Forward Stock Purchase
28-Aug-97, 03:51:24 PM
To: Highwoods Properties, Inc.
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Attn: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
From: Union Bank of Switzerland, London Branch
c/o UBS Securities LLC, as agent
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Date: 25 August 1997
Ladies and Gentlemen:
The purpose of this letter agreement (this "Confirmation") is to confirm the
terms and conditions of the Transaction entered into between us on the Trade
Date specified below (the "Transaction"). This Confirmation constitutes a
"Confirmation" as referred to in the ISDA Master Agreement specified below.
The definitions and provisions contained in the 1991 ISDA Definitions (as
published by the International Swaps and Derivatives Association, Inc.) are
incorporated into this Confirmation. In the event of any inconsistency between
those definitions and provisions and this Confirmation, this Confirmation will
govern. References herein to the "Transaction" shall be deemed to be references
to a "Swap Transaction" for the purposes of the 1991 ISDA Definitions.
This Confirmation evidences a complete binding agreement between you and us as
to the terms of the Transaction to which this Confirmation relates. In addition,
you and we agree to use all reasonable efforts promptly to negotiate, execute
and deliver an agreement in the form of the ISDA Master Agreement
(Multicurrency-Cross Border) (the "ISDA Form"), with such modifications as you
and we will in good faith agree. Upon the execution by you and us of such an
agreement, this Confirmation will supplement, form a part of, and be subject to
that agreement. All provisions contained or incorporated by reference in that
agreement upon its execution will govern this Confirmation except as expressly
modified below. Until we execute and deliver that agreement, this Confirmation,
together with all other documents referring to the ISDA Form (each a
"Confirmation") confirming transactions (each a "Transaction") entered into
between us (notwithstanding anything to the contrary in a Confirmation), shall
supplement, form a part of, and be subject to an agreement in the form of the
ISDA Form as if we had executed an agreement in such form m(but without any
Schedule) on the Trade Date of the firm such Transaction between us. In the
event of any inconsistency between the provisions of that agreement and this
Confirmation, this Confirmation will prevail for the purpose of this
Transaction.
The Agreement and each Confirmation thereunder will be governed by and construed
in accordance with the laws of the State of New York without reference to choice
of law doctrine.
Forward Stock Purchase
I. The Transaction
This Transaction is a commitment by Highwoods Properties, Inc. (the "Company")
to purchase, and Union Bank of Switzerland, London Branch ("UBS") acting through
UBS Securities LLC as its agent for each purchase or sale of Securities ("UBS
LLC") to sell, common shares of beneficial interest, par value $0.01 per share,
of the Company ("Common Shares") up to an aggregate of 1,800,000, in exchange
for cash or Common Shares of the Company on the terms more particularly
specified herein (the "Confirmation").
II. Settlement
A. Notice and Settlement Amount
1. The Company may on any Exchange Trading Day up to and including the
Maturity Date, upon the giving of five (5) Business Days telephonic notice
to UBS, settle all or part of this Transaction. Such notice shall specify:
(i) the number of Underlying Shares subject to such settlement
(the "Settlement Shares"),
(ii) the settlement method (Cash, Stock or Net Stock Settlement,
as such methods are described below), and
(iii) the date upon which such settlement shall begin ("Day S"),
which must be an Exchange Trading Day; provided however, that if
in UBS' reasonable judgment the settlement of the Settlement
Shares would potentially violate or contravene any legal or
regulatory prohibition or requirement applicable to UBS or cause
UBS to contravene any established UBS corporate policy or
compliance policy (other than any corporate policy limiting the
amount of UBS's investment in another entity), then UBS shall at
least three (3) Business Days prior to the proposed Day S, notify
the Company telephonically (confirmed by writing) of any such
impediment and its estimate of the period during which such
impediment will preclude UBS' ability to settle all or part of
this Transaction, in which case the Company may upon telephonic
notice to UBS at least one (1) Exchange Trading Day prior to the
proposed Day S withdraw its settlement notice.
Such notice shall be effective only if the notice requirements specified
above are fulfilled, provided, that if no settlement method is specified,
then the settlement method shall be deemed to be Cash Settlement.
In the case of any partial settlement ("Partial Settlement"), following
such settlement the number of Underlying Shares to which this Transaction
shall relate shall be adjusted by subtracting the number of Settlement
Shares from the number of Underlying Shares to which the Transaction
related (as the same may have been adjusted prior to such Partial
Settlement) immediately prior to such partial settlement. The Settlement
Shares shall not be subject to forward accretion and shall be treated
separately from the remaining Underlying Shares, during any Unwind Period.
2. On Day S, the Settlement Price for the Settlement Shares and the Settlement
Amount shall be determined for Day S.
3. The Settlement Amount shall be settled pursuant to the settlement method
(B, C, or D of this Article II) selected by the Company in its sole
discretion.
4. If settlement with respect to the Settlement Shares (this section does not
apply for Interim Net Stock Settlement) shall occur on or before the 180th
day following the Effective Date, then the Settlement Price for purposes of
such settlement shall be increased by any positive amount, calculated by
UBS as follows:
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Forward Stock Purchase
Spread x Forward Price x (180 - calendar days since Trade Date)
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360
5. It shall be a condition precedent to any right of the Company to elect
Stock Settlement (II. C. below) or Net Stock Settlement (II. D. below),
that the Company must (i) notify UBS of such election at least 5 Business
Days prior to Day S and (ii) prior to Day S, cause to be filed with the
Securities and Exchange Commission (the "Commission") and cause to become
effective under the Securities Act of 1933, as amended (the "Securities
Act") a resale registration statement covering all Common Shares to be
delivered by the Company to UBS LLC for the account of UBS in effecting
such Stock Settlement or Net Stock Settlement, such registration statement
to include one or more preliminary prospectuses, prospectuses, and any
amendments and supplements thereto such that any preliminary prospectus or
prospectus, as amended or supplemented, shall not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they are made The
Company further agrees that it will cause any such Registration Statement
to remain in effect until the earliest of the date on which (i) all Common
Shares issued pursuant hereto and not required to be delivered to the
Company hereunder have been sold by UBS LLC for the account of UBS and UBS
agrees to notify the Company of such fact, within two (2) Business Days of
its occurrence, (ii) UBS LLC for the account of UBS is able to sell the
Common Shares subject thereto under Rule 144(k), or (iii) UBS has advised
the Company that it no longer requires that such registration statement be
effective.
B. Cash Settlement
The Company shall settle by delivering cash in an amount equal to the
Settlement Amount in exchange for the Settlement Shares ("Cash Settlement")
on the Exchange Trading Day immediately succeeding Day S. UBS LLC for the
account of UBS shall deliver the Settlement Shares to the Company on the
Exchange Trading Day immediately succeeding Day S upon receipt of such Cash
Settlement.
C. Stock Settlement
If the Company elects to meet its payment obligations by delivering Common
Shares in exchange for the Settlement Shares ("Stock Settlement"), the
number of Common Shares to be delivered (the "Stock Settlement Shares")
shall be equal to (a) the Settlement Amount divided by (b) the Stock
Settlement Unwind Price. The mechanics for settlement are set forth in II.
E.2. below and Article V.
D. Net Stock Settlement
If the Company determines that it will elect to meet its payment
obligations under II.A. or its delivery obligations under III.A. on a net
stock basis ("Net Stock Settlement"), the number of net stock settlement
shares (the "Net Stock Settlement Shares") shall equal:
i) the number of Settlement Shares, times
ii) the Settlement Price minus the Stock Settlement Unwind Price,
divided by
iii) the Stock Settlement Unwind Price.
If such calculation yields a negative number, this shall indicate the
number of Common Shares to be delivered from UBS LLC for the account of UBS
to the Company. The mechanics for settlement are set forth in II. E. below
and Article V.
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Forward Stock Purchase
E. Stock and Net Stock Settlement Mechanics
1. Preliminary Stock Settlement. If the Company has chosen Stock
Settlement, the Company shall deliver to UBS LLC for the account of
UBS, by 11:00 a.m. on Day S, that number of Common Shares, registered,
for resale under an effective registration statement (the "Preliminary
Stock Settlement Shares"), equal to the product of (i)(a) the
Settlement Amount divided by (b) the closing price of the Common
Shares on the Exchange Trading Day immediately preceding Day S, times
(ii) 110%. Upon receipt of the Preliminary Stock Settlement Shares,
UBS will deposit the Settlement Shares in the Company's Margin
Account.
2. Preliminary Net Stock Settlement. If the Company has chosen Net Stock
Settlement and if the Settlement Price exceeds the closing price of
the Common Shares on the Exchange Trading Day immediately preceding
Day S, the Company shall deliver to UBS LLC for the account of UBS by
11:00 a.m. on Day S, that number of Common Shares (the "Preliminary
Net Stock Settlement Shares) equal to (i)(a) the number of Settlement
Shares times (b) the difference between the Settlement Price and the
closing price of the Common Shares on the Exchange Trading Day
immediately preceding Day S divided by (ii) the closing price of the
Common Shares on the Exchange Trading Day immediately preceding Day S
times (iii) 125%. If the closing price of the Common Shares on the
Exchange Trading Day immediately preceding Day S exceeds the
Settlement Price, the Company shall not be required to deliver any
shares to UBS LLC for the account of UBS under this subsection II.E.2.
3. By 11:00 a.m. on every fifth (5th) Exchange Trading Day during the
Unwind Period and on the Business Day following the final Exchange
Trading Day of the Unwind Period:
(a) For Stock Settlement:
Stock Settlement Shares shall be calculated as if such Exchange
Trading Day were Day S, except that (a) there shall be no adjustment
to the Settlement Amount and (b) for purposes of calculating the Stock
Settlement Unwind Price, the Unwind Period shall be deemed to have
ended on the Exchange Trading Day on which the calculation is made.
(i) if Stock Settlement Shares are greater than the sum of (a)
Preliminary Stork Settlement Shares plus (b) any shares previously
delivered pursuant to this settlement under this subparagraph (i),
then the Company shall deliver that number of registered, freely
tradable Common Shares equal to the difference between Stock
Settlement Shares and Preliminary Stock Settlement Shares to UBS LLC
for the account of UBS, and
(ii) on the final day of the Unwind Period, if the sum of (a)
Preliminary Stock Settlement Shares plus (b) any shares previously
delivered pursuant to this settlement under this subparagraph (i) are
greater than Stock Settlement Shares, then UBS LLC, for the account of
UBS, shall deliver Common Shares equal to the difference between the
sum of (a) and (b) above and Stock Settlement Shares to the Company's
Margin Account,
(b) For Net Stock Settlement:
Net Stock Settlement Shares shall be calculated as if such Exchange
Trading Day were Day S except that (a) there shall be no adjustment to
the Settlement Amount and (b) for purposes of calculating the Stock
Settlement Unwind Price, the Unwind Period shall be deemed to have
ended on the Exchange Trading Day on which the calculation is made.
(i) if Net Stock Settlement Shares are greater than the sum of (a)
Preliminary Net Stock Settlement Shares plus (b) any shares previously
delivered pursuant to this settlement under this subparagraph (i),
then the Company shall deliver Common Shares (which Common Shares may
be delivered
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Forward Stock Purchase
from its Margin Account) registered for resale under an effective
registration statement equal in number to the difference between Net
Stock Settlement Shares and the sum of (a) and (b) to UBS LLC for the
account of UBS, or
(ii) on the final day of the Unwind Period, if the sum of a)
Preliminary Net Stock Settlement Shares plus b) any shares previously
delivered pursuant to this settlement under this subparagraph (i) are
greater than Net Stock Settlement Shares, UBS LLC for the account of
UBS shall deliver Common Shares equal in number to the difference
between sum of (a) and (b) above and Net Stock Settlement Shares to
the Company's Margin Account.
4. The Company shall cause all shares delivered by it to UBS LLC for the
account of UBS to be fully and effectively registered under the
Securities Act.
5. On the Exchange Trading Day following the final Exchange Trading Day
of the Unwind Period, UBS LLC for the account of UBS shall release
claims to Common Shares held in the Company's Margin Account,
including any Underlying Shares delivered pursuant to Stock Settlement
(II. E. 1. above), and deliver all such Common Shares to the Company
with the dollar value of all fractional shares settled in cash.
6. In the event of Stock or Net Stock Settlement (this section does not
apply for Interim Net Stock Settlement), the Company shall pay an
unwind accretion fee, in cash or stock, calculated in accordance with
the following formula:
Settlement Amount x (days in Unwind Period) x [1 month USD LIBOR + Spread]
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2 360
7. In the event of Stock or Net Stock Settlement (this section does not
apply for Interim Net Stock Settlement), the Company shall pay a
placement fee to UBS LLC for the account of UBS calculated as:
Settlement Amount x 0.50%
III. Interim Net Stock Settlement
A. On each Reset Date, if the Forward Price exceeds the closing price of the
Common Shares on such Reset Date, on the Business Day following the Fifth
Exchange Trading Day thereafter the Company shall deliver Common Shares
registered for resale by URS to UBS LLC (if the Company is restricted by
law or regulation or self-regulatory requirements or related policies and
procedures, whether or not such requirements, policies or procedures are
imposed by law directly or have been voluntarily adopted by the Company to
insure compliance with applicable laws or in its reasonable judgment is
otherwise unable or unwilling to deliver registered Common Shares, see
III.B. below) for the account of UBS equal to the Interim Settlement
Shares.
B. In the event that the Company fails to deliver registered shares pursuant
to Paragraph III.A. due to an inability described in such paragraph, the
Company shall deliver cash collateral in an amount equal to the market
value of the Interim Settlement Shares specified in III.A. to a collateral
account at UBS. Such collateral account will earn interest at USD LIBOR for
a designated maturity of 1 month, adjusted for any interest breakage costs
(whether positive or negative). All other aspects of Interim Net Stock
Settlement shall be unaffected. At the Company's option, upon delivering an
effective resale registration statement to UBS LLC for the account of UBS,
the Company may deliver freely salable registered shares to UBS equal in
salable market value, based on closing market prices during a commercially
reasonable valuation period, to the value of the collateral held in the
collateral account at UBS. On the day after the last day of such
commercially reasonable valuation period, UBS shall release all claims to
collateral held in the collateral account and deliver such amounts to the
Company.
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Forward Stock Purchase
C. If the Company fails to deliver an effective resale registration statement
within 90 days of the Trade Date, until an effective resale registration
statement is provided and an Interim Net Stock Settlement can be effected,
the Company shall deliver cash collateral in an amount calculated as
specified in III.A. to a collateral account at UBS. Such collateral account
will earn interest at USD LIBOR for a designated maturity of 1 month,
adjusted for any interest breakage costs. Monitoring of the Transaction on
a cash collateral basis (using standards set forth above) shall be effected
bi-weekly (every 2 weeks) until an Interim Net Settlement can be effected
or the transaction is settled on a Cash Settlement basis. At the Company's
option, upon delivering an effective resale registration statement to UBS
LLC for the account of UBS, the Company may deliver freely salable
registered shares to UBS equal in salable market value, based on closing
market prices during a commercially reasonable valuation period, to the
value of the collateral held in the collateral account at UBS. On the day
after the last day of .such commercially reasonable valuation period, UBS
shall release all claims to collateral held in the collateral account and
deliver such amounts to the Company.
IV. Definitions
For the purposes of this Confirmation, the following terms shall have the
meanings set opposite:
Ability to Settle in Stock: As of the date hereof, the Company has not, and
after the date hereof, the Company will not, enter
into any obligation that would contractually
prohibit the Company from Stock Settlement of any
shares under this Agreement.
Adjustment to Forward Price: In the event of:
(a) a subdivision, consolidation or
reclassification of the Common Shares, or a free
distribution or dividend of any Common Shares to
all existing holders of Common Shares by way of
bonus, capitalization or similar issue;
(b) a distribution or dividend to all existing
holders of Common Shares of (i) additional Common
Shares or (ii) other share capital or securities
granting right to payment of dividends and/or the
proceeds of liquidation of the Company equally or
proportionally with such payments to holders of
Common Shares or (iii) and other type of
securities, warrants or other assets, in any case
for payment (cash or otherwise) at less than the
prevailing market price; or
(c) any other event that has a diluting or
concentrative effect on the value of the
Underlying Shares, an adjustment shall thereupon
be effected to the Forward Price and/or the
Underlying Shares at the time of such event with
the intent that following such adjustment, the
value of this Transaction is economically
equivalent to the value immediately prior to the
occurrence of the event causing the adjustment.
Calculation Agent: UBS, whose calculations and determinations shall
be made in a commercially reasonable manner and
shall be binding absent manifest error.
Compounding Period: Means each period commencing on and including:
(i) in the case of the first Compounding Period,
the Effective Date and ending on but excluding the
first Reset Date, and
(ii) for each period thereafter, a Reset Date and
ending on (but excluding) the next following Reset
Date.
Daycount: Actual/360
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Forward Stock Purchase
Dividend Amount: Means, on each Reset Date, or Early Termination
Date, or Maturity Date, an amount in U.S. Dollars
equal to:
(i) the sum of all cash distributions paid on a
single Common Share during the relevant
Compounding Period; plus
(ii) an amount representing interest that could
have been earned on such distributions at a USD
LIBOR having a Designated Maturity of 1 month for
the period from the date that such distributions
would have been received by a holder of such
Common Shares until such Reset Date.
Separately, and not included in Dividend Amount,
all cash dividends, having gone ex-dividend but
not paid prior to the end of the final Compounding
Period for any settlement, on a number of shares
equal to the Underlying Shares, or on a reduced
number shares during an Unwind Period, will be
paid to the Company by UBS LLC for the account of
UBS on the Business Day after the relevant
dividend payment date declared by the Company's
Board of Directors.
Effective Date: 25 August 1997
Exchange Trading Day: Each day on which the Relevant Exchange is open
for trading.
Forward Price: On any day, the Forward Price shall be determined
for such day by:
a) (i) compounding the Initial Price for each
Compounding Period at the USD LIBOR rate plus
Spread for a Designated Maturity of 3 months or
the Designated Maturity which corresponds to the
Compounding Period if less than 3 months
(Actual/360 day count fraction) to such Reset Date
and
(ii) subtracting the Dividend Amount at that date,
and
b) provided however that if the Company delivers
shares pursuant to III., the Forward Price for
purposes of determining the Initial Price for the
next Reset Date, shall be adjusted to a price
equal to the closing price of the Common Shares on
the Exchange Trading Day immediately prior to the
current Reset Date, Early Termination Date or
Maturity Date adjusted up for any positive result
or down for any negative result of the following
formula:
(ii) the Interim Settlement Amount
minus,
(i) (a) Interim Settlement Shares times (b) the
average closing price of the Common Shares on the
five (5) Exchange Trading Days immediately
following the receipt of shares by UBS pursuant to
III. above.
such result divided by,
(iii) the number of Underlying Shares.
Initial Price: Means,
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Forward Stock Purchase
a) for the Compounding Period ending on the first
Reset Date, an amount in U.S. Dollars equal to
[closing price], and
b) for each subsequent Reset Date, the Forward
Price as calculated on or adjusted as of the prior
Reset Date.
Interim Settlement Amount: On any day, the product of (a) the number of
Underlying, Shares, and (b) the amount by which
the Forward Price exceeds the closing price of the
Common Shares on the Exchange Trading Day
immediately prior to such day.
Interim Settlement Shares: (i) 110% times (ii) Interim Settlement Amount
divided by (iii) the closing price of the Common
Shares on the Exchange Trading Day immediately
prior to such Reset Date.
Mandatory Unwind Mandatory
Thresholds: Unwind Thresholds Unwind Share Limit
----------------- ------------------
70.0% of current price up to 25% of shares
65.0% 50%
62.5% 75%
60.0% 100%
Maturity Date: One (1) year after the Effective Date, subject to
extension upon the written approval of UBS in its
sole discretion.
Relevant Exchange: Means, with respect to any Exchange Trading Day,
the principal Stock Exchange on which the Common
Shares are traded on that day.
Reset Dates: 25 November 1997, 25 February 1998, 25 May 1998,
25 August 1998.
Settlement Amount: The product of the Settlement Price and the
Settlement Shares.
Settlement Disruption Event: Means an event beyond the control of the parties
as a result of which The Depository Trust Company
("DTC") or any successor depository cannot effect
a transfer of the Settlement Shares or the Common
Shares. If there is a Settlement Disruption Event
on a Valuation Date, then the transfer of the
Common Shares that would otherwise be due to be
made by UBS LLC for the account of UBS or the
transfer of the Common Shares that would otherwise
be due to be made by the Company, as applicable,
on that date shall take place on the first
succeeding Exchange Trading Dy on which settlement
can take place through DTC, provided that if such
a Settlement Disruption Event persists for five
consecutive Business Days, then the Party obliged
to deliver such Settlement Shares shall use its
best efforts to cause such Shares to be delivered
promptly thereafter to the other Party in any
commercially reasonable manner.
Settlement Price: If Day S is a Reset Date, the Forward Price. If
Day S is not a Reset Date, the Forward Price
adjusted for LIBOR breakage adjustments (either
positive or negative) for the Settlement Shares
for the period from Day S to the next following
Reset Date. Any breakage adjustments shall be
calculated by the Calculation Agent in accordance
with normal industry standards.
Spread: 0.75% per annum.
Stock Exchange: Means the New York Stock Exchange, the American
Stock Exchange or
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Forward Stock Purchase
NASDAQ.
Stock Settlement
Unwind Price: The daily average closing price of the Common
Shares for Exchange Trading Days during the Unwind
Period.
Trade Date: 25 August 1997
Unwind Period: In the event of Stock Settlement or Net Stock
Settlement, the 35 Exchange Trading Day period
(subject to change based on mutual agreement)
beginning on Day S; provided that UBS may extend
such period for such additional number of Exchange
Trading Days required to complete its hedging
activities in a commercially reasonable manner or
upon the occurrence of a Market Disruption Event.
Underlying Shares: 1,800,000 Common Shares of the Company (ticker
"HIW")
Valuation Date: In the case of determining any Cash Settlement
value, Net Stock Settlement Shares or Stock
Settlement Shares, Day S, the day preceding Day S
and all Exchange Trading Days during the Unwind
Period; in the case of determining any Preliminary
Stock Settlement Shares or Preliminary Net Stock
Settlement Shares, the Exchange Trading Day
immediately preceding Day S.
Valuation Time: 4:00 pm EST, or in the event the Relevant Market
closes early, such closing time.
V. Certain Covenants and Other Provisions
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Forward Stock Purchase
Mandatory Unwind Event: If at any time prior to the Maturity Date:
(i) the average closing price on the Relevant
Exchange of the Common Shares on an Exchange
Trading Days, other than a day on which a Market
Disruption Event has occurred, is equal to or less
than any of the Mandatory Unwind Thresholds, then
on the Mandatory Unwind Date the Parties agree to
settle, all or a portion of the Transaction, up to
the Unwind Share Limit for the corresponding
Mandatory Unwind Threshold settling such amounts
pursuant to Article II. above,
Once a Mandatory Unwind Event has occurred, if the
Common Shares trade below a lower Mandatory Unwind
Threshold at any time, the Parties agree to
settle, all or a portion of the Transaction, up to
the corresponding Unwind Share Limit.
Or,
(ii) if any of the following events occur:
(1) any Financial Covenant Default as more
particularly described in Exhibit A attached
hereto,
(2) any Event of Default under the outstanding
$280 million unsecured credit line, evidenced by
that certain Credit Agreement by and among
Highwoods/Forsyth Limited Partnership as borrower
the Company and certain subsidiaries as
guarantors, the lenders named therein,
NationsBank, N.A. as administrative agent and
First Union National Bank of North Carolina as
documentation agent, dated September 27, 1996,
(3) any Event of Default under any other unsecured
lending agreement involving the Company,
(4) Bankruptcy or Insolvency, and/or
(5) any failure of the Company to post cash
collateral pursuant to III. B. herein.
then, UBS LLC for the account of UBS may, on
giving 5 Business Days notice to the Company
require all or part of the Transaction to be
settled early on such date (such date and amount
being "Day S" and "Settlement Shares" for the
purposes of the "Settlement" provisions above).
The Company may elect the method of settlement for
such early settlement in accordance with the
settlement provisions set forth herein.
however,
in the event (1) no resale Registration Statement
has been provided and declared effective prior to
Day S or (2) any resale Registration Statement so
provided and declared effective becomes, on Day S
or during an unwind period, the subject of a stop
order suspending its effectiveness or is the
subject of any proceeding for that purpose or any
such proceeding is threatened by the Commission,
then the Company at its sole option may choose to
(A) cash collateralize 125% of its obligation to
UBS in a manner similar to that described in
Section III.3., (B) effect Cash Settlement as to
all of the Settlement Shares in accordance with
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Forward Stock Purchase
Section II.B. hereof on the Exchange Trading Day
immediately succeeding the occurrence of one of
the events specified in (1) or (2) above or (C)
effect settlement with Common Shares that are not
subject to a resale Registration Statement to
allow UBS to unwind the Transaction and liquidate
any position it may hold in such unregistered
Settlement Shares by means of negotiated private
resales, to the extent and in the manner permitted
by applicable federal and state securities laws.
In recognition that such negotiated private
resales, if any, are likely to be completed at
prices reflective of a discount to the prevailing
open market prices for any freely tradable Common
Shares, the Company agrees to deliver such number
of supplemental Common Shares as UBS may
reasonably request to which UBS shall assign a
dollar price in order to approximate an aggregate
amount equal to the aggregate discount accepted by
UBS in connection with the resale of the
Settlement Shares or the Company shall pay an
amount to UBS equal to the aggregate discount
accepted by UBS in connection with the resale of
the Settlement Shares.
Upon receipt of full payment from the Company to
UBS LLC for the account of UBS, UBS LLC for the
account of UBS will promptly return all shares in
the Company's Margin Account to the Company.
Market Disruption Event: The occurrence or existing or existence on any
Exchange Trading Day during the one-half hour
period that ends at the Valuation Time of any
suspension of or limitation imposed on trading on
(i) any of the Relevant Exchanges or (ii) any of
the Related Exchanges in options or futures
contracts on the Common Shares of the Company if,
in the reasonable determination of the Calculation
Agent, such suspension or limitation is material.
In the event that a Market Disruption Event occurs
or is continuing on a Valuation Date, then any
determination of the closing pricing of the Common
Shares shall be postponed to the first succeeding
Exchange Trading Day on which there is no Market
Disruption Event, provided that if there is a
Market Disruption Event on each of the five
Exchange Trading Days immediately following the
original Valuation Date that but for the Market
Disruption Event would have been a day on which
the closing price of the Common Shares would have
been determined, such fifth Exchange Trading Day
shall be deemed to be such Valuation Date
notwithstanding the Market Disruption Event and
the Calculation Agent shall, in consultation with
the Company, determine the closing price for that
Valuation Date based upon the last closing price
prior to such Market Disruption Event, and if
applicable, shall effect the settlement of the
Underlying Shares by using such last closing price
for the determination of the Settlement Amount
under Paragraph II.A.3. above.
The Calculation Agent shall within one (1 )
Business Day notify the other party of the
existence or occurrence of a Market Disruption
Event on any day that but for the occurrence or
existence of a Market Disruption Event would have
been a Valuation Date.
Regulatory Compliance: Each party agrees that if the delivery of shares
upon settlement is subject to any restriction
imposed by a regulatory authority, it shall not be
an event of default, and the parties will
negotiate in good faith a procedure to effect
settlement of such shares in a manner which
complies with any relevant rules of such
regulatory authority and which is satisfactory in
form and substance to their respective counsel.
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Forward Stock Purchase
Securities Law Compliance: Each party agrees that it will comply, in
connection with this Transaction and all related
or contemporaneous sales and purchases of the
Company's Common Shares, with the applicable
provisions of the Securities Act, the Securities
Exchange Act of 1934 (the "Exchange Act") and the
rules and regulations thereunder.
Settlement Stock Delivery: Pursuant to the Stock Settlement and Net Stock
Settlement provisions under Section II. above, UBS
LLC for the account of UBS shal1 deliver all
Settlement Shares to the Company's Margin Account.
Such Common Shares will be owned by the Company,
and will serve as collateral until released by UBS
LLC for the account of UBS in accordance with the
settlement mechanics noted under II.E. above.
The Company covenants and agrees with UBS that
Common Shares delivered by the Company pursuant to
settlement events in accordance herewith will be
duly authorized, validly issued, fully paid and
nonassessable. The issuance of such Common Shares
will not require the consent, approval,
authorization, registration, or qualification of
any government authority, except such as shall
have been obtained on or before the delivery date
to UBS LLC for the account of UBS in connection
with any registration statement filed with respect
to any shares.
Stock Settlement Transfer: All settlements shall occur through DTC or any
other mutually acceptable depository.
Solvency: Immediately following the execution of this
agreement, the Company will be solvent and able to
pay its debts as they mature, will have capital
sufficient to carry on business and all businesses
in which it engages, and will have assets which
will have a present fair market valuation greater
than the amount of all of its liabilities.
Trading Authorization: The following individuals and /or any individual
authorized in writing by the Treasurer of the
Company are authorized by the Company to provide
trading instructions to UBS LLC for the account of
UBS with regard to this transaction.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
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Forward Stock Purchase
VI. Delivery Instructions:
Party A: Chase, NYC
UBS Securities LLC
ABA ▇▇▇▇▇▇▇▇▇
A/C No. ###-##-####
Attn: GED
Party B:
Please confirm that the foregoing correctly sets
forth the terms of our agreement by executing the
copy of this Confirmation enclosed for that
purpose and returning it to ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇, 29th
Floor.
Yours faithfully,
Union Bank of Switzerland, London Branch
By: ________________________ By: _______________________________
Name: Name:
Title: Title:
Date: Date:
Highwoods Properties Inc.
By: ____________________________ By: _____________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
Title: Vice President and Chief Title: Vice President and
Financial Officer General Counsel
Date: August 28, 1997 Date: August 28, 1997
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Forward Stock Purchase
Exhibit A
Financial Covenants
Financial Covenants * Test Period Threshold
--------------------- ----------- ---------
Adjusted NOI to Total Liabilities Rolling 4Q >= 16 5%
Minimum Tangible Net Worth NA (1)
Total Liabilities to Total Market Capitalization NA <= 45%
Total Liabilities to Total Property Assets at Cost NA <= 50%
EBITDA to Interest Expense (plus Capex) Rolling 4Q >= 2 20x
Unencumbered Assets to Unsecured Debt Rolling 4Q >= 2.25x
Secured Debt to Total Property Assets at Cost Rolling 4Q <= 30NO
Unencumbered Adjusted NOI to Unsecured Interest Expense Rolling 4Q >= 2 25x
Unencumbered Adjusted NOI to Unsecured Debt Rolling 4Q >= 18%
Speculative Land to Improved Properties Rolling 4Q <= 3 .0%
Any above capitalized terms shall be defined pursuant to the Company's $280
million Credit Agreement by and among Highwoods/Forsyth Limited Partnership as
borrower, the Company and certain subsidiaries as guarantors, the lenders named
therein, NationsBank, N.A. as administrative agent and First Union National Bank
of North Carolina as documentation agent, dated September 27, 1996.
(1) Greater than or equal to the sum of (i) $700 million plus (ii) 85% of the
Net Cash Proceeds of any Equity Issuance subsequent to the Closing Date of the
Credit Agreement by and among Highwoods/Forsyth Limited Partnership as borrower
the Company and certain subsidiaries as guarantors, the lenders named therein,
NationsBank, N A as administrative agent and First Union National Bank of North
Carolina as documentation agent, dated September 27, 1996.
* ($ millions where appropriate)
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