PURCHASE AGREEMENT

THIS PURCHASE AGREEMENT is made as of the 28th day of August, 1997, by and among Highwoods Properties, Inc. (the "Company"), a corporation organized under the laws of the State of Maryland and UBS Limited, an English corporation ("UBS Limited") and Union Bank of Switzerland, London Branch, acting through its agent UBS Securities LLC ("UBS-LB") (UBS Limited and UBS-LB being hereinafter collectively called the "UBS Parties" and sometimes individually, a UBS Party").

IN CONSIDERATION of the mutual covenants contained in this Purchase Agreement, the Company and the UBS Parties agree as follows:

SECTION 1. Authorization of Sale of the Shares. Subject to the terms and conditions of this Purchase Agreement, the Company has authorized the sale to UBS Limited of up to an aggregate of 1,800,000 shares of common stock (the "Common Shares"), $.01 par value per share (the "Purchase Shares"), of the Company. In addition, the Company may issue to UBS-LB additional Common Shares in settlement of certain of its obligations under the Forward Stock Purchase, dated August 28, 1997 (the "Forward Stock Purchase Agreement"), between the Company and UBS-LB (the "Additional Shares"). The Purchase Shares and the Additional Shares are hereinafter collectively called the "Shares".

SECTION 2. Agreement to Sell and Purchase the Purchase Shares. Subject to the terms and conditions of this Purchase Agreement, on the Closing Date (as defined in Section 3 hereof), the Company will sell to UBS Limited the Purchase Shares, the number of which shall equal 1,800,000, for a per share purchase price equal to the Closing Price. The "Closing Price" shall equal the closing price reported on the New York Stock Exchange for a Common Share on the business day immediately preceding the Closing Date.

SECTION 3. Delivery of the Shares at the Closing.

3.1. Closing. The completion of the purchase and sale of the Purchase Shares (the "Closing") shall occur as soon as practicable, on such date to be agreed upon by the Company and the UBS Parties (hereinafter, the "Closing Date").

3.2. Conditions. At Closing, the Company shall deliver to the UBS Limited one or more stock certificates registered in the name of UBS Limited representing the number of Purchase Shares set forth in Section 2 above.

The Company's obligation to complete the purchase and sale of the Purchase Shares and deliver such stock certificate(s) to UBS Limited at the Closing shall be subject to the following conditions, any one or more of which may be waived by the Company: (i) receipt by the Company of Federal Funds (or other mutually agreed upon form of payment) in the full

amount of the purchase price for the Purchase Shares being purchased hereunder,
(ii) the accuracy in all material respects, as of the Closing Date, of the representations and warranties made by the UBS Parties herein and the fulfillment of in all material respects those undertakings of the UBS Parties therein to be fulfilled prior to the Closing, (iii) the Forward Stock Purchase Agreement shall have been fully executed by the parties thereto and (iv) receipt by the Company of a cross-receipt with respect to the Purchase Shares executed by UBS Limited and a certificate by an officer or authorized representative of UBS Limited to the effect that the representations and warranties of UBS Limited set forth in Section 5 hereof are true and correct as of the date of this Agreement and as of the Closing Date.

UBS Limited's obligation to accept delivery of such stock certificate(s) and to pay for the Purchase Shares evidenced thereby shall be subject to the following conditions: (i) the accuracy in all material respects, as of the Closing Date, of the representations and warranties made by the Company herein and the fulfillment in all material respects, as of the Closing Date, of those undertakings of the Company to be fulfilled prior to Closing; and (ii) the UBS Parties shall have received all opinions and certificates to be delivered pursuant to this Agreement.

SECTION 4. Representations, Warranties and Covenants of the Company. The Company hereby represents and warrants to, and covenants with, the UBS Parties as follows:

4.1. Organization and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of Maryland and has all requisite corporate power and authority to conduct its business as currently conducted.

4.2. Authorized Capital Stock. The Company has authorized and outstanding capital stock as set forth in the Most Recent Financial Statements (as defined below); the issued and outstanding shares of the Company's Common Shares have been duly authorized and validly issued, are fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities, and conform to the description thereof incorporated by reference in the Registration Statement. Other than as described in the Company's SEC Filings (as defined below), the Company does not have outstanding any options to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any such options, rights, convertible securities or obligations. The description of the Company's stock, stock bonus and other stock plans or arrangements and the options or other rights granted and exercised thereunder in the Company's SEC Fillings accurately and fairly presents the information required to be shown with respect to such plans, arrangements, options and rights.

4.3. Issuance, Sale and Delivery of the Shares. The Purchase Shares to be sold by the Company have been duly authorized and, when issued, delivered and paid for in the manner set forth in this Agreement, will be duly authorized, validly issued, fully paid and nonassessable, and will conform to the description thereof incorporated by reference in the Registration Statement. The Additional Shares, if and when issued pursuant to the Forward Stock Purchase Agreement, will be duly authorized, validly issued, fully paid and nonassessable, and will

conform to the description thereof incorporated by reference in the Registration Statement. None of the Shares when issued and delivered to the UBS Parties shall be subject to any lien, security interest, claim, charge or encumbrance of any nature. Other than the UBS Parties, no shareholder of the Company has any right, which has not been waived or has not expired by reason of lapse of time following notification of the Company's intent to file the Registration Statement (as defined below), to require the Company to register the sale of any shares owned by such shareholder under the Securities Act of 1933, as amended (the "Securities Act"), in the Registration Statement. No further approval or authority of the shareholders or the Board of Directors of the Company will be required for the issuance and/or sale of the Shares to be sold by the Company as contemplated herein or in the Forward Stock Purchase Agreement, except such as shall have been obtained on or before the Closing Date. The issuance and/or sale of the Shares to the UBS Parties by the Company pursuant to this Agreement or the Forward Stock Purchase Agreement (as the case may be), the compliance by the Company with the other provisions of this Agreement or the Forward Stock Purchase Agreement and the consummation of the other transactions contemplated hereby or thereby do not require the consent, approval, authorization, registration or qualification of or with any governmental authority, except such as shall have been obtained on or before the Closing Date other than the registration of the resale of the Shares by the UBS Parties with the Securities and Exchange Commission (the "SEC") and any required Blue Sky filings within the States. The Company meets and will continue to meet the requirements for use of Form S-3 under the Securities Act and the rules and regulations promulgated thereunder (the "Rules and Regulations"). The Company has filed and will file all documents which it is required to file under the Securities Exchange Act of 1934, as amended (the "Exchange Act") and all such documents (the "Company's SEC Filings") comply in all material respects with the requirements of the Exchange Act and the rules and regulations thereunder, as applicable, and none of such documents, when so filed, contained or will contain any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and any documents so filed and incorporated by reference subsequent to the effective date of the Registration Statement shall, when they are filed with the SEC, conform in all material respects with the requirements of the Securities Act and the Rules and Regulations and the Exchange Act and the rules and regulations thereunder, as applicable. No Registration Statement filed in respect of any of the Shares, when so filed, contained or will contain any untrue statement of a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

4.4. Due Execution, Delivery and Performance of the Agreement. The Company has full legal right, power and authority to enter into the Purchase Agreement and the Forward Stock Purchase Agreement and perform the transactions contemplated hereby and thereby. The Purchase Agreement and the Forward Stock Purchase Agreement have been duly authorized, executed and delivered by the Company. The making and performance of the Purchase Agreement and the Forward Stock Purchase Agreement by the Company and the consummation of the transactions herein and therein contemplated will not violate any provision of the articles of incorporation or bylaws, or other organizational documents, of the Company, and will not conflict with, result in the breach or violation of, or constitute, either by itself or upon notice or

the passage of time or both, a default under any material agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit or other instrument to which the Company is a party or by which the Company or its properties may be bound or affected, any statute or any authorization, judgment, decree, order, rule or regulation of any court or any regulatory body, administrative agency or other governmental body applicable to the Company or any of its properties. No consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental body is required for the execution and delivery of this Agreement, the Forward Stock Purchase Agreement or the consummation of the transactions contemplated hereby or thereby, except in connection with the filing of any Registration Statements pursuant to Section 7 below or for compliance with the Blue Sky laws applicable to the offering of the Shares. Upon the execution and delivery hereof, each of the Purchase Agreement and the Forward Stock Purchase Agreement will constitute the valid and binding obligation of the Company, enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and except as the indemnification agreements of the Company in Section 7.5 hereof may be legally unenforceable.

4.5. Accountants. The Company's independent certified public accountants, who have expressed their opinion with respect to the Most Recent Financial Statements (as defined below) are independent accountants as required by the Securities Act and the Rules and Regulations. The Company shall cause the independent certified public accountants to deliver, on the effective date of Registration Statement, and at the time of sale pursuant to the Registration Statement of Shares, a letter stating that such accountants are independent public accountants within the meaning of the Securities Act and otherwise in customary form and covering such financial and accounting matters as are customarily covered by letters of independent certified public accountants delivered in connection with underwritten public offerings of equity securities.

4.6. No Defaults. Except as to defaults, violations and breaches which individually or in the aggregate would not be material to the Company, the Company is not in violation or default of any provision of its articles of incorporation or bylaws, or other organizational documents, or is not in breach of or default with respect to any provision of any agreement, judgment, decree, order, mortgage, deed of trust, lease, franchise, license, indenture, permit or other instrument to which it is a party or by which it or any of its properties are bound; and there does not exist any state of fact which constitutes an event of default on the part of the Company as defined in such documents or which, with notice or lapse of time or both, would constitute such an event of default except such defaults which individually or in the aggregate would not be material to the Company.

4.7. Contracts. Neither the Company, nor to the best of the Company's knowledge, any other party is in breach of or default under any of such contracts to which the Company is a party except such breach or default which individually or in the aggregate would not be material to the Company.

4.8. No Actions. There are no legal or governmental actions, suits or proceedings pending or, to the best of the Company's knowledge, threatened to which the Company is or may be a part or of which property owned or leased by the Company is or may be the subject, or related to environmental or discrimination matters, which actions, suits or proceedings might, individually or in the aggregate, prevent or adversely affect the transactions contemplated by this Agreement or result in a material adverse change in the condition (financial or otherwise), of the properties, business, results of operations or prospects of the Company, and no labor disturbance by the employees of the Company exists or is imminent which might be expected to affect adversely such condition, properties, business, results of operations or prospects. The Company is neither a party nor subject to the provisions of any material injunction, judgment, decree or order of any court, regulatory body administrative agency or other governmental body.

4.9. Properties. The Company has good and marketable title to all the properties and assets reflected as owned by it in the financial statements included in the Most Recent Financial Statements, subject to no lien, mortgage, pledge, charge or encumbrance of any kind except (i) those, if any, reflected in such financial statements or the Company's SEC Filings, or (ii) those which are not material in amount and do not adversely affect the use made and promised to be made of such property by the Company. The Company holds its leased properties under valid and binding leases, with such exceptions as are not materially significant in relation to the business of the Company. The Company owns or leases all such properties as are necessary to its operations as now conducted.

The Company qualified as a real estate investment trust under the Internal Revenue Code of 1986, as amended, with respect to its taxable years ended December 31, 1994, December 31, 1995 and December 31, 1996, and is organized in conformity with the requirements for qualification as a real estate investment trust, and its manner of operation has enabled it to meet the requirements for qualification as a real estate investment trust as of the date hereof, and its proposed manner of operation will enable it to meet the requirements for qualification as a real estate investment trust in the future.

4.10. No Material Change. Since the date of the Most Recent Financial Statements, and except as otherwise disclosed in the Company's SEC Filings as of the Closing Date or in writing to the UBS Parties (i) the Company has not incurred any material liabilities or obligations, indirect, or contingent, or entered into any material verbal or written agreement or other transaction which is not in the ordinary course of business (it being agreed that for purposes of this sentence the Company's ordinary course of business shall include the acquisition, directly indirectly, of real estate properties or businesses of a type that may be owned by a "real estate investment trust" (as defined under the Internal Revenue Code) or which could reasonably be expected to result in a material reduction in the future earnings of the Company; (ii) the Company has not sustained any material loss or interference with its businesses or properties from fire, flood, windstorm, accident or other calamity, whether or not covered by insurance; (iii) the Company is not in default in the payment of principal or interest on any outstanding debt obligations; (iv) there has not been any change in the capital stock of the Company (other than the sale of the Purchase Shares hereunder and the sale of Common Stock under the Company's

Dividend Reinvestment and Stock Purchase Plan), or indebtedness material to the Company (other than in the ordinary course of business); and (v) there has not been any material adverse change in the condition (financial or otherwise), business, properties, results of operations or prospects of the Company.

4.11. Intellectual Property. The Company believes it has sufficient trademarks, trade names, patent rights, copyrights, licenses, approvals and governmental authorizations to conduct its businesses as now conducted; and the Company has no knowledge of any material infringement by it of trademark, trade name rights, patent rights, copyrights, licenses, trade secrets or other similar rights of others, and no claim has been made against the Company regarding trademark, trade name, patent, copyright, license, trade secrecy or other infringement which could have a material adverse effect on the condition (financial or otherwise), business, results of operations or prospects of the Company.

4.12. Compliance. The Company has not been advised, and has no reason to believe, that it is not conducting business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting business, including, without limitation, all applicable local, state and federal environmental laws and regulations; except where failure to be so in compliance would not materially adversely affect the condition (financial or otherwise), business, results of operations or prospects of the Company.

4.13. Taxes. The Company has filed all necessary federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of any tax deficiency which has been or might be asserted or threatened against the Company which could materially adversely affect the business condition (financial or otherwise), results of operations or prospects of the Company.

4.14. Transfer Taxes. On the Closing Date, all stock transfer or other taxes (other than income taxes) which are required to be paid in connection with the sale and transfer of the Purchase Shares to be sold to UBS Limited hereunder will be, or will have been, fully paid or provided for by the Company and all laws imposing such taxes will be or will have been fully complied with.

4.15. Investment Company. The Company is not required to register as an "investment company" as such term is defined in the Investment Company Act of 1940, as amended.

4.16. Offering Materials. The Company has not distributed and will not distribute prior to the Closing Date any offering material in connection with the offering and sale of the Purchase Shares other than the documents provided to the UBS Parties pursuant to Section 4.18, except as set forth at Section 5.5.

4.17. Insurance. The Company maintains insurance (or insurance is maintained on its behalf) of the types and in the amounts generally deemed adequate under customary industry standards for its business, including, but not limited to, insurance covering all real and

personal property owned or leased by the Company against theft, damage, destruction, acts of vandalism and all other risks customarily insured against, all of which insurance is in full force and effect.

4.18. SEC Filings. The Company represents and warrants that the information contained in the following documents, which the Company has furnished to the UBS Parties, or will furnish prior to the Closing, is or will be true and correct in all material respects as of their respective filing dates:

(a) Annual Report on Form 10-K for the year ended December 31, 1996, which Annual Report includes the Company's most recently available audited financial statements together with the report thereon of the independent certified public accountants (the "Most Recent Financial Statements");

(b) Quarterly Report on Form 10-Q for the quarters ended March 31, 1997 and June 30, 1997;

(c) the Company's proxy statements on Form 14A relating to (i) the most recent Annual Meeting of the Company's Shareholders and (ii) any Special Meetings of the Company's Shareholders which occurred during the 12-month period prior to the date hereof or for which a meeting date has been fixed and a proxy statement distributed; and

(d) all other documents, if any, filed by or with respect to the Company with the SEC since January 1, 1997 pursuant to Sections 13, 15(d) or 16(a) of the Exchange Act; and

(e) a covenant compliance certification stating that the Company and its subsidiaries are not in default under the $280 million unsecured revolving line of credit from a syndicate of lenders, 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 as documentation agent.

4.19. Legal Opinion. Prior to the Closing, counsel to the Company will deliver its legal opinion to the UBS Parties in substantially the form of Exhibit A hereto.

4.20 ERISA. The Company and its affiliates are in compliance in all material respects with all applicable provisions of the Employee Retirement Income Security Act of 1974, as amended and the rules and regulations promulgated thereunder ("ERISA"). Neither a Reportable Event (as defined under ERISA) nor a Prohibited Transaction (as defined under ERISA) has occurred with respect to any Plan (as defined below) of the Company and/or its affiliates; no notice of intent to terminate a Plan has been filed nor has any Plan been terminated

within the past five years; no circumstance exists which constitutes grounds under Section 402 of ERISA entitling the Pension Benefit Guaranty Corporation ("PBGC") to institute proceedings to terminate, or appoint a trustee to administer, a Plan, nor has the PBGC instituted any such proceedings; the Company and its affiliates have not completely or partially withdrawn under Sections 4201 or 4202 of ERISA from any Multiemployer Plan (as defined therein); the Company and its affiliates have met the minimum funding requirements of
Section 412 of the Internal Revenue Code of 1986, as amended (the "Code") and
Section 302 of ERISA with respect to each Plan and there is no unfunded current liability (as defined below) with respect to any Plan; the Company and its affiliates have not incurred any liability to the PBGC under ERISA (other than for the payment of premiums under Section 4007 of ERISA); no part of the funds to be used by the Company in satisfaction of its obligations under this Purchase Agreement or the Forward Stock Purchase Agreement constitute "plan assets" of any "employee benefit plan" within the meaning of ERISA or of any "plan" within the meaning of Section 4975(e)(1) of the Code, as interpreted by the Internal Revenue Service and the U.S. Department of Labor in rules, regulations, releases and bulletins or as interpreted under applicable case law. As used below, "Plan" means an "employee benefit plan" or "plan" as described in Section 3(3) of ERISA; and "unfunded current liability" has the meaning provided in Section 302(d)(8)(A) of ERISA.

4.21. Certificate. A certificate of the Company executed by the Chairman of the Board or President and the chief financial or accounting officer of the Company, to be dated the Closing Date in form and substance satisfactory to the UBS Parties to the effect that the representations and warranties of the Company set forth in this Section 4 are true and correct as of the date of this Agreement and as of the Closing Date, and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied on or prior to such Closing Date.

4.23 Environmental Protection. To the Company's knowledge, except as disclosed in the Company's SEC Filings, none of the Company's or its affiliates' properties contain any Hazardous Materials that, under any Environmental Law,
(i) would impose liability on the Company or any affiliate that is likely to have a material adverse effect on the condition (financial or other), business, results of operations, or prospects, of the Company or (ii) is likely to result in the imposition of a lien on any assets owned, directly or indirectly, by the Company. To the Company's knowledge, neither it nor any affiliate is subject to any existing, pending or threatened investigation or proceeding by any governmental agency or authority with respect or pursuant to any Environmental Law, except any which, if adversely determined, would not have a material adverse effect on the condition (financial or other), business, results of operations or prospects of the Company. As used herein, "Environmental Laws" mean all federal, state, local and foreign environmental, health and safety laws, codes and ordinances and all rules and regulations promulgated thereunder, including, without limitation laws relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment (including, without limitation, air, surface water, ground water, land surface or subsurface strata) or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, chemicals, or industrial, solid, toxic or hazardous substances or wastes; and "Hazardous Material" includes, without limitation, (i) all substances which are designated

pursuant to Section 311(b)(2)(A) of the Federal Water Pollution Control Act ("FWPCA"), 33 U.S.C ss.1251 et seq.; (ii) any element, compound, mixture, solution, or substance which is designated pursuant to Section 102 of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. ss.9601 et seq.; (iii) any hazardous waste having the characteristics which are identified under or listed pursuant to Section 3001 of the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. ss.6901 et seq.; (iv) any toxic pollutant listed under Section 307(a) of the FWPCA; (v) any hazardous air pollutant which is listed under Section 112 of the Clean Air Act, 42 U.S.C. ss.7401 et seq.; (vi) any imminently hazardous chemical substance or mixture with respect to which action has been taken pursuant to Section 7 of the Toxic Substances Control Act, 15 U.S.C. ss.2601 et seq.; and (vii) petroleum, petroleum products, petroleum by-products, petroleum decomposition by-products, and waste oil.

SECTION 5. Representations, Warranties and Covenants of the UBS Parties.

5.1. Investment. UBS Limited and/or UBS-LB represents and warrants to, and covenants with, the Company that: (i) UBS Limited, taking into account the personnel and resources it can practically bring to bear on the purchase of the Purchase Shares contemplated hereby, is knowledgeable, sophisticated and experienced in making, and is qualified to make, decisions with respect to investments in shares presenting an investment decision like that involved in the purchase of the Purchase Shares, including investments in securities issued by the Company, and has requested, received, reviewed and considered all information it deems relevant in making an informed decision to purchase the Purchase Shares; (ii) UBS Limited is acquiring the number of Purchase Shares set forth in Section 2 above in the ordinary course of its business and for its own account for investment (as defined for purposes of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the regulations thereunder) only and with no present intention of distributing any of such Purchase Shares or any arrangement or understanding with any other persons regarding the distribution of such Shares (this representation and warranty not limiting the rights of either UBS Party to sell pursuant to any Registration Statement); (iii) neither UBS Party will, directly or indirectly, sell or otherwise dispose of (or solicit any offers to purchase or otherwise acquire) any of the Shares except in compliance with the Securities Act, the Rules and Regulations and any applicable state securities or blue sky laws or pursuant to an available exemption or exclusion therefrom; (iv) each UBS Party has completed or caused to be completed the Registration Statement Questionnaire and the Stock Certificate Questionnaire, both attached hereto as Appendix I, for use in preparation of the Registration Statement and the answers thereto are true and correct to the best knowledge of the UBS Parties as of the date hereof and will be true and correct as of the effective date of the Registration Statement; (v) the UBS Parties have, in connection with their decision to purchase the number of Purchase Shares set forth in Section 2 above, relied solely upon the documents identified in Section 4.18, the information referred to in Section 5.5 and the representations and warranties of the Company contained herein; (vi) each of the UBS Parties is an "accredited investor" within the meaning of Rule 501 of Regulation D promulgated under the Securities Act; (vii) the UBS Parties do not directly or indirectly have an interest of five percent or more of the Common Shares outstanding as shown in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 and (viii) the Purchaser understands that the Shares will contain a legend to the following effect:

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THESE SHARES UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF THE COMPANY'S COUNSEL THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.

5.2. Resale. Each UBS Party acknowledges and agrees that the Shares are not transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a separate officer's certificate: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the UBS Parties, and (iii) to the effect that (A) the Shares have been sold in accordance with the Registration Statement, the Securities Act and the Rules and Regulations and any applicable state securities or blue sky laws or pursuant to valid exemptions or exclusions therefrom and (B) the requirement under the Securities Act of delivering a current prospectus has been satisfied. Each UBS Party acknowledges that there may occasionally be times when the Company must suspend the right of the UBS Parties to effect sales of the Shares through use of the Prospectus forming a part of the Registration Statement until such time as an amendment to the Registration Statement has been filed by the Company and declared effective by the SEC, or until such time as the Company has filed an appropriate report with the SEC pursuant to the Exchange Act (each, a "Black-out Period"); provided that no Black-out Period shall exceed 60 consecutive days and such Black-out Periods shall not during any 12-month period exceed 120 days in the aggregate. Each UBS Party hereby covenants that it will not sell any Shares pursuant to said Prospectus during the period commencing at the time at which the Company gives the UBS Parties written notice of the suspension of the use of said Prospectus and ending at the time the Company gives the UBS Parties written notice that the UBS Parties may thereafter effect sales pursuant to said Prospectus. Each UBS Party further covenants to notify the Company promptly of the sale of all of its Shares.

5.3. Due Execution, Delivery and Performance of this Agreement. The UBS Parties further represent and warrant to, and covenant with, the Company that
(i) each UBS Party has full right, power, authority and capacity to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and (ii) upon the execution and delivery of this Agreement, this Agreement shall constitute a valid and binding obligation of the UBS Parties enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and except as the indemnification agreements of the UBS Parties in Section 7.3 hereof may be legally unenforceable.

5.4 Residence of UBS Limited. UBS Limited is organized under the laws of England and has its principal place of business in London.

5.5 Pending Acquisition. UBS Limited represents and warrants to the Company that: (i) UBS Limited has been informed by the Company of a non-public material pending acquisition (the "Transaction"), which is the subject of a letter of intent between the Company and certain sellers dated as of August 14, 1997, and that UBS Limited has had the opportunity to discuss fully the Transaction with the Company's officers; (ii) UBS Limited has been informed by the Company that
(x) such discussions and any written material regarding the Transaction contain forward-looking statements and (y) actual results could differ materially from those contained in the forward-looking statements as a result of factors such as increased development of office space in the Company's markets or changes in the financial condition of the Company's tenants or other factors detailed in the Company's Annual Report on Form 10-K for the year ending December 31, 1996,
(iii) no UBS Party will disclose any information regarding the Transaction and
(iv) no UBS Party will trade in securities of the Company (other than the purchase of the Shares contemplated hereby) until two business days after the Company has made a public announcement regarding the Transaction.

SECTION 6. Survival of Representations, Warranties and Agreements. Notwithstanding any investigation made by any party to this Purchase Agreement, all covenants, agreements, representations and warranties made by the Company, and the UBS Parties herein and in the certificates for the Shares delivered pursuant hereto shall survive the execution of this Purchase Agreement, the Forward Stock Purchase Agreement, the delivery to UBS Limited of the Purchase Shares being purchased and the payment therefor.

SECTION 7. Registration of the Shares; Compliance with the Securities Act.

7.1. Registration Procedures and Expenses. The Company shall:

(a) as soon as practicable after the Closing, prepare and file with the SEC a Registration Statement (as defined below) covering the resale by the UBS Parties, from time to time, of up to a number of Shares equal to 130% of the number of Purchase Shares through the facilities of the New York Stock Exchange, the automated quotation system of The Nasdaq Stock Market or the facilities of any other national securities exchange on which the Company's common stock is then traded or in privately negotiated transactions (the "Initial Registration Statement"). If the total number of Shares exceeds the number of Shares covered by the Initial Registration Statement, then the Company shall prepare and file with the SEC such additional Registration Statement or Statements as shall be necessary to cover the resale by UBS-LB of such excess Shares in the same manner as contemplated by the Initial Registration Statement for the Shares covered thereby (each, an "Additional Registration Statement"); provided that prior to issuing any such excess Shares to UBS-LB, the Company shall cause such Registration Statement to have become effective. For purposes of

this Purchase Agreement, "Registration Statement" means a registration statement under the Securities Act on Form S-3 covering the resale by one or both UBS Parties of up to a specified number of Shares, filed and maintained effective by the Company pursuant to the provisions of this Section 7, including the Prospectus (as defined below) contained therein, any amendments and supplements to such registration statement, including all post-effective amendments thereto, and all exhibits and all material incorporated by reference into such registration statement;

(b) use all reasonable best efforts to cause the SEC to notify the Company of the SEC's willingness to declare the Initial Registration Statement effective within 60 days after the Registration Statement is filed by the Company; provided that the Company will use its best efforts to cause such Initial Registration Statement to become effective no later than 90 days after the Closing Date;

(c) prepare and file with the SEC such amendments and supplements to the Registration Statement and the prospectus used in connection therewith (the "Prospectus") as may be necessary to keep the Registration Statement effective until the date on which the Shares may be resold by the UBS Parties without registration, by reason of Rule 144(k) under the Securities Act or any other rule of similar effect;

(d) furnish to the UBS Parties with respect to the Shares registered under the Registration Statement (and to each underwriter, if any, of such Shares) such reasonable number of copies of Prospectuses, including any supplements and amendments thereto, an opinion from counsel to the Company covering the matters set forth on Exhibit B hereto and such other documents as the UBS Parties may reasonably request, in order to facilitate the public sale or other disposition of all or any of the Shares by the UBS Parties;

(e) use its best efforts to prevent the happening of any event that would cause such Registration Statement to contain a material misstatement or omission or to be not effective and usable for resale of the Shares during the period that such Registration Statement is required to be effective and usable; provided that this paragraph (e) shall in no way limit the Company's right to suspend the right of the UBS Parties to effect sales under the Registration Statement during any Black-out Period as specified at Section 5.2 above.

(f) file documents required of the Company for normal blue sky clearance in states specified in writing by the UBS Parties, provided, however, that the Company shall not be required to qualify to do business or consent to

service of process in any jurisdiction in which it is not now so qualified or has not so consented; and

(g) bear all expenses in connection with the procedures in paragraphs (a) through (f) of this Section 7.1 and the registration of the Shares pursuant to the Registration Statement, including the fees and expenses of counsel or other advisers to the UBS Parties, other than underwriting discounts, brokerage fees and commissions incurred by the UBS Parties, if any.

7.2. Covenants in Connection With Registration.

(a) The Company hereby covenants with the UBS Parties that (i) it shall not file any Registration Statement or Prospectus or any amendment or supplement thereto, unless a copy thereof shall have been first submitted to the UBS Parties and the UBS Parties did not object thereto in good faith (provided that if the UBS Parties do not object within two business days of receiving any such material, they shall be deemed to have no objection thereto); (ii) it shall immediately notify the UBS Parties of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or the initiation of any proceedings for such purpose; (iii) it shall make every reasonable effort to obtain the withdrawal of any order suspending the effectiveness of such Registration Statement at the earliest possible moment; (iv) it shall notify the UBS Parties of the receipt of any notification with respect to the suspension of the qualification of the Shares for sale under the securities or blue sky laws of any jurisdiction or the initiation of any proceeding for such purpose; and
(v) it shall as soon as practicable notify the UBS Parties in writing of the existence of any fact which results in any Registration Statement, any amendment or post-effective amendment thereto, the Prospectus, any prospectus supplement, or any document incorporated therein by reference containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make the statements therein not misleading and shall prepare a supplement or post-effective amendment to such Registration Statement or the Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Shares, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading; provided that this clause (v) shall in no way limit the Company's right to suspend the right of the UBS Parties to effect sales under the Registration Statement during any Black-out Period as specified at Section 5.2 above.

(b) The UBS Parties shall notify the Company at least two business days prior to the date on which it intends to commence effecting any resales of Shares under a Registration Statement and if the Company does not, within such two-day period, advise the UBS Parties of the existence of any facts of the type referred to in Section 7.2(a)(iv) above, then the Company shall be deemed to have certified and represented to the UBS Parties that no such facts then exist and the UBS Parties may rely on such certificate and representation in making such sales. The preceding sentence shall in no way limit the Company's obligations under Section 7.2(a) above.

7.3. Extension of Required Effectiveness. In the event that the Company shall give any notice required by Section 7.2(a)(v) hereof, the period during which the Company is required to keep such Registration Statement effective and useable shall be extended by the number of days during the period from and including the date of the giving of such notice to and including the date when the UBS Parties are advised in writing by the Company that the use of the Prospectus may be resumed.

7.4. Transfer of Shares After Registration. Each UBS Party agrees that it will not effect any disposition of the Shares or its right to purchase the Shares that would constitute a sale within the meaning of the Securities Act or pursuant to any applicable state securities or blue sky laws except as contemplated in each Registration Statement referred to in Section 7.1 or except pursuant to any exemption from the registration requirements of the Securities Act (including, without limitation, Rule 144 promulgated thereunder and any successor thereto) and that it will promptly notify the Company of any changes in the information set forth in any such Registration Statement regarding the UBS Parties or its Plan of Distribution.

7.5. Indemnification. For the purpose of this Section 7.5, the term "Registration Statement" shall include any final prospectus, exhibit, supplement or amendment included in or relating to any Registration Statement referred to in Section 7.1.

(a) Indemnification by Company. The Company agrees to indemnify and hold harmless the UBS Parties and each person, if any, who controls either UBS Party within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses, joint or several, to which the UBS Parties or such controlling person may become subject (including in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement, including the Prospectus, financial statements and schedules, and all other documents filed as a part thereof, as amended at the time of effectiveness of such Registration Statement, including any information deemed to be a part thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rule 434, of the Rules and Regulations, or the Prospectus, in the form first filed with the SEC pursuant to Rule 424(b) of the Regulations, or filed as part of such Registration Statement at the time of effectiveness if no Rule 424(b) filing is required, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in any of them not misleading, and will reimburse each UBS Party and each such controlling person for any legal and other expenses as such expenses are reasonably incurred by the UBS Parties or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action. The Company will also indemnify selling brokers, dealers and similar securities industry professionals participating in the sale or resale of the Shares, their officers, directors and partners and each person who controls any such person within the meaning of the Securities Act, provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon an untrue statement

or alleged untrue statement or omission or alleged omission made in such Registration Statement, such Prospectus or any amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company (i) by or on behalf of the UBS Parties expressly for use therein or (ii) any statement or omission in any Prospectus that is corrected in any subsequent Prospectus that was delivered to a UBS Party prior to the pertinent sale or sales by such UBS Party and not delivered by such UBS Party in connection with such sale or sales.

(b) Indemnification by UBS Parties. The UBS Parties will indemnify and hold harmless the Company, each of its directors, each of its officers who signed any Registration Statement and each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses, joint and several, to which the Company, each of its directors, each of its officers who signed any Registration Statement or any controlling person may become subject (including in settlement of any litigation, if such settlement is effected with the written consent of the UBS Parties) insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon any untrue or alleged untrue statement of any material fact contained in such Registration Statement, such Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in such Registration Statement, such Prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by or on behalf of the UBS Parties expressly for use therein, and will reimburse the Company, each of its directors, each of its officers who signed such Registration Statement and each controlling person for any legal and other expense reasonably incurred by the Company, each of its directors, each of its officers who signed such Registration Statement or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action.

(c) Proceedings. Promptly after receipt by an indemnified party under this
Section 7.5 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 7.5 notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this
Section 7.5 or to the extent it is not prejudiced as a proximate result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be a conflict between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it

and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 7.5 for any reasonable legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall be not liable for the expenses of more than one separate counsel, approved by such indemnifying party in the case of paragraph (a), representing the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of action, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying party.

(d) Contribution. If the indemnification provided for in this Section 7.5 is required by its terms but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under paragraphs
(a), (b) or (c) of this Section 7.5 in respect of any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein in such proportion as is appropriate to reflect the relative benefits received by the Company and the UBS Parties from the purchase and sale of the Shares and the relative fault of the Company and the UBS Parties in connection with the statements or omissions or inaccuracies in the representations and warranties in this Agreement which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The respective relative benefits received by the Company on the one hand and the UBS Parties on the other shall be deemed to be in the same proportion as the amount paid by the UBS Parties to the Company pursuant to this Agreement for the Shares purchased by the UBS Parties that were sold pursuant to any Registration Statement bears to the difference (the "Difference") between the amount the UBS Parties paid for the Shares that were sold pursuant to such Registration Statement and the amount received by the UBS Parties from such sale. The relative fault of the Company and the UBS Parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact or the inaccurate or the alleged inaccurate representation and/or warranty relates to information supplied by the Company or by the UBS Parties and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in paragraph (c) of this Section 7.5 any reasonable legal or other fees or expenses incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in paragraph (c) of this Section 7.5 with respect to notice of commencement of any action shall apply if a claim for contribution is to be made under this paragraph (d); provided, however, that

no additional notice shall be required with respect to any action for which notice has been given under paragraph (c) for purposes of indemnification. The Company and the UBS Parties agree that it would not be just and equitable if contribution pursuant to this Section 7.5 were determined solely by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this paragraph. Notwithstanding the provisions of this Section 7.5, the UBS Parties shall not be required to contribute any amount in excess of the amount by which the aggregate proceeds received by the UBS Parties from the transactions contemplated hereby exceeds the amount of any damages that the UBS Parties has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

7.6. Termination of Conditions and Obligations. The conditions precedent imposed by Section 5 or this Section 7 upon the transferability of the Shares shall cease and terminate as to any particular number of the Purchase Shares upon the passage of twenty-four months from the purchase of such Shares by UBS Limited, as to any particular number of the Additional Shares upon the passage of twenty-four months from the issuance of such Shares to UBS-LB or as to any particular number of the Shares at such time as an opinion of counsel satisfactory to the Company shall have been rendered to the effect that such conditions are not necessary in order to comply with the Securities Act. At such time, the Company's obligation to maintain an effective Registration Statement with respect to such Shares shall cease.

7.7. Information Available. So long as any Registration Statement covering the resale of any Shares owned by either UBS Party is effective, the Company will furnish to the UBS Parties:

(a) as soon as practicable after available, one copy of (i) its Annual Report to Shareholders, (ii) its Annual Report on Form 10-K, (iii) its Quarterly Reports to Shareholders, (iv) its quarterly reports on Form 10-Q, (v) a full copy of the particular Registration Statement covering the Shares (the foregoing, in each case, excluding exhibits) and (vi) upon request, any or all other public filings under the Exchange Act by the Company; and

(b) upon the reasonable request of either UBS Party, a reasonable number of copies of the Prospectuses to supply to any other party requiring such Prospectuses;

and the Company, upon the reasonable request of the UBS Parties, will meet with the UBS Parties or a representative thereof at the Company's headquarters to discuss all information relevant for disclosure in such Registration Statement covering the Shares, subject to appropriate confidentiality limitations.

7.8 Non-Exclusivity. The rights and remedies provided under Section 7.5 hereof shall not be in limitation or exclusion of any other rights or remedies available to a party, whether

by agreement, at law, in equity or otherwise, with respect to the inaccuracy of any representation or warranty by, or the breach of any covenant of, the other party made herein or in the Forward Stock Purchase Agreement.

7.9 Notice Requirement. The Company covenants and agrees that it will notify the UBS Parties at any time it becomes aware that as a result of a change in the Company's capital stock the UBS Parties beneficially hold more than 4.9% of the Company's Common Shares.

7.10 Transfer of Shares. The Company covenants and agrees to use its best efforts to cause the transfer agent to effect promptly any transfer of the Shares requested by the UBS Parties and to cause the transfer agent to remove promptly the restrictive legend from the Shares upon presentation to the transfer agent of all necessary documentation.

SECTION 8. Registration Exemptions. For so long as the Company is subject to the reporting requirements of Section 13 or 15 of the Exchange Act, the Company covenants that it will file the reports required to be filed by it under the Securities Act and Section 13(a) and 15(d) of the Exchange Act and the rules and regulations adopted by the Commission thereunder.

SECTION 9. Broker's Fee. Other than any fees payable under or in connection with the Forward Stock Purchase Agreement, each of the parties hereto hereby represents that, on the basis of any actions and agreements by it, there are no brokers or finders entitled to compensation in connection with the sale or issuance of the Shares to the UBS Parties.

SECTION 10. Notices. All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed by first-class registered or certified airmail, by telegram or telecopy or sent by nationally recognized overnight express courier postage prepaid, and shall be deemed given when so mailed or for telecopies, when transmitted and receipt confirmed, and shall be delivered as addressed as follows:

(a) if to the Company, to:

3100 Smoketree Court Suite 600
Raleigh, North Carolina 27604 Attn: Mark D. Pridgen, III

with a copy so mailed to:

Smith Helms Mulliss & Moore, L.L.P.

2800 Two Hanover Square
Raleigh, North Carolina 27601
Attn: Brad S. Markoff

or to such other person at such other place as the Company shall designate to the UBS Parties in writing; and

(b) if to the UBS Parties, c/o UBS Securities, LLC, 299 Park Avenue, New York, New York 10171, or at such other address or addresses as may have been furnished to the Company in writing.

SECTION 11. Changes. This Agreement may not be modified or amended except pursuant to an instrument in writing signed by the Company and the UBS Parties.

SECTION 12. Headings. The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement.

SECTION 13. Severability. In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

SECTION 14. Governing Law; Jurisdiction.

14.1 This Agreement shall be governed by and construed in accordance with the laws of the State of New York (without regard to the conflicts of law principles thereof) and of the federal law of the United States of America.

14.2 The Company (i) hereby irrevocably submits to the jurisdiction of, and agrees that any suit shall be brought in, the state and federal courts located in the City and County of New York for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement or the transactions contemplated hereby and (ii) hereby waives to the extent not prohibited by applicable law, and agrees not to assert, by way of motion, as a defense or otherwise, in any such proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that any such proceeding brought in one of the above-named courts is brought in an inconvenient forum, that the venue of any such proceeding brought in one of the above-named courts is improper, or that this Agreement, or the transactions contemplated hereby may not be enforced in or by such court.

SECTION 15. Transfer to Affiliate. Notwithstanding anything herein to the contrary, UBS Limited may transfer the Purchase Shares to any affiliate of UBS Limited, together with all of UBS Limited's rights hereunder; provided that (i) such affiliate shall assume and be subject to all of UBS Limited's obligations hereunder; (ii) such affiliate shall be an "accredited investor" within the meaning of Rule 501 of Regulation D promulgated under the Securities Act; and
(iii) such transfer shall be consistent with the investment representations set forth at Section 5.1 hereto. In the event of such an assignment, such affiliate shall in all respects be substituted for UBS Limited as a party hereto.

SECTION 16. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties.

SECTION 17. Waiver of Trial by Jury. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO JURY TRIAL IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.

Highwood Properties, Inc.

By:________________________________
Name:
Title:

UBS Limited

By:________________________________
Name:
Title:

By:________________________________
Name:
Title:

Union Bank of Switzerland
London Branch

By:________________________________
Name:
Title:

By:________________________________
Name:
Title:

Appendix I
(one of two)

STOCK CERTIFICATE QUESTIONNAIRE

Pursuant to Section 3 of the Agreement, please provide us with the following information:

1. The exact name that your Shares are to be registered in (this is the name that will appear on your stock certificate(s)). You may use a nominee name if appropriate: ____________________________

Appendix I
(two of two)

REGISTRATION STATEMENT QUESTIONNAIRE

In connection with the preparation of the Registration Statement, please provide us with the following information:

1. Pursuant to the "Selling Shareholders" section of the Registration Statement, please state your or your organization's name exactly as it should appear in the Registration Statement:

2. Please provide the number of shares that you or your organization will own immediately after Closing, including those Shares purchased by you or your organization pursuant to this Purchase Agreement and those shares purchased by you or your organization through other transactions:

3. Have you or your organization had any position, office or other material relationship within the past three years with the Company or its affiliates?

_____ Yes _____ No

If yes, please indicate the nature of any such relationships below:

APPENDIX II

Attention:

PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE

The undersigned, [an officer of, or other person duly authorized by] _______________________________________ hereby certifies that he/she [fill in official name of individual or institution] [said institution] is the Purchaser of the shares evidenced by the attached certificate, and as such, sold such shares on _______ in accordance with Registration Statement
[date]
number ___________________________________________________________________,
[fill in the number of or otherwise identify Registration Statement]

the Securities Act of 1933, as amended, and any applicable state securities or blue sky laws and the requirement of delivering a current prospectus by the Company has been complied with in connection with such sale.

Print or Type:

                  Name of Purchaser
                    (Individual or
                    Institution):           ____________________________________

                  Name of Individual
                    representing
                    Purchaser (if an
                    Institution)            ____________________________________

                  Title of Individual
                    representing
                    Purchaser (if an
                    Institution):           ____________________________________

Signature by:

                  Individual Purchaser
                    or Individual repre-
                    senting Purchaser:      ____________________________________

EXHIBIT A

[Form of Closing Opinion of Counsel to the Company]

August __, 1997

Union Bank of Switzerland
London Branch
[Address]

Ladies and Gentlemen:

We have acted as counsel to Highwood Properties, Inc., a Maryland real estate investment trust (the "Company"), in connection with (i) the issuance and sale by the Company of [Number] shares of the Company's common stock, par value $.01 per share ("Common Shares"), pursuant to that certain Purchase Agreement, dated August __, 1997 (the "Purchase Agreement"), by and between the Company and Union Bank of Switzerland, London Branch, acting through its agent UBS Securities LLC, (the "Purchaser") and (ii) the forward stock purchase transaction evidenced by the letter agreement, dated August __, 1997 (the "Confirmation") between the Company and the Purchaser. This opinion is being rendered to you pursuant to Section 4.17 of the Purchase Agreement in connection with the Closing of the sale of the Shares. Capitalized terms not otherwise defined in this opinion have the meaning given them in the Purchase Agreement.

In connection with the opinions expressed herein we have made such examination of matters of law and of fact as we considered appropriate or advisable for purposes hereof. As to matters of fact material to the opinions expressed herein, we have relied upon the representations and warranties as to factual matters contained in and made by the Company pursuant to the Purchase Agreement and upon certificates and statements of government officials and of officers of the Company. We have also examined originals or copies of such corporate documents or records of the Company as we have considered appropriate for the opinions expressed herein. We have assumed for the purposes of this opinion that the signatures on documents and instruments examined by us are authentic, that each document is what it purports to be, and that all documents submitted to us as copies conform with the originals, which facts we have not independently verified.

Union Bank of Switzerland
London Branch
[Date]

In rendering this opinion we have also assumed that the Purchase Agreement and the Confirmation have each been duly and validly executed and delivered by the other parties to such agreements and constitute valid, binding and enforceable obligations of such other parties.

In our capacity as counsel to the Company, we have examined, among other things, originals, or copies identified to our satisfaction as being true copies, of the following: [List]

This opinion relates solely to the laws of the State of _________, and the federal securities law of the United States, and we express no opinion with respect to the effect or applicability of the laws in other areas or of other jurisdictions.

Our opinion in paragraph 4 below is subject to the effect of bankruptcy, insolvency, moratorium, fraudulent conveyance and similar laws relating to or affecting creditors' rights generally and we express no opinion with respect to the application of equitable principles in any proceeding, whether at law or in equity.

Based upon the foregoing and subject to the limitations, exceptions, qualifications and assumptions set forth herein, we are of the opinion that as of the date hereof:

1. The Company is a real estate investment trust duly organized, validly existing and in good standing under the laws of the State of Maryland, and the Company has the requisite corporate power and authority to own its properties and to conduct its business as presently conducted.

2. The Purchase Shares and the Additional Shares have been duly authorized and, when issued and delivered by the Company in accordance with and subject to the terms of the Purchase Agreement or the Confirmation (as the case may be), will be validly issued, nonassessable and fully paid, and are not subject to any preemptive or similar rights.

3. The Company has the power and authority to execute, deliver and perform the Purchase Agreement and the Confirmation, including issuing, selling and delivering the Purchase Shares and Additional Shares as contemplated thereby.

4. Each of the Purchase Agreement and the Confirmation have been duly authorized, executed and delivered by the Company and is a valid and binding obligation of the Company, enforceable in accordance with its terms.

5. The execution and delivery by the Company of, and the performance by the Company of its obligations under, the Purchase Agreement and the Confirmation will not contravene any provision of applicable law or the declaration of trust or bylaws of the Company, or, to the best of our knowledge, any judgment order or decree of any governmental body, agency or court having jurisdiction over the Company or any of its property, or, to the best of our

Union Bank of Switzerland
London Branch
[Date]

knowledge, constitute a breach or default under any agreement or other instrument binding upon the Company and filed as an exhibit to the Company's filings with the Securities and Exchange Commission.

6. No consent, approval, authorization or order of or qualification with any governmental body or agency is required for the performance by the Company of its obligations under the Purchase Agreement and the Confirmation, except such as may be required by the securities or blue sky laws of the various states (on which we express no opinion) in connection with the purchase and sale of the Shares and except such as may be required in connection with providing the registration statements contemplated by the Purchase Agreement or the Confirmation.

7. To the best of our knowledge, and except as disclosed in the Company's public filings with the Securities and Exchange Commission, there is no action, suit or proceeding pending or threatened in writing against the Company, at law or in equity, or before any court or governmental agency or instrumentality which, if resolved against the Company, may materially adversely affect the financial or business condition of the Company or would prevent the Company from entering into or performing its obligations under the Purchase Agreement or the Confirmation.

8. The authorized capital stock of the Company conforms as to legal matters in all material respects under the heading ["Capitalization"] in the Company's public filings with the Securities and Exchange Commission, and the form of certificate used to evidence the Shares complies in all material respects with all applicable statutory requirements. The outstanding shares of Common Stock of the Company have been duly and validly authorized and issued, and are, to our knowledge, fully paid and nonassessable.

[While we have not verified, and are not passing upon and do not assume any responsibility for, the accuracy, completeness or fairness of the statements contained in the Registration Statement or Final Prospectus, we have participated in reviews and discussions in connection with the preparation of the Registration Statement and Final Prospectus, and advise you that, in the course of such reviews and discussions, nothing has come to our attention which would lead us to believe (i) that the Registration Statement at the time it became effective (except for the financial statements and the notes thereto and the other financial data included or incorporated by reference therein, as to which we express no belief) contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein not misleading or (ii) that the Final Prospectus on the date thereof or on the date of this opinion (except for the financial statements and the notes thereto and the other financial data included or incorporated by reference therein, as to which we express no belief) contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.]

Union Bank of Switzerland
London Branch
[Date]

Our opinions expressed above are specifically subject to the following limitations, exceptions, qualifications and assumptions:

(A) We are not called upon to express, and do not express, any view, opinion or belief as to the financial statements, schedules, statistical data and other financial data contained in any filings with the Securities and Exchange Commission.

(B) We express no opinion as to the Company's compliance or noncompliance with applicable federal or state antitrust statutes, laws, rules and regulations.

(C) We express no opinion concerning the past, present or future fair market value of any securities.

This opinion is rendered solely for your benefit in connection with the Purchase Agreement and the Confirmation and may not be delivered to, quoted or relied upon by any person other than you, or for any other purpose, without our prior written consent. Our opinion is expressly limited to the matters set forth above and we render no opinion, whether by implication or otherwise, as to any other matters relating to the Company. We assume no obligation to advise you of facts, circumstances, events or developments which hereinafter may be brought to our attention and which may alter, affect or modify the opinions expressed herein.

Very truly yours,

Smith Helms Mulliss & Moore, L.L.P.

EXHIBIT B

Opinion Matters for Additional Registration Statements

[opinion paragraphs to be delivered in connection with resale registration statements]

1. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland, and the Company has the requisite corporate power and authority to own its properties and to conduct is business as presently conducted.

2. The Additional Shares have been duly authorized and are validly issued, nonassessable and fully paid, and are not subject to any preemptive or similar rights.

3. The Registration Statement has been declared effective under the Securities Act; to our knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or threatened; and the Registration Statement, the Final Prospectus, and each amendment thereof or supplement thereto (except for the financial statements, schedules and the notes thereto and the other financial data included or incorporated by reference therein, as to which we express no opinion) comply as to form in all material respects with the requirements of the Securities Act and the Exchange Act and the respective rules of the Commission thereunder.

While we have not verified, and are not passing upon and do not assume any responsibility for, the accuracy, completeness or fairness of the statements contained in the Registration Statement or Final Prospectus, we have participated in reviews and discussions in connection with the preparation of the Registration Statement and Final Prospectus, and advise you that, in the curse of such reviews and discussions, nothing has come to our attention which would lead us to believe (i) that the Registration Statement at the time it became effective (except for the financial statements and the notes thereto and the other financial data included or incorporated by reference therein, as to which we express no belief) contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein not misleading or (ii)that the Final Prospectus on the date thereof or on the date of this opinion (except for the financial statements and the notes thereto and the other financial data included or incorporated by reference therein, as to which we express no belief) contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

                             Forward Stock Purchase

                                                          28-Aug-97, 03:51:24 PM

To:               Highwoods Properties, Inc.
                  3100 Smoketree Court
                  Suite 600
                  Raleigh, NC  27604

Attn:             Mr.  Carmen Liuzzo

From:             Union Bank of Switzerland, London Branch
                  c/o UBS Securities LLC, as agent
                  299 Park Avenue
                  New York, NY  10171

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:

Forward Stock Purchase

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.

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

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:

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.

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

                             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,

                             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

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

                             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

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.

                             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.

                                            Ronald P.  Gibson
                                            Carman J.  Liuzzo
                                            Mack D.  Pridgen III

Forward Stock Purchase

VI. Delivery Instructions:

Party A: Chase, NYC UBS Securities LLC
ABA 021000021

A/C No. 000-00-0000
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 Ms. Gale Herzing, 29th Floor.

Yours faithfully,

Union Bank of Switzerland, London Branch

By: ________________________             By: _______________________________
Name:                                    Name:
Title:                                   Title:

Date: Date:

By: ____________________________         By: _____________________________
Name: Carman J. Liuzzo                   Name: Mack D. Pridgen III
Title: Vice President and Chief          Title: Vice President and
       Financial Officer                        General Counsel
Date: August 28, 1997                    Date: August 28, 1997

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)

CREDIT AGREEMENT

among

HIGHWOODS/FORSYTH LIMITED PARTNERSHIP,
as Borrower

AND

HIGHWOODS PROPERTIES, INC.,

and certain Subsidiaries of the Borrower and Highwoods Properties, Inc. as Guarantors

AND

NATIONSBANK, N.A.,
as Agent and a Lender

AND

THE OTHER LENDERS IDENTIFIED HEREIN (IF ANY)

DATED AS OF December 15, 1997

TABLE OF CONTENTS

                                                                            Page
                                                                            ----
SECTION 1  DEFINITIONS AND ACCOUNTING TERMS....................................1
1.1 Definitions................................................................1
1.2 Computation of Time Periods and Other Definitional Provisions..............8

SECTION 2  CREDIT FACILITIES. .................................................9
2.1 Revolving Loans............................................................9

SECTION 3  GENERAL PROVISIONS APPLICABLE TO LOANS.............................11
3.1 Interest..................................................................11
3.2 Place and Manner of Payments..............................................11
3.3 Prepayments...............................................................12
3.4 Unused Fees...............................................................12
3.5 Payment in full at Maturity...............................................13
3.6 Computations of Interest and Fees.........................................13
3.7 Pro Rata Treatment........................................................14
3.8 Sharing of Payments.......................................................14
3.9 Capital Adequacy..........................................................15
3.10 Inability To Determine Eurodollar Rate...................................15
3.11 Illegality to Make Eurodollar Loans......................................16
3.12 Changes in Requirements of Law...........................................16
3.13 Taxes....................................................................17
3.14 Indemnity as to Eurodollar Loans.........................................18

SECTION 4  GUARANTY...........................................................19
4.1 Guaranty of Payment.......................................................18
4.2 Obligations Unconditional.................................................19
4.3 Modifications.............................................................19
4.4 Waiver of Rights..........................................................20
4.5 Reinstatement.............................................................20
4.6 Remedies..................................................................20
4.7 Limitation of Guaranty....................................................21

SECTION 5  CONDITIONS PRECEDENT...............................................21
5.1 Closing Conditions........................................................21
5.2 Conditions to All Loans...................................................23

SECTION 6  REPRESENTATIONS AND WARRANTIES.....................................25

SECTION 7  AFFIRMATIVE COVENANTS..............................................25

SECTION 8  NEGATIVE COVENANTS.................................................26

                                       i

SECTION 9  EVENTS OF DEFAULT..................................................26
9.2 Events of Default.........................................................27
9.3 Acceleration; Remedies....................................................27
9.4 Allocation of Payments After Event of Default.............................28

SECTION 10  AGENCY PROVISIONS.................................................29
10.1 Appointment..............................................................29
10.2 Delegation of Duties.....................................................29
10.3 Exculpatory Provisions...................................................29
10.4 Reliance on Communications...............................................30
10.5 Notice of Default........................................................30
10.6 Non-Reliance on Agent and Other Lenders..................................31
10.7 Indemnification..........................................................31
10.8 Agent in Its Individual Capacity.........................................32
10.9 Successor Agent..........................................................32

SECTION 11 MISCELLANEOUS......................................................33
11.1 Notices..................................................................32
11.2 Right of Set-Off.........................................................33
11.3 Benefit of Agreement.....................................................33
11.4 No Waiver; Remedies Cumulative...........................................35
11.5 Payment of Expenses; Indemnification.....................................35
11.6 Amendments, Waivers and Consents.........................................36
11.7 Counterparts.............................................................36
11.8 Headings.................................................................37
11.9 Defaulting Lender........................................................37
11.10 Survival of Indemnification and
       Representations and Warranties.........................................37
11.11  Governing Law..........................................................37
11.12  Arbitration............................................................37
11.13  Time...................................................................38
11.14  Severability...........................................................38
11.15  Entirety...............................................................38

                                       ii

SCHEDULES

Schedule 1.1(a)            Commitment Percentages
Schedule 11.1              Notices

EXHIBITS

Exhibit 2.1(b)             Form of Notice of Borrowing
Exhibit 2.1(d)             Form of Notice of Continuation/Conversion
Exhibit 2.1(f)             Form of Revolving Note
Exhibit 7.1(c)             Form of Officer's Certificate
Exhibit 7.16               Form of Joinder Agreement
Exhibit 11.3               Form of Assignment Agreement

CREDIT AGREEMENT

THIS CREDIT AGREEMENT, dated as of December 15, 1997 (this "Credit Agreement"), is entered into by and among HIGHWOODS/FORSYTH LIMITED PARTNERSHIP, a North Carolina limited partnership (the "Borrower"), HIGHWOODS PROPERTIES, INC., a Maryland corporation ("Highwoods Properties") (Highwoods Properties and certain Subsidiaries of the Borrower and Highwoods Properties, individually a "Guarantor" and collectively the "Guarantors"), the Lenders (as defined herein) and NATIONSBANK, N.A., (the "Bank"), as Agent for the Lenders.

R E C I T A L S

WHEREAS, the Borrower has requested that the Lenders provide a $150,000,000 credit facility for the purposes hereinafter set forth; and

WHEREAS, the Lenders have agreed to make the requested credit facility available to the Borrower on the terms and conditions hereinafter set forth.

NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

SECTION 1

DEFINITIONS AND ACCOUNTING TERMS

1.1 Definitions.

As used herein, the following terms shall have the meanings herein specified unless the context otherwise requires. Defined terms herein shall include in the singular number the plural and in the plural the singular:

"Additional Credit Party" means each Person that becomes a Guarantor under the Related Facility.

     "Adjusted   Base  Rate"  means  the  Base  Rate  plus  the  Applicable
Percentage.

     "Adjusted   Eurodollar  Rate"  means  the  Eurodollar  Rate  plus  the

Applicable Percentage.

"Agent" means NationsBank, N.A. (or any successor thereto) or any successor administrative agent appointed pursuant to Section 10.

"Affiliate" means a Person: (a) which directly or indirectly through one or more intermediaries controls or is controlled by, or is under common control of the Borrower or a Guarantor; or (b) which beneficially owns or holds five percent (5%) or more of any class of the voting stock of a Guarantor or more than five percent (5%) of the partnership interests of the Borrower; or (c) of which five percent (5%) or more of the voting stock
(or in the case of a Person which is not a corporation, five percent (5%)
or more of the equity interest) is beneficially owned or held by the Borrower or a Guarantor.

"Applicable Percentage" means, at any time, and with respect to all Eurodollar Loans and Base Rate Loans then outstanding, the applicable percentage as follows:

  APPLICABLE                  APPLICABLE
  PERCENTAGE                  PERCENTAGE
FOR EURODOLLAR                 BASE RATE
    LOANS                        LOANS
    -----                        -----
    0.90%                         0%

"Authorized Officer" means the President, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Secretary or Chairman of the Board of Highwoods Properties.

"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the United States Code, as amended, modified, succeeded or replaced from time to time.

"Base Rate" means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest whole multiple of 1/100 of 1%) equal to the greater of (a) the Federal Funds Rate in effect on such day plus 1/2 of 1% or (b) the Prime Rate in effect on such day. If for any reason the Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable after due inquiry to ascertain the Federal Funds Rate for any reason, including the inability or failure of the Agent to obtain sufficient quotations in accordance with the terms hereof, the Base Rate shall be determined without regard to clause (a) of the first sentence of this definition until the circumstances giving rise to such inability no longer exist. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall be effective on the effective date of such change in the Prime Rate or the Federal Funds Rate, respectively.

"Base Rate Loan" means any Loan bearing interest at a rate determined by reference to the Base Rate.

"Borrower" means Highwoods/Forsyth Limited Partnership, a North Carolina limited partnership, together with any permitted successors and assigns.

"Business Day" means any day other than a Saturday or Sunday or a legal holiday in Charlotte, North Carolina, or a day on which banking institutions are authorized by law or

other governmental action to close; provided, however, if the applicable day relates to the determination of the Eurodollar Rate, such day must also be a day upon which banks are open for the transaction of business in London, England and dealings in U.S. dollar deposits are carried on in the London interbank market.

"Closing Date" means the date hereof.

"Commitments" means the commitment of each Lender with respect to the Revolving Committed Amount.

"Credit Documents" means, collectively, this Agreement and the Note.

"Credit Parties" means the Borrower and the Guarantors and "Credit Party" means any one of them.

"Credit Party Obligations" means, without duplication all of the obligations of the Credit Parties to the Lenders and the Agent, whenever arising, under this Credit Agreement, the Notes, or any of the other Credit Documents to which the Borrower or any Guarantor is a party.

"Default" means any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default.

"Defaulting Lender" means, at any time, any Lender that, (a) has failed to make a Loan required pursuant to the terms of this Credit Agreement, (b) has failed to pay to the Agent or any Lender an amount owed by such Lender pursuant to the terms of this Credit Agreement (but only for so long as such amount has not been repaid) or (c) has been deemed insolvent or has become subject to a bankruptcy or insolvency proceeding or to a receiver, trustee or similar official.

"Dollars" and "$" means dollars in lawful currency of the United States of America.

"Effective Date" means the date on which the conditions set forth in
Section 5.1 shall have been fulfilled (or waived in the sole discretion of the Lenders) and on which the initial Loans shall have been made.

"Eligible Assignee" means (a) any Lender or Affiliate or subsidiary of a Lender and (b) any other commercial bank, financial institution, institutional lender or "accredited investor" (as defined in Regulation D of the Securities and Exchange Commission) with total assets of at least $10 billion and with a rating on their long term unsecured debt of at least BBB with S&P or its equivalent and organized under the laws of the United States or a state thereof.

"Environmental Claim" means any investigation, written notice, violation, written demand, written allegation, action, suit, injunction, judgment, order, consent decree, penalty, fine, lien, proceeding, or written claim whether administrative, judicial, or private

in nature arising (a) pursuant to, or in connection with, an actual or alleged violation of, any Environmental Law, (b) in connection with any Hazardous Material, (c) from any assessment, abatement, removal, remedial, corrective, or other response action in connection with an Environmental Law or other order of a Governmental Authority or (d) from any actual or alleged damage, injury, threat, or harm to health, safety, natural resources, or the environment.

"Environmental Laws" means any current or future legal requirement of any Governmental Authority pertaining to (a) the protection of health, safety, and the indoor or outdoor environment, (b) the conservation, management, or use of natural resources and wildlife, (c) the protection or use of surface water and groundwater, (d) the management, manufacture, possession, presence, use, generation, transportation, treatment, storage, disposal, release, threatened release, abatement, removal, remediation or handling of, or exposure to, any hazardous or toxic substance or material or (e) pollution (including any release to land surface water and groundwater) and includes, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 USC 9601 et seq., Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendment of 1984, 42 USC 6901 et seq., Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33 USC 1251 et seq., Clean Air Act of 1966, as amended, 42 USC 7401 et seq., Toxic Substances Control Act of 1976, 15 USC 2601 et seq., Hazardous Materials Transportation Act, 49 USC App. 1801 et seq., Occupational Safety and Health Act of 1970, as amended, 29 USC 651 et seq., Oil Pollution Act of 1990, 33 USC 2701 et seq., Emergency Planning and Community Right-to-Know Act of 1986, 42 USC 11001 et seq., National Environmental Policy Act of 1969, 42 USC 4321 et seq., Safe Drinking Water Act of 1974, as amended, 42 USC 300(f) et seq., any analogous implementing or successor law, and any amendment, rule, regulation, order, or directive issued thereunder.

"Eurodollar Loan" means a Loan bearing interest based at a rate determined by reference to the Eurodollar Rate.

"Eurodollar Rate" means, for the Interest Period for each Eurodollar Loan comprising part of the same borrowing (including conversions, extensions and renewals), a per annum interest rate determined pursuant to the following formula:

"Eurodollar Reserve Percentage" means for any day, that percentage (expressed as a decimal) which is in effect from time to time under Regulation D of the Board of Governors of the Federal Reserve System (or any successor), as such regulation may be amended from time to time or any successor regulation, as the maximum reserve requirement (including, without limitation, any basic, supplemental, emergency, special, or marginal reserves) applicable with respect to Eurocurrency liabilities as that term is defined in Regulation D (or against any other category of liabilities that includes deposits by reference to which the interest rate of Eurodollar Loans is determined), whether or not a Lender has any

Eurocurrency liabilities subject to such reserve requirement at that time. Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credits for proration, exceptions or offsets that may be available from time to time to a Lender. The Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Eurodollar Reserve Percentage.

"Event of Default" means any of the events or circumstances described in Section 9.

"Extension of Credit" means the making of any loans (including the extension of, or conversion into, a Eurodollar Loans).

"Federal Funds Rate" means for any day the rate per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day and (b) if no such rate is so published on such next preceding Business Day, the Federal Funds Rate for such day shall be the average rate quoted to the Agent on such day on such transactions as determined by the Agent.

"Fee Letter" means that certain letter agreement, dated as of Closing Date, between the Bank and the Borrower, as amended, modified, supplemented or replaced from time to time.

"GAAP" means generally accepted accounting principles in the United States applied on a consistent basis.

"Governmental Authority" means any Federal, state, local, provincial or foreign court or governmental agency, authority, instrumentality or regulatory body.

"Guarantors" means Highwoods Properties, Inc., a Maryland corporation, each of the Subsidiaries of Highwoods Properties and the Borrower (other than the Non-Guarantor Subsidiaries) and each Additional Credit Party that has executed a Joinder Agreement.

"Interest Payment Date" means (a) as to Base Rate Loans, on the fifteenth (15th) day of each month and on the Revolving Loan Maturity Date and (b) as to Eurodollar Loans, on the last day of each applicable Interest Period and on the Revolving Loan Maturity Date.

"Interest Period" means, as to Eurodollar Loans, a period of one month's duration, commencing, in each case, on the date of the borrowing
(including continuations and conversions thereof); provided, however, (a)
if any Interest Period would end on a day which is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day (except that when the next succeeding Business Day falls in the next succeeding calendar month, then on the next preceding Business Day), (b) no Interest

Period shall extend beyond the Revolving Loan Maturity Date and (c) where an Interest Period begins on a day for which there is no numerically corresponding day in the calendar month in which the Interest Period is to end, such Interest Period shall end on the last Business Day of such calendar month.

"Lender" means any of the Persons identified as a "Lender" on the signature pages hereto, and any Person which may become a Lender by way of assignment in accordance with the terms hereof, together with their successors and permitted assigns.

"Lien" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance, lien (statutory or otherwise), preference, priority or charge of any kind, including, without limitation, any agreement to give any of the foregoing, any conditional sale or other title retention agreement, and any lease in the nature thereof.

"Loan" or "Loans" mean revolving loans made hereunder.

"London Interbank Offered Rate" means, with respect to any Eurodollar Loan for the Interest Period applicable thereto, the rate of interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in Dollars at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided, however, if more than one rate is specified on Telerate Page 3750, the applicable rate shall be the arithmetic mean of all such rates. If, for any reason, such rate is not available, the term "London Interbank Offered Rate" shall mean, with respect to any Eurodollar Loan for the Interest Period applicable thereto, the rate of interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London interbank offered rate for deposits in Dollars at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided, however, if more than one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates.

"Material Adverse Effect" means a material adverse effect on (a) the operations, financial condition, business or prospects of the Borrower or a Guarantor, (b) the ability of the Borrower or a Guarantor to perform its respective obligations under this Credit Agreement or any of the other Credit Documents, or (c) the validity or enforceability of this Credit Agreement, any of the other Credit Documents, or the rights and remedies of the Lenders hereunder or thereunder taken as a whole.

"Non-Excluded Taxes" has the meaning set forth in Section 3.13.

"Non-Guarantor Subsidiaries" means AP Southeast Portfolio Partners, L.P., AP-GP Southeast Portfolio Partners, L.P., a Delaware limited partnership, Highwoods Realty GP Corp., a Delaware limited partnership and Forsyth-Carter Brokerage, L.L.C.

"Note" or "Notes" means the Revolving Loan Notes, individually or collectively, as appropriate.

"Notice of Borrowing" means a request by the Borrower for a Revolving Loan, in the form of Exhibit 2.1(b).

"Notice of Continuation/Conversion" means a request by the Borrower to continue an existing Eurodollar Loan to a new Interest Period or to convert a Eurodollar Loan to a Base Rate Loan or a Base Rate Loan to a Eurodollar Loan, in the form of Exhibit 2.1(d).

"Person" means any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other enterprise (whether or not incorporated), or any Governmental Authority.

"Prime Rate" means the per annum rate of interest established from time to time by the Bank at its principal office in Charlotte, North Carolina (or such other principal office of the Bank as communicated in writing to the Borrower and the Lenders) as its Prime Rate. Any change in the interest rate resulting from a change in the Prime Rate shall become effective as of 12:01 a.m. of the Business Day on which each change in the Prime Rate is announced by the Bank. The Prime Rate is a reference rate used by the Bank in determining interest rates on certain loans and is not intended to be the lowest rate of interest charged on any extension of credit to any debtor.

"Related Credit Agreement" means that certain Credit Agreement between the Credit Parties, NationsBank, N.A., as "Agent", First Union National Bank of North Carolina, as "Documentation Agent", and certain other financial institutions identified therein as "Lenders" dated as of September 27, 1996, as amended by (i) that certain First Amendment and Restatement of Credit Agreement dated as of May 27, 1997, and (ii) that certain letter agreement among such parties dated August 20, 1997 (the "Letter Agreement"), and as further amended, modified, extended or replaced from time to time.

"Related Credit Facilities" means those credit facilities provided under the Related Credit Agreement.

"Related Credit Facility Lenders" means those lenders party to the Related Credit Agreement.

"Required Lenders" means all Lenders; provided, however, that if any Lender shall be a Defaulting Lender at such time then such Defaulting Lender shall be excluded from the determination of Required Lenders at such time.

"Requirement of Law" means, as to any Person, the articles or certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or final, non-appealable determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or to which any of its material property is subject.

"Revolving Committed Amount" means ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000).

"Revolving Loan Commitment Percentage" means, for each Lender, the percentage identified as its Revolving Loan Commitment Percentage on Schedule 1.1(a), as such percentage may be modified in connection with any assignment made in accordance with the provisions of Section 11.3.

"Revolving Loan Maturity Date" means June 30, 1998.

"Revolving Loans" means the Revolving Loans made to the Borrower pursuant to Section 2.

"Revolving Note" or "Revolving Notes" means the promissory notes of the Borrower in favor of each of the Lenders evidencing the Revolving Loans provided pursuant to Section 2, individually or collectively, as appropriate, as such promissory notes may be amended, modified, supplemented, extended, renewed or replaced from time to time and as evidenced in the form of Exhibit 2.1f.

"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill, Inc., or any successor or assignee of the business of such division in the business of rating securities.

"Subsidiary" means, as to any Person, (a) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time, any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person directly or indirectly through Subsidiaries, and (b) any partnership, association, joint venture or other entity in which such person directly or indirectly through Subsidiaries has more than a 50% equity interest at any time.

"Unused Commitment" means, for any period, the amount by which (a) the then applicable aggregate Revolving Committed Amount exceeds (b) the daily average sum for such period of the outstanding aggregate principal amount of all Revolving Loans.

"Unused Fee Percentage" means 0.15% per annum.

1.2 Computation of Time Periods and Other Definitional Provisions.

For purposes of computation of periods of time hereunder, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding." References in this Agreement to "Articles", "Sections", "Schedules" or "Exhibits" shall be to Articles, Sections, Schedules or Exhibits of or to this Agreement unless otherwise specifically provided.

SECTION 2

CREDIT FACILITIES

2.1 Revolving Loans.

(a) Revolving Loan Commitment. Subject to the terms and conditions set forth herein, each Lender severally agrees to make revolving loans (each a "Revolving Loan" and collectively the "Revolving Loans") to the Borrower, in Dollars, at any time and from time to time, during the period from and including the Effective Date to but not including the Revolving Loan Maturity Date (or such earlier date if the Revolving Committed Amount has been terminated as provided herein); provided, however, that (i) the sum of the aggregate amount of Revolving Loans outstanding shall not exceed the Revolving Committed Amount and
(ii) with respect to each individual Lender, the Lender's pro rata share of outstanding Revolving Loans shall not exceed such Lender's Revolving Loan Commitment Percentage of the Revolving Committed Amount. Subject to the terms of this Credit Agreement (including Section 3.3), the Borrower may borrow, repay and reborrow Revolving Loans.

(b) Method of Borrowing for Revolving Loans. By no later than 10:00 a.m.
(i) one Business Day prior to the requested borrowing of Revolving Loans that will be Base Rate Loans or (ii) two Business Days prior to the date of the requested borrowing of Revolving Loans that will be Eurodollar Loans, the Borrower shall submit a written Notice of Borrowing in the form of Exhibit 2.1(b) to the Agent (which notice may be by telecopy with the original to follow) setting forth (A) the amount requested, (B) whether such Revolving Loans shall accrue interest at the Adjusted Base Rate or the Adjusted Eurodollar Rate,
(C) how the proceeds from such Revolving Loans will be used and (D) certification that the Borrower has complied in all respects with Section 5;

(c) Funding of Revolving Loans. Upon receipt of a Notice of Borrowing, the Agent shall promptly inform the Lenders as to the terms thereof. Each Lender shall make its Revolving Loan Commitment Percentage of the requested Revolving Loans available to the Agent by 2:00 p.m. on the date specified in the Notice of Borrowing by deposit, in Dollars, of immediately available funds at the offices of the Agent at its principal office in Charlotte, North Carolina or at such other address as the Agent may designate in writing. The amount of the requested Revolving Loans will then be made available to the Borrower by the Agent by crediting the account of the Borrower on the books of such office of the Agent, to the extent the amount of such Revolving Loans are made available to the Agent.

No Lender shall be responsible for the failure or delay by any other Lender in its obligation to make Revolving Loans hereunder; provided, however, that the failure of any Lender to fulfill its obligations hereunder shall not relieve any other Lender of its obligations hereunder. Unless the Agent shall have been notified by any Lender prior to the date of any such Revolving Loan that such Lender does not intend to make available to the Agent its portion of the Revolving Loans to be made on such date, the Agent may assume that such Lender has made such amount available to the

Agent on the date of such Revolving Loans, and the Agent in reliance upon such assumption, may (in its sole discretion but without any obligation to do so) make available to the Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Agent, the Agent shall be able to recover such corresponding amount from such Lender. If such Lender does not pay such corresponding amount forthwith upon the Agent's demand therefor, the Agent will promptly notify the Borrower, and the Borrower shall immediately pay such corresponding amount to the Agent. The Agent shall also be entitled to recover from the Lender or the Borrower, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Agent to the Borrower to the date such corresponding amount is recovered by the Agent at a per annum rate equal to (i) from the Borrower at the applicable rate for such Revolving Loan pursuant to the Notice of Borrowing and (ii) from a Lender at the Federal Funds Rate.

(d) Continuations and Conversions. Upon receipt of a Notice of Continuation/Conversion, the Agent shall promptly inform the Lenders as to the terms thereof. Subject to the terms of Section 5.2, the Borrower shall have the option, on any Business Day, to continue existing Eurodollar Loans for a subsequent Interest Period, to convert Base Rate Loans into Eurodollar Loans or to convert Eurodollar Loans into Base Rate Loans; provided, however, that (i) each such continuation or conversion must be requested by the Borrower pursuant to a written Notice of Continuation/Conversion, in the form of Exhibit 2.1(d), in compliance with the terms set forth below, (ii) except as provided in Section 3.11, Eurodollar Loans may only be continued or converted into Base Rate Loans on the last day of the Interest Period applicable thereto, (iii) Eurodollar Loans may not be continued nor may Base Rate Loans be converted into Eurodollar Loans during the existence and continuation of a Default or Event of Default and
(iv) any request to continue a Eurodollar Loan that fails to comply with the terms hereof or any failure to request a continuation of a Eurodollar Loan at the end of an Interest Period shall constitute a conversion to a Base Rate Loan on the last day of the applicable Interest Period. Each continuation or conversion must be requested by the Borrower no later than 11:00 a.m. (A) one Business Day prior to a requested conversion of a Eurodollar Loan to a Base Rate Loan or (B) two Business Days prior to the date for a requested continuation of a Eurodollar Loan or conversion of a Base Rate Loan to a Eurodollar Loan, in each case pursuant to a written Notice of Continuation/Conversion submitted to the Agent.

(e) Minimum Amounts. Each request for a borrowing, conversion or continuation shall be subject to the requirements that (i) each Eurodollar Loan shall be in a minimum amount of $5,000,000 and in integral multiples of $500,000 in excess thereof, (ii) each Base Rate Loan shall be in a minimum amount of the lesser of $1,000,000 (and integral multiples of $500,000 in excess thereof) or the remaining amount available under the Revolving Committed Amount and (iii) no more than five (5) Eurodollar Loans shall be outstanding hereunder at any one time.

(f) Notes. The Revolving Loans made by each Lender shall be evidenced by a duly executed promissory note of the Borrower to each applicable Lender in the face amount of its Revolving Loan Commitment Percentage of the Revolving Committed Amount in substantially the form of Exhibit 2.1(f).

SECTION 3

GENERAL PROVISIONS APPLICABLE TO LOANS

3.1 Interest.

(a) Interest Rate. All Base Rate Loans shall accrue interest at the Adjusted Base Rate and all Eurodollar Loans shall accrue interest at the Adjusted Eurodollar Rate.

(b) Default Rate of Interest. Upon the occurrence, and during the continuance, of an Event of Default, the principal of and, to the extent permitted by law, interest on the Loans and any other amounts owing hereunder or under the other Credit Documents (including without limitation fees and expenses) shall bear interest, payable on demand, at a per annum rate equal to 4% plus the rate which would otherwise be applicable (or if no rate is applicable, then the rate for Revolving Loans that are Base Rate Loans plus four percent (4%) per annum).

(c) Late Charges. In the event any payment of interest or principal is delinquent more than fifteen (15) days, the Borrower will pay to the Agent for the benefit of the Lenders a late charge of four percent (4%) of the amount of the overdue payment. This provision for late charges shall not be deemed to extend the time for payment or be a "grace period" or "cure period" that gives the Borrower a right to cure a Default or Event of Default. Imposition of such late charges is not contingent upon giving of any notice or the lapse of any cure period provided for in the Credit Agreement.

(d) Interest Payments. Interest on Loans shall be due and payable in arrears on each Interest Payment Date. If an Interest Payment Date falls on a date which is not a Business Day, such Interest Payment Date shall be deemed to be the next succeeding Business Day, except that in the case of Eurodollar Loans where the next succeeding Business Day falls in the next succeeding calendar month, then on the next preceding Business Day.

3.2 Place and Manner of Payments.

All payments of principal, interest, fees, expenses and other amounts to be made by a Credit Party under this Agreement shall be received not later than 12:00 noon on the date when due, in Dollars and in immediately available funds, by the Agent at its offices in Charlotte, North Carolina. Payments received after such time shall be deemed to have been received on the next Business Day. The Borrower shall, at the time it makes any payment under this Agreement, specify to the Agent, the Loans, fees or other amounts payable by the Borrower hereunder to which such payment is to be

applied (and in the event that it fails to specify, or if such application would be inconsistent with the terms hereof, the Agent shall, subject to Section 3.7, distribute such payment to the Lenders in such manner as the Agent may deem appropriate). The Agent will distribute such payments to the Lenders on the date received if any such payment is received prior to 12:00 p.m.; otherwise the Agent will distribute such payment to the Lenders on the next succeeding Business Day. Whenever any payment hereunder shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day (subject to accrual of interest and fees for the period of such extension), except that in the case of Eurodollar Loans, if the extension would cause the payment to be made in the next following calendar month, then such payment shall instead be made on the next preceding Business Day. If the Agent fails to timely forward payment to a Lender it shall pay such Lender interest at the Federal Funds Rate until such payment is made.

3.3 Prepayments.

(a) Voluntary Prepayments. The Borrower shall have the right to prepay Loans in whole or in part from time to time without premium or penalty; provided, however, that (i) Eurodollar Loans may only be prepaid on two Business Days' prior written notice to the Agent and any prepayment of Eurodollar Loans will be subject to Section 3.14 and (ii) each such partial prepayment of Loans shall be in the minimum principal amount of $100,000 and integral multiples of $100,000 in excess thereof.

(b) Mandatory Prepayments. If at any time the sum of the aggregate amount of Revolving Loans outstanding exceeds the Revolving Committed Amount, the Borrower shall immediately make a principal payment to the Agent in the manner and in an amount necessary to be in compliance with Section 2.1.

(c) Application of Prepayments. All amounts required to be paid pursuant to
Section 3.3(b) shall be applied first to Base Rate Loans. If the amount required to be paid under Section 3.3(b) exceeds the aggregate amount of Base Rate Loans outstanding, such excess shall be applied second to Eurodollar Loans. All prepayments hereunder shall be subject to Section 3.14.

3.4 Unused Fees.

In consideration of the Revolving Committed Amount being made available by the Lenders hereunder, the Borrower agrees to pay to the Agent, for the pro rata benefit of each applicable Lender (based on each Lender's Revolving Loan Percentage of the Revolving Committed Amount), a fee equal to the Unused Fee Percentage on the Unused Commitment (the "Unused Fees"). The accrued Unused Fees shall commence to accrue on the Closing Date, shall be calculated as of the last day of December 1997 and March 1998 and the Revolving Loan Maturity Date and shall be due and payable in arrears on January 15 and April 15, 1998 (as well as on the Revolving Loan Maturity Date and on any date that the Revolving Committed Amount is reduced) for the immediately preceding calendar quarter (or portion thereof), beginning with the first of such dates to occur after the Closing Date.

3.5 Payment in full at Maturity.

On the Revolving Loan Maturity Date, the entire outstanding principal balance of all Revolving Loans, together with accrued but unpaid interest and all other sums owing with respect thereto, shall be due and payable in full, unless accelerated sooner pursuant to Section 9.

3.6 Computations of Interest and Fees.

(a) All computations of interest and fees hereunder shall be made on the basis of the actual number of days elapsed over a year of 360 days. Interest shall accrue from and include the date of borrowing (or continuation or conversion) but exclude the date of payment.

(b) It is the intent of the Lenders and the Credit Parties to conform to and contract in strict compliance with applicable usury law from time to time in effect. All agreements between the Lenders and the Borrower are hereby limited by the provisions of this paragraph which shall override and control all such agreements, whether now existing or hereafter arising and whether written or oral. In no way, nor in any event or contingency (including but not limited to prepayment or acceleration of the maturity of any obligation), shall the interest taken, reserved, contracted for, charged, or received under this Credit Agreement, under the Notes or otherwise, exceed the maximum nonusurious amount permissible under applicable law. If, from any possible construction of any of the Credit Documents or any other document, interest would otherwise be payable in excess of the maximum nonusurious amount, any such construction shall be subject to the provisions of this paragraph and such documents shall be automatically reduced to the maximum nonusurious amount permitted under applicable law, without the necessity of execution of any amendment or new document. If any Lender shall ever receive anything of value which is characterized as interest on the Loans under applicable law and which would, apart from this provision, be in excess of the maximum lawful amount, an amount equal to the amount which would have been excessive interest shall, without penalty, be applied to the reduction of the principal amount owing on the Loans and not to the payment of interest, or refunded to the Borrower or the other payor thereof if and to the extent such amount which would have been excessive exceeds such unpaid principal amount of the Loans. The right to demand payment of the Loans or any other indebtedness evidenced by any of the Credit Documents does not include the right to receive any interest which has not otherwise accrued on the date of such demand, and the Lenders do not intend to charge or receive any unearned interest in the event of such demand. All interest paid or agreed to be paid to the Lenders with respect to the Loans shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term (including any renewal or extension) of the Loans so that the amount of interest on account of such indebtedness does not exceed the maximum nonusurious amount permitted by applicable law.

3.7 Pro Rata Treatment.

Except to the extent otherwise provided herein each Revolving Loan borrowing, each payment or prepayment of principal and/or interest of any Loan, each payment of fees (other than the Administrative Fees retained by the Agent for its own account), each reduction of the Revolving Committed Amount, and each conversion or continuation of any Loan, shall (except as otherwise provided in
Section 3.11) be allocated pro rata among the relevant Lenders in accordance with the respective Revolving Loan Commitment Percentages of such Lenders (or, if the Commitments of such Lenders have expired or been terminated, in accordance with the respective principal amounts of the outstanding Loans of such Lenders); provided that, if any Lender shall have failed to pay its applicable pro rata share of any Revolving Loan, then any amount to which such Lender would otherwise be entitled pursuant to this subsection (a) shall instead be payable to the Agent until the share of such Loan not funded by such Lender has been repaid; provided further, that in the event any amount paid to any Lender pursuant to this subsection (a) is rescinded or must otherwise be returned by the Agent, each Lender shall, upon the request of the Agent, repay to the Agent the amount so paid to such Lender, with interest for the period commencing on the date such payment is returned by the Agent until the date the Agent receives such repayment at a rate per annum equal to, during the period to but excluding the date two Business Days after such request, the Federal Funds Rate, and thereafter, the Base Rate plus two percent (2%) per annum; and

3.8 Sharing of Payments.

The Lenders agree among themselves that, except to the extent otherwise provided herein, in the event that any Lender shall obtain payment in respect of any Loan or any other obligation owing to such Lender under this Credit Agreement through the exercise of a right of setoff, banker's lien or counterclaim, or pursuant to a secured claim under Section 506 of the Bankruptcy Code or other security or interest arising from, or in lieu of, such secured claim, received by such Lender under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means, in excess of its pro rata share of such payment as provided for in this Credit Agreement, such Lender shall promptly pay in cash or purchase from the other Lenders a participation in such Loans and other obligations in such amounts, and make such other adjustments from time to time, as shall be equitable to the end that all Lenders share such payment in accordance with their respective ratable shares as provided for in this Credit Agreement. The Lenders further agree among themselves that if payment to a Lender obtained by such Lender through the exercise of a right of setoff, banker's lien, counterclaim or other event as aforesaid shall be rescinded or must otherwise be restored, each Lender which shall have shared the benefit of such payment shall, by payment in cash or a repurchase of a participation theretofore sold, return its share of that benefit
(together with its share of any accrued interest payable with respect thereto)
to each Lender whose payment shall have been rescinded or otherwise restored. The Borrower agrees that any Lender so purchasing such a participation may, to the fullest extent permitted by law, exercise all rights of payment, including setoff, banker's lien or counterclaim, with respect to such participation as fully as if such Lender were a holder of such Loan or other obligation in the amount of such participation. Except as otherwise expressly provided in this Credit Agreement, if any Lender or an Agent shall fail to remit to the Agent or any other Lender an amount payable by such Lender or such Agent to such Agent or such other Lender pursuant to this Credit Agreement on the date when such amount is due, such payments shall be made together with interest thereon for each date from

the date such amount is due until the date such amount is paid to such Agent or such other Lender at a rate per annum equal to the Federal Funds Rate. If under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a setoff to which this Section 3.8 applies, such Lender shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders under this
Section 3.8 to share in the benefits of any recovery on such secured claim.

3.9 Capital Adequacy.

If, after the date hereof, any Lender has determined that the adoption or the becoming effective of, or any change in, or any change by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof in the interpretation or administration of, any applicable law, rule or regulation regarding capital adequacy, or compliance by such Lender, or its parent corporation, with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Lender's (or parent corporation's) capital or assets as a consequence of its commitments or obligations hereunder to a level below that which such Lender, or its parent corporation, could have achieved but for such adoption, effectiveness, change or compliance (taking into consideration such Lender's (or parent corporation's) policies with respect to capital adequacy), then, upon notice from such Lender to the Borrower, the Borrower shall be obligated to pay to such Lender such additional amount or amounts as will compensate such Lender on an after-tax basis (after taking into account applicable deductions and credits in respect of the amount indemnified) for such reduction. Each determination by any such Lender of amounts owing under this
Section shall, absent manifest error, be conclusive and binding on the parties hereto. This covenant shall survive the termination of this Credit Agreement and the payment of the Loans and all other amounts payable hereunder.

3.10 Inability To Determine Eurodollar Rate.

If prior to the first day of any Interest Period, the Agent shall have determined in good faith (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period, the Agent shall give telecopy or telephonic notice thereof to the Borrower and the Lenders as soon as practicable thereafter, and will also give prompt written notice to the Borrower when such conditions no longer exist. If such notice is given (a) any Eurodollar Loans requested to be made on the first day of such Interest Period shall be made as Base Rate Loans, (b) any Loans that were to have been converted on the first day of such Interest Period to or continued as Eurodollar Loans shall be converted to or continued as Base Rate Loans and (c) any outstanding Eurodollar Loans shall be converted, on the first day of such Interest Period, to Base Rate Loans. Until such notice has been withdrawn by the Agent, no further Eurodollar Loans shall be made or continued as such, nor shall the Borrower have the right to convert Base Rate Loans to Eurodollar Loans.

3.11 Illegality to Make Eurodollar Loans.

Notwithstanding any other provision herein, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof occurring after the Closing Date shall make it unlawful for any Lender to make or maintain Eurodollar Loans as contemplated by this Credit Agreement, (a) such Lender shall promptly give written notice of such circumstances to the Borrower and the Agent (which notice shall be withdrawn whenever such circumstances no longer exist), (b) the commitment of such Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and convert a Base Rate Loan to Eurodollar Loans shall forthwith be canceled and, until such time as it shall no longer be unlawful for such Lender to make or maintain Eurodollar Loans, such Lender shall then have a commitment only to make a Base Rate Loan when a Eurodollar Loan is requested and (c) such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans on the respective last days or the then current Interest Periods with respect to such Loans or within such earlier period as required by law. If any such conversion of a Eurodollar Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Borrower shall pay to such Lender such amounts, if any, as may be required pursuant to Section 3.14.

3.12 Changes in Requirements of Law.

If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof applicable to any Lender, or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority, in each case made subsequent to the Closing Date (or, if later, the date on which such Lender becomes a Lender):

(a) shall subject such Lender to any tax of any kind whatsoever with respect to any Eurodollar Loans made by it or its obligation to make Eurodollar Loans, or change the basis of taxation of payments to such Lender in respect thereof (except for Non-Excluded Taxes covered by Section
3.13 (including Non-Excluded Taxes imposed solely by reason of any failure of such Lender to comply with its obligations under Section 3.13(b)) and changes in taxes measured by or imposed upon the overall net income, or franchise tax (imposed in lieu of such net income tax), of such Lender or its applicable lending office, branch, or any affiliate thereof);

(b) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender which is not otherwise included in the determination of the Eurodollar Rate hereunder; or

(c) shall impose on such Lender any other condition (excluding any tax of any kind whatsoever);

and the result of any of the foregoing is to increase the cost to such Lender, by an amount which such Lender deems to be material, of making, converting into, continuing or maintaining Eurodollar

Loans or to reduce any amount receivable hereunder in respect thereof, then, in any such case, upon notice to the Borrower from such Lender, through the Agent, in accordance herewith, the Borrower shall be obligated to promptly pay such Lender, upon its demand, any additional amounts necessary to compensate such Lender on an after-tax basis (after taking into account applicable deductions and credits in respect of the amount indemnified) for such increased cost or reduced amount receivable, provided that, in any such case, the Borrower may elect to convert the Eurodollar Loans made by such Lender hereunder to Base Rate Loans by giving the Agent at least one Business Day's notice of such election, in which case the Borrower shall promptly pay to such Lender, upon demand, without duplication, such amounts, if any, as may be required pursuant to
Section 3.14. If any Lender becomes entitled to claim any additional amounts pursuant to this Section 3.12, it shall provide prompt notice thereof to the Borrower, through the Agent, certifying (x) that one of the events described in this Section 3.12 has occurred and describing in reasonable detail the nature of such event, (y) as to the increased cost or reduced amount resulting from such event and (z) as to the additional amount demanded by such Lender and a reasonably detailed explanation of the calculation thereof. Such a certificate as to any additional amounts payable pursuant to this Section 3.12 submitted by such Lender, through the Agent, to the Borrower shall be conclusive and binding on the parties hereto in the absence of manifest error. This covenant shall survive the termination of this Credit Agreement and the payment of the Loans and all other amounts payable hereunder.

3.13 Taxes.

Except as provided below in this Section 3.13, all payments made by the Borrower under this Credit Agreement and any Notes shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any court, or governmental body, agency or other official, excluding taxes measured by or imposed upon the overall net income of any Lender or its applicable lending office, or any branch or affiliate thereof, and all franchise taxes, branch taxes, taxes on doing business or taxes on the overall capital or net worth of any Lender or its applicable lending office, or any branch or affiliate thereof, in each case imposed in lieu of net income taxes: (i) by the jurisdiction under the laws of which such Lender, applicable lending office, branch or affiliate is organized or is located, or in which its principal executive office is located, or any nation within which such jurisdiction is located or any political subdivision thereof; or (ii) by reason of any connection between the jurisdiction imposing such tax and such Lender, applicable lending office, branch or affiliate other than a connection arising solely from such Lender having executed, delivered or performed its obligations, or received payment under or enforced, this Credit Agreement or any Notes. If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts payable to an Agent or any Lender hereunder or under any Notes, (A) the amounts so payable to an Agent or such Lender shall be increased to the extent necessary to yield to an Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Credit Agreement and any Notes, provided, however, that the Borrower shall be entitled to deduct and withhold any Non-Excluded Taxes and shall not be required to increase any such amounts payable to any Lender that is not organized under the laws of the United States of America or a state thereof if such Lender fails to comply with the requirements of paragraph
(b) of this Section 3.13 whenever any Non-Excluded Taxes are payable by the

Borrower, and (B) as promptly as possible after requested the Borrower shall send to such Agent for its own account or for the account of such Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails to remit to the Agent the required receipts or other required documentary evidence, the Borrower shall indemnify the Agent and any Lender for any incremental taxes, interest or penalties that may become payable by the Agent or any Lender as a result of any such failure. The agreements in this subsection shall survive the termination of this Credit Agreement and the payment of the Loans and all other amounts payable hereunder.

3.14 Indemnity as to Eurodollar Loans.

The Borrower promises to indemnify each Lender and to hold each Lender harmless from any loss or expense which such Lender may sustain or incur as a consequence of (a) default by the Borrower in making a borrowing of, conversion into or continuation of Eurodollar Loans after the Borrower has given a notice requesting the same in accordance with the provisions of this Credit Agreement,
(b) default by the Borrower in making any prepayment of a Eurodollar Loan after the Borrower has given a notice thereof in accordance with the provisions of this Credit Agreement and (c) the making of a prepayment of Eurodollar Loans on a day which is not the last day of an Interest Period with respect thereto. Such indemnification may include an amount equal to (i) the amount of interest which would have accrued on the amount so prepaid, or not so borrowed, converted or continued, for the period from the date of such prepayment or of such failure to borrow, convert or continue to the last day of the applicable Interest Period (or, in the case of a failure to borrow, convert or continue, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Eurodollar Loans provided for herein (excluding, however, the Applicable Percentage included therein, if any) minus
(ii) the amount of interest (as reasonably determined by such Lender) which would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank Eurodollar market. The agreements in this Section shall survive the termination of this Credit Agreement and the payment of the Loans and all other amounts payable hereunder.

SECTION 4

GUARANTY

4.1 Guaranty of Payment.

Subject to Section 4.7 below, each of the Guarantors hereby, jointly and severally, unconditionally guarantees to each Lender and the Agent the prompt payment of the Credit Party Obligations in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise). The Guarantors additionally, jointly and severally, unconditionally guarantee to each Lender, and the Agent the timely performance of all other obligations under the Credit Documents. This Guaranty is a guaranty of payment and not of collection and is a continuing guaranty and shall apply to all Credit Party Obligations whenever arising.

4.2 Obligations Unconditional.

The obligations of the Guarantors hereunder are absolute and unconditional, irrespective of the value, genuineness, validity, regularity or enforceability of any of the Credit Documents, or any other agreement or instrument referred to therein, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor. Each Guarantor agrees that this Guaranty may be enforced by the Lenders without the necessity at any time of resorting to or exhausting any other security or collateral and without the necessity at any time of having recourse to the Notes or any other of the Credit Documents or any collateral, if any, hereafter securing the Credit Party Obligations or otherwise and each Guarantor hereby waives the right (including, without limitation, any rights under Section 26-7 et seq. of North Carolina General Statutes) to require the Lenders to proceed against the Borrower or any other Person (including a co-guarantor) or to require the Lenders to pursue any other remedy or enforce any other right. Each Guarantor further agrees that it shall have no right of subrogation, indemnity, reimbursement or contribution against the Borrower or any other Guarantor of the Credit Party Obligations for amounts paid under this Guaranty until such time as the Lenders have been paid in full, all Commitments under the Credit Agreement have been terminated and no Person or Governmental Authority shall have any right to request any return or reimbursement of funds from the Lenders in connection with monies received under the Credit Documents. Each Guarantor further agrees that nothing contained herein shall prevent the Lenders from suing on the Notes or any of the other Credit Documents or foreclosing its security interest in or Lien on any collateral, if any, securing the Credit Party Obligations or from exercising any other rights available to it under this Credit Agreement, the Notes, any other of the Credit Documents, or any other instrument of security, if any, and the exercise of any of the aforesaid rights and the completion of any foreclosure proceedings shall not constitute a discharge of any of any Guarantor's obligations hereunder; it being the purpose and intent of each Guarantor that its obligations hereunder shall be absolute, independent and unconditional under any and all circumstances. Neither any Guarantor's obligations under this Guaranty nor any remedy for the enforcement thereof shall be impaired, modified, changed or released in any manner whatsoever by an impairment, modification, change, release or limitation of the liability of the Borrower or by reason of the bankruptcy or insolvency of the Borrower. Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Credit Party Obligations and notice of or proof of reliance of by any Agent or any Lender upon this Guarantee or acceptance of this Guarantee. The Credit Party Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Guarantee. All dealings between the Borrower and any of the Guarantors, on the one hand, and the Agent and the Lenders, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon this Guarantee.

4.3 Modifications.

Each Guarantor agrees that (a) all or any part of the security now or hereafter held for the Credit Party Obligations, if any, may be exchanged, compromised or surrendered from time to time; (b) the Lenders shall not have any obligation to protect, perfect, secure or insure any such security interests, liens or encumbrances now or hereafter held, if any, for the Credit Party Obligations or the properties subject thereto; (c) the time or place of payment of the Credit Party Obligations may be

changed or extended, in whole or in part, to a time certain or otherwise, and may be renewed or accelerated, in whole or in part; (d) the Borrower and any other party liable for payment under the Credit Documents may be granted indulgences generally; (e) any of the provisions of the Notes or any of the other Credit Documents may be modified, amended or waived; (f) any party (including any co-guarantor) liable for the payment thereof may be granted indulgences or be released; and (g) any deposit balance for the credit of the Borrower or any other party liable for the payment of the Credit Party Obligations or liable upon any security therefor may be released, in whole or in part, at, before or after the stated, extended or accelerated maturity of the Credit Party Obligations, all without notice to or further assent by such Guarantor, which shall remain bound thereon, notwithstanding any such exchange, compromise, surrender, extension, renewal, acceleration, modification, indulgence or release.

4.4 Waiver of Rights.

Each Guarantor expressly waives to the fullest extent permitted by applicable law: (a) notice of acceptance of this Guaranty by the Lenders and of all extensions of credit to the Borrower by the Lenders; (b) presentment and demand for payment or performance of any of the Credit Party Obligations; (c) protest and notice of dishonor or of default (except as specifically required in the Credit Agreement) with respect to the Credit Party Obligations or with respect to any security therefor; (d) notice of the Lenders obtaining, amending, substituting for, releasing, waiving or modifying any security interest, lien or encumbrance, if any, hereafter securing the Credit Party Obligations, or the Lenders' subordinating, compromising, discharging or releasing such security interests, liens or encumbrances, if any; (e) all other notices to which such Guarantor might otherwise be entitled; and (f) demand for payment under this Guaranty.

4.5 Reinstatement.

The obligations of the Guarantors under this Section 4 shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of any Person in respect of the Credit Party Obligations is rescinded or must be otherwise restored by any holder of any of the Credit Party Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, and each Guarantor agrees that it will indemnify the Agent and each Lender on demand for all reasonable costs and expenses (including, without limitation, reasonable fees of counsel) incurred by the Agent or such Lender in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law.

4.6 Remedies.

The Guarantors agree that, as between the Guarantors, on the one hand, and the Agent and the Lenders, on the other hand, the Credit Party Obligations may be declared to be forthwith due and payable as provided in Section 9 (and shall be deemed to have become automatically due and payable in the circumstances provided in Section 9) notwithstanding any stay, injunction or other prohibition preventing such declaration (or preventing such Credit Party Obligations from becoming automatically due and payable) as against any other Person and that, in the event of such

declaration (or such Credit Party Obligations being deemed to have become automatically due and payable), such Credit Party Obligations (whether or not due and payable by any other Person) shall forthwith become due and payable by the Guarantors.

4.7 Limitation of Guaranty.

Notwithstanding any provision to the contrary contained herein or in any of the other Credit Documents, to the extent the obligations of any Guarantor shall be adjudicated to be invalid or unenforceable for any reason (including, without limitation, because of any applicable state or federal law relating to fraudulent conveyances or transfers) then the obligations of such Guarantor hereunder shall be limited to the maximum amount that is permissible under applicable law (whether federal or state and including, without limitation, the Bankruptcy Code).

SECTION 5

CONDITIONS PRECEDENT

5.1 Closing Conditions.

The obligation of the Lenders to enter into this Credit Agreement and make the initial Extension of Credit is subject to satisfaction of the following conditions:

(a) Executed Credit Documents. Receipt by the Agent of duly executed copies of: (i) this Credit Agreement; (ii) the Notes; and (iii) all other Credit Documents, each in form and substance reasonably acceptable to the Agent in its sole discretion.

(b) Partnership Documents. Receipt by the Agent of the following:

(i) Certificates of Authorization. Certificate of authorization of the general partner of the Borrower (and each other Credit Party that is a partnership) as of the Effective Date, approving and adopting the Credit Documents to be executed by the Borrower (or such other Credit Party) and authorizing the execution and delivery thereof.

(ii) Partnership Agreement. Certified copies of the partnership agreement of the Borrower (and each other Credit Party that is a partnership), together with all amendments thereto.

(iii) Certificates of Good Standing or Existence. Certificate of good standing or existence for the Borrower (and each other Credit Party that is a partnership) issued as of a recent date by its state of organization and each other state where the failure to qualify or be in good standing could have a Material Adverse Effect.

(c) Corporate Documents. Receipt by the Agent of the following:

(i) Charter Documents. Copies of the articles or certificates of incorporation or other charter documents of Highwoods Properties (and each other Credit Party that is a corporation) certified to be true and complete as of a recent date by the appropriate Governmental Authority of the state or other jurisdiction of its incorporation and certified by a secretary or assistant secretary of Highwoods Properties (and each other Credit Party that is a corporation) to be true and correct as of the Effective Date.

(ii) Bylaws. A copy of the bylaws of Highwoods Properties (and each other Credit Party that is a corporation) certified by a secretary or assistant secretary of Highwoods Properties to be true and correct as of the Effective Date.

(iii) Resolutions. Copies of resolutions of the Board of Directors of Highwoods Properties (and each other Credit Party that is a corporation) approving and adopting the Credit Documents to which it is a party, the transactions contemplated therein and authorizing execution and delivery thereof, certified by a secretary or assistant secretary of Highwoods Properties (and each other Credit Party that is a corporation) to be true and correct and in force and effect as of the Effective Date.

(iv) Good Standing. Copies of (A) certificates of good standing, existence or its equivalent with respect to Highwoods Properties (and each other Credit Party that is a corporation) certified as of a recent date by the appropriate Governmental Authorities of the state or other jurisdiction of incorporation and each other jurisdiction in which the failure to so qualify and be in good standing could have a Material Adverse Effect and (B) to the extent available, a certificate indicating payment of all corporate franchise taxes certified as of a recent date by the appropriate governmental taxing authorities.

(v) Incumbency. An incumbency certificate of Highwoods Properties (and each other Credit Party that is a corporation) certified by a secretary or assistant secretary to be true and correct as of the Effective Date.

(d) Financial Statements. Receipt by the Agent and the Lenders of the audited consolidated financial statements of the Credit Parties, dated as of December 31, 1996, and the unaudited consolidated financial statements of the Credit Parties dated as of September 30, 1997.

(e) Opinion of Counsel. Receipt by the Agent of an opinion, or opinions (which shall cover, among other things, authority, legality, validity, binding effect, and enforceability), reasonably satisfactory to the Agent, addressed to the Agent on behalf of the Lenders and dated as of the Effective Date, from legal counsel to the Credit Parties.

(f) Evidence of Insurance. Receipt by the Agent of copies of insurance policies or certificates of insurance of the Credit Parties evidencing liability and casualty insurance

meeting the requirements set forth in the Credit Documents, including, but not limited to, naming the Agent as secondary loss payee on behalf of the Lenders subject only to a first priority loss payee clause relating to the Related Credit Facilities.

(g) Material Adverse Effect. There shall not have occurred a change since December 31, 1996 that has had or could reasonably be expected to have a Material Adverse Effect.

(h) Litigation. There shall not exist any pending or threatened action, suit, investigation or proceeding against a Credit Party that would have or would reasonably be expected to have a Material Adverse Effect.

(i) Officer's Certificates. The Agent shall have received a certificate or certificates executed by the general partner of the Borrower and the chief financial officer of the Highwoods Properties as of the Effective Date stating that (i) each of the Borrower and Highwoods Properties is in compliance with all existing material financial obligations, (ii) no action, suit, investigation or proceeding is pending or threatened in any court or before any arbitrator or governmental instrumentality that purports to effect any Credit Party or any transaction contemplated by the Credit Documents, if such action, suit, investigation or proceeding could have or could be reasonably expected to have a Material Adverse Effect, (iii) the financial statements and information delivered pursuant to Section 5.1(d) are true and accurate in all material respects and (iv) except for the matters noted in such certificates, immediately after giving effect to this Credit Agreement, the other Credit Documents and all the transactions contemplated therein to occur on such date, (A) each Credit Party is Solvent, (B) no Default or Event of Default exists,
(C) all representations and warranties contained herein and in the other Credit Documents are true and correct in all material respects, and (D) the Credit Parties are in compliance with all requirements of the Related Credit Facilities.

(j) Fees and Expenses. Payment by the Credit Parties of all fees and expenses owed by them to the Lenders and the Agent, including, without limitation, payment to the Agent of the fees set forth in the Fee Letter.

(k) Other. Receipt by the Lenders of such other documents, instruments, agreements or information as reasonably and timely requested by any Lender, including, but not limited to, information regarding litigation, tax, accounting, labor, insurance, pension liabilities (actual or contingent), real estate leases, material contracts, debt agreements, property ownership and contingent liabilities of the Credit Parties.

5.2 Conditions to All Loans.

In addition to the conditions precedent stated elsewhere herein, the Lenders shall not be obligated to make Loans (or continue or convert Loans) unless:

(a) Notice. The Borrower shall have delivered a Notice of Borrowing, duly executed and completed, by the time specified in Section 2.1.

(b) Representations and Warranties. The representations and warranties made by the Credit Parties in any Credit Document are true and correct in all material respects at and as if made as of such date except to the extent they expressly relate to an earlier date;

(c) No Default. No Default or Event of Default shall exist or be continuing either prior to or after giving effect thereto;

(d) No Material Adverse Effect. There shall not have occurred any Material Adverse Effect;

(e) Availability. Immediately after giving effect to the making of a Revolving Loan (and the application of the proceeds thereof), the sum of the Revolving Loans outstanding shall not exceed the Revolving Commitment Amount; and

(f) Related Facility Conditions. All other conditions precedent to the obligation of the Related Facility Lenders to make a loan under the Related Credit Facility shall have been and remain satisfied;

provided that the matters referred to in the certificate required by Section 5.1(i) hereto shall not excuse a Lender from its obligations hereunder. The delivery of each Notice of Borrowing and each Notice of Continuation/Conversion shall constitute a representation and warranty by the Borrower of the correctness of the matters specified in this Section 5.2.

SECTION 6

REPRESENTATIONS AND WARRANTIES

6.1 Incorporation. The representations and warranties contained in the Related Credit Agreement (the "Incorporated Representations") as in effect as of the date thereof are incorporated herein by reference as such Incorporated Representations relate to the Closing Date, this Agreement and the credit facilities provided hereunder with the same effect as if stated at length. The Credit Parties affirm and represent and warrant to the Agent and the Lenders that the Incorporated Representations are true and correct in all material respects as of the date hereof, provided that (i) such Incorporated Representations as incorporated herein shall reflect that they are delivered to and run in favor of the Agent and the Lenders hereunder, and references therein to the "Credit Agreement" and "Credit Documents" shall be deemed for purposes hereof to include this Credit Agreement and the Credit Documents relating hereto, (ii) any amendments or modifications to such Incorporated Representations subsequent to the date hereof must be consented to in writing by the Lenders hereunder, and (iii) in the event that the Related Credit Agreement shall be refinanced or replaced by another credit agreement or shall otherwise expire or terminate, then the Incorporated Representations shall be as in effect immediately prior to such refinancing, replacement, expiration or termination. All capitalized terms used in such Incorporated Representations shall have the meaning ascribed thereto in the Related Credit

Agreement, but as such meaning would be determined relative to this Credit Agreement and the Credit Documents.

6.2 Material Adverse Effect. The financial statements delivered by the Credit Parties pursuant to Section 5.1(d) accurately reflect the financial condition of the Credit Parties as of the respective dates of such financial statements and there has been no material change in the financial condition of the Credit Parties since September 30, 1997 and no other change in the business or assets of the Credit Parties which has resulted or could result in a Material Adverse Effect.

SECTION 7

AFFIRMATIVE COVENANTS

7.1 Incorporation. The affirmative covenants contained in the Related Credit Agreement other than those set forth in all of Section 7.10 (other than
Section 7.10(c) which is incorporated hereby), and Section 7.12 thereof (the "Incorporated Affirmative Covenants") as in effect as of the date thereof are incorporated herein by reference as such Incorporated Affirmative Covenants relate to the Closing Date, this Agreement and the credit facilities provided hereunder with the same effect as if stated at length. The Credit Parties affirm and represent and warrant to the Agent and the Lenders that the Incorporated Affirmative Covenants shall be as binding on the Credit Parties as if fully set forth herein, provided that (i) such Incorporated Affirmative Covenants as incorporated herein shall reflect that they are delivered to and run in favor of the Agent and the Lenders hereunder, and references therein to the "Credit Agreement" and "Credit Documents" shall be deemed for purposes hereof to include this Credit Agreement and the Credit Documents relating hereto, (ii) any amendments or modifications to such Incorporated Affirmative Covenants subsequent to the date hereof must be consented to in writing by the Lenders hereunder, and (iii) in the event that the Related Credit Agreement shall be refinanced or replaced by another credit agreement or shall otherwise expire or terminate, then the Incorporated Representations shall be as in effect immediately prior to such refinancing, replacement, expiration or termination. Notwithstanding the above, the prior waivers and consents affecting such Incorporated Affirmative Covenants granted pursuant to that Letter Agreement constituting a portion of the Related Credit Agreement shall also apply to such Incorporated Affirmative Covenants under this Credit Agreement. All capitalized terms used in such Incorporated Affirmative Covenants shall have the meaning ascribed thereto in the Related Credit Agreement, but as such meaning would be determined relative to this Credit Agreement and the Credit Documents.

SECTION 8

NEGATIVE COVENANTS

8.1 Incorporation. The negative covenants contained in the Related Credit Agreement (the "Incorporated Negative Covenants") as in effect as of the date thereof are incorporated herein by reference as such Incorporated Negative Covenants relate to the Closing Date, this Agreement and the credit facilities provided hereunder with the same effect as if stated at length. The Credit Parties affirm and represent and warrant to the Agent and the Lenders that the Incorporated Negative Covenants shall be as binding on the Credit Parties as if fully set forth herein, provided that (i) such Incorporated Negative Covenants as incorporated herein shall reflect that they are delivered to and run in favor of the Agent and the Lenders hereunder, and references therein to the "Credit Agreement" and "Credit Documents" shall be deemed for purposes hereof to include this Credit Agreement and the Credit Documents relating hereto, (ii) any amendments or modifications to such Incorporated Negative Covenants subsequent to the date hereof must be consented to in writing by the Lenders hereunder, and
(iii) in the event that the Related Credit Agreement shall be refinanced or replaced by another credit agreement or shall otherwise expire or terminate, then the Incorporated Negative Covenants shall be as in effect immediately prior to such refinancing, replacement, expiration or termination. Notwithstanding the above, the prior waivers and consents affecting such Incorporated Negative Covenants granted pursuant to that Letter Agreement constituting a portion of the Related Credit Agreement shall also apply to such Incorporated Negative Covenants under this Credit Agreement. All capitalized terms used in such Incorporated Negative Covenants shall have the meaning ascribed thereto in the Related Credit Agreement, but as such meaning would be determined relative to this Credit Agreement and the Credit Documents.

SECTION 9

EVENTS OF DEFAULT

9.1 Incorporation. The events of default contained in the Related Credit Agreement (the "Incorporated Events of Default") as in effect as of the date thereof are incorporated herein by reference as such Incorporated Events of Default relate to the Closing Date, this Agreement and the credit facilities provided hereunder with the same effect as if stated at length. The Credit Parties acknowledge and agree that the Incorporated Events of Default as incorporated herein shall reflect that they are for the benefit of the Agent and the Lenders hereunder, and references therein to the "Credit Agreement" and "Credit Documents" shall be deemed for purposes hereof to include this Credit Agreement and the Credit Documents relating hereto, (ii) any amendments or modifications to such Incorporated Events of Default subsequent to the date hereof must be consented to in writing by the Lenders hereunder, and (iii) in the event that the Related Credit Agreement shall be refinanced or replaced by another credit agreement or shall otherwise expire or terminate, then the Incorporated Events of Default shall be as in effect immediately prior to such refinancing, replacement, expiration or termination. All capitalized terms used in such Incorporated Events of Default shall have the meaning ascribed thereto in the Related Credit

Agreement, but as such meaning would be determined relative to this Credit Agreement and the Credit Documents.

9.2 Additional Events of Default.

Except as set forth in the proviso of Section 5.2, an Event of Default shall exist upon the occurrence of any of the following specified events (each an "Event of Default"):

(a) Payment. Any Credit Party shall default in the payment within five
(5) days of when due of (i) any principal of any of the Loans or (ii) any interest on the Loans or (iii) any fees or other amounts owing hereunder, under any of the other Credit Documents or in connection herewith.

(b) Breach of Representations or Covenants. (i) Any representation, warranty or statement made or deemed to be made by any Credit Party herein, in any of the other Credit Documents, or in any statement or certificate delivered or required to be delivered pursuant hereto or thereto shall prove untrue in any material respect on the date as of which it was made or deemed to have been made or (ii) any Credit Party shall default in the due performance or observance of any covenant or the terms and conditions set forth in the Credit Documents, and such default shall continue unremedied for the time period, if any, provided for in the Incorporated Events of Default.

(c) Related Credit Agreement. An Event of Default (as defined therein) shall occur under the Related Credit Agreement.

9.3 Acceleration; Remedies.

Upon the occurrence of an Event of Default, and at any time thereafter (including with respect to an Event of Default under section 9.2(c) any time after such Event of Default (as defined therein) may be waived under the Related Credit Agreement) unless and until such Event of Default has been waived in writing by the Required Lenders hereunder (or the Lenders as may be required hereunder), the Agent shall, upon the request and direction of the Required Lenders, (or if in the reasonable judgment of the Agent there is not sufficient time to obtain the consent of the Required Lenders then on its own) by written notice to the Borrower, take any of the following actions without prejudice to the rights of the Agent or any Lender to enforce its claims against the Credit Parties, except as otherwise specifically provided for herein:

(a) Termination of Commitments. Declare the Commitments terminated whereupon the Commitments shall be immediately terminated.

(b) Acceleration of Loans. Declare the unpaid principal of and any accrued interest in respect of all Loans and any and all other indebtedness or obligations of any and every kind owing by a Credit Party to any of the Lenders hereunder to be due whereupon the same shall be immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Credit Parties.

(c) Enforcement of Rights. Enforce any and all rights and interests created and existing under the Credit Documents, including, without limitation, all rights and remedies against the Guarantors and all rights of set-off.

Notwithstanding the foregoing, if an Event of Default specified in Section 9.1 shall occur as a result of the incorporation of Section 9.1(f) of the Related Credit Agreement, then the Commitments shall automatically terminate and all Loans, all accrued interest in respect thereof, all accrued and unpaid fees and other indebtedness or obligations owing to the Lenders hereunder shall immediately become due and payable without the giving of any notice or other action by the Agent or the Lenders, which notice or other action is expressly waived by the Credit Parties.

Notwithstanding the fact that enforcement powers reside primarily with the Agent, each Lender has, to the extent permitted by law, a separate right of payment and shall be considered a separate "creditor" holding a separate "claim" within the meaning of Section 101(5) of the Bankruptcy Code or any other insolvency statute.

9.4 Allocation of Payments After Event of Default.

Notwithstanding any other provisions of this Credit Agreement, after the occurrence and during the continuance of an Event of Default, all amounts collected or received by the Agent or any Lender on account of amounts outstanding under any of the Credit Documents shall be paid over or delivered as follows:

FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including without limitation reasonable attorneys' fees) of the Agent in connection with enforcing the rights of the Lenders under the Credit Documents;

SECOND, to payment of any fees owed to the Agent;

THIRD, to the payment of all reasonable out-of-pocket costs and expenses, (including, without limitation, reasonable attorneys' fees) of each of the Lenders in connection with enforcing its rights under the Credit Documents;

FOURTH, to the payment of all accrued fees and interest payable to the Lenders hereunder;

FIFTH, to the payment of the outstanding principal amount of the Loans;

SIXTH, to all other obligations which shall have become due and payable under the Credit Documents and not repaid pursuant to clauses "FIRST" through "FIFTH" above; and

SEVENTH, to the payment of the surplus, if any, to whoever may be lawfully entitled to receive such surplus.

In carrying out the foregoing, (a) amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category; and (b) each of the Lenders

shall receive an amount equal to its pro rata share (based on the proportion that the then outstanding Loans, held by such Lender bears to the aggregate then outstanding Loans) of amounts available to be applied pursuant to clauses "THIRD", "FOURTH," "FIFTH," and "SIXTH" above.

SECTION 10

AGENCY PROVISIONS

10.1 Appointment.

Each Lender hereby designates and appoints NationsBank, N.A. as Agent of such Lender to act as specified herein and the other Credit Documents, and each such Lender hereby authorizes the Agent, as the agent for such Lender, to take such action on its behalf under the provisions of this Credit Agreement and the other Credit Documents and to exercise such powers and perform such duties as are expressly delegated by the terms hereof and of the other Credit Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere herein and in the other Credit Documents, the Agent shall not have any duties or responsibilities, except those expressly set forth herein and therein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Credit Agreement or any of the other Credit Documents, or shall otherwise exist against the Agent. The provisions of this Section are solely for the benefit of the Agent and the Lenders and none of the Credit Parties shall have any rights as a third party beneficiary of the provisions hereof. In performing its functions and duties under this Credit Agreement and the other Credit Documents, the Agent shall act solely as an agent of the Lenders and does not assume and shall not be deemed to have assumed any obligation or relationship of agency or trust with or for any Credit Party.

10.2 Delegation of Duties.

The Agent may execute any of its duties hereunder or under the other Credit Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.

10.3 Exculpatory Provisions.

Neither the Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection herewith or in connection with any of the other Credit Documents (except for its or such Person's own gross negligence or willful misconduct) or (b) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any of the Credit Parties contained herein or in any of the other Credit Documents or in any certificate, report, document, financial statement or other written or oral statement referred to or provided for in, or received by an Agent under or in connection herewith or in connection with the other Credit Documents, or enforceability or sufficiency therefor of any of the other Credit Documents, or for

any failure of the Borrower to perform its obligations hereunder or thereunder. The Agent shall not be responsible to any Lender for the effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of this Credit Agreement, or any of the other Credit Documents or for any representations, warranties, recitals or statements made herein or therein or made by the Borrower or any Credit Party in any written or oral statement or in any financial or other statements, instruments, reports, certificates or any other documents in connection herewith or therewith furnished or made by the Agent to the Lenders or by or on behalf of the Credit Parties to the Agent or any Lender or be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained herein or therein or as to the use of the proceeds of the Loans or of the existence or possible existence of any Default or Event of Default or to inspect the properties, books or records of the Credit Parties. The Agent is a not trustee for the Lenders and owes no fiduciary duty to the Lenders. The Agent shall administer the facility evidenced by the Credit Documents similar to other credits in which the Agent holds 100% of the credit exposure.

10.4 Reliance on Communications.

The Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to any of the Credit Parties, independent accountants and other experts selected by the Agent with reasonable care). The Agent may deem and treat the Lenders as the owner of its interests hereunder for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Agent in accordance with Section 11.3(b). The Agent shall be fully justified in failing or refusing to take any action under this Credit Agreement or under any of the other Credit Documents unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder or under any of the other Credit Documents in accordance with a request of the Required Lenders (or to the extent specifically provided in Section 11.6, all the Lenders) and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders (including their successors and assigns).

10.5 Notice of Default.

An Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder (other than Section 9.1(a)) unless such Agent has received notice from a Lender or a Credit Party referring to the Credit Document, describing such Default or Event of Default and stating that such notice is a "notice of default." In the event that the Agent receives such a notice, the Agent shall give prompt notice thereof to the Lenders. The Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders.

10.6 Non-Reliance on Agent and Other Lenders.

Each Lender expressly acknowledges that neither the Agent, NationsBanc Montgomery Securities, Inc. ("NMSI") nor any of their officers, directors, employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by the Agent, NMSI or any affiliate thereof hereinafter taken, including any review of the affairs of any Credit Party, shall be deemed to constitute any representation or warranty by the Agent or NMSI to any Lender. Each Lender represents to the Agent and NMSI that it has, independently and without reliance upon the Agent or NMSI or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, assets, operations, property, financial and other conditions, prospects and creditworthiness of the Credit Parties and made its own decision to make its Loans hereunder and enter into this Credit Agreement. Each Lender also represents that it will, independently and without reliance upon the Agent, NMSI or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Credit Agreement, and to make such investigation as it deems necessary to inform itself as to the business, assets, operations, property, financial and other conditions, prospects and creditworthiness of the Credit Parties. The Agent shall promptly provide to the Lenders (a) copies of all notices of Defaults or Events of Default or other notices received in accordance with Section 11.1, (b) copies of all financial statements, certificates and other information sent to it by the Borrower pursuant to Article 7, (c) any written information it receives regarding the unsecured debt rating of Highwoods Properties and (d) such other documents or notices received by the Agent pursuant to this Agreement and requested in writing by a Lender. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Agent hereunder, the Agent and NMSI shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, assets, property, financial or other conditions, prospects or creditworthiness of the Credit Parties which may come into the possession of the Agent, NMSI or any of their officers, directors, employees, agents, attorneys-in-fact or affiliates.

10.7 Indemnification.

The Lenders agree to indemnify the Agent in its capacity as such but not in its capacity as a Lender (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Commitments (or if the Commitments have expired or been terminated, in accordance with the respective principal amounts of outstanding Loans of the Lenders), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including without limitation at any time following payment in full of the Credit Party Obligations) be imposed on, incurred by or asserted against an Agent in its capacity as such in any way relating to or arising out of this Credit Agreement or the other Credit Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by an Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements (i) resulting from the gross negligence or willful misconduct of the Agent, (ii) arising

solely from an internal or regulatory matter relating only to the Agent (i.e. a legal lending limit violation by the Agent) or (iii) resulting from and related solely to a dispute between the Agent and one or more Lenders in which it is reasonably determined that the Agent did not prevail. If any indemnity furnished to the Agent for any purpose shall, in the reasonable judgment of the Agent, be insufficient or become impaired, the Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished. The agreements in this Section shall survive the payment of the Credit Party Obligations and all other amounts payable hereunder and under the other Credit Documents.

10.8 Agent in Its Individual Capacity.

The Agent and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrower or any other Credit Party as though the Agent were not the Agent hereunder. With respect to the Loans made and all obligations owing to it, the Agent shall have the same rights and powers under this Credit Agreement as any Lender and may exercise the same as though they were not the Agent, and the terms "Lender" and "Lenders" shall include the Agent in its individual capacity.

10.9 Successor Agent.

The Agent may, at any time, resign upon 20 days written notice to the Lenders. Upon any such resignation, the Required Lenders shall have the right to appoint a successor Agent; provided that if no successor Agent shall have been appointed by the Required Lenders, and shall have accepted such appointment, within 45 days after the notice of resignation, then the retiring Agent shall select a successor Agent. In either case, whether selected by the Required Lenders or the retiring Agent, the successor Agent must be either an existing Lender hereunder or a commercial bank organized under the laws of the United States of America or of any State thereof and have total assets of at least $25 billion and a long term unsecured debt rating of at least BBB+ with S&P or its equivalent. Upon the acceptance of any appointment as the Agent hereunder by a successor, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations as the Agent, as appropriate, under this Credit Agreement and the other Credit Documents and the provisions of this Section 10.9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Agent under this Credit Agreement.

SECTION 11

MISCELLANEOUS

11.1 Notices.

Except as otherwise expressly provided herein, all notices and other communications shall have been duly given and shall be effective (a) when delivered by hand, (b) when transmitted via telecopy (or other facsimile device) to the number set out below, (c) the Business Day following the day on which the same has been delivered prepaid to a reputable national overnight air courier service, or (d) the third Business Day following the day on which the same is sent by certified or

registered mail, postage prepaid, in each case to the respective parties at the address or telecopy numbers set forth on Schedule 11.1, or at such other address as such party may specify by written notice to the other parties hereto.

11.2 Right of Set-Off.

In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, upon the occurrence of an Event of Default and the commencement of remedies described in Section 9.3, each Lender is authorized at any time and from time to time, without presentment, demand, protest or other notice of any kind (all of which rights being hereby expressly waived), to set-off and to appropriate and apply any and all deposits (general or special) and any other indebtedness at any time held or owing by such Lender (including, without limitation, branches, agencies or Affiliates of such Lender wherever located) to or for the credit or the account of any Credit Party against obligations and liabilities of such Credit Party to the Lenders hereunder, under the Notes, the other Credit Documents or otherwise, irrespective of whether the Agent or the Lenders shall have made any demand hereunder and although such obligations, liabilities or claims, or any of them, may be contingent or unmatured, and any such set-off shall be deemed to have been made immediately upon the occurrence of an Event of Default even though such charge is made or entered on the books of such Lender subsequent thereto. The Credit Parties hereby agree that any Person purchasing a participation in the Loans and Commitments hereunder pursuant to Section 11.3(c) or 3.8 may exercise all rights of set-off with respect to its participation interest as fully as if such Person were a Lender hereunder.

11.3 Benefit of Agreement.

(a) Generally. This Credit Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto; provided that none of the Credit Parties may assign and transfer any of its interests without the prior written consent of the Lenders; and provided further that the rights of each Lender to transfer, assign or grant participation in its rights and/or obligations hereunder shall be limited as set forth below in subsections (b) and (c) of this Section 11.3. Notwithstanding the above (including anything set forth in subsections (b) and (c) of this Section 11.3), nothing herein shall restrict, prevent or prohibit any Lender from (A) pledging its Loans hereunder to a Federal Reserve Bank in support of borrowings made by such Lender from such Federal Reserve Bank, or (B) granting assignments or participation in such Lender's Loans and/or Commitments hereunder to its parent company and/or to any Affiliate of such Lender or to any existing Lender or Affiliate thereof. No action permitted by this Section 11.3(a) shall require a fee to be paid to the Agent.

(b) Assignments. In addition to the assignments permitted in Section 11.3(a), each Lender may, with the prior written consent of the Agent which shall not be unreasonably withheld, assign all or a portion of its rights and obligations hereunder pursuant to an assignment agreement substantially in the form of Exhibit 11.3 to one or more Eligible Assignees; provided that (i) any such assignment shall be in a minimum aggregate amount of $10,000,000 of the Commitments and in integral multiples of $1,000,000 above such amount (or the remaining amount of Commitments held by such

Lender) and (ii) each such assignment shall be of a constant, not varying, percentage of all of the assigning Lender's rights and obligations under the Commitment being assigned. Any assignment hereunder shall be effective upon satisfaction of the conditions set forth above and delivery to the Agent of a duly executed assignment agreement together with a transfer fee of $3,500 payable to the Agent for its own account. Upon the effectiveness of any such assignment, the assignee shall become a "Lender" for all purposes of this Credit Agreement and the other Credit Documents and, to the extent of such assignment, the assigning Lender shall be relieved of its obligations hereunder to the extent of the Loans and Commitment components being assigned. Along such lines the Borrower agrees that upon notice of any such assignment and surrender of the appropriate Note or Notes, it will promptly provide to the assigning Lender and to the assignee separate promissory notes in the amount of their respective interests substantially in the form of the original Note or Notes (but with notation thereon that it is given in substitution for and replacement of the original Note or Notes or any replacement notes thereof).

By executing and delivering an assignment agreement in accordance with this
Section 11.3(b), the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows: (i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim and the assignee warrants that it is an Eligible Assignee; (ii) except as set forth in clause (i) above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Credit Agreement, any of the other Credit Documents or any other instrument or document furnished pursuant hereto or thereto, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Credit Agreement, any of the other Credit Documents or any other instrument or document furnished pursuant hereto or thereto or the financial condition of any Credit Party or the performance or observance by any Credit Party of any of its obligations under this Credit Agreement, any of the other Credit Documents or any other instrument or document furnished pursuant hereto or thereto; (iii) such assignee represents and warrants that it is legally authorized to enter into such assignment agreement; (iv) such assignee confirms that it has received a copy of this Credit Agreement, the other Credit Documents and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such assignment agreement; (v) such assignee will independently and without reliance upon the Agent, such assigning Lender or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Credit Agreement and the other Credit Documents; (vi) such assignee appoints and authorizes the Agent to take such action on its behalf and to exercise such powers under this Credit Agreement or any other Credit Document as are delegated to the Agent by the terms hereof or thereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Credit Agreement and the other Credit Documents are required to be performed by it as a Lender.

(c) Participations. Each Lender may sell, transfer, grant or assign participations in all or any part of such Lender's interests and obligations hereunder; provided that (i) such selling Lender shall remain a "Lender" for all purposes under this Credit Agreement (such selling Lender's obligations under the Credit Documents remaining unchanged) and the participant shall not constitute a Lender hereunder, (ii) no such participant shall have, or be granted, rights to approve any amendment or waiver relating to this Credit Agreement or the other Credit Documents except to the extent any such amendment or waiver would (A) reduce the principal of or rate of interest on or fees in respect of any Loans in which the participant is participating or increase any Commitments with respect thereto, (B) postpone the date fixed for any payment of principal (including the extension of the final maturity of any Loan or the date of any mandatory prepayment), interest or fees in which the participant is participating, or (C) release all or substantially all of the collateral or guaranties (except as expressly provided in the Credit Documents) supporting any of the Loans or Commitments in which the participant is participating, (iii) sub-participations by the participant (except to an Affiliate, parent company or Affiliate of a parent company of the participant) shall be prohibited and (iv) any such participations shall be in a minimum aggregate amount of $10,000,000 of the Commitments and in integral multiples of $1,000,000 in excess thereof. In the case of any such participation, the participant shall not have any rights under this Credit Agreement or the other Credit Documents (the participant's rights against the selling Lender in respect of such participation to be those set forth in the participation agreement with such Lender creating such participation) and all amounts payable by the Borrower hereunder shall be determined as if such Lender had not sold such participation; provided, however, that such participant shall be entitled to receive additional amounts under Sections 3.9, 3.12, 3.13 and 3.14 to the same extent that the Lender from which such participant acquired its participation would be entitled to the benefit of such cost protection provisions.

11.4 No Waiver; Remedies Cumulative.

No failure or delay on the part of an Agent or any Lender in exercising any right, power or privilege hereunder or under any other Credit Document and no course of dealing between the Borrower or any Credit Party and the Agent or any Lender shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Credit Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights and remedies provided herein are cumulative and not exclusive of any rights or remedies which the Agent or any Lender would otherwise have. No notice to or demand on any Credit Party in any case shall entitle any Credit Party to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Agent or the Lenders to any other or further action in any circumstances without notice or demand.

11.5 Payment of Expenses; Indemnification.

The Credit Parties agree to: (a) pay all reasonable out-of-pocket costs and expenses of (i) the Agent and the Lenders in connection with (A) the negotiation, preparation, execution and delivery and administration of this Credit Agreement and the other Credit Documents and the documents and instruments referred to therein (including, without limitation, the reasonable fees

and expenses of Moore & Van Allen, PLLC, special counsel to the Agent); provided that reimbursement to any Lender (other than the Agent) for fees and expenses shall be limited to $7,500 per Lender and (B) any amendment, waiver or consent relating hereto and thereto including, but not limited to, any such amendments, waivers or consents resulting from or related to any work-out, renegotiation or restructure relating to the performance by the Credit Parties under this Credit Agreement and (ii) the Agent and the Lenders in connection with (A) enforcement of the Credit Documents and the documents and instruments referred to therein, including, without limitation, in connection with any such enforcement, the reasonable fees (at standard hourly rates) and disbursements of counsel for the Agent and each of the Lenders, and (B) any bankruptcy or insolvency proceeding of a Credit Party; provided that the Credit Parties shall not be responsible for the legal fees of the Agent and the Lenders in connection with any proceeding in which a Credit Party is the prevailing party as determined by a court of competent jurisdiction, and (b) indemnify the Agent, and each Lender, its officers, directors, employees, representatives and agents from and hold each of them harmless against any and all losses, liabilities, claims, damages or expenses incurred by any of them as a result of, or arising out of, or in any way related to, or by reason of, any investigation, litigation or other proceeding (whether or not any Agent or Lender is a party thereto) related to
(i) the entering into and/or performance of any Credit Document or the use of proceeds of any Loans (including other extensions of credit) hereunder or the consummation of any other transactions contemplated in any Credit Document, including, without limitation, the reasonable fees and disbursements of counsel incurred in connection with any such investigation, litigation or other proceeding (but excluding any such losses, liabilities, claims, damages or expenses to the extent incurred by reason of gross negligence or willful misconduct on the part of the Person to be indemnified), (ii) any Environmental Claim and (iii) any claims for Non-Excluded Taxes.

11.6 Amendments, Waivers and Consents.

Neither this Credit Agreement nor any other Credit Document nor any of the terms hereof or thereof may be amended, changed, waived, discharged or terminated unless such amendment, change, waiver, discharge or termination is in writing and signed by the Agent, the Required Lenders and the Credit Parties.

Notwithstanding the fact that the consent of all the Lenders is required in certain circumstances as set forth above, (x) each Lender is entitled to vote as such Lender sees fit on any reorganization plan that affects the Loans, and each Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy Code supersedes the unanimous consent provisions set forth herein and (y) the Required Lenders may consent to allow a Credit Party to use cash collateral in the context of a bankruptcy or insolvency proceeding.

11.7 Counterparts.

This Credit Agreement may be executed in any number of counterparts, each of which where so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. It shall not be necessary in making proof of this Credit Agreement to produce or account for more than one such counterpart.

11.8 Headings.

The headings of the sections and subsections hereof are provided for convenience only and shall not in any way affect the meaning or construction of any provision of this Credit Agreement.

11.9 Defaulting Lender.

Each Lender understands and agrees that if such Lender is a Defaulting Lender then notwithstanding the provisions of Section 11.6 it shall not be entitled to vote on any matter requiring the consent of the Required Lenders or to object to any matter requiring the consent of all the Lenders; provided, however, that all other benefits and obligations under the Credit Documents shall apply to such Defaulting Lender.

11.10 Survival of Indemnification and Representations and Warranties.

All indemnities set forth herein and all representations and warranties made herein shall survive the execution and delivery of this Credit Agreement, the making of the Loans and other obligations and the termination of the commitments hereunder.

11.11 Governing Law.

THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA.

11.12 Arbitration.

Any controversy or claim between or among the parties hereto including, but not limited to, those arising out of or relating to this Agreement or any related agreements or instruments, including any claim based on or arising from an alleged tort, shall be determined by binding arbitration in accordance with the Federal Arbitration Act (or if not applicable, the applicable state law), the Rules of Practice and Procedure for the Arbitration of Commercial Disputes of Judicial Arbitration and Mediation Services, Inc. (J.A.M.S.), and the "Special Rules" set forth below. In the event of any inconsistency, the Special Rules shall control. Judgment upon any arbitration award may be entered in any court having jurisdiction. Any party to this Agreement may bring an action, including a summary or expedited proceeding, to compel arbitration of any controversy or claim to which this Agreement applies in any court having jurisdiction over such action.

(a) Special Rules. The arbitration shall be conducted in the city of the Borrower's domicile at time of this Agreement's execution and administered by J.A.M.S. who will appoint an arbitrator; if J.A.M.S. is unable or legally precluded from administering the arbitration, then the American Arbitration Association will serve. All arbitration hearings will be commenced within ninety (90) days of the demand for arbitration; further, the arbitrator shall only, upon a showing of cause, be permitted to extend the commencement of such hearing for up to an additional sixty
(60) days.

(b) Reservations of Rights. Nothing in this Agreement shall be deemed to (i) limit the applicability of any otherwise applicable statutes of limitation or repose and any waivers contained in this Agreement; or (ii) be a waiver by the Lenders of the protection afforded to it by 12 U.S.C.
Section 91 or any substantially equivalent state law; or (iii) limit the right of the Lenders (A) to exercise self help remedies such as (but not limited to) setoff, or (B) to foreclose against any real or personal property collateral, or (C) to obtain from a court provisional or ancillary remedies such as (but not limited to) injunctive relief or the appointment of a receiver. The Lenders may exercise such self help rights, foreclose upon such property, or obtain such provisional or ancillary remedies before, during or after the pendency of any arbitration proceeding brought pursuant to this Agreement. At the Lenders' option, foreclosure under the Credit Documents may be accomplished by the exercise of a power of sale or a judicial sale under the Credit Documents or by judicial foreclosure. Neither the exercise of self help remedies nor the institution or maintenance of an action for foreclosure or provisional or ancillary remedies shall constitute a waiver of the right of any party, including the claimant in any such action, to arbitrate the merits of the controversy or claim occasioning resort to such remedies.

11.13 Time.

All references to time herein shall be references to Eastern Standard Time or Eastern Daylight time, as the case may be, unless specified otherwise.

11.14 Severability.

If any provision of any of the Credit Documents is determined to be illegal, invalid or unenforceable, such provision shall be fully severable and the remaining provisions shall remain in full force and effect and shall be construed without giving effect to the illegal, invalid or unenforceable provisions.

11.15 Entirety.

This Credit Agreement together with the other Credit Documents represent the entire agreement of the parties hereto and thereto, and supersede all prior agreements and understandings, oral or written, if any, including any commitment letters or correspondence relating to the Credit Documents or the transactions contemplated herein and therein.

[remainder of page intentionally left blank]

Each of the parties hereto has caused a counterpart of this Credit Agreement to be duly executed and delivered as of the date first above written, the Credit Parties doing so under seal.

                               By:  Highwoods Properties, Inc.,
By:___________________              a Maryland corporation, its sole general
                                    partner
Title:_______________
                               By: __________________________________________
  [CORPORATE SEAL]             Name: ________________________________________
                               Title: _______________________________________




GUARANTORS:                    HIGHWOODS PROPERTIES, INC.,
                               a Maryland corporation
ATTEST:
                               By: __________________________________________
By:__________________          Name: ________________________________________
Title:________________         Title: _______________________________________

[CORPORATE SEAL]

                               By: __________________________________________
By:__________________          Name: ________________________________________
Title:________________         Title: _______________________________________

  [CORPORATE SEAL]


                               SOUTHEAST REALTY OPTIONS CORP.,
                               a Delaware corporation
ATTEST:
                               By: __________________________________________
By:__________________          Name: ________________________________________
Title:________________         Title: _______________________________________

  [CORPORATE SEAL]

                               By: __________________________________________
By:__________________          Name: ________________________________________
Title:________________         Title: _______________________________________

  [CORPORATE SEAL]


                               HIGHWOODS/FLORIDA HOLDINGS GP, L.P.,
                               a Delaware corporation

                               By:  Highwoods/Florida GP Corp.,
                                    a Delaware corporation, its sole
                                    general partner

AATTEST:
                               By: __________________________________________
By:__________________          Name: ________________________________________
Title:________________         Title: _______________________________________

  [CORPORATE SEAL]

                               HIGHWOODS/FLORIDA HOLDINGS L.P.,
                               a Delaware corporation

                               By:  Highwoods/Florida Holdings GP, L.P.,
                                    a Delaware limited
                                    partnership, its sole general partner

                               By:  Highwoods/Florida GP Corp.,
                                    a Delaware corporation, its sole
                                    general partner

ATTEST:
                               By: __________________________________________
By:__________________          Name: ________________________________________
Title:________________         Title: _______________________________________

[CORPORATE SEAL]

                               By: __________________________________________
By:__________________          Name: ________________________________________
Title:________________         Title: _______________________________________

  [CORPORATE SEAL]

                               HIGHWOODS/TENNESSEE HOLDINGS GP, L.P.,
                               a Tennessee limited partnership

                               By:  Highwoods/Tennessee Properties, Inc.,
                                    a Tennessee corporation, its sole
                                    general partner

ATTEST:
                               By: __________________________________________
By:__________________          Name: ________________________________________
Title:________________         Title: _______________________________________

  [CORPORATE SEAL]

                               HIGHWOODS/TENNESSEE HOLDINGS L.P.,
                               a Tennessee limited partnership

                               By:  Highwoods/Tennessee Holdings GP, L.P.,
                                    a Tennessee limited
                                    partnership, its sole general partner

                               By:  Highwoods/Tennessee Properties, Inc.,
                                    a Delaware corporation, its sole
                                    general partner

ATTEST:
                               By: __________________________________________
By:__________________          Name: ________________________________________
Title:________________         Title: _______________________________________

  [CORPORATE SEAL]

LENDERS:

NATIONSBANK, N.A.,
individually in its capacity as a
Lender and in its capacity as Agent

By: __________________________________________ Name: ________________________________________ Title: _______________________________________

                                                                      Revolving
                                         Revolving                   Commitment
Lender                               Committed Amount                Percentage
------                               ----------------                ----------
NationsBank, N.A.,                     $ 150,000,000                    100%

Lender                                       Address for All Notices
------                                       -----------------------

NationsBank, N.A.                            NationsBank, N.A.
                                             One Hannover Square, Suite 301
                                             Raleigh, NC  27611-7287
                                             Attn: Patty Gardenhire
                                             Ph: (919) 829-6683
                                             Fax: (919) 829-6713

                                             with a copy to:

                                             Mark S. Cagley
                                             Senior Vice President
                                             NationsBank
                                             Real Estate Banking Group
                                             100 N. Tryon Street
                                             11th Floor
                                             NC1-007-11-07
                                             Charlotte, NC   28255
                                             Phone: (704) 386-7449
                                             Fax: (704) 388-0617

TO:               NATIONSBANK, N.A., as Agent
                  NATIONSBANK CORPORATE CENTER
                  CHARLOTTE, NORTH CAROLINA  28255

RE:               Credit   Agreement  dated  as  of  December  ___,  1997  among
                  Highwoods/Forsyth   Limited   Partnership   (the   "Borrower")
                  Highwoods  Properties,  Inc., the Subsidiaries of the Borrower
                  and Highwoods Properties,  Inc., NationsBank,  N.A., as Agent,
                  and the  Lenders  party  thereto  (as the same may be amended,
                  modified,  extended or restated from time to time, the "Credit
                  Agreement")

DATE:    _____________, 199__

________________________________________________________________

1.       This Notice of  Borrowing  is made  pursuant to the terms of the Credit
         Agreement.  All capitalized  terms used herein unless otherwise defined
         shall have the meanings set forth in the Credit Agreement.

2.       Please be advised that the Borrower is  requesting  Revolving  Loans in
         the amount of  $__________ to be funded on  ____________,  199__ at the
         interest rate option set forth in paragraph 3 below.  Subsequent to the
         funding of the  requested  Revolving  Loans,  the  aggregate  amount of
         outstanding  Revolving Loans will be $_________,  which is less than or
         equal to the Revolving Committed Amount.

3.       The interest rate option  applicable to the requested  Revolving  Loans

shall be:

a. ________ the Adjusted Base Rate

b. ________ the Adjusted Eurodollar Rate for an Interest Period of one (1) month

4. The proceeds from the Revolving Loans shall be used for ________________________________________ which is in compliance with
Section 7 of the Credit Agreement.

5. The representations and warranties made by the Credit Parties in the Credit Documents are true and correct in all material respects at and as if made on the date hereof except to the extent they expressly relate to an earlier date.

6. As of the date hereof, no Default or Event of Default has occurred and is continuing or would be caused by this Notice of Borrowing.

7. No Material Adverse Effect has occurred since the Closing Date.

8. The Borrower is in compliance with all requirements of the Related Credit Agreement. In furtherance of this certification, Borrower represents that the ratio of (a) Total Liabilities (as defined in the Related Credit Agreement) to (b) Market Capitalization (as defined in the Related Credit Agreement) is less than or equal to 0.45 to 1.0.

HIGHWOODS/FORSYTH LIMITED PARTNERSHIP

By: Highwoods Properties, Inc., its sole general partner

By:____________________________
Name:__________________________
Title:_________________________

TO:               NATIONSBANK, N.A., as Agent
                  NATIONSBANK CORPORATE CENTER
                  CHARLOTTE, NORTH CAROLINA  28255

RE:               Credit  Agreement  dated  as  of  December  ____,  1997  among
                  Highwoods/Forsyth   Limited   Partnership   (the   "Borrower")
                  Highwoods  Properties,  Inc., the Subsidiaries of the Borrower
                  and Highwoods Properties,  Inc., NationsBank,  N.A., as Agent,
                  and the  Lenders  party  thereto  (as the same may be amended,
                  modified,  extended or restated from time to time, the "Credit
                  Agreement")

DATE:    _____________, 199__

____________________________________________________________

1.       This Notice of Continuation/Conversion is made pursuant to the terms of
         the  Credit  Agreement.   All  capitalized  terms  used  herein  unless
         otherwise  defined  shall  have the  meanings  set forth in the  Credit
         Agreement.

2.       Please be advised that the Borrower is requesting that a portion of the
         current  outstanding  Revolving  Loans  in the  amount  of  $__________
         currently accruing interest at _________ be extended or converted as of
         _____________  at the  interest  rate  option set forth in  paragraph 3
         below.

3.       The interest  rate option  applicable to the extension or conversion of
         all or part of the existing Revolving Loans shall be:

         a.   ________ the Adjusted Base Rate

         b.   ________ the Adjusted Eurodollar Rate for an Interest Period
                       of one (1) month

4.       The  representations  and warranties  made by the Credit Parties in the
         Credit  Documents are true and correct in all material  respects at and
         as if made on the date  hereof  except  to the  extent  they  expressly
         relate to an earlier date.

5.       As of the date hereof,  no Default or Event of Default has occurred and
         is    continuing    or   would   be   caused   by   this    Notice   of
         Continuation/Conversion.

6.       No Material Adverse Effect has occurred since the Closing Date.

7. The Borrower is in compliance with all requirements of the Related Credit Agreement. In furtherance of this certification, Borrower represents that the ratio of (a) Total Liabilities (as defined in the Related Credit Agreement) to (b) Market Capitalization (as defined in the Related Credit Agreement) is less than or equal to .45 to 1.0.

HIGHWOODS/FORSYTH LIMITED PARTNERSHIP
By: Highwoods Properties, Inc., its sole general partner

By:____________________________

Name:__________________________ Title:_________________________

Exhibit 2.1(f)

FORM OF
REVOLVING NOTE

$____________ _______ ____, 1997

FOR VALUE RECEIVED, Highwoods/Forsyth Limited Partnership, a North Carolina limited partnership, (the "Borrower"), hereby promises to pay to the order of ___________________ (the "Lender"), at the office of NationsBank, N.A. (the "Agent") as set forth in that certain Credit Agreement dated as of December 15, 1997 between the Borrower, Highwoods Properties, Inc., the Subsidiaries of the Borrower and Highwoods Properties, Inc., the Lenders named therein (including the Lender), and NationsBank, N.A., as Agent (as modified and supplemented and in effect from time to time, the "Credit Agreement"), the principal sum of $______________ (or such lesser amount as shall equal the aggregate unpaid principal amount of the Revolving Loans made by the Lender to the Borrower under the Credit Agreement), in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount of each such Revolving Loan, at such office, in like money and funds, for the period commencing on the date of such Revolving Loan until such Revolving Loan shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement.

This Note is one of the Revolving Notes referred to in the Credit Agreement and evidences Revolving Loans made by the Lender thereunder. Capitalized terms used in this Revolving Note and not otherwise defined shall have the respective meanings assigned to them in the Credit Agreement and the terms and conditions of the Credit Agreement are expressly incorporated herein and made a part hereof.

The Credit Agreement provides for the acceleration of the maturity of the Revolving Loans evidenced by this Revolving Note upon the occurrence of certain events (and for payment of collection costs in connection therewith) and for prepayments of Revolving Loans upon the terms and conditions specified therein. In the event this Revolving Note is not paid when due at any stated or accelerated maturity, the Borrower agrees to pay, in addition to the principal and interest, all costs of collection, including reasonable attorney fees.

The date, amount, type, interest rate and duration of Interest Period (if applicable) of each Revolving Loan made by the Lender to the Borrower, and each payment made on account of the principal thereof, shall be recorded by the Lender on its books; provided that the failure of the Lender to make any such recordation or endorsement shall not affect the obligations of the Borrower to make a payment when due of any amount owing hereunder or under this Revolving Note in respect of the Revolving Loans to be evidenced by this Revolving Note, and each such recordation or endorsement shall be prima facie evidence of such information.

THIS REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,

THE LAWS OF THE STATE OF NORTH CAROLINA.

IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be executed as of the date first above written.

HIGHWOODS/FORSYTH LIMITED PARTNERSHIP

By: Highwoods Properties, Inc., its sole general partner

By:____________________________
Name:__________________________
Title:_________________________

Exhibit 7.1(c)

FORM OF OFFICER'S CERTIFICATE

For the fiscal quarter ended _________________, 19___.

I, ______________________, chief financial officer of Highwoods Properties, Inc., the sole general partner of Highwoods/Forsyth Limited Partnership (the "Borrower") hereby certify on behalf of the Borrower that, with respect to that certain Credit Agreement dated as of December 15, 1997 (as it may be amended, modified, extended or restated from time to time, the "Credit Agreement"; all of the capitalized terms herein shall have the meanings set forth in the Credit Agreement) among the Borrower, the other Credit Parties party thereto, the Lenders party thereto and NationsBank, N.A., as Agent:

a. Attached hereto as Schedule 1 are calculations demonstrating compliance by the Credit Parties with the financial covenants contained in
Section 7.2 of the Related Credit Agreement as of the end of the fiscal period referred to above.

b. No Default or Event of Default has occurred under the Credit Agreement(1).

c. The quarterly financial statements which accompany this certificate fairly present in all material respects the financial condition of the Credit Parties, on a consolidated basis, and have been prepared in accordance with GAAP, subject to changes resulting from normal year-end audit adjustments.

This ______ day of ___________, 19__.

HIGHWOODS PROPERTIES, INC.,

sole general partner of Highwoods/Forsyth
Limited Partnership

By:_________________________________
Name:_______________________________
Title: Chief Financial Officer

Exhibit 7.16

FORM OF JOINDER AGREEMENT

THIS JOINDER AGREEMENT (this "Agreement"), dated as of _____________, 199_, is entered into between _____________________, a ___________________ (the "New Subsidiary") and NATIONSBANK, N.A., in its capacity as Agent (the "Agent") under that certain Credit Agreement, dated as of December 15, 1997, among Highwoods/Forsyth Limited Partnership (the "Borrower"), Highwoods Properties, Inc., the Subsidiaries of the Borrower and Highwoods Properties, Inc., the Lenders party thereto and the Agent (as the same may be amended, modified, extended or restated from time to time, the "Credit Agreement"). All capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Credit Agreement.

The New Subsidiary and the Agent, for the benefit of the Lenders, hereby agree as follows:

1. The New Subsidiary hereby acknowledges, agrees and confirms that, by its execution of this Agreement, the New Subsidiary will be deemed to be a Credit Party under the Credit Agreement and a "Guarantor" for all purposes of the Credit Agreement and shall have all of the obligations of a Guarantor thereunder as if it had executed the Credit Agreement. The New Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in the Credit Agreement, including without limitation
(a) all of the representations and warranties of the Credit Parties set forth in
Section 6 of the Credit Agreement, (b) all of the affirmative and negative covenants set forth in Sections 7 and 8 of the Credit Agreement and (c) all of the guaranty obligations set forth in Section 4 of the Credit Agreement. Without limiting the generality of the foregoing terms of this paragraph 1, the New Subsidiary, subject to the limitations set forth in Section 4.7 of the Credit Agreement, hereby guarantees, jointly and severally with the other Guarantors, to the Agent and the Lenders, as provided in Section 4 of the Credit Agreement, the prompt payment and performance of the Credit Party Obligations in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise) strictly in accordance with the terms thereof and agrees that if any of the Credit Party Obligations are not paid or performed in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise), the New Subsidiary will, jointly and severally together with the other Guarantors, promptly pay and perform the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Credit Party Obligations, the same will be promptly paid in full when due (whether at extended maturity, as a mandatory prepayment, by acceleration or otherwise) in accordance with the terms of such extension or renewal.

2. The address of the New Subsidiary for purposes of Section 11.1 of the Credit Agreement is as follows:

3. The New Subsidiary hereby waives acceptance by the Agent and the Lenders of the guaranty by the New Subsidiary under the Credit Agreement upon the execution of this Agreement by the New Subsidiary.

4. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument.

5. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA.

IN WITNESS WHEREOF, the New Subsidiary has caused this Agreement to be duly executed by its authorized officer, and the Agent, for the benefit of the Lenders, has caused the same to be accepted by its authorized officer, as of the day and year first above written.

[NEW SUBSIDIARY]

By:___________________________
Name:_________________________
Title:________________________

Acknowledged and accepted:

NATIONSBANK, N.A., as Agent

By:___________________________
Name:_________________________
Title:________________________

Exhibit 11.3

FORM OF
ASSIGNMENT AGREEMENT

Reference is made to that certain Credit Agreement dated as of December 15, 1997 (as the same may be amended, modified, extended or restated from time to time, the "Credit Agreement") among Highwoods/Forsyth Limited Partnership (the "Borrower"), Highwoods Properties, Inc., the Subsidiaries of the Borrower and Highwoods Properties, Inc. the Lenders identified therein and NationsBank, N.A., as Agent. All capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Agreement.

1. The Assignor (as defined below) hereby sells and assigns, without recourse, to the Assignee (as defined below), and the Assignee hereby purchases and assumes, without recourse, from the Assignor, effective as of effective date of the assignment as designated below (the "Effective Date"), the interests set forth below (the "Assigned Interest") in the Assignor's rights and obligations under the Credit Agreement, including, without limitation, (a) the interests set forth below in the Revolving Loan Commitment Percentage of the Assignor on the Effective Date and (b) the Loans owing to the Assignor in connection with the Assigned Interest which are outstanding on the Effective Date. The purchase of the Assigned Interest shall be at par and periodic payments made with respect to the Assigned Interest which (i) accrued prior to the Effective Date shall be remitted to the Assignor and (ii) accrue from and after the Effective Date shall be remitted to the Assignee. From and after the Effective Date, the Assignee, if it is not already a Lender under the Credit Agreement, shall become a "Lender" for all purposes of the Credit Agreement and the other Credit Documents and, to the extent of such assignment, the assigning Lender shall be relieved of its obligations under the Credit Agreement.

2. The Assignor represents and warrants to the Assignee that it is the holder of the Assigned Interest and the Loans related thereto and it has not previously transferred or encumbered such Assigned Interest or Loans.

3. The Assignee represents and warrants to the Assignor that it is an Eligible Assignee.

4. This Assignment shall be effective only upon (a) to the extent required, the consent of the Agent under Section 11.3(b) of the Credit Agreement and (b) delivery to the Agent of this Assignment Agreement together with the transfer fees, if applicable, set forth in Section 11.3(b) of the Credit Agreement.

5. The Assignor and the Assignee confirm to and agree with each other and the other parties to the Credit Agreement as to the terms set forth in paragraph 2 of Section 11.3(b) of the Credit Agreement.

6. This Assignment shall be governed by and construed in accordance with the laws of the State of North Carolina.

7. Terms of Assignment

(a)      Date of Assignment                           _________________

(b)      Legal Name of Assignor                       _________________

(c)      Legal Name of Assignee                       _________________

(d)      Effective Date of Assignment                 _________________

(e)      Revolving Loan Commitment
         Percentage assigned                          _________________

(f)      Total Revolving Loans
         outstanding as of Effective Date            $_________________

(g)      Principal Amount of Revolving
         Loans assigned on Effective Date
         (the amount set forth in (f)
         multiplied by the
         percentage set forth in (e))                $_________________

(h)      Revolving Committed
         Amount                                      $_________________

(i)      Principal Amount of Revolving
         Committed Amount Assigned on the
         Effective Date (the amount set forth
         in (h) multiplied by
         the percentage set forth in (e))            $_________________

The terms set forth above
are hereby agreed to:

_______________________, as Assignor

By:____________________________________
Name:__________________________________
Title:_________________________________

____________________, as Assignee

By:____________________________________
Name:__________________________________
Title:_________________________________

CONSENTED TO (if applicable):

NATIONSBANK, N.A., as Agent

By:____________________________________
Name:__________________________________
Title:_________________________________

Exhibit 4.16

Agreement to Furnish Certain Instruments Defining the Rights of Long-Term Debt Holders.

The Company hereby agrees to furnish, upon request, any and all instruments defining the rights of long-term debt holders not contained as an exhibit to