Securities Exchange Act of 1934 -- Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended to
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Commission File Number 1-12494
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CBL & Associates Properties, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 62-1545718
--------------------------------- ---------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Park Place, 6148 Lee Highway, Chattanooga, TN 37421
-------------------------------------------------- -------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (423) 855-0001
---------------
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(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
------- -------
The number of shares outstanding of each of the registrants classes of
common stock, as of May 5, 1998 : Common Stock, par value $.01 per share,
24,078,375 Shares.
<PAGE>
CBL & ASSOCIATES PROPERTIES, INC.
INDEX
PART I FINANCIAL INFORMATION PAGE NUMBER
ITEM 1: FINANCIAL INFORMATION 3
CONSOLIDATED BALANCE SHEETS - AS OF MARCH 31,
1998 AND DECEMBER 31, 1997 4
CONSOLIDATED STATEMENTS OF OPERATIONS - FOR
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 5
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
THREE MONTHS ENDED MARCH 31, 1998 AND 1997 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9
PART II OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS 20
ITEM 2: CHANGES IN SECURITIES 20
ITEM 3: DEFAULTS UPON SENIOR SECURITIES 20
ITEM 4: SUBMISSION OF MATTERS TO HAVE
A VOTE OF SECURITY HOLDERS 20
ITEM 5: OTHER INFORMATION 20
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K 21
SIGNATURE 22
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<PAGE>
CBL & ASSOCIATES PROPERTIES, INC.
ITEM 1 - FINANCIAL INFORMATION
The accompanying financial statements are unaudited; however, they have
been prepared in accordance with generally accepted accounting principles
for interim financial information and in conjunction with the rules and
regulations of the Securities and Exchange Commission. Accordingly, they
do not include all of the disclosures required by generally accepted
accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting solely of normal recurring
matters) necessary for a fair presentation of the financial statements for
these interim periods have been included. The results for the interim
period ended March 31, 1998 are not necessarily indicative of the results
to be obtained for the full fiscal year.
These financial statements should be read in conjunction with the CBL &
Associates Properties, Inc. (the "Company") December 31, 1997 audited
financial statements and notes thereto included in the CBL & Associates
Properties, Inc. Form 10-K for the year ended December 31, 1997.
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<PAGE>
CBL & ASSOCIATES PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<S> <C> <C>
MARCH 31, DECEMBER 31,
1998 1997
----------- ------------
ASSETS
Real estate assets:
Land $ 193,853 $ 164,895
Buildings and improvements 1,210,328 1,019,283
----------- ----------
1,404,181 1,184,178
Less: Accumulated depreciation (154,510) (145,641)
----------- ----------
1,249,671 1,038,537
Developments in progress 57,092 103,787
----------- ----------
Net investment in real estate assets 1,306,763 1,142,324
Cash and cash equivalents 9,008 3,124
Cash in escrow __ 66,108
Receivables:
Tenant 14,380 12,891
Other 1,161 1,121
Mortgage notes receivable 12,032 11,678
Other assets 9,061 7,779
----------- ----------
$1,352,405 $1,245,025
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage and other notes payable $849,845 $741,413
Accounts payable and accrued liabilities 25,397 41,978
----------- ----------
Total liabilities 875,242 783,391
----------- ----------
Distributions and losses in excess of
investment in unconsolidated affiliates 7,321 6,884
----------- ----------
Minority interest 128,123 123,897
Commitments and contingencies
Shareholders' Equity:
Preferred stock, $.01 par value, 5,000,000
shares authorized, none issued __ __
Common stock, $.01 par value, 95,000,000
shares authorized, 24,074,732 and 24,063,963
shares issued and outstanding in 1998 and
1997, respectively 241 241
Excess stock, $.01 par value, 100,000,000
shares authorized, none issued __ __
Additional paid - in capital 359,796 359,541
Accumulated deficit (17,834) (28,433)
Deferred compensation (484) (496)
----------- ----------
Total shareholders' equity 341,719 330,853
----------- ----------
$1,352,405 $1,245,025
=========== ==========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
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CBL & ASSOCIATES PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<S> <C> <C>
Three Months Ended
March 31,
------------------
1998 1997
-------- --------
REVENUES:
Rentals:
Minimum $ 36,053 $ 26,562
Percentage 1,675 1,376
Other 433 220
Tenant reimbursements 15,451 11,716
Management, leasing and development fees 696 679
Interest and other 748 689
-------- --------
Total revenues 55,056 41,242
EXPENSES:
Property operating 8,844 7,073
Depreciation and amortization 9,155 7,688
Real estate taxes 4,962 3,365
Maintenance and repairs 3,000 2,359
General and administrative 3,001 2,217
Interest 13,775 8,940
Other 6 27
-------- --------
Total expenses 42,743 31,669
-------- --------
INCOME FROM OPERATIONS 12,313 9,573
GAIN ON SALES OF REAL ESTATE ASSETS 1,931 3,019
EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES 737 620
MINORITY INTEREST IN EARNINGS:
Operating partnership (4,173) (3,594)
Shopping center properties (209) (142)
-------- --------
INCOME BEFORE EXTRAORDINARY ITEM 10,599 9,476
EXTRAORDINARY LOSS ON EXTINGUISHMENT OF DEBT -- (496)
-------- --------
NET INCOME $ 10,599 $ 8,980
======== ========
BASIC PER SHARE DATA:
INCOME BEFORE EXTRAORDINARY ITEM $ 0.44 $ 0.40
======== ========
NET INCOME $ 0.44 $ 0.38
======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING 24,070 23,507
DILUTED PER SHARE DATA:
INCOME BEFORE EXTRAORDINARY ITEM $ 0.44 $ 0.40
======== ========
NET INCOME $ 0.44 $ 0.38
======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING
ASSUMING DILUTION 24,304 23,784
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
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CBL & ASSOCIATES PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<S> <C> <C>
THREE MONTHS
ENDED MARCH 31,
-------------------
1998 1997
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 10,599 $ 8,980
Adjustments to reconcile net income to
net cash provided by operating activities:
Minority interest in earnings 4,382 3,736
Depreciation 7,786 6,941
Amortization 1,645 916
Gain on sales of real estate assets (1,931) (3,019)
Equity in earnings of unconsolidated affiliates (737) (620)
Distributions from unconsolidated affiliates 1,334 1,053
Issuance of stock under incentive plan 104 83
Amortization of deferred compensation 94 88
Write-off of development projects 6 27
Distributions to minority investors (4,348) (4,122)
Changes in assets and liabilities -
Tenant and other receivables (1,534) (139)
Other assets (1,475) (486)
Accounts payable and accrued expenses 61 (6,397)
-------- --------
Net cash provided by operating activities 15,986 7,041
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction of real estate assets and
land acquisition (28,673) (34,659)
Acquisition of real estate assets (146,140) (5,716)
Capitalized interest (1,161) (1,676)
Other capital expenditures (2,842) (2,741)
Deposits in escrow 66,108 --
Proceeds from sales of real estate assets 5,111 5,556
Additions to notes receivable -- (232)
Payments received on notes receivable 118 478
Advances and investments in unconsolidated
affiliates (160) (765)
-------- --------
Net cash used in investing activities (107,639) (39,755)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage and other notes payable 111,066 94,755
Principal payments on mortgage and other
notes payable (2,634) (127,324)
Additions to deferred finance costs (316) (824)
Dividends paid (10,648) (8,806)
Proceeds from issuance of common stock 69 74,352
Proceeds from exercise of stock options -- 54
Prepayment penalties on extinguishment
of debt -- (496)
-------- --------
Net cash provided by financing activities 97,537 31,711
-------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS 5,884 (1,003)
CASH AND CASH EQUIVALENTS, beginning of period 3,124 4,298
-------- --------
CASH AND CASH EQUIVALENTS, end of period $ 9,008 $ 3,295
======== ========
Cash paid for Interest Net of amounts capitalized $ 12,954 $ 10,174
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE>
CBL & ASSOCIATES PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - UNCONSOLIDATED AFFILIATES
At March 31, 1998, the Company had investments in four partnerships and
joint ventures all of which are reflected using the equity method of
accounting. Condensed combined results of operations for the unconsolidated
affiliates are presented as follows (dollars in thousands):
<TABLE>
<S> <C> <C> <C> <C>
COMPANY'S SHARE
TOTAL FOR THE FOR THE
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, MARCH 31,
------------------ ------------------
1998 1997 1998 1997
-------- -------- -------- --------
REVENUES $ 5,992 $ 5,564 $ 2,942 $ 2,770
-------- -------- -------- --------
Depreciation and amortization 707 673 400 401
Interest expense 2,058 1,969 1,010 893
Other operating expenses 1,722 1,645 795 856
-------- -------- -------- --------
Net income $ 1,505 $ 1,277 $ 737 $ 620
-------- -------- -------- --------
</TABLE>
NOTE 2 - CONTINGENCIES
The Company is currently involved in certain litigation arising in the
ordinary course of business. In the opinion of management, the pending
litigation will not materially affect the financial statements of the
Company. Additionally, based on environmental studies completed to date on
the real estate properties, management believes any exposure related to
environmental cleanup will not be significant to the financial position and
results of operations of the Company.
NOTE 3 - CREDIT AGREEMENTS
In March 1998, the Company closed on a $20 million credit facility with
SouthTrust Bank. The total available under the Company's credit facilities
was $55.4 million at March 31, 1998 and $37.4 million at May 1, 1998. The
Company's weighted average interest rate on its credit facilities at
March 31, 1998 is 6.60%.
In June 1995, the Company executed a $50.0 million interest rate swap
agreement with NationsBank N.A. which fixes the LIBOR component of $50
million of LIBOR-based variable rate debt at 5.52% for a term of three
years. There was no fee for this transaction. In December 1997, the
Company obtained two $100 million caps on LIBOR-based variable rate debt,
one at 7.0% for 1998 and one at 7.5% for 1999. There was a fee paid to
obtain these caps. In January 1998, the Company executed an interest rate
swap agreement which fixes the LIBOR component of $65 million of the
Company's LIBOR-based variable rate debt at 5.72% for a term of two years.
In February 1998, the Company executed an interest rate swap agreement which
fixes the LIBOR component of $81 million of the Company's LIBOR-based
variable rate debt at 5.54% for a term of two years.
NOTE 4 - RECLASSIFICATIONS
Certain reclassifications have been made in the 1997 financial
statements to conform with the 1998 presentation.
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CBL & ASSOCIATES PROPERTIES, INC.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the financial condition and
results of operations should be read in conjunction with CBL & Associates
Properties, Inc. Consolidated Financial Statements and Notes thereto.
Information included herein contains "forwarding-looking statements"
within the meaning of the federal securities laws. Such statements are
inherently subject to risks and uncertainties, many of which cannot be
predicted with accuracy and some of which might not even be anticipated.
Future events and actual results, financial and otherwise, may differ
materially from the events and results discussed in the forward-looking
statements. We direct you to the Company's other filings with the
Securities and Exchange Commission, including without limitation the Company's
Annual Report on Form 10-K and the "Management's Discussion and Analysis
of Financial Condition and Results of Operations" incorporated by reference
therein, for a discussion of such risks and uncertainties.
GENERAL BACKGROUND
CBL & Associates Properties, Inc.(the "Company") Consolidated Financial
Statements and Notes thereto reflect the consolidated financial results of
CBL & Associates Limited Partnership (the" Operating Partnership") which
includes at March 31, 1998, the operations of a portfolio of properties
consisting of nineteen regional malls, eleven associated centers, eighty-one
community centers, an office building, joint venture investments in three
regional malls and one associated center, and income from six mortgages,
("the Properties"). The Operating Partnership also has one mall, one
associated center and three community centers currently under construction
and options to acquire certain shopping center development sites. The
consolidated financial statements also include the accounts of CBL &
Associates Management, Inc. (the "Management Company").
The Company classifies its regional malls into two categories - malls
which have completed their initial lease-up ("Stabilized Malls") and malls
which are in their initial lease-up phase ("New Malls"). Beginning with
this quarter Turtle Creek Mall in Hattiesburg, Mississippi is classified
as a stabilized mall as it has attained initial maturity and lease up. The
New Mall category is presently comprised of the redeveloped and expanded
Westgate Mall in Spartanburg, South Carolina, Oak Hollow Mall in High
Point, North Carolina, the redevelopment Springdale Mall in Mobile, Alabama
nd the recently opened Bonita Lakes Mall in Meridian, Mississippi.
In September 1995, the Company completed a follow-on offering of
4,163,500 shares of its Common Stock at $20.625, including 150,000 shares
purchased by management. The net proceeds of $80.7 million were used to
repay floating rate indebtedness under the Company's revolving lines of
credit.
In January 1997, the Company completed a follow-on offering of 3,000,000
shares of its Common Stock at $26.125 per share, including 55,000 shares
purchased by management. The
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net proceeds of $74.3 million were used to repay variable rate indebtedness
incurred in the Company's development and acquisition program.
RESULTS OF OPERATIONS
Operational highlights for the three months ended March 31, 1998 as
compared to March 31, 1997 are as follows:
SALES
Mall shop sales, for those tenants who have reported, in the
eighteen Stabilized Malls in the Company's portfolio increased
by 5.5% on a comparable per square foot basis.
Three Months Ended March 31,
----------------------------
1998 1997
------------ ------------
Sales per square foot $55.35 $52.48
Total sales volume in the mall portfolio, including New Malls,
increased 11.0% to $229.0 million for the three months ended
March 31, 1998 from $206.3 million for the three months ended
March 31, 1997.
Occupancy costs as a percentage of sales for the three months
ended March 31, 1998 and 1997 for the Stabilized Malls were 12.9%
and 14.6%, respectively. Occupancy costs were 11.2%, 11.5% and
12.3% for the years ended December 31, 1997, 1996, and 1995,
respectively. Occupancy costs as a percentage of sales are
generally higher in the first three quarters of the year as
compared to the fourth quarter due to the seasonality of retail
sales.
OCCUPANCY
Occupancy for the Company's overall portfolio was as follows:
At March 31,
----------------------------
1998 1997
------------ ------------
Stabilized malls 91.6% 88.1%
New malls 87.1 88.2
Associated centers 84.1 91.1
Community centers 97.3 96.6
------------ ------------
Total Portfolio 93.4% 92.5%
============ ============
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<PAGE>
The Company's associated center occupancy at March 31, 1998
decreased to 84.1% primarily due to the acquisition and
redevelopment of Westgate Crossing in Spartanburg, South
Carolina. The Company's associated center occupancy would
have increased to 93.0% excluding this redevelopment center.
AVERAGE BASE RENT
Average base rents for the Company's three portfolio categories
were as follows:
At March 31,
----------------------------
1998 1997
------------ ------------
Malls $18.65 $18.99
Associated centers 9.69 9.65
Community centers 7.85 7.12
LEASE ROLLOVERS
On spaces previously occupied, the Company achieved the
following results from rollover leasing for the three months
ended March 31, 1998 compared to the base and percentage
rent previously paid:
Per Square Per Square
Foot Rent Foot Rent Percentage
Prior Lease(1) New Lease(2) Increase
-------------- ------------ ----------
Malls $19.01 $20.11 5.80%
Associated centers 13.28 15.93 19.95%
Community centers 8.03 8.40 4.60%
(1) - Rental achieved for spaces previously occupied at
the end of the lease including percentage rent.
(2) - Average base rent over the term of the lease.
For the three months ended March 31, 1998, malls represented 72.5% of
total revenues from the properties; revenues from associated centers
represented 3.8%; revenues from community centers represented 21.4%; and
revenues from mortgages and the office building represented 2.3%.
Accordingly, revenues and results of operations are disproportionately
impacted by the malls' achievements.
The shopping center business is somewhat seasonal in nature with tenant
sales achieving the highest levels during the fourth quarter because of the
holiday season. The malls earn most of their "temporary" rents (rents from
short-term tenants) during the holiday period. Thus,
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occupancy levels and revenue production are generally the highest in the
fourth quarter of each year. Results of operations realized in any one
quarter may not be indicative of the results likely to be experienced over
the course of the fiscal year.
COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31,
1998 TO THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997
Total revenues for the three months ended March 31, 1998 increased by
$13.8 million, or 33.5%, to $55.1 million as compared to $41.2 million in
1997. Minimum rents increased by $9.5 million, or 35.7% to $36.1 million
as compared to $26.6 million in 1997, and tenant reimbursements increased
by $3.7 million, or 31.9%, to $15.5 million in 1998 as compared to $11.7
million in 1997.
Approximately $10.1 million of the increase in revenues resulted from
operations at the fourteen new centers opened or acquired during the past
fifteen months. These centers consist of:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Project Name Location Total GLA Type of Addition Opening Date
- ------------------------- --------------------------- ---------- ---------------- ------------------------
Northpark Center Richmond, Virginia 62,500 New Development March, 1997
The Terrace Chattanooga, Tennessee 156,317 New Development February/March, 1997
Massard Crossing Fort Smith, Arkansas 290,717 New Development March, 1997
Salem Crossing Virginia Beach, Virginia 289,305 New Development April, 1997
Strawbridge Marketplace Virginia Beach, Virginia 43,570 New Development August, 1997
Springhurst Towne Center Louisville, Kentucky 798,736 New Development August, 1997/April 1998
Bonita Lakes Mall Meridian, Mississippi 631,555 New Development October, 1997
Bonita Lakes Crossing Meridian, Mississippi 110,500 New Development October, 1997/March 1998
Cortlandt Town Center Cortlandt, New York 772,451 New Development November, 1997
Chester Plaza Richmond, Virginia 10,000 New Development October, 1997
Westgate Crossing Spartanburg, South Carolina 151,489 Acquisition August, 1997
Springdale Mall Mobile, Alabama 926,376 Acquisition September, 1997
Asheville Mall Asheville, North Carolina 823,916 Acquisition January, 1998
Burnsville Center Burnsville (Minneapolis), 1,078,568 Acquisition January, 1998
Minnesota
</TABLE>
Approximately $3.8 million of the increase in revenues resulted from
improved operations and occupancies in the existing centers.
Property operating expense, including real estate taxes, maintenance
and repairs, and ground rent increased in the first quarter of 1998 by
$4.0 million or 31.3% to $16.8 million as compared to $12.8 million in the
first quarter of 1997. This increase is primarily the result of the addition
of the fourteen new centers referred to above.
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<PAGE>
Depreciation and amortization increased in the first quarter of 1998 by
$1.5 million or 19.1% to $9.2 million as compared to $7.7 million in the
first quarter of 1997. This increase is primarily due to the addition of
the fourteen new centers referred to above.
Interest expense increased in the first quarter of 1998 by $4.8 million,
or 54.1% to $13.8 million as compared to $8.9 million in 1997. This increase
is primarily due to the additional interest on the fourteen centers opened
during the last fifteen months.
The gain on sales of real estate assets decreased in the first quarter
of 1998 by $1.1 million, to $1.9 million as compared to $3.0 million in
1997. The gains in the first quarter of 1998 were in connection with
outparcel sales at our development at Springhurst Towne Center in
Louisville, Kentucky. Gain on sales in the first quarter of 1997 was for
various outparcel sales and included $1.6 million of gain on sale from a
pad sale at Cortlandt Towne Center in Cortlandt, New York.
Equity in earnings of unconsolidated affiliates increased in the first
quarter of 1998 by $0.1 million to $0.7 million from $0.6 million in the
first quarter of 1997 due to the acquisition of a 49% interest in Governor's
Plaza in Clarksville, Tennessee and improved operations at existing equity
centers.
LIQUIDITY AND CAPITAL RESOURCES
The principal uses of the Company's liquidity and capital resources have
historically been for property development, expansion and renovation
programs, acquisitions and debt repayment. To maintain its qualification
as a real estate investment trust under the Internal Revenue Code, the
Company is required to distribute to its shareholders at least 95% of its
"Real Estate Investment Trust Taxable Income" as defined in the Internal
Revenue Code of 1986, as amended (the "Code").
As of May 1, 1998, the Company had $13.8 million available in unfunded
construction and redevelopment loans to be used for completion of the
construction and redevelopment projects and replenishment of working
capital previously used for construction. Additionally, as of May 1, 1998,
the Company had obtained revolving credit lines and term loans totaling
$207.5 million of which $37.4 million was available. As a publicly traded
company, the Company has access to capital through both the public equity
and debt markets. The Company has filed a Shelf Registration authorizing
shares of the Company's preferred stock and common stock and warrants to
purchase shares of the Company's common stock with an aggregate public
offering price of up to $350 million. The Company anticipates that the
combination of these sources will, for the foreseeable future, provide
adequate liquidity to enable it to continue its capital programs
substantially as in the past and make distributions to its shareholders in
accordance with the Code's requirements applicable to real estate investment
trusts.
Management expects to refinance the majority of the mortgage notes
payable maturing over the next five years with replacement loans.
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<PAGE>
The Company's policy is to maintain a conservative debt to total market
capitalization ratio in order to enhance its access to the broadest range
of capital markets, both public and private. The Company's current capital
structure includes property specific mortgages, which are generally non-
recourse, revolving lines of credit, common stock and a minority interest in
the Operating Partnership. The minority interest in the Operating
Partnership represents the 28.2% ownership in the Operating Partnership
held by the Company's executive and senior officers which may be exchanged
for approximately 9.5 million shares of common stock. Additionally, Company
executive officers and directors own approximately 1.7 million shares of
the outstanding common stock of the Company, for a combined total interest
in the Operating Partnership of approximately 33.2%. Assuming the exchange
of all limited partnership interests in the Operating Partnership for common
stock, there would be outstanding approximately 33.6 million shares of
common stock with a market value of approximately $822.0 million at
March 31, 1998 (based on the closing price of $24.50 per share on March 31,
1998). Company executive and senior officers' ownership interests had a
market value of approximately $272.8 million at March 31, 1998.
Mortgage debt consists of debt on certain consolidated properties as
well as on three properties in which the Company owns a non-controlling
interest and is accounted for under the equity method of accounting. At
March 31, 1998, the Company's share of funded mortgage debt on its
consolidated properties adjusted for minority investors' interests in nine
properties was $827.3 million and its pro rata share of mortgage debt on
unconsolidated properties (accounted for under the equity method) was $42.5
million for total debt obligations of $869.8 million with a weighted average
interest rate of 7.32%.
The Company's total conventional fixed rate debt as of March 31, 1998
was $409.1 million with a weighted average interest rate of 8.07% as
compared to 8.17% as of March 31, 1997.
The Company's variable rate debt as of March 31, 1998 was $264.7 million
with a weighted average interest rate of 6.66% as compared to 6.85% as of
March 31, 1997. Through the execution of swap agreements, the Company has
fixed the interest rates on $196 million of debt on operating properties at
a weighted average interest rate of 6.52%.
Of the Company's remaining variable rate debt of $264.7 million,
interest rate caps in place of $100.0 million and conventional permanent
loan commitments of $78.0 million leave only $86.7 million of debt subject
to variable rates. Interest on $57.1 million of this remainder is
capitalized to projects currently under construction leaving $29.6 million
of variable rate debt exposure on operating properties as of March 31, 1998.
In June 1995, the Company executed a $50.0 million interest rate swap
agreement with NationsBank N.A., which fixes the LIBOR component of $50
million of LIBOR-based variable rate debt at 5.52%. This agreement
effectively fixes $50.0 million of the Company's variable rate debt at a
rate no greater than 6.77% for a term of three years. There were no fees
charged to the Company related to this transaction. In December 1997, the
Company obtained two $100 million caps on LIBOR-based variable rate debt,
one at 7% for 1998 and one at 7.5% for 1999. There was a fee paid to obtain
these caps. In January 1998, the Company executed an interest rate swap
agreement which effectively fixes the LIBOR component of $65 million of
the company's LIBOR-based variable rate debt at 5.72% for a term
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of two years. In February 1998, the Company executed an interest rate
swap agreement which effectively fixes the LIBOR component of $81 million of
the company's LIBOR-based variable rate debt at 5.54% for a term of two
years.
In March 1998, the Company closed on a $20 million credit facility with
SouthTrust Bank at an interest rate of 100 basis points over LIBOR. The
weighted average interest rate on the Company's credit facilities and term
loans is 97 basis points over LIBOR. In September 1996, the Company closed
a short term loan with Compass Bank in the amount of $12.5 million at an
interest rate of 50 basis point over LIBOR. This note matures on July 15,
1998.
Based on the debt (including construction projects) and the market value
of equity described above, the Company's debt to total market capitalization
(debt plus market value equity) ratio was 51.4% at March 31, 1998.
DEVELOPMENT, EXPANSIONS AND ACQUISITIONS
Development projects under construction and scheduled to open during
1998 are: Sterling Creek Commons in Portsmouth, Virginia, a 65,000-square-
foot community center scheduled to open in June 1998 and Sand Lake Corners
in Orlando, Florida, a 594,000-square-foot community center, the first phase
of which will open in November 1998 with the remainder to open by April 1999.
In the first quarter of 1998, the Company began construction on Fiddler's
Run in Morganton, North Carolina, a 203,000-square-foot community center
scheduled to open in March 1999. Other projects currently under construction
are Arbor Place Mall in Douglasville, Georgia, a suburb of Atlanta. This
860,000-square-foot mall is scheduled to open in October 1999 with an
additional 550,000-square-feet planned. Preliminary grading work has
already begun for the construction of an adjacent 165,000-square-foot
associated center to be called The Landing at Arbor Place.
During April 1998 the Company opened a 14,000-square-foot expansion to
Hamilton Crossing in Chattanooga, Tennessee. The Company will open a 15,000-
square-foot expansion to Girvin Plaza in Jacksonville, Florida in May 1998
and a 12,000-square-foot expansion to CoolSprings Crossing in Nashville,
Tennessee in August, 1998.
During the first quarter of 1998, the Company acquired Asheville Mall in
Asheville, North Carolina, an 820,000-square-foot mall anchored by Belk,
Dillard's, JCPenney, Montgomery Ward and Sears. The company also acquired
Burnsville Center in Burnsville (Minneapolis), Minnesota, a 1,079,000-square-
foot super regional mall anchored by Dayton's, JCPenney, Mervyn's and Sears.
Subsequent to the end of the quarter, the Company purchased Stroud Mall in
Stroudsburg, Pennsylvania, a 427,000-square-foot mall anchored by Sears,
The Bon-Ton and JCPenney.
The Company has entered into standby purchase agreements with third-
party developers (the "Developers") for the construction, development and
potential ownership of two community centers in Georgia and Texas (the "Co-
Development Projects"). The Developers have utilized these standby
Page 15
<PAGE>
purchase agreements to assist in obtaining financing to fund the construction
of the Co-Development Projects. The standby purchase agreements, which
expire in 1999, are dependent upon certain completion requirements, rental
levels, the inability of the Developers to obtain adequate permanent
financing and the inability to sell the Co-Development Project before the
Company becomes obligated to fund its equity contribution or purchase the
Co-Development Project. In return for its commitment to purchase a Co-
Development Project pursuant to a standby purchase agreement, the Company
receives a fee as well as a participation interest in either the cash flow
or gains from sale on each Co-Development Project. In addition to the
standby purchase agreements, the Company has extended credit on a secured
basis to each of the Developers to cover pre-development costs. The
outstanding amount on standby purchase agreements is $49.1 million and the
committed amount on secured credit agreements is $3.7 million of which $1.8
million is outstanding at March 31, 1998.
The Company has entered into a number of option agreements for the
development of future regional malls and community centers. Except for
these projects and as further described below, the Company currently has
no other capital commitments.
It is management's expectation that the Company will continue to have
access to the capital resources necessary to expand and develop its
business. Future development and acquisition activities will be undertaken
by the Company as suitable opportunities arise. Such activities are not
expected to be undertaken unless adequate sources of financing are available
and a satisfactory budget with targeted returns on investment has been
internally approved.
The Company will fund its major development, expansion and acquisition
activity with its traditional sources of construction and permanent debt
financing as well as from other debt and equity financings, including public
financings, and its credit facilities in a manner consistent with its
intention to operate with a conservative debt to total market capitalization
ratio.
OTHER CAPITAL EXPENDITURES
Management prepares an annual capital expenditure budget for each
property which is intended to provide for all necessary recurring and
non-recurring capital improvements. Management believes that its annual
operating reserve for maintenance and recurring capital improvements and
reimbursements from tenants will provide the necessary funding for such
requirements. The Company intends to distribute approximately 70% - 90%
of its funds from operations with the remaining 10% - 30% to be held as a
reserve for capital expenditures and continued growth opportunities. The
Company believes that this reserve will be sufficient to cover (I) tenant
finish costs associated with the renewal or replacement of current tenant
leases as their leases expire and (II) capital expenditures which will not
be reimbursed by tenants.
Major tenant finish costs for currently vacant space are expected to be
funded with working capital, operating reserves, or the revolving lines of
credit, and a return on the funds so invested is expected to be earned.
Page 16
For the first quarter of 1998, revenue generating capital expenditures
or tenant allowances for improvements were $2.3 million. These capital
expenditures generate increased rents from these tenants over the term of
their leases. Revenue enhancing capital expenditures, or remodeling and
renovation costs, were $1.0 million for the first quarter of 1998. Revenue
neutral capital expenditures, which are recovered from the tenants, were
$0.5 million for the first quarter of 1998.
The Company believes that the Properties are in compliance in all
material respects with all federal, state and local ordinances and
regulations regarding the handling, discharge and emission of hazardous or
toxic substances. The Company has not been notified by any governmental
authority, or is not otherwise aware, of any material noncompliance,
liability or claim relating to hazardous or toxic substances in connection
with any of its present or former properties.
The Company has not recorded in its financial statements any material
liability in connection with environmental matters.
CASH FLOWS
Cash flows provided by operating activities for the first quarter of
1998, increased by $8.9 million, or 127%, to $16.0 million from $7.0
million in 1997. This increase was primarily due to the fifteen centers
opened or acquired over the last fifteen months, improved operations
in the existing centers and the timing of the payment of real estate taxes.
Cash flows used in investing activities for the first quarter of 1998,
increased by $67.9 million, to $107.6 million compared to $39.8 million in
1997. This increase was due primarily to an increase of $140.4 million of
acquisitions offset by the reduction of cash deposited in escrow of $66.1
million and increased investment in capital and development for the first
quarter of 1998, as compared to the first quarter of 1997. Cash flows
provided by financing activities for the first quarter of 1998, increased
by $65.8 million, compared to the first quarter of 1997 primarily due to
increased borrowings related to the development and acquisition program.
IMPACT OF INFLATION
In the last three years, inflation has not had a significant impact on
the Company because of the relatively low inflation rate. Substantially all
tenant leases do, however, contain provisions designed to protect the
Company from the impact of inflation. Such provisions include clauses
enabling the Company to receive percentage rentals based on tenant's gross
sales, which generally increase as prices rise, and/or escalation clauses,
which generally increase rental rates during the terms of the leases. In
addition, many of the leases are for terms of less than ten years which may
enable the Company to replace existing leases with new leases at higher base
and/or percentage rentals if rents of the existing leases are below the
then-existing market rate. Most of the leases require the tenants to pay
their share of operating expenses, including common area maintenance, real
estate taxes and insurance, thereby reducing the Company's exposure to
increases in costs and operating expenses resulting from inflation.
Page 17
<PAGE>
FUNDS FROM OPERATIONS
Management believes that Funds from Operations ("FFO") provides an
additional indicator of the financial performance of the Properties. FFO
is defined by the Company as net income (loss) before depreciation of real
estate assets, other non-cash items (including the write-off of development
projects not being pursued) gains or losses on sales of real estate and
gains or losses on investments in marketable securities. FFO also includes
the Company's share of FFO in unconsolidated properties and excludes
minority interests' share of FFO in consolidated properties. The Company
computes FFO in accordance with the National Association of Real Estate
Investments Trusts ("NAREIT") recommendation concerning finance costs and
non-real estate depreciation. The FFO for the first quarter of 1997 has
been restated to include straight line rents. Beginning with the first
quarter of 1998 the Company includes straight line rent in its FFO
calculation. However, the Company continues to exclude gains or losses
on outparcel sales, even though NAREIT permits their inclusion when
calculating FFO. Gains or losses on outparcel sales would have added
$1.9 million in the first quarter of 1998 and $3.0 million in 1997.
The use of FFO as an indicator of financial performance is influenced
not only by the operations of the Properties, but also by the capital
structure of the Operating Partnership and the Company. Accordingly,
management expects that FFO will be one of the significant factors
considered by the Board of Directors in determining the amount of cash
distributions the Operating Partnership will make to its partners (including
the REIT). FFO does not represent cash flow from operations as defined by
GAAP and is not necessarily indicative of cash available to fund all cash
flow needs and should not be considered as an alternative to net income
(loss) for purposes of evaluating the Company's operating performance or
to cash flow as a measure of liquidity.
For the three months ended March 31, 1998, FFO increased by $4.1
million, or 23.0%, to $22.0 million as compared to $17.9 million for the
same period in 1997. The increase in FFO was primarily attributable to the
new developments opened during 1997, the acquisitions during 1997 and the
first quarter of 1998 and improved operations in the existing portfolio.
Page 18
<PAGE>
The Company's calculation of FFO is as follows: (dollars in thousands)
<TABLE>
<S> <C> <C>
Three Months Ended
March 31,
-------------------
1998 1997
--------- --------
Income from operations $ 12,313 $ 9,573
ADD:
Depreciation & amortization from 9,155 7,688
consolidated properties
Income from operations of 737 620
unconsolidated affiliates
Depreciation & amortization from 346 401
unconsolidated affiliates
Write-off of development costs charged 6 27
to net income
SUBTRACT:
Minority investors' share of income
from operations in nine properties (209) (142)
Minority investors share of depreciation
and amortization in nine properties (206) (178)
Depreciation and amortization of non-real
estate assets and finance costs (129) (94)
--------- --------
TOTAL FUNDS FROM OPERATIONS $ 22,013 $ 17,895
========= ========
DILUTED WEIGHTED AVERAGE SHARES WITH
OPERATING PARTNERSHIP UNITS FULLY CONVERTED 33,780 33,192
========= ========
</TABLE>
Page 19
<PAGE>
PART II - OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
None
ITEM 2: CHANGES IN SECURITIES
None
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4: SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Shareholders on April 30,
1998. At the meeting, shareholders re-elected as directors
Stephen D. Lebovitz (24,487,182 votes for and 227,978 votes
against or withheld), and Winston W. Walker (20,462,108 votes for
and 253,052 votes against or withheld), to three-year terms
expiring in 2001. Other continuing directors of the Company are,
Charles B. Lebovitz, Claude M. Ballard, and Leo Fields whose terms
expire in 1999 and John N. Foy and William J. Poorvu whose terms
expire in 2000.
In addition, at the meeting, shareholders approved a proposal to
ratify the selection of Arthur Andersen LLP as independent public
accountants for the fiscal year ending December 31, 1998 (20,694,083
votes for, 21,077 votes against or withheld).
ITEM 5: OTHER INFORMATION
None
Page 20
<PAGE>
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
25.1 Loan agreement with South Trust Bank dated
January 15, 1998.
27 Financial Data Schedule
B. Reports on Form 8-K
The following items were reported:
Additional information on the acquisition of Burnsville Center
in Burnsville (Minneapolis), Minnesota (Item 2) was reported
in an 8-K/A dated April 15, 1998.
The outline from the Company's April 30, 1998 conference call
with analysts and investors regarding earnings (Item 5) was
filed on April 30, 1998.
Page 21
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CBL & ASSOCIATES PROPERTIES, INC.
/s/ John N. Foy
------------------------------------
John N. Foy
Executive Vice President,
Chief Financial Officer and Secretary
(Authorized Officer of the Registrant,
Principal Financial Officer and
Principal Accounting Officer)
Date: May 14, 1998
Page 22
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO.
- -------
25.1 Loan agreement with South Trust Bank dated January 15, 1998.
27 Financial Data Schedule
Page 23
<PAGE>
REVOLVING CREDIT LOAN AGREEMENT
THIS REVOLVING CREDIT LOAN AGREEMENT ("Loan Agreement"), dated
this ___ day of January, 1998, is by and between CBL & ASSOCIATES
LIMITED PARTNERSHIP, a Delaware limited partnership, whose address
is One Park Place, 6148 Lee Highway, Chattanooga, Tennessee 37421-
2931 (the "Borrower"), and SOUTHTRUST BANK, NATIONAL ASSOCIATION,
a national banking association organized and existing under the
statutes of the United States of America, with offices at 420 North
20th Street, Commercial Real Estate Group, 11th Floor, Birmingham,
Alabama 35203 (the "Bank").
R E C I T A L S
Borrower has requested that the Bank commit to make loans and
advances to it on a revolving credit basis in an amount not to
exceed at any one time outstanding the principal sum of TWENTY
MILLION DOLLARS ($20,000,000) (or, if lesser, the Borrowing Base
described herein) for the purpose of providing working capital for
pre-development expenses, development costs, equity investments,
repayment of existing indebtedness, certain distributions to
limited partners (as allowed herein), and for general corporate
purposes. The Bank has agreed to make establish such credit
facility on the terms and conditions herein set forth.
NOW, THEREFORE, incorporating the Recitals set forth above and
in consideration of the mutual agreements herein contained, the
parties agree as follows:
ARTICLE I:
DEFINITIONS AND ACCOUNTING TERMS
1.1 Certain Defined Terms. For the purposes of this Loan
Agreement, the following terms shall have the following meanings
(such meanings to be applicable equally to both the singular and
plural forms of such terms) unless the context otherwise requires:
"Adjusted Loan Amount" means the lesser of (a) an eighty-five
percent (85%) loan-to-value ratio of the Mortgaged Properties, such
loan-to-value ratio to be calculated based upon the appraised
values given to the Mortgaged Properties in current appraisals
complying with the Bank's standard appraisal requirements, or (b)
the combined Net Operating Income from the Mortgaged Properties as
of each July 1, January 1, April 1 and October 1, as the case may
be, based upon the then immediately preceding twelve (12) month
period, divided by 1.15 with the resulting figure being further
divided by the applicable mortgage constant of 8.81 (as such
mortgage constant may be adjusted from time to time in Bank's
reasonable judgment based upon Bank's then current permanent loan
underwriting criteria for comparable projects), or (c) Twenty
Million Dollars ($20,000,000).
"Affiliate" means as to any Person, any other Person which,
directly or indirectly, owns or controls, on an aggregate basis
including all beneficial ownership and ownership or control as a
trustee, guardian or other fiduciary, at least ten percent (10%) of
the outstanding shares of Capital Stock or other ownership interest
having ordinary voting power to elect a majority of the board of
directors or other governing body (irrespective of whether, at the
time, stock of any other class or classes of such corporation shall
have contingency) of such Person or at least ten percent (10%) of
the partnership or other ownership interest of such Person; or
which controls, is controlled by or is under common control with
such Person. For the purposes of this definition, "control" means
the possession, directly or indirectly, of the power to direct or
cause the direction of management and policies, whether through the
ownership of voting securities, by contract or otherwise.
Notwithstanding the foregoing, a pension fund, university or other
endowment funds, mutual fund investment company or similar fund
having a passive investment intent owning such a ten percent (10%)
or greater interest in a Person shall not be deemed an Affiliate of
such Person unless such pension, mutual, endowment or similar fund
either (i) owns fifty percent (50%) or more of the Capital Stock or
other ownership interest in such Person, or (ii) has the right or
power to select one or more members of such Person's board of
directors or other governing body.
"Applicable Law" means, in respect of any Person, all
provisions of statutes, rules, regulations and orders of any
governmental authority applicable to such Person, and all orders
and decrees of all courts and arbitrators in proceedings or actions
in which the person in question is a party.
"Borrowing Base" is the limitation on the aggregate Revolving
Credit Loan indebtedness which may be outstanding at any time
during the term of this Agreement. The Borrowing Base will be
calculated each July 1, January 1, April 1 and October 1 during the
term hereof. The Borrowing Base will be an amount not to exceed
the Borrower's Adjusted Loan Amount.
"Business Day" means a banking business day of the Bank.
"Capital Stock" means, as to any Person, any and all shares,
interests, warrants, participations or other equivalents (however
designated) of corporate stock of such Person.
"Capitalized Value" means an amount, calculated as of any
date, equal to the quotient of (a) the sum of (i) Borrower's Funds
From Operations during the most recent quarter end, annualized plus
(ii) the Interest Expense used in calculating Borrower's Funds
From Operations pursuant to clause (i) above, plus (iii) the
annualized base rental income from tenants which have executed
leases in completed projects and in projects scheduled for
completion during the twelve month period subsequent to such date,
and (b) nine percent (.09).
"CBL Holdings" means CBL Holdings I, Inc., a Delaware
corporation and the sole general partner of Borrower.
"CBL Management, Inc." means CBL & Associates Management,
Inc., a Delaware corporation.
"CBL Mortgages" means, collectively, the mortgages and/or
deeds of trust with security agreements and assignments of rents
and leases and related amendments executed contemporaneously
herewith by Kingston Overlook Limited Partnership with respect to
the Kingston Overlook Shopping Center in Knoxville, Tennessee, by
Cary Limited Partnership with respect to the Devonshire Place
Shopping Center in Cary, North Carolina, and by Massard Crossing
Limited Partnership with respect to the Massard Crossing Shopping
Center in Ft. Smith, Arkansas (such mortgages covering the
properties described in Exhibit A attached hereto and made a part
hereof) together with such other affiliates of the Borrower who
may hereafter execute and deliver to Bank a CBL Mortgage as
referred to in Section 4.1(e) hereof.
"CBL Properties, Inc." means CBL & Associates Properties,
Inc., a Delaware corporation and a qualified public REIT and the
sole owner of CBL Holdings, and who has guaranteed payment and
performance of the Borrowers obligations hereunder pursuant to its
Guaranty Agreement of even date herewith in favor of the Lender.
"Closing Date" means the date set out in the first paragraph
of this Loan Agreement.
"Combined" means, as to any calculation hereunder, that such
calculation shall be made on a combined basis for Borrower, CBL
Properties, Inc. and CBL Management, Inc., with each such
calculation being made, (a) in respect of Borrower, on a
consolidated basis for Borrower and its Subsidiaries, (b) in
respect of CBL Properties, Inc., on a consolidated basis for CBL
Properties, Inc. and its Subsidiaries, and (c) in respect of CBL
Management, Inc., on a consolidated basis for CBL Management, Inc.
and its Subsidiaries.
"Contingent Obligations" means, for any Person, any material
commitment, undertaking, Guarantee or material obligation
constituting a continuing liability under GAAP, but only to the
extent the same are required to be reflected on such Persons'
audited financial statements.
"Debt Coverage Ratio" means, as of any date the same is
calculated, the ratio of (a) EBITDA for the fiscal quarter ending
on or most recently ended prior to such date to (b) Debt Service
during such fiscal quarter, in each case calculated on a Combined
basis in accordance with GAAP.
"Debt Service" means, with respect to Borrower, CBL
Properties, Inc., and their respective Subsidiaries for any period,
the sum of (a) Interest Expense of Borrower, CBL Properties, Inc.
and their respective Subsidiaries for such period, plus (b)
regularly scheduled principal payments on Indebtedness of Borrower,
CBL Properties, Inc. and their respective Subsidiaries during such
period other than any regularly scheduled principal payment payable
on any Indebtedness which prepays such Indebtedness in full, to the
extent the amount of such final scheduled principal payment is
greater than the scheduled principal payment immediately preceding
such final scheduled principal payment, determined in each case on
a Combined basis in accordance with GAAP. For purposes of this
definition, a voluntary prepayment of Indebtedness shall not
constitute a regularly scheduled principal payment even if, under
the terms of the agreement governing such Indebtedness, the notice
of prepayment has the effect of causing the amount of the
prepayment to become due and payable on the date set for such
notice of such prepayment.
"EBITDA" means, for any period, the sum of (i) Net Income of
Borrower, CBL Properties, Inc. and their respective Subsidiaries
for such period (excluding equity in net earnings (or loss) of
their Unconsolidated Affiliates), plus (ii) depreciation and
amortization expense and other non-cash charges of Borrower, CBL
Properties, Inc. and their respective Subsidiaries for such period,
plus (iii) interest expense of Borrower, CBL Properties, Inc. and
their respective Subsidiaries for such period, plus (iv) income tax
expense in respect of such period, plus (v) cash dividends and
distributions actually received by Borrower, CBL Properties, Inc.
and their respective Subsidiaries during such period from
Unconsolidated Affiliates, plus (vi) extraordinary losses (and any
unusual losses arising in or outside the ordinary course of
business of Borrower, CBL Properties, Inc. and their respective
Subsidiaries not included in extraordinary losses determined in
accordance with GAAP that have been reflected in the determination
of Net Income) for such period, minus (vii) extraordinary gains of
Borrower, CBL Properties, Inc. and their respective Subsidiaries
(and any unusual gains arising in or outside the ordinary course of
business of Borrower, CBL Properties, Inc. or such respective
Subsidiaries not included in extraordinary gains determined in
accordance with GAAP that have been reflected in the determination
of Net Income) for such period, determined in each case on a
Combined basis in accordance with GAAP.
"Environmental Laws" means all applicable local, state or
federal laws, rules or regulations pertaining to environmental
regulation, contamination or cleanup, including, without
limitation, the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, the Resource Conservation and Recovery
Act of 1976 or any state lien or superlien or environmental cleanup
statutes.
"Event of Default" has the meaning assigned to that phrase in
Section 8.
"Funds from Operations" means, as to any period, an amount
equal to (a) income (or loss) from operations of Borrower, CBL
Properties, Inc. and their respective Subsidiaries for such period,
plus (b) depreciation and amortization, plus (or minus) (c) to the
extent not included in clause (a) above, gain (loss) on the sales
of outparcels made in the ordinary course of business, and after
adjustments for Unconsolidated Affiliates, determined in each case
on a Combined basis in accordance with GAAP. Adjustments for
Unconsolidated Affiliates will be calculated to reflect funds from
operations on the same basis.
"GAAP" means generally accepted accounting principles applied
on a basis consistent with those which are to be used in making the
calculations for purposes of determining compliance with this
Agreement. All calculations made for the purposes of determining
compliance with this Agreement shall (except as may be otherwise
expressly provided herein) be made by application of generally
accepted accounting principles applied on a basis consistent with
those used in preparation of the annual and quarterly financial
statements of CBL Properties, Inc. furnished to the Securities and
Exchange Commission.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any
Indebtedness or other obligation of any other Person and, without
limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase
or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise), or (ii)
entered into for the purpose of assuring in any other manner the
obligee of such Indebtedness or other obligation of the payment
thereof or to protect such obligee against losses in respect
thereof (in whole or in part), provided that the term "Guarantee"
shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb
has a corresponding meaning.
"Hazardous Substances" means and includes all hazardous and
toxic substances, wastes or materials, any pollutants or
contaminants (including, without limitation, asbestos and raw
materials which include hazardous constituents), or any other
similar substances or materials which are included under or
regulated by any applicable Environmental Laws.
"Indebtedness" means, as applied to any Person at any time,
without duplication (a) all indebtedness, obligations or other
liabilities of such Person (i) for borrowed money or evidenced by
debt securities, debentures, acceptances, notes or other similar
instruments, and any accrued interest, fees and charges relating
thereto; (ii) with respect to letters of credit issued for such
Person's account; (iii) under agreements for the prospective
purchase or repurchase assets other than obligations arising under
unexercised option agreements; (iv) to make future investments in
any Person; (v) to pay the deferred purchase price of property or
services previously purchased or rendered, except unsecured trade
accounts payable and accrued expenses required to be capitalized in
accordance with GAAP; (b) all indebtedness, obligations or other
liabilities of such Person or others secured by a Lien on any asset
of such Person, whether or not such Person is otherwise obligated
on such indebtedness, obligations or liabilities are assumed by
such Person, all as of such time; (c) all indebtedness, obligations
or other liabilities of such Person in respect of any foreign
exchange contract or any interest rate swap, cap or collar
agreement or similar arrangement, net of liabilities owed to such
Person by the counterparties thereon; (d) all shares of Capital
Stock or equivalent ownership interest subject (upon the occurrence
of any contingency or otherwise) to mandatory redemption prior to
the date the Loan is scheduled to be repaid in full; (e)
obligations of others to the extent Guaranteed by such Person or to
the extent such Person is otherwise liable on a recourse basis; and
(f) such Person's pro rata share of non-recourse Indebtedness of a
partnership in which such Person is a partner (it being understood
that the remaining portion of such non-recourse partnership
Indebtedness shall not constitute Indebtedness of such Person).
"Interest Coverage Ratio" means, as of any date the same is
calculated, the ratio of (a) EBITDA for the fiscal quarter ending
on or most recently ended prior to such date to (b) Interest
Expense for such fiscal quarter, determined in each case on a
Combined basis in accordance with GAAP.
"Interest Expense" means, for any Person for any period, total
interest expense on Indebtedness of such Person, whether paid or
accrued, but without duplication (including the interest component
of capital leases), including, without limitation, (a) all
commissions, discounts and other fees and charges owed with respect
to letters of credit, and (b) one hundred percent (100%) of any
interest expense, whether paid or accrued, or any other Person for
which such Person is wholly or partially liable (whether by
Guarantee, pursuant to Applicable Law or otherwise) but excluding
(i) interest on Reserved Construction Loans, and (ii) swap or other
interest hedging breakage costs, all as determined in conformity
with GAAP.
"Investment" in any Person shall mean any investment, whether
by means of share purchase, loan, advance, extension of credit,
capital contribution or otherwise, in or to such Person, the
Guarantee of any Indebtedness of such Person, or the subordination
of any claim against such Person to other Indebtedness of such
Person.
"LIBOR Rate" means one hundred and twenty-five (125) basis
point (1.25%) in excess of the London Interbank Offered Rate
(LIBOR), adjusted in Bank's discretion for applicable reserve
requirements (if any), as quoted by Telerate (or if such rate is
not available from Telerate, then from such other sources as Bank
may select), and which, at Borrower's option, shall be either a one
(1) month, two (2) months, three (3) months, or six (6) months
LIBOR interest period.
"Lien" means any interest in Property securing an obligation
owed to, or a claim by, a Person other than the owner of the
Property, whether such interest is based on the common law, statute
or contract, and including but not limited to the security interest
or lien arising from a deed of trust, mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment
or bailment for security purposes, and including but not limited to
reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting the Mortgaged Properties.
"Loan" means the Revolving Credit Loan from the Bank to the
Borrower.
"Loan Agreement" means this Loan Agreement between the
Borrower and the Bank, and any modifications, amendments, or
replacements thereof, in whole or in part.
"Maturity Date" means the date that the Loan shall be due and
payable, and shall be December 15, 2000.
"Maximum Rate" means the maximum variable contract rate of
interest which the Bank may lawfully charge under applicable
statutes and laws from time to time in effect.
"Mortgages" or "Mortgage" means a mortgage, deed of trust,
deed to secure debt or similar security instrument made or to be
made by a Person owning a Mortgaged Property or an interest in a
Mortgaged Property, granting a Lien on such real estate or interest
in real estate as security for the payment of indebtedness.
"Mortgaged Properties" means any property encumbered by a CBL
Mortgage. As of the date hereof, the Mortgaged Properties are the
Kingston Overlook Shopping Center in Knoxville, Tennessee, the
Devonshire Place Shopping Center in Cary, North Carolina, and the
Massard Crossing Shopping Center in Ft. Smith, Arkansas, together
with any other properties which are hereafter subject to a CBL
Mortgage.
"Net Income" means, with respect to Borrower, CBL Properties,
Inc., and their respective Subsidiaries for any period, net
earnings (or loss) after deducting therefrom all operating
expenses, income taxes and reserves and net earnings (or loss)
attributable to minority interests in Subsidiaries for the period
in question, determined in each case on a Combined basis in
accordance with GAAP. Without limiting the generality of the
foregoing, earnings (or losses) from the sale of outparcels in the
ordinary course of business shall be included in determining Net
Income.
"Net Operating Income" means, for any Property for the period
in question (a) any cash rentals, expense or cost reimbursements,
or other income or gain earned by Borrower with respect to such
Property, less (b) all cash expenses (excluding items capitalized
under GAAP) incurred by Borrower during such period in connection
with the operation or leasing of such Property.
"Net Worth" means, with respect to Borrower, CBL Properties,
Inc. and their Subsidiaries as of any date, the sum of (a) the
total shareholders' equity of CBL Properties, Inc., plus (b) the
value of all minority interests in Borrower, plus (c) depreciation
and amortization since December 31, 1993, minus (d) all intangible
assets, determined on a Combined basis in accordance with GAAP.
"Note" means the Revolving Credit Note executed by the
Borrower to the Bank, dated of even date herewith as such note may
be modified, renewed or extended from time to time; and any other
note or notes executed at any time to evidence the indebtedness
under this Loan Agreement, in whole or in part, and any renewals,
modifications and extensions thereof, in whole or in part.
"Permitted Encumbrances" means and includes:
(a) liens for taxes, assessments or similar governmental
charges not in default or being contested in good faith
by appropriate proceedings;
(b) workmen's, vendors', mechanics' and materialmen's liens
and other liens imposed by law incurred in the ordinary
course of business, and easements and encumbrances which
are not substantial in character or amount and do not
materially detract from the value or interfere with the
intended use of the properties subject thereto and
affected thereby;
(c) liens in respect of pledges or deposits under social
security laws, worker's compensation laws, unemployment
insurance or similar legislation and in respect of
pledges or deposits to secure bids, tenders, contracts
(other than contracts for the payment of money), leases
or statutory obligations;
(d) any liens and security interests specifically listed and
described in Exhibit B hereto attached or in any exhibit
describing permitted exceptions and attached to any CBL
Mortgage;
(e) such other liens and encumbrances to which Bank shall
consent in writing; and
(f) leases, licenses, rental agreements or other agreements
for use and occupancy of the subject property.
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, association, joint venture or a
government or agency or political subdivision thereof.
"Project" or "Projects," which definition is used and only
applies within Section 7.9 hereof, means the real estate projects
owned by Borrower, a Subsidiary of Borrower, or any other Person
and "Project" shall mean any one of the Projects.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, tangible or intangible.
"Reserved Construction Loan" means a construction loan
extended to Borrower or a Subsidiary of Borrower for the
construction of a Project in respect of which: (a) neither any
monetary or material non-monetary default nor any event of default
exists; (b) interest on such loan has been budgeted to accrue at a
rate of not less than the Base Rate plus two percent (2%) at the
time the interest reserve account is established; (c) the amount of
such budgeted interest has been (i) included in the principal
amount of such loan and (ii) segregated into an interest reserve
account (which shall include any arrangement whereby loan proceeds
equal to such budgeted interest are reserved and only disbursed to
make interest payments in respect of such loan); (d) absent an
event of default or a monetary or material non-monetary default,
such interest can be paid out of such interest reserve account only
for the purpose of making interest payments on such loan; (e) the
amount held in such interest reserve account in respect of such
loan, together with the net income if any, from such project
projected by the Bank in its reasonable judgment, will be
sufficient, as reasonably determined by the Bank from time to time,
to pay all Interest Expense on such loan until the date that the
EBITDA of the project being financed by such loan is anticipated to
be sufficient to pay all Interest Expense on such loan; and (f)
Borrower has delivered all certificates required by Section 6
hereof.
"Revolving Credit Advances" means advances of principal on the
Revolving Credit Loan to be made by the Bank under the terms of
this Loan Agreement to the Borrower during the Revolving Credit
Period pursuant to Section 3.1.
"Revolving Credit Loan" means the Borrower's revolving credit
indebtedness to the Bank pursuant to Section 2 of this Loan
Agreement.
"Revolving Credit Note" means the Note as described in
Section 2.3 hereof.
"Revolving Credit Period" means the period of time during
which the Bank will make Revolving Credit Advances of the Loan to
the Borrower. The Revolving Credit shall commence on the Closing
Date and shall expire on the earlier of (a) January 15, 1998
(subject, however, to being extended as is set forth in Section 2.4
hereof) or in the event that the Bank and Borrower shall hereafter
mutually agree in writing that the Revolving Credit Loan and the
Bank's commitment hereunder shall be extended to another date, such
other date mutually agreed upon between Bank and Borrower to which
the Bank's commitment shall have been extended, or (b) the date as
of which Borrower shall have terminated the Bank's commitment under
the provisions of Section 2.5 hereof.
"Subsidiary" means, as to any Person, any other Person, more
than fifty percent (50%) of the outstanding shares of Capital
Stock, partnership interest or other ownership interest, having
ordinary voting power to elect a majority of the board of directors
or similar governing body of such other Person (irrespective of
whether or not at the time stock or other ownership interests of
any other class or classes of such other Person shall have or might
have voting power by reason of the happening of any contingency) is
at the time directly or indirectly owned or controlled by such
Person or by one or more "Subsidiaries" of such Person, and whose
financial reports are prepared on a consolidated basis with such
Person. "Wholly Owned Subsidiary" shall mean any such Person of
which all of the shares of Capital Stock or ownership interests
(other than, in the case of a corporation, directors' qualifying
shares) are so owned or controlled. For purposes of this Agreement
CBL Management, Inc. shall be deemed to be a Subsidiary of
Borrower.
"Total Obligations" means, as of any date, the sum (without
duplication) of (a) the Indebtedness of Borrower, CBL Properties,
Inc. and their respective Subsidiaries (other than Indebtedness
described in clauses (a)(iii) and (a)(iv) of the definition
thereof); plus (b) the aggregate amount of Contingent Obligations
of Borrower, CBL Properties, Inc. and their respective Subsidiaries
in respect of Indebtedness (other than Indebtedness described in
clauses (a)(iii) and (a)(iv) of the definition thereof); plus (c)
Borrower's, CBL Properties, Inc's or their respective Subsidiaries'
proportionate share of Indebtedness (other than Indebtedness
described in clauses (a)(iii) and (a)(iv) of the definition
thereof) of any Unconsolidated Affiliate, whether or not Borrower,
CBL Properties, Inc. or such Subsidiary is obligated on such
Indebtedness; plus (d) all other amounts which would be classified
as a liability on the consolidated balance sheets of Borrower or
CBL Properties, Inc., determined in each case on a Combined basis
in accordance with GAAP.
"Unconsolidated Affiliate" means, in respect of any Person,
any other Person in whom such Person holds an Investment, which
Investment is accounted for in the financial statements of such
Person on an equity basis of accounting.
1.2 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the
preparation of the financial statements required to be delivered
from time to time pursuant to Section 6.5 hereof.
ARTICLE II
COMMITMENT; FUNDING AND TERMS OF REVOLVING CREDIT LOAN
2.1 The Commitment. Subject to the terms and conditions
herein set out, Bank agrees and commits to make Revolving Credit
Advances to the Borrower from time to time during the Revolving
Credit Period in an aggregate principal amount not to exceed, at
any one time outstanding, the lesser of (a) Twenty Million Dollars
($20,000,000) or (b) the Borrowing Base. Within the aforesaid
limits, the Borrower may borrow, make payments of, and re-borrow
under the Revolving Credit Loan.
2.2 Funding the Loan. Each Revolving Credit Advance
hereunder shall be made upon the written request of the Borrower to
the Bank, specifying the date and amount and intended use thereof.
All Revolving Credit Advance hereunder shall be made by depositing
the same to the checking account of Borrower at the Bank or other
methods acceptable to Borrower and Bank.
2.3 The Note and Interest. The Revolving Credit Loan shall
be evidenced by the Note, a copy of which is attached hereto as
Exhibit C. The unpaid principal balances of the Revolving Credit
Loan shall bear interest from the Closing Date on disbursed and
unpaid principal balances at the LIBOR Rate. The first selection
of the one (1) month, two (2) months, three (3) months, or six (6)
months LIBOR interest period shall be made by the Borrower on or
prior to the date of the Note and each selection thereafter shall
be made at least twenty-four (24) hours prior to the end of the
then applicable interest rate period. The Borrower may not select
a rate period which extends beyond the Maturity Date. Interest
shall be payable monthly on the fifteenth (15th) day of each month
after the Closing Date, commencing February 15, 1998, with the
final installment of interest, together with the entire outstanding
principal balance of the Revolving Credit Loan, being due and
payable on the Maturity Date.
2.4 Loan Review; Extensions of Revolving Credit Period;
Continuing Security.
(a) The Revolving Credit Period may be extended for
additional periods of one (1) year (but in no event later than the
Maturity Date), in accordance with the following. On January 15,
1998 and January 15, 1999, Bank shall review the performance of the
Loan. If the Bank deems performance of the Loan acceptable, it
will renew the Revolving Credit Period for one (1) year (to the
following January 15), and during such renewal period, Bank will
make Revolving Credit Advances to the Borrower in accordance with
the terms hereof. However, if Bank, in its sole judgment, deems
performance of the Loan not acceptable, Bank shall not be obligated
to renew the Revolving Credit Period of the Loan, and, in such
case, the then outstanding principal balance of the Loan shall
convert to a "term" note, no further Revolving Credit Advances will
be made hereunder, and the Borrower shall pay to Bank monthly
installments of accrued and unpaid interest on the outstanding
principal balance until December 15, 2000, and on the Maturity
Date, Borrower shall pay to the Bank the outstanding principal
balance, together with all accrued and unpaid interest thereon.
Assessment of performance and the decision whether to renew the
Revolving Credit Period shall be solely within Bank's discretion.
(b) The Bank's election not to make further Revolving
Credit Advances shall not affect the security interest granted to
Bank pursuant to the CBL Mortgages, nor the duties, covenants, and
obligations of the Borrower therein and in this Agreement until all
indebtedness, liabilities and obligations secured by the CBL
Mortgages are satisfied in full; and all of such duties, covenants
and obligations shall remain in full force and effect until the
Revolving Credit Loan and all obligations under this Loan Agreement
have been fully paid and satisfied in all respects.
2.5 Commitment Fee/Servicing Fee. [INTENTIONALLY DELETED.]
2.6 Prepayments or Termination of the Revolving Credit Loan.
The Borrower may, at its option, from time to time, subject to the
terms and conditions hereof, without penalty, borrow, repay and
reborrow amounts under the Revolving Credit Loan. By notice to the
Bank in writing, Borrower shall be entitled to terminate the Bank's
commitment to make further Revolving Credit Advances, in which case
the Loan, unless paid in full by the Borrower, shall convert to a
term note as set forth in Section 2.4 above and shall be payable in
accordance therewith. Provided that the Revolving Credit Loan and
all interest and all other obligations of Borrower to Bank arising
hereunder shall have been paid in full, Bank shall thereupon at
Borrower's request release its security interest in the Mortgaged
Properties.
2.7 Substitution of Collateral. Upon the Bank's prior
written approval, the Borrower may substitute collateral originally
provided for the Revolving Credit Loan for collateral of equal
value but such substituted collateral must be acceptable to the
Bank and the acceptance thereof is solely within the discretion of
the Bank.
ARTICLE III
REQUIRED PAYMENTS, PLACE OF PAYMENT, ETC.
3.1 Required Repayments. In the event that the outstanding
principal balance of the Revolving Credit Loan shall at any time
exceed the Borrowing Base, upon discovery of the existence of such
excess borrowings, the Borrower shall, within one hundred twenty
(120) days from the date of such discovery, make a principal
payment which will reduce the outstanding principal balance of the
Revolving Credit Loan to an amount which does not exceed the
Borrowing Base and/or at Borrower's option provide the Bank with
additional collateral for the Revolving Credit Loan of a value and
type reasonably satisfactory to the Bank which additional
collateral shall be at a minimum sufficient to secure the then
outstanding balance of the Loan (after credit for any principal
reduction payment received from Borrower, if any), and if Borrower
intends to request additional Revolving Credit Advances under the
Loan, the additional collateral shall include collateral, deemed
sufficient in the Bank's discretion, to secure the Twenty Million
Dollars ($20,000,000) credit line limitation, thereafter permitting
Borrower to obtain additional Revolving Credit advances in the
manner and to the extent provided under the terms of this Loan
Agreement.
In addition and during such one hundred twenty (120) day
period or until the principal payment or satisfactory collateral is
received, whichever is less, the Borrower will not make any
additional requests for Revolving Credit Advance under the
Revolving Credit Loan. Once calculated, the Borrowing Base shall
remain effective until the next Borrowing Base calculation date as
provided in Section 1 of this Agreement.
3.2 Place of Payments. All payments of principal and
interest on the Revolving Credit Loan and all payments of fees
required hereunder shall be made to the Bank, at its address listed
in Section 9.2 of this Agreement in immediately available funds.
3.3 Payment on Non-Business Days. Whenever any payment of
principal, interest or fees to be made on the indebtedness
evidenced by the Note shall fall due on a Saturday, Sunday or
public holiday under the laws of the State of Alabama, such payment
shall be made on the next succeeding Business Day.
ARTICLE IV
CONDITIONS OF LENDING
4.1 Conditions Precedent to Closing and Funding Initial
Revolving Credit Advance. The obligation of the Bank to fund the
initial Revolving Credit Advance hereunder is subject to the
condition precedent that the Bank shall have received, on or before
the Closing Date, all of the following in form and substance
satisfactory to the Bank:
(a) This Loan Agreement.
(b) The Note.
(c) The CBL Mortgages together with title commitments
from title insurance companies acceptable to the
Bank, providing for the issuance of mortgagee's
loan policies insuring the liens of the CBL
Mortgages in form, substance and amount
satisfactory to the Bank, containing no exceptions
which are unacceptable to the Bank, and containing
such endorsements as the Bank may require.
(d) Current draft financial statements of the Borrower
in form satisfactory to the Bank to be held by the
Bank in strict confidence.
(e) Certified copy of Borrower's limited partnership
agreement and certificate of limited partnership,
and all amendments thereto and a certificate of
existence for the Borrower.
(f) Certified corporate resolutions of Borrower's
general partner, and certificate(s) of existence
for Borrower's general partner from the state of
its incorporation and such other states as Bank
shall require, together with a copy of the charter
and bylaws of the Borrower's general partner.
(g) Certified copy of the limited partnership agreement
and certificate of limited partnership for Kingston
Overlook Limited Partnership, Cary Limited
Partnership, and Massard Crossing Limited
Partnership, and all amendments thereto and a
certificate of existence for such entities
(h) Certified corporate resolutions of the general
partners of Kingston Overlook Limited Partnership,
Cary Limited Partnership, and Massard Crossing
Limited Partnership, and certificate(s) of
existence for such general partners from the states
of their incorporation and such other states as
Bank shall require, together with a copy of the
charter and bylaws of the general partners.
(i) The opinion of counsel for Borrower, Kingston
Overlook Limited Partnership, Cary Limited
Partnership, Massard Crossing Limited Partnership,
and for the general partner of each of the
foregoing entities, that the transactions herein
contemplated have been duly authorized by all
requisite corporate and partnership authority, that
this Loan Agreement and the other instruments and
documents herein referred to have been duly
authorized, validly executed and are in full force
and effect, and pertaining to such other matters as
the Bank may require.
(j) A certificate from an insurance company,
satisfactory to Bank, setting forth the information
concerning insurance which is required by
Section 6.3 of this Loan Agreement; or, if the Bank
shall so require, certified copies of the original
insurance policies evidencing such insurance.
(k) Environmental audits of the applicable Mortgaged
Properties.
(l) Current as-built surveys of the applicable
Mortgaged Properties at Closing, indicating the
location of all building lines, easements (visible,
reflected in the public records or otherwise) and
any existing improvements or encroachments, which
survey s shall contain no set of facts
objectionable to the Bank and shall be accompanied
by the Bank's usual survey certificate.
(m) Appraisals of the applicable Mortgaged Properties.
(n) All the items and information shown on the
Checklist for Closing, a copy of which is attached
hereto and marked Exhibit D.
4.2 Conditions Precedent to All Revolving Credit Advances.
The obligation of the Bank to make Revolving Credit Advances
pursuant hereto (including the initial advance at the Closing Date)
shall be subject to the following additional conditions precedent:
(a) The Borrower shall have furnished to the Bank a
written request stating the amount of Revolving
Credit Advance requested together with the intended
use of the Revolving Credit Advance.
(b) The Borrower shall not be in default of any of the
terms and provisions hereof or of any instrument or
document now or at any time hereafter evidencing or
securing all or any part of the Revolving Credit
Loan indebtedness. Each of the Warranties and
Representations of the Borrower, as set out in
Section 5 hereof shall remain true and correct in
all material respects as of the date of such
Revolving Credit Advance.
(c) Within forty-five (45) days after each July 1,
January 1, April 1 and October 1, Borrower shall
furnish to the Bank a Non-Default Certificate
executed by a duly authorized officer of Borrower,
in the form of Exhibit E attached hereto.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that:
5.1 Partnership Status. It is a limited partnership duly
organized, validly existing and in good standing under the laws of
the State of Delaware; it has the power and authority to own its
properties and assets and is duly qualified to carry on its
business in every jurisdiction wherein such qualification is
necessary.
5.2 Power and Authority. The execution, delivery and
performance of the Loan Agreement and the Note by the Borrower have
been duly authorized by all requisite action and, to the best of
Borrower's knowledge, will not violate any provision of law, any
order of any court or other agency of government, the limited
partnership agreement of the Borrower, any provision of any
indenture, agreement or other instrument to which Borrower is a
party, or by which Borrower's respective properties or assets are
bound, or be in conflict with, result in a breach of, or constitute
(with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation
or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of Borrower, except
for liens and other encumbrances provided for and securing the
indebtedness covered by this Loan Agreement.
5.3 Financial Condition.
(a) The balance sheet of Borrower for the fiscal year
ended as of December 31, 1996 and the related statement of income
and changes in financial conditions for such years then ended, a
copy of each of which has been furnished to the Bank, together with
any explanatory notes therein referred to and attached thereto, are
correct and complete and fairly present the financial condition of
Borrower as at the date of said balance sheets and the results of
its operations for said periods and as of the date of closing of
this Loan Agreement and related transactions, respectively. All
such financial statements have been prepared in accordance with
GAAP applied on a consistent basis maintained through the period
involved.
(b) There has been no substantial adverse change in the
business, properties or condition, financial or otherwise, of
Borrower since December 31, 1996.
(c) The balance sheet of CBL Properties, Inc. for the
fiscal year ended as December 31, 1996 and the related statement of
income and changes in financial conditions for the year then ended,
a copy of which has been furnished to the Bank, together with any
explanatory notes therein referred to and attached thereto, are
correct and complete and fairly present the financial condition of
CBL Properties, Inc. as at the date of said balance sheets and the
results of its operations for said periods and as of the date of
closing of this Loan Agreement and related transactions,
respectively. All such financial statements have been prepared in
accordance with GAAP applied on a consistent basis maintained
through the period involved.
(d) There has been no substantial adverse change in the
business, properties or condition, financial or otherwise, of CBL
Properties, Inc. since December 31, 1996.
(e) The warranties and representations made in this
Section 5.3 are and were made as of the date of this Loan Agreement
and any violation thereof shall be determined as of that date.
5.4 Title to Assets. Borrower has good and marketable title
to all its properties and assets reflected on the most recent
balance sheet furnished to Bank subject to the Permitted
Encumbrances with respect to the Mortgaged Properties and subject
to all encumbrances, whether of record or not, with respect to all
other properties.
5.5 Litigation. There is no action, suit or proceeding at
law or in equity or by or before any governmental instrumentality
or other agency now pending, or, to the knowledge of the Borrower
threatened against or affecting Borrower, or any properties or
rights of Borrower, which, if adversely determined, would
materially adversely affect the financial or any other condition of
Borrower except as set forth in Exhibit F attached hereto.
5.6 Taxes. Borrower has filed or caused to be filed all
federal, state or local tax returns which are required to be filed,
and has paid all taxes as shown on said returns or on any
assessment received by it, to the extent that such taxes have
become due, except as otherwise permitted by the provisions hereof.
5.7 Contracts or Restrictions Affecting Borrower. In
Borrower's opinion, Borrower is not a party to any agreement or
instrument or subject to any partnership agreement restrictions
adversely affecting its business, properties or assets, operations
or condition (financial or otherwise) other than this agreement,
other bank loan or property partnership agreements that contain
certain restrictive covenants or other agreements entered into in
the ordinary course of business.
5.8 No Default. No Event of Default (as defined herein) has
occurred and not been waived under any agreement or instrument to
which it is a party beyond the expiration of any applicable notice
and cure period, which default if not cured would materially and
substantially affect the financial condition, property or
operations of the Borrower. For the purposes of this Paragraph
5.8, monetary defaults specifically excepted under the provisions
of Paragraph 8.2 (which excludes non-recourse debt) below shall not
be deemed material defaults.
5.9 Patents and Trademarks. Borrower possesses all necessary
patents, trademarks, trade names, copyrights, and licenses
necessary to the conduct of its businesses.
5.10 ERISA. To the best of Borrower's knowledge and belief,
Borrower is in compliance with all applicable provisions of the
Employees Retirement Income Security Act of 1974 ("ERISA") and all
other laws, state or federal, applicable to any employees'
retirement plan maintained or established by it.
5.11 Hazardous Substances. No Hazardous Substances are
unlawfully located on or have been unlawfully stored, processed or
disposed of on or unlawfully released or discharged (including
ground water contamination) from any if the Mortgaged Properties
and no above or underground storage tanks exist unlawfully on such
Mortgaged Properties. No private or governmental lien or judicial
or administrative notice or action related to Hazardous Substances
or other environmental matters has been filed against any property
which, if adversely determined, would materially adversely affect
the business, operations or the financial condition of Borrower
except as set forth in Exhibit F attached hereto.
5.12 Ownership of Borrower and CBL Holdings. As of the date
hereof, CBL Properties, Inc. owns 100% of CBL Holdings. As of the
date hereof, CBL Holdings owns an approximate _____% general
partnership interest in the Borrower. As of the date hereof, CBL
& Associates, Inc. and its affiliates (including wholly-owned
subsidiaries), officers and key employees own an approximate
_______% limited partnership interest in the Borrower. The
Borrower has no other general partners.
ARTICLE VI
AFFIRMATIVE COVENANTS OF BORROWER
Borrower covenants and agrees that from the date hereof and
until payment in full of the principal of and interest on
indebtedness evidenced by the Note, unless the Bank shall otherwise
consent in writing, such consent to be at the discretion of the
Bank, Borrower will:
6.1 Business and Existence. Perform all things necessary to
preserve and keep in full force and effect its existence, rights
and franchises, comply with all laws applicable to it and continue
to conduct and operate its business in a sound and prudent manner.
6.2 Maintain Property. Maintain, preserve, and protect all
leases, franchises, and trade names and preserve all of its
properties used or useful in the conduct of its business in a sound
and prudent manner, keep the same in good repair, working order and
condition, ordinary wear and tear excepted, and from time to time
make, or cause to be made, all needed and proper repairs, renewals,
replacements, betterments and improvements thereto so that the
business carried on in connection therewith may be properly
conducted at all times.
6.3 Insurance. (a) With respect to all Mortgaged
Properties, at all times maintain in some company or companies
(having a Best's rating of A:XI or better) approved by Bank:
(i) Comprehensive public liability insurance
covering claims for bodily injury, death, and property damage,
with minimum limits satisfactory to the Bank, but in any event
not less than those amounts customarily maintained by
companies in the same or substantially similar business;
(ii) Business interruption insurance and/or loss of
rents insurance in a minimum amount specified by Bank, with
loss payable clause in favor of Bank;
(iii) Hazard insurance insuring Borrower's
property and assets against loss by fire (with extended
coverage) and against such other hazards and perils (including
but not limited to loss by windstorm, hail, explosion, riot,
aircraft, smoke, vandalism, malicious mischief and vehicle
damage) as Bank, in its sole discretion, shall from time to
time require, all such insurance to be issued in such form,
with such deductible provision, and for such amount as shall
be satisfactory to Bank, with loss payable clause in favor of
Bank. The Bank is hereby authorized and empowered, at its
option, to adjust or compromise any loss under any such
insurance policies and to collect and receive the proceeds
from any such policy or policies as provided in the CBL
Mortgages; and
(iv) Such other insurance as the Bank may, from time
to time, reasonably require by notice in writing to the
Borrower.
(b) All required insurance policies shall provide for
not less than thirty (30) days' prior written notice to the Bank of
any cancellation, termination, or material amendment thereto; and
in all such liability insurance policies, Bank shall be named as an
additional insured. Each such policy shall, in addition, provide
that there shall be no recourse against the Bank for payment of
premiums or other amounts with respect thereto. Hazard insurance
policies shall contain the agreement of the insurer that any loss
thereunder shall be payable to the Bank notwithstanding any action,
inaction or breach of representation or warranty by the Borrower.
The Borrower will deliver to Bank original or duplicate policies of
such insurance, or satisfactory certificates of insurance, and, as
often as Bank may reasonably request, a report of a reputable
insurance broker with respect to such insurance. Any insurance
proceeds received by Bank shall be applied upon the indebtedness,
liabilities, and obligations of the Borrower to the Bank (whether
matured or unmatured) or, at Bank's option, released to the
Borrower.
6.4 Obligations, Taxes and Liens. Pay all of its
indebtedness and obligations in accordance with normal terms and
practices of its business and pay and discharge or cause to be paid
and discharged all taxes, assessments, and governmental charges or
levies imposed upon it or upon any of its income and profits, or
upon any of its properties, real, personal or mixed, or upon any
part thereof, before the same shall become in default, as well as
all lawful claims for labor, materials, and supplies which
otherwise, if unpaid, might become a lien or charge upon such
properties or any part thereof; provided, however, that the
Borrower shall not be required to pay and discharge or to cause to
be paid and discharged any such indebtedness, obligation, tax,
assessment, trade payable, charge, levy or claim so long as the
validity thereof shall be contested in good faith by appropriate
proceedings satisfactory to Bank, and Bank shall be furnished, if
Bank shall so request, bond or other security protecting it against
loss in the event that such contest should be adversely determined.
6.5 Financial Reports and Other Data. Furnish to the Bank as
soon as available and in any event within ninety (90) days after
the end of each fiscal year of Borrower an unqualified audit as of
the close of such fiscal year of Borrower, including a balance
sheet and statement of income and surplus of Borrower together with
the unqualified audit report and opinion of Arthur Andersen
Company, Certified Public Accountant, or other independent
Certified Public Accountant which is widely recognized and of good
national repute or which is otherwise acceptable to the Bank,
showing the financial condition of Borrower at the close of such
year and the results of operations during such year; and, within
forty-five (45) days after the end of each fiscal quarter, (i)
financial statements similar to those described above for Borrower
and for CBL Properties, Inc., not audited but certified by the
Chief Financial Officer or Controller of Borrower and CBL
Properties, Inc., as the case may be, such balance sheets to be as
of the end of such quarter and such statements of income and
surplus to be for the period from the beginning of said year to the
end of such quarter, in each case subject only to audit and
year-end adjustment and the preparation of required footnotes; and
(ii) a Non-Default Certificate in the form prescribed on Exhibit E
Attached hereto and made a part hereof; and, within thirty (30)
days after the end of each fiscal quarter, rent rolls and operating
statements related to the Mortgaged Properties.
6.6 Additional Information. Furnish such other information
regarding the operations, business affairs and financial condition
of the Borrower as Bank may reasonably request, including but not
limited to written confirmation of requests for Revolving Credit
Advances, true and exact copies of its books of account and tax
returns, and all information furnished to the owners of its
partnership interests, or any governmental authority, and permit
the copying of the same and Bank agrees that all such information
shall be maintained in strict confidence. Provided, however, the
Borrower shall not be required to divulge the terms of other
financing arrangements with other lending institutions if and to
the extent Borrower is prohibited by contractual agreement with
such lending institutions from disclosing such information with the
exception that Borrower shall promptly notify Bank in writing of
all defaults, if any, which exist beyond any applicable cure
periods and the nature thereof, which occur in connection with such
financing arrangements and which defaults would constitute an Event
of Default hereunder. Borrower shall not enter into any such
contractual arrangement whereby the Borrower is prohibited from
disclosing such financial arrangements, without providing Bank with
written notice of the nature of such prohibitions. In addition,
Borrower shall not enter into any such arrangement while any Event
of Default hereunder exists beyond any applicable cure periods.
6.7 Right of Inspection. Permit any person designated by the
Bank, at the Bank's expense, to visit and inspect any of the
properties, books and financial reports of the Borrower and to
discuss its affairs, finances and accounts with its principal
officers, at all such reasonable times and as often as a Bank may
reasonably request provided that such inspection shall not
unreasonably interfere with the operation and conduct of Borrower's
properties and business affairs and provided further that such
person shall disclose such information only to the Bank, the Bank's
appraisers and examiners as required by banking laws, rules and
regulations.
6.8 Environmental Laws. Maintain the Mortgaged Properties
in compliance with all applicable Environmental Laws, and
immediately notify the Bank of any notice, action, lien or other
similar action alleging either the location of any Hazardous
Substances or the violation of any Environmental Laws with respect
to any of such properties.
6.9 Notice of Adverse Change in Assets. At the time of
Borrower's first knowledge or notice, immediately notify the Bank
of any information that may adversely affect in any material manner
the Mortgaged Properties.
6.10 Total Obligations to Capitalized Value. Maintain at all
times beginning on the Closing Date, a ratio of Total Obligations
to Capitalized Value of not more than .60 to 1.00.
6.11 Appraisals. Deliver to the Bank upon the Bank's request
but, for each Mortgaged Property, no more frequently than once per
every twelve (12) month period, reappraisals of the Mortgaged
Properties at Borrower's expense.
6.12 Secondary Financing by CBL Properties, Inc. In the event
CBL Properties, Inc. does any secondary offering of its securities,
it will apply no less than seventy-five (75%) net of expenses of
the monies received from such offering for the benefit of the
Borrower and will not use that percentage of funds so received to
capitalize or otherwise fund any other new partnerships or
entities.
<PAGE>
ARTICLE VII
NEGATIVE COVENANTS OF BORROWER
Borrower covenants and agrees that at all times from and after
the Closing Date, unless the Bank shall otherwise consent in
writing, such consent to be at the discretion of the Bank, it will
not, either directly or indirectly:
7.1 Indebtedness. Incur, create, assume or permit to exist
any indebtedness or liability, secured by any of the Mortgaged
Properties, except for indebtedness, which is subordinate in all
respects to the indebtedness evidenced by the Note, which
indebtedness does not exceed Two Hundred Fifty Thousand Dollars
($250,000.00) in the aggregate per property and is used for
renovation of the Mortgaged Properties.
7.2 Mortgages, Liens, Etc. Create, assume or suffer to exist
any mortgage, pledge, lien, charge or other encumbrance of any
nature whatsoever on any of the Mortgaged Properties except:
(a) Liens securing payment of the Note;
(b) Permitted Encumbrances (as defined at Section 1);
and
(c) Liens securing indebtedness permitted under Section
7.1 above.
7.3 Sale of Assets. Sell, lease, convert, transfer or
dispose (other than in the normal course of business) of all or a
substantial part of its assets for less than book value or fair
market consideration without the Bank's prior written consent;
provided, however, while the Revolving Credit Loan is outstanding,
the Borrower may not sell in a single transaction or related series
of transactions properties whose GAAP base value exceeds twenty
percent (20%) of the GAAP book value of the Borrower's assets
without the Bank's approval or review. All transfers, whether or
not the Bank's approval shall be required as set forth above, shall
be reported to the Bank.
7.4 Consolidation or Merger; Acquisition of Assets. Enter
into any transaction of merger or consolidation, acquire any other
business or corporation, or acquire all or substantially all of the
property or assets of any other Person unless the Borrower and/or
its general partner shall be the surviving entities.
7.5 Partnership Distributions and Other Payments. Except as
hereinafter provided, declare or pay, or set apart any funds for
the payment of, any distributions on any partnership interest in
Borrower, or apply any of its funds, properties, or assets to or
set apart any funds, properties or assets for, the purchase or
other retirement of or make any other distribution (whether by
reduction of partnership capital or otherwise) in respect of, any
partnership interest in Borrower; or without the consent of Bank,
pay any fee or other compensation of any nature to or for the
benefit of CBL & Associates, Inc. and/or CBL Properties, Inc.
and/or their affiliates, officers or key employees (the
"Distributees"). Notwithstanding anything stated in the foregoing
to the contrary, (a) Borrower may pay to such Distributees and its
other partners quarterly distributions so long as such
distributions do not exceed in the aggregate 95% of Funds from
Operations and (b) Borrower may pay any fee or other reasonable
compensation of any nature to or for the benefit of (i) CBL
Management, Inc., or (ii) any other Distributee, which payment has
been made in the ordinary course of business and approved by the
independent directors of CBL Properties, Inc. Borrower may make a
distribution from Loan proceeds but only once during any rolling
twelve (12) month period and provided Borrower is not in default
hereunder and such distribution will not create a default
hereunder.
7.6 Loans to Officers and Employees. Permit or allow loans
to officers and employees of Borrower or holders of partnership
interests in Borrower to exceed $500,000.00 in any one instance or
$2,000,000.00 in the aggregate, provided that nothing in the
foregoing shall be deemed to limit loans made in the ordinary
course of business to CBL Management, Inc.
7.7 Limitations on Floating Rate Indebtedness. Incur, assume
or suffer to exist any outstanding indebtedness bearing interest at
a variable rate that fluctuates during the scheduled life of such
indebtedness (other than indebtedness under Reserved Construction
Loans, as that term is defined hereinafter) in an aggregate
principal amount in excess of $125,000,000.00 at any one time
outstanding unless Borrower has obtained an interest rate swap, cap
or collar agreement or similar arrangement with a recognized
investment grade financial institution which prevents the all-in
effective interest rate payable by Borrower with respect to the
principal amount of such indebtedness in excess of $125,000,000.00
(including base rate, applicable margin and reserve and similar
costs) from increasing above the rate set forth below with respect
to such indebtedness:
Principal Amount in
Excess of $125,000,000.00 Interest Rate
Less than or equal
to $50,000,000.00 8.5%
Greater than
$50,000,000.00 and
less than or equal
to $100,000,000.00 8.0%
Greater than
$100,000,000.00 and
less than or equal
to $150,000,000.00 7.5%
Greater than
$150,000,000.00 7.0%
For purposes of this Loan Agreement, "Reserved Construction
Loan" shall mean a construction loan extended to Borrower or to a
subsidiary of Borrower for the construction of a project in respect
to which (a) neither any monetary or material non-monetary default
nor any event of default exists; (b) interest on such loan has been
budgeted to accrue at a rate of not less than the Base Rate plus
two percent (2%) at the time the interest reserve account is
established; (c) the amount of such budgeted interest has been (i)
included in the principal amount of such loan and (ii) segregated
into an interest reserve account (which shall include any
arrangement whereby loan proceeds equal to such budgeted interest
are reserved and only disbursed to make interest payments with
respect to such loan); (d) absent an event of default or a monetary
or material non-monetary default, such interest can be paid out of
such interest reserve account only for the purpose of making
interest payments on such loan; (e) the amount held in such
interest reserve account with respect to such loan, together with
the net income, if any, from such project projected by the Bank in
its reasonable judgment, will be sufficient, as reasonably
determined by the Bank from time to time, to pay all interest
expense on such loan until the date that the earnings before
income, taxes, depreciation and amortization of the project being
financed by such loan is anticipated to be sufficient to pay all
interest expense on such loan; and (f) Borrower has delivered all
certificates required by this Loan Agreement.
7.8 Investment Concentration.
(a) Borrower shall not make, and shall not permit any of
its Subsidiaries to make, any Investment in the following items
which would cause the value of such holdings of Borrower to exceed
the following percentages of Borrower's Net Worth:
(i) raw land, such that the aggregate book value
of all such raw land (other than: (A) raw
land subject to a ground lease under which
Borrower is the landlord and a Person not an
Affiliate of Borrower is the tenant; (B) land
on which the development of a Project has
commenced; (C) land subject to a binding
contract of sale under which Borrower or one
of its Subsidiaries is the seller, the buyer
is not an Affiliate of Borrower and (D) out-
parcels held for lease or sale) exceeds ten
percent (10%) of Net Worth;
(ii) developed real estate used primarily for non-
retail purposes, such that the aggregate book
value of such real estate (other than the real
estate located at 6148 Lee Highway,
Chattanooga, Tennessee) exceeds ten percent
(10%) of Net Worth;
(iii)Capital Stock of any Person, such that the
aggregate value of such Capital Stock in
Unconsolidated Affiliates other than CBL
Management, Inc., calculated on the basis
of the lower of cost or market, exceeds
ten percent (10%) of Net Worth;
(iv) Mortgages, such that the aggregate principal
amount secured by Mortgages acquired by
Borrower after the Effective Date exceeds ten
percent (10%) of Net Worth;
(v) Investments made after the date hereof in
partnerships, joint ventures and other non-
corporate Persons accounted for an equity
basis (determined in accordance with GAAP),
such that the aggregate outstanding amount of
such Investments (other than Investments in
partnerships in which (A) Borrower is the sole
general partner and the only limited partners
are either (I) the Person from whom the real
estate owned by such partnership was
purchased, and such Person's successors and
assigns or (II) a Person operating stores
which anchor the development constructed or to
be constructed by such partnership or (B)
Borrower owns not less than ninety percent
(90%) of the partnership interests and has the
unilateral right to make all operational and
strategic decisions) exceeds ten percent (10%)
of Net Worth.
(b) Neither Borrower nor any of its Subsidiaries shall
acquire the business of all or substantially all of the assets or
stock of any Person, or any division of any Person, whether through
Investment, purchase of assets, merger or otherwise; provided that
Borrower or its Subsidiaries may make such an acquisition so long
as Borrower has delivered to Bank, not less than thirty (30) days
prior to the date such acquisition is consummated, (i) all
information related to such acquisition as is reasonably requested
by the Bank and (ii) a certificate, signed by the chief financial
officer of Borrower, certifying that, giving effect to such
acquisition, there shall not exist any Default or Event of Default
hereunder and setting forth in reasonable detail the calculations
setting forth, on a pro forma basis giving effect such acquisition,
Borrower's compliance with the financial covenants set forth
herein.
7.9 Minimum Net Worth. Permit its Net Worth at any time to
be less than $275,000,000.00 plus fifty percent (50%) of the net
proceeds or value (whether cash, property or otherwise) received by
CBL Properties, Inc. or Borrower from any issuance after the
effective date of this Loan Agreement of any shares of Capital
Stock of CBL Properties, Inc., any operating partnership units of
Borrower or any shares of Capital Stock or other equity interest in
any Subsidiary of Borrower.
7.10 Debt Coverage Ratio. Permit, as of the last day of any
fiscal quarter of Borrower, the Debt Coverage Ratio to be less than
1.75 to 1.00.
7.11 Interest Coverage Ratio. Permit, as of the last day of
any fiscal quarter, the Interest Coverage Ratio to be less than
2.00 to 1.00.
7.12 Debt Coverage Ratio. Not permit, as of the last day of
any fiscal quarter of Borrower, the Debt Coverage Ratio to be less
than 1.75 to 1.00.
ARTICLE VIII
EVENTS OF DEFAULT
An "Event of Default" shall exist if any of the following
shall occur:
8.1 Payment of Principal, Interest to Bank. The Borrower
defaults in the payment as and when due of principal or interest on
the Note or any fees due under this Loan Agreement which default
shall continue for more than ten (10) days following mailing of
notice from Bank to Borrower thereof; or in the payment when due of
any other recourse indebtedness, liabilities, or obligations to the
Bank beyond the expiration of any applicable notice and cure
period, whether now existing or hereafter created or arising;
direct or indirect, absolute or contingent; or
8.2 Payment of Obligations to Others. The Borrower defaults
in the payment as and when due of any other indebtedness or
obligation but only if: (a) such indebtedness or obligation is
with recourse to the Borrower; and (b) the effect of such default
is to accelerate the maturity of such indebtedness or obligation,
or the effect of such default is to permit the holder thereof to
cause such indebtedness or obligation to become due prior to its
stated maturity; and (c) the default is not cured within the
applicable cure period, if any, or subsequently waived by the
lender to whom payment is owed. Provided, however, even if such
indebtedness or obligation is with recourse to the Borrower, the
Borrower will not be considered in default hereunder if the default
is either: (a) a monetary default which does not exceed One
Million Dollars ($1,000,000.00) and is not a failure to pay a
normal monthly, quarterly or other periodic principal or interest
installment due; or, (b) is being contested by the Borrower in good
faith through appropriate proceedings acceptable to Bank; or
8.3 Performance of Obligations to Bank. The Borrower
defaults with respect to the performance of any non-monetary
obligation incurred in connection with the Loan other than its
obligations under Section 7.8 hereof and such default continues for
more thirty (30) days following mailing of notice thereof from Bank
to Borrower, or, if such default is incapable of cure within such
thirty (30) day period, Borrower fails to diligently, continuously
and in good faith pursue such cure to completion; or the Borrower
defaults with respect to the performance of any other non-monetary
obligation incurred in connection with any recourse indebtedness
for borrowed money owed to the Bank an such default continues for
more thirty (30) days following mailing of notice thereof from Bank
to Borrower, or, if such default is incapable of cure within such
thirty (30) day period, Borrower fails to diligently, continuously
and in good faith pursue such cure to completion; or
8.4 Performance of Obligations to Others. An event of
default occurs with respect to the performance of non-monetary
obligations incurred in connection with any recourse indebtedness
for borrowed money owed to a lender other than Bank, if the default
even if subsequently waived by the Bank is considered a material
default by the Bank and if the default is not cured within the
applicable cure period provided by the lender to whom such
performance is owed; provided, however, if the indebtedness is in
an amount less that $1,000,000.00, or if the lender's declaration
of default is being continuously and diligently contested by the
Borrower in good faith through appropriate proceedings, such
default shall not constitute a default hereunder; or
8.5 Representation or Warranty. Any representation or
warranty made by the Borrower herein, or in any report,
certificate, financial statement or other writing furnished in
connection with or pursuant to this Loan Agreement shall prove to
be false, misleading or incomplete in any substantial material
respect on the date as of which made; or
8.6 Bankruptcy, Etc. The Borrower, CBL Holdings, or CBL
Properties, Inc. shall make a general assignment of assets for the
benefit of creditors, file a petition in bankruptcy, petition or
apply to any tribunal for the appointment of a custodian, receiver
or any trustee for it or a substantial part of its assets, or shall
commence on its or their behalf any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction,
whether now or hereafter in effect; or if there shall have been
filed any such petition or application, or any such proceeding
shall have been commenced against Borrower, CBL Holdings, or CBL
Properties, Inc., in which an order for relief is entered against
Borrower, CBL Holdings, or CBL Properties, Inc. or which remains
undismissed for a period of ninety (90) days or more; or Borrower,
CBL Holdings, or CBL Properties, Inc. by any act or omission shall
indicate its consent to, approval of or acquiescence in any such
petition, application or proceeding or order for relief or the
appointment of a custodian, receiver or any trustee for it or any
substantial part of any of its properties, or shall suffer any such
custodianship, receivership or trusteeship to continue undischarged
for a period of ninety (90) days or more; or Borrower, CBL
Holdings, or CBL Properties, Inc. shall generally not pay its debts
as such debts become due; or
8.7 Concealment of Property, Etc. The Borrower, CBL
Holdings, or CBL Properties, Inc. shall have concealed, removed, or
permitted to be concealed or removed, any part of its property,
with intent to hinder, delay or defraud its or his creditors or any
of them, or made or suffered a transfer of any of its property
which shall constitute a fraudulent act under any bankruptcy,
fraudulent conveyance or similar law; or shall have made any
transfer of its property to or for the benefit of a creditor at a
time when other creditors similarly situated have not been paid; or
shall have suffered or permitted, while insolvent, any creditor to
obtain a lien upon any of its property through legal proceedings or
distraint which is not vacated within thirty (30) days from the
date thereof; or
8.8 Management Change. Management of the Borrower shall, for
a period of one hundred eighty (180) consecutive days, cease to be
in at least one of the following persons: (a) Charles B. Lebovitz,
(b) John N. Foy, (c) Bucky Wolford, (d) Jay Wiston, or (e) Stephen
D. Lebovitz, who shall be in an executive management position with
Borrower or who shall be a senior vice president, executive vice
president, senior executive vice president or president with
Borrower's general partner; or
8.9 Change in Ownership. CBL & Associates, Inc., its
affiliates (including wholly-owned subsidiaries), officers and key
employees shall have, through sale or transfer, reduced their
aggregate partnership interest in Borrower (which, for this
purpose, shall include a proportionate share of CBL Properties,
Inc.'s partnership interest in Borrower equal to their
proportionate shareholding in CBL Properties, Inc.) to less than
50% of such partnership interests owned by them on November 7,
1993. Provided, however, if the change in ownership occurs as a
result of actions taken by Borrower in compliance with Section 2.7
of this Loan Agreement, no such change of ownership shall result in
an Event of Default hereunder; or
8.10 Loan Documents Terminated or Void. This Loan Agreement,
the Note, or any instrument securing the Note shall, at any time
after their respective execution and delivery and for any reason,
cease to be in full force and effect or shall be declared to be
null and void; or the Borrower shall deny it has any or further
liability under this Loan Agreement or the Note, respectively; or
8.11 Covenants. The Borrower defaults in the performance or
observance of any other covenant, agreement or undertaking on its
part to be performed or observed, contained herein, in the CBL
Mortgages or in any other instrument or document which now or
hereafter evidences or secures all or any part of the loan
indebtedness which default shall continue for more than thirty (30)
days following the mailing of notice from Bank to Borrower thereof;
or
8.12 Remedy. Upon the occurrence of any Event of Default, as
specified herein, the Bank shall, at its option, be relieved of any
obligation to make further Revolving Credit Advances under this
Agreement; and the Bank may, at its option, thereupon declare the
entire unpaid principal balances of the Note of Borrower, all
interest accrued and unpaid thereon and all other amounts payable
under this Loan Agreement to be immediately due and payable for all
purposes, and may exercise all rights and remedies available to it
under the CBL Mortgages, any other instrument or document which
secures the Note, or available at law or in equity. All such rights
and remedies are cumulative and nonexclusive, and may be exercised
by the Bank concurrently or sequentially, in such order as the Bank
may choose.
ARTICLE XIV
MISCELLANEOUS
9.1 Amendments. The provisions of this Loan Agreement, the
Note or any instrument or document executed pursuant hereto or
securing the indebtedness may be amended or modified only by an
instrument in writing signed by the parties hereto.
9.2 Notices. All notices and other communications provided
for hereunder shall be in writing and shall be mailed, certified
mail, return receipt requested, or delivered, if to the Borrower,
to it at c/o CBL Properties, Inc., One Park Place, 6148 Lee
Highway, Chattanooga, Tennessee 37421, Attention: President; if
to the Bank, to it at 420 North 20th Street, Commercial Real Estate
Group, 11th Floor, Birmingham, Alabama 35203, with a copy to Mr.
Ronald H. Johnston, c/o SouthTrust Bank of Tennessee, N.A., 230
Fourth Avenue North, 7th Floor, Nashville, Tennessee 37219, or as
to any such person at such other address as shall be designated by
such person in a written notice to the other parties hereto
complying as to delivery with the terms of this Section 9.2. All
such notices and other communications shall be effective (i) if
mailed, when received or three business days after mailing,
whichever is earlier; or (ii) if delivered, upon delivery and
receipt of an executed acknowledgment of receipt by the party to
whom delivery is made.
9.3 No Waiver, Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Bank, any right,
power or privilege hereunder, shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. Waiver of
any right, power, or privilege hereunder or under any instrument or
document now or hereafter securing the indebtedness evidenced
hereby or under any guaranty at any time given with respect thereto
is a waiver only as to the specified item. The rights and remedies
herein provided are cumulative and not exclusive of any rights or
remedies provided by law.
9.4 Indemnification. Borrower agrees to indemnify Bank from
and against any and all claims, losses and liabilities, including,
without limitation, reasonable attorneys' fees, growing out of or
resulting from this Agreement (including, without limitation,
enforcement of this Agreement), except claims, losses or
liabilities resulting solely and directly from Bank's gross
negligence or willful misconduct or from Bank's violation of
applicable banking rules and regulations. The indemnification
provided for in this Section shall survive the payment in full of
the loan.
9.5 Survival of Agreements. All agreements, representations
and warranties made herein shall survive the delivery of the Note.
This Loan Agreement shall be binding upon, and inure to the benefit
of, the parties hereto and their respective successors and assigns,
except that the Borrower shall not have the right to assign its
rights hereunder or any interest therein.
9.6 Execution in Counterparts. This Loan Agreement may be
executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument.
9.7 Terminology; Section Headings. All personal pronouns
used in this Loan Agreement whether used in the masculine,
feminine, or neuter gender, shall include all other genders; the
singular shall include the plural, and vice versa. Section
headings are for convenience only and neither limit nor amplify the
provisions of this Loan Agreement.
9.8 Enforceability of Agreement. Should any one or more of
the provisions of this Loan Agreement be determined to be illegal
or unenforceable, all other provisions, nevertheless, shall remain
effective and binding on the parties hereto.
9.9 Interest Limitations.
(a) The Loan and the Note evidencing the loan,
including any renewals or extensions thereof, may provide for the
payment of any interest rate (i) permissible at the time the
contract to make the loan is executed, (ii) permissible at the time
the loan is made or any advance thereunder is made, or
(iii) permissible at the time of any renewal or extension of the
loan or the Note.
(b) It is the intention of the Bank and the Borrower
to comply strictly with applicable usury laws; and, accordingly, in
no event and upon no contingency shall the Bank ever be entitled to
receive, collect, or apply as interest any interest, fees, charges
or other payments equivalent to interest, in excess of the maximum
rate which the Bank may lawfully charge under applicable statutes
and laws from time to time in effect; and in the event that the
holder of the Note ever receives, collects, or applies as interest
any such excess, such amount which, but for this provision, would
be excessive interest, shall be applied to the reduction of the
principal amount of the indebtedness thereby evidenced; and if the
principal amount of the indebtedness evidenced thereby, and all
lawful interest thereon, is paid in full, any remaining excess
shall forthwith be paid to the Borrower, or other party lawfully
entitled thereto. In determining whether or not the interest paid
or payable, under any specific contingency, exceeds the highest
rate which Bank may lawfully charge under applicable law from time
to time in effect, the Borrower and the Bank shall, to the maximum
extent permitted under applicable law, characterize any
non-principal payment as a reasonable loan charge, rather than as
interest. Any provision hereof, or of any other agreement between
the Bank and the Borrower, that operates to bind, obligate, or
compel the Borrower to pay interest in excess of such maximum rate
shall be construed to require the payment of the maximum rate only.
The provisions of this paragraph shall be given precedence over any
other provision contained herein or in any other agreement between
the Bank and the Borrower that is in conflict with the provisions
of this paragraph.
9.10 Non-Control. In no event shall the Bank's rights
hereunder be deemed to indicate that the Bank is in control of the
business, management or properties of the Borrower or has power
over the daily management functions and operating decisions made by
the Borrower.
9.11 Fees and Expenses. The Borrower agrees to pay, or
reimburse the Bank for, the reasonable actual third party
out-of-pocket expenses, including counsel fees and fees of any
accountants, inspectors or other similar experts, as deemed
necessary by the Bank, incurred by the Bank in connection with the
development, preparation, execution, amendment, recording,
(excluding the salary and expenses of Bank's employees and Bank's
normal and usual overhead expenses) or enforcement of, or the
preservation of any rights under this Loan Agreement, the Notes,
and any instrument or document now or hereafter securing the and
Revolving Credit Loan indebtedness.
9.12 Time of Essence. Time is of the essence of this Loan
Agreement, the Note, and the other instruments and documents
executed and delivered in connection herewith.
9.13 Compromises, Releases, Etc. Bank is hereby authorized
from time to time, without notice to anyone, to make any sales,
pledges, surrenders, compromises, settlements, releases,
indulgences, alterations, substitutions, exchanges, changes in,
modifications, or other dispositions including, without limitation,
cancellations, of all or any part of the Loan indebtedness, or of
any contract or instrument evidencing any thereof, or of any
security or collateral therefor, and/or to take any security for or
guaranties upon any of said indebtedness; and the liability of any
guarantor, if any, shall not be in any manner affected, diminished,
or impaired thereby, or by any lack of diligence, failure, neglect,
or omission on the part of Bank to make any demand or protest, or
give any notice of dishonor or default, or to realize upon or
protect any of said indebtedness or any collateral or security
therefor. Bank shall have the right to apply such payments and
credits first to the payment of all its expenses, including costs
and reasonable attorneys' fees, then to interest due under the Note
and then to principal due under the Note. Bank shall be under no
obligation, at any time, to first resort to, make demand on, file
a claim against, or exhaust its remedies against the Borrower, or
its property or estate, or to resort to or exhaust its remedies
against any collateral, security, property, liens, or other rights
whatsoever. Upon the occurrence of an Event of Default, it is
expressly agreed that Bank may at any time make demand for payment
on, or bring suit against, the Borrower and any guarantor, jointly
or severally and may compromise with any of them for such sums or
on such terms as it may see fit, and without notice or consent, the
same being hereby expressly waived.
9.14 Limited Recourse and Joinder of CBL Properties, Inc. CBL
Properties, Inc. joins herein for the purpose of acknowledging and
consenting to the terms and provisions of Section 6.12 hereof.
Except for its failure to abide by Section 6.12 of this Loan
Agreement in no event shall CBL Properties, Inc. have any personal
liability whatsoever hereunder, all recourse being held to the
assets of Borrower.
9.15 Bank's Consent. Except as otherwise expressly provided
herein, in any instance hereunder where Bank's approval or consent
is required or the exercise of its judgment is required, the
granting or denial of such approval or consent and the exercise of
such judgment shall be within the sole discretion of Bank, and Bank
shall not, for any reason or to any extent, be required to grant
such approval or consent or exercise such judgment provided that
the Bank shall proceed at all times in good faith and in a
commercially reasonable manner. Bank may consult with counsel, and
the written advice or opinion of such counsel shall be full and
complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
9.16 Conflict. In the event of any conflict between the
provisions hereof and any other loan document, during the
continuance of this Agreement the provisions of this Agreement
shall control.
9.17 Controlling Law. THE VALIDITY, INTERPRETATION,
ENFORCEMENT AND EFFECT OF THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ALABAMA. THE
BANK'S PRINCIPAL PLACE OF BUSINESS IS LOCATED IN JEFFERSON COUNTY
IN THE STATE OF ALABAMA, AND THE BORROWER AGREES THAT THIS
AGREEMENT SHALL BE HELD BY BANK AT SUCH PRINCIPAL PLACE OF
BUSINESS, AND THE HOLDING OF THIS AGREEMENT BY BANK THEREAT SHALL
CONSTITUTE SUFFICIENT MINIMUM CONTACTS OF BORROWER WITH JEFFERSON
COUNTY AND THE STATE OF ALABAMA FOR THE PURPOSE OF CONFERRING
JURISDICTION UPON THE FEDERAL AND STATE COURTS PRESIDING IN SUCH
COUNTY AND STATE. BORROWER CONSENTS THAT ANY LEGAL ACTION OR
PROCEEDING ARISING HEREUNDER MAY BE BROUGHT IN THE CIRCUIT COURT OF
THE STATE OF ALABAMA , JEFFERSON COUNTY, ALABAMA OR THE UNITED
STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA AND
ASSENTS AND SUBMITS TO THE PERSONAL JURISDICTION OF ANY SUCH COURT
IN ANY ACTION OR PROCEEDING INVOLVING THIS AGREEMENT. NOTHING
HEREIN SHALL LIMIT THE JURISDICTION OF ANY OTHER COURT.
9.18 Waiver of Jury Trial. BORROWER HEREBY WAIVES ANY RIGHT
THAT IT MAY HAVE TO A TRIAL BY JURY ON ANY CLAIM, COUNTERCLAIM,
SETOFF, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING OUT OF OR IN
ANY WAY RELATED TO THIS AGREEMENT OR THE LOAN, OR (B) IN ANY WAY
CONNECTED WITH OR PERTAINING OR RELATED TO OR INCIDENTAL TO ANY
DEALINGS OF BANK AND/OR BORROWER WITH RESPECT TO THE LOAN OR IN
CONNECTION WITH THIS AGREEMENT OR THE EXERCISE OF EITHER PARTY'S
RIGHTS AND REMEDIES UNDER THIS AGREEMENT OR OTHERWISE, OR THE
CONDUCT OR THE RELATIONSHIP OF THE PARTIES HERETO, IN ALL OF THE
FOREGOING CASES WHETHER NOW EXISTING OR HEREAFTER ARISING AND
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. BORROWER AGREES
THAT BANK MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY, AND BARGAINED AGREEMENT
OF BORROWER IRREVOCABLY TO WAIVE ITS RIGHTS TO TRIAL BY JURY, AND
THAT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY DISPUTE OR
CONTROVERSY WHATSOEVER (WHETHER OR NOT MODIFIED HEREIN) BETWEEN
BORROWER AND BANK SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT
JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
IN TESTIMONY WHEREOF, the above partnership Borrower and CBL
Properties, Inc. has caused this instrument to be executed in the
appropriate company or partnership name by its duly authorized general
partner, and has adopted as its seal the word "SEAL" appearing beside
its name, this sealed instrument being executed and delivered on the
date first above written.
CBL&ASSOCIATES LIMITED PARTNERSHIP,
a Delaware limited partnership
BY: CBL HOLDINGS I, INC.,
a Delaware corporation
Its Sole General Partner
BY:
____________________,President
ATTEST:
______________________________________
______________________________, Secretary
(Corporate Seal)
CBL & ASSOCIATES PROPERTIES, INC.
a Delaware corporation
BY:
____________________,President
ATTEST:
______________________________________
______________________________, Secretary
(Corporate Seal)
SOUTHTRUST BANK, NATIONAL
ASSOCIATION, a national banking
association
By:
Ronald H. Johnston
Its Vice President
EXHIBIT A
Real property known as:
Kingston Overlook, Knoxville, Tennessee
Devonshire Place, Cary, North Carolina
Massard Crossing, Ft. Smith, Arkansas
all as more particularly described in the individual deeds of trust
and/or mortgages applicable to the above described properties.
<PAGE>
EXHIBIT B
PERMITTED ENCUMBRANCES
As described in the Mortgages.<PAGE>
EXHIBIT C
REVOLVING CREDIT NOTE
$20,000,000 Birmingham, Alabama
January ___, 1998
FOR VALUE RECEIVED, the undersigned, the undersigned CBL &
ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership (the
"Borrower"), promises to pay to the order of SOUTHTRUST BANK, NATIONAL
ASSOCIATION, a national banking association having a principal place of
business in Birmingham, Alabama (the "Bank"), the principal sum of
TWENTY MILLION DOLLARS ($20,000,000),or so much as may be advanced to
Borrower from time to time and not repaid by Borrower pursuant to the
terms hereof, together with interest thereon at the rates of interest
hereafter specified, which such principal and interest are payable in
the manner provided below in lawful money of the United States.
This Note is executed pursuant to that certain Revolving
Credit Loan Agreement dated as of the date hereof between the
Borrower and Bank (the "Loan Agreement"; capitalized terms used
herein and not otherwise defined shall have the meanings set forth
in the Loan Agreement).
1. Defined Terms As used herein, the following terms shall
have the following meanings:
"Default Rate" means a rate which is two percent (2%) in
excess of the rate then accruing on the outstanding principal
balance.
"Event of Default" has the meaning ascribed to it in
Section 7 hereof.
"LIBOR Rate" means one hundred and twenty-five (125)
basis point (1.25%) in excess of the London Interbank Offered Rate
(LIBOR), adjusted in Bank's discretion for applicable reserve
requirements (if any), as quoted by Telerate (or if such rate is
not available from Telerate, then from such other sources as Bank
may select), and which, at Borrower's option, shall be either a one
(1) month, two (2) months, three (3) months, or six (6) months
LIBOR interest period.
"Loan" means the credit facility established for the
Borrower's benefit and evidenced hereby and by the Loan Agreement.
"Loan Documents" has the meaning ascribed to it in
Section 6 hereof.
"Revolving Credit Advances" means the advances of the
Loan to be made by the Bank in accordance with the provisions of
Article II of the Loan Agreement during the Revolving Credit
Period.
"Revolving Credit Period" means the period of time during
which the Bank will make Revolving Credit Advances of the Loan to
the Borrower. The Revolving Credit shall commence on the Closing
Date and shall expire on the earlier of (a) January 15, 1999
(subject, however, to being extended as is set forth in Section 2.4
of the Loan Agreement) or in the event that the Bank and Borrower
shall hereafter mutually agree in writing that the Revolving Credit
Loan and the Bank's commitment hereunder shall be extended to
another date, such other date mutually agreed upon between Bank and
Borrower to which the Bank's commitment shall have been extended,
or (b) the date as of which Borrower shall have terminated the
Bank's commitment under the provisions of Section 2.5 of the Loan
Agreement.
"Maturity Date" means January 15, 2001.
2. Advances of the Line of Credit Loan.
(a) During the Revolving Credit Period, the proceeds of
the Loan will be advanced from time to time to the Borrower by the
Bank in installments as requested by the Borrower, and repaid by
the Borrower and subsequently re-advanced by the Bank, as requested
by the Borrower, in an amount not exceeding the Borrowing Base. By
reason of prepayments of the Loan, there may be times when no
indebtedness is owing hereunder, and notwithstanding any such
occurrence, this Note shall remain valid and shall be in full force
and effect as to each subsequent Revolving Credit Advance made
hereunder, and the Collateral shall remain in full force and effect
as security for the Loan until all Loan Obligations have been paid
in full and Bank is under no obligation to make further Revolving
Credit Advances hereunder. Each Revolving Credit Advance hereunder
and each payment made hereon may, at the Bank's option, be
reflected by a notation made by the Bank on a grid which may be
attached hereto, and the Bank is hereby authorized, at Bank's sole
option, to record on such grid all such Revolving Credit Advances
and payments hereunder. No failure of the Bank to record any
Revolving Credit Advance or payment shall limit or otherwise affect
the obligation of the Borrower hereunder with respect to any
Revolving Credit Advance and no payment of principal by the
Borrower shall be affected by the failure of the Bank to record the
same.
(b) In the event the Bank elects not to renew the
Revolving Credit Period as set forth in Section 2.4 of the Loan
Agreement, the then outstanding principal hereof shall
automatically convert from a revolving credit facility to a term
loan, and the Borrower shall not thereafter be able to request
further Revolving Credit Advances hereunder.
3. Interest Rate.
(a) The unpaid principal balances of the Loan shall bear
interest from the Closing Date on disbursed and unpaid principal
balances at the LIBOR Rate. The first selection of the one (1)
month, two (2) months, three (3) months, or six (6) months LIBOR
interest period shall be made by the Borrower on or prior to the
date of this Note and each selection thereafter shall be made at
least twenty-four (24) hours prior to the end of the then
applicable interest rate period. The Borrower may not select a
rate period which extends beyond the Maturity Date.
(b) All interest on the outstanding principal balance
shall be calculated on the basis of a 360-day year by multiplying
the outstanding principal amount by the applicable per annum rate,
multiplying the product thereof by the actual number of days
elapsed, and dividing the product so obtained by 360.
(c) Borrower agrees that, notwithstanding the fact that
Borrower may have elected to base the interest rate applicable hereunder
upon Bank's cost of funds in the Eurodollar market, Bank shall not be
required actually to obtain funds from such source at any time.
(d) Upon the occurrence of any Event of Default
hereunder, the outstanding principal balance will bear interest at
the Default Rate until the aggregate indebtedness is paid in full.
4. Payment Terms.
Principal and interest shall be payable as follows:
(a) On February 15, 1998, and on the fifteenth (15th)
day of each calendar month thereafter, to and including October 15,
2001, Borrower shall pay to Bank all accrued and unpaid interest on
the outstanding principal balance.
(b) If not sooner prepaid, the unpaid principal balance
of this Note and all accrued but unpaid interest under this Note
shall be due and payable on the Maturity Date.
(c) The principal and interest shall be payable in
lawful money of the United States which shall be legal tender for
public and private debts at the time of payment. This Note shall be
valid and enforceable as to the aggregate amount advanced at any
time hereunder, whether or not the full face amount hereof is
advanced.
(d) At any time and from time to time, Borrower shall
have the right to prepay the outstanding principal balance, in
whole or in part, without premium or penalty but with accrued
interest to the date of such prepayment on the amounts prepaid.
5. Late Charge; Interest on Overdue Installments.
(a) Borrower shall pay to Bank a late charge equal to
five percent (5%) of any monthly payment which is not received by
Bank within ten (10) days of the due date thereof.
(b) Upon the occurrence of an Event of Default
hereunder, Borrower agrees to pay interest to Bank (or any
subsequent holder hereof) at the Default Rate on the aggregate
indebtedness represented hereby, until such aggregate indebtedness
is paid in full.
(c) Bank (or any subsequent holder hereof) shall be
entitled to recover all costs of collecting, securing or attempting
to collect or secure this Note, including, without limitation,
court costs and reasonable attorneys' fees actually incurred,
including actual reasonable attorneys' fees on any appeal by either
Borrower or Bank.
6. Security. This Note is executed in connection with the
Loan Agreement and is secured by the CBL Mortgages which are
more particularly described in the Loan Agreement (together
with any other documents executed by the Borrower or others in
connection with the Loan, collectively, the "Loan Documents").
7. Events of Default. If the Borrower shall fail to make
payment of any installment of interest, as above provided,
within ten (10) days following mailing of notice from Bank to
Borrower of such failure, or upon any default beyond the
expiration of any applicable notice and cure period in the
terms and provisions of any of the other Loan Documents, then,
in any of such events, the entire unpaid principal balance of
the indebtedness evidenced hereby together with all interest
then accrued, shall, at the absolute option of the Bank, at
once become due and payable, without demand or notice, the same
being expressly waived.
8. Usury. In no event shall the amount of interest due or
payable hereunder exceed the maximum rate of interest allowed
by applicable law, and in the event any such payment is
inadvertently paid by Borrower or inadvertently received by
Bank (or any subsequent holder hereof), then such excess sum
shall be credited as a payment of principal, unless Bank (or
any subsequent holder hereof) elects to have such excess sum
refunded to Borrower forthwith, which refund Borrower hereby
agrees to accept. It is the express intent hereof that
Borrower not pay and Bank (or any subsequent holder hereof)
not receive, directly or indirectly, interest in excess of
that which may be legally paid by Borrower under applicable
law.
9. Relationships of Parties. Borrower and Bank agree
that the relationship between them shall be solely that of
debtor and creditor. Nothing contained in this Note or in any
other Loan Document shall be deemed to create a partnership,
tenancy-in-common, joint tenancy, joint venture or co-ownership
by or between Borrower and Bank. Bank (or any subsequent holder
hereof) shall not be in any way responsible or liable for debts,
losses, obligations or duties of Borrower with respect to the
collateral described in the Loan Documents or otherwise.
Borrower, at all times consistent with the terms and provisions
of this Note and the Loan Documents, shall be free to determine
and follow its own policies and practices in the conduct of
its business.
10. Miscellaneous.
(a) Borrower agrees that, as of the date hereof, there
are no defenses, equities, or setoffs with respect to the
obligations set forth herein.
(b) All amounts due hereunder shall be payable in lawful
money of the United States of America.
(c) With respect to the amounts due under this Note,
Borrower waives the following to the fullest extent permitted by
law:
(i) All rights of exemption of property from
levy or sale under execution or other process for the
collection of debts under the Constitution or laws of the
United States or any state thereof;
(ii) Demand, presentment, protest, notice of
dishonor, notice of non-payment, diligence in collection,
and all other requirements necessary to charge or hold
the Borrower liable on any obligations hereunder; and
(iii) Receipt of any further notice from or
acknowledgment by Bank of any collateral now or hereafter
deposited as security for the obligations hereunder.
(d) Bank shall not by any act, delay, omission, or
otherwise be deemed to have waived any of its rights or remedies
under the Loan Documents, and no waiver of any kind shall be valid
unless in writing and signed by Bank.
(e) All rights and remedies of Bank under the terms of
the Loan Documents, and applicable statutes or rules of law shall
be cumulative and may be exercised successively or concurrently.
(f) The provisions of this Note shall be construed
without regard to the party responsible for the drafting and
preparation hereof.
(g) Any provision in this Note which may be
unenforceable or invalid under any law shall be ineffective to the
extent of such unenforceability or invalidity without affecting the
enforceability or validity of any other provision hereof.
(h) The obligations of Borrower hereunder shall be
binding upon and enforceable against Borrower and its successors
and assigns.
(i) Time is of the essence of this Note and the
performance of each of the covenants and agreements contained
herein.
(j) THE VALIDITY, INTERPRETATION, ENFORCEMENT AND EFFECT
OF THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF ALABAMA. THE BANK'S PRINCIPAL PLACE
OF BUSINESS IS LOCATED IN JEFFERSON COUNTY IN THE STATE OF ALABAMA,
AND THE BORROWER AGREES THAT THIS NOTE SHALL BE DELIVERED TO AND
HELD BY BANK AT SUCH PRINCIPAL PLACE OF BUSINESS, AND THE HOLDING
OF THIS NOTE BY BANK THEREAT SHALL CONSTITUTE SUFFICIENT MINIMUM
CONTACTS OF BORROWER WITH JEFFERSON COUNTY AND THE STATE OF ALABAMA
FOR THE PURPOSE OF CONFERRING JURISDICTION UPON THE FEDERAL AND
STATE COURTS PRESIDING IN SUCH COUNTY AND STATE. BORROWER CONSENTS
THAT ANY LEGAL ACTION OR PROCEEDING ARISING HEREUNDER MAY BE
BROUGHT IN THE CIRCUIT COURT OF THE STATE OF ALABAMA, JEFFERSON
COUNTY, ALABAMA OR THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ALABAMA AND ASSENTS AND SUBMITS TO THE
PERSONAL JURISDICTION OF ANY SUCH COURT IN ANY ACTION OR PROCEEDING
INVOLVING THIS AGREEMENT. NOTHING HEREIN SHALL LIMIT THE
JURISDICTION OF ANY OTHER COURT.
(k) BORROWER HEREBY WAIVES ANY RIGHT THAT IT MAY HAVE TO
A TRIAL BY JURY ON ANY CLAIM, COUNTERCLAIM, SETOFF, DEMAND, ACTION
OR CAUSE OF ACTION (A) ARISING OUT OF OR IN ANY WAY RELATED TO THIS
NOTE, OR (B) IN ANY WAY CONNECTED WITH OR PERTAINING OR RELATED TO
OR INCIDENTAL TO ANY DEALINGS OF BANK AND/OR BORROWER WITH RESPECT
TO THE LOAN DOCUMENTS OR IN CONNECTION WITH THIS NOTE OR THE
EXERCISE OF EITHER PARTY'S RIGHTS AND REMEDIES UNDER THIS NOTE OR
OTHERWISE, OR THE CONDUCT OR THE RELATIONSHIP OF THE PARTIES
HERETO, IN ALL OF THE FOREGOING CASES WHETHER NOW EXISTING OR
HEREAFTER ARISING AND WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE. BORROWER AGREES THAT BANK MAY FILE A COPY OF THIS NOTE
WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY, AND
BARGAINED AGREEMENT OF BORROWER IRREVOCABLY TO WAIVE ITS RIGHTS TO
TRIAL BY JURY AS AN INDUCEMENT OF BANK TO MAKE THE LOAN EVIDENCED
HEREBY, AND THAT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY
DISPUTE OR CONTROVERSY WHATSOEVER (WHETHER OR NOT MODIFIED HEREIN)
BETWEEN BORROWER AND BANK SHALL INSTEAD BE TRIED IN A COURT OF
COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]<PAGE>
IN TESTIMONY WHEREOF, the above partnership Borrower and CBL
Properties, Inc. has caused this instrument to be executed in the
appropriate company or partnership name by its duly authorized general
partner, and has adopted as its seal the word "SEAL" appearing beside
its name, this sealed instrument being executed and delivered on the
date first above written.
CBL&ASSOCIATES LIMITED PARTNERSHIP,
a Delaware limited partnership
BY: CBL HOLDINGS I, INC.,
a Delaware corporation
Its Sole General Partner
BY:
____________________, President
ATTEST:
______________________________________
______________________________, Secretary
(Corporate Seal)
STATE OF TENNESSEE
COUNTY OF HAMILTON
I, _________________________________, a Notary Public of Hamilton
County, Tennessee, do hereby certify that ________________________________
personally appeared before me this day and acknowledged that __he is
Secretary of CBL Holdings I, Inc., a Delaware corporation, as the Sole
General Partner of CBL & Associates Limited Partnership, and that by
authority duly given and as the act of the corporation, the foregoing
instrument was signed in its name by its President, sealed with its
corporate seal, and attested by ____self as its __________________
Secretary.
Witness my hand and official stamp or seal, this ______ day of
January, 1998.
My commission expires:
_____________________ ___________________________________________
(Notarial stamp/seal) NOTARY PUBLIC
EXHIBIT D
CLOSING CHECKLIST
SURVEY MEMORANDUM
The Bank requires a current survey on the ground made or
rechecked within ninety (90) days of closing by a registered
surveyor acceptable to Bank and showing all easements, set-back and
building lines, lines and widths of abutting streets, distance to
nearest intersecting streets affording ingress and egress to the
property, and the location and dimensions of all encroachments and
improvements. A survey map based on that survey, signed and
certified as accurate by the surveyor shall be furnished to us and
to the title insurer as specified in the commitment letter. The
survey shall be in form and content acceptable to Bank and the
title insurer and should contain a certificate imprinted thereon in
the following form:
This survey is made for the benefit of SouthTrust Bank,
National Association, [borrower], and [title company].
I hereby certify that this survey was made on the ground as
per field notes and that the legal description shown hereon is
correct; that this survey shows the location of all easements
and other matters of record affecting the subject property per
legal description in such easements and other matters, and
shows any other matters visible on the ground which may
adversely affect the subject title, other than those easements
and restrictions listed below (if any) which are blanket
easements and restrictions affecting the property; that this
survey shows the location of all buildings and improvements on
the subject property and all building set back lines; that the
location of all buildings and improvements on the subject
property is in conformity with all applicable zoning laws
regulating the use of the subject property, applicable laws
containing minimum setback provisions, and covenants and
restrictions of record; that there are no encroachments either
way except as shown on the survey; that all utilities enter
the subject property by way of public easements; that adequate
ingress and egress to and from the subject property is
provided by streets and dedicated public rights-of-way
maintained by the City of ________________,
____________________; and that the subject property does not
serve any adjoining properties for drainage, ingress and
egress, or other purposes. The following are blanket
easements and restrictions affecting the property which are
not capable of being depicted at a specific location or area:
[list by recording information].
Registered Surveyor
(Stamp or Seal)
<PAGE>
SURVEY MEMORANDUM
In an attempt to avoid requiring a revised final survey, the
following is a list of items which, in addition to the above, we
require on all of our surveys:
1. Each boundary line should have a bearing and distance,
not merely an angle at corner.
2. The legal description must be imprinted on the face of
the survey. This legal description should be a metes and
bounds description, and not just a reference to a
previous survey or platted subdivision, but such
reference should also be included if applicable.
3. All easements affecting the property (burdening or
benefitting) should be traced on the survey, including
water, sewer, power, gas, telephone and storm sewer. In
this regard the surveyor must show how the real property
is drained and how it is served with utilities by
locating above and below ground utilities entering the
property, and the location at which the utilities tap
onto such buildings.
4. Have the surveyor indicate the acreage of the property.
5. Have the surveyor indicate the error of closure, with a
minimum requirement of one/ten thousand.
6. Have the surveyor show the street address of the property
on the face of the survey.
7. Have the surveyor indicate the square footage of the
building inside the foundation line.
8. Have the surveyor indicate parking lot striping and
location of landscaping and the total number of spaces as
well as the number of spaces per thousand square feet of
floor space in the buildings.
9. Book and page numbers must be shown on the survey to
identify all easements and other matters of record
affecting the subject property, listing blanket easements
and other matters in the certificate and listing specific
easements and other matters at their location on the
property.
10. The surveyor should state whether any part of the
property lies within a flood hazard area, and, if only a
part, should show the flood line generally and whether
all or a part lies within a flood hazard area, should
show the elevation below which there is a flood zone and
the elevation of all corners of the buildings, and state
the FEMA flood map reference.
SOUTHTRUST BANK, NATIONAL ASSOCIATION
REQUIREMENTS FOR ENVIRONMENTAL REPORT
Bank requires a Phase I Environmental Site Assessment of the
subject property (the "Site") which must, at a minimum, satisfy the
following requirements:
1. The report must be dated within three months of closing.
2. The firm and the engineer preparing the report must be
approved by Bank prior to the preparation of the report. Bank
reserves the right to review the firm's client list, the
qualifications of the engineer preparing the report, and a sample
Phase I report.
3. The report must be addressed to Bank, or the engineer
must execute a letter authorizing Bank to rely upon the report to
the same extent as if addressed to Bank.
4. The engineers preparing the report must sign it. The
engineers should state in their report that they are familiar with
applicable federal, state and local environmental laws and
ordinances affecting the Site. The report must certify that it has
been prepared in accordance with ASTM Standard Practice for
Environmental Site Assessments: Phase I Environmental Site
Assessment Process (Designation E 1527-97). Terms used in
quotation marks in these Requirements have the meanings given in
ASTM Standard Practice E 1527-97.
5. Any proposal or application which is to govern the scope
of work or the engineer's liability must be approved by Bank prior
to completion of the report and must be included within the report.
6. The report must contain:
(a) a review of the chain of title for the Site for a
period of at least fifty years and an analysis of the
likelihood that the owners or lessees identified in the chain
of title used, stored or handled "hazardous substances" or
"petroleum products" on the Site.
(b) a determination of which adjacent or nearby parcels
may, due to the flow of surface water or groundwater or other
conditions, be likely to have an environmental impact on the
Site ("Affecting Parcels"). Affecting Parcels shall include,
at a minimum, all parcels located within one-half mile of the
Site unless the engineer states that a lesser radius will
include all parcels having any potential environmental impact
upon the Site.
(c) a review of available aerial photographs of the Site
and Affecting Parcels and an analysis of the likelihood that
the uses of the Site and Affecting Parcels identified in the
photographs indicate the use, storage or handling of
"hazardous substances" or "petroleum products" in a manner
which would likely impact the Site.
(d) a statement that the engineer has checked available
federal, state and local records, including all "standard
environmental record sources," affecting the Site and other
properties within the "approximate minimum search distance,"
and a discussion and analysis of any reports filed or
investigations made and their impact upon the Site.
(e) a report of a recent "site reconnaissance," which
shall include an investigation of all buildings, surface water
and vegetation located on the Site, and a report of interviews
with owners and occupants of the Site and Affecting Parcels
and regulatory personnel as deemed necessary.
(f) the engineer's opinion as to whether there are now
located on the Site, or have been, any ground water wells and,
if so, their location and condition.
(g) the engineer's opinion as to whether there are now
located on the Site, or have been, any above- or below-ground
storage tanks and, if so, their location, contents and
condition, whether they are registered, whether any leaks have
been reported, and, if so, a description of any remediation
effort and its current status.
(h) a determination of whether or not the Site is
located in an area containing concentrations of radon as
determined by the EPA or other regulatory agencies, and if so,
radon testing should be conducted and the results included in
the report.
7. The report should conclude that the assessment has
revealed no evidence of "recognized environmental conditions,"
except as noted, and that no further investigation is recommended
to determine the presence or absence of "hazardous substances" or
"petroleum products" on the Site. If the engineer indicates that
either (a) further investigation will be necessary, or is
recommended, to determine the presence of "hazardous substances" or
"petroleum products," or (b) there is evidence of "hazardous
substances" or "petroleum products" on the Site (other than storage
and use of such materials in compliance with applicable law), Bank
may, in its discretion, decline to proceed with the loan
transaction. If Bank agrees to proceed, further testing and/or
remediation, consistent with the engineer's recommendation, will be
required until a clean opinion can be given.
8. If there are existing structures on the Site, Bank will
also require an asbestos report indicating the presence or absence
of asbestos-containing materials (ACM's). If ACM's are present,
the report should include (a) the location of the ACM's, (b) an
analysis of friability of such ACM's, (c) a statement as to whether
removal, encapsulation, enclosure, or development of an operations
and maintenance program is recommended, and (d) an estimate of the
costs to comply with the recommendations in (c) above. Evidence
will be required that the engineer's recommendations have been
followed.
<PAGE>
EXHIBIT E
NON-DEFAULT CERTIFICATE
For Fiscal Year Ended _______________, 19__.
For Fiscal Quarter Ended _______________, 19__.
The undersigned, a duly authorized officer of CBL &
Associate Limited Partnership, a Tennessee limited partnership
[referred to as "Borrower" in that certain Loan Agreement (the
"Loan Agreement") dated April ___, 1997 between Borrower and
SouthTrust Bank of Alabama, National Association ("Bank")],
certifies to said Bank, in accordance with the terms and provisions
of said Loan Agreement, as follows:
1. All of the representations and warranties set forth in the
Loan Agreement are and remain true and correct on and as of
the date of this Certificate with the same effect as though
such representations and warranties had been made on and as of
this date except as otherwise previously disclosed to the Bank
in writing.
2. As of the date hereof, Borrower has no knowledge of any Event
of Default, as specified in Section 8 of the Loan Agreement,
nor any event which, upon notice, lapse of time or both, would
constitute an Event of Default, has occurred or is continuing.
3. As of the date hereof, Borrower is in full compliance with all
financial covenants contained in the Loan Agreement, and the
following are true, accurate and complete:
(a) The Net Worth (as defined in the Loan Agreement) of the
Borrower is $__________________________ as of
________________, 19___.
(b) The Total Obligations to Portfolio Value Ratio of the
Borrower is _____ to _____ as of _____________________,
19__.
(c) The Debt Coverage Ratio of the Borrower is ____ to ____
as of ______________, 19__.
(d) The Interest Coverage Ratio of the Borrower is ____ to
____ as of _____________________, 1996.
<PAGE>
DATED this ______ day of ______________________, 19__.
CBL & ASSOCIATES LIMITED PARTNERSHIP
BY: CBL HOLDINGS I, INC., Its Sole
General Partner
By:________________________________
Title:_____________________________<PAGE>
EXHIBIT F
LITIGATION
Disclosure Pursuant to Paragraph 5.5
See Exhibit "F-1" attached for description of all
litigation.
ENVIRONMENTAL MATTERS
Disclosure pursuant to Paragraph 5.11
None.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet at March 31, 1998 (unaudited) and the
Consolidated Statement of Operations for the year ended
March 31, 1998 (unaudited) and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> MAR-31-1998
<CASH> 9,008
<SECURITIES> 0
<RECEIVABLES> 15,541
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 154,510
<TOTAL-ASSETS> 1,352,405
<CURRENT-LIABILITIES> 25,397
<BONDS> 0
0
0
<COMMON> 241
<OTHER-SE> 341,478
<TOTAL-LIABILITY-AND-EQUITY> 1,352,405
<SALES> 0
<TOTAL-REVENUES> 55,056
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 28,968
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,775
<INCOME-PRETAX> 10,599
<INCOME-TAX> 0
<INCOME-CONTINUING> 10,599
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,599
<EPS-PRIMARY> .44
<EPS-DILUTED> .44
</TABLE>
