Exhibit 10.16

 

AGREEMENT

 

 

 

By and Between

 

HIGHWOODS REALTY LIMITED PARTNERSHIP,

A North Carolina Limited Partnership

 

and

 

JOHN L. TURNER, SR.,

ROBERT GOLDMAN, and

HENRY P. ROYSTER, JR.

 

and

 

Allman Spry Leggett & Crumpler, P.A.

 

as Escrow Agent

 

 

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AGREEMENT TO MAKE PARTNERSHIP DISTRIBUTION

   1

DESCRIPTION OF SUBJECT PROPERTY

   1

REDUCTION OF THE DISTRIBUTEES’ CAPITAL INTEREST IN HIGHWOODS

   3

Binder Deposit and Escrow Agent’s Duties and Rights

   3

ACTIONS PENDING CLOSING

   6

Survey and Plans

   6

Initial Delivery of Documentation

   7

Access to the Property

   7

Matters of Title

   7

Environmental Assessments

   8

Investigation Rights

   8

Termination Rights; Review Period

   9

Highwoods’ Removal of Property From Market

   10

ADDITIONAL AGREEMENTS OF THE PARTIES

   10

Title to the Property

   10

Permitted Exceptions

   11

Representations and Warranties of Highwoods

   12

Representations and Warranties of Distributees

   18

Maintenance of the Property

   20

Risk of Loss; Damage or Destruction; Condemnation

   21

No Transfer of Personal Property

   21

Compliance With Legal Requirements

   22

Delivery of Notices

   22

CONDITIONS PRECEDENT TO CLOSING

   22

The Distributees’ Conditions

   22

Highwoods’ Conditions.

   25

CLOSING

   26

Date

   26

Highwoods’ Closing Documents

   26

The Distributees’ Closing Documents

   27

Closing Costs

   27

Closing Adjustments

   28

Taxes

   28

Utilities

   28

Rents

   29

Calculations

   30

Prepaids

   30

Service Agreement Payments

   30

Settlement After Closing

   30

Leasing Commissions

   31

Tenant Improvements

   31

Equitable Adjustments

   32

DEFAULT AND REMEDIES

   32

OTHER PROVISIONS

   33

Counterparts

   33

Entire Agreement

   33

 

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Construction

   33

Applicable Law

   33

Severability

   33

Waiver of Covenants, Conditions and Remedies

   33

Exhibits

   33

Amendment

   33

Relationship of Parties

   34

Assignment

   34

Further Acts

   34

No Recording; Actions to Clear Title

   34

Broker Commissions

   34

Notices

   34

Press Releases

   36

Definition of Agreement Date

   36

Survival of the Agreement

   36

Exhibit A - Property Description

    

Exhibit B - Personal Property

    

Exhibit B-1 - Excluded Personal Property

    

Exhibit C - Leases

    

Exhibit C-1 - Service Maintenance Contracts

    

Exhibit D – Permitted Exceptions

    

Exhibit E – Tenant Estoppel Certificate

    

Exhibit F - Form of Assignment of Leases

    

 

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STATE OF NORTH CAROLINA

 

AGREEMENT

 

COUNTY OF FORSYTH

 

THIS AGREEMENT (this “Agreement”) is made and entered into as of the 11th day of
February, 2005, by and between HIGHWOODS REALTY LIMITED PARTNERSHIP, a North
Carolina Limited Partnership (“Highwoods”) and JOHN L. TURNER, SR., ROBERT
GOLDMAN, and HENRY P. ROYSTER, JR. (the “Distributees”) and Allman Spry Leggett
& Crumpler, P.A. (“Escrow Agent”).

 

W I T N E S S E T H :

 

WHEREAS, the Distributees are limited partners in Highwoods and the Distributees
and Highwoods have agreed that Highwoods will make a current “in-kind”
distribution of property to the Distributees in reduction of the Distributees’
capital interest in Highwoods. It is intended that Highwoods’ distribution of
property to the Distributees will be a non-taxable distribution of property
pursuant to Section 731(a) of the Internal Code 1986 as amended.

 

WHEREAS, Highwoods and the Distributees desire to enter into this Agreement to
incorporate all prior negotiations and dealings of the parties with respect to
the transaction contemplated hereby.

 

NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the payment of earnest money, and other good and valuable
consideration, receipt of which is hereby acknowledged by Highwoods, the parties
hereto agree as follows:

 

1. AGREEMENT TO MAKE PARTNERSHIP DISTRIBUTION. Highwoods agrees to distribute,
assign and convey to the Distributees, and the Distributees agree to accept such
distribution and conveyance from Highwoods, of a twenty-five percent (25%)
interest in the Land, the Improvements and the Lease as defined and described in
Section 2 hereof. The distribution by Highwoods to each Distributee as described
above shall consist of the following percentage interests in the Land, the
Improvements, and the Lease (the “Relative Percentage Interests”): as tenants in
common with the other Distributees:

 

(i)

   Henry P. Royster, Jr.   -      9.3950 %

(ii)

   John L. Turner, Sr.   -      7.8025 %

(iii)

   Robert Goldman   -      7.8025 %

 

2. DESCRIPTION OF SUBJECT PROPERTY. The property owned by Highwoods which is the
subject of this Agreement is as follows:

 

(a) that tract containing approximately 5.459 acres of land and being described
on Exhibit A (attached hereto and incorporated herein by reference), together
with all right-of-ways and easements appurtenant thereto (said tract being
commonly known as 2599 Empire Drive, Winston-Salem, North Carolina and being
hereinafter referred to as the “Land”).

 

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(b) All of Highwoods’ right, title and interest in and to all rights,
privileges, and easements appurtenant to the Land, including all 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.

 

(c) All improvements, buildings, structures, related amenities and fixtures
located on the Land and owned by Highwoods including, without limitation, that
warehouse building containing approximately 89,600 square feet (hereinafter
referred to as the “Building”), any and all other buildings, structures and
amenities currently located on the Land, 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 (all of which are together hereinafter called the “Improvements”).

 

(d) Except as hereinafter set forth, all personal property to be described on
Exhibit B pursuant to Section 4(b) hereof located on or in or used exclusively
in connection with the Land and Improvements and owned by Highwoods and used or
usable in the operation of the Property (as defined below) including, without
limitation, fittings, appliances, shades, furniture, furnishings, and other
furnishings or items of personal property used or usable in connection with the
Building’s HVAC systems, but excluding all personal property located on the Land
or in the Building owned by the tenant thereof or contractors who provide
service to the Building or is not otherwise owned by Highwoods (hereinafter
called the “Personal Property”). Notwithstanding the above, the Personal
Property being purchased hereby shall not include those items of Personal
Property described on Exhibit B-1, attached hereto and incorporated herein by
reference. After the date of this Agreement, Highwoods shall not remove any
Personal Property from the Building, Land or Improvements without the prior
written consent of the Distributees.

 

(e) All of Highwoods’ interest, if any, in the intangible property now or
hereafter owned by Highwoods and used or usable in connection with the Property,
Land, Improvements or Personal Property, that lease of the Building set forth on
Exhibit C (the “Lease”), ground leases, subleases, prepaid rent, security
deposits, contract rights, escrow deposits, utility agreements, guaranties,
warranties, zoning rights or other rights related to the ownership of or use and
operation of said Property, but excluding the rights to use the trade style name
Highwoods Properties, and derivations thereof and any other trademarks used in
connection therewith. A list of the service, maintenance and/or management
contracts affecting or relating to the Property (the “Service Contracts”), some
of which the Distributees may agree to assume prior to Closing, and all
guaranties and warranties relating to the Property which are assignable together
with a description of all pertinent terms and provisions of such Service
Contracts, guaranties and warranties shall be set forth in Exhibit C-1 and
attached hereto prior to Closing. All Service Contracts that are not assumed by
the Distributees shall be terminated at or before Closing.

 

All of the items of property described in Subsections (a), (b), (c), (d) and (e)
above are hereinafter collectively called the “Property.”

 

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It is hereby acknowledged by the Distributees that Highwoods shall not convey to
the Distributees claims relating to any real property tax refunds or rebates for
periods occurring prior to Closing, (as hereinafter defined), existing insurance
claims and any existing claims against the tenant or former tenants of the
Property related to claims or causes of actions which arise prior to the Closing
Date, which claims shall be reserved by Highwoods.

 

  3. REDUCTION OF THE DISTRIBUTEES’ CAPITAL INTEREST IN HIGHWOODS.

 

Subject to the terms and conditions of this Agreement, the Distributees agree
that their capital interest in Highwoods shall be reduced by Five Hundred
Thirty-Seven Thousand Five Hundred and no/100 Dollars ($537,500.00) in the
aggregate, (subject to prorations and adjustments as described herein) as the
result of the distribution of the Property by Highwoods to the Distributees,
with each such Distributee’s capital interest being reduced by the following
amounts, which may be modified as a result of the Closing Adjustments described
in Section 7(e) hereof (the “Redemption Amount”):

 

Henry P. Royster, Jr.

  -    $ 201,969.62

John L. Turner, Sr.

  -    $ 167,765.19

Robert Goldman

  -    $ 167,765.19

 

This reduction in each Distributees’ capital interest in Highwoods shall occur
by the redemption from each Distributee of that number of partnership units
owned by each Distributee in Highwoods (the “Partnership Units”) determined by
dividing each Distributee’s Redemption Amount by the average of the closing
prices of the common stock of Highwoods Properties, Inc. (Highwoods’ general
partner) as listed on the New York Stock Exchange on the ten (10) business days
immediately preceding the date of the Closing of the transaction contemplated by
this Agreement.

 

(a) Binder Deposit and Escrow Agent’s Duties and Rights. Within five (5)
business days after the full execution of this Agreement, the Distributees shall
pay and deliver to the Escrow Agent in United States currency the sum of Twenty
Thousand and No/100 Dollars ($20,000.00) as a binder deposit (such amount,
together with all interest earned thereon, being referred to herein as the
“Binder Deposit”). Escrow Agent shall hold the Binder Deposit in trust for the
mutual benefit of the parties, subject to the following terms and conditions:

 

(i) Escrow Agent shall deposit the Binder Deposit in an interest bearing account
in an institution as directed by the Distributees, and reasonably acceptable to
Highwoods, in Winston-Salem, North Carolina. The Binder Deposit, plus all
accrued interest thereon, shall be returned to the Distributees at the Closing
of this transaction. Otherwise, the Binder Deposit shall be delivered by Escrow
Agent to Highwoods or refunded by Escrow Agent to the Distributees in accordance
with the terms of this Agreement.

 

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(ii) In the event the transaction contemplated by this Agreement is not closed
solely because of any default on the part of Highwoods, or if any of the
conditions precedent set forth in Section 6 fail to be satisfied at Closing, or
if the Distributees terminate their obligations as allowed herein pursuant to
any other provision of this Agreement, then the Escrow Agent shall pay to the
Distributees the Binder Deposit, including interest which has accrued thereon.
To allow the interest bearing account to be opened, the Distributees’ and
Highwoods’ tax identification numbers are set forth below their signatures at
the end of this Agreement. Escrow Agent is executing this Agreement to
acknowledge Escrow Agent’s responsibilities hereunder, which may be modified
only by a written amendment signed by all of the parties. No such amendment
shall be binding on the Escrow Agent unless it has been signed by the Escrow
Agent. Escrow Agent shall accept the Binder Deposit with the understanding of
the parties that Escrow Agent is not a party to the Agreement except to the
extent of its specific responsibilities hereunder; and does not assume or have
any liability for the performance or non-performances of Highwoods or the
Distributees hereunder to either of them.

 

(iii) In the event the transaction contemplated by this Agreement is not closed
solely because of any default on the part of the Distributees, then the Escrow
Agent shall pay to Highwoods the Binder Deposit including interest which has
accrued thereon, and, except for the Distributees’ Continuing Indemnification
Obligations (as defined in Section 4(f) below), such payment shall be the
Distributees’ only liability to Highwoods as the result of such breach and shall
be considered liquidated damages, as Highwoods’ actual damages as a result of
the Distributees’ breach of its obligation hereunder shall be difficult, if not
impossible, to ascertain.

 

(iv) Within two (2) days after execution of this Agreement, the Distributees and
Highwoods shall deposit a copy of this Agreement executed by them with Escrow
Agent, and, upon receipt of the Binder Deposit from the Distributees, Escrow
Agent shall immediately execute this agreement where provided below. This
Agreement, together with such further instructions, if any, as the parties shall
provide to Escrow Agent by written agreement, shall constitute the escrow
instructions. If any requirements relating to the duties or obligations of
Escrow Agent hereunder are not acceptable to Escrow Agent, or if Escrow Agent
requires additional instructions, the parties hereto agree to make such
deletions, substitutions and additions hereto as counsel for the Distributees
and Highwoods shall mutually approve, which additional instructions shall not
substantially alter the terms of this Agreement unless otherwise expressly
agreed to by Highwoods and the Distributees.

 

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(v) Escrow Agent shall hold the Binder Deposit in accordance with the terms and
provisions of this Agreement, subject to the following:

 

(A) Escrow Agent’s duties hereunder shall be limited to investing, administering
and disbursing the Binder Deposit, and Escrow Agent shall have no additional
duties or responsibilities hereunder (in its role as Escrow Agent) in connection
with the Closing. Escrow Agent undertakes to perform only such duties as are
expressly set forth in this Agreement and no implied duties or obligations shall
be read into this Agreement against Escrow Agent.

 

(B) Escrow Agent may act in reliance upon any writing or instrument or signature
which it, in good faith, believes of any statement or assertion contained in
such writing or instrument, and may assume that any person purporting to give
any writing, notice, advice or instrument in connection with the provisions of
this Agreement has been duly authorized to do so. Escrow Agent shall not be
liable in any manner for the sufficiency or correctness as to form, manner and
execution, or validity of any instrument deposited in escrow, nor as to the
identity, authority, or right of any person executing the same, and Escrow
Agent’s duties under this Agreement shall be limited to those provided in this
Agreement.

 

(C) Unless Escrow Agent discharges any of its duties under this Agreement in a
negligent manner or is guilty of willful misconduct with regard to its duties
under this Agreement, Highwoods and the Distributees shall indemnify Escrow
Agent and hold it harmless from any and all claims, liabilities, losses,
actions, suits or proceedings at law or in equity which it may incur or with
which it may be threatened by reason of its acting as Escrow Agent under this
Agreement; and in such connection Highwoods and the Distributees shall indemnify
Escrow Agent against any and all expenses including reasonable attorney’s fees
and the cost of defending any action, suit or proceeding or resisting any claim
in such capacity.

 

(D) If the parties (including Escrow Agent) shall be in disagreement about the
interpretation of this Agreement, or about their respective rights and
obligations, or the propriety of any action contemplated by Escrow Agent, Escrow
Agent may, but shall not be required to, file an action in interpleader to
resolve the disagreement. Escrow Agent shall be indemnified for all costs and
reasonable attorneys’ fees in its capacity as Escrow Agent in connection with
any such interpleader action and shall be fully protected in suspending all or
part of its activities under this Agreement until a final judgment in the
interpleader action is received.

 

(E) Escrow Agent may consult with counsel of its own choice and have full and
complete authorization and protection in accordance with the opinion of such
counsel. Escrow Agent shall otherwise not be liable for any mistakes of fact or
errors of judgment, or for any acts or omissions of any kind, unless caused by
its negligence or willful misconduct.

 

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(F) The Escrow Agent may in its sole discretion resign by giving thirty (30)
days’ written notice thereof to the Distributees and Highwoods. The Distributees
and Highwoods shall furnish to the Escrow Agent written instructions for the
release of the escrow funds and escrow documents in such event. If the Escrow
Agent shall not have received such written instructions, the Escrow Agent may
petition any court of competent jurisdiction for the appointment of a successor
Escrow Agent, and upon such appointment deliver the escrow funds and escrow
documents to such successor.

 

(G) If costs and expenses (including attorneys’ fees) are incurred by Escrow
Agent because of litigation of any dispute between Highwoods and the
Distributees arising out of the holding of the Binder Deposit, the
non-prevailing party (i.e., either Highwoods or the Distributees) shall
reimburse Escrow Agent for such reasonable costs and expenses incurred.
Highwoods and the Distributees hereby agree and acknowledge that Escrow Agent
assumes no liability in connection with the holding or investment of the Binder
Deposit pursuant hereto, except for the negligence or willful misconduct of
Escrow Agent and its employees and agents. Escrow Agent shall not be responsible
for the validity, correctness or genuineness of any document or notice referred
to herein; and, in the event of any dispute under this Agreement relating to the
disposition of the Binder Deposit, Escrow Agent may seek advice from its own
counsel and shall be fully protected in any action taken in good faith in
accordance with the opinion of Escrow Agent’s counsel.

 

(H) Escrow Agent’s address for purpose of mailing or delivering documents and
notices hereunder is as follows:

 

Allman Spry Leggett & Crumpler, P.A.

380 Knollwood Street, Suite 700

Winston-Salem, NC 27103-4152

Attention:        Thomas T. Crumpler, Esquire

Telephone:       (336) 722-2300

Telecopier:       (336) 721-0414

 

Provisions with respect to notices set forth herein shall apply with respect to
notices given by or to Escrow Agent hereunder.

 

  4. ACTIONS PENDING CLOSING.

 

(a) Survey and Plans. The Distributees may cause to be secured and delivered to
the Distributees prior to the end of the Review Period (as defined in Section
4(g) below) a

 

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current physical and boundary survey (the “Survey”) of the Land and Improvements
prepared by a North Carolina registered land surveyor or licensed engineer which
shall be certified to the Distributees which shall contain such documentation
and certifications as the Title Company (as defined in Section 5[a]) may
require. The Distributees agree to pay for the cost of the Survey. The Survey
shall be used for a description of the Land contained in the deed of conveyance
of the Land from Highwoods to the Distributees and in all other documents
related to this transaction which require a legal description [including,
without limitation, such description as is required for the Title Policies
described under Section 5(a)]. In the event the Survey reveals anything which
materially or adversely affects the Property in the sole reasonable discretion
of the Distributees, the Distributees shall give notice to Highwoods of those
matters objected to by the Distributees in the Survey prior to the last day of
the Review Period. Highwoods 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 the Distributees. In the event that Highwoods fails or is
unwilling to cure such defects to the reasonable satisfaction of the
Distributees’ counsel at Highwoods’ sole cost and expense, the Distributees may
proceed to a Closing subject to the defect, or by written notice to Highwoods,
terminate this Agreement and receive a refund of the Binder Deposit, or
otherwise allow this Agreement to expire.

 

(b) Initial Delivery of Documentation. At the time of the execution of this
Agreement or within five (5) business days thereafter, Highwoods shall provide
to the Distributees the following: (i) a list of all the personal property
described in Section 2 above which shall be attached hereto as Exhibit B, (ii)
true, correct and complete copies of all service, maintenance, utility and other
contracts related to the Property, including any warranties or guaranties, a
list of which shall be attached hereto as Exhibit C-1, (iii) all title
information related to the Land in Highwoods’ possession or available to
Highwoods including but not limited to, title insurance policies, attorney’s
opinions on title and existing surveys, (iv) all environmental, engineering or
similar reports and drawing/specifications relating to the Land, Building or
Improvements in Highwoods’ possession, (v) a true, correct and complete copy of
the Lease and any amendments or guaranties of such Lease, (vi) all income and
expense records related to the Property for the year 2003 and 2004; and (vii) a
current rent roll of the Building. To the knowledge of Highwoods, the
information to be delivered to the Distributees pursuant to this subsection is
true and correct in every material respect.

 

(c) Access to the Property. Subject to Section 4(f) of this Agreement, Highwoods
shall give the Distributees and its agents, engineers and other representatives,
reasonable access to the Property.

 

(d) Matters of Title. If any objection to the Title Report (as defined in
Section 5[a] hereof) or the Survey (or existing survey(s), if applicable) is
identified by the Distributees, Highwoods shall use its commercially reasonable
efforts to resolve such objection to the Distributees’ satisfaction provided the
cost of such resolution does not exceed Twenty-Fifty Thousand and No/100 Dollars
($25,000). In the event that Highwoods cannot or refuses to cure an objection to
the Title Report or the Survey (or existing survey[s]) which remains
unacceptable to the Distributees, then and in that event, the Distributees may
terminate this Agreement without any further claim or obligation of any kind to
Highwoods, except for the Distributees’ Continuing Indemnification Obligation
(as defined in Section 4(f) below) or in the alternative, consummate the Closing
in accordance with the terms of Section 5(a) below.

 

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(e) Environmental Assessments. Prior to Closing, the Distributees at their sole
expense, and upon reasonable notice to Highwoods, may cause to be undertaken and
completed a current Phase I Environmental Site Assessment of the Land (the
“Environmental Assessment”). The Environmental Assessment shall be performed by
environmental inspection and engineering firms selected by the Distributees. The
Distributees shall determine from the Environmental Assessment and from such
other information available to the Distributees, in its sole discretion, whether
or not the Property is likely to be contaminated by hazardous or toxic waste,
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 contamination or any other adverse environmental condition is found to
likely exist at the Property, or in the event that such Environmental Assessment
recommends additional testing and Highwoods refuses to consent to such testing
(which consent may be withheld by Highwoods in its sole discretion), the
Distributees reserves the right to terminate this Agreement and receive a refund
of the Binder Deposit. If Highwoods withholds its consent for the Distributees
to do additional environmental testing of the Land, and the Distributees
terminate this Agreement as the result thereof, Highwoods will pay to the
Distributees its due diligence costs reasonably incurred during the Review
Period, and any fees forfeited by the Distributees to its lender as the result
of the Distributees’ termination of this Agreement as the result of Highwoods
refusal to allow the Distributees to conduct further environmental tests of the
Land. Highwoods has no obligation to the Distributees to remediate any
environmental contamination on the Land discovered by the Distributees or the
Distributees’ engineers. As stated above, the Distributees will not conduct a
Phase II Environmental Assessment of the Property without Highwoods’ written
consent, which consent may be withheld in Highwoods sole discretion.

 

(f) Investigation Rights. From the Agreement Date until such time as this
Agreement is either settled or terminated, the Distributees, the Distributees’
authorized agents, employees, consultants, architects, engineers and
contractors, as well as others authorized by the Distributees, shall have access
to the Property and shall be entitled to enter upon the Property and make such
surveying, architectural, engineering, topographical, geological, soil,
subsurface, environmental, water drainage, traffic, and other studies related to
the availability of water, sewer, natural gas, and other utility services in
sufficient quantities to meet the Distributees’ requirements and such other
investigations, inspections, evaluations, studies, tests and measurements
(collectively, the “Investigations”) as the Distributees deem necessary or
advisable. Provided, however, the Distributees’ rights hereunder to conduct
Investigations shall be subject to the following requirements and limitations:
(i) any entry upon the Property by the Distributees, the Distributees’
authorized agents and employees, as well as others authorized by the
Distributees shall require at least twenty-four (24) hours advance notice to
Highwoods of the date and time of the entry and the specific Investigations to
be conducted in connection with the entry, (ii) the Investigations shall not
result in any adverse change to the physical characteristics of the Property
(and the Distributees shall be obligated to completely repair and restore any
damage to the Property resulting from the Investigations), and (iii) the
Investigations will not substantially or adversely interfere with the rights of
the tenant in the Building to use and enjoy

 

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its leased space therein according to its Lease thereof. The Distributees agree
to indemnify and hold Highwoods harmless from and against any and all claims,
costs, expenses, and liabilities, including reasonable attorneys’ fees, arising
out of claims for injury, including death, to persons or physical injury to
property resulting from the Investigations (hereinafter the “The Distributees’
Continuing Indemnification Obligations”); provided, however, the Distributees
shall not be obligated to indemnify Highwoods from and against any claims,
costs, expenses, and liabilities caused by or arising out of the acts or
omissions of Highwoods or Highwoods’ employees, representatives or agents, or
from the presence or release of Hazardous Substances (as defined in Section 5(c)
herein) not introduced onto the Property by the Distributees or the
Distributees’ authorized agents and employees or other entities conducting the
Investigations. Highwoods shall be entitled to have one or more representatives
present to observe the Investigations on the Property. The Distributees shall
not be entitled to conduct any environmental Investigations on the Property
beyond a Phase I environmental site assessment (i.e. no sampling, drilling,
etc.) without first obtaining Highwoods’ prior written consent, which consent
may be withheld by Highwoods, in Highwoods’ sole discretion. Notwithstanding any
term or provision herein to the contrary, the provisions in this Agreement
[including in this Section 4(f)] relating to the Investigations shall apply to
all Investigations conducted by the Distributess and the Distributees’
authorized agents, employees, consultants, architects, engineers and contractors
both prior to the Agreement Date and from and after the Agreement Date.

 

The Distributees will remain responsible and liable to Highwoods for the
Continuing Indemnification Obligations and the full amount of actual damages
suffered by Highwoods resulting from the Distributees’ Investigation after the
completion of the Closing hereunder, the termination of this Agreement by the
Distributees or Highwoods or a default by the Distributees under this Agreement.

 

(g) Termination Rights; Review Period. The Distributees shall have the
unqualified right, in the Distributees’ sole and absolute discretion, to
terminate this Agreement by giving written notice of such election at any time
from the Agreement Date until 5:00 p.m. Eastern Standard time on the February
28, 2005 (30th) (such period of time until February 28, 2005 being referred to
herein as the “Review Period”). In the event the Distributees properly and
timely terminates this Agreement pursuant to this Section 4(g); Escrow Agent
shall promptly refund all but One Hundred and No/100 Dollars ($100) of the
Binder Deposit to the Distributees (such $100 payment to Highwoods being the
consideration paid by the Distributees for the right to terminate this Agreement
pursuant to this Section 4(g)), whereupon the parties hereto shall have no
further rights, obligation or liabilities to each other hereunder, except for
the Distributees’ Continuing Indemnification Obligations. Time is of the essence
with respect to this right to terminate. The failure of the Distributees to
provide such notice of termination prior to the expiration of the Review Period
shall be deemed conclusively a waiver of the Distributees’ termination rights
under this Section 4(g); and in such event, except in the case of a default by
Highwoods hereunder (which shall be governed by the terms of Section 8 herein)
or failure of any condition precedent to the Distributees’ obligation to close,
and except in the event of the termination of this Agreement by either party
pursuant to any specific termination right set forth herein which requires the
return of the Binder Deposit to the Distributees, the Binder Deposit shall be
deemed for all purposes under this Agreement to be nonrefundable to the
Distributees and “earned” by Highwoods.

 

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(h) Highwoods’ Removal of Property From Market. Until the end of the Review
Period, or earlier termination of this Agreement, Highwoods shall remove the
Property from the market and not have discussions with prospective purchasers
thereof, and will not solicit or accept any offers, whether or not binding,
regarding the Property during the Review Period and thereafter until the Closing
of the transaction contemplated hereby occurs or until the earlier termination
of this Agreement.

 

  5. ADDITIONAL AGREEMENTS OF THE PARTIES.

 

(a) Title to the Property. At the Closing, Highwoods shall deliver to the
Distributees a limited warranty deed in form and content satisfactory to the
Distributees’ counsel with transfer tax, if any, paid at Highwoods’ expense,
conveying to the Distributees a good, indefeasible, fee simple title to the
Land, its appurtenances and Improvements, said title to be insurable both as to
fee and marketability at regular rates by Chicago Title Insurance Company (the
“Title Company”), subject only to those matters enumerated in Section
5(b)(i)-(vi) below (“Permitted Exceptions”). Prior to the end of the Review
Period, the Distributees shall procure from HPI Title Agency, LLC, at the
Distributees’ cost, a current title commitment for title insurance issued by the
Title Company showing the condition of title to the Land, its appurtenances and
Improvements (the “Title Report”). If, prior to the end of the Review Period,
the Distributees disapproves of any matter of title contained in the Title
Report, the Distributees may then elect to provide written notice of the
Distributees’ disapproval of the same to Highwoods (those disapproved title
matters as so identified by the Distributees are hereinafter called the
“Disapproved Exceptions”). Highwoods agrees to commit its commercially
reasonable efforts to remove any Disapproved Exception, provided the cost
thereof does not exceed Twenty-Five Thousand and No/100 Dollars ($25,000).
However, in the event that as provided in Sections 4(a) and (d) above, the
Distributees proceed to and consummate the Closing subject to a Disapproved
Exception, such Disapproved Exception shall then be deemed to be a Permitted
Exception. Any 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 the Distributees. The title insurance
premium for the title insurance policy issued by the Title Company pursuant to
the title commitment (the “Title Policy”) shall be borne by the Distributees.
The Title Policy shall provide full coverage against mechanics’ or materialmen’s
liens, shall commit full survey coverage (if the Distributees procure a Survey
of the Land) and such other coverages and endorsements as shall be reasonably
required by the Distributees. If the Distributees request any endorsements to
the Title Policy, the Distributees will be responsible for the cost attributable
thereto.

 

The Distributees may, at or prior to Closing, notify Highwoods in writing (the
“Gap Notice”) of any objections to title raised by the Distributees’ Counsel or
the Title Company between the issuance of the Title Report and the Closing,
which did not exist as of the date of the issuance of the Title Report (“New
Encumbrances”). If the Distributees send a Gap Notice to Highwoods, but the New
Encumbrance is the result of some act that is beyond the control of Highwoods,
then the Distributees and Highwoods shall have the same rights and obligations
with

 

10

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respect to such notice as apply to a Disapproved Exception under Sections 5(a)
and 5(b) hereof. However, in the event the New Encumbrance results from any
action or omission of Highwoods (with the exception of New Encumbrances which
can be cured by a monetary payment which the Distributees have, and shall have,
the absolute right of making such payment and reducing by a like amount the
value of the Distributees’ capital interest in Highwoods, to be reduced as a
result of this transaction), the Distributees shall be entitled to terminate
this Agreement, receive a refund of the Binder Deposit, and reimbursement from
Highwoods of the costs, fees and expenses incurred by the Distributees related
to this Agreement and the Property.

 

(b) Permitted Exceptions. The Land, its appurtenances and the Improvements shall
be conveyed by Highwoods to the Distributees free and clear of all liens,
encumbrances, claims, rights-of-way, easements, leases, restrictions and
restrictive covenants, except the following Permitted Exceptions:

 

(i) Public utility easements and rights-of-way in customary form, so long as no
Improvements are located thereon and they do not interfere with the use of the
Property for office, warehouse and related commercial purposes permitted by the
Lease or materially affect the value of the Property;

 

(ii) Zoning and building laws or ordinances, provided they do not prohibit the
use of the Property for office, warehouse and related commercial purposes
permitted by the Lease and so long as the Property is in compliance with same;

 

(iii) Ad valorem real estate taxes for any year in which they are not yet due
and payable as of the date of Closing; and

 

(iv) Those matters which the Distributees have elected to accept;

 

(v) Items shown on the Survey and not objected to by the Distributees or waived
by the Distributees in accordance with Section 4(a) hereof.

 

(vi) Those Permitted Exceptions listed on Exhibit D, so long as they to not
interfere with the use of the Property for office, warehouse and related
commercial purposes permitted by the Lease or materially affect the value of the
Property.

 

If, in the opinion of the Distributees’ counsel, the Distributees are not able
to procure an owner’s title insurance commitment from the Title Company prior to
Closing, complying with the requirements of this Section 5, the Distributees
shall have the option of taking title “as is” and consummating the Closing, or
terminating this Agreement. 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 (and with respect to which
affirmative title insurance coverage is not available at the Title Company’s
standard rates) the Distributees have, and shall have, the absolute right of
making such payment and reducing by a like amount the value of the capital
interest of the Distributees in Highwoods to be reduced as a result of this
transaction.

 

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(c) Representations and Warranties of Highwoods. Highwoods hereby makes the
following representations and warranties to the Distributees:

 

(i) There are no options to purchase the Property which are effective, nor has
Highwoods previously entered into any contract of sale of the Property with a
party other than the Distributees which is presently effective. After the date
hereof and until Closing, or until this Agreement is otherwise terminated,
Highwoods will not enter into any agreement or contract or negotiate with any
party other than the Distributees with respect to the sale of the Property, nor,
will Highwoods pledge or assign any right, title, interest in or to the Property
or any part thereof to any person or entity.

 

(ii) All bills and claims for labor performed and services and materials
furnished to or for the benefit of the Property have been or will be paid in
full by Closing, and there are no mechanics’ liens or materialmen’s liens on or
affecting the Property. If any mechanics’ or materialmen’s lien is filed on or
affecting the Property for work, labor or materials, Highwoods shall indemnify
and save the Distributees harmless from, or bond over, such lien and cause the
Title Company to eliminate any exception therefor from the Title Policy issued
to the Distributees.

 

(iii) As of the date of the Agreement, except as otherwise set forth on Exhibit
C, there are no leases, subleases, licenses or other rental agreements or
occupancy agreements (written or verbal) which grant any possessory interest in
and to any space situated on or in any of the Property or that otherwise give
rights with regard to use of any portions of any of the Property and except as
set forth on Exhibit C-1, there are no commissions due with respect to any such
lease, sublease, etc., nor, except as set forth on Exhibit C-1, will any
commissions be due in connection with the renewal of any such lease, sublease,
etc.

 

(iv) Except as set forth on Exhibit C-1, neither Highwoods, nor to the knowledge
of Highwoods, any other party, has entered into any construction, design,
engineering, service, maintenance, supply, brokerage/leasing agreements,
employment agreements, management contracts or leases of personal property
(collectively, “Service/Equipment Contracts”) affecting the construction, use,
ownership, maintenance or/or operation of the Property that will continue
subsequent to the Closing. Prior to or on the Closing Date, Highwoods shall
terminate, at Highwoods’ sole cost and expense, all Service/Equipment Contracts
which the Distributees do not elect to assume in writing; or, if not terminable
by the Closing Date, shall remain responsible for and will timely perform all of
the obligations thereunder. To Highwoods’ knowledge, Highwoods is not in
material default under any of the Service/Equipment Contracts and, to Highwoods’
knowledge, no other parties to any of the Service/Equipment Contracts are in

 

12

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default, nor do any conditions exist that, with the passage of time, or giving
of notice, or both, shall constitute a default thereunder. The copies of the
Service/Equipment Contracts provided to the Distributees pursuant to this
Agreement are true, accurate and complete as of the date hereof, are in full
force and effect and none of them have been modified, amended or extended except
as otherwise set forth on Exhibit C-1.

 

(v) To the knowledge of Highwoods, which knowledge is based solely on the Phase
I Environmental Site Assessment of the Land dated
                                , conducted by
                                                  (The Environmental Report),
the Property has not been used for the generation, treatment, storage or
disposal of any hazardous substances in violation of any federal, state or local
environmental law, rule or violation during the period in which Highwoods has
owned the property. For the purposes of this Section 5(c)(v), “hazardous
substances” shall include (i) “hazardous substances” as defined in the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended, 42 U.S.C. § 9601 et seq., as amended, or by any regulations promulgated
thereunder; (ii) 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. § 6901 et. seq.), as amended or by any
regulations promulgated thereunder; (iii) any oil or other hazardous substances
as defined by the Oil and Hazardous Substances Control Act of 1986 as amended,
and any regulations adopted pursuant to said Act, or any similar environmental
protection law of the state in which the Property is located or its political
subdivisions. To the knowledge of Highwoods, which knowledge is based solely on
the Environmental Report, no asbestos or asbestos-containing materials have been
installed, used, incorporated into or disposed of on the Property. To the
knowledge of Highwoods, which knowledge is based solely on the Environmental
Report, no polychlorinated biphenyls (“PCBs”) are located on or in the Property,
whether such PCBs are in the form of electrical transformers, florescent light
fixtures with ballast, cooling oils or any other device or form. To the
knowledge of Highwoods, which knowledge is based solely on the Environmental
Report, except as set forth in the Environmental Report, no underground storage
tanks are located on the Property or were located on the Property and
subsequently removed or filled. To the knowledge of Highwoods, but without
having made any independent investigation, no investigation, administrative
order, consent order and agreement, litigation, or settlement with respect to
hazardous substances is proposed, threatened, anticipated or in existence with
respect to the Property.

 

(vi) Neither the entering into of this Agreement nor the consummation of the
transaction contemplated hereby will constitute or result in a violation or
breach by Highwoods of any judgment, order, writ, injunction or decree issued
against or imposed upon it, or will result in a violation of any applicable law,
order, rule or regulation of any governmental authority. There are no actions,
suits, proceedings, arbitrations or investigations pending or, to Highwoods’

 

13

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knowledge, threatened (i) against, relating to or affecting Highwoods which
might interfere in a material respect with the transaction contemplated by this
Agreement, become an encumbrance on the title to the Property or any portion
thereof or otherwise affect the Property or Highwoods’ ability to consummate the
transaction contemplated hereby or (ii) against, relating to or affecting the
Property.

 

(vii) Highwoods has not received notice:

 

(A) From any federal, state, county or municipal authority alleging any fire,
health, safety, building, pollution, environmental, zoning or other violation of
law in respect of the Property or any part thereof, including, without
limitation, the occupancy or operation thereof, which has not been entirely
corrected;

 

(B) Concerning the possible or anticipated condemnation of any part of the
Property, or the widening, change of grade or limitation on use of streets
abutting the same or concerning any special taxes or assessments levied or to be
levied against the Property or any part thereof;

 

(C) Concerning any change in the zoning or other land use classification of the
Property or any part thereof;

 

(D) Of any pending insurance claim related to the Property;

 

(E) From any governmental authority that any licenses, permits, certificates,
easements and rights of way, including proof of dedication, required from all
authorities having jurisdiction over the Property or from private parties for
the existing use, occupancy and operation of the Property and to insure
vehicular and pedestrian ingress to and egress from the Property are in
violation of any governmental laws or regulations, which has not been corrected
or will not be corrected by Closing.

 

(viii) No attachment, execution, assignment for the benefit of creditors or
voluntary proceedings in bankruptcy has been commenced by Highwoods or are
contemplated by Highwoods and, to the best of Highwoods’ knowledge, no such
action has been contemplated or threatened, nor has any involuntary proceedings
in bankruptcy been commenced against Highwoods.

 

(ix) 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 consummation of the transactions contemplated
hereunder on the part of Highwoods do not and will not violate the partnership
agreement or certificate of limited partnership of Highwoods and do not and will
not conflict with or result in the breach of any

 

14

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condition or provision of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon 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;

 

(x) Highwoods is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of North Carolina. Highwoods has full
power and authority to carry on its business as now conducted and to own, lease
and operate its properties and assets now owned or leased and operated by it;

 

(xi) Highwoods is not a foreign person within the meaning of Section 1445(f) of
the Internal Revenue Code, and Highwoods agrees to execute any and all documents
necessary or required by the Internal Revenue Service or the Distributees in
connection with such declaration(s).

 

(xii) Subject to Highwoods’ general partner’s board of directors approval of
this transaction, this Agreement does and will, and the documents required to be
executed by Highwoods pursuant to this Agreement will, constitute the valid and
binding obligations of Highwoods enforceable in accordance with their respective
terms subject to bankruptcy, receivership and similar laws affecting the rights
of creditors generally.

 

(xiii) Notwithstanding anything else herein to the contrary, Highwoods
represents to the Distributees that the Building is leased to the tenant and for
the lease term set forth on the rent roll attached hereto as Exhibit C and that
the Property is subject to those service and maintenance contracts set forth on
Exhibit C-1 attached to this Agreement. With respect to such Lease, Highwoods
represents as follows:

 

(A) Highwoods has not collected any prepaid rent in advance in excess of rent
for the month during which the Closing is to occur.

 

(B) No rents or leases have been assigned by Highwoods.

 

15

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(C) The Lease is in full force and effect, has been validly executed by the
landlord and tenant, and has not been amended or modified as to any items except
as set forth in the Rent Roll;

 

(D) The summary of the Lease set forth in Exhibit C is accurate in all material
respects and, there are no subleases thereof;

 

(E) The Lease will be free and clear of all liens and encumbrances on the date
of the Closing contemplated hereby

 

(F) Highwoods has taken no action, by act or omission, which constitutes the
waiver of a default by the tenant under the Lease, except as herein specifically
provided;

 

(G) Highwoods has fulfilled all of the landlord’s duties and obligations under
the Lease including the completion of all upfittings, construction, decoration
and alteration work which Highwoods is obligated to perform under the Lease.

 

(H) Highwoods or a previous landlord under the Lease has fulfilled all of the
landlord’s duties and obligations under the Lease with respect to any leasing
commissions or other compensation due arising out of any leasing, agency,
brokerage or management agreements relating to the Lease which may be due and
owing as of the Closing Date.

 

(I) Highwoods and the tenant under the Lease is not in default under any of the
terms and provisions of said Lease, and Highwoods has received no notice, of any
alleged default in connection with said Lease;

 

(J) There are no other rent concessions or set-offs against rent, nor has the
tenant under the Lease asserted any defense, set-off, or counterclaim in
connection with said Lease

 

(xiv) With respect to Services/Equipment Contracts:

 

(A) There are no contracts or agreements for services rendered in connection
with the operation of the Property which the Distributees shall be required to
take the Property subject to, except as agreed to by the Distributees and
expressly assumed under the terms of the Assignment of Contracts.

 

(B) Highwoods shall not, without Distributees’ consent, negotiate or enter into
any new service or other contract affecting the Property which cannot be
terminated without cost to the Distributees on or before the Closing.

 

16

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All representations and warranties of Highwoods contained in this Agreement are
true, accurate and correct in all material respects as of the date hereof and,
if Highwoods believes such representations and warranties continue to be true at
Closing, Highwoods shall deliver to the Distributees at Closing a certificate
certifying that they are still true, accurate and correct in all material
respects as of the Closing Date. Notwithstanding the foregoing, the Distributees
shall have no claim against Highwoods for any representation or warranty which,
although true upon the execution hereof, is untrue or inaccurate at Closing as a
result of facts, circumstances or occurrences beyond the control of or not
within the knowledge of Highwoods. For purposes of this Agreement and any
document delivered at Closing, whenever the phrases “to the best of Highwoods’
knowledge”, “to the current, actual knowledge of Highwoods” or the “knowledge”
of Highwoods or words of similar import are used, they shall be deemed to refer
to the current, actual, conscious knowledge without inquiry of Mark W. Shumaker,
Vice President and Rebecca Dixson, Property Manager. The representations and
warranties of Highwoods shall survive the Closing for one (1) year.

 

Subject to the Distributees’ rights of inspection and investigation during the
Review Period, the Distributees acknowledge for the Distributees and the
Distributees’ successors, and assignees, that the Distributees have been given a
reasonable opportunity to inspect and investigate the Property, all improvements
thereon and all aspects relating thereto, including all documents and contracts
related to the Property, either independently or through agents and experts of
the Distributees’ choosing. EXCEPT AS LIMITED BELOW OR AS OTHERWISE SET FORTH IN
THIS AGREEMENT, HIGHWOODS AND THE DISTRIBUTEES AGREE THAT THE PROPERTY SHALL BE
SOLD AND THAT THE DISTRIBUTEES SHALL ACCEPT POSSESSION OF THE PROPERTY ON THE
CLOSING DATE “AS IS, WHERE IS, WITH ALL FAULTS” WITH NO RIGHT OF SET-OFF OR
REDUCTION IN THE VALUE OF THE DISTRIBUTEES’ CAPITAL INTEREST IN HIGHWOODS TO BE
REDUCED PURSUANT TO THIS AGREEMENT, AND EXCEPT AS EXPRESSLY SET FORTH HEREIN
THAT THE CONVEYANCE OF THE PROPERTY TO THE DISTRIBUTEES SHALL BE WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION, WARRANTY OF INCOME WHICH MAY BE EARNED IN THE FUTURE, FUTURE
OPERATING EXPENSES, USES, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
(BUT SPECIFICALLY EXCLUDING THE LIMITED WARRANTY OF TITLE TO BE GIVEN IN THE
DEED FROM HIGHWOODS TO THE DISTRIBUTEES), AND HIGHWOODS DOES HEREBY DISCLAIM AND
RENOUNCE ANY SUCH REPRESENTATION OR WARRANTY. EXCEPT FOR HIGHWOODS’
REPRESENTATIONS WHICH ARE EXPRESSLY SET FORTH HEREIN, THE DISTRIBUTEES
SPECIFICALLY ACKNOWLEDGES THAT THE DISTRIBUTEES ARE NOT RELYING ON ANY
REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, FROM
HIGHWOODS OR BROKERS AS TO THE FOLLOWING MATTERS: (1) THE CONDITION OR SAFETY OF
THE PROPERTY OR ANY SEWER, HEATING AND ELECTRICAL SYSTEMS, ROOFING, AIR
CONDITIONING, IF ANY, FOUNDATIONS, SOILS AND GEOLOGY INCLUDING SUITABILITY OF
THE PROPERTY OR ITS IMPROVEMENTS FOR A PARTICULAR PURPOSE; (2) WHETHER THE
APPLIANCES, IF ANY, PLUMBING OR UTILITIES ARE IN WORKING ORDER; (3) THE
HABITABILITY OR SUITABILITY FOR OCCUPANCY OF ANY STRUCTURE AND THE QUALITY OF

 

17

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ITS CONSTRUCTION; (4) THE FITNESS OF ANY PERSONAL PROPERTY; OR (5) WHETHER THE
BUILDING IS STRUCTURALLY SOUND, IN GOOD CONDITION, OR IN COMPLIANCE WITH THE
APPLICABLE CITY, COUNTY, STATE OR FEDERAL STATUTES, CODES OR ORDINANCES. EXCEPT
FOR HIGHWOODS’ REPRESENTATIONS EXPRESSLY SET FORTH HEREIN THE DISTRIBUTEES ARE
RELYING SOLELY UPON ITS OWN INSPECTION OF THE PROPERTY WITH REGARD TO THE
ABOVE-REFERENCED MATTERS, AND NOT UPON ANY REPRESENTATIONS MADE BY HIGHWOODS OR
HIGHWOODS’ AGENTS RELATED TO THE ABOVE-REFERENCED MATTERS.

 

(d) Representations and Warranties of the Distributees. Each Distributee, for
and on behalf of themselves (but not for the other Distributees), hereby
represents and warrants to Highwoods as of the date hereof and as of Closing as
follows:

 

(i) The execution and delivery of this Agreement and the documents required
hereunder to be executed by them will on the date of Closing have been, duly
executed and delivered by the Distributees. To the current, actual knowledge of
the Distributees, 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, or
any agreement, judgment, injunction, order, decree or other instrument binding
upon the Distributees. This Agreement does and will, and the documents required
to be executed by them will, constitute the valid and binding obligations of the
Distributees enforceable in accordance with their respective terms, subject to
bankruptcy and similar laws affecting the remedies or resources of creditors
generally.

 

(ii) The execution and delivery of this Agreement and the performance by the
Distributees of their obligation hereunder 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 the Distributees (including
the Property) by reason of the terms of any contract, mortgage, lien, lease,
agreement, indenture, instrument or judgment to which the Distributees are a
party or which is or purports to be binding upon the Distributees or which
affect the Distributees.

 

(iii) No attachment, execution, assignment for the benefit of creditors or
voluntary proceedings in bankruptcy has been commenced by the Distributees and,
to the best of the Distributees’ knowledge, no such action has been contemplated
or threatened, nor has any involuntary proceedings in bankruptcy been commenced
against the Distributees.

 

(iv) The Distributees acknowledge that all information with respect to the
Property furnished to the Distributees or discovered by the Distributees during
their investigation thereof pursuant to Section 4 of this Agreement
(collectively, the “Confidential Information”), is and has been so furnished,
and the

 

18

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Distributees’ investigation of the Property has been permitted by Highwoods, on
the condition that the Distributees maintain the confidentiality thereof.
Accordingly, the Distributees shall, and shall cause their employees, and, their
agents, contractors and representatives to, hold in strict confidence, and not
disclose to any other person or entity without the prior written consent of
Highwoods until the Closing shall have been consummated, any of the Confidential
Information in respect of the Property. If the Closing does not occur and this
Agreement is terminated, the Distributees shall promptly return, or cause to be
returned, to Highwoods all copies of such Confidential Information without
retaining, or permitting retention of, any copy thereof. Notwithstanding
anything to the contrary hereinabove set forth, the Distributees may disclose
such Confidential Information (i) to their employees, their title insurer, their
current or prospective investors or lenders, and members of professional firms
serving them in connection with this transaction, including, without limitation,
their attorneys, architects, environmental consultants and engineers, bankers,
and their clients; (ii) as any governmental agency or authority may require in
order to comply with applicable laws or regulations; and (iii) if required by an
order of any court of competent jurisdiction; and this provision shall survive
Closing, provided, however, after the Closing, this provision shall not apply to
information available through the public records as a result of such Closing.

 

(v) The Distributees have full power and authority to enter into this Agreement
and to assume and perform all of their obligations hereunder; and no further
action or approval is required in order to constitute this Agreement as a
binding and enforceable obligation of the Distributees; the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereunder on the part of the Distributees do not and will not require any 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 the Distributees in accordance with its terms.

 

(vi) To the current, actual knowledge of the Distributees, there is no existing
or threatened legal action or governmental proceedings of any kind involving the
Distributees, any of their assets or the operation of any of the foregoing,
which if determined adversely to the Distributees or their assets, would have a
material adverse effect on the financial condition, business or prospects of the
Distributees or their assets or which would interfere with the Distributees’
ability to execute or deliver, or perform their obligations under this Agreement
or any of the documents required to be executed by them.

 

(vii) The Distributees have no current, actual knowledge of any existing
violation of any federal, state, county or municipal law, ordinance, order,
code, regulation or requirements affecting the Distributees or any of their
assets that would have a material adverse effect on the financial condition,
business or prospects of the Distributees or any of their assets.

 

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(viii) The Distributees have no current, actual knowledge of any information or
fact which has, or would have, a material adverse affect on the financial
condition, business or prospects of the Distributees or their assets in a manner
which would prevent the Distributees from consummating the transaction
contemplated by this Agreement.

 

(ix) The Distributees are, and at all times prior to the Closing date will be,
solvent. As used herein, “solvent” means that the Distributees (i) do not have
debts greater than the fair market value of their assets; (ii) are paying and
anticipate that they will continue to pay their debts as they mature and become
due; and (iii) have sufficient capital to operate their businesses as they are
operated on the date of this Agreement.

 

(x) The Distributees carry, or are covered by, and will maintain, insurance in
such amounts and covering such risks as is adequate for the conduct of their
business and the value of their 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.

 

(xi) The Distributees acknowledge that, prior to the execution of this
Agreement, the Distributees have had the opportunity to ask questions of and
receive answers or obtain additional information from a representative of
Highwoods concerning the financial and other affairs of Highwoods and its
general partner and, to the extent the Distributees believe necessary in light
of the Distributees’ personal knowledge of the affairs of Highwoods and its
general partner, the Distributees have asked such questions and received
satisfactory answers. The Distributees further acknowledge that they possess all
material facts necessary to make a determination to dispose of the Partnership
Units as more fully set forth herein.

 

For purposes of this Agreement and any document delivered at Closing, whenever
the phrases “to the best of the Distributees’ knowledge”, “to the current,
actual knowledge of the Distributees” or the “knowledge” of the Distributees or
words of similar import are used, they shall be deemed to refer to the current,
actual, conscious knowledge without inquiry of John L. Turner, Sr., Robert
Goldman, and Henry P. Royster, Jr.

 

(e) Maintenance of the Property. Between the date of this Agreement and the
Closing, Highwoods shall continue to maintain the Property in the same condition
and repair as currently being maintained, ordinary wear and tear and damage by
casualty excepted, and shall not cause or permit any waste upon the Property and
shall not, except as set forth above with respect to ordinary wear and tear and
casualty damage without the prior written consent of the Distributees, permit
any material physical change to the Property prior to Closing. Highwoods shall
not take any action which would adversely affect the value of or title to the
Property and will not amendment, modify or terminate the Lease without the
Distributees’ written consent.

 

20

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(f) Risk of Loss; Damage or Destruction; Condemnation. If, prior to Closing, the
Property or any part thereof shall be condemned, or destroyed or materially
damaged by fire or other casualty (that is, damage or destruction to the
Building which the Distributees reasonably believe would cost in excess of Two
Hundred Thousand and No/100 Dollars ($200,000) to repair or would entitle the
tenant under the Lease to terminate the Lease, or, in the case of a
condemnation, which substantially prevents access to the Property or any part
thereof), the Distributees shall have the option which shall be exercised not
later than the later of (i) five (5) days prior to Closing or (ii) ten (10)
business days following the date the Distributees receive written notice of the
condemnation or damage (with Closing being extended, if necessary, to
accommodate such time periods) either to (a) to terminate this Agreement, or (b)
to consummate the transaction contemplated by this Agreement notwithstanding
such condemnation, destruction or material damage. If the Distributees elect to
consummate the transaction contemplated by this Agreement notwithstanding a
casualty or condemnation, the Distributees shall be entitled to receive all of
the condemnation proceeds or settle the loss under all policies of insurance
applicable to the destruction or damage and receive all of the proceeds of
insurance applicable thereto, and Highwoods shall, at Closing and thereafter,
execute and deliver to the Distributees all required proofs of loss, assignments
of claims and other similar items, and the Distributees shall receive a credit
at Closing for the amount of any deductible under Highwoods’ insurance policies.
If the Distributees or Highwoods elects to terminate this Agreement as a result
of a casualty or condemnation, the Earnest Money plus any interest earned
thereon shall be returned to the Distributees by the Escrow Agent, in which
event this Agreement shall, without further action of the parties, become null
and void and neither party shall have any rights or obligations under this
Agreement, except for the Distributees’ Continuing Indemnification Obligations.
If there is any other damage or destruction to the Building (that is, damage or
destruction to the Building which the Distributees reasonably believe would cost
Two Hundred Thousand and No/100 Dollars ($200,000) or less to repair), or if
there is a condemnation which does not substantially prevent access to the Land
or any part thereof, or if the damage or destruction of the Building or
condemnation would not entitle the tenant under the Lease to terminate the
Lease, the Distributees shall not have the right to terminate this Agreement and
(i) in the event of a casualty, Highwoods shall either completely repair such
damage to the Building prior to Closing in a manner satisfactory to the
Distributees or, at Highwoods’ option, either assign all insurance claims
pertaining to such damage or destruction to the Distributees at Closing, with
the Distributees to receive a credit for the amount of any deductible under
Highwoods’ insurance policies, or allow the Distributees a credit against the
value of the Distributees’ capital interest in Highwoods to be reduced pursuant
to this transaction in an amount equal to the Distributees’ reasonably estimated
cost of repair and (ii) in the event of a condemnation, Highwoods shall assign
to the Distributees all of Highwoods’ rights to any condemnation proceeds to be
paid by the applicable governmental authority.

 

(g) No Transfer of Personal Property. Highwoods agrees not to transfer or remove
any personal property from the Property after the Agreement Date except for
repair or replacement thereof. Any items of Personal Property replaced after the
Agreement Date shall be promptly installed prior to Closing and shall be of
substantially similar quality to the item of personal property being replaced.

 

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(h) Compliance With Legal Requirements. All notices of violations of laws,
ordinances, or regulations (“Violations of Law”), which are issued or sent to
Highwoods prior to the Closing related to the Property by any governmental
department, agency or bureau having jurisdiction over the conditions relating to
such Violations of Law may (but is not required to) be remedied or complied with
by Highwoods prior to Closing; provided, however, if any notices of Violations
of Law are issued or sent to Highwoods by any governmental department, agency or
bureau having jurisdiction over the conditions related to such Violations of Law
after the end of the Review Period that Highwoods is unable or unwilling to
remedy or cure, or comply with such notices by the Closing then the Distributees
shall have the option to (a) terminate this Agreement, whereupon all obligations
of all parties hereto shall cease, the Binder Deposit shall be returned to the
Distributees and this Agreement shall be void and without recourse to the
parties hereto, except for provisions which are expressly stated to survive such
termination including the Distributees’ Continuing Indemnification Obligations;
or (b) proceed with Closing notwithstanding such Violations of Law and obtain an
adjustment to the value of the Distributees’ capital interest in Highwoods to be
reduced pursuant to this transaction as reasonably determined by the
Distributees and Highwoods. If Highwoods receives any notices of Violations of
Law prior to the end of the Review Period which Highwoods is unable or unwilling
to remedy or cure, the Distributees’ only remedy shall be to terminate this
Agreement and receive a refund of the Binder Deposit or proceed with Closing not
withstanding such Violations of Law and obtain an adjustment to the value of the
Distributees’ capital interest in Highwoods to be reduced pursuant to this
transaction as reasonably determined by the Distributees and Highwoods.

 

(i) Delivery of Notices. Highwoods shall promptly deliver to the Distributees
prior to Closing, copies of all notices, correspondence and reports generated or
received by Highwoods in connection with the Lease.

 

  6. CONDITIONS PRECEDENT TO CLOSING.

 

(a) The Distributees’ Conditions. The obligation of the Distributees to complete
the transaction contemplated by this Agreement is subject to the satisfaction on
or before the Closing of the following conditions, any of which may be waived in
whole or in part by the Distributees, but only in writing at or prior to
Closing:

 

(i) All representations and warranties of Highwoods in this Agreement shall be
true and correct in all material respects as of the Closing Date, with the same
force and effect as if such representations and warranties were made anew as of
the Closing Date. Any changes to such representations disclosed by Highwoods in
writing prior to Closing shall be subject to the provisions of Section 6(a)(ii)
below. Highwoods shall have performed and complied in all material respects with
all covenants and agreements required by this Agreement to be performed or
complied with by Highwoods prior to the Closing Date.

 

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(ii) In the event that the Distributees becomes aware at any time prior to
Closing that a representation or warranty made by Highwoods herein, while true
as of the date made, no longer remains true in all material respects, due to a
change of circumstances beyond the reasonable control of Highwoods subsequent to
the date of this Agreement, the Distributees shall promptly give written notice
of such fact to Highwoods. In the event Highwoods is unable or unwilling to
remedy such change of circumstances by the Closing, then the Distributees shall
have the option to (a) terminate this Agreement, whereupon all obligations of
all parties hereto shall cease (except for the Distributees’ Continuing
Indemnification Obligations) and the Binder Deposit shall be returned to the
Distributees; or (b) proceed with Closing notwithstanding such change of
circumstances; provided, however, that if Highwoods intentionally caused such
representation or warranty to become untrue, the Distributees shall have the
right to proceed with Closing and decrease the amount by which the Distributees’
capital interest in Highwoods will be reduced by the amount necessary to remedy
such breach or terminate this Agreement and Highwoods shall reimburse the
Distributees for the Distributees’ out-of-pocket expenses incurred in
negotiating this Agreement and conducting its review of the Property and
preparation for Closing (including, without limitation, reasonable attorneys’
fees, title examination, environmental assessment and survey and loan fees
forfeited to the Distributees’ lender as the result of the closing failing to
occur because Highwoods intentionally caused a representation or warranty made
by it herein to be untrue at closing).

 

(iii) All of Highwoods’ obligations hereunder shall have been performed with
regard to the Property.

 

(iv) Highwoods must have good and marketable fee simple title to the Property,
free and clear of all liens, encumbrances, covenants and conditions, save and
except the Permitted Exceptions, and the Building or other improvements on the
Property shall not encroach upon any land adjoining the Property, except for
encroachments of asphalt paving over utility easements.

 

(v) Highwoods shall not have caused any New Encumbrances to be placed on the
Property between the date of this Agreement and the Closing Date except with the
approval of the Distributees which approval shall not be unreasonably withheld
or delayed and Highwoods shall have the obligation to remove all such New
Encumbrances (not approved as aforesaid by the Distributees) on the Closing
Date.

 

(vi) The Property will be free and clear of any and all taxes or assessments and
any penalties associated therewith, except ad valorem taxes for the year of
Closing, which will be prorated on a calendar year basis at the Closing.

 

(vii) The Property shall be in substantially the same condition on the date of
Closing as of the date hereof subject, however, to normal wear and tear

 

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only, provided, in the event the Property is not in the condition described
above prior to Closing as the result of a casualty to the Building, the
provisions of Section 5(f) of this Agreement shall apply.

 

(viii) No order, writ, injunction or decree shall have been entered and be in
effect by any court of competent jurisdiction or any governmental authority, and
no statute, rule, regulation or other requirement shall have been promulgated or
enacted and be in effect, that restrains, enjoins or invalidates the
transactions contemplated hereby.

 

(ix) No suit or other proceeding shall be pending or threatened by any third
party not affiliated with or acting at the request of Highwoods before any court
or authority seeking to restrain or prohibit or declare illegal, or seeking
substantial damages against Highwoods in connection with the transactions
contemplated by this Agreement.

 

(x) Highwoods shall make all reasonable efforts to obtain and provide to the
Distributees five (5) days prior to Closing a tenant estoppel certificate in the
form attached hereto as Exhibit E (the “Tenant Estoppel Certificate”) from the
tenant of the Building. To the extent Highwoods has not delivered the Tenant
Estoppel Certificate at Closing, and if General Electric Capital Assurance
Company, or its affiliate (“G E Capital”) makes a loan to G-T Gateway, LLC an
affiliate of the Distributees [“G-T Gateway”] and will accept an estoppel
certificate from Highwoods, Highwoods may (but has no obligation to) execute an
estoppel certificate (certifying the same matters set forth in the Tenant
Estoppel Certificate submitted to the tenant of the Building). Highwoods may
agree to indemnify the Distributees (and G E Capital) from loss or damage
incurred by the Distributees and/or G E Capital resulting from the inaccuracy of
any matter contained in the estoppel certificate executed by Highwoods. In the
event Highwoods provides an estoppel certificate pursuant to the terms of this
Section, Highwoods may, after Closing, substitute a Tenant Estoppel Certificate
therefor, and thereafter, Highwoods shall be relieved from any liability to the
Distributees (and G E Capital) with respect to any Highwoods’ estoppel
certificate substituted by the Tenant Estoppel Certificate. Provided Highwoods
makes a reasonable effort to obtain the Estoppel Certificate, and if the G E
Capital will not accept a Highwoods’ estoppel certificate, Highwoods’ failure to
so provide the Estoppel Certificate to the Distributees and G E Capital shall
not be deemed a default by Highwoods under this Agreement and the Distributees
may (a) elect to delay Closing for a reasonable period of time to enable
Highwoods to obtain and deliver the Estoppel Certificate or (b) terminate this
Agreement and receive a refund of the Binder Deposit, or (c) close this
transaction without the Estoppel Certificate.

 

(xi) On or before the date of Closing, Highwoods shall have provided to the
Distributees and G E Capital a subordination, non-disturbance and attornment
agreement (“SNDA”) in a form acceptable to G E Capital executed by the tenant of
the Building. Provided Highwoods makes a reasonable effort to obtain the

 

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Estoppel Certificate, and if G E Capital will not accept the SNDA provided by
the tenant of the building, Highwoods’ failure to so provide an SNDA acceptable
to G E Capital shall not be deemed a default by Highwoods under this Agreement.
In the event Highwoods fails to deliver the SNDA to the Distributees and/or its
lender as required above, the Distributees may (a) elect to delay Closing for a
reasonable period of time to enable Highwoods to obtain and deliver the SNDA or
(b) terminate this Agreement and receive a refund of the Binder Deposit, or (c)
close this transaction without the SNDA.

 

(xii) G-T Gateway must have closed a loan with General Electric Capital
Assurance Company, or an affiliate thereof pursuant to a loan application with G
E Asset Management Incorporated to be applied for by G-T Gateway during the
Review Period providing G-T Gateway with loan proceeds of not less than
$1,612,500.00 (the “Loan”). G-T Gateway agrees to apply for the Loan during the
Review Period and make a commercially reasonable effort to close the Loan
pursuant to such application.

 

(xiii) On the date of Closing, the tenant of the Building shall not be a party
to any voluntary or involuntary bankruptcy proceeding filed pursuant to the
United States Bankruptcy Code, or any state receivership or state insolvency
proceeding.

 

(xiv) The Lease shall not have been modified or terminated without the written
consent of the Distributees.

 

If any of the foregoing conditions in this Section 6 for the benefit of the
Distributees shall fail to be satisfied within the time period set forth for
each condition, the Distributees may, at their election: (i) terminate their
obligations to accept a distribution of the Property; (ii) waive such condition
and complete the transaction contemplated hereby without any reduction in the
value of the Distributees’ capital interest in Highwoods to be reduced pursuant
to this transaction except as provided in Section 6(a)(ii); or (iii) require
Highwoods to perform its obligations hereunder, if any, with regard to the
Property or the Building and Highwoods’ failure to perform such obligations, if
any, shall be a default hereunder.

 

(b) Highwoods’ Conditions. The obligations of Highwoods under this Agreement are
subject to the satisfaction of each of the following conditions on or before the
Closing Date, any of which may be waived by Highwoods, and the Distributees
agree to cause the conditions described in clauses (ii) and (iii) below to be so
satisfied:

 

(i) This transaction must have been approved by Highwoods’ general partner’s
board of directors at its February meeting (anticipated to be February     ,
2005). Highwoods shall submit this Agreement to its general partner’s board of
directors at its February meeting.

 

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(ii) All the terms, covenants, and conditions of this Agreement to be complied
with and performed by the Distributees on or before the Closing Date shall have
been duly complied with and performed in all respects; and

 

(iii) The representations and warranties of the Distributees contained in this
Agreement shall be true and correct in all respects at and as of the Closing
Date with the same force and effect as though such representations and
warranties had been made as of the Closing Date, except for any changes which
have been disclosed to Highwoods in writing and expressly approved or waived by
Highwoods in writing.

 

(iv) Simultaneously with the closing of the transaction contemplated by this
Agreement, G-T Gateway, LLC must have purchased a seventy-five percent (75%)
interest in the Land pursuant to an agreement between Highwoods and G-T Gateway,
LLC of even date herewith.

 

  7. CLOSING.

 

(a) Date. The Closing of the transaction contemplated hereby shall occur on or
before March 1, 2005, at the offices of the Distributees’ attorney in
Winston-Salem, North Carolina, or such other place as may be mutually agreed
upon by Highwoods and the Distributees, or, at the Distributees’ option, closed
in escrow at the office of the Title Company, provided, the Distributees shall
give Highwoods at least five (5) business days notice of the date of any Closing
to take place under this Agreement. Notwithstanding the above, the Distributees
may delay closing until March 31, 2005 in the sole discretion of the
Distributees by paying to the Escrow Agent an additional binder deposit the sum
of Fifteen Thousand and No/100 Dollars ($15,000.00) (which shall be considered
and treated as the Binder Deposit pursuant to Section 3(a) hereof) in which
event this transaction will close on such date pursuant to the provisions of
this paragraph.

 

(b) Highwoods’ Closing Documents. At the Closing, Highwoods shall deliver to the
Distributees or its designated agent the following, each of which shall be
properly executed and acknowledged, if applicable:

 

(i) A limited warranty deed in a form reasonably acceptable to the Distributees
conveying to each Distributee good and marketable fee simple title to his
Relative Percentage Interest in the Land, as a tenant-in-common with the other
Distributees, free and clear of all liens, encumbrances, easements and
restrictions, except the Permitted Exceptions, which may encumber the Property
at the time of the conveyance thereof;

 

(ii) An assignment of a twenty-five percent (25%) interest in the Lease in the
form set forth on Exhibit F;

 

(iii) A standard owner’s affidavit and lien waiver form used by the Title
Company to cause an extended coverage ALTA owner’s title insurance policy to be
issued to the Distributees without standard exceptions to mechanics and/or
materialman liens;

 

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(iv) A certificate of Highwoods as to the warranties and representations
referred to in Section 5(c) hereof being true and correct as of the Closing
Date;

 

(v) An affidavit as to “foreign persons” referred to in Section 5(c)(xxiii)
hereof; (vi) The Tenant Estoppel Certificate (or Highwoods’ Estoppel Certificate
if applicable) and the SNDA;

 

(vii) All permits, warranties, plans and specifications, and documents,
instruments, files and records related to the Property and in the possession and
control of Highwoods;

 

(viii) The original executed Lease;

 

(ix) The keys to any door or lock on the Building and the original tenant files
in possession of Highwoods; and

 

(x) Such other matters as either the Distributees or Highwoods shall reasonably
require or shall be anticipated by the terms hereof.

 

(c) The Distributees’ Closing Documents. At Closing, the Distributees shall
execute and deliver to Highwoods an assignment of their interest in the
Partnership Units, and will execute such other documents and papers which may be
necessary for the consummation of the transaction described in this Agreement,
as may be reasonably requested by Highwoods or Highwoods’ counsel, including the
execution of an assignment of lease in the form set forth on Exhibit F, and any
document reasonably requested by Highwoods to effectuate the assignment of the
Distributees’ Partnership Units as contemplated in Section 3 hereof.

 

Simultaneously with, or promptly following, the Closing hereunder the parties
hereto shall execute such other and additional documents and assurances and
perform such other acts as shall be reasonably required in order to carry out
the intent and purposes of this Agreement.

 

(d) Closing Costs. Highwoods shall furnish the deed to a twenty-five percent
(25%) interest in the Land in accordance with the terms hereof and shall pay any
documentary stamps, excise or transfer tax, if any, with respect thereto and its
attorneys’ fees and shall pay all costs required to clear title to the Property,
provided Highwoods shall not be required to expend more than Twenty-Five
Thousand and No/100 Dollars ($25,000) in connection with such efforts. The
Distributees shall be responsible for paying the cost of the title insurance
premium charged by the Title Company in connection with the issuance of the
Title Policy, recording the deed, its attorneys’ fees, all engineering reports
procured by the Distributees in connection with its due diligence and any cost
associated with the Distributees’ financing of the Property, if any, and Survey
costs.

 

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(e) Closing Adjustments. Unless otherwise specified in this Agreement,
twenty-five percent (25%) of all income, expenses and costs related to the
Property shall be prorated as of 11:59 p.m. Eastern Standard Time on the date
immediately preceding the Closing Date as follows, with any credits or debits to
Highwoods as the result of such adjustments being added to or subtracted from
(in proportation to their Relative Percentage Interests) the value of the
Distributees’ capital interest in Highwoods which shall be reduced at Closing as
contemplated by Section 3 hereof.

 

(i) Taxes. To the extent not paid by the tenant under the Lease, ad valorem
property taxes, personal property taxes and special assessments, if any, due or
to be levied against the Property (the “Taxes”) for the year of Closing shall be
prorated with Highwoods being responsible for all such Taxes from January 1st of
the year of Closing through the last day prior to the day of Closing. The
Distributees shall be responsible for paying twenty-five percent (25%) of the
balance of the remaining Taxes due or to be levied against the Property for the
year of Closing. Highwoods shall be responsible for paying any unpaid Taxes for
any year prior to Closing. 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”). If the Taxes are not paid at Closing,
Highwoods shall deliver to the Distributees the bills for the Taxes promptly
upon receipt thereof and the Distributees shall thereupon be responsible for the
payment of twenty-five percent (25%) 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”), Highwoods and the Distributees shall prorate and pay such Tax Excess
or such Tax Refund as follows:

 

(A) Highwoods 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 last day before the Closing Date based upon a 365-day
calendar year. The amount of the Tax Excess or the Tax Refund shall be
determined when the property tax bills are received by the Distributees, and the
Distributees shall notify Highwoods within thirty (30) days thereof of the
calculation of the amount due to the Distributees from Highwoods in the case of
a Tax Excess or the amount due to Highwoods from the Distributees in the case of
a Tax Refund. Highwoods shall have thirty (30) days from Highwoods’ receipt of
such notification to pay its portion of the Tax Excess to the Distributees and
the Distributees shall have thirty (30) days from the Distributees’ receipt of
the property tax bills to pay Highwoods its portion of the Tax Refund.

 

(ii) Utilities. To the extent not paid by tenant under the Lease, twenty-five
percent (25%) of all utility charges and reimbursement for utility charges for
the Property (including, without limitation, telephone, water, storm and
sanitary

 

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sewer, electricity, gas, garbage and waste removal), to the extent not payable
by the tenant under the Lease, shall be prorated. Transfer fees required with
respect to any such utility shall be paid by the Distributees prior to Closing.

 

(iii) Rents. Twenty-five percent (25%) of all paid rents, including revenues and
charges of any kind, together with any other sums paid by the tenant (other than
security deposit), under the Lease, shall be prorated as of the Closing Date. In
the event that, at the time of Closing, there are any past due or delinquent
rents owing by the tenant of the Property, the Distributees shall have the
exclusive right to collect such past due or delinquent rents and shall remit to
Highwoods in cash to the extent, and only to the extent, that the rents received
by the Distributees from the tenant owing past due or delinquent rents exceed
the sum of the aggregate rents and other sums payable by such tenant for periods
from and after the Closing Date to the date of receipt, and then only if
Highwoods has notified the Distributees at Closing that the tenant under the
Lease is delinquent in its rent as of the Closing Date. The Distributees will
make a commercially reasonable good faith effort to collect after Closing any
rents which are delinquent and owing to Highwoods at Closing, but the
Distributees shall have no obligation to file suit to collect such amounts,
provided if the Distributees fail to file suit to collect such amounts after
being requested to do so by Highwoods, Highwoods shall have the right to collect
all rents owed to Highwoods at the time of Closing, which shall include
Highwoods’ filing of suit, if necessary, to collect such amounts. In the event
that, after Closing, Highwoods receives any payments of rent or other sums due
from the tenant under the Lease that relate to periods from and after Closing,
Highwoods shall promptly forward to the Distributees such payments. It is agreed
by the Distributees that the sums to be paid by the tenant referred to in this
Section 7(e)(iii) shall include all property operation costs “pass throughs” for
the years 2004 and 2005 not paid on a monthly basis, but rather at the end of a
calendar year after being invoiced therefor. These sums shall be provided and
paid to Highwoods and the Distributees, as applicable, when paid by the tenant
under the Lease. The Distributees shall use reasonable efforts to invoice the
tenant for “pass throughs” as promptly as is practicable after Closing (but in
no event shall the Distributees be required to do so until allowed under the
Lease), provided Highwoods must furnish to the Distributees all applicable
information regarding the amount of “pass through” operating expenses to be paid
by the tenant under the Lease for the calendar year 2004.

 

During the period after Closing, the Distributees shall deliver to Highwoods any
and all rents accrued but uncollected as of the Closing Date to the extent
subsequently collected by the Distributees, and to the extent the Distributees
receive such rents, shall apply rents received after Closing to the extent the
same are delinquent first to payment of current Rent then due, and thereafter to
delinquent rents (other than “true up” payments received from the tenant
attributable to a year-end reconciliation of actual and budgeted pass-through
payments which shall be allocated between Highwoods and the Distributees pro
rata in accordance with their respective period of ownership as

 

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set forth in this Section 7(e)(iv) below) but only after rent due and owing to
the Distributees have been paid in full, including any delinquent rent. If any
security deposits are in the form of a letter of credit, Highwoods shall assign
its interest in the letter of credit to the Distributees (to the extent
assignable) and deliver the original letter of credit to the Distributees at
Closing.

 

(iv) Calculations. For purposes of calculating prorations, the Distributees
shall be deemed to be the owner of the Property, and, therefore, entitled to
twenty-five percent (25%) of the income therefrom and responsible for
twenty-five percent (25%) of the expenses thereof for the entire day upon which
the Closing occurs. All such prorations shall be made on the basis of the actual
number of days of the month which shall have elapsed as of the day of the
Closing and based upon the actual number of days in the month and a three
hundred sixty-five (365) day year. The amount of such prorations shall be
initially performed at Closing but shall be subject to adjustment in cash after
the Closing as and when complete and accurate information becomes available, if
such information is not available at the Closing. Highwoods and the Distributees
agree to cooperate and use their best efforts to make such adjustments no later
than sixty (60) days after the Closing. Except as set forth in this Section
7(e)(iii) and (iv) all items of income and expense which accrue for the period
prior to the Closing will be for the account of Highwoods and twenty-five
percent (25%) of all items of income and expense which accrue for the period on
and after the Closing will be for the account of the Distributees. The
provisions of Section 7(e)(iii) and (iv) shall survive the Closing.

 

(v) Prepaids. Twenty-five percent (25%) of any expense or cost of prepaid items,
including, without limitation, fees for licenses which are transferred to the
Distributees at the Closing and annual permit and inspection fees shall be
apportioned between Highwoods and the Distributees at the Closing.

 

(vi) Service Agreement Payments. Twenty-five percent (25%) of all amounts
payable under any of the Service Contracts assumed by the Distributees shall be
prorated. The Distributees do not assume any obligation under any Service
Contracts for acts or omissions that occur prior to Closing. The Distributees do
not assume any obligation under any Service Contracts not expressly assumed by
the Distributees.

 

(vii) 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 7(e). After Closing, upon receipt by the
Distributees 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, the Distributees shall submit to Highwoods a copy of
such invoice with

 

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such additional supporting information as Highwoods shall reasonably request.
Within ten (10) days of receipt of such copy, Highwoods shall pay to the
Distributees an amount equal to twenty-five percent (25%) of the portion of such
invoice attributable to the period ending on the date immediately preceding the
Closing. Likewise, upon receipt by the Distributees of such an invoice after
Closing for the Property’s operating expenses which were paid in advance by
Highwoods and are attributable in whole or in part to a period on or after
Closing that were not apportioned at Closing, the Distributees shall submit to
Highwoods a copy of such invoice together with an amount equal twenty-five
percent (25%) of to the portion of such invoice attributable to the period on or
after Closing, within ten (10) days after receipt of such invoice.

 

(viii) Leasing Commissions. Twenty-five percent (25%) of all obligations to pay
leasing commissions due from and after the Closing Date of this Agreement as the
result of the execution of a new lease of the Building after the date hereof,
the result of the renewal of the Lease, the extension of the term of the Lease,
the expansion of the premises demised by the Lease for space within the
Building, or the exercise of an option to lease additional space in the Building
set forth in the Lease (collectively “Future Commissions”) which obligations are
incurred pursuant to the brokerage agreements set forth on Exhibit C-1 shall be
assumed and paid by the Distributees. Highwoods shall be responsible for all
leasing commissions due prior to the Closing Date. In addition Highwoods shall
indemnify, defend and hold the Distributees harmless from and against any
liability for commissions due pursuant to any agreement not set forth on Exhibit
C-1.

 

(ix) Tenant Improvements. Twenty-five percent (25%) of all obligations to pay
the cost of any tenant improvement work owed or to be owed in connection with
new leases of the Building executed after the date hereof or the result of the
renewal of the Lease, the extension of the term of the Lease, the expansion of
the premises demised by the Lease to space within the Building or the exercise
of an option to lease additional space in the Building set forth in the Lease
occurring after the date hereof, which costs shall include, but not be limited
to, all sums expended by Highwoods for such tenant improvement work (including
all overhead costs incurred by Highwoods or its affiliates in connection with
the performance of the work related to such tenant improvements not to exceed
five percent (5%) of the cost of such tenant improvements) and a profit not to
exceed ten percent (10%) of the cost of such tenant improvements shall be
assumed and paid by the Distributees on the Closing Date by reimbursing
Highwoods for the costs of such tenant improvements previously paid by Highwoods
in connection with new leases, renewals, extensions, relocations, expansions, or
the exercise of an option to lease additional space in the Building occurring
after the date hereof or if the cost of such tenant improvements are not yet due
and payable by paying the same when they otherwise become due without an
adjustment to the value of the capital interest of the Distributees in Highwoods
to be reduced as a result of this transaction. Notwithstanding the foregoing, to
the

 

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extent any portion of the term of a Lease, and renewals, extensions, expansions
and relocations for which any tenant improvement work is completed prior to the
Closing Date, the amount of the value of the capital interest of the
Distributees in Highwoods to be reduced as a result of this transaction will be
reduced by a pro rata share of such tenant improvement work based upon the
percentage of such term (exclusive of any renewal options) which occurs prior
the Closing Date. If any tenant improvement work is in process on the Closing
Date, Highwoods shall be responsible for completing the construction thereof,
provided, the Distributees shall be responsible for the costs thereof as set
forth above.

 

(x) Equitable Adjustments. In the event that any of the prorations or
adjustments described in this Section 7(e) 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.

 

  8. DEFAULT AND REMEDIES.

 

(a) In the event Highwoods defaults or fails to perform any of the conditions or
obligations of Highwoods under this Agreement, then the Distributees shall have
a right to terminate this Agreement and receive a refund of the Binder Deposit
and pursue an action for reimbursement of expenses, fees and costs incurred by
the Distributees and G-T Gateway relating to this Agreement or their due
diligence on the Property, provided such fees and costs shall not exceed Fifty
Thousand and No/100 Dollars ($50,000), plus the amount of any fees forfeited by
G-T Gateway to its lender as the result of the failure of such Closing because
of Highwoods default, and will be substantiated by legitimate invoices therefor,
or, in the alternative, compel Highwoods’ performance of its obligations
hereunder by bringing an action for specific performance or, if specific
performance is not available to the Distributees, as a result of the acts or
omissions of Highwoods, the Distributees may pursue any other legal remedy
available to the Distributees under the laws of the State of North Carolina,
including an action for reimbursement of expenses, fees and costs incurred by
the Distributees relating to this Agreement or the Property.

 

(b) In the event the Distributees default or fail to perform any of the
covenants or conditions of the Distributees under this Agreement, Highwoods may
terminate this agreement and the Escrow Agent shall pay the Binder Deposit to
Highwoods, and such payment shall constitute Highwoods’ liquidated damages as a
result of the Distributees’ default or failure to perform, as Highwoods’ actual
damages shall be difficult, if not impossible, to ascertain, and after such
payment the Distributees shall have no further obligations hereunder, except for
the Distributees’ Continuing Indemnification Obligations.

 

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  9. OTHER PROVISIONS.

 

(a) 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.

 

(b) Entire Agreement. This Agreement and the Exhibits attached hereto constitute
and contain the entire agreement between the parties, and supersede 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.

 

(c) Construction. The provisions of this Agreement shall be construed as to
their fair meaning, and not for or against any party based upon any attribution
to such 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 in
construing this Agreement.

 

(d) Applicable Law. This Agreement shall be governed by the laws of the State of
North Carolina.

 

(e) 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.

 

(f) 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.

 

(g) Exhibits. All exhibits to which reference is made in this Agreement are
deemed incorporated into this Agreement and made a part hereof, whether or not
actually attached.

 

(h) Amendment. This Agreement may be amended at any time by the written
agreement of the Distributees and Highwoods. 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.

 

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(i) Relationship of Parties. The parties agree that their relationship is that
of buyer and seller, and that 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 obligation or responsibility on behalf of the other
party, nor shall either party be in any way liable for any debt of the other.

 

(j) Assignment. Except as set forth below, the Distributees may not assign their
rights, obligations and liabilities hereunder to a third party without
Highwoods’ prior written consent, which shall not be unreasonably withheld.
Notwithstanding the above, the Distributees may assign this Agreement at Closing
(but only if the transaction contemplated hereby closes) without the requirement
of Highwoods’ consent to a corporation, limited liability company, or
partnership in which the Distributees own more than 50% of the equity interest
thereof. This Agreement shall be binding upon and shall inure to the benefit of
the successors and assigns of the parties to this Agreement.

 

(k) Further Acts. Each party agrees to perform any further acts and to execute,
acknowledge and deliver any documents which may be reasonable necessary to carry
out the provisions of this Agreement. The provisions of this Section 9(k) of
this Agreement shall survive Closing and shall not be merged upon the delivery
and acceptance of the Deed for the Land.

 

(l) No Recording; Actions to Clear Title. Neither Highwoods nor the Distributees
may record this Agreement or a memorandum of this Agreement without the consent
of the other party which shall not be unreasonably withheld or delayed. If the
Distributees fail to complete this transaction, or otherwise terminates or
permits this Agreement to expire for any reason, then the Distributees shall, at
no cost to Highwoods, promptly execute, acknowledge and deliver to Highwoods,
all within three (3) days after written request from Highwoods, a quitclaim
deed, in recordable form, in favor of Highwoods and any other documents
requested by Highwoods to remove the cloud on title to the Property that may
exist as the result of the existence of this Agreement.

 

(m) Broker Commissions. Each party warrants to the other that no person, firm or
individual is entitled to or has a claim for a commission or fee arising out of
this transaction. Highwoods shall and does hereby indemnify and hold harmless
the Distributees from and against any claim for any consulting fee, finder’s
fee, commission, or like compensation, including reasonable attorney’s fees in
defense thereof, payable in connection with any transaction contemplated hereby
and asserted by any party arising out of any act or agreement by Highwoods. The
Distributees do hereby indemnify and hold harmless Highwoods from and against
any claim for any consulting fee, finder’s fee, commission or the like,
including reasonable attorneys’ fees in the defense thereof, payable in
connection with any claim by any person or firm asserted by any party arising
out of any act or agreement by the Distributees.

 

(n) 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, overnight
courier service, certified mail, return receipt requested, or by telecopy
followed by next day delivery of a hard

 

34

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copy to the address set forth below for the respective parties. All notices and
demands so given shall be effective upon the delivery or sending of the same to
the party to whom notice or a demand is given, if personally delivered or sent
by telecopy, on the next business day if sent by overnight courier and within
three (3) business days or upon receipt, whichever is earlier, if sent by
certified mail, return receipt requested.

 

DISTRIBUTEES:   Mr. John L. Turner, Sr., Manager     G-T Gateway, LLC     1325
Ivy Avenue     Winston-Salem, NC 27105     Telephone:     336-725-9970    
Facsimile:        336-777-8904 And         Mr. Robert Goldman     1801 Century
Park West, 6th Floor     Los Angeles, CA 90067     Telephone:     310-777-0334  
  Facsimile:       310-777-8799 And         Mr. Henry P. Royster, Jr.     Triad
Commercial Properties     6520 Airport Parkway, Suite 205     Greensboro, NC
27409     Telephone:     336-668-9999     Facsimile:        336-0888 With copy
to:   Thomas T. Crumpler, Esquire     Allman Spry Leggett & Crumpler, P.A.    
380 Knollwood Street, Suite 700     Winston-Salem, NC 27103-4152     Telephone:
    336-722-2300     Facsimile:       336-721-0414 HIGHWOODS:   Highwoods Realty
Limited Partnership.     Attn: Mack D. Pridgen, III, Esquire     3100 Smoketree
Court, Suite 600     Raleigh, NC 27604-4924     Telephone:     919-875-6694    
Facsimile:        919-876-6929

 

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With copy to:    Samuel T. Oliver, Esquire      Manning Fulton & Skinner     
BB&T Plaza      3605 Glenwood Avenue      Raleigh, NC 27612     
Telephone:    919/787-8880      Facsimile:       919/781-0811

 

(o) Press Releases. Highwoods and the Distributees 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, which approval shall not be unreasonably withheld or delayed
by either party. It is the intention of this subparagraph that Highwoods and the
Distributees 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.

 

(p) Definition of Agreement Date. As used in this Agreement, Agreement Date
shall be deemed to refer to the date a fully executed original of this Agreement
is delivered to each party hereto, and the Agreement Date shall be inserted as
the date of this Agreement in the introductory paragraph of this Agreement.

 

(q) Survival of the Agreement. The promises, terms, conditions, representations,
warranties and provisions set forth in this Agreement shall survive the Closing
of the transaction and the delivery and recording of the deed and any other
instruments for the conveyance of the Property for a period of one (1) year
following the Closing, except as otherwise provided in this Agreement and if the
deed or any other recorded instruments are or may be construed to be
inconsistent with any such provision of this Agreement, then the applicable
provision of this Agreement shall control and shall not be deemed to have been
merged into such deed or other recorded instruments, unless otherwise expressly
provided in any such instruments.

 

IN WITNESS WHEREOF, the parties hereto have caused the signature page to this
Agreement to be duly executed by their hands and under seal affixed hereto as of
the day and year first above written.

 

[SIGNATURE PAGE ATTACHED]

 

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SIGNATURE PAGE TO AGREEMENT

BY AND BETWEEN

JOHN L. TURNER, SR., ROBERT GOLDMAN, AND

HENRY P. ROYSTER, JR., as the DISTRIBUTEES

AND

HIGHWOODS REALTY LIMITED PARTNERSHIP, as Highwoods

AND

ALLMAN SPRY LEGGETT & CRUMPLER, P.A.,

as Escrow Agent

 

Dated as of February 11, 2005

 

Distributee:  

/s/ John L. Turner, Sr.

--------------------------------------------------------------------------------

    John L. Turner, Sr.

 

37

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SIGNATURE PAGE TO AGREEMENT

BY AND BETWEEN

JOHN L. TURNER, SR., ROBERT GOLDMAN, AND

HENRY P. ROYSTER, JR., as the DISTRIBUTEES

AND

HIGHWOODS REALTY LIMITED PARTNERSHIP, as Highwoods

AND

ALLMAN SPRY LEGGETT & CRUMPLER, P.A.,

as Escrow Agent

 

Dated as of February 11, 2005

 

Distributee:  

/s/ Robert Goldman

--------------------------------------------------------------------------------

    Robert Goldman

 

 

38

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SIGNATURE PAGE TO AGREEMENT

BY AND BETWEEN

JOHN L. TURNER, SR., ROBERT GOLDMAN, AND

HENRY P. ROYSTER, JR., as the DISTRIBUTEES

AND

HIGHWOODS REALTY LIMITED PARTNERSHIP, as Highwoods

AND

ALLMAN SPRY LEGGETT & CRUMPLER, P.A.,

as Escrow Agent

 

Dated as of February 11, 2005

 

Distributee:  

/s/ Henry P. Royster, Jr.

--------------------------------------------------------------------------------

    Henry P. Royster, Jr.

 

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SIGNATURE PAGE TO AGREEMENT

BY AND BETWEEN

JOHN L. TURNER, SR., ROBERT GOLDMAN, AND

HENRY P. ROYSTER, JR., as the DISTRIBUTEES

AND

HIGHWOODS REALTY LIMITED PARTNERSHIP, as Highwoods

AND

ALLMAN SPRY LEGGETT & CRUMPLER, P.A.,

as Escrow Agent

 

Dated as of February 11, 2005

 

HIGHWOODS:  

HIGHWOODS REALTY LIMITED PARTNERSHIP,

a North Carolina limited partnership

    By:   Highwoods Properties, Inc., a Maryland         Corporation, its Sole
General Partner     By:  

/s/ Mack D. Pridgen III

--------------------------------------------------------------------------------

    Name:   Mack D. Pridgen III     Title:   Vice President

 

The undersigned, Escrow Agent herein, executes this Agreement for the purpose of
agreeing to the provisions set forth in this Agreement relating to Escrow Agent
and the Binder Deposit.

 

“ESCROW AGENT”   Allman Spry Leggett & Crumpler, P.A.     By:  

/s/ Thomas T. Crumpler

--------------------------------------------------------------------------------

    Name:   Thomas T. Crumpler

 

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