective
Anderson Property Owner owning such Property.
"Indebtedness" means, without duplication, any obligations for borrowed
money and all monetary obligations to trade creditors, whether
heretofore, now or hereafter owing, arising, due or payable to any
person and howsoever evidenced, created, incurred, acquired or owing,
whether primary, secondary, direct, contingent, fixed or
3
<PAGE>
otherwise and whether matured or unmatured. Without in any way limiting
the generality of the foregoing, Indebtedness specifically includes the
following: (a) all obligations or liabilities of any person that are
secured by any lien, claim, encumbrance or security interest upon
property; (b) all obligations or liabilities created or arising under
any capital lease of real or personal property, or conditional sale or
other title retention agreement with respect to property, even though
the rights and remedies of the lessor, seller or lender thereunder are
limited to repossession of such property; (c) all unfunded pension
fund, employee medical or welfare obligations and liabilities; (d)
deferred taxes; and (e) all obligations under any indemnification
agreements, guaranty agreements, letters of credit or other documents
creating such contingent liabilities.
"Liability" means any liability, obligation or indebtedness of any and
every kind and nature, whether heretofore, now or hereafter owing,
arising, due, or payable by the Anderson Parties or any of them,
howsoever evidenced, created, incurred, acquired or owing, whether
primary, secondary, direct, contingent, fixed, or otherwise, including
obligations of performance.
"Lien" means any interest in property securing an obligation owed to,
or a claim by, a person other than the owner of the property, whether
such interest is based on the common law, statute or contract, and
including but not limited to the lien or security interest arising from
a deed to secure debt, mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease consignment or
bailment for security purposes. The term Lien shall include
reservations, exceptions, defects of any kind or nature, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases
and other title exceptions and encumbrances affecting property.
"Payable Anderson Debt Financing" means the indebtedness described on
Schedule 1-5 attached hereto.
"Permitted Lien" means (i) liens for 1997 ad valorem taxes not yet due
and payable; (ii) restrictions, easements, covenants, reservations and
rights of way of record disclosed by Highwoods' title examination;
(iii) zoning ordinances, restrictions and other requirements imposed by
governmental authority as do not materially interfere with the present
use of a parcel of property; (iv) such imperfections of title, liens
and encumbrances, if any, as do not detract materially from the value
or interfere with the present use of a parcel of property and which do
not secure obligations for borrowed money or the deferred purchase
price of property; and (v) the liens securing the Assumed Anderson Debt
Financing and the liens securing the Payable Anderson Debt Financing.
Provided, however, that all of the items set forth at (iii) and (iv)
hereof known to Highwoods and/or which should have been disclosed by
Highwoods survey of or relating to the Properties shall be considered
Permitted Liens.
"Person" means any individual, joint venture, corporation, limited
liability company, voluntary association, partnership, trust, joint
stock company, unincorporated
4
<PAGE>
organization, association, government, or any agency, instrumentality,
or political subdivision thereof, or any other form of entity.
"Property" or "Properties" shall mean, individually, the real property
together with any Improvements thereon and all personal property and
rights, privileges and interests appurtenant thereto (other than
"Excluded Intangibles" as defined at Section 4.1 below) owned by an
Anderson Property Owner or, collectively, by all of the Anderson
Property Owners as more particularly described on the Descriptive
Property Exhibit attached hereto at Schedule 1-2.
"Purchase Option Agreements" means, collectively, those agreements
listed on Schedule 1-4 attached hereto between Highwoods, HPI and the
parties more particularly described therein and on Schedule 1-4
pursuant to which cash is to be paid for certain ownership interests in
the Anderson Partnerships.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Laws" means the Securities Act, the Exchange Act and the
rules and regulations promulgated thereunder.
"Shares" means the duly authorized common stock, par value $.01 per
share, of HPI.
"Tradeport Agreement" means that certain Contribution and Exchange
Agreement By and Between Highwoods/Forsyth Limited Partnership and
Anderson/Tradeport, L.L.C.
"Unit" means an undivided limited partnership interest of Highwoods,
which is exchangeable by the Unit holder for either cash or Shares,
whichever may be elected by HPI, after one year from the Closing Date
in accordance with the Highwoods Partnership Agreement and the
Registration Rights Agreement to be executed in conjunction with the
Acquisition Agreements. "Units" refers both to Class A Units and to
Class B Units as provided by the Highwoods Partnership Agreement unless
otherwise specified. Class B Units are more specifically described on
Exhibit 1 attached hereto.
5
<PAGE>
ARTICLE II
THE TRANSACTIONS
2.1 General. Subject to the terms, conditions, provisions and
limitations in this Master Agreement, on the Closing Date the parties shall
cause the transactions contemplated hereby (the "Transactions") to be
consummated, including, but not limited to:
(a) The closings under the Acquisition Agreements, as
described in Section 2.2 below;
(b) The contribution of certain of the API Assets (as
hereinafter defined) to Highwoods pursuant to the terms and conditions
hereof;
(c) The dissolution of the Anderson Partnerships other
than Anderson/Tradeport, L.L.C. and Anderson/Chastain, L.L.C. and the
resulting transfer by operation of law of all the Properties owned by
them, respectively, to Highwoods.
2.2 Acquisition Agreements. Highwoods shall tender the consideration
required by each of the Acquisition Agreements such that each "Final Closing",
as defined in the respective Acquisition Agreements, occurs under the terms of
each of the respective Acquisition Agreements.
2.3 Conditions of Loan Assumptions. As of the date hereof, Anderson has
provided to Highwoods true, correct and complete copies of all documents,
agreements, correspondence, waivers or other written materials (and made
Highwoods aware of any material agreements and understandings) evidencing,
securing or otherwise related to the Assumed Anderson Debt Financing (including
the Assumed Anderson Mortgages). Highwoods shall have from the date hereof until
the Closing Date (the "Review Period") to conduct its review of all
documentation required to be executed in connection with the assumption by
Highwoods of the Assumed Anderson Debt Financing (the "Assumption Documents").
If for any reason any of the terms, conditions or provisions of the Assumption
Documents, as the same are to be assumed by Highwoods, are unacceptable to
Highwoods in any respect in the sole and absolute discretion of Highwoods, then
Highwoods shall have the option at any time prior to the expiration of the
Review Period to terminate this Master Agreement.
2.4 Closing.
(a) The closing of the transactions contemplated by this
Master Agreement (the "Closing") shall take place at the offices of
ELROD & THOMPSON, Attorneys at Law, Atlanta, Georgia on or before the
Closing Date but in no event later than and, if no such unanimous
agreement is reached, on February 15, 1997 unless otherwise agreed in
writing by Highwoods and Anderson. The closing of any of the
Acquisition Agreements shall take place only if the Closing hereunder
occurs.
6
<PAGE>
(b) Highwoods may terminate this Master Agreement without
liability and without waiving any of its rights at law or in equity by
giving notice to Anderson at any time prior to the Closing:
(i) In the event any one of the Anderson Parties is
in breach (after any applicable period of notice and
cure) of any representation, warranty, or covenant
contained in this Master Agreement in any material
respect;
(ii) If the Closing shall not have occurred on or
before the Closing Date by reason of the failure of
the Anderson Parties to satisfy any condition
precedent to the performance of Highwoods (unless the
failure results from Highwoods itself breaching any
representation, warranty or covenant contained in
this Master Agreement);
(iii) If there has been a material adverse change in
the financial condition or business of the Anderson
Parties affecting the Properties after the date of
this Master Agreement or if API files any voluntary
petition, or has filed against it any involuntary
petition, seeking liquidation, reorganization,
arrangement, readjustment of debts or for any other
relief under the United State Bankruptcy Code or
under any other statute, code or act, whether state,
federal or foreign, or becomes insolvent or otherwise
becomes subject to any reorganization or insolvency
proceeding; or
(iv) Pursuant to the terms of Section 2.3 hereof.
(v) Pursuant to the terms of Section 2.5 hereof.
(c) The Anderson Parties may terminate this Master
Agreement without liability and without waiving any of their respective
rights at law or in equity by giving notice to Highwoods at any time
prior to the Closing:
(i) In the event Highwoods is in breach (after any
applicable period of notice and cure) of any
representation, warranty, or covenant contained in
this Master Agreement in any material respect;
(ii) If the Closing shall not have occurred on or
before the Closing Date by reason of any condition
precedent herein to the performance by the Anderson
Parties not being fulfilled (unless the failure
results from any of the Anderson Parties breaching
any representation, warranty, or covenant contained
in this Master Agreement); or
(iii) Upon five (5) days written notice, in the event
Highwoods takes any action or fails to take any
action that would cause HPI to fail to qualify as a
real estate investment trust under the Code.
7
<PAGE>
2.5 Examination by Highwoods.
(a) Highwoods shall have the right during the Review
Period to examine the Properties and to conduct title examinations,
environmental surveys and/or audits, make surveys, and conduct all
other investigations of the Properties as Highwoods deems necessary to
determine whether the Properties are suitable and satisfactory to
Highwoods. During the Review Period, the Anderson Parties shall make
available to Highwoods, for inspection and copying, all environmental
and engineering studies, surveys, title insurance policies, and other
documents and records that Highwoods may reasonably request in the
course of the performing its inspection activities. Notwithstanding
anything to the contrary set forth in this Agreement, this Agreement
shall terminate on the date that Highwoods gives written notice to
Anderson that the results of its examinations and investigations
undertaken during the Review Period are unsatisfactory to Highwoods,
provided that such written notice is received by Anderson on or before
the expiration of the Review Period. If Highwoods fails to give such
notice on or before the expiration of the Review Period, then this
Agreement shall continue in full force and effect in accordance with,
and subject to, all the terms and conditions hereof. Highwoods shall
have the right to determine, in Highwood's sole and absolute
discretion, whether or not the results of its inspection activities are
satisfactory. If this Agreement is terminated by Highwoods pursuant to
this Section 2.5, all rights and obligations of the parties under this
Agreement shall, except as specifically provided herein, expire, and
this Agreement shall become null and void.
(b) Highwoods agrees to indemnify and hold Seller harmless
from and against any and all claims, causes of action, damages, costs
(including reasonable attorney's fees), injuries and liabilities
resulting from the activities of Highwoods and/or Highwoods' agents or
designees at or on the Properties. Notwithstanding anything to the
contrary contained elsewhere in this Agreement, the provisions of this
Section 2.5(b) shall survive both Closing and termination of this
Agreement.
ARTICLE III
CONSIDERATION
3.1 Purchase Price Generally. The total consideration to be transferred
or paid to the Anderson Partners on the Closing Date (the "Aggregate
Consideration") (prior to the adjustment required by Section 3.3 below) shall be
based on the following aggregate assigned values for the various Properties:
(a) The consideration for the Properties listed on
Schedule 3.1(a) (the "In- Service Properties") shall be based upon a
total value for the Properties of $61,160,000 in a combination of cash,
Units (valued at $29.25 each) and debt assumption.
(b) The consideration to be tendered for the Properties
listed on Schedule 3.1(b) (the "Development Properties") shall be
$8,967,496 reduced by the estimated costs to complete the Development
Properties and will be paid in a combination of Units (valued at $29.25
each) and debt assumption.
8
<PAGE>
[(c) The consideration for the development land described
on Schedule 3.1(c) (the "Bluegrass Land") shall be determined on the
basis of $75,000 per acre and tendered 20% in Class A Units and 80% in
Class B Units with the latter to convert to Class A Units at the rate
of 25% annually on each anniversary of the Closing Date such that the
Class B Units will be fully converted as of the fourth anniversary of
the Closing Date. All Units will be issued at an exchange rate of
$29.25 each.]
(d) The consideration for the Properties listed on
Schedule 3.1(d) (the "Development Land") shall be as follows:
(i) The Tradeport property is subject to the
Tradeport Agreement.
(ii) The Chastain property currently zoned industrial
(approximately 10 acres) shall be acquired for
consideration based upon a value of $105,000 per acre
payable in a combination of Units (valued at $29.25
each) and debt assumption. The 5.69 acres of Chastain
land which is not zoned industrial shall be subject
to a right of first refusal in favor of Highwoods in
the form as attached hereto as Exhibit 3.1(d).
(iii) The consideration to be paid for Newpoint shall
be based upon a value of $110,000 per acre for a
total value of $2,189,473 and shall be in the form of
a combination of debt assumption and Units (all Units
to be valued at $29.25 each) in the form of 20% Class
A Units and 80% Class B Units (25% of the Class B
Units which shall convert to Class A Units on each
anniversary of the Closing Date such that the Class B
Units will be fully converted as of the fourth
anniversary of the Closing Date).
3.2 Agreed Upon Consideration. Subject to adjustment as provided below,
the aggregate consideration required by the Acquisition Agreements and this
Master Agreement, to be paid by Highwoods to or in favor of the Anderson
Partners on the Closing Date (the "Aggregate Consideration") shall be:
(a) the payment of cash in the amount of $________ to the
Anderson Cash Recipients pursuant to the terms of the applicable
Purchase Option Agreements and in accordance with Schedule 3.2(a)
attached hereto;
(b) the issuance of _______ Units, including ___ Class A
Units and ___ Class B Units, to the Anderson Unit Recipients pursuant
to the terms of the applicable Exchange Option Agreements and in
accordance with Schedule 3.2(a) attached hereto;
(c) the payment by Highwoods of the Payable Anderson Debt
Financing and the assumption of the principal balance of the Assumed
Anderson Debt Financing in the aggregate amount of $_______ and the
release of all the combined Anderson Partners from any and all
liability arising out of the Assumed Anderson Debt Financing and the
succession to other liabilities as expressly provided herein.
9
<PAGE>
Notwithstanding the amounts set forth in Schedule 3.2(a) hereof, each Anderson
Partner's consideration (in cash or Units) to be received shall be adjusted, as
applicable, pursuant to Paragraph 2 of each such Anderson Partner's Acquisition
Agreement and Section 3.3 below.
3.3 Closing Adjustments.
(a) Generally. All real estate taxes, charges and
assessments affecting a Property, all charges for water, sewer,
electricity, gas and all other utilities and operating expenses with
respect to a Property, to the extent not paid or payable by tenants
under the Leases (as defined in Section 5.7 below and as described on
Schedule 5.7A attached hereto), shall be apportioned on a per diem
basis as of midnight on the date immediately preceding the Closing. All
such expenses for the period preceding the Closing shall be deemed
expenses of the applicable Anderson Parties and all such expenses
commencing as of the Closing with respect to such Property shall be
deemed to be expenses of Highwoods. Amounts owed under this paragraph
shall be paid to the party to whom they are owed in cash at the Closing
or in the Post-Closing Adjustment Period (as defined below) in the same
manner as if the underlying real property were being sold. If any real
estate taxes, charges or assessments have not been finally assessed as
of the Closing Date for a Property for the then current calendar tax
year, they shall be adjusted at the Closing based upon the most
recently issued bills therefor. The provisions of this Section 3.3(a)
shall survive the Closing.
(b) Rent. Except for delinquent rent, all rent under an
Anderson Partnership's Leases and other income attributable to a
Property shall be apportioned on a per diem basis as of midnight on the
date immediately preceding the Closing. All such rent and other income,
including commissions earned, for the period preceding the Closing
shall be deemed to be property of the applicable Anderson Parties, and
all rent and other income for any period commencing as of the Closing
and thereafter shall be the property of Highwoods for the purpose of
making the adjustments set forth herein. Amounts owed under this
paragraph shall be paid to the party to whom they are owed in cash at
the Closing or during the Post- Closing Adjustment Period. Delinquent
rent shall not be prorated, but shall be deemed the property of the
appropriate Anderson Parties. Payments received by Highwoods from
tenants of an Anderson Partnership from and after the Closing with
respect to a Property shall be applied first to rents then due for the
current period from such tenant and then to such tenant's delinquent
rent as of the time of apportionment. Highwoods shall use reasonable
efforts to collect delinquent rents for the benefit of the Anderson
Parties but in no event shall be obligated to evict or sue any tenants
in order to collect such rents and shall cooperate with the Anderson
Parties in the collection of any delinquent amounts; provided, however,
that the Anderson Parties shall not have any rights to evict such
tenants for such delinquent amounts. Any amounts received by Anderson
Parties on account of rent or other income for the period after the
Closing with respect to the Property and the related personal property
shall be turned over to Highwoods for application in accordance with
the terms of this paragraph. All accounts receivable, notes, cash and
bank accounts of the Anderson Partnerships existing as of the Closing
date shall be transferred at Closing to the appropriate Anderson
Parties, other than the remaining balance of any escrow accounts for
tenant improvements and lease commissions held by the Anderson
Partnerships, the amount necessary to pay prorations of
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taxes, security deposits and amounts which belong to Highwoods after
making the closing adjustments for rent and operating expenses. Except
for the adjustments to be made in the Post Closing Adjustment Period,
the parties hereto agree that no adjustments to reimbursable income
received from tenants for taxes, insurance or common area maintenance
expenses will be made because the estimated periodic payments made by
tenants of the Properties for 1997 were more or less than the tenant
actual prorated share of taxes, insurance and common area maintenance
expenses. The provisions of this Section 3.3(b) shall survive the
Closing.
(c) Preclosing Expenses and Liabilities. The parties
acknowledge that not all invoices for expenses incurred with respect to
the Properties prior to the Closing will be received by the Closing and
that a mechanism needs to be in place so that such invoices can be paid
as received. All of the prorations referred to above will be done on an
interim basis at the Closing and will be subject to final adjustment in
accordance with the provisions hereof within sixty days or such other
agreed upon period of time following Closing (the "Post-Closing
Adjustment Period"). Upon receipt by Highwoods after Closing of an
invoice for a Property's operating expenses which are attributable in
whole or in part to a period prior to the Closing and which were not
apportioned (or, if apportioned, not correctly apportioned) at Closing,
Highwoods shall submit to Anderson, as agent for the Anderson Partners,
a copy of such invoice with such additional supporting information as
Anderson shall reasonably request. Within ten (10) days of receipt of
such copy, Anderson shall pay to Highwoods an amount equal to the
portion of such invoice attributable to the period ending as of
midnight on the date immediately preceding the Closing apportioned on a
per diem basis.
3.4 Fluctuation. EACH OF THE ANDERSON PARTIES AND HIGHWOODS
ACKNOWLEDGES AND AGREES THAT AFTER THE EXECUTION OF THE ACQUISITION AGREEMENTS,
THE MARKET VALUE OF THE HPI COMMON STOCK WHICH IS CURRENTLY OUTSTANDING MAY
INCREASE OR DECREASE IN VALUE AS THE RESULT OF MARKET FLUCTUATIONS, AND THAT ANY
SUCH FLUCTUATIONS MAY AFFECT THE VALUE OF THE UNITS. NOTWITHSTANDING THESE
FLUCTUATIONS, HIGHWOODS WILL NOT BE REQUIRED TO INCREASE THE NUMBER OF UNITS TO
BE ISSUED TO ANY ANDERSON UNIT RECIPIENT (WHOSE PURCHASE PRICE IS PAID IN UNITS)
IN THE EVENT OF A DECREASE IN THE MARKET VALUE OF HPI COMMON STOCK PRIOR TO THE
CLOSING. LIKEWISE, EACH ANDERSON UNIT RECIPIENT WHOSE PURCHASE PRICE IS BEING
PAID IN UNITS WILL BE ENTITLED TO THAT NUMBER OF UNITS SET FORTH ON SCHEDULE
3.2(a) HEREOF NOTWITHSTANDING ANY INCREASE IN VALUE OF HPI COMMON STOCK PRIOR TO
THE CLOSING, AS SUCH INCREASE MAY INURE TO THE BENEFIT OF SUCH ANDERSON UNIT
RECIPIENT.
3.5 Partnership Distribution Adjustment. For the first fiscal quarter
of Highwoods ending after the Closing Date, partnership distributions
attributable to such quarter payable by Highwoods to the Anderson Unit
Recipients pursuant to Section 12.2C of the Highwoods Partnership Agreement
shall be prorated to take into account the period of time during such quarter
that the Anderson Unit Recipients were limited partners in Highwoods. Each
Anderson Unit Recipient shall receive that portion of a full quarterly
distribution otherwise attributable to his Units determined by multiplying the
amount of such full distribution by a fraction the numerator of which is the
number of days during such quarter that the Anderson Unit
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Recipient was a limited partner in Highwoods and the denominator of which is the
number of days in such quarter. In the event that any Anderson Unit Recipient
receives a full cash distribution for such period, such Anderson Unit Recipient
shall reimburse Highwoods the prorated portion of such distribution within five
(5) days of receipt.
3.6 Prepayment Penalties. The Aggregate Consideration shall be reduced
by the prepayment penalties associated with the payment by Highwoods of
Indebtedness as described on Schedule 3.5 attached hereto.
ARTICLE IV
COVENANTS AND AGREEMENTS
4.1 Operation of Business. After making adequate provisions for all
prorations contemplated herein, specifically by Section 3.3, and by the
Acquisition Agreements, the Anderson Partnerships and API may make cash
distributions of all cash on hand immediately prior to the Closing and may
otherwise distribute all claims or other evidences of money owed to them,
including all commissions earned but not due and payable more particularly
described in Schedule 4.1 (the "Third Party Commissions"), it being understood
that, except as otherwise provided herein, no claims, accounts receivable, notes
receivable or other rights to payment of the Anderson Partnerships (the
"Excluded Intangibles", which term shall include the cash available for
distribution described above in this Section 4.1) shall remain assets of the
Anderson Partnerships as of the Closing Date. Highwoods and the Anderson Parties
agree to use their reasonable efforts to reconcile prorations and other closing
adjustments within the Post-Closing Adjustment Period. In the event Highwoods or
HPI receives any Third Party Commissions post-Closing, it will immediately pay
such Third Party Commissions to API.
4.2 Brokers. Each of the Anderson Parties covenants, represents and
warrants to Highwoods, and Highwoods covenants, represents and warrants to each
of the Anderson Parties that, except as indicated on Schedule 4.2 attached
hereto, no broker or finder or agent has been involved or engaged by it in
connection with the transactions contemplated hereby and, each hereby agrees,
and Anderson agrees specifically as related to the persons identified on
Schedule 4.2, to indemnify and hold harmless the other from and against any and
all broker's or finder's fees, commissions or similar charges incurred or
alleged to have been incurred by the indemnified party in connection with the
transactions contemplated hereby and any and all loss, liability, cost or
expense (including without limitation reasonable attorneys' fees) arising out of
any claim that the indemnifying party incurred or created any such fees,
commissions or charges.
4.3 Employment Agreements. At Closing, HPI and Anderson shall have
entered into the Employment Agreement in the form of Exhibit 4.3 attached
hereto.
4.4 Section 754 Elections. Anderson and each of the Anderson
Partnerships other than Anderson/Tradeport, L.L.C. and Anderson/Chastain, L.L.C.
agree to cause an election under Section 754 of the Code to be included in the
final federal partnership tax return of each of the Anderson Partnerships
indicating Highwoods as a partner.
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4.5 Employees; Benefit Plans. At Closing, either HPI or Highwoods, at
their discretion, shall hire all of the employees of API at their current level
of compensation and benefits or their equivalent economic values as such
employees were compensated by API.
4.6 Termination of Contracts. Unless otherwise specified by Highwoods
in writing, all management, development, or leasing contracts, entered into by
the Anderson Partnerships, if any, must be terminated as of the effective date
of Closing so that Highwoods or its designee shall have the exclusive right to
manage and lease the Properties.
4.7 Contribution of API Assets. All personal property listed on
Schedule 4.7, including the tradename "Anderson Properties" and the associated
goodwill, used by Anderson Properties, Inc. in the operation and management of
the Properties (the "API Assets") will be transferred to Highwoods in
conjunction with the Closing and as partial consideration for the transactions
otherwise contemplated by this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
ANDERSON AND API
To induce Highwoods and HPI to enter into this Master Agreement and the
transactions contemplated hereby, unless otherwise indicated, Anderson and API
represent and warrant, and each Anderson Partnership represents and warrants
(with respect to itself only), that the statements contained in this Article V
are true, correct and complete on the date hereof. Pursuant to Section 8.1
hereof, Anderson, each of the Anderson Partnerships (each with respect to itself
only) and API shall deliver to Highwoods at closing a certificate certifying
that all such representations and warranties are still true, correct and
complete as of the Closing Date, or to the extent that any representation and
warranty is not then true, correct and complete, stating the fact or facts which
render such representation and warranty untrue. It is the express intention and
agreement of Anderson, the Anderson Partnerships and API that the
representations and warranties set forth in this Article V shall, except to the
extent specified herein to the contrary, survive the consummation of the
transactions contemplated in this Master Agreement, but only to the extent
expressly provided in Section 11.2 hereof.
5.1 Consents. Except as disclosed on Schedule 5.1 attached hereto, (i)
no consents, approvals, waivers, notifications, acknowledgments or permissions
which have not been obtained are required in order for any of the Anderson
Parties to fully perform its or his respective obligations under this Master
Agreement or which, if left unobtained at Closing and thereafter, would have a
material adverse affect on the value, operation, occupation, use or development
of any Property, and (ii) the execution and delivery of this Master Agreement by
the Anderson Parties and the consummation of the transactions contemplated
hereby, including without limitation the execution of any related agreements,
will not require the consent of, or any prior filing with or notice to or
payment to, any governmental authority or other Person (other than normal and
customary transfer taxes, recording and other transactional costs and expenses).
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5.2 Disclosure. The representations and warranties contained in this
Master Agreement (including Schedules and Exhibits and documents or instruments
delivered in connection herewith) or in any information, statement, certificate
or agreement furnished or to be furnished to Highwoods by any of the Anderson
Parties in connection with the Closing pursuant to this Master Agreement, do not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements and information contained herein or
therein, in light of the circumstances in which they are made, not misleading.
5.3 Absence of Conflicts. Except as set forth on Schedule 5.1 and
Schedule 5.3 attached hereto, the execution, delivery and performance of this
Master Agreement by the Anderson Parties and the consummation of the
transactions contemplated hereby, including without limitation, the execution
and delivery of any documents, instruments or agreements contemplated hereby,
will not (after a lapse of time, due notice or otherwise) (a) conflict with,
violate or result in any breach or default under (i) any provision of any
partnership agreement, operating agreement or certificate of any of the Anderson
Partnerships; (ii) any provision of the articles of incorporation or bylaws of
API, (iii) any law, statute, rule or regulation of any administrative agency or
governmental body, or any judgment, order, writ, stipulation, injunction, award
or decree of any court, arbiter, administrative agency or governmental body to
which the Anderson Parties or the Properties are subject; or (iv) any indenture,
agreement, instrument or other contract to which the Anderson Parties may be
bound or relating to or affecting their assets (except for the documents and
instruments evidencing and/or securing the Assumed Anderson Debt Financing and
the Payable Anderson Debt Financing); or (b) result in the acceleration of,
create in any party the right to accelerate, terminate, modify or cancel, or
require any notice under or result in the creation or imposition of any Lien on
the Properties or related assets in accordance with the terms of this Master
Agreement under any indenture, mortgage, contract, agreement, lease, sublease,
license, sublicenses, franchise, permit, instrument of indebtedness, security
agreement or other undertaking or instrument to which the Anderson Parties may
be bound or affected.
5.4 Certification of Anderson Financial Statements. The Anderson
Financial Statements are true, correct and complete in all material respects,
are prepared in accordance either with generally acceptable accounting
principles or federal income tax principles, consistently applied, and fairly
present the financial condition of each of the applicable Anderson Parties.
5.5 Power and Authority of Anderson Partnerships. Each of the Anderson
Partnerships is a partnership or limited liability company, as the case may be,
duly formed and validly existing under the laws of the State of Georgia. Each
partner or member of the Anderson Partnerships (which is controlled directly or
indirectly by Anderson and/or API) which is not an individual has been duly
formed and is validly existing. All partnership interests in each Anderson
Partnership have been validly issued and fully paid. True, correct and complete
copies of each of the partnership agreements and operating agreements, as
applicable, of the Anderson Partnerships and all amendments thereto have been
submitted to Highwoods prior to the date of this Master Agreement. Each of the
Anderson Partnerships has full power and authority to own and operate its
properties and to enter into and perform its obligations under this Master
Agreement and the documents and instruments contemplated hereby to which they
are a party, and the execution, delivery and performance of this Master
Agreement have been duly authorized by all requisite partnership or company
actions on the
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part of each of the Anderson Partnerships. This Master Agreement constitutes,
and the documents and instruments contemplated hereby and other instruments and
documents to be executed and delivered by the Anderson Partnerships, as
applicable, hereunder will, when executed, constitute the legal, valid and
binding obligations of the Anderson Partnerships, respectively, enforceable
against them in accordance with their respective terms. The Closing of the
Acquisition Agreements and the Master Agreement will effectuate the transfer of
all of the ownership interests in each of the Anderson Partnerships.
5.6 Power and Authority of API. API is a corporation duly incorporated,
validly existing and authorized to transact business under the laws of the State
of Georgia and is authorized to transact business as a foreign corporation in
all states where the ownership of assets or the nature of its business requires
qualification as a foreign corporation, with full corporate power and authority
to conduct its business as it has been conducted in the past and enter into and
perform its obligations under each of the Acquisition Agreements, this Master
Agreement and each of the documents and instruments contemplated by this Master
Agreement. The execution, delivery and performance of each of the Acquisition
Agreements, this Master Agreement, the consummation of the transactions
contemplated hereby and the execution of the documents and instruments
contemplated hereby have been duly authorized by all requisite corporate action
on the part of API and this Master Agreement constitutes, each of the
Acquisition Agreements constitutes, and the instruments and documents to be
executed and delivered by API hereunder will, when executed, constitute the
legal, valid and binding obligations of API, enforceable against it in
accordance with their respective terms.
5.7 Rent Roll and Leases. The schedule of leases attached hereto as
Schedule 5.7A (the "Schedule of Leases") is a true, correct and complete
schedule of all leases, subleases and rights of occupancy (claiming directly by,
through, under or with the knowledge of Anderson, the Anderson Partnerships or
API) in effect with respect to each of the Properties, respectively (the
"Leases"), and there have been no material changes to the Schedule of Leases.
Except as set forth on the Schedule of Leases, there are no other leases,
subleases, tenancies or other rights of occupancy (claiming directly by,
through, under or with the knowledge of Anderson, the Anderson Partnerships or
API) in effect with respect to the Properties other than the Leases. True,
correct and complete copies of the Leases, together with all amendments and
supplements thereto and all other documents and correspondence relating thereto,
have been delivered or made available to Highwoods and its agents. Schedule 5.7A
includes the rent roll information and is, as of the date shown thereon, true
and correct in all material respects. The Schedule of Leases sets forth, as of
such date, (i) a list of all tenants under the Leases and the space occupied by
each such tenant, (ii) all arrearages owing from such tenants under such Leases
(listed on delinquency and default reports attached to the and made a part
thereof), (iii) the expiration date of the term of such Leases, (iv) the base
rent and the rent the tenant under such Lease is currently obligated to pay, (v)
the current outstanding balances of any security deposits held pursuant to any
Leases, (vi) any prepayments of rent by any tenant under any Lease of more than
one (1) month in advance (excluding security deposits which are delineated on
the list attached to the Schedule of Leases and made a part thereof) and (vii)
there are no rental concessions or abatements under a Lease applicable to any
period subsequent to the Closing. Except as set forth on the Schedule of Leases,
all such Leases are valid and enforceable and presently in full force and
effect, and none of the Leases have been assigned and all brokerage commissions
payable under any of the Leases have been paid or will be paid by the Anderson
Partnerships prior to the
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Closing Date, except as provided in Schedule 5.7B attached hereto. All tenant
upfit obligations provided for in any of the Leases not set forth on Schedule
5.7C will be completed or paid for in full prior to the Closing or will be paid
from escrow funds established for such purposes (and any excess amounts shall be
the obligation of Anderson regardless of when incurred). Except as set forth on
Schedule 5.7D attached hereto or the tenant estoppel certificates, none of the
Anderson Partnerships or any lessee under any Lease, is in default under such
Lease, and there is no event which, but for the passage of time or the giving of
notice, or both, would constitute a default under such Leases, except such
defaults that would not have a material adverse effect on the condition,
financial or otherwise or on the earnings, business affairs or business
prospects of any of the Anderson Partnerships or the Properties. Except as set
forth on the Schedule of Leases, no tenant under any of the Leases has an option
or right of first refusal to purchase the premises demised under such Leases.
The consummation of the transactions contemplated by this Master Agreement will
not give rise to any breach, default or event of default under any of the
Leases. Each of the Leases is assignable by the applicable Anderson Partnership
and, except as disclosed on Schedule 5.7E attached hereto, none of the Leases
requires the consent or approval of any party in connection with the
transactions contemplated by this Master Agreement.
5.8 No Contracts. No agreements, undertakings or contracts affecting
the Properties, the Anderson Partnerships or API, written or oral, will be in
existence as of the Closing, except as set forth on Schedule 1-1, Schedule 5.7A
[Leases], Schedule 1-5 and Schedule 5.8 attached hereto. With respect to any
such contracts set forth on Schedule 5.8 (collectively, the "Scheduled
Contracts"), each such contract is valid and binding on the applicable Anderson
Partnership and is in full force and effect in all material respects. Except as
specifically set forth on Schedule 5.8 attached hereto, no party to any
Scheduled Contract to API's or Anderson's Actual Knowledge has breached or
defaulted under the terms of such contract, except for such breaches or defaults
that would not have a material adverse effect on the business or operations of
any of the Properties or any of the Anderson Partnerships, as applicable. None
of the Scheduled Contracts requires the consent or approval of any party in
connection with the transactions contemplated by this Master Agreement.
5.9 Title to Property and Partnership Interests. The Descriptive
Property Exhibit hereof represents a true, correct and complete description of
all ownership interests in the Properties, and there exist no other ownership
interests in the Properties except as disclosed thereon. Either the Anderson
Partnerships or Anderson own and will own at Closing good, valid and marketable
fee simple title to the Properties, in such forms and in such percentages as are
shown on the Descriptive Property Exhibit hereof; the Anderson Partnerships or
Anderson, respectively, own good, valid and marketable title to all personal
property listed on Schedule 5.9A attached hereto (the "Personal Property"). API
owns good, valid and marketable title to the API Assets, free and clear of any
Lien. Each owner of any interests in any of the Anderson Partnerships owns, to
Anderson's and API's Actual Knowledge, good, valid and marketable title to such
interest(s) in the Anderson Partnership(s) as are being conveyed to Highwoods
under the Acquisition Agreements free and clear of any lien, encumbrance,
security interest, option, restriction, subscription or other similar right or
interest, and such owner has, to Anderson's and API's Actual Knowledge, the
absolute and unconditional right, power and authority to perform under the
respective Acquisition Agreements. Upon the consummation of the transactions
contemplated by this Master Agreement and the Acquisition
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Agreements, Highwoods will receive good and marketable title to all such
interests in all of the Anderson Partnerships and all of the Properties, free
and clear of any Liens (other than Permitted Liens). The Properties are not
subject to any Liens except Permitted Liens and the easements, encumbrances and
other exceptions to title listed as Schedule 5.9B attached hereto.
5.10 Liabilities; Indebtedness. Except for the Assumed Anderson Debt
Financing and the Payable Anderson Debt Financing, the Leases, the leasing
commissions listed on Schedule 5.7B and the operating agreements listed on
Schedule 5.22, and those liabilities disclosed to Highwoods in writing on
Schedule 5.10 hereto, neither Anderson nor the Anderson Partnerships have
incurred any Indebtedness related to the Properties except in each instance for
trade payables and any other customary and ordinary expenses in the ordinary
course of business that either will be paid and discharged in full by Anderson
or the Anderson Partnerships, respectively, will be subject to adjustment as
provided in Section 3.3 hereof or will remain an obligation of Anderson or an
Anderson Partnership, no part of the ownership of which such Anderson
Partnership is owned by Highwoods after Closing, as of the Closing. At Closing
and after giving effect to the transactions contemplated by this Master
Agreement, there will exist no default, or event which with the passage of time
or giving of notice or both would constitute a default with respect to the
Assumed Anderson Debt Financing. The Payable Anderson Debt Financing is
unconditionally prepayable in full, without penalty, premium or charges, except
as disclosed in Schedule 1-5 attached hereto. Except as shown on the Anderson
Financial Statements, none of the Anderson Partnerships, other than
Anderson/Chastain, L.L.C. and Anderson/Tradeport, L.L.C. is subject to or
obligated or liable under any Liability except for ordinary and customary
expenses incurred in the ordinary course of business.
5.11 Insurance. Each of the Anderson Parties currently maintains or
causes to be maintained all of the public liability, casualty and other
insurance coverage with respect to the Properties and their respective
businesses as set forth on Schedule 5.11 attached hereto. All such insurance
coverage shall be maintained in full force and effect through the Closing and
all premiums due and payable thereunder have been, and shall be, fully paid when
due.
5.12 Personal Property. All equipment, fixtures and personal property
located at or on any of the Properties or at the place(s) of business of API,
respectively, which is owned or leased by the Anderson Partnerships or API, as
applicable, shall remain at the Properties or at the place(s) of business of API
and shall not be removed prior to the Closing, except for equipment that becomes
obsolete or unusable, which may be disposed of or replaced in the ordinary
course of business. The personal property of the Anderson Partnerships and of
API is not subject to any liens except for Permitted Liens.
5.13 Claims or Litigation. Except as set forth on Schedule 5.13
attached hereto, none of the Anderson Parties nor any of the Properties are
subject to claim, demand, suit or unfiled lien, proceeding or litigation of any
kind, pending or outstanding, before any court or administrative, governmental
or regulatory authority, agency or body, domestic or foreign, or to any order,
judgment, injunction or decree of any court, tribunal or other governmental
authority, or, to the Actual Knowledge of Anderson or API, threatened, or likely
to be made or instituted, which would have a materially adverse affect on the
business or financial condition of any of the Anderson Parties or any of the
Properties or in any way be binding upon Highwoods or affect or limit Highwoods'
full
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use and enjoyment of any of the Properties or which would limit or restrict in
any way any Anderson Party' right or ability to enter into this Master Agreement
and consummate the assignments, transfers, conveyances and any other transaction
contemplated hereby.
5.14 Hazardous Substances. Except as set forth in the environmental
audit reports provided to Highwoods by the Anderson Parties and in the
environmental assessments of the Properties conducted on behalf of Highwoods
(the "Environmental Assessments"), the Anderson Parties have not generated,
stored, released, discharged or disposed of hazardous substances or hazardous
wastes at, upon or from any of the Properties in violation of any Environmental
Law, order, judgment or decree or permit, or in connection with which remedial
action would be required under any Environmental Law, order, judgment, decree or
permit. Except as set forth in the environmental audit reports provided to
Highwoods by the Anderson Parties or in the Environmental Assessments, no
hazardous substances or hazardous wastes have otherwise been generated, stored,
released, discharged or disposed of from, at or upon any of the Properties in
violation of any Environmental Law. Except as set forth in the environmental
audit reports provided to Highwoods by the Anderson Parties or in the
Environmental Assessments, no underground storage tanks are to Anderson's and
API's Actual Knowledge located on any of the Properties. As used in this Master
Agreement, the terms "hazardous substances" and "hazardous wastes" shall have
the meanings set forth in the Comprehensive Environmental Response, Compensation
and Liability Act, as amended, and the regulations thereunder, the Resource
Conservation and Recovery Act, as amended, and the regulations thereunder, and
the Federal Clean Water Act, as amended, and the regulations thereunder, and
such terms shall also include asbestos, petroleum products, radioactive
materials and any regulated substances under any Environmental Law, regulation
or ordinance.
5.15 Financial Condition of the Properties and Anderson Partnerships.
Except as set forth in Schedule 5.15 attached hereto, there has been no material
adverse change, financial or otherwise, in any of the Anderson Parties or any of
the Properties as previously represented by any of the Anderson Parties,
including, without limitation, as disclosed in the Anderson Financial
Statements.
5.16 Compliance with Laws. The Anderson Parties possess such
certificates, authorities or permits issued by the appropriate state or federal
regulatory agencies or bodies necessary to conduct the business to be conducted
by them and, to Anderson's and API's Actual Knowledge, there are no proceedings
relating to the revocation or modification of any such certificate, authority or
permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would materially and adversely affect the
condition, financial or otherwise, or the earnings, business affairs or business
prospects of any of the Anderson Partnerships, API or any of the Properties, as
applicable. There is no violation to Anderson's and API's Actual Knowledge of
any applicable zoning, building or safety code, rule, regulation or ordinance,
or of any employment, environmental, wetlands or other regulatory law, order,
regulation or other requirement, including without limitation the Americans With
Disabilities Act ("ADA"), or any restrictive covenants or other easements,
encumbrances or agreements, relating to any of the Properties, which remains
uncured. To Andersons' and API's Actual Knowledge: (i) each of the
Properties, has been constructed and is operated in accordance with all
applicable laws, ordinances, rules and regulations, (ii) all approvals regarding
zoning, land use, subdivision, environmental and building and construction laws,
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ordinances, rules and regulations have been obtained, and (iii) such approvals
will not be invalidated by the consummation of the transactions contemplated by
this Master Agreement. The representations and warranties, except to the extent
provided by Section 5.2 hereof, shall not survive Closing.
5.17 Employees. None of the Anderson Partnerships presently has any
employees nor have any of the Anderson Partnerships ever had any such employees.
5.18 Condemnation and Moratoria. There are to Andersons's and API's
Actual Knowledge (i) no pending or threatened condemnation or eminent domain
proceedings, or negotiations for purchase in lieu of condemnation, which affect
or would affect any portion of any of the Properties; (ii) no pending or
threatened moratoria on utility or public sewer hook-ups or the issuance of
permits, licenses or other inspections or approvals necessary in connection with
the construction or reconstruction of improvements, including without limitation
tenant improvements, which affect or would affect any portion of any of the
Properties; and (iii) no pending or threatened proceeding to change adversely
the existing zoning classification as to any portion of any of the Properties.
No portion of any of the Properties is a designated historic property or located
within a designated historic area or district, and there are no graveyards or
burial grounds located within any of the Properties.
5.19 Condition of Improvements. Except as disclosed or made known to
Highwoods in the course of its inspection activities or except as described on
Schedule 5.19 attached hereto, there is to Anderson's and API's Actual Knowledge
no material defect in the condition of (i) any of the Properties, (ii) the
improvements thereon, (iii) the roof, foundation, load-bearing walls or other
structural elements thereof, or (iv) the mechanical, electrical, plumbing and
safety systems therein, nor any material damage from casualty or other cause,
nor any soil condition of any nature that will not support all of the
Improvements currently thereon without the need for unusual or new subsurface
excavations, fill, footings, caissons or other installations. The
representations and warranties, except to the extent provided by Section 5.2
hereof, shall not survive Closing.
5.20 Taxes. Except as set forth on Schedule 5.20 attached hereto, (i)
all tax or information returns required to be filed on or before the date hereof
by or on behalf of the Anderson Parties or the Properties have been filed and
all such tax or information returns required to be filed hereafter will be filed
on or before the date due in accordance with all applicable laws prior to the
incurrence of any penalties or interest thereon and all taxes shown to be due on
any returns have been paid or will be paid when due; and (ii) there is no
action, suit or proceeding pending against or threatened with respect to any
Anderson Party or any of the Properties in respect of any tax, nor is any claim
for additional tax asserted by any taxing authority. None of the Anderson
Parties nor any of their respective federal, state and local income or franchise
tax returns are to Anderson's and API's Actual Knowledge the subject of any
audit or examination by any taxing authority. None of the Anderson Parties has
executed or filed with the Internal Revenue Service or any other taxing
authority any agreement now in effect extending the period for assessment or
collection of any income or other taxes.
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5.21 Management Agreements. All management, service and similar
agreements in effect between any of the Anderson Parties and any affiliates of
the Anderson Parties are described on Schedule 5.21 attached hereto
(collectively, the "Management and Leasing Agreements"), and all such Management
and Leasing Agreements relating to the Properties shall be terminated as of the
Closing Date and thereafter shall be void and of no further force and effect.
5.22 Operating Agreements. True, complete and correct copies of all
agreements pertaining to the operation of the Properties as of the date hereof
(collectively, the "Existing Operating Agreements") have been provided or made
available to Highwoods. The Existing Operating Agreements are in full force and
effect, no Anderson Party is in default of any of its material obligations under
any of such Existing Operating Agreements, and except for those set forth on
Schedule 5.22 attached hereto, all Existing Operating Agreements are terminable
on not more than thirty (30) days prior written notice and without payment of
any penalty. At the Closing with respect to each of the Properties, true,
complete and correct copies of such Existing Operating Agreements shall have
been provided or made available to Highwoods and, the Existing Operating
Agreements shall be, unless otherwise described in writing to Highwoods or
except as otherwise provided herein, (x) in full force and effect and (xi) free
from any default by the appropriate Anderson Partnership of any of its material
obligations under any of them. Anderson shall advise Highwoods immediately of
any default by any party to an Existing Operating Agreement.
5.23 ERISA; Employee Benefit Plans. Except as disclosed on Schedule
5.23 attached hereto, none of the Anderson Parties nor any Person which, in
conjunction with any of the Anderson Parties, is treated as a single employer
under Section 414 of the Code (referred to as an "ERISA Affiliate") has any
officer or employee bonus, incentive compensation, profit-sharing, pension,
stock ownership, medical expense reimbursement plan, group insurance or employee
welfare or benefit plan of any nature whatsoever (an "Employee Benefit Plan"),
including, without limitation, any "employee benefit plan" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or any "multiemployer plan" within the meaning of ERISA. To the
extent, if any, that there has heretofore been any such Employee Benefit Plan in
effect, such plan has been terminated, required notice, if any, has been given
to the Pension Benefit Guaranty Corporation and received from such Anderson
Party or ERISA Affiliate and all liabilities, if any, of any Anderson Party with
respect thereto have been fully and finally discharged and released in writing.
No Anderson Party or any ERISA Affiliate has any obligation, liability or
commitment to any Person with respect to any Employee Benefit Plan that will be
the obligation of, or will affect the property or assets of HIP or Highwoods.
5.24 Absence of Certain Changes. Since October 31, 1996, except as
otherwise set forth in this Master Agreement or as disclosed in writing to
Highwoods by an Anderson Party or as otherwise known to Highwoods, there has not
been with respect to Anderson, API or any of the Anderson Partnerships:
(a) any material adverse change in the financial condition
of any of such Anderson Parties;
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(b) any change in the condition of the property, business
or liabilities of any of the Anderson Partnerships or API except normal
and usual changes in the ordinary course of business which have not
been materially adverse;
(c) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the properties
or business of any of the Anderson Partnerships or API;
(d) any sale, abandonment or other disposition by any of
the Anderson Partnerships or API or of any interest in the Properties,
or of any personal property other than in the ordinary course of such
Anderson Partnerships or API's business;
(e) any change in the accounting methods or practices by
any of the Anderson Partnerships or API or in depreciation or
amortization policies theretofore used or adopted;
(f) any material contractual liability incurred by any of
the Anderson Partnerships or of API, contingent or otherwise, other
than for operating expenses, obligations under executory contracts
incurred for fair consideration and taxes accrued with respect to
operations during such period, all incurred in the ordinary course of
business; or
(g) any other material change in the business of any of
the Anderson Partnerships or API, or any of the Properties.
5.25 Tradename. API owns all right, title and interest in and to the
tradename "ANDERSON PROPERTIES " and all variations and derivatives thereof and
goodwill associated therewith arising out of the use of such tradename
(collectively, the "Tradename") free and clear of any Liens or pending or
threatened third party claims for infringement or unlawful use thereof, and API
has the right to sell, transfer, assign and convey the Tradename to Highwoods.
API will at Closing, transfer to Highwoods all of its right, title and interest
in the Tradename, including the goodwill associated therewith and the rights to
all the variations to the Tradename.
5.26 Operation of Business. Except as set forth on Schedule 5.26
attached hereto, from November 14, 1996 through the Closing Date, API has
conducted its business only in the ordinary course and has not granted any
substantial or general or uniform increase in the rate of pay of any employees
or any substantial increase in salaries to any employees or officers (by means
of bonus, pension plan or other contract or otherwise).
5.27 Effect of Transactions on Title. After giving effect to the
Transactions, Highwoods will be the owner of the Personal Property and the API
Assets, free and clear of any Liens or ownership interests except for the
Permitted Liens.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF HIGHWOODS
To induce the Anderson Parties to enter into this Master Agreement and
the transactions contemplated hereby, Highwoods hereby represents and warrants
to the Anderson Parties that the statements contained in this Article VI are
true, correct and complete as of the date hereof. Highwoods shall deliver to the
Anderson Parties, as applicable, at Closing a certificate certifying that all
such representations and warranties are still true, complete and correct as of
the Closing Date, or to the extent that any such representations and warranties
are not true, correct and complete, stating the fact or facts which render such
representation and warranty untrue. It is the express intention and agreement of
Highwoods that the foregoing representations and warranties shall survive the
consummation of the transactions contemplated in this Master Agreement, except
as expressly provided in Section 11.4 hereof.
6.1 Organization and Authority. Highwoods has been duly formed and is
validly existing as a North Carolina limited partnership and is duly qualified
to do business in all jurisdictions where such qualification is necessary to
carry on its business as now conducted and is duly qualified or in the process
of becoming duly qualified in all jurisdictions where the ownership of its
property would necessitate such qualification. Highwoods has all partnership
power and authority under its Partnership Agreement and its certificate of
limited partnership to enter into this Master Agreement and the Acquisition
Agreements and to enter into and deliver all of the documents and instruments
required to be executed and delivered by Highwoods and to perform its
obligations hereunder and thereunder.
6.2 Binding Obligation. The execution and delivery of this Master
Agreement, the Acquisition Agreements and the documents required to be executed
by Highwoods hereunder and thereunder, and the performance of its obligations
under this Master Agreement and the Acquisition Agreements, have been duly
authorized by all requisite partnership action, and this Master Agreement and
the Acquisition Agreements have been, and such documents will on the Closing
date have been, duly executed and delivered by Highwoods. This Master Agreement
and the Acquisition Agreements do and will, and the documents executed by
Highwoods will, constitute the valid and binding obligation of Highwoods
enforceable in accordance with their terms, subject to bankruptcy and similar
laws affecting the remedies or recourse of creditors generally.
6.3 Partnership Agreement. The Partnership Agreement attached as
Exhibit 6.3 and delivered to Anderson is a true, complete and correct copy of
the limited partnership agreement of Highwoods, as amended. The Partnership
Agreement is in full force and effect and has not been further amended, modified
or terminated except as disclosed to Anderson or the Anderson Parties.
6.4 Disclosure. To the Actual Knowledge of Highwoods, the
representations and warranties contained in this Master Agreement (including
Schedules and Exhibits and documents or instruments delivered in connection
herewith) or in any information, statement, certificate or agreement furnished
or to be furnished to any of the Anderson Parties by Highwoods in connection
with the Closing pursuant to this Master Agreement, do not contain any untrue
statement of a
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material fact or omit to state any material fact necessary to make the
statements and information contained herein or therein, in light of the
circumstances in which they are made, not misleading.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF HPI
HPI hereby represents and warrants to each Anderson Party as follows:
7.1 Organization and Authority. HPI has been duly formed and is validly
existing as a Maryland corporation and has elected under the Code to be treated
as a real estate investment trust, and is duly qualified to do business in all
jurisdictions where such qualification is necessary to carry on its business as
now conducted and is duly qualified or in the process of becoming duly qualified
in all jurisdictions in which its properties or Highwoods' properties are
located. HPI has all power and authority under its organizational documents to
enter into this Master Agreement and such other documents as are required hereby
and by the Acquisition Agreements to be executed by it.
7.2 Binding Obligations. The execution and delivery of this Master
Agreement, the Acquisition Agreements and the documents required to be executed
by HPI by the terms hereof and thereof, and the performance of its obligations
under this Master Agreement, the Acquisition Agreements and the documents
executed by it, have been duly authorized by all requisite action and this
Master Agreement, the Acquisition Agreements, and the documents required to be
executed by it have been and will on the Closing Date have been, duly executed
and delivered by HPI. To the Actual Knowledge of HPI, none of the foregoing
requires any action by or in respect of, or filing with, any governmental body,
agency or official or contravenes or constitutes a default under any provision
of applicable law or regulation, any organizational document of HPI or any
agreement, judgment, injunction, order, decree or other instrument binding upon
HPI. This Master Agreement does and will, and the documents required to be
executed by it will, constitute the valid and binding obligations of HPI
enforceable in accordance with their respective terms, subject to bankruptcy and
similar laws affecting the remedies or resources of creditors generally.
7.3 Securities Filings. HPI has delivered or made available to Anderson
the registration statement of HPI filed with the SEC in connection with HPI's
initial public offering of Shares of HPI common stock, and all exhibits,
amendments and supplements thereto (the "Initial Registration Statement"), and
each report, proxy statement or information statement and all exhibits thereto
prepared by it or relating to its properties since the effective date of the
Initial Registration Statement each in the form (including exhibits and any
amendments thereto) filed with the SEC (collectively, the "Highwoods Reports").
The Highwoods Reports, which were filed with the SEC in a timely manner,
constitute all forms, reports and documents required to be filed by HPI under
the Securities Laws. As of their respective dates, the Highwoods Reports (i)
complied as to form in all material respects with the applicable requirements of
the Securities Laws and (ii) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements made therein, in the light of circumstances under which
they were made, not misleading. No material adverse change in the financial
condition, business operations or properties of HPI has occurred that would
render any material statement made in any of the Highwoods Reports materially
untrue or misleading.
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7.4 REIT Status of HPI. HPI is organized and operates and will continue
to operate in a manner so as to qualify as a "real estate investment trust"
under Section 856 thorough 860 of the Code. HPI has elected, and will continue
to elect, to be taxed as a "real estate investment trust" under the Code.
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ARTICLE VIII
CLOSING DELIVERIES
8.1 Anderson Closing Deliveries. At Closing or at such earlier date if
otherwise provided in this Master Agreement or if otherwise expressly agreed by
Highwoods, the Anderson Parties shall deliver or cause to be delivered to
Highwoods the following documents, instruments, opinions, certificates and
statements:
(a) The documents, instruments, deeds, assignments,
affidavits, forms, contracts and agreements required to be delivered
under the Acquisition Agreements;
(b) A tenant estoppel certificate in the form attached
hereto as Exhibit 8.1(e) from each tenant under the Leases provided,
however, this Section 8.1(e) shall be deemed satisfied if such tenant
estoppel certificates are delivered from tenants occupying eighty-
percent (80%) of the net rented square feet of each of the improved
Properties (the "Buildings"). To the extent the Anderson Parties shall
not have delivered tenant estoppel certificates by Closing from tenants
occupying 80% of the net rented space of the Buildings, Anderson will
execute a sufficient number of certificates (certifying the same
matters set forth in the tenant estoppel certificates submitted to
tenants which were not received) (the "Owner Estoppel Certificates")
related to tenants leasing that number of net rented square feet in the
Buildings, which when added to the net rented square feet in the
Buildings leased by tenants whose tenant estoppel certificates have
been received, will equal 80% or more of the net rented square feet in
the Buildings. Anderson will agree to indemnify Highwoods from loss or
damage incurred by Highwoods resulting from the inaccuracy of any
matter contained in such certificates. Notwithstanding the
representations and warranties of Anderson to its Actual Knowledge
related to the Leases as set forth in Section 5.7 above, the Owner
Estoppel Certificates shall not be limited to Anderson's Actual
Knowledge, but rather shall contain unconditional representations.
Anderson agrees to send estoppel certificates to all tenants of the
Property and request that the same be completed and returned for
delivery to Highwoods. Provided, further, Anderson will be released
from liability under the above referenced indemnifications pari passu
with the receipt of executed tenant estoppels subsequent to Closing.
(c) A lender's estoppel certificate and assumption
agreement from each of the holders of the Assumed Anderson Debt
Financing ;
(d) A certified payoff letter, effective through the
Closing Date, from each of the holders of the Payable Anderson Debt
Financing, and such evidence of cancellation of documents or
instruments as Highwoods reasonably may require;
(e) If requested by Highwoods, quit claim deeds or
articles of merger and dissolution and bills of sales to facilitate the
dissolution of the Anderson Partnerships pursuant to Section 2.1(c)
hereto in form and substance satisfactory to Highwoods and its counsel;
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(f) An assignment of the Tradename and all derivatives or
variations thereof used prior to the Closing Date in form and substance
satisfactory to Highwoods and its counsel;
(g) Evidence, obtained based upon the best efforts of the
Anderson Parties, of compliance by the Properties, (and the
development, operation, occupation and use thereof) with all applicable
land use, zoning, building, planning, development, subdivision,
watershed and other similar laws, rules, regulation and ordinances from
all governmental or quasi-governmental agencies, boards, departments,
bodies, commissions or subdivisions having or asserting jurisdiction
over the Properties or the development, operation, use or occupancy
thereof in form, content and detail satisfactory to Highwoods and its
counsel.
8.2 Additional Deliveries. Each of the Anderson Parties agrees to
execute and deliver to Highwoods or cause to be executed and delivered to
Highwoods such further documents, instruments, statements, opinions,
certificates, deeds, waivers and agreements as Highwoods reasonably may deem
necessary or appropriate to carry out the terms and provisions of this Master
Agreement.
ARTICLE IX
CONDITIONS PRECEDENT TO
HIGHWOODS'S PERFORMANCE
The obligations of Highwoods to consummate the transactions provided
for herein on the Closing Date are subject to the fulfillment on or before the
Closing Date of each of the conditions in this Article IX, except to the extent
that Highwoods may, in its absolute discretion, waive one or more thereof in
writing in whole or in part, unless expressly provided otherwise herein.
9.1 Representations, Warranties and Covenants. The representations and
warranties of the Anderson Parties contained herein shall be true in all
respects on and as of the Closing Date with the same force and effect as if made
on and as of such date and the covenants and agreements of the Anderson Parties
set forth herein shall have been complied with through the Closing Date in all
material respects, and a certificate of such effect shall be executed and
delivered to Highwoods by the Anderson Parties on and as of the Closing Date.
9.2 Consents. The consents described in Schedules 5.1 and 5.7E shall
have been obtained in form reasonably satisfactory to Highwoods.
9.3 Document Deliveries. The Anderson Parties shall have delivered or
caused to be delivered to Highwoods the documents, instruments and other items
referred to in Article VIII above.
9.4 No Adverse Proceedings. No action, suit or proceeding before any
court or any governmental or regulatory authority shall have been commenced, no
investigation by any governmental or regulatory authority shall have been
commenced, and no action, suit or proceeding by any governmental or regulatory
authority shall have been threatened, against any of the parties to
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this Master Agreement, or any of the shareholders, members, officers or
directors of any of them, or any of the assets of any of the Anderson Parties,
or any of the Anderson Partnerships wherein an unfavorable judgment, order,
decree, stipulation, injunction or charge would (i) prevent consummation of any
of the transactions contemplated by this Master Agreement, (ii) cause any of the
transactions contemplated by this Master Agreement to be rescinded following
consummation, or (iii) adversely affect the right of Highwoods to own, operate
or control the Anderson Partnerships (and no such judgment, order, decree,
stipulation, injunction or charge shall be in effect) or own the assets of API.
9.5 Termination. The Anderson Parties shall have terminated the
Management and Leasing Agreements.
9.6 Legal Opinion. There shall have been delivered to Highwoods the
written legal opinion of Elrod & Thompson, counsel for the Anderson Partnerships
and Anderson and API, dated the Closing Date, in form reasonably acceptable to
Highwoods and its counsel.
9.7 Other Assurances. The Anderson Parties shall have delivered to
Highwoods such other and further certificates, assurances and documents as
Highwoods may reasonably request to evidence the accuracy of the representations
and warranties made pursuant to Article V, the performance of covenants and
agreements to be performed pursuant to Article IV at or prior to the Closing,
and the fulfillment of the conditions to Highwoods's obligations hereunder.
9.8 Review Period. Highwoods shall not have terminated this Agreement
pursuant to the rights granted to Highwoods in Section 2.3 and/or Section 2.5
hereof.
ARTICLE X
CONDITIONS PRECEDENT
TO ANDERSON PARTIES' PERFORMANCE
The obligations of the Anderson Parties to consummate the transactions
provided for herein on the Closing Date are subject to the fulfillment on or
before the Closing Date of each of the conditions in this Article X, except to
the extent that the Anderson Parties may, in their absolute discretion, waive in
writing one or more thereof in whole or in part.
10.1 Representations and Warranties. The representations and warranties
of Highwoods contained herein shall be true in all respects on and as of the
Closing Date with the same force and effect as if made on and as of such date,
and the covenants of Highwoods set forth herein shall have been complied with in
all material respects through the Closing Date, and a certificate to such effect
shall be executed and delivered to the Anderson Parties by Highwoods on and as
of the Closing Date.
10.2 Payment of Purchase Price. Highwoods shall have paid the Aggregate
Consideration in the manner described in Article III.
10.3 No Adverse Proceedings. No action, suit or proceeding before any
court or any governmental or regulatory authority shall have been commenced, no
investigation by any
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governmental or regulatory authority shall have been commenced, and no action,
suit or proceeding by any governmental or regulatory authority shall have been
threatened, against any of the parties to this Master Agreement, or any of the
shareholders, officers or directors of any of them, or any of the assets of
Highwoods wherein an unfavorable judgment, order, decree, stipulation,
injunction or charge would (i) prevent consummation of any of the transactions
contemplated by this Master Agreement, (ii) cause any of the transactions
contemplated by this Master Agreement to be rescinded following consummation or
(iii) adversely affect the right of Highwoods to own, operate or control the
Properties (and no such judgment, order, decree, stipulation, injunction or
charge shall be in effect).
10.4 Legal Opinion. There shall have been delivered to the Anderson
Parties the written opinion of Highwoods's special counsel, Smith Helms Mulliss
& Moore, L.L.P., dated the Closing Date, in form reasonably acceptable to the
Anderson Parties.
ARTICLE XI
INDEMNITY
11.1 Representations and Warranties of Anderson Partners. Anderson and
API hereby agree, for themselves and their successors and assigns, jointly and
severally, to indemnify, defend and hold both Highwoods and HPI harmless from
and against any and all damage, cause of action, action, proceeding, expense
(including without limitation reasonable expenses of investigation and
reasonable attorneys' fees and expenses), loss, cost, claim or liability (each a
"Claim") suffered or incurred by either Highwoods or HPI as a result of any
untruth, inaccuracy or breach in or of any the representations, warranties or
covenants made in Article V above.
11.2 Scope of Anderson Indemnity. Notwithstanding anything to the
contrary contained in this Master Agreement, Anderson shall have no liability
for any Claim which is asserted more than twelve (12) calendar months after the
Closing Date (except with respect to any Claim asserted because of the untruth,
inaccuracy or breach of Section 5.20 (a "Tax Claim"), the time limitation for
such a claim shall be the same as the statute of limitations applicable to the
Tax Claim) except with respect to Claims for which notice of the breach or
inaccuracy of the representations, warranties or covenants giving rise to such
right of indemnity have been given to Anderson by written notice from Highwoods
at any time within the twelve (12) month period following the Closing Date.
11.3 Representations and Warranties of Highwoods. Highwoods hereby
agrees, for itself and its successors and assigns, to indemnify, defend and hold
Anderson, API and the Anderson Partners harmless from and against any Claim
suffered or incurred by Anderson as a result of any of the following:
(a) any untruth or inaccuracy in any representations or
warranties herein; or
(b) to the extent as of the Closing Date Hyman Auerbach,
Bennie Auerbach, Leon Auerbach or any of the Anderson Parties or
Anderson Partners have not been released from any liability under or
guaranty of the Assumed Anderson Debt Financing or to the extent any
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recourse is sought against such party under the Payable Anderson Debt
Financing after the Closing Date.
It is the express intention and agreement of the parties that the foregoing
indemnity shall survive the consummation of the transactions contemplated in
this Master Agreement; provided, however, that Highwoods shall not have any
liability for expenses, damages, losses, costs or liability incurred by Anderson
with respect to any Claim which, other than principal and interest or collection
costs or other similar expenses related thereto under any Payable Anderson Debt
Financing or Assumed Anderson Debt Financing, arises or is asserted more than
twelve (12) calendar months after the Closing Date.
11.4 Notice to Indemnitors. Any party entitled to indemnification under
this Master Agreement (the "Indemnified Party") shall give prompt written notice
to the party against whom indemnity is sought pursuant to this Master Agreement
(the "Indemnifying Party") as to the assertion of any claim, or the commencement
of any suit, action or proceeding in respect of which indemnity may be sought
under this Master Agreement. Except as otherwise provided in Sections 11.2 and
11.3, the omission of the Indemnified Party to notify the Indemnifying Party of
any such claim shall not relieve the Indemnifying Party from any liability in
respect of such claim which it may have to the Indemnified Party on account of
this Master Agreement, except, however, the Indemnifying Party shall be relieved
of liability to the extent that the failure so to notify (a) shall have caused
prejudice to the defense of such claim, or (b) shall have increased the costs or
liability of the Indemnifying Party by reason of the inability or failure of the
Indemnifying Party (because of the lack of prompt notice from the Indemnified
Party) to be involved in any investigations or negotiations regarding any such
claim, nor shall it relieve the Indemnifying Party from any other liability
which it may have to the Indemnified Party. In case any such claim shall be
asserted or commenced against an Indemnified Party and it shall notify the
Indemnifying Party thereof, the Indemnifying Party shall be entitled to
participate in the negotiation or administration thereof and, to the extent it
may wish, to assume the defense thereof with counsel reasonably satisfactory to
the Indemnified Party, and, after notice from the Indemnifying Party to the
Indemnified Party of its election so to assume the defense thereof, which notice
shall be given within thirty (30) days of its receipt of such notice from such
Indemnified Party, the Indemnifying Party will not be liable to the Indemnified
Party hereunder for any legal or other expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof other than reasonable
costs of investigation. In the event that the Indemnifying Party does not wish
to assume the defense, conduct or settlement of any claim, the Indemnified Party
shall not settle such claim without the written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld or delayed. Nothing in
this Section 11.4 shall be construed to mean that either Highwoods or Anderson
shall be responsible for any obligations, acts or omissions of the other prior
to Closing, except for those obligations and liabilities expressly assumed by
Highwoods or Anderson pursuant to this Master Agreement.
11.5 Effect of Indemnity. Nothing in this Article XI shall be construed
to mean that either Highwoods or the Anderson Parties shall be responsible for
any obligations, acts or omissions of the other prior to Closing except for such
obligations and liabilities expressly assumed pursuant to this Master Agreement.
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ARTICLE XII
MISCELLANEOUS
12.1 Notices. All notices and demands which either party is required or
desires to give to the other shall be given in writing by personal delivery,
express courier service, certified mail, return receipt requested, or by
telecopy to the address or telecopy number set forth below for the respective
parties. All notices and demands so given shall be effective upon the delivery
of the same to the party to whom notice or a demand is given, if personally
delivered, or if sent by telecopy. If notice is by deposit with an express
courier service, it shall be effective on the next business day (if sent for
next business day delivery) following such deposit or, if notice is sent by
certified mail, return receipt requested, it shall be effective upon receipt.
NOTICES TO THE ANDERSON PARTIES:
To the Anderson Parties, to the addressee at the address
indicated on Schedule 12.1 attached hereto.
with copies to:
Elrod & Thompson
1500 Peachtree Center
South Tower
225 Peachtree St., N.E.
Atlanta, Georgia 30303
Attn: Ken Weiss
Telephone: (404) 659-1500
Telefax: (404) 880-4757
NOTICES TO HIGHWOODS:
HIGHWOODS PROPERTIES, INC.
3100 Smoketree Court, Suite 600
Raleigh, North Carolina 27604
Attention: Ronald P. Gibson
Telephone: (919) 872-4924
Telefax: (919) 876-2448
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with copies to:
SMITH HELMS MULLISS & MOORE, L.L.P.
2800 Two Hannover Square
Raleigh, North Carolina 27601
Attention: Mack D. Pridgen, III
Telephone: (919) 755-8796
Telefax: (919) 755-8800
MANNING FULTON & SKINNER
3605 Glenwood Avenue, Suite 500
Raleigh, North Carolina 27612
Attention: Samuel T. Oliver, Jr.
Telephone: (919) 787-8880
Telefax: (919) 781-0811
No notice required or permitted under this Master Agreement need be sent to any
Anderson Party in more than one legal capacity unless such notice relates to
such Anderson Party in that legal capacity.
12.2 Counterparts. This Master Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.3 Severability. Any provision of this Master Agreement which is
prohibited or unenforceable in any jurisdiction shall as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision on any other jurisdiction.
12.4 Assigns. This Master Agreement shall be binding upon and inure to
the benefit of any and all successors, assigns, or other successors in interest
of HPI and Highwoods. This Master Agreement shall be binding upon and inure to
the benefit of any and all respective successors, assigns, personal
representatives, executors, or other successors in interest of the Anderson
Parties; provided, however, that none of the Anderson Parties shall assign its
rights or delegate its obligations hereunder without the prior written consent
of Highwoods, which may be withheld for any reason. Neither Highwoods nor HPI
shall assign its rights or delegate its obligations hereunder without the prior
written consent of the Anderson Parties. This Master Agreement shall not confer
any rights or remedies upon any person or entity other than Highwoods, HPI, the
Anderson Parties and their respective successors and permitted assigns.
12.5 Public Announcement. Except as otherwise required by law, none of
the parties hereto may make public announcements with respect to the
transactions contemplated by this Master Agreement without the approval of the
other parties, which approval may be withheld for any reason.
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12.6 Remedies. In the event that any party defaults or fails to perform
any of the conditions or obligations of such party under this Master Agreement
or any other agreement, document or instrument executed in connection with this
Master Agreement, or in the event that any such party's representations or
warranties contained herein or in any such other agreement, document or
instrument are not true and correct as of the date hereof and as of the Closing
Date, any other party shall be entitled to exercise any and all rights and
remedies available to it by or pursuant to this Master Agreement, documents or
instruments contemplated hereby or at law (statutory or common) or in equity;
provided, however, that in the event of a Closing of the transactions
contemplated by this Master Agreement, the rights and remedies of each party
shall be limited to the rights contained in Article XI and in Section 3.3
relating solely to those closing adjustments allowed to be made in the
Post-Closing Adjustment Period of this Master Agreement.
12.7 Captions. The captions and headings set forth in this Master
Agreement are for convenience of reference only and shall not be construed as a
part of this Master Agreement.
12.8 Exhibits and Schedules. All exhibits and schedules referred to in
this Master Agreement and attached hereto shall be deemed and construed as part
of this Master Agreement and for all purposes all such exhibits and schedules
are hereby specifically incorporated herein by reference.
12.9 Merger Clause. This Master Agreement and the Acquisition
Agreements, including the exhibits and schedules incorporated herein and
therein, contain the final, complete and exclusive statement of the agreement
among the parties with respect to the transactions contemplated herein, and all
prior or contemporaneous oral and all prior written agreements with respect to
the subject matter hereof are merged herein.
12.10 Amendments and Waiver. No change, amendment, qualification,
cancellation or termination hereof shall be effective unless in writing and duly
executed by each of the parties hereto. No failure of any party to enforce any
provisions hereof or to resort to any remedy or to exercise any one or more of
alternate remedies and no delay in enforcing, resorting to or exercising any
remedy shall constitute a waiver by that party of its right subsequently to
enforce the same or any other provision hereof or to resort to any one or more
of such rights or remedies on account of any such ground then existing or which
may subsequently occur.
12.11 Governing Laws. This Master Agreement shall be governed by and
construed in accordance with the internal laws of the State of North Carolina
and of the United States of America.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement by
their hands and under seal affixed hereto as of the date and year first above
written.
HIGHWOODS PROPERTIES, INC.
ATTEST:
By: /s/ Ronald P. Gibson
___________________________________
President
/s/ Edward J. Fritsch
___________________________
_____ Secretary
[CORPORATE SEAL]
HIGHWOODS/FORSYTH LIMITED PARTNERSHIP
By: Highwoods Properties, Inc.,
General Partner
By:/s/ Ronald P. Gibson
___________________________________
Title: President
_________________________________
ANDERSON PROPERTIES, INC.
ATTEST:
By: /s/ Gene Anderson
___________________________________
_____ President
/s/ Edna K. Spier
___________________________
_____ Secretary
[CORPORATE SEAL]
/s/ Gene Anderson
_________________________ (SEAL)
H. Gene Anderson
___________________, a Georgia limited partnership
By: Anderson Properties, Inc., General Partner
33
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By: ___________________________________
Title: _________________________________
___________________, a Georgia limited liability company
By: ___________________________________
Title: _________________________________
34
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6348 NORTHEAST PARTNERS A (SEAL)
By: /s/ Gene Anderson
__________________________________
Title:_________________________________
6438 NORTHEAST EXPRESSWAY A (SEAL)
By: /s/ Gene Anderson
__________________________________
Title:_________________________________
R & A INVESTMENT HOLDINGS I,
L.L.C. (SEAL)
By: /s/ Gene Anderson
__________________________________
Title:_________________________________
SOUTHSIDE/CORPORATE LAKES AA (SEAL)
By: /s/ Gene Anderson
__________________________________
Title:_________________________________
COSMOPOLITAN NORTH AA (SEAL)
By: /s/ Gene Anderson
__________________________________
Title:_________________________________
ELLSWORTH INDUSTRIAL AA (SEAL)
By: /s/ Gene Anderson
__________________________________
Title:_________________________________
35
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GWINNETT DISTRIBUTION CENTER
AA (SEAL)
By: /s/ Gene Anderson
__________________________________
Title:_________________________________
LAVISTA BUSINESS PARK AA (SEAL)
By: /s/ Gene Anderson
__________________________________
Title:_________________________________
ANDERSON/NEWPOINT, L.L.C. (SEAL)
By: /s/ Gene Anderson
__________________________________
Title:_________________________________
OAKBROOK/MKKG JV (SEAL)
By: /s/ Gene Anderson
__________________________________
Title:_________________________________
STEEL DRIVE PARTNERS, LP (SEAL)
By: /s/ Gene Anderson
__________________________________
Title:_________________________________
36
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LIST OF SCHEDULES AND EXHIBITS
Schedule 1 Anderson Partnerships
Schedule 1-1 Assumed Anderson Debt Financing
Schedule 1-2 Descriptive Property Exhibit
Schedule 1-3 Exchange Option Agreements
Schedule 1-4 Purchase Option Agreements
Schedule 1-5 Payable Anderson Debt Financing
Schedule 3.1(a) In-Service Properties
Schedule 3.1(b) Development Properties
Schedule 3.1(c) Bluegrass Land
Schedule 3.1(d) Development Land
Schedule 3.2(a) Aggregate Consideration/Unit Recipients and Cash
Recipients
Schedule 3.5 Prepayment Penalties
Schedule 4.1 Third Party Commissions
Schedule 4.2 Brokers
Schedule 4.7 Personal Property of API
Schedule 5.1 Consent of Anderson Parties
Schedule 5.3 Conflicts
Schedule 5.7A Schedule of Leases
Schedule 5.7B Lease Commissions Assumed
Schedule 5.7C Highwoods Approved Leases
Schedule 5.7D Lease Defaults
Schedule 5.7E Lease Consents
Schedule 5.8 Scheduled Contracts
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Schedule 5.9A Personal Property
Schedule 5.9B Scheduled Liens and Encumbrances to Title
Schedule 5.10 Assumed Liabilities - Disclosed
Schedule 5.11 Insurance
Schedule 5.13 Claims or Litigation
Schedule 5.15 Exceptions to Financial Condition
Schedule 5.19 Condition of Improvements
Schedule 5.20 Taxes
Schedule 5.21 Management Agreements
Schedule 5.22 Operating Agreements - Exceptions to Termination
Schedule 5.23 Employee Benefit Plans
Schedule 5.26 Operation of Business - Exceptions
Schedule 12.1 Names and Addresses of Anderson Parties
Exhibit 1 Description - Class B Units
Exhibit 3.1(d) Form of Right of First Refusal
Exhibit 4.3 Form of Anderson Employment Agreement
Exhibit 6.3 Partnership Agreement
Exhibit 8.1(c) Form of Tenant Estoppel Certificate
38
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January 24, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Highwoods/Forsyth Limited Partnership
Ladies and Gentlemen:
In connection with the Highwoods/Forsyth Limited Partnership (the
"Registrant") current report on Form 8-K (the "Report"), the
Registrant hereby agrees, pursuant to Item 601(b)(2) of Regulation
S-K, to furnish the Securities and Exchange Commission upon its request
copies of the schedules omitted from Exhibits 2.1 and 2.2 of the Report.
Very truly yours,
HIGHWOODS/FORSYTH LIMITED PARTNERSHIP
By: Highwoods Properties, Inc., its general partner
/s/ Carman J. Liuzzo
Chief Financial Officer
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