Securities Exchange Act of 1934 -- Form10-Q
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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 September 30, 1998
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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 (IRS Employer
of incorporation or Identification
organization) No.)
One Park Place, 6148 Lee Highway, Chattanooga, TN 37421
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(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 November 9, 1998: Common Stock,
par value $.01 per share, 24,194,386 shares.
1
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CBL & ASSOCIATES PROPERTIES, INC.
INDEX
PART I FINANCIAL INFORMATION PAGE NUMBER
ITEM 1: FINANCIAL INFORMATION 3
CONSOLIDATED BALANCE SHEETS - AS OF
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997 4
CONSOLIDATED STATEMENTS OF OPERATIONS -
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
1998 AND 1997 AND FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1998 AND SEPTEMBER 30,
1997 5
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1998 AND SEPTEMBER 30, 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 6: EXHIBITS AND REPORTS ON FORM 8-K 25
SIGNATURE 26
2
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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
periods ended September 30, 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 "REIT") 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.
3
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CBL & ASSOCIATES PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(UNAUDITED)
September 30, December 31,
1998 1997
----------- ------------
ASSETS
Real estate assets:
Land . . . . . . . . . . . . . . . . . . . $ 258,234 $ 167,895
Buildings and improvements . . . . . . . . 1,609,231 1,019,283
---------- ----------
1,867,465 1,184,178
Less: Accumulated depreciation . . . . . . (174,921) (145,641)
---------- ----------
1,692,544 1,038,537
Developments in progress . . . . . . . . . 89,369 103,787
---------- ----------
Net investment in real estate assets . . . 1,781,913 1,142,324
Cash and cash equivalents. . . . . . . . . . 6,787 3,124
Cash in escrow . . . . . . . . . . . . . . . -- 66,108
Receivables:
Tenant . . . . . . . . . . . . . . . . . . 17,665 12,891
Other. . . . . . . . . . . . . . . . . . . 1,505 1,121
Mortgage notes receivable . . . . . . . . . 11,949 11,678
Other assets . . . . . . . . . . . . . . . . 14,648 7,779
---------- ----------
$1,834,467 $1,245,025
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage and other notes payable . . . . . . $1,184,967 $ 741,413
Accounts payable and accrued liabilities . . 41,020 41,978
---------- ----------
Total liabilities. . . . . . . . . . . . . 1,225,987 783,391
---------- ----------
Distributions and losses in excess of
investment in unconsolidated affiliates. . 6,996 6,884
---------- ----------
Minority interest . . . . . . . . . . . . . 193,420 123,897
---------- ----------
Commitments and contingencies. . . . . . . . -- --
Shareholders' Equity:
Preferred stock, $.01 par value, 5,000,000
shares authorized 2,875,000 issued in
1998, none in 1997 . . . . . . . . . . . 29 --
Common stock, $.01 par value, 95,000,000
shares authorized, 24,172,155 and
24,063,963 shares issued and outstanding
in 1998 and 1997, respectively . . . . . 242 241
Excess stock, $.01 par value, 100,000,000
shares authorized, none issued . . . . . -- --
Additional paid - in capital . . . . . . . 431,716 359,541
Accumulated deficit. . . . . . . . . . . . (23,376) (28,433)
Deferred compensation. . . . . . . . . . . (547) (496)
---------- ----------
Total shareholders' equity . . . . . . . 408,064 330,853
---------- ----------
$1,834,467 $1,245,025
========== ==========
The accompanying notes are an integral part of these balance sheets.
4
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CBL & ASSOCIATES PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
1998 1997 1998 1997
--------- --------- --------- ---------
REVENUES:
Rentals:
Minimum . . . . . . . . . . . $44,525 $28,726 $118,545 $83,266
Percentage. . . . . . . . . . 1,146 770 3,975 2,677
Other . . . . . . . . . . . . 462 256 1,282 615
Tenant reimbursements. . . . . . 20,238 12,225 52,241 36,622
Management, development
and leasing fees . . . . . . . . 639 655 2,058 1,765
Interest and other . . . . . . . 703 611 2,067 1,998
------- ------- ------- -------
Total revenues . . . . . . . . 67,713 43,243 180,168 126,943
------- ------- ------- -------
EXPENSES:
Property operating . . . . . . . 11,187 7,568 29,511 22,038
Depreciation and amortization. . 11,659 8,029 30,534 23,639
Real estate taxes. . . . . . . . 6,355 3,515 16,607 10,450
Maintenance and repairs. . . . . 3,928 2,427 10,223 7,270
General and administrative . . . 2,775 1,849 8,506 6,352
Interest . . . . . . . . . . . . 19,019 9,146 47,836 27,081
Other. . . . . . . . . . . . . . 113 3 122 45
------- ------- ------- -------
Total expenses . . . . . . . . 55,036 35,537 143,339 96,875
------- ------- ------- -------
Income from operations . . . . . 12,677 10,706 36,829 30,068
Gain on sales of real
estate assets. . . . . . . . . . 398 774 2,910 4,156
Equity in earnings of
unconsolidated affiliates. . . . 521 301 1,689 1,514
Minority interest in
earnings:
Operating partnership. . . . . (3,499) (3,178) (11,276) (9,763)
Shopping center properties . . (101) (116) (409) (405)
------- ------- ------- -------
Income before extraordinary
item . . . . . . . . . . . . . 9,996 8,487 29,743 25,570
Extraordinary loss on
extinguishment of debt . . . . (676) (432) (676) (928)
------- ------- ------- -------
Net income . . . . . . . . . . . 9,320 8,055 29,067 24,642
Preferred dividend . . . . . . . (1,617) -- (1,617) --
------- ------- ------- -------
Net income available to common
shareholders . . . . . . . . . $ 7,703 $ 8,055 $27,450 $24,642
======= ======= ======= =======
Basic per share data:
Income before extraordinary
item . . . . . . . . . . . . $ 0.35 $ 0.35 $ 1.17 $ 1.07
======= ======= ======= =======
Net income . . . . . . . . . . $ 0.32 $ 0.34 $ 1.14 $ 1.03
======= ======= ======= =======
Weighted average common shares
outstanding. . . . . . . . . . 24,117 24,025 24,089 23,842
======= ======= ======= =======
Diluted per share data:
Income before extraordinary
item . . . . . . . . . . . . $ 0.34 $ 0.35 $ 1.16 $ 1.06
======= ======= ======= =======
Net income . . . . . . . . . . $ 0.32 $ 0.33 $ 1.13 $ 1.02
======= ======= ======= =======
Weighted average common and
dilutive potential common
shares outstanding . . . . . . 24,409 24,300 24,345 24,104
======= ======= ======= =======
The accompanying notes are an integral part of these statements.
5
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CBL & ASSOCIATES PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
Nine Months
Ended September 30,
----------------------
1998 1997
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . $29,067 $24,642
Adjustments to reconcile net income to net
cash provided by operating activities:
Minority interest in earnings. . . . . . . . . 11,685 10,168
Depreciation . . . . . . . . . . . . . . . . . 26,032 21,397
Amortization . . . . . . . . . . . . . . . . . 5,369 2,760
Extraordinary loss on extinguishment of debt . -- 62
Gain on sales of real estate assets. . . . . . (2,910) (4,156)
Issuance of stock under incentive plan . . . . 287 127
Equity in earnings of unconsolidated
affiliates . . . . . . . . . . . . . . . . . (1,689) (1,514)
Amortization of deferred compensation. . . . . 392 239
Write-off of development projects. . . . . . . 122 45
Distribution from unconsolidated
affiliates . . . . . . . . . . . . . . . . . 2,768 1,764
Distributions to minority investors. . . . . . (13,193) (12,647)
Changes in assets and liabilities -
Tenant and other receivables . . . . . . . (5,158) (293)
Other assets . . . . . . . . . . . . . . . (6,187) (769)
Accounts payable and accrued expenses. . . 12,833 6,207
-------- --------
Net cash provided by operating
activities . . . . . . . . . . . . . . . 59,418 48,032
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction of real estate and land
acquisitions, net of payables. . . . . . . . (81,290) (101,282)
Acquisition of real estate assets. . . . . . . (501,156) (36,207)
Capitalized interest . . . . . . . . . . . . . (3,858) (4,702)
Other capital expenditures . . . . . . . . . . (16,186) (6,580)
Deposits in escrow . . . . . . . . . . . . . . 66,108 --
Proceeds from sales of real estate
assets . . . . . . . . . . . . . . . . . . . 6,730 8,876
Additions to mortgage notes receivable . . . . (1,497) (3,252)
Payments received on mortgage notes
receivable . . . . . . . . . . . . . . . . . 1,435 1,472
Additional investments in and advances to
unconsolidated affiliates. . . . . . . . . . (967) (1,724)
-------- --------
Net cash used in investing activities. . . . (530,681) (143,399)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage and other notes
payable. . . . . . . . . . . . . . . . . . . 586,832 251,540
Principal payments on mortgage and
other notes payable. . . . . . . . . . . . . (143,278) (198,279)
Additions to deferred finance costs. . . . . . (2,025) (655)
Proceeds from issuance of preferred stock. . . 70,112 --
Proceeds from issuance of common stock . . . . 240 74,465
Proceeds from exercise of stock options. . . . 1,391 1,104
Purchase of minority interest. . . . . . . . . (3,012) --
Prepayment penalties on extinguishment
of debt. . . . . . . . . . . . . . . . . . . (676) (866)
Dividends paid . . . . . . . . . . . . . . . . (34,658) (30,038)
--------- --------
Net cash provided by financing activities. . 474,926 97,271
--------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS. . . . . 3,663 1,904
CASH AND CASH EQUIVALENTS, beginning of
period . . . . . . . . . . . . . . . . . . . . . 3,124 4,298
--------- --------
CASH AND CASH EQUIVALENTS, end of period . . . . . $ 6,787 $ 6,202
========= ========
Cash paid for interest, net of amounts
capitalized. . . . . . . . . . . . . . . . . . . $ 42,147 $ 22,660
========= ========
The accompanying notes are an integral part of these statements.
6
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CBL & ASSOCIATES PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Unconsolidated Affiliates
At September 30, 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 as follows (in thousands):
Comapny's Share
Total For The For The
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
1998 1997 1998 1997
-------- -------- -------- --------
Revenues . . . . . . . . $ 2,597 $ 2,515 $ 8,125 $ 7,856
-------- -------- -------- --------
Depreciation and
amortization . . . . . 357 337 1,057 993
Interest expense . . . . 920 964 2,904 2,786
Other operating
expenses . . . . . . . 799 913 2,475 2,563
-------- -------- -------- --------
Net income . . . . . . . $ 521 $ 301 $ 1,689 $ 1,514
======== ======== ======== ========
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 that exposure, if any,
related to environmental cleanup will be immaterial to the financial
position and results of operations of the Company.
7
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Note 3 - Credit Agreements
The Company has credit facilities of $230 million of which $95.6 million
is available at September 30, 1998. Outstanding amounts under the credit
facilities bear interest at a weighted average interest rate of 6.51% at
September 30, 1998. The Company's variable rate debt as of September 30,
1998 was $521.1 million with a weighted average interest rate of 6.61% as
compared to 6.98% as of September 30, 1997. Through the execution of
interest rate swap agreements, the Company has fixed the interest rates on
$314 million of variable rate debt on operating properties at a weighted
average interest rate of 6.61%. Of the Company's remaining variable rate
debt of $207.1 million, interest rate caps in place of $100.0 million and
conventional permanent loan commitments of $39.4 million, leave $67.7 million
of debt subject to variable rates on construction properties and no debt
subject to variable rates on operating properties. There were no fees
charged to the Company related to these swap agreements. The Company's swap
agreements in place at September 30, 1998 are as follows:
Swap Amount Fixed LIBOR
(in millions) Component Expiration Date Effective Date
- -------------- -------------- --------------- --------------
$65 5.72% 01/07/2000 01/07/98
81 5.54% 02/04/2000 02/04/98
50 5.70% 06/15/2001 06/15/98
38 5.73% 06/30/2001 06/26/98
80 5.49% 09/01/2001 09/01/98
In December 1997, the Company obtained two $100 million interest rate
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.
Note 4- Non-Cash Financing and Investing Activities
During the three months ended September 30, 1998 the Company issued
operating partnership units to finance acquisitions of real estate assets
with a value of $69.0 million.
8
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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 the Company's
Consolidated Financial Statements and Notes thereto.
The information included herein contains "forward-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
The Company's Consolidated Financial Statements and Notes thereto
reflect the consolidated financial results of CBL & Associates Limited
Partnership (the "Operating Partnership") which includes at September 30,
1998 the operations of a portfolio of properties consisting of twenty-four
regional malls, thirteen associated centers, eighty-three 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, one
power center, two community centers and one expansion currently under
construction and holds 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"). 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, Springdale Mall in Mobile, Alabama which is being redeveloped
and Bonita Lakes Mall in Meridian, Mississippi.
9
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In July 1998, the Company acquired Hickory Hollow Mall, Rivergate Mall,
The Courtyard at Hickory Hollow, The Village at Rivergate and Lionshead
Village, all located in the metropolitan Nashville, Tennessee area. The
purchase price of $247.4 million was funded with a ten-year fixed-rate loan
in the amount of $182.7 million, 631,016 operating partnership units in the
Operating Partnership with a value of $15.3 million and the balance funded
from the Company's credit lines.
In July 1998, the Company purchased 122,008 limited partnership units
valued at $3.0 million from a former executive and minority investor in
the Operating Partnership.
In August 1998, the Company acquired Meridian Mall in Lansing (Oskemos),
Michigan and Janesville Mall in Janesville, Wisconsin. The purchase price
of $138 million was funded with an acquisition loan of $80 million, 2,118,229
limited partnership units in the Operating Partnership with a value of $53
million and, the assumption of a $17.1 million mortgage loan. Excess loan
proceeds of $12.1 million were used to pay down the Company's credit lines.
In the third quarter of 1998, the Company closed the purchase of three
parcels of land from CBL & Associates, Inc., the predecessor company, for
an aggregate price of $1,538,157. The Operating Partnership issued limited
partnership interests equivalent to 62,100 common shares in exchange for
the property. The Company used the land to expand existing centers.
RESULTS OF OPERATIONS
Operational highlights for the nine months ended September 30, 1998 as
compared to the nine months ended September 30, 1997 are as follows:
SALES
Mall shop sales, for those tenants who have reported, in the
twenty-three Stabilized Malls in the Company's portfolio increased
by 4.6% on a comparable per square foot basis.
Nine Months Ended September 30,
-------------------------------
1998 1997
------------ -----------
Sales per square foot $176.76 $169.07
Total sales volume in the mall portfolio, including New Malls,
increased 11.1% to $871.4 million for the nine months ended September
30, 1998 from $784.2 million for the nine months ended September 30,
1997.
Occupancy costs as a percentage of sales was 12.2% for the nine
months ended September 30, 1998 and 13.1% for the nine months ended
September 30, 1997 for the Stabilized Malls. 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.
10
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OCCUPANCY
Occupancy for the Company's overall portfolio is as follows:
At September 30,
--------------------
1998 1997
-------- -------
Stabilized malls . . . . . . . . 91.7% 89.0%
New malls . . . . . . . . . . . . 92.0% 87.9%
Associated centers . . . . . . . 89.7% 83.1%
Community centers . . . . . . . . 96.5% 97.4%
Total Portfolio . . . . . . . . . 93.7% 92.6%
AVERAGE BASE RENT
Average base rents per square foot for the Company's three
portfolio categories were as follows:
At September 30,
--------------------
1998 1997
-------- -------
Malls . . . . . . . . . . . . . . $19.29 $19.02
Associated centers. . . . . . . . 9.41 9.46
Community centers . . . . . . . . 8.10 7.30
LEASE ROLLOVERS
On spaces previously occupied, the Company achieved the following
results from rollover leasing during the nine months ended September 30,
1998, over and above the base and percentage rent paid by the previous
tenant:
Per Square Per Square
Foot Rent Foot Rent Percentage
Prior Lease(1) New Lease(2) Increase
-------------- ------------ -----------
Malls . . . . . . . . . $20.18 $22.96 13.8%
Associated centers. . . 10.17 11.50 13.1%
Community centers . . . 7.79 8.70 11.7%
11
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(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 nine months ended September 30, 1998, malls represented 74.0%
of total revenues from the Properties; revenues from associated centers
represented 3.9%; revenues from community centers represented 20.7%; and
revenues from mortgages and the office building represented 1.4%.
Accordingly, revenues and results of operations are disproportionately
impacted by the malls' results of operations. The Company's cost recovery
ratio increased to 92.7% for the nine months ended September 30, 1998 as
compared to 92.1% in 1997.
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, 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 entire year.
Comparison of Results of Operations for the three months ended September 30,
1998 to the Results of Operations for the three months ended September 30,
1997
Total revenues for the three months ended September 30, 1998 increased
by $24.5 million, or 56.7%, to $67.7 million as compared to $43.2 million
in 1997. Of this increase, minimum rents increased by $15.8 million, or
55.0%, to $44.5 million as compared to $28.7 million in 1997, and tenant
reimbursements increased by $8.0 million, or 65.5%, to $20.2 million in 1998
as compared to $12.2 million in 1997.
Improved occupancies and operations and increased rents in the Company's
operating portfolio generated approximately $1.4 million of the increase in
revenues. The majority of these increases were generated at Westgate Mall
in Spartanburg, South Carolina and St. Clair Square in Fairview Heights,
Illinois. New revenues of $23.1 million resulted from operations at the
twenty new centers opened or acquired during the past fifteen months as
follows:
<TABLE>
<C> <C> <C> <C> <C>
Project Name Location Total GLA Type of Addition Opening Date
- ------------- -------- ---------- ----------------- ------------
Salem Crossing Virginia Beach, Virginia 289,000 New Development July, 1997
Strawbridge Marketplace Virginia Beach, Virginia 44,000 New Development August, 1997
Springhurst Towne Center Louisville, Kentucky 811,000 New Development August, 1997
Bonita Lakes Mall Meridian, Mississippi 633,000 New Development October, 1997
Bonita Lakes Crossing Meridian, Mississippi 110,000 New Development October, 1997/
March, 1998
</TABLE>
12
<PAGE>
<TABLE>
<C> <C> <C> <C> <C>
Project Name Location Total GLA Type of Addition Opening Date
- ------------- -------- ---------- ----------------- ------------
Cortlandt Town Center Cortlandt, New York 772,000 New Development November, 1997
Chester Plaza Richmond, Virginia 10,000 New Development October, 1997
Sterling Creek Commons Portsmouth, Virginia 65,500 New Development June, 1998
Westgate Crossing Spartanburg, South Carolina 151,000 Acquisition August, 1997
Springdale Mall Mobile, Alabama 926,000 Acquisition September, 1997
Asheville Mall Asheville, North Carolina 817,000 Acquisition January, 1998
Burnsville Center Burnsville (Minneapolis), 1,070,000 Acquisition January, 1998
Minnesota
Stroud Mall Stroudsburg, Pennsylvania 427,000 Acquisition April, 1998
Hickory Hollow Mall Nashville, Tennessee 1,096,000 Acquisition July, 1998
Rivergate Mall Nashville, Tennessee 1,014,000 Acquisition July, 1998
Courtyart at Hickory Nashville, Tennessee 77,000 Acquisition July, 1998
Hollow
Village at Rivergate Nashville, Tennessee 166,000 Acquisition July, 1998
Lionshead Nashville, Tennessee 93,000 Acquisition July, 1998
Meridian Mall Oskemos (Lansing), Michigan 777,000 Acquisition August, 1998
Janesville Mall Janesville, Wisconsin 615,000 Acquisition August, 1998
</TABLE>
Interest and other income increased in the third quarter of 1998 by
$0.1 million, to $0.7 million from $0.6 million in 1997. This increase is
due to interest on advances to developers in the Company's co-development
program.
Property operating expenses, including real estate taxes and
maintenance and repairs, increased in the third quarter of 1998 by $8.0
million, or 58.9%, to $21.5 million as compared to $13.5 million in the third
quarter of 1997. This increase is primarily the result of the addition of the
twenty new centers referred to above.
Depreciation and amortization increased in the third quarter of 1998
by $3.6 million, or 45.2%, to $11.7 million as compared to $8.0 million in
the third quarter of 1997. This increase is primarily the result of the
addition of the twenty new centers referred to above.
Interest expense increased in the third quarter of 1998 by $9.9
million, or 107.9%, to $19.0 million as compared to $9.1 million in 1997.
This increase is primarily due to interest on debt related to the twenty new
centers opened or acquired during the last fifteen months.
The gain on sales of real estate assets decreased in the third quarter
of 1998 by $0.4 million, or 48.6%, to $0.4 million as compared to $0.8
million in 1997. The outparcel sale in the third quarter of 1998 was at Sand
Lake Corner in Orlando, Florida. The sales in the third quarter of 1997 were
for outparcels at Springhurst Towne Center in Louisville, Kentucky.
13
<PAGE>
The extraordinary loss in the third quarter of 1998 was from the
refinancing of the loan on College Square Mall in Morristown, Tennessee. The
Company reduced the interest rate from 10% to 6.75% and extended the term to
fifteen years.
Comparison of Results of Operations for the nine months ended September 30,
1998 to the Results of Operations for the nine months ended September 30,
1997
Total revenues for the nine months ended September 30, 1998 increased
by $53.3 million, or 42.0%, to $180.2 million as compared to $126.9 million
in 1997. Of this increase, minimum rents increased by $35.2 million, or
42.3%, to $118.5 million as compared to $83.3 million in 1997, and tenant
reimbursements increased by $15.6 million, or 42.6%, to $52.2 million in 1998
as compared to $36.6 million in 1997.
Improved occupancies and operations and increased rents in the
Company's operating portfolio generated $5.5 million of increased revenues.
The majority of these increases were generated at Westgate Mall in
Spartanburg, South Carolina and Coolsprings Galleria in Nashville, Tennessee.
New revenues of $47.7 million resulted from operations at the twenty-five new
centers opened or acquired during the past twenty-one months. These centers
are as follows:
<TABLE>
<C> <C> <C> <C> <C>
Project Name Location Total GLA Type of Addition Opening Date
- ------------- -------- ---------- ----------------- ------------
Northpark Center Richmond, Virginia 61,000 New Development March, 1997
The Terrace Chattanooga, Tennessee 156,000 New Development February/
March 1997
Massard Crossing Fort Smith, Arkansas 291,000 New Development March, 1997
Salem Crossing Virginia Beach, Virginia 289,000 New Development July, 1997
Strawbridge Marketplace Virginia Beach, Virginia 44,000 New Development August, 1997
Springhurst Towne Center Louisville, Kentucky 811,000 New Development August, 1997
Bonita Lakes Mall Meridian, Mississippi 633,000 New Development October, 1997
Bonita Lakes Crossing Meridian, Mississippi 62,300 New Development October, 1997/
March 1998
Cortlandt Town Center Cortlandt, New York 772,000 New Development November, 1997
Chester Plaza Richmond, Virginia 10,000 New Development October, 1997
Hamilton Place Expansion Chattanooga, Tennessee 12,500 New Development April, 1998
Sterling Creek Commons Portsmouth, Virginia 65,500 New Development June, 1998
Governor's Plaza Clarksville, Tennessee 151,000 Acquisition June, 19978
Westgate Crossing Spartanburg, South Carolina 151,000 Acquisition August, 1997
Springdale Mall Mobile, Alabama 926,000 Acquisition September, 1997
Asheville Mall Asheville, North Carolina 817,000 Acquisition January, 1998
Burnsville Center Burnsville (Minneapolis), 1,070,000 Acquisition January, 1998
Minnesota
Stroud Mall Stroudsburg, Pennsylvania 427,000 Acquisition April, 1998
Hickory Hollow Mall Nashville, Tennessee 1,095,946 Acquisition July, 1998
Rivergate Mall Nashville, Tennessee 1,013,970 Acquisition July, 1998
Courtyart at Hickory Nashville, Tennessee 77,460 Acquisition July, 1998
Hollow
</TABLE>
14
<PAGE>
<TABLE>
<C> <C> <C> <C> <C>
Project Name Location Total GLA Type of Addition Opening Date
- ------------- -------- ---------- ----------------- ------------
Village at Rivergate Nashville, Tennessee 166,366 Acquisition July, 1998
Lionshead Nashville, Tennessee 93,290 Acquisition July, 1998
Meridian Mall Oskemos (Lansing), Michigan 776,960 Acquisition August, 1998
Janesville Mall Janesville, Wisconsin 615,000 Acquisition August, 1998
</TABLE>
Management, leasing and development fees increased by $0.3 million to
$2.1 million in the first nine months of 1998 as compared to $1.8 million in
1997. This increase was primarily due to fees earned in the Company's co-
development program and increases in management fees on managed properties.
Property operating expenses, including real estate taxes and
maintenance and repairs, increased in the first nine months of 1998 by $16.6
million, or 41.7%, to $56.3 million as compared to $39.8 million in 1997.
This increase is primarily the result of the addition of the twenty-five new
centers referred to above.
Depreciation and amortization increased in the first nine months of
1998 by $6.9 million, or 29.2%, to $30.5 million as compared to $23.6 million
in 1997. This increase is primarily the result of the addition of the
twenty-five new centers referred to above.
Interest expense increased in the first nine months of 1998 by $20.8
million, or 76.6%, to $47.8 million as compared to $27.1 million in 1997.
This increase is primarily the result of interest on debt related to the
addition of the twenty-five new centers referred to above.
The gain on sales of real estate assets decreased for the first nine
months of 1998 by $1.3 million, or 30.0%, to $2.9 million as compared to
$4.2 million in 1997. Gain on sales in the first nine months of 1998 were
for outparcel sales at the Company's developments in Springhurst Towne Center
in Louisville, Kentucky and Sterling Creek Commons in Portsmouth, Virginia.
The sales in the first nine months of 1997 were in connection with anchor pad
and outparcel sales at developments in Courtlandt Town Center in Courtlandt,
New York, Salem Crossing in Virginia Beach, Virginia, and Springhurst Towne
Center in Louisville, Kentucky, off-set by a loss on sale at Kingston
Overlook in Knoxville, Tennessee.
The extraordinary loss in the first nine months of 1998 was from the
refinancing of the loan on College Square Mall in Morristown, Tennessee. The
Company reduced the interest rate from 10% to 6.75% and extended the term to
fifteen years.
Liquidity and Capital Resources
The principal uses of the Company's liquidity and capital resources
have historically been for property development, acquisitions, expansion and
renovation programs, and debt repayment.
15
<PAGE>
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 October 31, 1998, the Company had $75.2 million available in
unfunded construction loans to be used for completion of construction
projects and replenishment of working capital previously used for
construction. Additionally, as of October 31, 1998, the Company had obtained
revolving credit facilities totaling $230 million of which $83.8 million was
available. Also, 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,
with $278 million remaining after the Company's preferred stock offering on
June 30, 1998. The Company at this time thinks 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.
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, credit facilities, preferred stock, common stock and a minority
interest in the Operating Partnership. Ownership interest in the Operating
Partnership held by the Company's executive, former executive and senior
officers is 26.2% 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 30.4%. Ownership interests granted in exchange for acquired
properties may be exchanged for approximately 2.8 million shares of common
stock. The minority interest in the Operating Partnership from executive
ownership interest and ownership interest granted in exchange of acquired
properties is 33.7%. Assuming the exchange of all limited partnership
interests in the Operating Partnership for common stock, there would be
outstanding approximately 36.5 million shares of common stock with a market
value of approximately $938.8 million at September 30, 1998 (based on the
closing price of $25.75 per share on September 30, 1998). The Company's
total market equity is $1,010.7 million including 2.9 million shares of
preferred stock at $25.00 per share at September 30,1998. Company executive,
former executive and senior officers' ownership interests had a market value
of approximately $286.0 million at September 30, 1998.
Mortgage debt consists of debt on certain consolidated properties as
well as on three properties in which the Company owns a non-controlling
16
<PAGE>
interest and are accounted for under the equity method of accounting. At
September 30, 1998, the Company's share of funded mortgage debt on its
consolidated properties adjusted for minority investors' interests in nine
properties was $1,163.4 million and its pro rata share of mortgage debt on
unconsolidated properties (accounted for under the equity method) was $41.4
million for total debt obligations of $1,204.8 million with a weighted
average interest rate of 7.13%.
The Company's total conventional fixed rate debt as of September 30,
1998 was $683.7 million with a weighted average interest rate of 7.52% as
compared to 8.1% as of September 30, 1997.
The Company's variable rate debt as of September 30, 1998 was $521.1
million with a weighted average interest rate of 6.61% as compared to 6.98%
as of September 30, 1997. Through the execution of interest rate swap
agreements, the Company has fixed the interest rates on $314 million of
variable rate debt on operating properties at a weighted average interest
rate of 6.61%. Of the Company's remaining variable rate debt of $207.1
million, interest rate caps in place of $100.0 million and conventional
permanent loan commitments of $39.4 million, leave $67.7 million of debt
subject to variable rates on construction properties and no debt subject to
variable rates on operating properties. There were no fees charged to the
Company related to these swap agreements. The Company's swap agreements in
place at September 30, 1998 are as follows:
Swap Amount Fixed LIBOR
(in millions) Component Expiration Date Effective Date
- -------------- -------------- --------------- --------------
$65 5.72% 01/07/2000 01/07/98
81 5.54% 02/04/2000 02/04/98
50 5.70% 06/15/2001 06/15/98
38 5.73% 06/30/2001 06/26/98
80 5.49% 09/01/2001 09/01/98
In December 1997, the Company obtained two $100 million interest rate
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 August 1998, Wells Fargo Reality Advisors Funding, Inc., the agent
for the Company's largest credit facility, increased the Company's credit
facility to $120 million from $85 million. In September 1998, the Company
extended a short term loan with Compass Bank in the amount of $12.5 million
at an interest rate of 50 basis points over LIBOR. The note matures in equal
installments on November 15, 1998 and pays out over the next 60 days. The
weighted average interest rate on the Company's credit facilities is 6.52%
at September 30, 1998.
17
<PAGE>
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 54.4% at September
30, 1998.
Development, Expansions And Acquisitions
In the third quarter of 1998, the Company opened a 12,000-square-foot
expansion to Coolsprings Crossing in Nashville, Tennessee. The Company's
other development project under construction and scheduled to open during
1998 is Sand Lake Corners in Orlando, Florida, a 594,000 square-foot
community center, the non-owned first phase of which will open in November
1998 with the remainder to open by April 1999. Projects scheduled to open
in 1999 are Fiddler's Run in Morganton, North Carolina, a 203,000 square-
foot community center scheduled to open in March 1999 and Arbor Place Mall
in Douglasville, Georgia, a suburb of Atlanta. This 983,000 square-foot
mall is scheduled to open in October 1999 with an additional 250,000 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. In the second quarter of 1998 the Company
began construction on an 83,000 square-foot Regal Cinema in Jacksonville,
Florida scheduled to open in the fall of 1999. In July 1998, the Company
began sitework on a 92,000 square foot Sears expansion to Lakeshore Mall
in Sebring, Florida.
In July 1998, the Company acquired Hickory Hollow Mall, a 1,096,000
square-foot mall, and Rivergate Mall, a 1,074,000 square-foot mall both of
which are located in the metropolitan Nashville, Tennessee area. Both
malls are anchored by Dillard's, JC Penney, Proffitts and Sears. The
Company also acquired The Courtyard at Hickory Hollow, a 77,000 square-
foot associated center, The Village at Rivergate, a 166,000 square-foot
associated center, and Lionshead Village, a 93,000 square-foot community
center, all located in the metropolitan Nashville, Tennessee area. In
August 1998, the Company acquired Meridian Mall, a 767,000 square-foot
mall, in Lansing (Oskemos), Michigan and Janesville Mall, a 615,000 square-
foot mall, in Janesville, Wisconsin.
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 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 to a Developer to cover pre-development
costs. The outstanding amount on standby purchase agreements is $49.1
18
<PAGE>
million and the committed amount on secured credit agreements is $2.7 million
of which $2.2 million is outstanding at September 30, 1998.
The Company has entered into a number of option agreements for the
development of future regional malls and community centers as well as
contingent contracts for the purchase of certain properties. 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 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% - 80% of its funds from operations
with the remaining 20% - 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 both tenant finish costs associated with the
renewal or replacement of current tenant leases as their leases expire and
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 credit facilities.
For the nine months ended September 30, 1998, revenue generating
capital expenditures, or tenant allowances for improvements, were $4.9
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 $7.7 million for the
nine months ended September 30, 1998. Revenue neutral capital expenditures,
which are recovered from the tenants, were $3.5 million for the nine months
ended September 30, 1998.
19
<PAGE>
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 nine months ended
September 30, 1998 increased by $11.4 million, or 23.7%, to $59.4 million
from $48.0 million in 1997. This increase was primarily due to the increases
in net income and depreciation and amortization related to the addition of
twenty-five new properties over the last twenty-one months. Cash flows used
in investing activities for the nine months ended September 30, 1998
increased by $387.3 million, or 270.1%, to $530.7 million compared to $143.4
million in 1997. This increase was due to the purchase of seven malls and
three other centers in 1998 and continuing development of new properties as
compared to 1997. Cash flows provided by financing activities for the nine
months ended September 30, 1998, increased by $377.6 million, or 388.1%, to
$474.9 million compared to $97.3 million in 1997. The increase was primarily
due to increased borrowings related to the development and acquisition
program and a decrease in the amount of debt repaid in the nine months ended
September 30, 1998 as compared to the same period in 1997.
Impact of Inflation
In the last four 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.
20
<PAGE>
YEAR 2000 READINESS DISCLOSURES
The Year 2000 problem results from the use of a two digit year date
instead of a four digit date in the programs that operate computers
information processing technology and systems and other devices (i.e.
non-information processing systems such as elevators, utility monitoring
systems and time clocks that use computer chips). Systems with a Year 2000
problem have programs that were written to assume that the first two digits
for any date used in the program would always be "19". Unless corrected, this
assumption may result in problems when the century date occurs. On that date,
these computer programs likely will misinterpret the date January 1, 2000 as
January 1, 1900. This could cause systems to incorrectly process critical
financial and operational information, generate erroneous information or fail
altogether. The Year 2000 issue effects almost all companies and
organizations.
The Company has completed a program to identify both its information and
non-information processing applications that are not year 2000 compliant. As
a result of this identification program, the Company believes that its core
accounting application and the majority of non-information processing
applications are year 2000 compliant. Certain of its other information and
non-information processing applications are not yet year 2000 compliant. The
Company has undertaken to correct or replace all non-compliant systems and
applications including embedded systems and expects the task to be completed
by the end of 1998. The Company has initiated communications with its
significant suppliers and tenants to determine the extent to which the Company
is vulnerable to the failure of such parties to correct their year 2000
compliance issues. In addition, the Company has formed a Year 2000 Committee
that includes senior personnel from most areas of the Company. These people
are charged with the duty of determining the extent of the Company's exposure
and taking the appropriate action to minimize any impact on the Company's
operations.
Costs to Address the Company's Year 2000 Issue
As the Company's Year 2000 compliance issues have already been
addressed, which costs were not material, the Company does not expect to incur
any significant additional costs regarding the compliance of all non compliant
information processing systems and non-information processing systems
including embedded systems.
Risks Relating to The Year 2000 Issue And Contingency Plans
Although the Company is not currently aware of any specific
significant Year 2000 issues involving third-parties, the Company believes
that its most significant potential risk relating to the Year 2000 issue
is in regard to such third parties. For example, the Company believes there
could be failure in the information systems of certain service providers
that the Company relies upon for electrical, telephone and data
transmission and banking services. The Company believes that any service
disruption with respect to these providers due to a Year 2000 issue would
be of a short-term nature. The Company has existing back-up systems and
procedures, developed primarily for natural disasters, that could be
utilized on a short-term basis to address any service interruptions. In
addition, with respect to tenants, a failure of their information systems
could delay the payment of rents or even impair their ability to operate.
These tenant problems are likely to be isolated and would likely not impact
the operations of any particular mall or the Company as a whole. While it
is not possible at this time to determine the likely impact of any of these
potential problems, the Company will continue to evaluate these areas and
develop additional contingency plans, as appropriate. Therefore, although
the Company believes that its Year 2000 issues have been addressed and that
suitable remediation and/or contingency procedures will be in place by
December 31, 1999, there can be no assurance that Year 2000 issues will not
have a material adverse effect on the Company's results of operations or
financial condition.
New Accounting Pronouncements
In May 1998, the Emerging Issues Task Force ("EITF") issued EITF
98-9 "Reporting Contingent Rents" in which it reached a consensus regarding
the accounting for contingent rent in interim financial periods. The Company
does not expect to this to have a material impact on the Company's results
of operations.
21
<PAGE>
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities". SFAS No. 133 establishes
accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability measured at its
fair value. SFAS No. 133 requires that changes in the derivative's fair
value be recognized currently in earnings unless specific hedge accounting
criteria are met. Special accounting for qualifying hedges allows a
derivative's gains and losses to offset related results on the hedged item
in the income statement, and requires that a company must formally document,
designate, and assess the effectiveness of transactions that receive hedge
accounting.
SFAS No. 133 is effective for fiscal years beginning after June 15,
1999. A company may also implement SFAS No. 133 as of the beginning of
any fiscal quarter after issuance (that is, fiscal quarters beginning June
16, 1998 and thereafter). SFAS No. 133 cannot be applied retroactively. SFAS
No. 133 must be applied to (a) derivative instruments and (b) certain
derivative instruments embedded in hybrid contracts that were issued,
acquired, or substantively modified after December 31, 1997 (and, at the
company's election, before January 1, 1998).
The Company has not yet quantified the impact of adopting SFAS
No. 133 on its financial statements and has not determined the timing of or
method of adoption of SFAS No. 133. However, SFAS No. 133 could increase
volatility in earnings and other comprehensive income.
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 assets
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. 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 $0.4 million and $2.6
million to FFO in the three months and nine months ended September 30, 1998,
respectively, and $0.8 million and $4.2 million in the same periods in 1997,
respectively. FFO for the third quarter and first nine months of 1997 has
been restated to include straight line rents.
22
<PAGE>
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 for purposes
of evaluating the Company's operating performance or to cash flows as a
measure of liquidity.
For the three months ended September 30, 1998, FFO increased by $4.3
million, or 22.5%, to $23.2 million as compared to $19.0 million for the
same period in 1997. For the nine months ended September 30, 1998, FFO
increased by $12.2 million, or 22.1%, to $67.1 million as compared to $55.0
million for the same period in 1997. The increase in FFO for both periods
was primarily attributable to the new developments opened during 1997 and
1998, the properties acquired during 1997 and 1998 and improved operations
in the existing portfolio.
23
<PAGE>
The REIT's calculation of FFO is as follows (in thousands):
Three Months Ended Nine Month Ended
September 30, September 30,
------------------ ------------------
1998 1997 1998 1997
-------- -------- -------- --------
Income from operations. . . . . $ 12,677 $ 10,706 $ 36,829 $ 30,068
ADD:
Depreciation & amortization from
consolidated properties . . . 11,659 8,029 30,534 23,639
Income from operations of
unconsolidated affiliates . . 521 301 1,689 1,514
Depreciation & amortization from
unconsolidated affiliates . . 357 337 1,057 993
Write-off of development costs
charged to net income . . . . 113 3 122 45
SUBTRACT:
Minority investors' share of
income from operations in
nine properties . . . . . . . (101) (116) (409) (405)
Minority investors share of
depreciation and amortization
in nine properties. . . . . . (216) (199) (649) (582)
Depreciation and amortization
of non-real estate assets
and finance costs . . . . . . (168) (107) (446) (320)
Preferred Dividend. . . . . . . (1,617) -- (1,617) --
-------- -------- -------- --------
TOTAL FUNDS FROM OPERATIONS . . $ 22,225 $ 18,954 $ 67,110 $ 54,952
======== ======== ======== ========
Basic per share data:
Funds from operations . . . . $ 0.66 $ 0.57 $ 1.97 $ 1.65
======== ======== ======== ========
Weighted average common
shares outstanding with
operating partnership
units fully converted . . . 35,073 33,501 34,067 33,281
======== ======== ======== ========
Diluted per share data:
Funds from operations . . . . $ 0.66 $ 0.56 $ 1.96 $ 1.64
======== ======== ======== ========
Weighted average common
shares and dilutive
potential common shares
outstanding with operating
partnership units fully
converted . . . . . . . . . 35,365 33,776 34,323 33,543
======== ======== ======== ========
24
<PAGE>
PART II - OTHER INFORMATION
ITEM 6: Exhibits and Reports on Form 8-K
A. Exhibits
10 Second Amended and Restated Agreement of
Limited Partnership of CBL & Associates
Limited Partnership dated June 30, 1998
11.2 Amended and restated Loan Agreement between
CBL & Associates, Inc. Properties and First
Tennessee Bank National Association Dated
June 12, 1998
11.2 First Amendment To Third Amended And Restated
Credit Agreement and Third Amended And
Restated Credit Agreement between CBL &
Associates Properties, Inc. and Wells Fargo
Bank, National Association, dated August 4, 1998
B. Reports on Form 8-K
The following items were reported:
Information on the purchase of Meridian Mall in
Oskemos (Lansing), Michigan and Janesville Mall in
Janesville, Wisconsin (Item 2) was filed on
September 11, 1998.
The outline from the Company's October 29, 1998
conference call with analysts and investors
regarding earnings (Item 5) was filed on
October 29, 1998.
Additional information (Form 8-K/A) on the purchase
of Meridian Mall in Oskemos (Lansing), Michigan and
Janesville Mall in Janesville, Wisconsin (Item 2) was
filed on November 10, 1998.
25
<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: November 13, 1998
26
<PAGE>
EXHIBIT INDEX
Exhibit
No.
-------
10 Second Amended and Restated Agreement of
Limited Partnership of CBL & Associates
Limited Partnership dated June 30, 1998
11.2 Amended and restated Loan Agreement between
CBL & Associates, Inc. Properties and First
Tennessee Bank National Association Dated
June 12, 1998
11.2 First Amendment To Third Amended And Restated
Credit Agreement and Third Amended And
Restated Credit Agreement between CBL &
Associates Properties, Inc. and Wells Fargo
Bank, National Association, dated August 4, 1998
27 Financial Data Schedule
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[DESCRIPTION] EXHIBIT 10 SECOND AMENDED AND RESTATED AGREEMENT
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CBL & ASSOCIATES LIMITED PARTNERSHIP
June 30, 1998
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TABLE OF CONTENTS
ARTICLE I. Definitions, Etc.
1.1. Definitions 2
Accountants 2
Acquisition Cost 2
Act 2
Additional Partner 2
Additional Units 2
Adjusted Capital Account Deficit 3
Administrative Expenses 3
Affiliate 4
Agreement 4
Assignee 4
Assumed Liability 4
Audited Financial Statements 4
Bankruptcy 5
Capital Account 6
Capital Contribution 6
Capital Stock 6
CBL 6
Certificate of Limited Partnership 7
Claim 7
Closing Price 7
Code 8
Common Stock 8
Common Stock Amount 8
Common Units 8
Company 9
Consent of the Limited Partners 9
Contributed Property 9
Contribution Date 9
Contributing Partner 9
Control 9
Conversion Factor 10
Current Per Share Market Price 11
Demand Notice 11
Depreciation 11
Entity 11
ERISA 11
Exercise Notice 11
First Restated Agreement 12
General Partner 12
General Partner Loan 12
Gross Asset Value 12
Immediate Family 13
Incentive Option 13
Incentive Option Agreement 13
Joint Venture Partnership 13
Liens 14
Limited Partner Representatives 14
Limited Partners 14
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Liquidating Transaction 14
Liquidating Trustee 14
Major Decisions 14
Majority-In-Interest of the Limited Partners 14
Management Agreement 15
Management Company 15
Minimum Gain Attributable to Partner
Nonrecourse Debt 15
Net Cash Flow 15
Net Financing Proceeds 16
Net Income or Net Loss 16
Net Sale Proceeds 18
Nonrecourse Deductions 19
Nonrecourse Liabilities 19
Offered Units 19
Office Building 19
Ownership Limit 19
Partner Nonrecourse Debt 19
Partner Nonrecourse Deductions 19
Partners 19
Partnership 19
Partnership Minimum Gain 19
Partnership Units 20
Person 20
Preferred Contributed Funds 20
Preferred Distribution Requirement 20
Preferred Distribution Shortfall 20
Preferred Redemption Amount 20
Preferred Redemption Price 20
Preferred Stock 20
Preferred Unit Designation 20
Preferred Unit Issue Price 21
Preferred Units 21
Properties 21
Property Partnerships 21
Qualified Individual 21
Registered Agent 21
Registered Office 21
Regulations 22
Regulatory Allocations 22
REIT 22
REIT Expenses 22
REIT Requirements 23
Requesting Party 23
Related Issue 23
Responding Party 23
Restricted Partner 23
Rights 23
SEC 23
Securities Act 23
Stock Incentive Plan 23
Substituted Limited Partner 23
Tax Items 23
Trading Day 24
Transfer 24
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1.2. Exhibits, Etc. 24
ARTICLE II. Organization
2.1. Continuation 24
2.2. Name 25
2.3. Character of the Business 25
2.4. Location of the Principal Place of Business 26
2.5. Registered Agent and Registered Office 26
ARTICLE III. Term
3.1. Commencement 27
3.2. Dissolution 27
ARTICLE IV. Contributions to Capital
4.1. Partners 27
4.2. General Partner Capital Contribution 28
4.3. Limited Partner Capital Contributions 28
4.4. Issuance of Additional Units 29
4.5. Admission of Additional Partners. 32
4.6. Stock Incentive Plan 33
4.7. No Third Party Beneficiary 34
4.8. No Interest; No Return 34
4.9. Adjustment Upon Conversion of Preferred Stock 34
ARTICLE V. Representations, Warranties and Covenants
5.1. Representations and Warranties 35
5.2. Covenants 36
ARTICLE VI. Allocations, Distributions, and Other Tax and Accounting
Matters
6.1. Allocations, Distributions, and Other Tax
and Accounting Matters 36
6.2. Distributions 36
6.3. Books of Account 38
6.4. Reports 39
6.5. Audits 40
6.6. Tax Elections and Returns 40
6.7. Tax Matters Partner 42
ARTICLE VII. Rights, Duties and Restrictions of the General Partner
7.1. Expenditures by Partnership 43
7.2. Powers and Duties of General Partner 44
7.3. Major Decisions 48
7.4. Actions with Respect to Certain Documents 48
7.5. Reliance by Third Parties 49
7.6. Company Participation 50
7.7. Proscriptions 50
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7.8. Additional Partners 51
7.9. Title Holder 51
7.10. Compensation of the General Partner 51
7.11. Waiver and Indemnification. 51
7.12. Limited Partner Representatives 52
7.13. Operation in Accordance with REIT Requirements 53
7.14. Transactions with Affiliates 54
7.15. Other Matters Concerning the General Partner 54
ARTICLE VIII. Dissolution, Liquidation and Winding-Up
8.1. Accounting 55
8.2. Distribution on Dissolution 56
8.3. Timing Requirements 56
8.4. Sale of Partnership Assets 57
8.5. Distributions in Kind 57
8.6. Documentation of Liquidation 58
8.7. Liability of the Liquidating Trustee 58
ARTICLE IX. Transfer of Partnership Units
9.1. General Partner Transfer 58
9.2. Transfers by Limited Partners 60
9.3. Restrictions on Transfer 61
ARTICLE X. Rights and Obligations of the Limited Partners
10.1. No Participation in Management 64
10.2. Bankruptcy of a Limited Partner 65
10.3. No Withdrawal 65
10.4. Duties and Conflicts 65
10.5. Limited Liability 66
ARTICLE XI. Grant of Rights to Limited Partners
11.1. Grant of Rights 66
11.2. Terms of Rights 67
ARTICLE XII. Indemnification
12.1. Indemnification of the Limited Partners 67
12.2. Indemnification of the General Partner,
the Company and Others 68
ARTICLE XIII. Arbitration of Disputes
13.1. Arbitration 68
13.2. Procedures 69
13.3. Binding Character 70
13.4. Exclusivity 70
13.5. No Alternative of Agreement 70
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ARTICLE XIV. General Provisions
14.1. Notices 70
14.2. Successor 71
14.3. Effect and Interpretation 71
14.4. Counterparts 71
14.5. Partners Not Agents 71
14.6. Entire Understanding; Etc. 72
14.7. Amendments 72
14.8. Severability 73
14.9. Pronouns and Headings 73
14.10. Assurances 74
14.11. Expenses 74
14.12. Waiver of Partition 74
EXHIBITS
A Percentage Interests
B Preferred Unit Designation
C Allocations
D Rights Terms
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THE PARTNERSHIP UNITS REFERRED TO IN THIS AGREEMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAWS. ACCORDINGLY, NO PARTNERSHIP UNITS
MAY BE RESOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS
SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE,
AND UNLESS THE OTHER TRANSFER RESTRICTIONS CONTAINED HEREIN HAVE BEEN
SATISFIED. REFERENCE IS MADE TO ARTICLE IX OF THIS AGREEMENT FOR
PROVISIONS RELATING TO VARIOUS RESTRICTIONS ON THE SALE OR OTHER TRANSFER
OF THESE PARTNERSHIP UNITS.
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
CBL & ASSOCIATES LIMITED PARTNERSHIP
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
is made and entered into as of the 30th day of June, 1998 by and among
CBL Holdings I, Inc., a Delaware corporation, and those certain Persons
identified on Exhibit A attached hereto as a Limited Partner.
W I T N E S S E T H:
WHEREAS, CBL & Associates Limited Partnership (the "Partnership")
was formed by that certain Agreement of Limited Partnership dated October
29, 1993, as amended and restated in its entirety by that certain Amended
and Restated Agreement of Limited Partnership dated November 3, 1993, and
further amended by that certain Modification No. One to the Amended and
Restated Agreement of Limited Partnership dated March 31, 1997 and by the
Modification No. Two to the Amended and Restated Agreement of Limited
Partnership dated February 19, 1998, (together, the "First Restated
Agreement"); and
WHEREAS, the parties desire to amend the First Restated Agreement
in its entirety as set forth in this Agreement.
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NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration,
the receipt, adequacy and sufficiency of which are hereby acknowledged,
the parties hereto, intending legally to be bound, hereby agree that the
First Restated Agreement shall be amended and restated in its entirety as
follows:
ARTICLE I.
Definitions, Etc.
1. Definitions. Except as otherwise herein expressly provided, the
following terms and phrases shall have the meanings set forth below:
"Accountants" shall mean the firm or firms of independent certified
public accountants selected by the General Partner on behalf of the
Partnership to audit the books and records of the Partnership (and, to
the extent provided under the applicable Joint Venture Partnership
agreement, the Joint Venture Partnerships) and to prepare statements and
reports in connection therewith.
"Acquisition Cost" shall have the meaning set forth in Section
4.2(b) hereof.
"Act" shall mean the Revised Uniform Limited Partnership Act as
enacted in the State of Delaware, and as the same may hereafter be
amended from time to time.
"Additional Partner" shall have the meaning set forth in Section
4.4(a) hereof.
"Additional Units" shall have the meaning set forth in Section
4.4(a) hereof.
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"Adjusted Capital Account Deficit" shall mean with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account
as of the end of the relevant fiscal year, after giving effect to the
following adjustments:
(i) Such Capital Account shall be deemed to be increased by
any amounts which such Partner is obligated to restore to the
Partnership (pursuant to this Agreement or otherwise) or is deemed
to be obligated to restore pursuant to the second to last sentence
of Regulation Section 1.704-2(g)(1) and Section 1.704-2(i)(5)
(relating to allocations attributable to nonrecourse debt); and
(ii) Such Capital Account shall be deemed to be decreased by
the items described in Regulation Section 1.704-1(b)(2)(ii)(d)(4),
(5) and (6).
The foregoing definition of Adjusted Capital Deficit is intended to
comply with the provisions of Regulation Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted and applied consistently therewith.
"Administrative Expenses" shall mean (i) all administrative and
operating costs and expenses incurred by the Partnership, (ii) all
administrative, operating and other costs and expenses (including any
deficits) incurred by the Property Partnerships and to be paid, advanced
or reimbursed by the Partnership pursuant to the partnership agreements
of such Property Partnerships, (iii) those administrative costs and
expenses of the Company and the General Partner, including salaries paid
to officers of the Company and the General Partner, and accounting and
legal expenses undertaken by the Company and the General Partner on
behalf or for the benefit of the Partnership, (iv) all amounts paid or
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advanced by the Partnership to the Management Company pursuant to the
Management Agreement, and (v) to the extent not included in clause (iii)
above, REIT Expenses.
"Affiliate" shall mean, with respect to any Partner (or as to any
other Person the affiliates of whom are relevant for purposes of any of
the provisions of this Agreement), (i) any member of the Immediate Family
of such Partner; (ii) any Entity in which such Person owns of record and
beneficially a majority of the capital or economic interests; or (iii)
any Entity which directly or indirectly through one or more
intermediaries, Controls, is Controlled by, or is under common Control
with, such Partner.
"Agreement" shall mean this Second Amended and Restated Agreement
of Limited Partnership, as originally executed and as hereafter amended,
modified, supplemented or restated from time to time, as the context
requires.
"Assignee" shall mean a Person to whom one or more Partnership
Units have been transferred, but who has not become a Substituted Limited
Partner.
"Assumed Liability" shall mean any liability of a Limited Partner
or an Affiliate thereof assumed by the Partnership pursuant to Section
13.1 of the First Restated Agreement.
"Audited Financial Statements" shall mean financial statements
(balance sheet, statement of income, statement of partners' equity and
statement of cash flows) prepared in accordance with generally accepted
accounting principles and accompanied by an independent auditor's report
containing an opinion thereon.
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"Bankruptcy" shall mean, with respect to any Person, (i) the
commencement by such Person of any proceeding seeking relief under any
provision or chapter of the federal Bankruptcy Code, 11 U.S.C. 101 et.
seq., as the same may be amended from time to time, or any other federal
or state law relating to insolvency, bankruptcy or reorganization, (ii)
an adjudication that such Person is insolvent or bankrupt, (iii) the
entry of an order for relief under the federal Bankruptcy Code with
respect to such Person, (iv) the filing of any such petition or the
commencement of any such case or proceeding against such Person, unless
such petition and the case or proceeding initiated thereby are stayed or
dismissed within ninety (90) days from the date of such filing, (v) the
filing of an answer by such Person admitting the allegations of any such
petition, (vi) the appointment of a trustee, receiver or custodian for
all or substantially all of the assets of such Person unless such
appointment is stayed, vacated or dismissed within ninety (90) days from
the date of such appointment, (vii) the execution by such Person of a
general assignment for the benefit of creditors, (viii) the levy,
attachment, execution or other seizure of substantially all of the assets
of such Person where such seizure is not discharged within thirty (30)
days thereafter, (ix) the admission by such Person in writing of its
inability generally to pay its debts as they mature or that it is
generally not paying its debts as they become due, or (x) the taking of
any corporate or partnership action in connection with any of the
foregoing.
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"Capital Account" shall mean, with respect to any Partner, the
separate "book" account which the Partnership shall establish and
maintain for such Partner in accordance with Section 704(b) of the Code
and Section 1.704-1(b)(2)(iv) of the Regulations and such other
provisions of Section 1.704-1(b) of the Regulations that must be complied
with in order for the Capital Accounts to be determined in accordance
with the provisions of said Regulations. In furtherance of the
foregoing, the Capital Accounts shall be maintained in compliance with
Section 1.704-1(b)(2)(iv) of the Regulations; and the provisions hereof
shall be interpreted and applied in a manner consistent therewith. In
the event that a Partnership Unit is transferred in accordance with the
terms of this Agreement, the Capital Account, at the time of the
transfer, of the transferor attributable to the transferred interest
shall carry over to the transferee.
"Capital Contribution" shall mean, with respect to any Partner, the
amount of money and the initial Gross Asset Value of any property other
than money contributed to the Partnership with respect to the Partnership
Units held by such Partner (net of liabilities to which such property is
subject).
"Capital Stock" means Common Stock, Preferred Stock and other
classes and series of capital stock issued from time to time by the
Company.
"CBL" shall mean CBL & Associates, Inc., a Tennessee corporation.
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"Certificate of Limited Partnership" shall mean the Certificate of
Limited Partnership establishing the Partnership, filed with the office
of the Secretary of State of the State of Delaware on July 16, 1993, as
it may be amended from time to time in accordance with the terms of this
Agreement and the Act.
"Claim" shall have the meaning set forth in Section 12.1 hereof.
"Closing Price" on any date shall mean the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in
the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange
or, if the Common Stock is not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Common Stock is
listed or admitted to trading or, if the Common Stock is not listed or
admitted to trading on any national securities exchange, the last quoted
price, or if not so quoted, the average of the high bid and low asked
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prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotations System or,
if such system is no longer in use, the principal other automated
quotations system that may then be in use or, if the Common Stock is not
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Common Stock as such person is selected from time to time by the General
Partner.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall mean the shares of the common stock, par value
$.01 per share, of the Company.
"Common Stock Amount" shall mean, with respect to any number of
Common Units, the number of shares of Common Stock equal to such number
of Common Units multiplied by the Conversion Factor; provided, however,
that in the event the Company issues to all holders of Common Stock
rights, options, warrants or convertible or exchangeable securities
entitling the shareholders to subscribe for or purchase additional Common
Stock, or any other securities or property of the Company, the value of
which is not included in the first sentence of the definition of Closing
Price of the shares of Common Stock (collectively, "additional rights"),
then the Common Stock Amount shall also include such additional rights
that a holder of that number of shares of Common Stock would be entitled
to receive.
"Common Units" shall mean the ownership interest of a Partner in
the Partnership from time to time, which entitles a Partner to the
allocations specified in Section 6 hereof and all distributions from the
Partnership, and its rights of management, consent, approval, or
participation, if any, as provided in this Agreement. The number of
Common Units held by each Partner at the date hereof and the percentage
of the total number of outstanding Units represented thereby is as set
forth opposite such Partner's name on Exhibit A hereto. Common Units do
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not include Preferred Units.
"Company" shall mean CBL & Associates Properties, Inc., a Delaware
corporation, and any successor entity thereto.
"Consent of the Limited Partners" shall mean the written consent of
a Majority-In-Interest of the Limited Partners, which consent shall be
obtained prior to the taking of any action for which it is required by
this Agreement and may be given or withheld by a Majority-In-Interest of
the Limited Partners, unless otherwise expressly provided herein, in
their sole and absolute discretion; provided, however, that except as
otherwise required by the Act, the Consent of the Limited Partners shall
only be required if Charles B. Lebovitz or his Affiliates collectively
own at least 15% of the then outstanding Common Units.
"Contributed Property" shall have the meaning set forth in Section
4.2(b) hereof.
"Contribution Date" shall have the meaning set forth in Section 4.4
hereof.
"Contributing Partner" shall have the meaning set forth in Section
4.4(b) hereof.
"Control" shall mean the ability, whether by the direct or indirect
ownership of shares or other equity interests, by contract or otherwise,
to elect a majority of the directors of a corporation, to select the
managing partner of a partnership, or otherwise to select, or have the
power to remove and then select, a majority of those persons exercising
governing authority over an Entity. In the case of a limited
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partnership, the sole general partner, all of the general partners to the
extent each has equal management control and authority, or the managing
general partner or managing general partners thereof shall be deemed to
have control of such partnership and, in the case of a trust, any trustee
thereof or any Person having the right to select any such trustee shall
be deemed to have control of such trust.
"Conversion Factor" shall mean 1.0, provided that in the event that
the Company (i) pays a dividend on its outstanding shares of Common Stock
in shares of Common Stock or makes a distribution to all holders of its
outstanding Common Stock in shares of Common Stock, (ii) subdivides its
outstanding shares of Common Stock, or (iii) combines its outstanding
shares of Common Stock into a smaller number of shares of Common Stock,
the Conversion Factor shall be adjusted by multiplying the Conversion
Factor by a fraction, the numerator of which shall be the number of
shares of Common Stock issued and outstanding on the record date for such
dividend, distribution, subdivision or combination (assuming for such
purposes that such dividend, distribution, subdivision or combination
occurred as of such time), and the denominator of which shall be the
actual number of shares of Common Stock (determined without the above
assumption) issued and outstanding on the record date for such dividend,
distribution, subdivision or combination. Any adjustment to the
Conversion Factor shall become effective immediately after the record
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date for such event in the case of a dividend or distribution or the
effective date in the case of a subdivision or combination.
"Current Per Share Market Price" on any date shall mean the average
of the Closing Price for the five consecutive Trading Days ending on and
including such date (or if such date is not a Trading Day, ending on the
immediately preceding Trading Day).
"Demand Notice" shall have the meaning set forth in Section 13.2
hereof.
"Depreciation" shall mean, with respect to any asset of the
Partnership for any fiscal year or other period, the depreciation,
depletion or amortization, as the case may be, allowed or allowable for
federal income tax purposes in respect of such asset for such fiscal year
or other period; provided, however, that if there is a difference between
the Gross Asset Value and the adjusted tax basis of such asset,
Depreciation shall mean "book depreciation, depletion or amortization" as
determined under Section 1.704-1(b)(2)(iv)(g)(3) of the Regulations.
"Entity" shall mean any general partnership, limited partnership,
corporation, joint venture, limited liability company, trust, business
trust, cooperative or association.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time (or any corresponding provisions of
succeeding laws).
"Exercise Notice" shall have the meaning set forth in Schedule 1 to
Exhibit D.
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"First Restated Agreement" shall have the meaning set forth in the
preamble to this Agreement.
"General Partner" shall mean CBL Holdings I, Inc., a Delaware
corporation, its duly admitted successors and assigns and any other
Person who is a general partner of the Partnership at the time of
reference thereto.
"General Partner Loan" shall have the meaning set forth in Section
4.7 hereof.
"Gross Asset Value" shall mean, with respect to any asset of the
Partnership, such asset's adjusted basis for federal income tax purposes,
except as follows:
(a) the Gross Asset Value of any asset contributed
by a Partner to the Partnership shall be the gross fair
market value of such asset as determined under Article
IV;
(b) if the General Partner reasonably determines
that an adjustment is necessary or appropriate to
reflect the relative economic interests of the Partners,
the Gross Asset Values of all Partnership assets shall
be adjusted to equal their respective gross fair market
values, as reasonably determined by the General Partner,
as of the following times:
1. a Capital Contribution (other than a de
minimis Capital Contribution) to the Partnership by a
new or existing Partner as consideration for
Partnership Units;
2. the distribution by the Partnership to a
Partner of more than a de minimis amount of
Partnership property as consideration for the
redemption of Partnership Units; and
3. the liquidation of the Partnership within
the meaning of Section 1.704-1(b)(2)(ii)(g) of the
Regulations;
(c) the Gross Asset Values of Partnership assets
distributed to any Partner shall be the gross fair
market values of such assets (taking Section 7701(g) of
the Code into account) as reasonably determined by the
General Partner as of the date of distribution; and
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(d) the Gross Asset Values of Partnership assets
shall be increased (or decreased) to reflect any
adjustments to the adjusted basis of such assets
pursuant to Sections 734(b) or 743(b) of the Code, but
only to the extent that such adjustments are taken into
account in determining Capital Accounts pursuant to
Section 1.704-1(b)(2)(iv)(m) of the Regulations;
provided, however, that Gross Asset Values shall not be
adjusted pursuant to this paragraph to the extent that
the General Partner reasonably determines that an
adjustment pursuant to paragraph (b) above is necessary
or appropriate in connection with a transaction that
would otherwise result in an adjustment pursuant to this
paragraph (d).
At all times, Gross Asset Values shall be adjusted by any
Depreciation taken into account with respect to the
Partnership's assets for purposes of computing Net Income and
Net Loss. Any adjustment to the Gross Asset Values of
Partnership property shall require an adjustment to the
Partners' Capital Accounts; as for the manner in which such
adjustments are allocated to the Capital Accounts, see
paragraph (c) of the definition of Net Income and Net Loss in
the case of adjustment by Depreciation, and paragraph (d) of
said definition in all other cases.
"Immediate Family" shall mean, with respect to any
Person, such Person's spouse, parents, or descendants by
blood or adoption.
"Incentive Option" means an option to purchase Common
Stock granted under the Stock Incentive Plan.
"Incentive Option Agreement" means the form of Incentive
Option Agreement to be used under the Stock Incentive Plan.
"Joint Venture Partnership" shall mean any Property
Partnership in which the Partnership and the Company do not
own, directly or indirectly, 100% of the ownership interests
in the aggregate.
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"Liens" shall mean any liens, security interests,
mortgages, deeds of trust, charges, claims, encumbrances,
pledges, options, rights of first offer or first refusal and
any other similar encumbrances of any nature whatsoever.
"Limited Partner Representatives" shall have the meaning
set forth in Section 7.12 hereof.
"Limited Partners" shall mean (i) those Persons listed
under the heading "Limited Partners" on Exhibit A hereto in
their respective capacities as limited partners of the
Partnership, their permitted successors or assigns as a
limited partners hereof, and (ii) any Person who, at the time
of reference thereto, is a limited partner of the
Partnership.
"Liquidation Transaction" shall mean any sale of assets
of the Partnership in contemplation of, or in connection
with, the liquidation of the Partnership.
"Liquidating Trustee" shall mean the General Partner or,
if the General Partner is unable or unwilling to serve in
such capacity, such other individual or Entity which, with
the Consent of the Limited Partners or otherwise under the
Act, shall be charged with winding up the Partnership.
"Major Decisions" shall have the meaning set forth in
Section 7.3 hereof.
"Majority-In-Interest of the Limited Partners" shall
mean Limited Partner(s) who hold in the aggregate more than
fifty percent (50%) of the voting rights associated with the
then outstanding Partnership Units which are entitled to vote
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on the matter with respect to which such calculation is made,
as a class.
"Management Agreement" shall mean the Management
Agreement dated November 3, 1993 between the Management
Company and the Partnership, as such may be amended or
supplemented.
"Management Company" shall mean CBL & Associates
Management, Inc., a Delaware corporation, or its permitted
successors or assigns.
"Minimum Gain Attributable to Partner Nonrecourse Debt"
shall mean "partner nonrecourse debt minimum gain" as
determined in accordance with Regulation Section
1.704-2(i)(2).
"Net Cash Flow" shall mean, with respect to any fiscal
period of the Partnership, the excess, if any, of "Receipts"
over "Expenditures." For purposes hereof, the term
"Receipts" means the sum of all cash receipts of the
Partnership from all sources for such period (including Net
Sale Proceeds and Net Financing Proceeds but excluding
Capital Contributions) and any amounts held as reserves as of
the last day of such period which the General Partner
reasonably deems to be in excess of necessary reserves as
determined below. The term "Expenditures" means the sum of
(a) all cash expenses of the Partnership for such period, (b)
the amount of all payments of principal of, premium, if any,
and interest on account of any indebtedness of the
Partnership including payments of principal of, premium, if
any, and interest on account of General Partner Loans, or
amounts due on such indebtedness during such period, and (c)
such additions to cash reserves as of the last day of such
period as the General Partner deems necessary or appropriate
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for any capital, operating or other expenditure, including,
without limitation, contingent liabilities, but the term
"Expenditures" shall not include any expense paid from a cash
reserve previously established by the Partnership.
"Net Financing Proceeds" shall mean the cash proceeds
received by the Partnership in connection with any borrowing
or refinancing of borrowing by or on behalf of the
Partnership or by or on behalf of any Property Partnership
(whether or not secured), after deduction of all costs and
expenses incurred by the Partnership or the Property
Partnership in connection with such borrowing, and after
deduction of that portion of such proceeds used to (i)
acquire the Property with respect to which any such borrowing
was specifically incurred, and (ii) repay any other
indebtedness of the Partnership or Property Partnerships with
respect to which any such refinancing or borrowing was
specifically incurred, or any interest or premium thereon.
For this purpose, cash proceeds received by a Joint Venture
Partnership shall not be deemed to be received or available
to the Partnership until (i) the distribution of such
proceeds is actually received by the Partnership, or (ii)
under the terms of the Joint Venture Partnership's
partnership agreement, the Partnership controls the timing of
the Joint Venture Partnership's distributions and then only
to the extent of the Partnership's entitlement to such
distributions.
"Net Income or Net Loss" shall mean, for each fiscal
year or other applicable period, an amount equal to the
Partnership's net income or loss for such year or period as
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determined for federal income tax purposes by the
Accountants, determined in accordance with Section 703(a) of
the Code (for this purpose, all items of income, gain, loss
or deduction required to be stated separately pursuant to
Section 703(a) of the Code shall be included in taxable
income or loss), with the following adjustments: (a) by
including as an item of gross income any tax-exempt income
received by the Partnership; (b) by treating as a deductible
expense any expenditure of the Partnership described in
Section 705(a)(2)(B) of the Code (including amounts paid or
incurred to organize the Partnership (unless an election is
made pursuant to Code Section 709(b)) or to promote the sale
of interests in the Partnership and by treating deductions
for any losses incurred in connection with the sale or
exchange of Partnership property disallowed pursuant to
Section 267(a)(1) or Section 707(b) of the Code as
expenditures described in Section 705(a)(2)(B) of the Code);
(c) in lieu of depreciation, depletion, amortization, and
other cost recovery deductions taken into account in
computing total income or loss, there shall be taken into
account Depreciation; (d) gain or loss resulting from any
disposition of Partnership property with respect to which
gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of
such property rather than its adjusted tax basis; (e) in the
event of an adjustment of the Gross Asset Value of any
Partnership asset which requires that the Capital Accounts of
the Partnership be adjusted pursuant to Regulation Section
1.704-1(b)(2)(iv)(e), (f) and (m), the amount of such
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adjustment is to be taken into account as additional Net
Income or Net Loss pursuant to Exhibit C; and (f) excluding
any items specially allocated pursuant to Section 2 of
Exhibit C. Once an item of income, gain, loss or deduction
has been included in the initial computation of Net Income or
Net Loss or is subject to the special allocation rules in
Exhibit C, Net Income or Net Loss shall be recomputated
without regard to such item.
"Net Sale Proceeds" means the cash proceeds received by
or available to the Partnership in connection with a sale or
condemnation of, or casualty or other capital event with
respect to, any asset by or on behalf of the Partnership or
by or on behalf of a Property Partnership, after deduction of
any costs or expenses incurred by the Partnership or a
Property Partnership with respect to, or payable specifically
out of the proceeds of, such transaction (including, without
limitation, any repayment of any indebtedness required to be
repaid as a result of such sale together with accrued
interest and premium, if any, thereon and any sales
commissions or other costs and expenses due and payable to
any Person in connection with a sale, including to a Partner
or its Affiliates). For this purpose, cash proceeds received
by a Joint Venture Partnership shall not be deemed to be
received or available to the Partnership until (i) the
distribution of such proceeds is actually received by the
Partnership, or (ii) under the terms of the Joint Venture
Partnership's partnership agreement, the Partnership controls
the timing of the Joint Venture Partnership's distributions
and then only to the extent of the Partnership's entitlement
to such distributions.
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"Nonrecourse Deductions" shall have the meaning set
forth in Sections 1.704-2(b)(1) and (c) of the Regulations.
"Nonrecourse Liabilities" shall have the meaning set
forth in Section 1.704-2(b)(3) of the Regulations.
"Offered Units" shall have the meaning set forth in
Schedule 3 to Exhibit D.
"Office Building" shall mean the 49,250 square foot
office building known as One Park Place located at 6148 Lee
Highway, Chattanooga, Tennessee 37421-2931.
"Ownership Limit" shall have the meaning set forth in
Exhibit D.
"Partner Nonrecourse Debt" shall mean any nonrecourse
indebtedness of the Partnership that is loaned or guaranteed
by any Partner and/or is treated as "partner nonrecourse
debt" under Section 1.704-2(b)(4) of the Regulations.
"Partner Nonrecourse Deductions" shall have the meaning
set forth in Section 1.704-2(i)(2) of the Regulations.
"Partners" shall mean the General Partner and the
Limited Partners, their duly admitted successors or assigns
or any Person who is a partner of the Partnership at the time
of reference thereto.
"Partnership" shall mean the limited partnership hereby
constituted, as such limited partnership may from time to
time be constituted.
"Partnership Minimum Gain" shall have the meaning set
forth in Section 1.704-2(b)(2) of the Regulations.
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"Partnership Units" shall mean the Common Units and the
Preferred Units.
"Person" shall mean any individual or Entity.
"Preferred Contributed Funds" shall have the meaning set
forth in Section 4.4(b) hereof.
"Preferred Distribution Requirement" shall have the
meaning set forth in Section 4.4(b) hereof.
"Preferred Distribution Shortfall" shall have the
meaning set forth in Section 6.2(a)(i).
"Preferred Redemption Amount" shall mean, with respect
to any class or series of Preferred Units, the sum of (i) the
amount of any accumulated Preferred Distribution Shortfall
with respect to such class or series of Preferred Units, (ii)
the Preferred Distribution Requirement with respect to such
class or series of Preferred Units to the date of redemption
and (iii) the Preferred Redemption Price indicated in the
Preferred Unit Designation with respect to such class or
series of Preferred Units.
"Preferred Redemption Price" shall have the meaning set
forth in Section 4.4(b) hereof.
"Preferred Stock" shall mean any class of equity
securities of the Company now or hereafter authorized or
reclassified, other than the Common Stock, having dividend
rights that are superior or prior to dividends payable on the
Common Stock.
"Preferred Unit Designation" shall have the meaning set
forth in Section 4.4(b) hereof.
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"Preferred Unit Issue Price" shall mean the amount of
the funds contributed or deemed to have been contributed by
the relevant Partner, in exchange for the Preferred Units.
"Preferred Units" shall mean interests in the
Partnership issued pursuant to Section 4.4 hereof. The
holder of Preferred Units shall have such rights to the
allocations of Net Income or Net Loss as specified in Section
6.1 hereof and to distributions pursuant to Section 6.2
hereof, but shall not, by reason of its ownership of such
Preferred Units, be entitled to participate in the management
of the Partnership or to consent to or approve any action
which is required by the Act or this Agreement to be approved
by any or all of the Partners.
"Properties" or "Property" shall mean any real property
in which the Partnership, directly or indirectly, holds or
acquires ownership of a fee, mortgage or leasehold interest.
"Property Partnerships" shall mean and include any
partnership or other Entity in which the Partnership is or
becomes a partner or other equity participant and which is
formed for the purpose of acquiring, developing or owning a
Property or a proposed Property.
"Qualified Individual" shall have the meaning set forth
in Section 13.2(b) hereof.
"Registered Agent" shall have the meaning set forth in
Section 2.5 hereof.
"Registered Office" shall have the meaning set forth in
Section 2.5 hereof.
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"Regulations" shall mean the final, temporary or
proposed Income Tax Regulations promulgated under the Code,
as such regulations may be amended from time to time
(including corresponding provisions of succeeding
regulations).
"Regulatory Allocations" shall have the meaning set
forth in Section 2(f) of Exhibit C.
"REIT" shall mean a real estate investment trust as
defined in Section 856 of the Code.
"REIT Expenses" shall mean (i) costs and expenses
relating to the formation and continuity of existence of the
Company and the General Partner, including taxes (other than
the Company's and the General Partner's federal and state
income and franchise taxes), fees and assessments associated
therewith, any and all costs, expenses or fees payable to any
director or trustee of the Company, the General Partner or
any subsidiary of either the Company or the General Partner,
(ii) costs and expenses relating to any offer or registration
of securities by the Company and all statements, reports,
fees and expenses incidental thereto, including underwriting
discounts and selling commissions applicable to any such
offer of securities, (iii) costs and expenses associated with
the preparation and filing of any periodic reports by the
Company under federal, state or local laws or regulations,
including filings with the SEC, (iv) costs and expenses
associated with compliance by the Company and the General
Partner with laws, rules and regulations promulgated by any
regulatory body, including the SEC, and (v) all other
operating or administrative costs of the Company and the
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General Partner incurred in the ordinary course of its
business on behalf of the Partnership.
"REIT Requirements" shall have the meaning set forth in
Section 6.2 hereof.
"Requesting Party" shall have the meaning set forth in
Section 13.2(a) hereof.
"Related Issue" shall mean, with respect to a class or
series of Preferred Units, the class or series of Preferred
Stock the sale of which directly or indirectly provided a
Partner with the proceeds to contribute to the Partnership in
exchange for such Preferred Units.
"Responding Party" shall have the meaning set forth in
Section 13.2(b) hereof.
"Restricted Partner" shall have the meaning set forth in
Section 1(b) of Exhibit C.
"Rights" shall have the meaning set forth in Section
11.1 hereof.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Stock Incentive Plan" shall mean the Company's 1993
Stock Incentive Plan.
"Substituted Limited Partner" shall have the meaning set
forth in the Act.
"Tax Items" shall have the meaning set forth in Section
3(a) of Exhibit C.
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"Trading Day" shall mean a day on which the principal
national securities exchange on which the Common Stock is
listed or admitted to trading is open for the transaction of
business or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, shall mean any
day other than a Saturday, a Sunday or a day on which banking
institutions in the State of New York are authorized or
obligated by law or executive order to close.
"Transfer" as a noun, shall mean any sale, assignment,
conveyance, pledge, hypothecation, gift, encumbrance or other
transfer, and as a verb, shall mean to sell, assign, convey,
pledge, hypothecate, give, encumber or otherwise transfer.
1. Exhibits, Etc.. References to "Exhibit" or to a
"Schedule" are, unless otherwise specified, to one of the
Exhibits or Schedules attached to this Agreement, and
references to an "Article" or a "Section" are, unless
otherwise specified, to one of the Articles or Sections of
this Agreement. Each Exhibit and Schedule attached hereto
and referred to herein is hereby incorporated herein by
reference.
ARTICLE I.
Organization
1. Continuation. The parties hereto do hereby continue the
Partnership as a limited partnership pursuant to the
provisions of the Act, for the purposes and upon the terms
and conditions hereinafter set forth. The Partners agree
that the rights and liabilities of the Partners shall be as
provided in the Act except as otherwise herein expressly
provided. Promptly upon the execution and delivery hereof,
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the General Partner shall, to the extent required under the
Act or otherwise deemed necessary or appropriate by the
General Partner, cause an amendment to the Certificate of
Limited Partnership to be filed with the Delaware Secretary
of State, and such other notice, instrument, document, or
certificate as may be required by applicable law, and which
may be necessary or desirable to enable the Partnership to
conduct its business, and to own its properties, under the
Partnership's name, to be filed or recorded in all
appropriate public offices.
1. 1. Name. The business of the Partnership shall be
conducted under the name of CBL & Associates Limited
Partnership or such other name as the General Partner may
select, and all transactions of the Partnership, to the
extent permitted by applicable law, shall be carried on and
completed in such name.
1. 2. Character of the Business. The purpose of the
Partnership shall be: to acquire, hold, own, develop,
redevelop, construct, improve, maintain, operate, manage,
sell, lease, rent, Transfer, encumber, mortgage, convey,
exchange, and otherwise dispose of, deal with, foreclose
upon, or otherwise exercise all rights with respect to, any
of the Properties and any other real, personal and intangible
property of all kinds; exercise all of the powers of a
partner in Property Partnerships; to undertake such other
activities as may be necessary, advisable, desirable or
convenient to the business of the Partnership; to engage in
such other ancillary activities as shall be necessary,
desirable or appropriate to effectuate the foregoing
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<PAGE>
purposes; and to otherwise engage in any enterprise, business
or activity in which a limited partnership may engage or
conduct under the Act. The Partnership shall have all powers
necessary or desirable to accomplish the purposes enumerated.
In connection with the foregoing, but subject to all of the
terms, covenants, conditions and limitations contained in
this Agreement and any other agreement entered into by the
Partnership, the Partnership shall have full power and
authority, directly or through its interest in Property
Partnerships, to enter into, perform, and carry out contracts
of any kind, to borrow money and to issue evidences of
indebtedness, whether or not secured by mortgage, trust deed,
pledge or other lien or assignment, and, directly or
indirectly, to develop, acquire and construct additional
Properties necessary or useful in connection with its
business.
1. 3. Location of the Principal Place of Business.
The location of the principal place of business of the
Partnership shall be at the Office Building, or such other
location as shall be selected from time to time by the
General Partner in its sole discretion.
1. 4. Registered Agent and Registered Office. The
Registered Agent of the Partnership shall be Corporation
Trust Company or such other Person as the General Partner may
select in its sole discretion. The Registered Office of the
Partnership shall be 1209 Orange Street, Wilmington, Delaware
19801 or such other location as the General Partner may
select in its sole and absolute discretion.
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ARTICLE I.
Term
1. Commencement. The Partnership's term commenced upon the
filing of the Certificate of Limited Partnership with the
Secretary of State of the State of Delaware on July 16, 1993.
1. 1. Dissolution. The Partnership shall continue
until dissolved upon the occurrence of the earliest of the
following events:
(a) The withdrawal (as defined in the Act),
dissolution, termination, retirement or Bankruptcy of
the General Partner or the Bankruptcy of the Company;
the Partnership's business may, however, be continued
and the Partnership reconstituted as provided in Section
9.1 hereof;
(b) The election to dissolve the Partnership made
in writing by the General Partner with, subject to
Section 7.3, the Consent of the Limited Partners;
(c) The sale or other disposition of all or
substantially all the assets of the Partnership unless
the General Partner elects to continue the Partnership
business for the purpose of the receipt and the
collection of indebtedness or the collection of any
other consideration to be received in exchange for the
assets of the Partnership (which activities shall be
deemed to be part of the winding-up of the affairs of
the Partnership);
(d) Dissolution required by operation of law; or
(e) December 31, 2090.
ARTICLE I.
Contributions to Capital
1. Partners.
Exhibit A hereto sets forth the names of Partners of the
Partnership as of the date hereof, and the Partnership Units
held by each such Partner. A Partner may be both a General
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Partner and a Limited Partner hereunder. The Partnership
shall establish and maintain a separate Capital Account for
each Partner.
1. 1. General Partner Capital Contribution.
A. Prior to the date hereof, the General Partner
has made certain Capital Contributions to the
Partnership as described in the books and records of the
Partnership as of the date hereof.
B. The gross fair market value of any property
contributed by the General Partner to the Partnership
("Contributed Property"), other than money, shall,
except as otherwise expressly provided herein, be the
Acquisition Cost of such Contributed Property. For
purposes hereof, the "Acquisition Cost" of Contributed
Property shall be, (i) in the case of Contributed
Property acquired by the General Partner or the Company
in exchange for shares of Common Stock, the Current Per
Share Market Price as of the closing date on which the
General Partner or the Company, as applicable, acquired
such Contributed Property multiplied by the number of
shares of Common Stock issued in the acquisition or (ii)
in the case of Contributed Property acquired by the
General Partner or the Company for consideration other
than Common Stock, the amount of such consideration
plus, in either case, any costs and expenses incurred by
the General Partner or the Company, as applicable, (and
unreimbursed by the Partnership) in connection with such
acquisition or contribution; provided, however, that (A)
in the event the General Partner or the Company acquires
the Contributed Property in exchange for shares of
Common Stock or with proceeds from a public offering of
the Company's securities, the Partnership shall assume
and pay (or reflect on its books as additional
consideration for such Contributed Properties) the
expenses, including any applicable underwriting
discounts, incurred by the Company in connection with
the issuance of such shares or securities, and (B) in
the event the Acquisition Cost of Contributed Property
is financed by any borrowings by the General Partner or
the Company, or is otherwise encumbered by Liens
relating to obligations of the General Partner or the
Company, the Partnership shall, in either case, assume
any such obligations of the General Partner or the
Company concurrently with the contribution of such
property to the Partnership or, if impossible, shall
obligate itself to the General Partner or the Company,
as applicable, in an amount and on terms equal to such
indebtedness or obligation, and the Acquisition Cost
shall be reduced by the amount of such obligations
assumed or obligations incurred by the Partnership.
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<PAGE>
1. Limited Partner Capital Contributions.
A. Prior to the date hereof, each Limited Partner
has made certain Capital Contributions to the
Partnership as described in the books and records of the
Partnership as of the date hereof.
B. A Limited Partner shall be unconditionally
liable to the Partnership for all or a portion of any
deficit in its Capital Account if it so elects to be
liable for such deficit or portion thereof. Such
election may be for either a limited or an unlimited
amount and may be amended or withdrawn at any time. The
election, and any amendment thereof, shall be made by
written notice to the General Partner stating that the
Limited Partner elects to be liable, and specifying the
limitations, if any, on the maximum amount or duration
of such liability. Said election, or amendment thereof,
shall be effective only from the date the written notice
is received by the General Partner, and shall terminate
upon the date, if any, specified therein as a
termination date or upon delivery to the General Partner
of a subsequent written notice withdrawing or otherwise
amending such election. A withdrawal, or an amendment
reducing the Limited Partner's maximum liability, shall
not be effective to avoid responsibility for any loss
incurred prior to such amendment or withdrawal.
C. The Limited Partners acknowledge that the
Partnership Units have not been registered under any
federal or state securities laws and, as a result
thereof, they may not be sold or otherwise transferred,
except in compliance with such laws and in accordance
with the provisions of this Agreement. Notwithstanding
anything to the contrary contained in this Agreement, no
Partnership Units may be sold or otherwise transferred
unless such transfer is exempt from registration under
any applicable securities laws or such transfer is
registered under such laws, it being acknowledged that
the Partnership has no obligation to take any action
which would cause any such Units to be registered.
1. Issuance of Additional Units. (a) Without the consent
of any Limited Partner, but subject to the terms of Section
9.3 below, the General Partner may from time to time cause
the Partnership to issue to the Partners (including the
General Partner) or other Persons additional Partnership
Units ("Additional Units") in one or more classes, or one or
29
<PAGE>
more series of any of such classes, with such designations,
preferences and relative, participating, optional or other
special rights, powers and duties, including, without
limitation, rights, powers and duties senior to the Common
Units, and admit any such other Person as an additional
Limited Partner ("Additional Partner") (in accordance with
Section 4.5 hereof), in exchange for the Capital Contribution
by such Partner or Person of cash and/or property. Without
limiting the provisions of this Article IV, the General
Partner is expressly authorized to cause the Partnership to
issue Additional Units for less than either, (i) the fair
market value thereof, or (ii) the applicable Current Per
Share Market Price multiplied by the number of shares of
Common Stock issuable with respect to such Additional Units
upon the exercise of the Rights with respect thereto. The
General Partner shall have the right and shall possess the
authority to amend this Agreement without the consent of any
Limited Partner to evidence any action taken pursuant to this
Section 4.4(a).
(b) In the event a Partner (the "Contributing Partner")
contributes to the Partnership any funds obtained directly or
indirectly from the issuance by the Company of Preferred
Stock (the "Preferred Contributed Funds"), then the
Contributing Partner shall be issued Preferred Units of a
designated class or series to reflect its contribution of
such funds. Each class or series of Preferred Units so
issued shall be designated by the General Partner to identify
such class or series with the class or series of Preferred
Stock which constitutes the Related Issue. Each class or
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<PAGE>
series of Preferred Units shall be described in a written
document (the "Preferred Unit Designation") attached as
Exhibit B that shall set forth, in sufficient detail, the
economic rights, including dividend, redemption and
conversion rights and sinking fund provisions, of the class
or series of Preferred Units and the Related Issue. The
number of Preferred Units of a class or series shall be equal
to the number of shares of the Related Issue sold. The
Preferred Unit Designation shall provide for such terms for
the class or series of Preferred Units that shall entitle the
holders thereof to substantially the same economic rights as
the holders of the Related Issue. Specifically, the holders
of such Preferred Units shall receive distributions on the
class or series of Preferred Units pursuant to Section 6.2
equal to the aggregate dividends payable on the Related Issue
at the times such dividend are paid (the "Preferred
Distribution Requirement"). The Partnership shall redeem the
class or series of Preferred Units for a redemption price per
Preferred Unit equal to the redemption price per share of the
Related Issue, exclusive of any accrued unpaid dividends (the
"Preferred Redemption Price") upon the redemption of any
shares of the Related Issue. Each class or series of
Preferred Units shall also be converted into additional
Common Units at the time and on such economic terms and
conditions as the Related Issue is converted into Common
Stock. Upon the issuance of any class or series of Preferred
Units pursuant to this Section 4.4(b), the General Partner
shall provide the Limited Partners with a copy of the
Preferred Unit Designation relating to such class or series.
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A Partner shall have the right, in lieu of contributing to
the Partnership funds received directly or indirectly from
the issuance of Preferred Stock as Preferred Contributed
Funds, to lend such funds to the Partnership. Any such loan
shall be on the same terms and conditions as the Related
Issue except that dividends payable on the Related Issue
shall be payable by the Partnership to such Partner as
interest, any mandatory redemptions shall take the form of
principal payments and no Preferred Units shall be issued to
such Partner. If any such loan is made, the Partnership
shall promptly reimburse such Partner for all expenses
(including any applicable underwriter discounts) incurred by
the Company in connection with raising the funds. Any such
loan made by such Partner to the Partnership may at any time
be contributed to the Partnership as Preferred Contributed
Funds in exchange for Preferred Units as above provided; and
if the Related Issue is by its terms convertible into Common
Stock, such loan shall be so contributed to the Partnership
prior to the effectuation of such conversion.
(c) In the event a Partner contributes to the Partnership
any funds obtained directly or indirectly from the issuance
by the Company of Capital Stock, the Partnership shall
reimburse such Partner for the expenses (including any
applicable underwriter discounts) incurred by the Company in
connection with raising such funds.
1. 1. Admission of Additional Partners.
A. After the date hereof, a Person who makes a
Capital Contribution to the Partnership in accordance
with this Agreement shall be admitted to the Partnership
as an Additional Partner only upon furnishing to the
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General Partner (i) a written agreement in form
satisfactory to the General Partner accepting all of the
terms and conditions of this Agreement and (ii) such
other documents or instruments as may be required in the
discretion of the General Partner.
B. No Person shall be admitted as an Additional
Partner without the consent of the General Partner,
which consent may be given or withheld in the General
Partner's sole and absolute discretion and for any or no
reason whatsoever. The admission of any Person as an
Additional Partner shall become effective on the date
upon which the name of such Person is recorded on the
books and records of the Partnership, following the
consent of the General Partner to such admission.
C. If an Additional Partner is admitted to the
Partnership on any other date than the first day of a
the Partnership's tax year, then Net Income, Net Loss,
each item thereof and all other items allocable among
Partners and Assignees for such tax year shall be
allocated among such Additional Partner and all other
Partners and Assignees by taking into account their
varying interests during the Fiscal Year in accordance
with Section 706(d) of the Code, using the interim
closing of the books method. Solely for purposes of
making such allocations, each of such items for the
calendar month in which an admission of any Additional
Partner occurs shall be allocated among all Partners and
Assignees including such Additional Partner.
D. The General Partner, acting alone, shall be
authorized on behalf of each of the Partners to amend
this Agreement to reflect the admission of any
Additional Partner or to record any change in ownership
of Partnership Units of any Partner.
1. Stock Incentive Plan. If at any time or from time to
time Incentive Options granted in connection with the
Company's Stock Incentive Plan are exercised in accordance
with the terms of the Incentive Option Agreement:
(a) the Company shall, as soon as practicable
after such exercise, contribute or cause to be
contributed to the capital of the Partnership an amount
equal to the exercise price paid to the Company by such
exercising party in connection with the exercise of the
Incentive Option; and
(b) the Partner which makes a contribution to the
capital of the Partnership pursuant to Section 4.2(a)
hereof shall be deemed to have contributed to the
Partnership as Capital Contributions an amount equal to
the Current Per Share Market Price (as of the Trading
Date immediately preceding the date on which the
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<PAGE>
purchase of the Common Stock by such exercising party is
consummated) multiplied by the number of shares of
Common Stock delivered by the Company to such exercising
party and the Partnership shall issue to such
contributing Partner a number of Common Units equal to
such number of shares of Common Stock divided by the
Conversion Factor.
1. No Third Party Beneficiary. No creditor or other third
party having dealings with the Partnership shall have the
right to enforce the right or obligation of any Partner to
make Capital Contributions or loans or to pursue any other
right or remedy hereunder or at law or in equity, it being
understood and agreed that the provisions of this Agreement
shall be solely for the benefit of, and may be enforced
solely by, the parties hereto and their respective successors
and assigns. None of the rights or obligations of the
Partners herein set forth to make Capital Contributions or
loans to the Partnership shall be deemed an asset of the
Partnership for any purpose by any creditor or other third
party, nor may such rights or obligations be sold,
transferred or assigned by the Partnership or pledged or
encumbered by the Partnership to secure any debt or other
obligation of the Partnership or of any of the Partners.
1. 1. No Interest; No Return. No Partner shall be
entitled to interest on its Capital Contribution or on such
Partner's Capital Account. Except as provided herein or by
law, no Partner shall have any right to demand or receive the
return of its Capital Contribution from the Partnership or
from any of the other Partners.
1. 2. Adjustment Upon Conversion of Preferred Stock.
Upon the conversion of any shares of Preferred Stock to
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<PAGE>
Common Stock pursuant to the terms of such Preferred Stock,
the ownership of Partnership Units of the Partners shall be
adjusted in accordance with the provisions of this Agreement
to reflect, on the date of such conversion, the parallel
conversion of the Preferred Units that were a Related Issue
of such converted Preferred Stock into Common Units equal in
number to the number of shares of Common Stock issued as a
result of such conversion.
ARTICLE I.
Representations, Warranties and Covenants
1. Representations and Warranties. Each Limited Partner
hereby represents and warrants to the Partnership and the
General Partner the following:
A. Organization; Authority. Such Limited Partner
is either (A) in the case of such persons which are
corporations, duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of
incorporation, or (B) in the case of such persons which
are partnerships or trusts, a partnership or trust, as
the case may be, duly formed, validly existing and in
good standing (to the extent applicable) under the laws
of its jurisdiction of formation. The Limited Partner
has the requisite authority to enter into and perform
this Agreement.
B. Due Authorization; Binding Agreement. The
execution, delivery and performance of this Agreement by
such Limited Partner has been duly and validly
authorized by all necessary action of such Limited
Partner. This Agreement has been duly executed and
delivered by such Limited Partner, or an authorized
representative of such Limited Partner, and constitutes
a legal, valid and binding obligation of such Limited
Partner, enforceable against such Limited Partner in
accordance with the terms hereof.
C. Consents and Approvals. No consent, waiver,
approval or authorization of, or filing, registration or
qualification with, or notice to, any governmental unit
or any other person is required to be made, obtained or
given by such Limited Partner in connection with the
execution, delivery and performance of this Agreement
except for those which have been heretofore obtained.
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D. No Violation. None of the execution, delivery
or performance of this Agreement by such Limited Partner
does or will, with or without the giving of notice,
lapse of time or both, (i) violate, conflict with or
constitute a default under any term or provision of
(A) the organizational documents of such Limited Partner
or any agreement to which such Limited Partner is a
party or by which it is bound or (B) any term or
provision of any judgment, decree, order, statute,
injunction, rule or regulation of a governmental unit
applicable to such Limited Partner or any agreement to
which such Limited Partner is a party or by which it or
its assets or properties are bound, or (ii) result in
the creation of any Lien or other encumbrance upon the
assets or properties of such Limited Partner other than
in favor of such Partnership.
1. Covenants. Without the prior consent of the General
Partner, no Limited Partner shall take any action, including
acquiring, directly or indirectly, an interest in any tenant
of a Property, which would have the effect of causing the
percentage of the gross income of the Company that fails to
be treated as "rents from real property" within the meaning
of Section 856(d)(2) of the Code to exceed such percentage as
of the date of the First Restated Agreement.
ARTICLE I.
Allocations, Distributions, and
Other Tax and Accounting Matters
1. Allocations. The Net Income or Net Loss and/or other
Partnership items shall be allocated pursuant to the
provisions of Exhibit C hereto. All Net Income or Net Loss
with respect to periods prior to the date hereof, shall be
allocated to the Limited Partners pursuant to the First
Restated Agreement.
1. 1. Distributions.
(a) The General Partner shall cause the
Partnership to distribute all or a portion of Net Cash
Flow to the Partners from time to time as determined by
the General Partner, but in any event not less
frequently than quarterly, in such amounts as the
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General Partner shall determine. All such distributions
other than distributions of Net Financing Proceeds and
Net Sales Proceeds shall be made in accordance with the
following order of priority:
1. First, to the extent that the amount of
Net Cash Flow distributed to the relevant Partner, on
account of the Preferred Units, for any prior quarter
was less than the Preferred Distribution Requirement
for such quarter, and has not been subsequently
distributed pursuant to this Section 6.2(a)(i) (a
"Preferred Distribution Shortfall"), Net Cash Flow
shall be distributed to the relevant Partner, on
account of the Preferred Units, in an amount necessary
to satisfy such Preferred Distribution Shortfall for
the current and all prior Partnership taxable years.
In the event that the Net Cash Flow distributed for a
particular quarter is less than the Preferred
Distribution Shortfall, then all Net Cash Flow for the
current quarter shall be distributed to the relevant
Partner on account of the Preferred Units;
2. Second, Net Cash Flow shall be
distributed to the relevant Partner, on account of the
Preferred Units, in an amount equal to the Preferred
Distribution Requirement for the then current quarter
for each outstanding Preferred Unit. In the event
that the amount of Net Cash Flow distributed for a
particular quarter pursuant to this subparagraph
(a)(ii) is less than the Preferred Distribution
Requirement for such quarter, then all such Net Cash
Flow for such quarter shall be distributed to the
relevant Partner, on account of the Preferred Units.
In addition, in the event that the Partnership is
liquidated pursuant to Article VIII, the allocation
described above shall be made to the relevant Partner,
on account of the Preferred Units, with respect to all
Preferred Units then outstanding; and
3. Third, the balance of the Net Cash Flow
to be distributed, if any, shall be distributed to
holders of Common Units, pro rata in accordance with
their proportionate ownership of Common Units.
(b) Neither the Partnership nor the Limited
Partners shall have any obligation to see that any funds
distributed pursuant to subparagraph (a)(i) of this
Section 6.2 are in turn used to pay dividends on any
Capital Stock of the Company. Distributions of Net
Financing Proceeds and Net Sales Proceeds shall be made,
first to the relevant Partner, on account of the
Preferred Units in accordance with the terms thereof,
and then to the holders of Common Units, pro rata in
accordance with their proportionate ownership of Common
Units. Subject to the preceding sentences, (a) the
General Partner shall use its reasonable efforts to
cause the Partnership to distribute sufficient amounts
to enable the Company to pay shareholder dividends that
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will (i) satisfy the requirements for qualifying as a
REIT under the Code and Regulations ("REIT
Requirements"), and (ii) avoid any federal income or
excise tax liability of the Company; and (b) in the
event of a sale of a Property or an interest in a
Property Partnership giving rise to a special allocation
of taxable income or gain to a Limited Partner or
Partners pursuant to Section 3(c) of Exhibit C, the
General Partner shall cause the Partnership to
distribute the Net Sales Proceeds therefrom up to an
amount sufficient to enable such Limited Partner or
Partners to pay any income tax liability with respect to
the income or gain so specially allocated (or, if any
such Limited Partner is a partnership or S corporation,
to enable such Limited Partner to distribute sufficient
amounts to its equity owners to enable such owners to
pay any income tax liability with respect to their share
of such taxable income or gain). Upon the receipt by
the General Partner of each Exercise Notice pursuant to
which one or more Limited Partners exercise Rights in
accordance with the provisions of Article XI hereof, the
General Partner shall, unless the General Partner is
required or elects only to issue Common Stock to such
exercising Limited Partner or Limited Partners, cause
the Partnership to distribute to the Partners, pro rata
in accordance with their proportionate ownership of
Partnership Units on the date of delivery of such
Exercise Notice, all (or such lesser portion as the
General Partner shall reasonably determine to be prudent
under the circumstances) of Net Cash Flow, which
distribution shall be made prior to the closing of the
purchase and sale of the Offered Units specified in such
Exercise Notice.
(c) If in any quarter the Partnership redeems any
outstanding Preferred Units, unless and except to the
extent that such redemption is effected out of borrowed
funds, Capital Contributions or other sources, Net Cash
Flow shall be distributed to the relevant Partner, on
account of the Preferred Units, in an amount equal to
the Preferred Redemption Amount for the Preferred Units
being redeemed before being distributed pursuant to
Section 6.2(a). There shall be no adjustment of the
then current proportionate ownership of Partnership
Units of the Partners on account of any distribution
under this Section 6.2(c).
(d) Notwithstanding the forgoing, all
distributions pursuant to this Section 6.2 shall remain
subject to the provisions of the Certificates of
Designation for each class or series of Preferred Units
set forth in Exhibit B hereto.
1. Books of Account. At all times during the continuance
of the Partnership, the General Partner shall maintain or
cause to be maintained full, true, complete and correct books
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of account in accordance with generally accepted accounting
principles wherein shall be entered particulars of all
monies, goods or effects belonging to or owing to or by the
Partnership, or paid, received, sold or purchased in the
course of the Partnership's business, and all of such other
transactions, matters and things relating to the business of
the Partnership as are usually entered in books of account
kept by persons engaged in a business of a like kind and
character. In addition, the Partnership shall keep all
records as required to be kept pursuant to the Act. The
books and records of account shall be kept at the principal
office of the Partnership, and each Partner shall at all
reasonable times have access to such books and records and
the right to inspect the same.
1. 1. Reports. The General Partner shall cause to be
submitted to the Limited Partner Representatives promptly
upon receipt of the same from the Accountants and in no event
later than April 1 of each year, copies of Audited Financial
Statements prepared on a consolidated basis for the
Partnership and the Property Partnerships, together with the
reports thereon, and all supplementary schedules and
information, prepared by the Accountants, provided, however,
that with respect to Joint Venture Partnerships which are not
Controlled by the Partnership, the General Partner shall
diligently seek to (i) cause the Joint Venture Partnership to
distribute its Audited Financial Statements on or before
April 1 of each year subject to the Joint Venture
Partnership's partnership agreement, and (ii) cause such
Audited Financial Statements to be submitted to the Limited
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Partners promptly upon their receipt. The Partnership shall
also cause to be prepared such reports and/or information as
are necessary for the General Partner to determine its
qualification as a REIT and its compliance with REIT
Requirements.
1. 2. Audits. Not less frequently than annually, the
General Partner shall cause the Accountants to audit books
and records of the Partnership and the Property Partnerships
(and, pursuant to the terms of the applicable partnership
agreement, diligently seek to cause each Joint Venture
Partnership not Controlled by the Partnership to annually
audit such Joint Venture Partnership's books and records).
1. 3. Tax Elections and Returns. All elections
required or permitted to be made by the Partnership under any
applicable tax law shall be made by the General Partner in
its sole discretion; provided, however, the General Partner
shall, if requested by a transferee, file an election on
behalf of the Partnership pursuant to Section 754 of the Code
to adjust the basis of the Partnership property in the case
of a Transfer of a Partnership Unit, including Transfers made
in connection with the exercise of Rights, made in accordance
with the provisions of the Agreement. The General Partner
shall cause the Accountants to prepare and file all state and
federal tax returns on a timely basis. The General Partner
shall cause the Accountants to prepare and submit to the
Limited Partner Representatives on or before April 1 of each
year for review all federal and state income tax returns of
the Partnership and cause the accountants for the Property
Partnerships (and diligently seek to cause the accountants of
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the Joint Venture Partnerships not Controlled by the
Partnership) to submit to the Limited Partner Representatives
on or before April 1 of each year for review all federal and
state income tax returns of the Property Partnerships. If
the Limited Partner Representatives determine that any
modifications to the tax returns of the Partnership or any
Property Partnership should be considered, such Limited
Partner Representatives shall, within thirty (30) days
following receipt of such tax returns from the Accountants or
the General Partner, indicate to the Accountants or to the
General Partner to advise the Property Partnership's
accountants the suggested revisions to the tax returns, which
returns shall be resubmitted to the Limited Partner
Representatives for their review (but not approval). The
Limited Partner Representatives shall complete their review
of the resubmitted returns within ten (10) days after receipt
thereof from the Accountants or the General Partner. The
General Partner shall consult in good faith with the Limited
Partner Representatives regarding any proposed modifications
to the tax returns of the Partnership and/or the Property
Partnerships. A statement of the allocation of Net Income or
Net Loss of the Partnership shown on the annual income tax
returns prepared by the Accountants and a statement of the
allocation of Net Income or Net Loss shown on the income tax
return of the Property Partnerships shall be transmitted and
delivered to the Limited Partner Representatives within ten
(10) days of the receipt thereof by the Partnership. The
General Partner shall be responsible for preparing and filing
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all federal and state tax returns for the Partnership and
furnishing copies thereof to the Partners, together with
required Partnership schedules showing allocations of tax
items and copies of the tax returns of all Property
Partnerships all within the period of time prescribed by law.
1. 4. Tax Matters Partner. The General Partner is
hereby designated as the Tax Matters Partner within the
meaning of Section 6231(a)(7) of the Code for the
Partnership; provided, however, (i) in exercising its
authority as Tax Matters Partner it shall be limited by the
provisions of this Agreement affecting tax aspects of the
Partnership; (ii) the General Partner shall consult in good
faith with the Limited Partner Representatives regarding the
filing of a Code Section 6227(b) administrative adjustment
request with respect to the Partnership or a Property before
filing such request, it being understood, however, that the
provisions hereof shall not be construed to limit the ability
of any Partner, including the General Partner, to file an
administrative adjustment request on its own behalf pursuant
to Section 6227(a) of the Code; (iii) the General Partner
shall consult in good faith with the Limited Partner
Representatives regarding the filing of a petition for
judicial review of an administrative adjustment request under
Section 6228 of the Code, or a petition for judicial review
of a final partnership administrative judgment under Section
6226 of the Code relating to the Partnership before filing
such petition; (iv) the General Partner shall give prompt
notice to the Limited Partner Representatives of the receipt
of any written notice that the Internal Revenue Service or
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any state or local taxing authority intends to examine
Partnership income tax returns for any year, receipt of
written notice of the beginning of an administrative
proceeding at the Partnership level relating to the
Partnership under Section 6223 of the Code, receipt of
written notice of the final Partnership administrative
adjustment relating to the Partnership pursuant to Section
6223 of the Code, and receipt of any request from the
Internal Revenue Service for waiver of any applicable statute
of limitations with respect to the filing of any tax return
by the Partnership; and (v) the General Partner shall
promptly notify the Limited Partner Representatives if the
General Partner does not intend to file for judicial review
with respect to the Partnership. The General Partner, in
acting on behalf of the Partnership as tax matters partner of
a Property Partnership, shall afford the Limited Partners the
same rights with respect to Property Partnership tax matters
as afforded to the Limited Partners under this Section 6.7.
ARTICLE I.
Rights, Duties and Restrictions of the General Partner
1. Expenditures by Partnership. The General Partner is
hereby authorized to pay compensation for accounting,
administrative, legal, technical, management and other
services rendered to the Partnership. All of the aforesaid
expenditures shall be made on behalf of the Partnership and
the General Partner shall be entitled to reimbursement by the
Partnership for any expenditures incurred by it on behalf of
the Partnership which shall be made other than out of the
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funds of the Partnership. The Partnership shall also assume,
and pay when due, all Administrative Expenses.
1. 1. Powers and Duties of General Partner. The
General Partner shall be responsible for the management of
the Partnership's business and affairs. Except as otherwise
herein expressly provided, the General Partner shall have,
and is hereby granted, full and complete power, authority and
discretion to take such action for and on behalf of the
Partnership and in its name as the General Partner shall, in
its sole and absolute discretion, deem necessary or
appropriate to carry out the purposes for which the
Partnership was organized. Except as otherwise expressly
provided herein, and subject to Section 7.3 hereof, the
General Partner shall have the right, power and authority:
(a) To manage, control, invest, reinvest, acquire
by purchase, lease or otherwise, sell, contract to
purchase or sell, grant, obtain, or exercise options to
purchase, options to sell or conversion rights, assign,
transfer, convey, deliver, endorse, exchange, pledge,
mortgage, abandon, improve, repair, maintain, insure,
lease for any term and otherwise deal with any and all
property of whatsoever kind and nature, and wheresoever
situated, in furtherance of the business or purposes of
the Partnership;
(b) To acquire, directly or indirectly, interests
in real estate of any kind and of any type, and any and
all kinds of interests therein (including, without
limitation, Entities investing therein), and to
determine the manner in which title thereto is to be
held; to manage (directly or through property managers,
including without limitation, the Management Company),
insure against loss, protect and subdivide any of the
real estate, interests therein or parts thereof; to
improve, develop or redevelop any such real estate; to
participate in the ownership and development of any
property; to dedicate for public use, to vacate any
subdivisions or parts thereof, to re-subdivide, to
contract to sell, to grant options to purchase or lease,
to sell on any terms; to convey, mortgage, pledge or
otherwise encumber said property, or any part thereof;
to lease said property or any part thereof from time to
time, upon any terms and for any period of time, and to
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renew or extend leases, to amend, change or modify the
terms and provisions of any leases and to grant options
to lease and options to renew leases and options to
purchase; to partition or to exchange said real
property, or any part thereof, for other real or
personal property; to grant easements or charges of any
kind; to release, convey or assign any right, title or
interest in or about or easement appurtenant to said
property or any part thereof; to construct and
reconstruct, remodel, alter, repair, add to or take from
buildings on any property in which the Partnership owns
an interest; to insure any Person having an interest in
or responsibility for the care, management or repair of
such property; to direct the trustee of any land trust
to mortgage, lease, convey or contract to convey the
real estate held in such land trust or to execute and
deliver deeds, mortgages, notes, and any and all
documents pertaining to the property subject to such
land trust or in any matter regarding such trust; to
execute assignments of all or any part of the beneficial
interest in any land trust in which the Partnership owns
a beneficial interest;
(c) To employ, engage or contract with or dismiss
from employment or engagement Persons to the extent
deemed necessary or appropriate by the General Partner
for the operation and management of the Partnership
business, including but not limited to, contractors,
subcontractors, engineers, architects, surveyors,
mechanics, consultants, accountants, attorneys,
insurance brokers, real estate brokers and others;
(d) To enter into, make, amend, perform and carry
out or cancel and rescind, contracts and other
obligations on behalf of the Partnership and to cause
all Administrative Expenses to be paid;
(e) To borrow money, procure loans and advances
from any Person for Partnership purposes, and to apply
for and secure, from any Person, credit or
accommodations; to contract liabilities and obligations,
direct or contingent and of every kind and nature
(including interest rate swaps, caps and hedges) with or
without security; and to repay, discharge, settle,
adjust, compromise, or liquidate any such loan, advance,
credit, obligation or liability;
(f) To pledge, hypothecate, mortgage, assign,
deposit, deliver, enter into sale and leaseback
arrangements or otherwise give as security or as
additional or substitute security or for sale or other
disposition any and all Partnership property, tangible
or intangible, including, but not limited to, real
estate and beneficial interests in land trusts, and to
make substitutions thereof, and to receive any proceeds
thereof upon the release or surrender thereof; to sign,
execute and deliver any and all assignments, deeds and
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other contracts and instruments in writing; to
authorize, give, make, procure, accept and receive
moneys, payments, property, notices, demands, vouchers,
receipts, releases, compromises and adjustments; to
waive notices, demands, protests and authorize and
execute waivers of every kind and nature; to enter into,
make, execute, deliver and receive written agreements,
undertakings and instruments of every kind and nature;
to give oral instructions and make oral agreements; and
generally to do any and all other acts and things
incidental to any of the foregoing or with reference to
any dealings or transactions which the General Partner
may deem necessary, proper or advisable to effect or
accomplish any of the foregoing or to carry out the
business and purposes of the Partnership;
(g) To acquire and enter into any contract of insurance
which the General Partner deems necessary or appropriate
for the protection of the Partnership, for the
conservation of the Partnership's assets or for any
purpose convenient or beneficial to the Partnership;
(h) To conduct any and all banking transactions on
behalf of the Partnership; to adjust and settle
checking, savings, and other accounts with such
institutions as the General Partner shall deem
appropriate; to draw, sign, execute, accept, endorse,
guarantee, deliver, receive and pay any checks, drafts,
bills of exchange, acceptances, notes, obligations,
undertakings and other instruments for or relating to
the payment of money in, into, or from any account in
the Partnership's name; to execute, procure, consent to
and authorize extensions and renewals of any of the
foregoing; to make deposits into and withdrawals from
the Partnership's bank accounts; and to negotiate or
discount commercial paper, acceptances, negotiable
instruments, bills of exchange and dollar drafts;
(i) To demand, sue for, receive, and otherwise
take steps to collect or recover all debts, rents,
proceeds, interests, dividends, goods, chattels, income
from property, damages and all other property, to which
the Partnership may be entitled or which are or may
become due the Partnership from any Person; to commence,
prosecute or enforce, or to defend, answer or oppose,
contest and abandon all legal proceedings in which the
Partnership is or may hereafter be interested; and to
settle, compromise or submit to arbitration any
accounts, debts, claims, disputes and matters which may
arise between the Partnership and any other Person and
to grant an extension of time for the payment or
satisfaction thereof on any terms, with or without
security;
(j) To make arrangements for financing, including
the taking of all action deemed necessary or appropriate
by the General Partner to cause any approved loans to be
closed;
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(k) To take all reasonable measures necessary to insure
compliance by the Partnership with applicable
arrangements, and other contractual obligations and
arrangements entered into by the Partnership from time
to time in accordance with the provisions of this
Agreement, including periodic reports as required to be
submitted to lenders and using all due diligence to
insure that the Partnership is in compliance with its
contractual obligations;
(l) To maintain the Partnership's books and
records;
(m) To prepare and deliver, or cause to be
prepared and delivered by the Partnership's Accountants,
all financial and other reports with respect to the
operations of the Partnership and all Federal and state
tax returns and reports;
(n) To act in any state or nation in which the
Partnership may lawfully act, for itself or as
principal, agent or representative for any person with
respect to any business of the Partnership;
(o) To become a partner or member in, and perform
the obligations of a partner or member of, any general
or limited partnership or limited liability company;
(p) To apply for, register, obtain, purchase or
otherwise acquire trademarks, trade names, labels and
designs relating to or useful in connection with any
business of the Partnership, and to use, exercise,
develop and license the use of the same;
(q) To pay or reimburse any and all actual fees,
costs and expenses incurred in the formation and
organization of the Partnership;
(r) To do all acts which are necessary, customary
or appropriate for the protection and preservation of
the Partnership's assets, including the establishment of
reserves; and
(s) In general, to exercise all of the general
rights, privileges and powers permitted to be had and
exercised by the provisions of the Act.
Except as otherwise provided herein, to the extent the duties
of the General Partner require expenditures of funds to be
paid to third parties, the General Partner shall not have any
obligations hereunder except to the extent that Partnership
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funds are reasonably available to it for the performance of
such duties, and nothing herein contained shall be deemed to
authorize or require the General Partner, in its capacity as
such, to expend its individual funds for payment to third
parties on behalf of the Partnership or to undertake any
individual liability or obligation on behalf of the
Partnership.
1. Major Decisions. The General Partner shall not, without
the prior Consent of the Limited Partners, on behalf of the
Partnership, undertake any of the following actions (the
"Major Decisions"):
(a) Make a general assignment for the benefit of
creditors or appoint or acquiesce in the appointment of
a custodian, receiver or trustee for all or any part of
the assets of the Partnership.
(b) Take title to any personal or real property,
other than in the name of the Partnership, a Property
Partnership or pursuant to Section 7.9 hereof.
(c) Institute any proceeding for Bankruptcy on
behalf of the Partnership.
(d) Dissolve the Partnership.
Except as specifically provided in this Agreement, including,
without limitation, this Section 7.3, the Limited Partners
shall have no right to vote on any matter concerning the
business and affairs of the Partnership, including, without
limitation, any decisions regarding the merger of the
Partnership or the sale, exchange, lease, mortgage or pledge
or other transfer of, or the granting of a security interest
in, all or substantially all of the assets of the Partnership
and the incurrence of indebtedness by the Partnership,
whether or not in the ordinary course of the Partnership's
business.
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1. Actions with Respect to Certain Documents.
Notwithstanding the provisions of Section 7.3 hereof to the
contrary, whenever the consent, agreement, authorization or
approval of the Partnership is required under any agreement
which the Limited Partners or their Affiliates have executed
other than in their capacities as Limited Partners of the
Partnership, the Consent of the Limited Partners shall not be
required.
1. 1. Reliance by Third Parties. Notwithstanding
anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that
the General Partner has full power and authority to encumber,
sell or otherwise use in any manner any and all assets of the
Partnership and to enter into any contracts on behalf of the
Partnership, and such Person shall be entitled to deal with
the General Partner as if it were the Partnership's sole
party in interest, both legally and beneficially. Each
Limited Partner hereby waives any and all defenses or other
remedies which may be available against such Person to
contest, negate or disaffirm any action of the General
Partner in connection with any such dealing. In no event
shall any Person dealing with the General Partner or its
representatives be obligated to ascertain that the terms of
this Agreement have been complied with or to inquire into the
necessity or expedience of any act or action of the General
Partner or its representatives. Each and every certificate,
document or other instrument executed on behalf of the
Partnership by the General Partner shall be conclusive
evidence in favor of any and every Person relying thereon or
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claiming thereunder that (i) at the time of the execution and
delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or
instrument was duly authorized and empowered to do so for and
on behalf of the Partnership and (iii) such certificate,
document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement
and is binding upon the Partnership.
1. 2. Company Participation. The Company agrees that
all business activities of the Company, including without
limitation all activities pertaining to the acquisition,
development, ownership, management and leasing of real
properties, shall be conducted, directly or indirectly,
through the Partnership (except for: (i) property management
and leasing activities conducted through the Management
Company pursuant to the Management Agreement; and (ii) the
Company's direct and indirect interests in any Property
Partnerships or subsidiaries other than through the
Partnership). The Company agrees that all borrowings for the
purpose of making distributions to its stockholders will be
incurred by the Partnership or by one or more of the Property
Partnerships and the proceeds of such indebtedness will be
included as Net Financing Proceeds hereunder.
1. 3. Proscriptions. Except as otherwise expressly
authorized herein, the General Partner shall not have the
authority to:
(a) Do any act in contravention of this Agreement
or which would make it impossible to carry on the
ordinary business of the Partnership;
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(b) Possess any Partnership property or assign
rights in specific Partnership property for other than
Partnership purposes; or
(c) Do any act in contravention of applicable law.
Nothing herein contained shall impose any obligation on
any Person or firm doing business with the Partnership
to inquire as to whether or not the General Partner has
properly exercised its authority in executing any
contract, lease, mortgage, deed or other instrument on
behalf of the Partnership, and any such third Person
shall be fully protected in relying upon such authority.
1. Additional Partners. The General Partner shall have the
right to admit additional Partners to the Partnership in
accordance with the provisions of this Agreement.
1. 1. Title Holder. To the extent allowable under
applicable law, title to all or any part of the Properties of
the Partnership may be held in the name of the Partnership or
in the name of any other Person, provided, however, that all
of the beneficial interest in such Properties shall at all
times be vested in the Partnership. Any such title holder
shall perform any and all of its respective functions to the
extent and upon such terms and conditions as may be
determined from time to time by the General Partner,
consistent with the business purposes of the Partnership.
1. 2. Compensation of the General Partner. The
General Partner shall not be entitled to any compensation for
services rendered to the Partnership solely in its capacity
as General Partner except with respect to reimbursement for
those costs and expenses constituting Administrative
Expenses.
1. 3. Waiver and Indemnification.
A. Neither the General Partner nor any Person
acting on its behalf, pursuant hereto, shall be liable,
responsible or accountable in damages or otherwise to
the Partnership or to any Partner for any acts or
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omissions performed or omitted to be performed by them
within the scope of the authority conferred upon the
General Partner by this Agreement and the Act, provided
that the General Partner's or such other Person's
conduct or omission to act was taken in good faith and
in the belief that such conduct or omission was in the
best interests of the Partnership and, provided further,
that the General Partner or such other Person shall not
be guilty of fraud, misconduct or gross negligence. The
Partnership shall, and hereby does, indemnify and hold
harmless the General Partner and its Affiliates and any
individual acting on their behalf from any loss, damage,
claim or liability, including, but not limited to,
reasonable attorneys' fees and expenses, incurred by
them by reason of any act performed by them in
accordance with the standards set forth above or in
enforcing the provisions of this indemnity; provided,
however, no Partner shall have any personal liability
with respect to the foregoing indemnification, any such
indemnification to be satisfied solely out of the assets
of the Partnership.
B. Any Person entitled to indemnification under
this Agreement shall be entitled to receive, upon
application therefor, advances to cover the costs of
defending any proceeding against such Person; provided,
however, that such advances shall be repaid to the
Partnership, without interest, if such Person is found
by a court of competent jurisdiction upon entry of a
final judgment not to be entitled to such
indemnification. All rights of the indemnitee hereunder
shall survive the dissolution of the Partnership;
provided, however, that a claim for indemnification
under this Agreement must be made by or on behalf of the
Person seeking indemnification prior to the time the
Partnership is liquidated hereunder. The
indemnification rights contained in this Agreement shall
be cumulative of, and in addition to, any and all
rights, remedies and recourse to which the person
seeking indemnification shall be entitled, whether at
law or at equity. Indemnification pursuant to this
Agreement shall be made solely and entirely from the
assets of the Partnership and no Partner shall be liable
therefor.
1. Limited Partner Representatives. A Majority-In-Interest
of the Limited Partners shall appoint one or more
representatives ("Limited Partner Representatives").
Whenever, under the terms of this Agreement, matters require
the Consent of the Limited Partners, the same shall mean the
consent of a majority of the Limited Partner Representatives,
and any action taken by the Limited Partner Representatives
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shall be fully binding on the Limited Partners, it being the
intention of the Limited Partners that the Limited Partner
Representatives shall have full power and authority, which
shall be irrevocable, to take all action, or to authorize all
action, which the Limited Partners are authorized to take
under the provisions of this Agreement. A
Majority-In-Interest of the Limited Partners shall have the
right, at any time, within their sole discretion, upon not
less than 10 days' prior notice, to replace any of the
Limited Partner Representatives, to appoint a temporary
substitute to act for any Limited Partner Representative
unable to act, or to vest in only one of the Limited Partner
Representatives the sole power to exercise rights of the
Limited Partner Representatives hereunder. The Limited
Partner Representatives shall be appointed or replaced by the
Limited Partners in writing, a copy of which shall be
delivered to the Partners. Any appointments of Limited
Partner Representatives made hereunder shall remain effective
until rescinded in a written notice, and the General Partner
shall have the right and authority to rely (and shall be
fully protected in so doing) on the actions taken and
directions given by such Limited Partner Representatives
without any further evidence of their authority or further
action by the Limited Partners.
1. 1. Operation in Accordance with REIT Requirements.
The Partners acknowledge and agree that the Partnership shall
be operated in a manner that will enable the Company to (a)
satisfy the REIT Requirements and (b) avoid the imposition of
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any federal income or excise tax liability. The Partnership
shall avoid taking any action, or permitting any Property
Partnership to take any action, which would result in the
Company ceasing to satisfy the REIT Requirements or would
result in the imposition of any federal income or excise tax
liability on the Company. The determination as to whether
the Partnership has operated in the manner prescribed in this
Section 7.13 shall be made without regard to any action or
inaction of the Company with respect to distributions and the
timing thereof.
1. 2. Transactions with Affiliates. The Partnership
may lend or contribute funds to its subsidiaries or other
Entities in which it has an equity investment, and such
Entities may borrow funds from the Partnership, on terms and
conditions established in the discretion of the General
Partner. The foregoing authority shall not create any right
or benefit in favor of any Person. The Partnership may also
engage in other transactions and enter into contracts with an
Affiliate of any Partner, which transactions and contracts
are on terms fair and reasonable to the Partnership and no
less favorable to the Partnership than would be obtained from
unaffiliated third parties, provided however, that the
affirmative determination by the Company's Board of Directors
shall determine conclusively that a transaction or contract
between the Partnership on the one hand and the General
Partner or the Company on the other hand satisfies such
requirement.
1. 3. Other Matters Concerning the General Partner.
A. The General Partner may rely and shall be
protected in acting or refraining from acting upon any
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resolution, certificate, statement, instrument, opinion,
report, or other document believed by it to be genuine
and to have been signed or presented by the proper party
or parties.
B. The General Partner may consult with legal
counsel, accountants, appraisers, management
consultants, investment bankers and other consultants
and advisers selected by it, and any act taken or
omitted to be taken in reliance upon the opinion of such
Persons as to matters which such General Partner
reasonably believes to be within such Person's
professional expertise shall be conclusively presumed to
have been done or omitted in good faith and in
accordance with such opinion.
C. The General Partner shall have the right, in
respect of any of its powers or obligations hereunder,
to act through any of its duly authorized officers and
any attorney or attorneys-in-fact duly appointed by the
General Partner. Each such attorney shall, to the
extent provided by the General Partner in the power of
attorney, have full power and authority to do and
perform all and every act and duty which is permitted or
required to be done by the General Partner hereunder.
D. Notwithstanding any other provisions of this
Agreement or the Act, any action of the General Partner
on behalf of the Partnership or any decision of the
General Partner to refrain from acting on behalf of the
Partnership, undertaken in the good faith belief that
such action or omission is necessary or advisable in
order (i) to protect or further the ability of the
Company to continue to qualify as a REIT or (ii) to
avoid the Company incurring any taxes under Section 857
or Section 4981 of the Code, is expressly authorized
under this Agreement and is deemed approved by all of
the Limited Partners. Nothing however in this Agreement
shall be deemed to give rise to any liability on the
part of the Limited Partners for the Company's failure
to qualify or continue to qualify as a REIT or failure
to avoid incurring any taxes under the foregoing
Sections of the Code.
ARTICLE E.
Dissolution, Liquidation and Winding-Up
1. Accounting. In the event of the dissolution,
liquidation and winding-up of the Partnership, a proper
accounting (which shall be certified) shall be made of the
Capital Account of each Partner and of the Net Income or Net
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Losses of the Partnership from the date of the last previous
accounting to the date of dissolution. Financial statements
presenting such accounting shall include a report of a
national certified public accountant (which may be the
Accountant) selected by the Liquidating Trustee.
1. 1. Distribution on Dissolution. In the event of
the dissolution and liquidation of the Partnership for any
reason, the assets of the Partnership shall be liquidated for
distribution in the following rank and order:
(a) Payment of creditors of the Partnership (other
than Partners) in the order of priority as provided by
law;
(b) Establishment of reserves as provided by the
Liquidating Trustee to provide for contingent
liabilities, if any;
(c) Payment of debts of the Partnership to
Partners, if any, in the order of priority provided by
law; and
(d) To the Partners in accordance with the
positive balances in their Capital Accounts after giving
effect to all contributions, distributions and
allocations for all periods, including the period in
which such distribution occurs (other than those
adjustments made pursuant to this Section 8.2(d),
Section 8.4 or Section 8.5 hereof).
Whenever the Liquidating Trustee reasonably determines that
any reserves established pursuant to paragraph (b) above are
in excess of the reasonable requirements of the Partnership,
the amount determined to be excess shall be distributed to
the Partners in accordance with the above provisions.
Notwithstanding the forgoing, all distributions pursuant to
this Section 8.2 shall remain subject to the provisions of
the Certificates of Designation for each class or series of
Preferred Units set forth in Exhibit B hereto.
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1. Timing Requirements. In the event that the Partnership
is "liquidated" within the meaning of Section
1.704-1(b)(2)(ii)(g) of the Regulations, any and all
distributions to the Partners pursuant to Section 8.2(d)
hereof shall be made no later than the later to occur of (i)
the last day of the taxable year of the Partnership in which
such liquidation occurs or (ii) ninety (90) days after the
date of such liquidation.
1. 1. Sale of Partnership Assets. In the event of
the liquidation of the Partnership in accordance with the
terms of this Agreement, the Liquidating Trustee may sell
Partnership or Property Partnership property or Property
Partnership interests on the best terms and conditions as the
Liquidating Trustee in good faith believes are reasonably
available at the time and under the circumstances and on a
non-recourse basis to the Limited Partners. The liquidation
of the Partnership shall not be deemed finally completed
until the Partnership shall have received cash payments in
full with respect to obligations such as notes, installment
sale contracts or other similar receivables received by the
Partnership in connection with the sale of Partnership assets
and all obligations of the Partnership have been satisfied,
released or assumed by the General Partner. The Liquidating
Trustee shall continue to act to enforce all of the rights of
the Partnership pursuant to any such obligations until such
obligations are paid in full or otherwise satisfied.
1. 2. Distributions in Kind. In the event that it
becomes necessary to make a distribution of Partnership
property in kind, the General Partner may Transfer and convey
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such property to the distributees as tenants in common,
subject to any liabilities attached thereto, so as to vest in
them undivided interests in the whole of such property in
proportion to their respective rights to share in the
proceeds of the sale of such property (other than as a
creditor) in accordance with the provisions of Section 8.2
hereof.
1. 3. Documentation of Liquidation. Upon the
completion of the dissolution and liquidation of the
Partnership, the Partnership shall terminate and the
Liquidating Trustee shall have the authority to execute and
record any and all documents or instruments required to
effect the dissolution, liquidation and termination of the
Partnership.
1. 4. Liability of the Liquidating Trustee. The
Liquidating Trustee shall be indemnified and held harmless by
the Partnership from and against any and all claims, demands,
liabilities, costs, damages and causes of action of any
nature whatsoever arising out of or incidental to the
Liquidating Trustee's taking of any action authorized under
or within the scope of this Agreement; provided, however,
that the Liquidating Trustee shall not be entitled to
indemnification, and shall not be held harmless, where the
claim, demand, liability, cost, damage or cause of action at
issue arose out of:
(a) A matter entirely unrelated to the Liquidating
Trustee's action or conduct pursuant to the provisions
of this Agreement; or
(b) The proven misconduct or gross negligence of
the Liquidating Trustee.
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ARTICLE
I.
Transfer of Partnership Units
1. General Partner Transfer. The General Partner shall not
withdraw from the Partnership and shall not sell, assign,
pledge, encumber or otherwise dispose of all or any portion
of its Partnership Units, in each case prior to the
dissolution and winding up of the Partnership, without the
Consent of the Limited Partners. Upon any Transfer of a
Partnership Unit in accordance with the provisions of this
Section 9.1, the transferee General Partner shall become
vested with the powers and rights of the transferor General
Partner, and shall be liable for all obligations and
responsible for all duties of the General Partner, once such
transferee has executed such instruments as may be necessary
to effectuate such admission and to confirm the agreement of
such transferee to be bound by all the terms and provisions
of this Agreement with respect to the Partnership Unit so
acquired. It is a condition to any Transfer otherwise
permitted hereunder that the transferee assume by operation
of law or express agreement all of the obligations of the
transferor General Partner under this Agreement with respect
to such transferred Partnership Units and no such Transfer
(other than pursuant to a statutory merger or consolidation
wherein all obligations and liabilities of the transferor
General Partner are assumed by a successor corporation or
other Entity to the General Partner by operation of law)
shall relieve the transferor General Partner of its
obligations under this Agreement without the Consent of the
Limited Partners, in their reasonable discretion. In the
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event the General Partner withdraws from the Partnership in
violation of this Agreement or otherwise, dissolves or
terminates or upon the Bankruptcy of the General Partner, (i)
any remaining general partner may continue the Partnership
business or (ii) within 90 days thereafter, all of the
remaining Partners (or, to the extent permitted under the
Act, such lesser number or percentage of the Partners, but in
no case less than a Majority-in-Interest of the Limited
Partners) may elect to continue the business of the
Partnership by selecting a substitute General Partner, which
substitute General Partner accepts such election and agrees
to serve as the General Partner. Such successor General
Partner shall thereupon succeed to the rights and obligations
of the General Partner as provided in this Section 9.1.
1. 1. Transfers by Limited Partners.
A. Subject to the provisions of Sections 9.2(b)
and 9.3 hereof, including, without limitation,
compliance with any restrictions or limitations set
forth therein, each Limited Partner shall have the right
to Transfer all or a portion of its Partnership Units to
any Person that is the Immediate Family of such Limited
Partner, an Affiliate of such Limited Partner, another
Limited Partner, a bona fide pledgee after a default in
the obligation secured by the pledge, or to a bona fide
purchaser for value from such pledgee, provided that
prior written notice of such proposed transfer is
delivered to the General Partner. No other Transfers of
a Limited Partner's Partnership Units may be effected
without the consent of the General Partner, which
consent may be given, withheld or conditioned in the
General Partner's sole and absolute discretion.
B. No transfer permitted or consented to under
this Section 9.2 (other than pursuant to a statutory
merger or consolidation wherein all obligations and
liabilities of the transferor Partner are assumed by a
successor corporation or other Entity by operation of
law) shall relieve the transferor Limited Partner of its
obligations under this Agreement without the approval of
the General Partner, in its sole and absolute
discretion. Upon such permitted or consented to
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Transfer, the transferee shall be deemed to be an
Assignee with respect to such Partnership Units, but
shall not become or be admitted to the Partnership as a
Substituted Limited Partner without the consent of the
General Partner, which consent may be given or withheld
in the General Partner's sole and absolute discretion
and for any or no reason whatsoever. An Assignee shall
be entitled as a result of such Transfer only to receive
the economic benefits of the Partnership Interest to
which the transferor Limited Partner would otherwise be
entitled, along with such transferor Limited Partner's
rights with respect to the Rights (although any
transferee of any transferred Partnership Units shall be
subject to any and all ownership limitations contained
in the corporate charter of the Company as may be
amended from time to time), and such Assignee shall have
no right (a) to participate in the management of the
Partnership or to vote on any matter requiring the
consent or approval of the Limited Partners, (b) to
demand or receive any account of the Partnership's
business, or (c) to inspect the Partnership's books and
records, unless and until such Assignee is admitted to
the Partnership as a Substituted Limited Partner. A
transferee of a Partnership Unit may become a
Substituted Limited Partner only upon the satisfaction
of the following conditions: (A) filing with the
Partnership of a duly executed and acknowledged written
instrument of assignment in a form approved by the
General Partner specifying the Partnership Units being
assigned, setting forth the intention of the transferor
Limited Partner that such transferee succeed to the
assignor's interest as a Limited Partner and assuming by
operation of law or express agreement all of the
obligations of the transferor Limited Partner under this
Agreement with respect to such transferred Partnership
Units; (B) execution and acknowledgment by the
transferor Limited Partner and such transferee of any
other instruments required in the sole and absolute
discretion of the General Partner, including the
acceptance and adoption by such transferee of the
provisions of this Agreement; (C) obtaining the written
consent of the General Partner as provided in Section
9.2(a) above; and (D) payment of a transfer fee to the
Partnership, sufficient to cover the reasonable expenses
of the substitution, if any. Any transferee, whether or
not admitted as a Substituted Limited Partner, shall
take subject to the obligations of the transferor
Limited Partner hereunder.
1. Restrictions on Transfer. In addition to any other
restrictions on transfer herein contained, in no event may
any Transfer of a Partnership Unit by any Partner be made and
in no event shall Additional Units be issued (i) to any
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Person or Entity who or which lacks the legal right, power or
capacity to own a Partnership Unit, or, except with the prior
written consent of the General Partner, to a Person or Entity
which is not an "Accredited Investor" within the meaning of
Regulation D promulgated by the SEC under the Securities Act;
(ii) in violation of any provision of any mortgage or trust
deed (or the note or bond secured thereby) constituting a
Lien against a Property or any part thereof, or other
instrument, document or agreement to which the Partnership or
any Property Partnership is a party or otherwise bound
(including, without limitation, the organizational documents
of any Property Partnership); (iii) in violation of
applicable law; (iv) of any component portion of a
Partnership Unit, such as the Capital Account, or rights to
Net Cash Flow, separate and apart from all other components
of a Partnership Unit; (v) in the event such Transfer would
cause the Company to cease to comply with the REIT
Requirements; (vi) if such Transfer would cause a termination
of the Partnership for federal income tax purposes (except
with the Consent of the General Partner and the Consent of
the Limited Partners); (vii) if such Transfer would, in the
opinion of counsel to the Partnership, cause the Partnership
to cease to be classified as a partnership for federal income
tax purposes; (viii) if such Transfer would cause the
Partnership to become, with respect to any employee benefit
plan subject to Title 1 of ERISA, a "party-in-interest" (as
defined in Section 3(14) of ERISA) or a "disqualified person"
(as defined in Section 4975(c) of the Code); (ix) if such
Transfer would, in the opinion of counsel to the Partnership,
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cause any portion of the assets of the Partnership to
constitute assets of any employee benefit plan pursuant to
Department of Labor Regulations Section 2510.2-101; (x) if
such Transfer would result in the Transferor or Transferee
owning Common Units having a value (computed as of the date
of such proposed Transfer by multiplying the Common Stock
Amount with respect to such Common Units by the Current Per
Share market Price) less than $250,000; (xi) if such Transfer
or issuance may not be effected without registration of such
Partnership Units under the Securities Act, would require
filing of a registration statement under the Securities Act,
or would otherwise violate any Federal, state or foreign
securities laws or regulations applicable to the Partnership
or such Partnership Units; (xii) if such Transfer or issuance
would violate any provision of the Company's certificate of
incorporation, as such may be amended from time to time;
(xiii) to a lender to the Partnership or any Person who is
related (within the meaning of Section 1.752-4(b) of the
Regulations) to any lender to the Partnership whose loan
constitutes a "nonrecourse liability" (within the meaning of
Section 1.752-1(a)(2) of the Regulations) without the consent
of the General Partner, in its sole and absolute discretion,
unless the Partnership's basis for tax purposes would not be
reduced as a result of such Transfer; (xiv) except with the
express written consent of the General Partner, if such
Transfer would result either in the Partnership having more
than one hundred Partners or in the Partnership being
classified as a "publicly traded partnership" within the
meaning of the Code and the Regulations; or (xv) except with
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the express written consent of the General Partner, to any
entity that is a partnership, grantor trust or S corporation
if (i) substantially all of the value of the interest of a
person owning an interest in such entity is attributable to
the entity's (direct or indirect) interest in a Unit, and
(ii) a principal purpose of the use of the tiered arrangement
is to permit the Partnership to satisfy the 100-person
limitation in paragraph (h)(1)(ii) of Section 1.7704-1 of the
Regulations.
ARTICLE I.
Rights and Obligations of the Limited Partners
1. No Participation in Management.
A. Except as expressly permitted hereunder, the
Limited Partners, in their capacities as Limited
Partners of the Partnership, shall not take part in the
management of the Partnership's business, transact any
business in the Partnership's name or have the power to
sign documents for or otherwise bind the Partnership,
provided, however, that nothing in the foregoing shall
be deemed to prohibit or preclude any Limited Partner or
its Affiliates from serving as an officer, director or
employee of the Company, the General Partner or
Management Company or otherwise transacting business
with the Partnership.
B. In addition to other rights provided by this
Agreement or by the Act, each Limited Partner shall have
the right, for a purpose reasonably related to such
Limited Partner's interest as a limited partner in the
Partnership, upon written demand with a statement of the
purpose of such demand and at such Limited Partner's own
expense (including such copying and administrative
charges as the General Partner may establish from time
to time):
(1) to obtain a copy of the most recent
annual and quarterly reports filed with the
Securities and Exchange Commission by the General
Partner pursuant to the Securities Exchange Act of
1934;
(2) to obtain a copy of the Partnership's
federal, state and local income tax returns for
each Partnership Year;
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(3) to obtain a current list of the name and
last known business, resident or mailing address of
each Partner; and
(4) to obtain a copy of this Agreement and
the Certificate of Limited Partnership and all
amendments thereto, together with executed copies
of all powers of attorney pursuant to which this
Agreement, the Certificate and all amendments
thereto have been executed.
1. Bankruptcy of a Limited Partner. The Bankruptcy of any
Limited Partner shall not cause a dissolution of the
Partnership, but the rights of such Limited Partner to share
in the Net Income or Net Losses of the Partnership and to
receive distributions of Partnership funds shall, on the
happening of such event, devolve on its successors or
assigns, subject to the terms and conditions of this
Agreement, and the Partnership shall continue as a limited
partnership. In no event, however, shall such assignee(s)
become an Assignee Limited Partner except in accordance with
Article IX hereof.
1. 1. No Withdrawal. No Limited Partner may withdraw
from the Partnership without the prior written consent of the
General Partner, other than as expressly provided in this
Agreement.
1. 2. Duties and Conflicts. The General Partner
recognizes that certain of the Limited Partners and their
Affiliates have or may have other business interests,
activities and investments, some of which may be in conflict
or competition with the business of the Partnership, and that
such Persons are entitled to carry on such other business
interests, activities and investments. Such Limited Partners
and their Affiliates may engage in or possess an interest in
any other business or venture of any kind, independently or
with others, on their own behalf or on behalf of other
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entities with which they are affiliated or associated, and
such Persons may engage in any activities, whether or not
competitive with the Partnership, without any obligation to
offer any interest in such activities to the Partnership or
to any Partner. Neither the Partnership nor any Partner
shall have any right, by virtue of this Agreement, in or to
such activities, or the income or profits derived therefrom,
and the pursuit of such activities, even if competitive with
the business of the Partnership, shall not be deemed wrongful
or improper.
1. 3. Limited Liability. No Limited Partner shall be
bound, or personally liable for, the expenses, liabilities or
obligations of the Partnership, except as provided by this
Agreement or the Act.
ARTICLE
I.
Grant of Rights to Limited Partners
1. Grant of Rights. The Company does hereby grant to each
Limited Partner, and each of the Limited Partners does hereby
accept, the right, but not the obligation (hereinafter
referred to as the "Rights"), to require the Company and the
General Partner to exchange part or all of the Limited
Partner's Common Units for shares of Common Stock or their
cash equivalent, at the Company's election, at any time or
from time to time prior to November 3, 2043, on the terms and
subject to the conditions and restrictions contained in
Exhibit D hereto. The Rights granted hereunder may be
exercised by any one or more of the Limited Partners, on the
terms and subject to the conditions and restrictions
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contained in Exhibit D hereto, upon delivery to the Company
of an Exercise Notice, which notice shall specify the number
of Common Units to be exchanged by such Limited Partner.
Once delivered, the Exercise Notice shall be irrevocable,
subject to delivery by the Company or the General Partnerof
the exchange consideration in respect of the Common Units
being exchanged in accordance with the terms hereof.
Notwithstanding the forgoing, upon the issuance of any Common
Units the General Partner and the Partner to who such Common
Units are issued may agree that such Common Units are not
entitled to the Rights.
1. 1. Terms of Rights. The terms and provisions
applicable to the Rights shall be as set forth in attached
Exhibit D.
ARTICLE
I.
Indemnification
1. Indemnification of the Limited Partners. From and after
the date hereof, the Partnership shall indemnify and hold
harmless each of the Limited Partners and its Affiliates
against and from all liability, demands, claims, actions or
causes of action, assessments, losses, fines, penalties,
costs, damages and expenses (including, without limitation,
reasonable attorneys' and accountants' fees and expenses)
(each, a "Claim") sustained or incurred by such Limited
Partner or Affiliate or any assignee or successor thereof
(including, without limitation, any Assignee Limited Partner)
as a result of or arising out of any Assumed Liability. If a
claim for indemnification is asserted against the Partnership
hereunder, the Partnership shall have the right, at its own
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expense, to participate in the defense of any Claim asserted
against such Limited Partner or its Affiliate which resulted
in the claim for indemnification, and if such right is
exercised, the parties shall cooperate in the defense of such
action or proceeding.
1. 1. Indemnification of the General Partner, the
Company and Others. From and after the date hereof, the
Partnership shall indemnify and hold harmless each of the
General Partner, the Company and any officer, director,
employee or agent of any of the Partnership, the General
Partner or the Company against and from all for the same
matters and to the same extent as the Company is entitled to
indemnify its officers, directors, employees or agents
pursuant to the Company's certificate of incorporation, as
such may be amended from time to time.
ARTICLE
I.
Arbitration of Disputes
1. Arbitration. Notwithstanding anything to the contrary
contained in this Agreement, all claims, disputes and
controversies between the parties hereto (including, without
limitation, any claims, disputes and controversies between
the Partnership and any one or more of the Partners and any
claims, disputes and controversies between any one or more
Partners) arising out of or in connection with this Agreement
or the Partnership created hereby, relating to the validity,
construction, performance, breach, enforcement or termination
thereof, or otherwise, shall be resolved by binding
arbitration in New York, New York, in accordance with this
Article XIII and, to the extent not inconsistent herewith,
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the Expedited Procedures and Commercial Arbitration Rules of
the American Arbitration Association or any successor
thereto.
1. 1. Procedures. Any arbitration called for by this
Article XIII shall be conducted in accordance with the
following procedures:
(a) The Partnership or any Partner (the
"Requesting Party") may demand arbitration pursuant to
Section 13.1 hereof at any time by giving written notice
of such demand (the "Demand Notice") to all other
Partners and (if the Requesting Party is not the
Partnership) to the Partnership, which Demand Notice
shall describe in reasonable detail the nature of the
claim, dispute or controversy.
(b) Within fifteen (15) days after the giving of a
Demand Notice, the Requesting Party, on the one hand,
and each of the other Partners and/or the Partnership
against whom the claim has been made or with respect to
which a dispute has arisen (collectively, the
"Responding Party"), on the other hand, shall select and
designate in writing to the other party one reputable,
disinterested individual (a "Qualified Individual")
willing to act as an arbitrator of the claim, dispute or
controversy in question. Each of the Requesting Party
and the Responding Party shall use their best efforts to
select a present or former partner of a "Big 6"
accounting firm having no affiliation with any of the
parties as their respective Qualified Individual to act
as the second arbitrator. Within fifteen (15) days
after the foregoing selections have been made, the
arbitrators so selected shall jointly select a present
or former partner of a "Big 6" accounting firm having no
affiliation with any of the parties as the third
Qualified Individual willing to act as an arbitrator of
the claim, dispute or controversy in question. In the
event that the two arbitrators initially selected are
unable to agree on a third arbitrator within the second
fifteen (15) day period referred to above, then, on the
application of either party, the American Arbitration
Association shall promptly select and appoint a present
or former partner of a "Big 6" accounting firm having no
affiliation with any of the parties as the Qualified
Individual to act as the third arbitrator. The three
arbitrators selected pursuant to this subsection (b)
shall constitute the arbitration panel for the
arbitration in question.
(c) The presentations of the parties hereto in the
arbitration proceeding shall be commenced and completed
within sixty (60) days after the selection of the
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arbitration panel pursuant to subsection (b) above, and
the arbitration panel shall render its decision in
writing within thirty (30) days after the completion of
such presentations. Any decision concurred in by any
two (2) of the arbitrators shall constitute the decision
of the arbitration panel, and unanimity shall not be
required.
(d) The arbitration panel shall have the
discretion to include in its decision a direction that
all or part of the attorneys' fees and costs of any
party or parties and/or the costs of such arbitration be
paid by any other party or parties. On the application
of a party before or after the initial decision of the
arbitration panel, and proof of its attorneys' fees and
costs, the arbitration panel shall order the other party
to make any payments directed pursuant to the preceding
sentence.
1. Binding Character. Any decision rendered by the
arbitration panel pursuant to this Article XIII shall be
final and binding on the parties hereto, and judgment thereon
may be entered by any state or federal court of competent
jurisdiction.
1. 1. Exclusivity. Arbitration shall be the
exclusive method available for resolution of claims, disputes
and controversies described in Section 13.1 hereof, and the
Partnership and its Partners stipulate that the provisions
hereof shall be a complete defense to any suit, action, or
proceeding in any court or before any administrative or
arbitration tribunal with respect to any such claim,
controversy or dispute. The provisions of this Article XIII
shall survive the dissolution of the Partnership.
1. 2. No Alternative of Agreement. Nothing contained
herein shall be deemed to give the arbitrators any authority,
power or right to alter, change, amend, modify, add to, or
subtract from any of the provisions of this Partnership
Agreement.
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ARTICLE I.
General Provisions
1. Notices. All notices, offers or other communications
required or permitted to be given pursuant to this Agreement
shall be in writing and may be personally served, telecopied
or sent by United States mail and shall be deemed to have
been given when delivered in person, upon receipt of telecopy
or three business days after deposit in United States mail,
registered or certified, postage prepaid, and properly
addressed, by or to the appropriate party. For purposes of
this Section 14.1, the address of the General Partner shall
be: One Park Place, 6148 Lee Highway, Chattanooga, Tennessee
37421-2931 (telecopier number (423) 490-8662) and the address
of each of the Limited Partners shall be c/o CBL &
Associates, Inc., One Park Place, 6148 Lee Highway,
Chattanooga, Tennessee 37421-2931 (telecopier number (423)
490-8662). The address of any party hereto may be changed by
a notice in writing given in accordance with the provisions
hereof.
1. 1. Successor. This Agreement and all the terms
and provisions hereof shall be binding upon and shall inure
to the benefit of all Partners, and their legal
representatives, heirs, successors and permitted assigns,
except as expressly herein otherwise provided.
1. 2. Effect and Interpretation. This Agreement
shall be governed by and construed in conformity with the
laws of the State of Delaware.
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1. 3. Counterparts. This Agreement may be executed
in counterparts, each of which shall be an original, but all
of which shall constitute one and the same instrument.
1. 4. Partners Not Agents. Nothing contained herein
shall be construed to constitute any Partner the agent of
another Partner, except as specifically provided herein, or
in any manner to limit the Partners in the carrying on of
their own respective businesses or activities.
Notwithstanding anything to the contrary contained herein, no
recourse shall be had by the Partnership or any Partner
against any director, shareholder, officer, employee, agent
or attorney of the General Partner acting in such capacity
for any act or omission of the General Partner or any
obligation or liability of the General Partner under this
Agreement, and none of the foregoing shall have any personal
liability for or with respect to any of the foregoing.
1. 5. Entire Understanding; Etc. This Agreement
constitutes the entire agreement and understanding among the
Partners and supersedes any prior understandings and/or
written or oral agreements among them respecting the subject
matter within.
1. 6. Amendments.
A. Except to the extent expressly otherwise
provided herein (including, without limitation, in
Section 14.7(b) below), this Agreement may not be
amended unless such amendment is approved by the General
Partner with the prior Consent of the Limited Partners;
provided that no amendment of this Agreement may be made
without the consent of all of the affected Limited
Partners if such amendment (i) converts any Limited
Partner's interest in the Partnership into a general
partnership interest (other than the General Partner if
the General Partner is also a Limited Partner), (ii)
modifies the limited liability of any Limited Partner if
the General Partner is also a Limited Partner), or (iii)
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alters or modifies the Rights set forth in Article XI in
a manner adverse to such Partner.
B. Notwithstanding anything to the contrary
provided in Section 14.7(a) above, the General Partner
shall have the power, without the consent of any Limited
Partner, to amend this Agreement as may be required to
facilitate or implement any of the following:
1. to add to the obligations of the General
Partner or surrender any right or power granted to the
General Partner or any Affiliate of the General
Partner for the benefit of the Limited Partners;
2. to reflect the admission, substitution,
termination, or withdrawal of Partners in accordance
with this Agreement;
3. to set forth the rights, powers and
duties of the holders of any Additional Units issued
pursuant to Section 4.4(a) hereof (including, without
limitation, amending the distribution and allocation
provisions set forth herein);
4. to reflect any change that does not
adversely affect the Limited Partners in any material
respect, to cure any ambiguity, to correct or
supplement any defective provision in this Agreement,
or to make other changes with respect to matters
arising under this Agreement that will not be
inconsistent with any other provision of this
Agreement; and
5. to satisfy any requirements, conditions,
or guidelines contained in any order, directive,
opinion, ruling or regulations of a Federal or state
agency or contained in Federal or state law.
C. This Section 14.7 may not be amended except
with the prior written consent of all the Partners.
1. Severability. If any provision of this Agreement, or
the application of such provision to any person or
circumstance, shall be held invalid by a court of competent
jurisdiction, the remainder of this Agreement, or the
application of such provision to persons or circumstances
other than those to which it is held invalid by such court,
shall not be affected thereby.
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1. 1. Pronouns and Headings. As used herein, all
pronouns shall include the masculine, feminine and neuter,
and all defined terms shall include the singular and plural
thereof wherever the context and facts require such
construction. The headings, titles and subtitles herein are
inserted for convenience of reference only and are to be
ignored in any construction of the provisions hereof. Any
references in this Agreement to "including" shall be deemed
to mean "including without limitation".
1. 2. Assurances. Each of the Partners shall
hereafter execute and deliver such further instruments and do
such further acts and things as may be required or useful to
carry out the intent and purpose of this Agreement and as are
not inconsistent with the terms hereof.
1. 3. Expenses. All expenses incurred by the Partners
in negotiating, drafting and executing this Agreement and the
Exhibits hereto, including without limitation all expenses of
counsel, shall be borne and paid by the Partnership.
1. 4. Waiver of Partition. Except as otherwise
expressly provided for in this Agreement, no Partner shall,
either directly or indirectly, take any action to require
partition or appraisement of the Partnership or any of its
assets or properties or cause the sale of any Partnership
assets or property, and notwithstanding any provision of
applicable law to the contrary, each Partner (for itself and
its legal representatives, successors and assigns) hereby
irrevocably waives any and all right to partition, or to
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maintain any action for partition, or to compel any sale with
respect to its interest in, or with respect to, any assets or
properties of the Partnership, except as expressly provided
in this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement or caused this Agreement to be executed as of
the date and year first above written.
GENERAL PARTNER:
CBL HOLDINGS I, INC.
By: __Charles B. Lebovitz_____
Charles B. Lebovitz
Chairman of the Board, President
and Chief Executive Officer
LIMITED PARTNERS:
CBL HOLDINGS, II, INC.
By:____Charles B. Lebovitz_____
Charles B. Lebovitz,
Chairman of the Board, President
and Chief Executive Officer
CBL & ASSOCIATES, INC.
By:____Charles B. Lebovitz_____
Charles B. Lebovitz,
Chairman of the Board, President
and Chief Executive Officer
CBL EMPLOYEES PARTNERSHIP/CONWAY
By: CBL & Associates, Inc.
Managing Partner
By:____Charles B. Lebovitz____
Charles B. Lebovitz,
Chairman of the Board, President
and Chief Executive Officer
75
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COLLEGE STATION ASSOCIATES
By:____Charles B. Lebovitz____
Charles B. Lebovitz,
Managing Partner
FOOTHILLS PLAZA PARTNERSHIP
By: Mortgage Services, Inc.
Managing Partner
By:___John N. Foy_______
John N. Foy, President
____John N. Foy_____
John N. Foy
GIRVIN ROAD PARTNERSHIP
By: CBL & ASSOCIATES, INC.,
Managing Partner
By:_____Charles B. Lebovitz_____
Charles B. Lebovitz,
Chairman of the Board, President
and Chief Executive Officer
____Ben S. Landress______
Ben S. Landress
____Alan L. Lebovitz____
Alan L. Lebovitz
____Charles B. Lebovitz____
Charles B. Lebovitz
___Charles B. Lebovitz____
Laurie Beth Lebovitz
___Michael I. Lebovitz____
Michael I. Lebovitz
76
<PAGE>
___Stephen D. Lebovitz___
Stephen D. Lebovitz
TRUST U/W MOSES LEBOVITZ F/B/O
CHARLES B. LEBOVITZ, ET AL
By:___Charles B. Lebovitz_____
Charles B. Lebovitz
Trustee
By:____Faye L. Israel_______
Faye L. Israel,
Trustee
By:___Ralph Schumacker______
Ralph Schumacker,
Trustee
TRUST U/W MOSES LEBOVITZ F/B/O
FAYE L. ISRAEL, ET AL
By:___Charles B. Lebovitz_____
Charles B. Lebovitz,
Trustee
By:____Faye L. Israel______
Faye L. Israel,
Trustee
By:___Ralph Shumacker_____
Ralph Shumacker,
Trustee
___Mark D. Mancuso______
Mark D. Mancuso
___Eric P. Snyder_______
Eric P. Snyder
77
<PAGE>
___Augustus N. Stephas_____
Augustus N. Stephas
WAREHOUSE PARTNERSHIP
By: CBL & Associates, Inc.,
Managing Partner
By:___Charles B. Lebovitz_____
Charles B. Lebovitz,
Chairman of the Board, President
and Chief Executive Officer
___Jay Wiston_________
Jay Wiston
___James L. Wolford___
James L. Wolford
SOLELY FOR PURPOSES OF SECTIONS
4.6,5.2, 7.6, 7.13 9.3 and 12.2,
ARTICLEs XI, XIII AND XIV AND
EXHIBIT D HEREOF:
CBL & Associates Properties, INC.
By:___Charles B. Lebovitz_____
Charles B. Lebovitz
Chairman of the Board, President
and Chief Executive Officer
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EXHIBIT A
<PAGE>
EXHIBIT B
To be provided by the General Partner pursuant to the terms
of the Agreement.
CERTIFICATE OF DESIGNATION
OF
9.0% SERIES A CUMULATIVE REDEEMABLE PREFERRED UNITS
OF
CBL & ASSOCIATES PROPERTIES, LIMITED PARTNERSHIP
Pursuant to Article 4.4 of the
Second Amended and Restated Partnership Agreement of
CBL & Associates, Limited Partnership
WHEREAS, CBL & Associates Properties, Inc. (the "Company")
has issued 2,875,000 shares (the "Offering") of 9.0% Series A Cumulative
Redeemable Preferred Stock (the "Preferred Stock");
WHEREAS, the Company and the Operating Partnership desire
that the Company contribute net proceeds of the Offering to CBL &
Associates, Limited Partnership (the "Operating Partnership") in exchange
for preferred units having substantially the same economic rights and
terms of the Preferred Stock;
WHEREAS, Article 4.4 of the Second Amended and Restated
Partnership Agreement of the Operating Partnership (the "Partnership
Agreement") provides for a Preferred Unit Designation, setting forth, in
sufficient detail, the economic rights and terms of the class or series
of preferred units.
NOW THEREFORE, CBL Holdings I, Inc., the general partner of
the Operating Partnership (the "General Partner") hereby designates a
series of preferred units and fixes the designations, powers, preferences
and relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, of such preferred
units, as follows:
1. Designation and Amount.
The units of such series shall be designated "9.0% Series A
Cumulative Redeemable Preferred Units" (the "Series A Preferred Units")
and the number of units constituting such series shall be 2,875,000. The
designations, powers, preferences and relative, participating, optional
or other special rights, and the qualifications, limitations or
restrictions thereof, of the Series A Preferred Units shall be subject in
all cases to the provisions of the Partnership Agreement.
2. Dividends and Distribution Rights.
(a) Holders of Series A Preferred Units shall be
entitled to receive, when, as and if declared by the General
Partner, out of assets of the Operating Partnership legally
available for the payment of dividends, cumulative
preferential cash dividends at the rate of 9.0% per annum of
the $25.00 liquidation preference. Such dividends shall be
cumulative from the date of the original issue by the
Operating Partnership of Series A Preferred Units and shall
be payable quarterly in arrears on the 30th day of March,
June, September, and December of each year or, if not a
business day, the next succeeding business day (each, a
"Dividend Payment Date"). The first dividend shall be paid
on September 30, 1998. Such first dividend and any dividend
payable on the Series A Preferred Units for any partial
dividend period shall be computed on the basis of a 360-day
year consisting of twelve 30-day months. Dividends will be
payable to holders of record as they appear in the records of
the Operating Partnership at the close of business on the
applicable record date, which shall be the 15th day of the
calendar month in which the applicable Dividend Payment Date
falls or on such other date designated by the General Partner
for the payment of dividends that is not more than 30 nor
less than 10 days prior to such Dividend Payment Date (each,
a "Dividend Record Date").
(b) No dividends on the Series A Preferred Units
shall be declared by the General Partner or paid or set apart
for payment by the General Partner at such time as the terms
and provisions of any agreement of the Operating Partnership,
including any agreement relating to its indebtedness,
prohibits such declaration, payment or setting apart for
payment or provides that such declaration, payment or setting
apart for payment would constitute a breach thereof or a
default thereunder, or if such declaration or payment shall
be restricted or prohibited by law.
(c) Notwithstanding anything contained herein to
the contrary, dividends on the Series A Preferred Units shall
accrue whether or not the Operating Partnership has earnings,
whether or not there are funds legally available for the
payment of such dividends, and whether or not such dividends
are declared. Accrued but unpaid dividends on the Series A
Preferred Units shall accumulate as of the Dividend Payment
Date on which they first become payable.
(d) Except as set forth in the next sentence, no
dividends shall be declared or paid or set apart for payment
on any of the Operating Partnership's Common Units ("Common
Units"), or units of any other class or series of units of
the Operating Partnership ranking, as to dividends, on a
parity with or junior to the Series A Preferred Units (other
than a dividend paid in units of Common Units or in units of
any other class or series of units ranking junior to the
Series A Preferred Units as to dividends and upon
liquidation) for any period unless full cumulative dividends
for all past dividend periods and the then current dividend
period shall have been or contemporaneously are (i) declared
and paid in cash or (ii) declared and a sum sufficient for
the payment thereof in cash is set apart for such payment on
the Series A Preferred Units. When dividends are not paid in
full (or a sum sufficient for such full payment is not so set
apart) upon the Series A Preferred Units and the units of any
other series of preferred units ranking on a parity as to
dividends with the Series A Preferred Units, all dividends
declared upon the Series A Preferred Units and any other
series of preferred units ranking on a parity as to dividends
with the Series A Preferred Units shall be declared pro rata
so that the amount of dividends declared per unit of Series A
Preferred Units and such other series of preferred units
shall in all cases bear to each other the same ratio that
accrued dividends per share on the Series A Preferred Units
and such other series of preferred units (which shall not
include any accrual in respect of unpaid dividends on such
other series of preferred units for prior dividend periods if
such other series of preferred units does not have a
cumulative dividend) bear to each other. No interest, or sum
of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on the Series A Preferred
Units which may be in arrears.
(e) Except as provided in paragraph 2(d), unless
full cumulative dividends on the Series A Preferred Units
shall have been or contemporaneously are declared and paid in
cash or declared and a sum sufficient for the payment thereof
in cash is set apart for payment for all past dividend
periods and the then current dividend period, no dividends
(other than in Common Units or other units ranking junior to
the Series A Preferred Units as to dividends and upon
liquidation) shall be declared or paid or set aside for
payment or other dividend shall be declared or made upon the
Common Units or any other units of the Operating Partnership
ranking junior to or on parity with the Series A Preferred
Units as to dividends or amounts upon liquidation nor shall
any units of Common Units, or any other units of capital
stock of the Operating Partnership ranking junior to or on a
parity with the Series A Preferred Units as to dividends or
upon liquidation, shall be redeemed, purchased or otherwise
acquired for any consideration (or any moneys be paid to or
made available for a sinking fund for the redemption of any
such units) by the Operating Partnership (except by
conversion into or exchange for other units of the Operating
Partnership ranking junior to the Series A Preferred Units as
to dividends and upon liquidation) Nothing in the foregoing
shall be deemed to preclude the exercise of Rights (as
defined in the Partnership Agreement) by any unit holder in
accordance with the Partnership Agreement.
(f) Holders of units of Series A Preferred Units
shall not be entitled to any dividend, whether payable in
cash, property or units, in excess of full cumulative
dividends on the Series A Preferred Units as provided above.
Any dividend payment made on the Series A Preferred Units
shall first be credited against the earliest accrued but
unpaid dividends due with respect to such units which remains
payable.
3. Liquidation Rights.
Upon any voluntary or involuntary liquidation,
dissolution or winding-up of the affairs of the Operating
Partnership, the holders of units of Series A Preferred Units
shall be entitled to be paid out of the assets of the
Operating Partnership legally available for distribution to
its Unit holders a liquidation preference of $25.00 per unit,
plus an amount equal to any accrued and unpaid dividends to
the date of payment (whether or not declared), before any
distribution or payment shall be made to holders of share of
Common Units or any other class or series of Units of the
Operating Partnership ranking junior to the Series A
Preferred Units as to liquidation rights. In the event that,
upon such voluntary or involuntary liquidation, dissolution
or winding-up, the available assets of the Operating
Partnership are insufficient to pay the amount of the
liquidating distributions on all outstanding units of Series
A Preferred Units and the corresponding amounts payable on
all units of other classes or series of units of the
Operating Partnership ranking on a parity with the Series A
Preferred Units in the distribution of assets, then the
holders of the Series A Preferred Units and all other such
classes or series of units shall share ratably in any such
distribution of assets in proportion to the full liquidating
distributions to which they would otherwise be respectively
entitled. Holders of Series A Preferred Units shall be
entitled to written notice of any such liquidation. After
payment of the full amount of the liquidating distributions
to which they are entitled, the holders of Series A Preferred
Units will have no right or claim to any of the remaining
assets of the Operating Partnership. The consolidation or
merger of the Operating Partnership with or into any
corporation, trust or entity or of any corporation, trust or
other entity, or the sale, lease or conveyance of all or
substantially all of the property or business of the
Operating Partnership shall not be deemed to constitute a
liquidation, dissolution or winding-up of the Operating
Partnership.
4. Redemption.
(a) Series A Preferred Units shall not be
redeemable prior to July 1, 2003. On or after July 1, 2003,
the Operating Partnership, at its option upon not less than
30 nor more than 60 days' written notice, may redeem the
Series A Preferred Units, in whole or in part, at any time or
from time to time, for cash at a redemption price of $25.00
per unit, plus all accrued and unpaid dividends thereon to
the date fixed for redemption (except as provided below),
without interest. If fewer than all of the outstanding units
of Series A Preferred Units are to be redeemed, the units of
Series A Preferred Units to be redeemed shall be redeemed pro
rata (as nearly as may be practicable without creating
fractional units) or by lot or by any other equitable method
determined by the Operating Partnership. Holders of Series A
Preferred Units to be redeemed shall surrender such Series A
Preferred Units at the place designated in such notice and
shall be entitled to the redemption price and any accrued and
unpaid dividends payable upon such redemption following such
surrender. If notice of redemption of any Series A Preferred
Units has been given and if the funds necessary for such
redemption have been set aside by the Operating Partnership
in trust for the benefit of the holders of any units of
Series A Preferred Units so called for redemption, then from
and after the redemption date dividends shall cease to accrue
on such Series A Preferred Units, such units of Series A
Preferred Units shall no longer be deemed outstanding and all
rights of the holders of such units will terminate, except
the right to receive the redemption price plus any accrued
and unpaid dividends payable upon such redemption.
(b) Unless full cumulative dividends on all Series
A Preferred Units shall have been or contemporaneously are
declared and paid in cash or declared and a sum sufficient
for the payment thereof in cash set apart for payment for all
past dividend periods and the then current dividend period,
no Series A Preferred Units shall be redeemed unless all
outstanding units of Series A Preferred Units are
simultaneously redeemed and the Operating Partnership shall
not purchase or otherwise acquire directly or indirectly any
units of Series A Preferred Units (except by exchange for
units of the Operating Partnership ranking junior to the
Series A Preferred Units as to dividends and amounts upon
liquidation).
(c) Notice of redemption shall be mailed by the
Operating Partnership, postage prepaid, not less than 30 nor
more than 60 days prior to the redemption date, addressed to
the respective holders of record of the units of Series A
Preferred Units to be redeemed at their respective addresses
as they appear on the records of the Operating Partnership.
No failure to give such notice or any defect thereto or in
the mailing thereof shall affect the validity of the
proceedings for the redemption of any Series A Preferred
Units except as to a holder to whom notice was defective or
not given. Each notice shall state (i) the redemption date;
(ii) the redemption price; (iii) the number of units of
Series A Preferred Units to be redeemed; (iv) the place or
places where units of Series A Preferred Units are to be
surrendered for payment of the redemption price; and (v) that
dividends on the Series A Preferred Units to be redeemed
shall cease to accrue on such redemption date. If fewer than
all of the units of Series A Preferred Units held by any
holder are to be redeemed, the notice mailed to such holder
shall also specify the number of units of Series A Preferred
Units held by such holder to be redeemed.
(d) Immediately prior to any redemption of Series
A Preferred Units, the Operating Partnership shall pay, in
cash, any accumulated and unpaid dividends through the
redemption date, unless a redemption date falls after a
Dividend Record Date and prior to the corresponding Dividend
Payment Date, in which case each holder of Series A Preferred
at the close of business of such Dividend Record Date shall
be entitled to the dividend payable on such units on the
corresponding Dividend Payment Date notwithstanding the
redemption of such units before such Dividend Payment Date.
Except as provided above, the Operating Partnership shall
make no payment or allowance for unpaid dividends, whether or
not in arrears, on Series A Preferred Units for which a
notice of redemption has been given.
(e) All units of the Series A Preferred Units
redeemed pursuant to this paragraph 4 shall be retired and
shall be restored to the status of authorized and unissued
units of preferred units, without designation as to series
and may thereafter be reissued as units of any series of
preferred units.
(f) The Series A Preferred Units shall have no
stated maturity and shall not be subject to any sinking fund
or mandatory redemption.
5. Voting Rights.
(a) Holders of the Series A Preferred Units shall
not have any voting rights, except as set forth in the
Partnership Agreement.
(b) So long as any units of Series A Preferred
Units remain outstanding, the Operating Partnership shall
not, without the affirmative vote or consent of the holders
of two-thirds of the units of Series A Preferred Units
outstanding at the time, given in person or by proxy, either
in writing or at a meeting (such series voting separately as
a class): (i) authorize or create, or increase the
authorized or issued amount of, any class or series of units
ranking prior to the Series A Preferred Units with respect to
payment of dividends or the distribution of assets upon
liquidation, dissolution or winding-up of the Operating
Partnership or reclassify any authorized units of the
Operating Partnership into such units, or create, authorize
or issue any obligation or security convertible into or
evidencing the right to purchase any such units; or (ii)
amend, alter or repeal the provisions of the Partnership
Agreement or this Certificate of Designations, whether by
merger, consolidation or otherwise (an "Event"), so as to
materially and adversely affect any right, preference,
privilege or voting power of the Series A Preferred Units or
the holders thereof; provided however, with respect to the
occurrence of any of the Events set forth in (ii) above, so
long as the Series A Preferred Units remains outstanding with
the terms thereof materially unchanged, taking into account
that, upon the occurrence of an Event, the Operating
Partnership may not be the surviving entity, the occurrence
of such Event shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting power
of holders of Series A Preferred Units and provided further
that (A) any increase in amount of the authorized Preferred
Units or the creation or issuance of any other Series A
Preferred Units or (B) any increase in the number of
authorized units of Series A Preferred Units or any other
series of Preferred Units in each case ranking on a parity
with or junior to the Series A Preferred Units of such series
with respect to the payment of dividends or the distribution
of assets upon liquidation, dissolution or winding up, shall
not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers.
(c) The foregoing voting provisions of this
paragraph 5 shall not apply if, at or prior to the time when
the act with respect to which such vote would otherwise be
required shall be effected, all outstanding units of Series A
Preferred Units shall have been redeemed or called for
redemption upon proper notice and sufficient funds, in cash,
shall have been deposited in trust to effect such redemption.
(d) In any matter in which the Series A Preferred
Units may vote (as expressly provided herein or as may be
required by law), each share of Series A Preferred Units
shall be entitled to one vote, except that when any other
series of preferred units of the Operating Partnership shall
have the right to vote with the Series A Preferred Units as a
single class on any matter, the Series A Preferred Units and
such other series shall have with respect to such matters one
vote per each $25.00 of stated liquidation preference.
6. Conversion.
The units of Series A Preferred Units shall not be
convertible into or exchangeable for any other property or
units of the Operating Partnership.
7. Ranking.
The Series A Preferred Units shall, with respect to
dividend rights and rights upon liquidation, dissolution or
winding-up of the Operating Partnership, rank (a) senior to
the Common Units and to all units ranking junior to such
Series A Preferred Units; (b) on a parity with all units
issued by the Operating Partnership the terms of which
specifically provide that such units rank on a parity with
the Series A Preferred Units; and (c) junior to all units
issued by the Operating Partnership (in accordance with this
Certificate of Designations) the terms of which specifically
provide that such units rank senior to the Series A Preferred
Units. For purposes of this paragraph 7, the term "units"
does not include indebtedness convertible into units.
8. Exclusion of Other Rights.
The Series A Preferred Units shall not have any
preferences or other rights, voting powers, restrictions,
limitations as to dividends or other distributions,
qualifications or terms or conditions of redemption other
than expressly set forth in the Partnership Agreement and
this Certificate of Designations.
9. Headings of Subdivisions.
The headings of the various subdivisions hereof are
for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
10. Severability of Provisions.
If any preferences or other rights, voting powers,
restrictions, limitations as to dividends or other
distributions, qualifications or terms or conditions of
redemption of the
Series A Preferred Units set forth in the Partnership
Agreement and this Certificate of Designations is invalid,
unlawful or incapable of being enforced by reason of any rule
of law or public policy, all other preferences or other
rights, voting powers, restrictions, limitations as to
distributions, qualifications or terms or conditions of
redemption of Series A Preferred Units set forth in the
Partnership Agreement which can be given effect without the
invalid, unlawful or unenforceable provision thereof shall,
nevertheless, remain in full force and effect and no
preferences or other rights, voting powers, restrictions,
limitations as to dividends or other distributions,
qualifications or terms or conditions of redemption of the
Series A Preferred Units herein set forth shall be deemed
dependent upon any other provision thereof unless so
expressed therein.
11. No Preemptive Rights.
No holder of Series A Preferred Units shall be
entitled to any preemptive rights to subscribe for or acquire
any unissued units of the Operating Partnership (whether now
or hereafter authorized) or securities of the Operating
Partnership convertible into or carrying a right to subscribe
to or acquire units of the Operating Partnership.
SIGNATURE APPEARS ON NEXT PAGE<PAGE>
IN WITNESS WHEREOF, CBL Holdings
I, Inc. has caused this
Certificate of Designation of Series A Cumulative Redeemable
Preferred Units to be duly executed by its Executive Vice
President and Chief Financial Officer this _____ day of June,
1998.
CBL Holdings I, Inc.
By
John Foy
Executive Vice President
and Chief Financial
Officer
EXHIBIT C
Allocations
1. Allocation of Net Income and Net Loss.
(a) Except as otherwise provided herein, Net Income and Net Loss
of the Partnership for each tax year shall be allocated among the
Partners in the follow order and priority:
(i) First, Net Income shall be allocated to the relevant
Partner, on account of the Preferred Units, in an amount equal to
the excess of (A) the amount of Net Cash Flow distributed to such
Partner pursuant to Sections 6.2(a)(i) and (ii) and Section 6.2(c)
(but only to the extent of the Preferred Distribution Requirement
and Preferred Distribution Shortfalls) for the current and all
prior Partnership tax years over (B) the amount of Net Income
previously allocated to such Partner pursuant to this subparagraph
(i).
(ii) Second, for any Partnership tax year ending on or after
a date on which Preferred Units are redeemed, Net Income (or Net
Losses) shall be allocated to the relevant Partner, on account of
the Preferred Units, in an amount equal to the excess (or deficit)
of the sum of the applicable Preferred Redemption Amounts for the
Preferred Units that have been or are being redeemed during such
Partnership tax year over the Preferred Unit Issue Price of such
Preferred Units.
(iii) Any remaining Net Income and Net Losses shall be
allocated among the Partners in accordance with their proportionate
ownership of Common Units (except as otherwise required by the
Regulations).
(iv) Notwithstanding subparagraphs (i), (ii) and (iii), Net
Income and Net Losses from a Liquidation Transaction shall be
allocated as follows:
First, Net Income (or Net Losses) shall be allocated to
the relevant Partner, in connection with the Preferred Units,
in an amount equal to the excess (or deficit) of the sum of
the applicable Preferred Redemption Amounts of the Preferred
Units which have been or will be redeemed with the proceeds
of the Liquidation Transaction over the Preferred Unit Issue
Price of such Preferred Units;
Second, Net Income (or Net Losses) shall be allocated
among the Partners so that the Capital Accounts of the
Partners (excluding from the Capital Account of any Partner
the amount attributable to its Preferred Units) are
proportional to the number of Common Units held by each
Partner; and
Third, any remaining Net Income (and Losses) shall be
allocated among the Partners in accordance with their
proportionate ownership of Common Units.
2. Special Allocations.
Notwithstanding any provisions of paragraph 1 of this Exhibit C,
the following special allocations shall be made in the following order:
(a) Minimum Gain Chargeback (Nonrecourse Liabilities). If there
is a net decrease in Partnership Minimum Gain for any Partnership fiscal
year (except as a result of conversion or refinancing of Partnership
indebtedness, certain capital contributions or revaluation of the
Partnership property as further outlined in Regulation Sections 1.704-
2(d)(4), (f)(2) or (f)(3)), each Partner shall be specially allocated
items of Partnership income and gain for such year (and, if necessary,
subsequent years) in an amount equal to that Partner's share of the net
decrease in Partnership Minimum Gain. The items to be so allocated shall
be determined in accordance with Regulation Section 1.704-2(f). This
paragraph (a) is intended to comply with the minimum gain chargeback
requirement in said section of the Regulations and shall be interpreted
consistently therewith. Allocations pursuant to this paragraph (a) shall
be made in proportion to the respective amounts required to be allocated
to each Partner pursuant hereto.
(b) Minimum Gain Attributable to Partner Nonrecourse Debt. If
there is a net decrease in Minimum Gain Attributable to Partner
Nonrecourse Debt during any fiscal year (other than due to the
conversion, refinancing or other change in the debt instrument causing it
to become partially or wholly nonrecourse, certain capital contributions,
or certain revaluations of Partnership property as further outlined in
Regulation Section 1.704-2(i)(4)), each Partner shall be specially
allocated items of Partnership income and gain for such year (and, if
necessary, subsequent years) in an amount equal to that Partner's share
of the net decrease in the Minimum Gain Attributable to Partner
Nonrecourse Debt. The items to be so allocated shall be determined in
accordance with Regulation Section 1.704-2(i).(4) and (j)(2). This
paragraph (b) in intended to comply with the minimum gain chargeback
requirement with respect to Partner Nonrecourse Debt contained in said
section of the Regulations and shall be interpreted consistently
therewith. Allocations pursuant to this paragraph (b) shall be made in
proportion to the respective amounts required to be allocated to each
Partner pursuant thereto.
(c) Qualified Income Offset. In the event a Limited Partner
unexpectedly receives any adjustments, allocations or distributions
described in Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), and
such Limited Partner has an Adjusted Capital Account Deficit, items of
Partnership income and gain shall be specially allocated to such Partner
in an amount and manner sufficient to eliminate the Adjusted Capital
Account Deficit as quickly as possible. This paragraph (c) is intended
to constitute a "qualified income offset" under Regulation Section 1.704-
1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
(d) Nonrecourse Deduction. Nonrecourse Deductions for any fiscal
year or other applicable period shall be allocated to the Partners in
accordance with their proportionate ownership of Common Units.
(e) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any fiscal year or other applicable period shall be
specially allocated to the Partner that bears the economic risk of loss
for the debt (i.e., the Partner Nonrecourse Debt) in respect of which
such Partner Nonrecourse Deductions are attributable (as determined under
Regulation Section 1.704-2(b)(4) and (i)(1).
(f) Curative Allocations. The Regulatory Allocations (as defined
below) shall be taken into account in allocating other item of income,
gain, loss, and deduction among the Partners so that, to the extent
possible, the cumulative net amount of allocations of Partnership items
under paragraphs 1 and 2 of this Exhibit C shall be equal to the net
amount that would have been allocated to each Partner if the Regulatory
Allocations had not occurred. This subparagraph (f) is intended to
minimize to the extent possible and to the extent necessary any economic
distortions which may result from application of the Regulatory
Allocations and shall be interpreted in a manner consistent therewith.
For purposes hereof, "Regulatory Allocations" shall mean the allocations
provided under this paragraph 2.
3. Tax Allocations.
(a) Generally. Subject to paragraphs (b) and (c) hereof, items
of income, gain, loss, deduction and credit to be allocated for income
tax purposes (collectively, "Tax Items") shall be allocated among the
Partners on the same basis as their respective book items.
(b) Sections 1245/1250 Recapture. If any portion of gain from
the sale of property is treated as gain which is ordinary income by
virtue of the application of Code Section 1245 or 1250 ("Affected Gain"),
then (A) such Affected Gain shall be allocated among the Partners in the
same proportion that the depreciation and amortization deductions giving
rise to the Affected Gain were allocated and (B) other Tax Items of gain
of the same character but would have been recognized, but for the
application of Code Section 1245 and/or 1250, shall be allocated away
from those Partners who are allocated Affected Gain pursuant to Clause
(A) so that, to the extent possible, the other Partners are allocated the
same amount, and type, of capital gain that would have been allocated to
them had Code Section 1245 and/or 1250 not applied. For purposes hereof,
in order to determine the proportionate allocations of depreciation and
amortization deductions for each fiscal year or other applicable period,
such deductions shall be deemed allocated on the same basis as Net Income
and Net Loss for such respective period.
(c) Allocations Respecting Section 704(c) and Revaluations:
Curative Allocations Resulting from the Ceiling Rule. Notwithstanding
paragraph (b) hereof, Tax Items with respect to Partnership property that
is subject to Code Section 704(c) and/or Regulation Section 1.704-
1(b)(2)(iv)(f) (collectively "Section 704(c) Tax Items") shall be
allocated in accordance with said Code section and/or Regulation Section
1.704-1(b)(4)(i), as the case may be. The allocation of Tax Items shall
be subject to the ceiling rule stated in Regulation Section 1.704-1(c)
and Regulation Section 1.704-3. The General Partner will not specially
allocate Tax Items (other than the Section 704(c) Tax Items) to cure for
the effect of the ceiling rule. The Partnership shall allocate items of
income, gain, loss and deduction allocated to it by a Property
Partnership to the Partner or Partners contributing the interest or
interests in such Property Partnership, so that, to the greatest extent
possible, such contributing Partner or Partners are allocated the same
amount and character of items of income, gain, loss and deduction with
respect to such Property Partnership that they would have been allocated
had they contributed undivided interests in the assets owned by such
Property Partnership to the Partnership in lieu of contributing the
interest or interests in the Property Partnership to the Partnership.
Notwithstanding the above, with respect to property contributed to the
Partnership after the date hereof, such Section 704(c) Tax Items may be
allocated under such method selected by the General Partner that is
consistent with the Section 704(c) Regulations.
EXHIBIT D
Rights Terms
The Rights granted to the Limited Partners pursuant to
Section 11.1 hereof shall be subject to the following terms and
conditions:
1. Definitions. Capitalized terms used herein without
definition shall have the meanings ascribed thereto in the Agreement,
and, in addition, the following terms and phrases shall, for purposes of
this Exhibit D and the Agreement, have the meanings set forth below:
"Beneficially Own" shall mean the ownership of shares of Common
Stock by a Person who would be treated as an owner of such shares of
Common Stock either directly or indirectly through the application of
Sections 542 and 544 of the Code, as modified by Section 856(h)(1)(B) of
the Code, and any comparable successor provisions thereto.
"Beneficial Ownership Limit" shall mean (A) with respect to any
Person other than members of the Lebovitz Group and the Wolford Group, 6%
of the outstanding Capital Stock of the Company, (B) with respect to the
Lebovitz Group, 23% of the outstanding Capital Stock of the Company and
(C) with respect to the Wolford Group, 8% of the outstanding Capital
Stock of the Company, in each case, determined by (i) number of shares
outstanding, (ii) voting power or (iii) value (as determined by the Board
of Directors), whichever produces the smallest holding of Capital Stock
under the three methods, and computed taking into account all outstanding
shares of Capital Stock and, to the extent provided by the Code, all
shares of Capital Stock issuable under existing options and Exchange
Rights that have not been exercised or deferred stock that has not
vested.
"Constructively Own" shall mean the ownership of shares of Common
Stock by a Person who would be treated as an owner of such shares of
Common Stock either directly or indirectly through the application of
Section 318 of the Code, as modified by Section 856(d)(5) of the Code,
and any comparable successor provisions thereto.
"Constructive Ownership Limit" shall mean (A) with respect to any
Person other than members of the Lebovitz Group and the Wolford Group, 6%
of the outstanding Capital Stock of the Company, (B) with respect to the
Lebovitz Group, 23% of the outstanding Capital Stock of the Company and
(C) with respect to the Wolford Group, 8% of the outstanding Capital
Stock of the Company, in each case, determined by (i) number of shares
outstanding, (ii) voting power or (iii) value (as determined by the Board
of Directors), whichever produces the smallest holding of Capital Stock
under the three methods, and computed taking into account all outstanding
shares of Capital Stock and, to the extent provided by the Code, all
shares of Capital Stock issuable under existing options and Exchange
Rights that have not been exercised or deferred stock that has not
vested; provided, however, that members of the Lebovitz Group or the
Wolford Group shall be subject to a Constructive Ownership Limit of 9.9%
of the outstanding Capital Stock of the Company at all times that (x)
members of the Lebovitz Group or the Wolford Group Constructively Own (i)
10% or more of either the total combined voting power of all classes of
stock entitled to vote or the total number of outstanding shares of stock
of any Tenant that is treated as a corporation for federal income tax
purposes or (ii) an interest of 10% or more in the assets or net profits
of any Tenant that is not treated as a corporation for federal income tax
purposes and (y) the aggregate amount of income derived by the Company in
its immediately preceding taxable year from such Tenants whose ownership
is described in clause (x) hereof exceeded the amount derived from
Tenants on November 3, 1993, adjusted as provided herein.
"Election Notice" shall mean the written notice to be given by the
Company to the Exercising Partners in accordance with the provisions of
Paragraph 6 hereof in response to the receipt by the Company of an
Exchange Notice from such Exercising Partners, the form of which Election
Notice is attached hereto as Schedule 2.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor statute.
"Exchange Consideration" shall have the meaning set forth in
Paragraph 5 hereof.
"Exchange Notice" shall have the meaning set forth in Paragraph
2(a) hereof.
"Exchange Rights" shall have the meaning set forth in Paragraph
2(a) hereof.
"Exercising Partners" shall have the meaning set forth in Paragraph
2 hereof.
"Grandfathered Related Party Tenant" shall mean any Tenant which is
a Related Party Tenant at the time that the Agreement of which this
Exhibit is a part is entered into, as set forth on Schedule 4 hereto.
"Hart-Scott Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Independent" shall have the meaning set forth in the Amended and
Restated Certificate of Incorporation of the Company.
"Lebovitz Group" shall mean (i) Charles B. Lebovitz and (ii) any
Beneficial Owner or Constructive Owner of shares of Common Stock whose
shares of Common Stock are Beneficially Owned or Constructively Owned by
Charles B. Lebovitz or members of his family.
"Offered Units" shall mean the Common Units of the Exercising
Partners identified in an Exchange Notice which, pursuant to the exercise
of Exchange Rights, can be acquired by the Company under the terms
hereof.
"Ownership Limit" shall mean the Beneficial Ownership Limit or the
Constructive Ownership Limit, as appropriate.
"Registration Rights" shall mean the registration rights
attributable to shares of Common Stock, if any, issued to Limited
Partners in accordance with the provisions hereof, as set forth in
Schedule 3 hereto.
"Related Party Tenant" shall mean any Tenant 10% or more of either
the total combined voting power of all classes of stock entitled to vote
or the total number of outstanding shares of stock of which, in the case
of a corporate Tenant, or 10% or more of the assets or net profits of
which, in the case of a non-corporate Tenant, is Constructively Owned by
members of the Lebovitz Group or the Wolford Group.
"Securities Act" shall mean the Securities Act of 1933, as amended,
or any successor statute.
"Tenant" shall mean any Person that rents real property owned,
directly or indirectly, by the Company or the Partnership.
"Wolford Group" shall mean (i) James L. Wolford and (ii) any
Beneficial Owner or Constructive Owner of shares of Common Stock whose
shares of Common Stock are Beneficially Owned or Constructively Owned by
James L. Wolford or members of his family.
2. Delivery of Exchange Notices. Any one or more Limited
Partners ("Exercising Partners") may, subject to the limitations set
forth herein, deliver to the Company written notice (the "Exchange
Notice") pursuant to which such Exercising Partners elect to exercise
their Rights to exchange (the "Exchange Rights") all or any portion of
their Common Units for Exchange Consideration subject to the limitations
contained in Paragraphs 3 and 4 below.
3. Exercise Subject to Ownership Limit. Exchange Rights
may be exercised at any time and from time to time, to the extent that,
upon exercise of the Exchange Rights, the Exercising Partner shall not,
on a cumulative basis, Beneficially Own or Constructively Own shares of
Common Stock including shares of Common Stock to be issued in connection
with the exercise of such Exchange Rights, in excess of the applicable
Ownership Limit. If an Exchange Notice is delivered to the Company but,
as a result of the applicable Ownership Limit or as a result of
restrictions contained in the Certificate of Incorporation of the
Company, the Exchange Rights cannot be exercised in full, the Exchange
Notice shall be deemed to be modified such that the Exchange Rights shall
be exercised only to the extent permitted under the applicable Ownership
Limit under the Certificate of Incorporation of the Company, and the
Exchange Notice with respect to the remainder of such Exchange Rights
shall be deemed to have been withdrawn.
4. Limitation on Exercise of Exchange Rights. Exchange
Rights may be exercised at any time and from time to time, provided,
however that, except with the prior written consent of the General
Partner, (a) only one (1) Exchange Notice may be delivered to the Company
by any Limited Partners during any consecutive 12-month period; and (b)
no Exchange Notice may be delivered with respect to Common Units having a
value of less than $250,000 or result in the exchanging Limited Partner
owning Common Units having a value of less than $250,000 after giving
effect to the exchange, in each case calculated by multiplying the Common
Stock Amount with respect to such Common Units by the Current Per Share
Market Price.
5. Computation of Exchange Consideration/Form of Payment.
The exchange consideration ("Exchange Consideration") payable by the
Company to each Exercising Partner shall be equal to the Common Stock
Amount with respect to the Offered Units multiplied by the Current Per
Share Market Price, each computed as of the date on which the Exchange
Notice was delivered to the Company (the "Computation Date"). The
Exchange Consideration shall, in the sole and absolute discretion of the
Company, be paid in the form of (a) cash, or cashier's or certified
check, or by wire transfer of immediately available funds to the
Exercising Partner's designated account or (b) subject to the applicable
Ownership Limit, by the issuance by the Company of a number of shares of
its Common Stock equal to the Common Stock Amount with respect to the
Offered Units or (c) subject to the applicable Ownership Limit, any
combination of cash and Common Stock (valued at the Current Per Share
Market Price).
6. Closing; Delivery of Election Notice. Within thirty
(30) days after receipt by the Company of any Exchange Notice delivered
in accordance with the requirements of Paragraphs 2 and 4 hereof, the
Company shall deliver to the Exercising Partners a notice (an "Election
Notice"), which Election Notice shall set forth the computation of the
Exchange Consideration and shall specify the form of the Exchange
Consideration (which shall be in accordance with Paragraph 5 hereof) to
be paid by the Company to such Exercising Partners and the date, time and
location for completion of the purchase and sale of the Offered Units,
which date shall, to the extent required, in no event be more than (A) in
the case of Offered Units with respect to which the Company has elected
to pay the Exchange Consideration by issuance of shares of Common Stock,
the later of (i) ten (10) days after delivery by the Company of the
Election Notice for Offered Units and (ii) the expiration or termination
of the waiting period applicable to each Exercising Partner, if any,
under the Hart-Scott Act or (B) in the case of Offered Units with respect
to which the Company has elected to pay the Exchange Consideration in
cash, sixty (60) days after the initial date of receipt by the Company of
the Exchange Notice for such Offered Units; provided, however, that such
sixty (60) day period may be extended for an additional sixty (60) day
period to the extent required for the Company to cause additional shares
of its Common Stock to be issued to provide financing to be used to
acquire the Offered Units. Notwithstanding the foregoing, the Company
agrees to use its reasonable efforts to cause the closing of the exchange
hereunder to occur as quickly as possible.
7. Adjustment to Exchange Consideration. If the Company
elects to pay all or any portion of the Exchange Consideration in cash
and if, as a result thereof, the Company elects to raise such cash
through a public offering of its securities, borrowings or otherwise, the
aggregate Exchange Consideration computed under Paragraph 5 above shall
be reduced by an amount ("Transaction Expenses") equal to the expenses
incurred by the Company in connection with such raising of funds
allocable to the amounts required to pay the Exchange Consideration
hereunder; provided, however, notwithstanding the foregoing, the Exchange
Consideration shall not be reduced hereunder by an amount exceeding 5% of
the Exchange Consideration computed without regard to the adjustment for
Transaction Expenses.
8. Closing Deliveries. At the closing of the purchase and
sale of Offered Units, payment of the Exchange Consideration shall be
accompanied by proper instruments of transfer and assignment and by the
delivery of (i) representations and warranties of (A) the Exercising
Partner with respect to (x) its due authority to sell all of the right,
title and interest in and to such Offered Units to the Company, (y) the
status of the Offered Units being sold, free and clear of all Liens and
(z) its intent to acquire the Common Stock for investment purposes and
not for distribution, and (B) the Company with respect to due authority
for the purchase of such Offered Units, and (ii) to the extent that any
shares of Common Stock are issued in payment of the Exchange
Consideration or any portion thereof, (A) an opinion of counsel for the
Company, reasonably satisfactory to the Exercising Partners, to the
effect that (I) such shares of Common Stock have been duly authorized,
are validly issued, fully-paid and non-assessable and (II) issuance of
such shares will not violate the Ownership Limit, and (B) a stock
certificate or certificates evidencing the shares of Common Stock to be
issued and registered in the name of the Exercising Partner or its
designee with an appropriate legend reflecting that such shares are not
registered under the Securities Act of 1933, as amended, and may not be
offered or sold unless registered pursuant to the provisions of such act
or an exemption therefrom is available as established by an opinion of
counsel satisfactory to the Company.
9. Term of Rights. Unless sooner terminated, the rights
of the parties with respect to the Rights shall commence as of the date
hereof and lapse for all purposes and in all respects on November 3,
2043; provided, however, that the parties hereto shall continue to be
bound by an Exchange Notice delivered to the Company prior to such date.
Notwithstanding any provisions of this Exhibit to the contrary, Exchange
Rights associated with Exchange Rights held by members of the Lebovitz
Group or the Wolford Group shall terminate, to the extent necessary to
reduce the Constructive Ownership of the members of the Lebovitz Group or
the Wolford Group to 9.9% of the value of the outstanding Common Stock
(treating, for these purposes, shares of Common Stock subject to Exchange
Rights associated with Rights held by members of the Lebovitz Group or
the Wolford Group, as applicable, as outstanding), immediately if:
(a) the Constructive Ownership by the members of the
Lebovitz Group of any Grandfathered Related Party Tenant increases;
(b) there comes to be a Related Party Tenant other
than a Grandfathered Related Party Tenant;
(c) the rent from Related Party Tenants to be taken
into account for purposes of Section 856(d) of the Code in annual
amounts exceeds the amounts derived from Related Party Tenants on
the date of the Initial Public Offering or such other amount as a
majority of the Independent members of the Board of Directors of
the Company shall determine; or
(d) there is an increase (as determined on an
annualized basis at the time of any rental payment) of more than 5%
in the rental payments derived by the Company or the Partnership
from a Grandfathered Related Party Tenant with respect to any real
property owned, directly or indirectly, by the Company or the
Partnership over the rental payments made by such Grandfathered
Related Party Tenant with respect to such real property at the time
that the Agreement of which this Exhibit is a part is entered into.
10. Covenants of the Company. To facilitate the Company's
ability to fully perform its obligations hereunder, the Company covenants
and agrees as follows:
(a) At all times during the pendency of the Rights,
the Company shall reserve for issuance such number of shares of
Common Stock as may be necessary to enable the Company to issue
such shares in full payment of the Exchange Consideration in regard
to all Common Units which are from time to time outstanding.
(b) As long as the Company shall be obligated to file
periodic reports under the Exchange Act, the Company will timely
file such reports in such manner as shall enable any recipient of
Common Stock issued to Limited Partners hereunder in reliance upon
an exemption from registration under the Securities Act to continue
to be eligible to utilize Rule 144 promulgated by the SEC pursuant
to the Securities Act, or any successor rule or regulation or
statute thereunder, for the resale thereof.
(c) During the pendency of the Rights, the Limited
Partner Representatives shall receive in a timely manner all
reports filed by the Company with the SEC and all other
communications transmitted from time to time by the Company to its
shareholders generally.
(d) The Company shall not issue or sell any shares of
Common Stock or other equity securities or any instrument
convertible into any equity security for a consideration less than
the fair value of such Common Stock or other equity security, as
determined in each case by the Board of Directors of the Company,
in consultation with the Company's professional advisors, and under
no circumstances shall the Company declare any stock dividend,
stock split, stock distribution or the like, unless fair and
equitable arrangements are provided, to the extent necessary, to
fully adjust, and to avoid any dilution in, the rights of Limited
Partners under this Exhibit and the Agreement.
(e) Notwithstanding the Company's determination as to
the form in which the Exchange Consideration shall be payable, the
Company shall be required to pay the Exchange Consideration by
cashier's check or wire transfer of New York clearing house funds
to the extent that payment by issuance of Common Stock would
disqualify the Company from being characterized as a real estate
investment trust under the Code.
11. Limited Partners' Covenant. Each Limited Partner
covenants and agrees with the Company that all Offered Units tendered to
the Company in accordance with the exercise of Rights herein provided
shall be delivered to the Company free and clear of all Liens and should
any Liens exist or arise with respect to such Units, the Company shall be
under no obligation to acquire the same unless, in connection with such
acquisition, the Company has elected to pay such portion of the Exchange
Consideration in the form of cash consideration in circumstances where
such consideration will be sufficient to cause such existing Lien to be
discharged in full upon application of all or a part of such
consideration and the Company is expressly authorized to apply such
portion of the Exchange Consideration as may be necessary to satisfy any
indebtedness in full and to discharge such Lien in full. Each Limited
Partner further agrees that, in the event any state or local property
transfer tax is payable as a result of the transfer of its Offered Units
to the Company (or its designee), such Limited Partner shall assume and
pay such transfer tax.
12. Registration Rights. The Limited Partners shall have
the Registration Rights set forth in Schedule 3 hereof with respect to
shares of Common Stock acquired hereunder.
<PAGE>
EXHIBIT D
SCHEDULE 1
EXCHANGE NOTICE
To: CBL & Associates Properties, Inc.
Reference is made to that certain Second Amended and Restated
Agreement of Limited Partnership of CBL & Associates Limited Partnership
dated June __, 1998 (the "Partnership Agreement"). Capitalized terms
used but not defined herein shall have the meanings set forth in the
Partnership Agreement. Pursuant to Article XI and Paragraph 2 of Exhibit
D of the Partnership Agreement, each of the undersigned, being a limited
partner of the Partnership (an "Exercising Partner"), hereby elects to
exercise its Exchange Rights as to a portion or portions of its
Partnership Units all as specified opposite its signature below:
Dated: ___________________
Exercising Partner
Number of
Offered
Units
Exercising Partners:
_________________________
_________________________
<PAGE>
EXHIBIT D
SCHEDULE 2
ELECTION NOTICE
To: All Exercising Partners
Reference is made to that certain Second Amended and Restated
Agreement of Limited Partnership of CBL & Associates Limited Partnership
dated June __, 1998 (the "Partnership Agreement"). All capitalized terms
used but not defined herein shall have the meanings set forth in the
Partnership Agreement. Pursuant to Paragraph 6 of Exhibit D to the
Partnership Agreement, the undersigned, being the general partner of the
Partnership, hereby notifies the Exercising Partners that (a) the
Exchange Consideration for the Offered Units as to which the Exchange
Rights are being or are deemed to be exercised is $ , the
computation of which is set forth on an attachment hereto; (b) $
of the Exchange Consideration is payable in cash and the balance thereof
is payable by issuance of shares of Common Stock; and (c) the
closing of the purchase and sale of the Offered Units as to which the
Exchange Rights are being or are deemed to be exercised shall take place
at the offices of at a.m., local
time, on .
Dated: _______________________
CBL & ASSOCIATES PROPERTIES, INC.,
a Delaware corporation
By:_______________________________
Its: _________________________
<PAGE>
EXHIBIT D
SCHEDULE 3
REGISTRATION RIGHTS
<PAGE>
EXHIBIT D
SCHEDULE 4
GRANDFATHERED RELATED PARTY TENANTS
AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT ("Loan Agreement") amends and
restates in its entirety that certain Loan Agreement dated to be effective
June 12, 1998 between the parties hereto and is made to be effective as of
the 30th day of June, 1998, 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
LAKESHORE/SEBRING LIMITED PARTNERSHIP, a Florida limited partnership, whose
address is the same as the Borrower's described above ("Lakeshore"), and
FIRST TENNESSEE BANK NATIONAL ASSOCIATION, a national banking association
organized and existing under the statutes of the United States of America,
with offices at 701 Market Street, Chattanooga, Tennessee 37402 (hereinafter
referred to as the "Bank").
Recitals of Fact
Borrower has previously requested that the Bank commit to make loans
and advances to it, and to Lakeshore, for the benefit of Borrower, on a
revolving credit basis in an amount not to exceed at any one time outstanding
the aggregate principal sum of Eighty Million Dollars ($80,000,000.00) 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), letters of
credit and construction and for general corporate purposes. The Bank has
agreed to make certain portions of such loans and advances on the terms and
conditions herein set forth. KeyBank National Association, formerly Society
National Bank, Compass Bank and AmSouth Bank, all as participants in the
Loan have also agreed to make certain portions of such loan and advances on
the terms and conditions herein set forth.
This Loan Agreement is currently being amended to change The Total
Obligations to Capitalized Value covenant.
NOW, THEREFORE, incorporating the Recitals of Fact set forth above and
in consideration of the mutual agreements herein contained, the parties agree
as follows:
AGREEMENTS
SECTION 1: 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 combined Net Operating Income from the
properties described in the CBL Mortgage as of each July 1, January 1, April
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1 and October 1, as the case may be, based upon the then immediately
preceding twelve (12) month period, divided by 1.25 with the resulting figure
being further divided by the applicable mortgage constant of .1159.
"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.
"Agent" means Wells Fargo Realty Advisors Funding, Incorporated, a
Colorado corporation as agent pursuant to the Credit Agreement dated July 28,
1994 between Borrower and Agent.
"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.
"Bank's Proportionate Share" means the Bank's undivided participating
interest in the Loan which shall be equal to Twenty Two Million Five Hundred
Thousand and NO/100 Dollars ($22,500,000.00).
"Base Rate" means the base commercial rate of interest established from
time to time by Bank. The currently existing Base Rate is eight and one-half
percent (8.50%) per annum.
"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. 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" shall mean, as to any Person, any and all shares,
interests, warrants, participations or other equivalents (however designated)
of corporate stock of such Person.
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"Capitalized Value" shall mean:
(a) with respect to Non-Mall Projects, an amount, calculated as of any
date, equal to the quotient of (i) the sum of (A) Borrower's Funds From
Operations during the most recent quarter end (not including Funds from
Operations from Mall Projects), plus (minus), to the extent not already
included in this calculation, Net Operating Income (loss) from any Newly
Acquired Property (not including Mall Projects), annualized, plus (B) the
Interest Expense (not including interest expense from Mall Projects) used in
calculating Borrower's Funds From Operations pursuant to clause (A) above,
and (ii) nine and one half percent (9.5%).
(b) with respect to Mall Projects, an amount, calculated as of any
date, equal to the quotient of (i) the sum of (A) Borrower's Funds From
Operations during the most recent quarter end (from Mall Projects only), plus
(minus), to the extent not already included in this calculation, Net
Operating Income (loss) from any Newly Acquired Property (from Mall Projects
only), annualized, plus (B) the Interest Expense (from Mall Projects only)
used in calculating Borrower's Funds From Operations pursuant to clause (A)
above, and (ii) eight and one half percent (8.5%).
"CBL Holdings I" means CBL Holdings I, Inc., a Delaware corporation and
the sole general partner of Borrower.
"CBL Holdings II" means CBL Holdings II, Inc., a Delaware corporation
and a limited partner of Borrower.
"CBL Management, Inc." means CBL & Associates Management, Inc., a
Delaware corporation.
"CBL Mortgage" means the mortgages and/or deeds of trust with security
agreements and assignments of rents and leases and related amendments
executed by Borrower, Coolsprings Crossing Limited Partnership, East Towne
Crossing Limited Partnership, Valley Crossing Associates Limited Partnership,
Walnut Square Associates Limited Partnership, Lakeshore/Sebring Limited
Partnership [Including the Lakeshore Mortgage (New) and the Lakeshore
Mortgage (Old)] and/or Vicksburg Mall Associates, Ltd. and/or any other
entity related to or owned by Borrower and/or CBL & Associates Properties,
Inc. and/or CBL Holdings I, Inc. in favor of Bank covering their interest in
the properties described in EXHIBIT "A," attached hereto and made a part
hereof, 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 formerly until March 31,
1997 the sole general partner of Borrower.
"Closing Date" means the date set out in the first paragraph of this
Loan Agreement.
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"Combined" means, as to any calculation hereunder, that such
calculation shall be made on a combined basis for Borrower, CBL Holdings, 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 Holdings, on a consolidated basis for
CBL Holdings and its Subsidiaries, (c) in respect of CBL Properties, Inc.,
on a consolidated basis for CBL Properties, Inc. and its Subsidiaries, and
(d) 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.
"Credit Agreement" means the Credit Agreement dated as of July 28, 1994
and as amended by amendments dated as of May 5, 1995, July 5, 1995 and
subsequent amendments between the Borrower, Wells Fargo Realty Advisors
Funding, Incorporated and others.
"Debt Coverage Ratio" shall mean, 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 (x) in respect of any period
following the Termination Date, the scheduled principal payments of the Term
Out Amount made after the Termination Date, the scheduled principal payments
of the Term Out Amount made after the Termination Date and (y) 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
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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.
"Effective Date," which definition is used and only applies within
Section 7.9 hereof, means the date the Credit Agreement between the Borrower
and Wells Fargo Realty Advisors Funding Incorporated became effective in
accordance with Section 4.1 thereof.
"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 (loss) from operations of Borrower, CBL Properties, Inc. and their
respective Subsidiaries for such period, plus (b) depreciation and
amortization, plus (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, plus (minus) (d) to the extent not included in clause (a) above,
Net Operating Income (loss) from any Newly Acquired Property acquired by
Borrower, CBL Properties, Inc. and their respective Subsidiaries during such
period, calculated based upon the immediately preceding twelve (12) months
period for such Newly Acquired Property, evidenced by the supporting
financial information to be furnished by Borrower pursuant to Section 6.5(d)
hereof, 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" shall mean 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
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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" shall mean and include 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" shall mean, 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 of 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
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Reserved Construction Loan 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.
"Lakeshore Note" means the promissory note from Lakeshore in the
original principal sum of $ 34,600,000.00 payable to the order of Agent,
later assigned by Agent to Shopping Center Finance Corp., and later assigned
by Shopping Center Finance Corp. to the Bank, such Promissory Note being now
for the principal sum of $20,400,000.00, as amended, renewed, or replaced
from time to time, but it does not include the Renewal of Promissory Note
dated December 6, 1994 to be effective April 1, 1994.
"Lakeshore Mortgage" means the Florida Mortgage from Lakeshore/Sebring
Limited Partnership in favor of Agent later assigned by Agent to Shopping
Center Finance Corp. and subsequently assigned to the Bank, as amended from
time to time.
"LIBOR Rate" means the London Interbank Offered Rates as established
from time to time and published in The Wall Street Journal, Money Rates
Section which, unless otherwise specified herein or in the Note, is a one (1)
month LIBOR Rate.
"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 Property.
"Loan" means the Revolving Credit Loan from the Bank to the Borrower,
including the Lakeshore Note which was purchased by the Bank.
"Loan Agreement" means this Loan Agreement between the Borrower,
Lakeshore and the Bank, and any modifications, amendments, or replacements
thereof, in whole or in part.
"Mall Projects" means the real estate and improvement owned by the
Borrower and/or it Affiliates that is in the form of an enclosed regional
retail shopping mallthat includes two (2) or more anchor stores.
"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.
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"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 real estate or an interest in real estate granting a Lien on such real
estate or interest in real estate as security for the payment of
indebtedness.
"Newly Acquired Property" means Property acquired by Borrower, CBL
Properties, Inc. and/or their respective Subsidiaries during any fiscal
quarter for which compliance with financial covenants is being tested.
"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.
"Non-Mall Projects" means the real estate and improvement owned by the
Borrower and/or it Affiliates that is in the form of a retail shopping center
that is not a Mall Project.
"Note" means the Revolving Credit Note or Notes executed by the
Borrower to the Bank in the original principal sums of Ten Million Six
Hundred Thousand Dollars ($10,600,000.00) (the "$10,600,000.00 Note") and
Forty Nine Million Dollars ($49,000,000.00), and the Lakeshore Note, as such
note or notes 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.
"Participant" means KeyBank National Association, Compass Bank, AmSouth
Bank, their successors and assigns, and any other participants in the Loan.
"Participant's Proportionate Share (AmSouth)" means AmSouth Bank's (or
any successor to such bank's interest in the Loan) undivided participating
interest in the Loan which shall be equal to Twenty Two Million Five Hundred
Thousand and NO/100 Dollars ($22,500,000.00).
"Participant's Proportionate Share (KeyBank)" means KeyBank's (or any
successor to such bank's interest in the Loan) undivided participating
interest in the Loan which shall be equal to Twenty Two Million Five Hundred
Thousand and NO/100 Dollars ($22,500,000.00).
"Participant's Proportionate Share (Compass)" means Compass Bank's, (or
any successor to such bank's interest in the Loan) undivided participating
interest in the Loan which shall be equal to Twelve Million Five Hundred
Thousand Dollars ($12,500,000.00).
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"Participants' Proportionate Share" means Participant's Proportionate
Share (KeyBank), Participant's Proportionate Share (Compass), and
Participant's Proportionate Share (AmSouth).
"Participation Agreement" means that certain Participation Agreement
entered into of even date herewith among Bank, KeyBank National Association,
Compass Bank, AmSouth Bank and/or any other participants in the Loan, as
amended from time to time.
"Permitted Encumbrances" shall mean and include:
(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 Wholly Owned Subsidiary of Borrower, a Subpartnership or, to the extent
approved by the Supermajority Lenders, any other Person and "Project" shall
mean any one of the Projects. The capitalized terms used in this definition
shall have the same meaning as provided in the Credit Agreement.
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"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, tangible or intangible.
"Reserved Construction Loan" shall mean 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 Agent in its
reasonable judgment, will be sufficient, as reasonably determined by the
Agent 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 by the Bank under the terms of this Loan Agreement to
the Borrower during the term of the Revolving Credit Loan pursuant to
Section 3.1.
"Revolving Credit Loan" means the aggregate of the Borrower's and
Lakeshore's indebtedness to the Bank pursuant to Section 2 of this Loan
Agreement.
"Revolving Credit Note" means the Notes as described in Section 2.3
hereof and the Lakeshore Note.
"Subsidiary" shall mean, 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.
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"Termination Date of Revolving Credit Loan" shall mean the earlier of
(a) June 1, 2000, 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.
"Term Out Amount" means the then outstanding principal balance of the
Loan due and owing the Bank under the Note, if the Bank elects not to extend
the existing Maturity Date and the Borrower elects to cap the line of credit
as provided in the Note.
"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" shall mean, 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.
SECTION 2: 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 loan advances and letter of credit
advances to the Borrower from time to time, from the Closing Date until the
Termination Date of Revolving Credit Loan, in an aggregate principal amount
not to exceed, at any one time outstanding, the lesser of (a) Eighty Million
Dollars ($80,000,000.00) minus the sum, if any, applicable under the
provisions of Section 2.8 hereof; or (b) the Borrower's Borrowing Base, as
defined in Section 1.
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2.2 FUNDING THE LOAN. Each loan 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 advances hereunder, whether under the
Note or the Lakeshore Note, shall be made by depositing the same to the
checking account of Borrower at the Bank or other methods acceptable to
Borrower and Bank. LAKESHORE ACKNOWLEDGES AND AGREES THAT NO ADVANCES SHALL
BE MADE DIRECTLY TO LAKESHORE EXCEPT UPON THE EXPRESS WRITTEN CONSENT OF THE
BORROWER RECEIVED BY THE BANK PRIOR TO THE ADVANCE BEING MADE.
2.3 THE NOTE AND INTEREST. The Revolving Credit Loan shall be
evidenced by two (2) promissory notes of the Borrower and one (1) promissory
note of Lakeshore, each payable to the order of the Bank in the aggregate
principal amount of Eighty Million Dollars ($80,000,000.00), in form
substantially the same as the copy of the Revolving Credit Note and the
Lakeshore Note attached hereto as EXHIBIT "C." The entire principal amount
of the Loan shall be due and payable on the Termination Date of Revolving
Credit Loan. The unpaid principal balances of the Revolving Credit Loan
shall bear interest from the Closing Date on disbursed and unpaid principal
balances (calculated on the basis of a year of 365 or 366 days as is
appropriate) at a rate per annum as specified in the Note. Said interest
shall be payable monthly on the first day of each month after the Closing
Date, commencing July 1, 1998 provided the Bank has in each instance mailed
to the Borrower a billing notice at least ten (10) days prior thereto setting
forth the payment amount next due, with the final installment of interest,
together with the entire outstanding principal balance of the Revolving
Credit Loan, being due and payable on the Termination Date of Revolving
Credit Loan. The first selection of the one (1) month, three (3) months, six
(6) months or one (1) year LIBOR Rate shall be made by the Borrower and
Lakeshore (but the rate selected by Lakeshore must always be the same as the
rate selected 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. Neither the Borrower
nor Lakeshore may ever select a rate period which exceeds the Termination
Date of the Revolving Credit Loan.
2.4 COMMITMENT FEE/SERVICING FEE. On the Closing Date, the Borrower
agrees to pay to the Bank [in addition to the commitment fee it paid in: (a)
March of 1994 in the amount of Seventy-Five Thousand Dollars ($75,000.00);
(b) November of 1994 in the amount of Fifty Thousand Dollars ($50,000.00);
(c) July of 1995 in the amount of No Dollars ($-0-); (d) March of 1996 in the
amount of Eighty Five Thousand and NO/100 Dollars ($85,000.00), and (e)
February of 1997 in the amount of One Hundred Ninety Thousand and no/100
Dollars ($190,000.00)], an extension/commitment fee, of One Hundred Thousand
and no/100 Dollars ($100,000.00) for the extension of the maturity dates of
the Loans, the previous commitment fees having been paid in consideration of
the Bank's agreement to make additional funds available to Borrower under the
terms and provisions hereof from the Closing Date until the initial
Termination Date of Revolving Credit Loan specified in Section 1 hereof. In
addition to the commitment fee, on each November 2 hereafter, the Borrower
shall pay to the Bank a servicing fee in the amount of Twenty Four Thousand
and NO/100 Dollars ($24,000.00) for the Bank's services in connection with
administering the Loan participation with Participant. The servicing fee
shall belong solely to the Bank and the Participant shall have no interest
therein. Borrower agrees that the commitment fees and servicing fee are fair
and reasonable considering the condition of the money market, the
creditworthiness of Borrower, the interest rate to be paid, and the nature
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of the security for the Loan. In the event that Borrower and Bank shall
hereafter mutually agree to extend the term of the Bank's commitment
hereunder, they may also agree at that time as to an additional commitment
fee, if any, to be paid for such further commitment by the Bank, but not to
exceed the maximum permitted by applicable law.
2.5 BORROWINGS UNDER, 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 including Section 2.8 hereof, without
penalty, borrow, repay and reborrow amounts under the Revolving Credit Note
and the Lakeshore Note, first from the Ten Million Six Hundred Thousand
Dollars ($10,600,000.00) Note, then from the Forty Nine Million Dollars
($49,000,000.00) Note, then from the Lakeshore Note and principal payments
received shall be applied by the Bank to the Revolving Credit Note and the
Lakeshore Note in such order and amounts as the Bank deems appropriate in its
sole discretion. Neither the Borrower nor Lakeshore shall be permitted to
borrow, repay and reborrow up to the principal amounts of the Lakeshore Note
unless documentary stamps tax and intangibles tax, required by law to be
paid, has been paid on the amounts readvanced and unless the Bank has a first
in priority mortgage on the Florida property owned by Lakeshore securing the
Lakeshore Note.
By notice to the Bank in writing, Borrower shall be entitled to
terminate the Bank's commitment to make further advances on the Revolving
Credit Loan; and 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 all of Borrower's Property securing the Revolving Credit Loan.
2.6 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.
2.7 SECONDARY FINANCING BY CBL PROPERTIES, INC. CBL Properties, Inc.
was formerly the general partner of the Borrower. It is also a real estate
investment trust. In the event CBL Properties, Inc. does any secondary
offering of its securities, it will apply no less than 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.
2.8 CAP ON LOAN. Notwithstanding anything contained in this Loan
Agreement to the contrary, if at any time the Bank does not have a first-in-
priority lien on the Florida property (Lakeshore Mall) pursuant to the
Lakeshore Mortgage up to the sum of Thirty One Million Dollars
($31,000,000.00) the Loan shall be capped at Forty Nine Million Dollars
($49,000,000.00).
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SECTION 3: REQUIRED PAYMENTS, PLACE OF PAYMENT, ETC.
3.1 REQUIRED REPAYMENTS. In the event that the outstanding aggregate
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 advances under the Loan,
the additional collateral shall include collateral, deemed sufficient in the
Bank's discretion, to secure the Eighty Million Dollars ($80,000,000.00)
credit line limitation, thereafter permitting Borrower to obtain additional
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 advances
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 indebtednesses evidenced by the Note shall
fall due on a Saturday, Sunday or public holiday under the laws of the State
of Tennessee, such payment shall be made on the next succeeding business day.
SECTION 4: CONDITIONS OF LENDING
4.1 CONDITIONS PRECEDENT TO CLOSING AND FUNDING INITIAL ADVANCE. The
obligation of the Bank to fund the initial Revolving Credit Loan 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, which Bank acknowledges it has previously received.
(c) The Lakeshore Note, which Bank acknowledges it has previously
received.
(d) The CBL Mortgage, the Lakeshore Mortgage together with a title
commitment from a title insurance company acceptable to the Bank, providing
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for the issuance of a mortgagee's loan policy insuring the lien of the CBL
Mortgage 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; provided, however, with respect to the
Florida (Lakeshore Mall) and Mississippi (Pemberton Mall) properties being
added as collateral for the Loan, the Bank, in its sole discretion may
require only a title report and may not require the issuance of a mortgagee's
loan policy. The Bank acknowledges it has received all of the foregoing
items except the Lakeshore Mortgage amendment to include portions of the
Lakeshore Mall parking lot previously omitted from the Florida Mortgage and
the related title policy endorsement.
(e) Current financial statements of the Borrower in form satisfactory
to the Bank to be held by the Bank in strict confidence.
(f) 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, which the Bank acknowledges it has
previously received.
(g) 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.
(h) The opinion of counsel for Borrower and the Borrower's general
partner, 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.
(i) 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, all of which the Bank acknowledges it has previously received.
(j) Environmental audits of the properties described in the CBL
Mortgage, which the Bank acknowledges it has previously received.
(k) Current surveys of the property subject to the CBL Mortgage,
indicating the location of all building lines, easements (visible, reflected
in the public records or otherwise) and any existing improvements or
encroachments, which survey shall contain no set of facts objectionable to
the Bank and shall be accompanied by the Bank's usual survey certificate, all
of which the Bank has previously received.
(l) Copies of the appraisals of the real estate described in
EXHIBIT "A" attached hereto, all of which the Bank has previously received.
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(m) The Guaranty Agreements of the Borrower guarantying the Lakeshore
Note and of CBL Properties, Inc. guarantying the Loan, all of which the Bank
has previously received.
(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 LOAN 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 advance.
(b) The Borrower and Lakeshore 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 indebtednesses. Each of the Warranties and Representations of the
Borrower and Lakeshore, as set out in Section 5 hereof shall remain true and
correct in all material respects as of the date of such Loan 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.
(d) The Borrower shall have furnished to the Bank an updated and
current title report with respect to the property or properties covered by
any CBL Mortgage held by the Bank. If any lien shall have been placed on the
property subsequent to the date of this Agreement or the applicable CBL
Mortgage, other than liens in favor of the Bank, no additional advances shall
be made.
SECTION 5: REPRESENTATIONS AND WARRANTIES
Borrower and Lakeshore represent and warrant that:
5.1 PARTNERSHIP STATUS. The Borrower 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. Lakeshore is a limited partnership duly
organized, validly existing and in good standing under the laws of the State
of Florida; it has the authority to own its properties and assets and is duly
qualified to carry on its business in every jurisdiction wherein such
qualification is necessary. Lakeshore is a wholly owned subsidiary of the
Borrower.
5.2 POWER AND AUTHORITY. The execution, delivery and performance of
the Loan Agreement, the Note, the CBL Mortgage and the other loan and
collateral documents executed pursuant thereto by the Borrower and/or
Lakeshore have been duly authorized by all requisite action and, to the best
of Borrower's and Lakeshore's knowledge, will not violate any provision of
law, any order of any court or other agency of government, the limited
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partnership agreement of the Borrower or Lakeshore, any provision of any
indenture, agreement or other instrument to which Borrower and/or Lakeshore
is a party, or by which Borrower's and/or Lakeshore'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 and/or Lakeshore, except for
liens and other encumbrances provided for and securing the indebtedness
covered by this Loan Agreement.
5.3 FINANCIAL CONDITION. (a) (i) The audited balance sheet of
Borrower and Lakeshore for the fiscal year ended as of December 31, 1997, and
the related statement of income and changes in financial conditions for the
year then ended, and (ii) the unaudited interim balance sheet of Borrower and
Lakeshore for March 30, 1998 and the related statement of income and changes
in financial conditions for the period 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 and Lakeshore 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 Generally Accepted Accounting Principles 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 and/or Lakeshore
since March 30, 1998.
(c) (i) The audited balance sheet of CBL Properties, Inc. for the
fiscal year ended as December 31, 1997, the unaudited balance sheet of CBL
Properties, Inc. for the period ended March 30, 1998, and the related
statement of income and changes in financial conditions for the year ended
1997 and the period ended March 30, 1998, 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 Generally Accepted
Accounting Principles 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 March 30, 1998.
(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.
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5.4 TITLE TO ASSETS. Borrower and Lakeshore have 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 properties described in the CBL Mortgages 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 and Lakeshore threatened
against or affecting Borrower and/or Lakeshore, or any properties or rights
of Borrower and/or Lakeshore, which, if adversely determined, would
materially adversely affect the financial or any other condition of Borrower
and/or Lakeshore except as set forth in EXHIBIT "F" attached hereto.
5.6 TAXES. Borrower and Lakeshore have 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. In Borrower's and Lakeshore's opinions,
Borrower and Lakeshore are 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 and/or Lakeshore. 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 and Lakeshore possess 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 and Lakeshore'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 property owned by Borrower and/or Lakeshore which is encumbered by the
CBL Mortgage and no above or underground storage tanks exist unlawfully on
such property. 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,
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would materially adversely affect the business, operations or the financial
condition of Borrower and/or Lakeshore except as set forth in EXHIBIT "F"
attached hereto.
5.12 OWNERSHIP OF BORROWER. As of the date hereof, CBL Holdings I
owns an approximate 2.8% general partner interest in the Borrower and CBL
Holdings II owns a 69% limited partner interest in the Borrower. As of the
date hereof, CBL Properties, Inc. does not own a direct interest in Borrower;
however, it owns 100% of the stock of CBL Holdings I and CBL Holdings II.
As of the date hereof, CBL & Associates, Inc. and its affiliates, officers
and key employees own an approximate 28% limited partner interest in the
Borrower. As of the date hereof, CBL Management, Inc. owns no interest in
the Borrower. The Borrower has no other general partners. As of the date
hereof the Borrower and its Affiliates own 100% of the partnership interests
in Lakeshore.
5.13 OUTSTANDING BALANCE ON LAKESHORE NOTE. As of the date hereof, the
outstanding unpaid principal balance of the Lakeshore Note is $18,000,000.00
and the undisbursed amount of the Lakeshore Note is $2,400,000.00 and no
defenses or offsets exist against the holder of the Lakeshore Note or
otherwise.
SECTION 6: AFFIRMATIVE COVENANTS OF BORROWER AND LAKESHORE
Borrower and Lakeshore covenant and agree that from the date hereof and
until payment in full of the principal of and interest on indebtednesses
evidenced by the Note and the Lakeshore Note, unless the Bank shall otherwise
consent in writing, such consent to be at the discretion of the Bank,
Borrower and Lakeshore 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 of the Property which serves
as collateral for the Loan, 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;
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(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 and Lakeshore'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 Mortgage; and
(iv) Such other insurance as the Bank may, from time to time,
reasonably require by notice in writing to the Borrower and/or to
Lakeshore.
(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 and/or
Lakeshore. The Borrower and Lakeshore 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 indebtednesses,
liabilities, and obligations of the Borrower to the Bank (whether matured or
unmatured) or, at Bank's option, released to the Borrower or Lakeshore, as
the case might be.
6.4 OBLIGATIONS, TAXES AND LIENS. Pay all of its indebtednesses 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. In addition, Borrower and
Lakeshore shall immediately pay, upon the request of the Bank, all mortgage
and/or intangible taxes and/or penalties payable to government officials with
respect to any CBL Mortgage and/or the Note or, if Bank has elected to pay
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same, Borrower shall immediately reimburse Bank therefor upon the request of
the Bank; provided, however Borrower shall not be required to pay or
reimburse so long as Borrower is contesting the tax and/or penalties in good
faith and through continuous and appropriate proceedings.
6.5 FINANCIAL REPORTS AND OTHER DATA. Furnish to the Bank as soon as
available: (a) and in any event within ninety (90) days after the end of each
fiscal year of Borrower and Lakeshore, respectively, an unqualified audit as
of the close of such fiscal year of Borrower and Lakeshore, including a
balance sheet and statement of income and surplus of Borrower and Lakeshore
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, (b) 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, (c) within thirty (30) days after the end of
each fiscal quarter, rent rolls and operating statements related to the
properties described in the CBL Mortgage; and, (d) simultaneously with the
inclusion of Net Operating Income (loss) from Newly Acquired Property in any
financial calculation provided for in this Loan Agreement, a current rent
roll and a current income and expense statement, similar to those described
above, not audited but certified by the Chief Financial Officer or Controller
of Borrower and CBL Properties, Inc., as the case may be, such rent roll and
statement of income and expense to be for the twelve (12) month period used
in any such calculation and/or to also be for the period from the beginning
of said year to the end of such quarter, as the case may be.
6.6 ADDITIONAL INFORMATION. Furnish such other information regarding
the operations, business affairs and financial condition of the Borrower
and/or Lakeshore as Bank may reasonably request, including but not limited
to written confirmation of requests for loan 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
and Lakeshore shall not be required to divulge the terms of other financing
arrangements with other lending institutions if and to the extent Borrower
and/or Lakeshore is prohibited by contractual agreement with such lending
institutions from disclosing such information with the exception that
Borrower and Lakeshore 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 and
Lakeshore shall not enter into any such contractual arrangement whereby the
Borrower or Lakeshore is prohibited from disclosing such financial
arrangements, without providing Bank with written notice of the nature of
such prohibitions. In addition, Borrower and Lakeshore shall not enter into
any such arrangement while any Event of Default hereunder exists beyond any
applicable cure periods.
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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 Lakeshore 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 and/or Lakeshore'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 at all times all of Borrower's and
Lakeshore's property described in the CBL Mortgage 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
and/or Lakeshore's first knowledge or notice, immediately notify the Bank of
any information that may adversely affect in any material manner the
properties of the Borrower and/pr Lakeshore which are subject to the CBL
Mortgage.
6.10 MINIMUM NET WORTH. Borrower shall not permit Net Worth at any
time to be less than an amount equal to $410,000,000.00 plus ninety percent
(90%) 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.
6.11 TOTAL OBLIGATIONS TO CAPITALIZED VALUE. Maintain at all times
(except as herein permitted) beginning on the Closing Date, a ratio of Total
Obligations to Capitalized Value of not more than .60 to .65; provided
however, as of the end of the Borrower's second (2nd) and fourth (4th) fiscal
quarters, the Bank, in its sole discretion and consistent with trends in the
real estate market, may adjust the Capitalized Value cap rates of nine and
one half percent (9.5%) for Non- Mall Projects and eight and one half
percent (8.5%) for Mall Projects. If the cap rate is adjusted by the Bank,
the Borrower shall not be deemed out of compliance with any covenants
affected by the adjustment until the end of the quarter following the
effective date of the adjustment.
6.12 APPRAISALS. Deliver to the Bank upon the Bank's request but, for
each property, no more frequently than once per every eighteen (18) month
period, reappraisals of the property or properties described in the CBL
Mortgage.
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6.13 INTEREST COVERAGE RATIO. Borrower shall not permit, as of the
last day of any fiscal quarter, the Interest Coverage Ratio to be less than
2.00 to 1.00.
6.14 DEBT COVERAGE RATIO. Borrower shall 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.
6.15 AGREEMENTS REGARDING LAKESHORE NOTE AND LAKESHORE MORTGAGE. So
long as no Event of Default then exists or with notice or lapse of time would
exist, upon the request of the Borrower, but in the Bank's discretion, the
Bank shall sell to the Borrower and/or the Borrower's designated subsidiary,
the Lakeshore Note and/or the Lakeshore Mortgage for the balance due under
the Lakeshore Note (the "Lakeshore Principal Balance") plus accrued interest.
SECTION 7: NEGATIVE COVENANTS OF BORROWER AND LAKESHORE
Borrower and Lakeshore covenant and agree 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, Borrower and Lakeshore 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 properties described in the
CBL Mortgage, (except with respect to the Borrower only) 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
property or properties described in the CBL Mortgage.
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 properties subject to the CBL Mortgage except:
(a) Liens in favor of the Bank securing payment of the Note and/or the
Lakeshore Note;
(b) Existing liens securing indebtednesses permitted under Section 7.1
above;
(c) Permitted Encumbrances (as defined at Section 1); and
(d) 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 and Lakeshore 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
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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 and/or
Lakeshore, 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 and/or
Lakeshore; or without the consent of Bank, pay any fee or other compensation
of any nature to or for the benefit of CBL & Associates, Inc., CBL Holdings,
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 Holdings. 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 Properties 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 $175,000,000.00
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 $175,000,000.00 (including base rate,
applicable margin and reserve and similar costs) from increasing above the
rate set forth below with respect to such indebtedness:
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Principal Amount in
Excess of $175,000,000.00 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 Lakeshore 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 LIMITATIONS ON ACTIONS AGAINST BANK AND PARTICIPANTS. Take any
action against:
(a) Bank, if any Participant fails or refuses to fund for the account
of Borrower and/or Lakeshore or to Bank for the benefit of Borrower and/or
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Lakeshore, such Participant's respective Proportionate Share and such failure
or refusal has not been caused by Bank's breach of this Loan Agreement; or
(b) any Participant, if Bank fails or refuses to fund for the account
of Borrower and/or Lakeshore any Participant's Proportionate Share, to the
extent such Participant's Proportionate Share has been received by Bank; or
(c) any Participant, if Bank fails or refuses to fund for the account
of Borrower and/or Lakeshore Bank's Proportionate Share and such failure has
not been caused by such Participant's breach of this Loan Agreement or the
Participation Agreement. Borrower's and Lakeshore's cause of action under
this Loan Agreement, if any, for failure to fund being directly against the
lender which fails or refuses to fund, and then only if such failure or
refusal to fund would constitute a breach of this Loan Agreement.
7.9 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 and/or 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 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
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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 Agent, 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
Agent 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 Sections 6.8, 6.11, 6.12,
6.13, 6.14, 6.15, 6.17 or 6.18 of the loan documents which exist between
Borrower and Agent.
SECTION 8: 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 and/or
Lakeshore defaults in the payment as and when due of principal or interest
on any Note or the Lakeshore 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 and/or Lakeshore thereof; or the Borrower
and/or Lakeshore defaults in the payment when due of any other recourse
indebtednesses, 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 and/or Lakeshore
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/or Lakeshore; 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 and/or
Lakeshore, the Borrower and Lakeshore 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 and/or Lakeshore in good
faith through appropriate proceedings acceptable to Bank; or
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8.3 PERFORMANCE OF OBLIGATIONS TO BANK. The Borrower and/or
Lakeshore 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 and/or Lakeshore,
or, if such default is incapable of cure within such thirty (30) day period,
Borrower and/or Lakeshore fails to diligently, continuously and in good faith
pursue such cure to completion; or the Borrower and/or Lakeshore 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 and/or Lakeshore, as the case may be,
or, if such default is incapable of cure within such thirty (30) day period,
Borrower and/or Lakeshore 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 Lender 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 and/or Lakeshore 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 and/or Lakeshore 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 or Lakeshore or 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 or Lakeshore or CBL Holdings or CBL
Properties, Inc., in which an order for relief is entered against Borrower
or CBL Properties, Inc. or which remains undismissed for a period of ninety
(90) days or more; or Borrower or Lakeshore or 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 or
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Lakeshore or 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 or Lakeshore or 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) Jay
Wiston, or (d) 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,
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 Holdings' and CBL Properties,
Inc.'s partnership interest in Borrower equal to their proportionate
shareholding in CBL Holdings and 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
and/or Lakeshore shall deny it has any or further liability under this Loan
Agreement or the Note, respectively; or
8.11 COVENANTS. The Borrower or Lakeshore or any grantor under any
CBL Mortgage defaults in the performance or observance of any covenant,
agreement or undertaking on its part to be performed or observed, contained
herein, in the Security Agreement, CBL Mortgage 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 and/or Lakeshore
and/or such grantor under any CBL Mortgage thereof; or
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8.12 BREACH OF SECTION 7.8 OF THIS LOAN AGREEMENT. The Borrower
and/or Lakeshore shall fail to observe or perform its obligations to the
Bank, and/or any Participant under Section 7.8 of this Loan Agreement;
8.13 PLACEMENT OF LIENS ON PROPERTY. The Borrower or any other
grantor of a CBL Mortgage shall, without the prior written consent of the
Bank, create, place or permit to be created or placed, or through any act or
failure to act, acquiesce in the placing of, or allow to remain, any
mortgage, deed of trust, pledge, lien (statutory, constitutional or
contractual), or security interest, encumbrance or charge on, or conditional
sale or other title retention agreement, regardless of whether same are
expressly subordinate to the liens of the CBL Mortgage, with respect to the
property described in the Lakeshore Mortgage or any other CBL Mortgage.
8.14 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 record the Lakeshore Mortgage (New); and the
Bank may, at its option, thereupon declare the entire unpaid principal
balances of the Note of Borrower and the Lakeshore Note, 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 Mortgage, any other
instrument or document which secures the Note and/or the Lakeshore 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.
SECTION 9: MISCELLANEOUS
9.1 AMENDMENTS. The provisions of this Loan Agreement, the Note or
the Lakeshore Note or any instrument or document executed pursuant hereto or
securing the indebtednesses 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 and/or Lakeshore, to it
at c/o CBL & Associates Properties, Inc., One Park Place, 6148 Lee Highway,
Chattanooga, Tennessee 37421, Attention: President; if to the Bank, to it
at 701 Market Street, Chattanooga, Tennessee 37402, Attention: Gregory L.
Cullum; 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.
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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 and Lakeshore agree 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 GOVERNING LAW. This Loan Agreement shall be governed and
construed in accordance with the laws of the State of Tennessee; except
(a) that the provisions hereof which relate to the payment of interest shall
be governed by (i) the laws of the United States or, (ii) the laws of the
State of Tennessee, whichever permits the Bank to charge the higher rate, as
more particularly set out in the Note, and (b) to the extent that the Liens
in favor of the Bank, the perfection thereof, and the rights and remedies of
the Bank with respect thereto, shall, under mandatory provisions of law, be
governed by the laws of a state other than Tennessee.
9.7 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.
9.8 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.
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9.9 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.
9.10 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/or Lakeshore 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 and/or Lakeshore,
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 and/or Lakeshore that is in
conflict with the provisions of this paragraph.
The Note and the Lakeshore Note shall be governed and construed
according to the statutes and laws of the State of Tennessee from time to
time in effect, except to the extent that Section 85 of Title 12 of the
United States Code (or other applicable federal statue) may permit the
charging of a higher rate of interest than applicable state law, in which
event such applicable federal statute, as amended and supplemented from time
to time shall govern and control the maximum rate of interest permitted to
be charged hereunder; it being intended that, as to the maximum rate of
interest which may be charged, received, and collected hereunder, those
applicable statutes and laws, whether state or federal, from time to time in
effect, which permit the charging of a higher rate of interest, shall govern
and control; provided, always, however, that in no event and under no
circumstances shall the Borrower and/or Lakeshore be liable for the payment
of interest in excess of the maximum rate permitted by such applicable law,
from time to time in effect.
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9.11 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 and/or Lakeshore or has power over the daily
management functions and operating decisions made by the Borrower and/or
Lakeshore.
9.12 LOAN REVIEW; EXTENSIONS OF TERMINATION DATE; CONTINUING SECURITY.
(a) The specific Termination Date of Revolving Credit Loan mentioned in
Article One may be extended for additional periods of one (1) year. On each
June 1 hereafter, so long as the Loan remains unpaid, Bank shall review the
performance of the Loan. If the Bank deems performance of the Loan
acceptable, it will renew the Loan for one (1) year from the then existing
Termination Date of Revolving Credit Loan. If Bank deems performance of the
Loan not acceptable, Bank shall not be obligated to extend the Termination
Date of Revolving Credit Loan; however, the Borrower shall then have the
right to repay the Loan pursuant to the repayment provisions contained in the
Note. Assessment of performance and the decision whether to extend the
Termination Date of Revolving Credit Loan shall be solely within Bank's
discretion. The Bank will not deem the performance of the Loan acceptable
unless and until the Borrower provides to the Bank, among other things,
updated title commitments with respect to all properties covered by any CBL
Mortgage, which title commitments must be in form and substance acceptable
to the Bank and must contain no exceptions unacceptable to the Bank. Bank
shall notify Borrower of the results of its review of the Loan no later than
eleven (11) months prior to the then effective Termination Date of the
Revolving Credit Loan. If Bank elects not to renew the Loan, Bank shall not
perform or cause to be performed, except at Bank's expense, any inspections,
appraisals, surveys or similar items between: (a) the date notice thereof
is given Borrower or the Termination Date, whichever first occurs, and (b)
the date the Note is repaid as provided herein.
(b) Upon the specific Termination Date of Revolving Credit Loan so
fixed in Article One, or in the event of the extension of this Agreement to
a subsequent Termination Date (when no effective extension is in force), the
Revolving Credit Loan and all other extensions of credit (unless sooner
declared to be due and payable by the Bank pursuant to the provisions
hereof), and subject to Borrower's election as set forth in subparagraph (a)
above, shall become due and payable for all purposes. Until all such
indebtednesses, liabilities and obligations secured by the CBL Mortgage are
satisfied in full, such termination shall not affect the security interest
granted to Bank pursuant to the CBL Mortgage, nor the duties, covenants, and
obligations of the Borrower therein and in this Agreement; 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.
9.13 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,
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<PAGE>
(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 indebtednesses.
9.14 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.
9.15 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 and/or Lakeshore, 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/or Lakeshore
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.
9.16 JOINDER OF CBL PROPERTIES, INC. CBL Properties, Inc. joins
herein for the purpose of acknowledging and consenting to the terms and
provisions of Section 2.7 hereof.
9.17 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.
9.18 VENUE OF ACTIONS. As an integral part of the consideration for
the making of the loan, it is expressly understood and agreed that no suit
or action shall be commenced by the Borrower, Lakeshore, CBL Holdings, CBL
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<PAGE>
Properties, Inc., by any guarantor, or by any successor, personal
representative or assignee of any of them, with respect to the loan
contemplated hereby, or with respect to this Loan Agreement or any other
document or instrument which now or hereafter evidences or secures all or any
part of the loan indebtedness, other than in a state court of competent
jurisdiction in and for the County of the State in which the principal place
of business of the Bank is situated, or in the United States District Court
for the District in which the principal place of business of the Bank is
situated, and not elsewhere. Nothing in this paragraph contained shall
prohibit Bank from instituting suit in any court of competent jurisdiction
for the enforcement of its rights hereunder or in any other document or
instrument which evidences or secures the loan indebtedness.
9.19 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION (a) ARISING UNDER THIS AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING; AND EACH PARTY HEREBY AGREES
AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
9.20 CONFLICT. In the event of any conflict between the provisions
hereof and any other loan document during the continuance of this Agreement
(including but not limited to the Construction Loan Agreement and any other
documents received by the Bank via assignment in connection with the
Lakeshore Mall), the provisions of this Agreement shall control.
9.21 PARTICIPATION AGREEMENT. The Borrower and Lakeshore acknowledge
that the Participation Agreement exists and that the Bank is obligated,
subject to the terms and conditions hereof, to fund Eighty Million Dollars
($80,000,000.00) to the Borrower but that of that amount KeyBank National
Association, formerly Society National Bank and AmSouth Bank are obligated,
subject to the terms and conditions of the Participation Agreement, to fund
Twenty Two Million Five Hundred Thousand Dollars ($22,500,000.00) each to the
Bank and Compass Bank is obligated, subject to the terms and conditions of
the Participation Agreement, to fund Twelve Million Five Hundred Thousand and
NO/100 Dollars ($12,500,000.00) to the Bank.
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<PAGE>
IN WITNESS WHEREOF, the Borrower, Lakeshore, the Bank, CBL Holdings and
CBL Properties, Inc. have caused this Agreement to be executed by their duly
authorized officers and/or partner, all as of the day and year first above
written.
CBL & ASSOCIATES LIMITED PARTNERSHIP
BY: CBL HOLDINGS I, INC.,
Its Sole General Partner
By:_____John N. Foy______________________
Title:__Executive Vice President_________
BORROWER
LAKESHORE/SEBRING LIMITED PARTNERSHIP
BY: CBL & ASSOCIATES LIMITED
PARTNERSHIP, It's sole General Partner
BY: CBL HOLDINGS I, INC.,
Its sole General Partner
By:___John N. Foy________________________
Title:___Executive Vice President________
LAKESHORE
CBL & ASSOCIATES PROPERTIES, INC.
By:___John N. Foy________________________
Title:___Executive Vice President________
GUARANTOR
CBL HOLDINGS I, INC.
By:____John N. Foy_______________________
Title:___Executive Vice President________
FIRST TENNESSEE BANK NATIONAL
ASSOCIATION
By:_____________________________________
Timothy L. Collins, Vice President
BANK
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EXHIBIT "A"
Real property known as:
Coolsprings Crossing located in Franklin, TN
Valley Crossing located in Hickory, NC
East Towne Crossing located in Knoxville, TN
Jean Ribaut Square located in Beaufort, SC
Garden City Plaza, Garden City, Kansas
North Ridge Plaza, Hilton Head, South Carolina
Ladies Island, Beaufort, South Carolina
Sattler Square, Big Rapids, Michigan
Walnut Square Mall, Dalton, Georgia
Lakeshore Mall, Sebring, Florida
Pemberton Mall, Vicksburg, Mississippi
all as more particularly described in the individual deeds of trust and/or
mortgages applicable to the above described properties.
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EXHIBIT "B"
PERMITTED ENCUMBRANCES
1. As described in the Mortgages.
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EXHIBIT "C"
REVOLVING CREDIT NOTES AND LAKESHORE NOTE
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EXHIBIT "D"
CHECKLIST FOR CLOSING
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EXHIBIT "E"
NON-DEFAULT CERTIFICATE
For Fiscal Year Ended _______________, 19__.
For Fiscal Quarter Ended _______________, 19__.
The undersigned, a duly authorized officer of CBL & Associates
Limited Partnership, a Delaware limited partnership [referred to as
"Borrower" in that certain Amended and Restated Loan Agreement (the "Loan
Agreement") dated as of June 30, 1998 between Borrower, Lakeshore and First
Tennessee Bank 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, neither Borrower nor Lakeshore has 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.
DATED this ______ day of ______________________, 19__.
CBL & ASSOCIATES LIMITED PARTNERSHIP
BY: CBL HOLDINGS I, INC.,
Its Sole General Partner
By:________________________________
Title:_____________________________
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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.
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JOINDER IN AMENDED AND RESTATED LOAN AGREEMENT
KEYBANK NATIONAL ASSOCIATION as "Participant" under the terms of
that certain Amended and Restated Loan Agreement (the "Loan Agreement") dated
effective as of June 30, 1998, between and among First Tennessee Bank
National Association, CBL & Associates Limited Partnership and
Lakeshore/Sebring Limited Partnership, in consideration of the mutual
agreements of the parties thereto and of the undersigned therein contained,
hereby joins as a party to said Loan Agreement and agrees to perform all
obligations to be performed on its part thereunder.
IN WITNESS WHEREOF, the undersigned has caused this Joinder in
Amended and Restated Loan Agreement to be executed by its duly authorized
officer effective as of June 30, 1998.
KEYBANK NATIONAL ASSOCIATION
By:________________________________
Title:___________________________
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<PAGE>
JOINDER IN AMENDED AND RESTATED LOAN AGREEMENT
COMPASS BANK as "Participant" under the terms of that certain
Amended and Restated Loan Agreement (the "Loan Agreement") dated effective
as of June 30, 1998, between and among First Tennessee Bank National
Association, CBL & Associates Limited Partnership and Lakeshore/Sebring
Limited Partnership, in consideration of the mutual agreements of the parties
thereto and of the undersigned therein contained, hereby joins as a party to
said Loan Agreement and agrees to perform all obligations to be performed on
its part thereunder.
IN WITNESS WHEREOF, the undersigned has caused this Joinder in
Amended and Restated Loan Agreement to be executed by its duly authorized
officer effective as of June 30, 1998.
COMPASS BANK
By:________________________________
Douglas Vibert, Vice President
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JOINDER IN AMENDED AND RESTATED LOAN AGREEMENT
AMSOUTH BANK as "Participant" under the terms of that certain
Amended and Restated Loan Agreement (the "Loan Agreement") dated effective
as of June 30, 1998, between and among First Tennessee Bank National
Association, CBL & Associates Limited Partnership and Lakeshore/Sebring
Limited Partnership, in consideration of the mutual agreements of the parties
thereto and of the undersigned therein contained, hereby joins as a party to
said Loan Agreement and agrees to perform all obligations to be performed on
its part thereunder.
IN WITNESS WHEREOF, the undersigned has caused this Joinder in
Amended and Restated Loan Agreement to be executed by its duly authorized
officer effective as of June 30, 1998.
AMSOUTH BANK
By:________________________________
Rusty Campbell, Vice President
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[DESCRIPTION] EXHIBIT 11.2 LOAN AGREEMENT DATED AUGUST 4, 1998
FIRST AMENDMENT
TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
(this "Amendment") is made and entered into as of the _4_ day of _August ,
1998, by and among CBL & ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited
partnership (hereinafter referred to as "Borrower"), WELLS FARGO BANK,
NATIONAL ASSOCIATION, a national banking association, as successor in
interest to Wells Fargo Realty Advisors Funding, Incorporated, a Colorado
corporation, U.S. BANK NATIONAL ASSOCIATION, a national banking association,
f/k/a First Bank National Association, FLEET NATIONAL BANK, a national
banking association, and WACHOVIA BANK, N.A., a national banking association
(hereinafter referred to individually as a "Lender" and collectively as
"Lenders") and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking
association, as successor in interest to Wells Fargo Realty Advisors
Funding, Incorporated, a Colorado corporation, as agent for the benefit of
each of the Lenders (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, Borrower, Wells Fargo Bank, National Association and U.S.
Bank National Association (collectively, the "Original Lenders") and Agent
entered into that certain Third Amended and Restated Credit Agreement dated
as of June 30, 1998 (the "Credit Agreement"), pursuant to which the Original
Lenders agreed to extend to Borrower a credit facility (the "Credit
Facility") in the aggregate principal amount of up to Eighty-Five Million
Dollars ($85,000,000.00) at any one time outstanding; and
WHEREAS, Borrower, Original Lenders, Fleet National Bank ("Fleet"),
Wachovia Bank, N.A. ("Wachovia") and Agent desire to modify and amend the
Credit Agreement to, among other matters, add Fleet and Wachovia as
"Lenders" thereunder and increase the aggregate principal amount of the
Credit Facility to up to One Hundred Twenty Million Dollars
($120,000,000.00).
NOW THEREFORE, for and in consideration of the premises, for Ten and
No/100 Dollars ($10.00) in hand paid by the parties to each other, and for
other good and valuable consideration, the receipt, adequacy and sufficiency
of which are hereby acknowledged by Borrower, Lenders, and Agent, Borrower,
Lenders, and Agent do hereby covenant and agree as follows:
1. Definitions. Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to such terms in the Credit
Agreement; and
2. Definition Changes. Section 1.1 of the Credit Agreement is
hereby amended by adding the following at the end of the definition of
"Adjusted Asset Value: "and, during the fifteen months after the purchase of
real property by Borrower, shall exclude any EBITDA from such real
property." Furthermore, Section 1.1 of the Credit Agreement is hereby
amended by deleting the definition of "Commitment" in its entirety and by
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substituting therefor a new definition of "Commitment" to read as follows:
"Commitment" means, in respect of each Lender, the obligation
of such Lender to make Advances to Borrower, subject to the terms and
conditions hereof, up to an aggregate principal amount not to exceed
at any one time outstanding the amount set forth opposite such
Lender's name on the signature pages hereto or as set forth in any
amendment to this Agreement, subject to adjustment, in the case of any
Lender, from time to time by assignment pursuant to Section 9.6 hereof
or decrease by Borrower pursuant to Section 2.1 hereof, and
"Commitments" shall mean the Commitment of all the Lenders in an
aggregate principal amount not to exceed at any one time outstanding
One Hundred Twenty Million Dollars ($120,000,000.00).
3. Commitment. The parties agree that, as of the date hereof,
giving effect to this Amendment, the Commitment of each Lender is as
follows:
Commitment Lender
$45,000,000.00 Wells Fargo Bank, National Association
$40,000,000.00 U.S. Bank National Association
$17,500,000.00 Fleet National Bank
$17,500,000.00 Wachovia Bank, N.A.
Borrower, Agent and the Original Lenders agree that Fleet and
Wachovia, to the extent of each of its $17,500,000.00 Commitment, shall have
the same rights and benefits with respect to Borrower under the Credit
Agreement and the Loan Documents as each would have had if it was a Lender
hereunder on June 30, 1998 with respect to its Pro Rata Share.
4. Borrowing Base. Schedule 3.1 attached to the Credit Agreement
is hereby amended by deleting it in its entirety and by substituting
therefor the Schedule 3.1 attached to this First Amendment.
5. Release of Eligible Projects. Section 3.1(d)(vi) of the Credit
Agreement is hereby amended by inserting the phrase "plus the aggregate face
amount of the outstanding Letters of Credit" after the word "Loans" in the
second line thereof.
6. Assignments. Section 9.6(c) of the Credit Agreement is hereby
amended by deleting the clause "(not to be unreasonably withheld)" from the
fourth line thereof, and inserting the clause "(not to be unreasonably
withheld, and provided that Borrower's consent shall not be required if, at
the time of such assignment, any monetary Default or monetary Event of
Default is in existence hereunder or under the Notes or any other Loan
Document)" is inserted in lien thereof.
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<PAGE>
7. Conditions Precedent. Subject to the other terms and conditions
hereof, this Amendment shall not become effective until the Agent shall have
had delivered to it each of the following instruments, documents or
agreements, each in form and substance satisfactory to the Agent and the
Lenders:
(a) counterparts this Amendment duly executed and delivered by the
Borrower, the Agent and each of the Lenders;
(b) receipt by Agent of the opinions of Mary Ann Sinnott and such
other counsel located in the jurisdictions where the Eligible Projects are
located, addressed to Agent and each Lender and satisfactory in form and
substance to Agent covering such matters relating to the transactions
contemplated by this Amendment as Agent may reasonably request;
(c) an amendment to each Mortgage (collectively, the "Mortgage
Amendments") encumbering a Project, amending each such Mortgage to reflect
this Amendment;
(d) endorsements to each of the title insurance policies insuring
the validity and priority of the Mortgage, as amended pursuant to Section
5(c), covered thereby as a first priority Lien upon the Eligible Project and
Collateral described therein, subject to Permitted Liens, and increasing the
amount of coverage of such policies by an aggregate amount of Thirty-Five
Million Dollars ($35,000,000), allocated in a manner approved by Agent and
the Lenders;
(e) a certificate of the Secretary of CBL Holdings I, Inc. dated as
of the date hereof certifying (i) that the Certificate of Incorporation and
By-laws of CBL Holdings I, Inc., have not been modified since June 30, 1998;
(ii) that attached thereto is a true and complete copy of Resolutions
adopted by the Board of Directors of CBL Holdings I, Inc., authorizing the
execution and delivery on behalf of Borrower of this Amendment and the other
instruments, documents or agreements executed and delivered by Borrower in
connection herewith, authorizing the execution and delivery on behalf of
Borrower as general partner of each Subpartnership of the Mortgage
Amendment(s) to which such Subpartnership is a party, and authorizing the
execution, delivery and performance of any instruments, documents or
agreements executed and delivered by CBL Holdings I, Inc. in connection with
this Amendment (all such instruments, documents or agreements executed and
delivered in connection herewith by or on behalf of CBL Holdings I, Inc.,
Borrower or any Subpartnership are hereinafter collectively referred to as
the "Amendment Documents"); and (iii) as to the incumbency and genuineness
of the signatures of the officers of CBL Holdings I, Inc. executing the
Amendment Documents to which CBL Holdings I, Inc., Borrower or any
Subpartnership is a party;
(f) receipt by Agent of a certificate of Borrower approving the
execution, delivery and performance of this Amendment and the other
Amendment Documents to which Borrower is a party, duly adopted by Borrower
in accordance with the terms of Borrower's Partnership Agreement; and
(g) receipt by Agent of a certificate of each Subpartnership
approving the execution, delivery and performance of the Amendment Documents
to which such Subpartnership is a party, duly adopted by such Subpartnership
in accordance with the terms of such Subpartnership's partnership agreement.
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Upon fulfillment of the foregoing conditions precedent, this Amendment
shall become effective as of the date hereof.
8. Borrowing. Upon the fulfillment of the conditions precedent set
forth in Section 7 above and the effectiveness of this Amendment, the
Borrower shall, on such date, borrow Advances from Fleet and Wachovia, such
that, after giving effect thereto, the Loan (including, without limitation,
the principal amounts of the Advances, the types and (if applicable)
Interest Periods thereof) shall be held by the Lenders ratably in accordance
with their Commitments by reference to the principal amounts of the Loan.
9. Notes. For purposes of Note, the addresses of Fleet National
Bank and Wachovia Bank, N.A. shall be as follows:
Fleet National Bank
Mail Stop MA BO F11C
75 State Street
Boston, MA 02109
Attention: Aron Levine
Wachovia Bank, N.A.
191 Peachtree Street, N.E.
30th Floor
Atlanta, GA 30303
Attention: Toni Nunn
provided, however, that Fleet National Bank and Wachovia Bank, N.A. shall
have the right to change its address for notice hereunder to any other
location within the continental United States by the giving of thirty (30)
days' notice to the other parties in the manner set forth in Paragraph 9.1
of the Credit Agreement.
10. Representations and Warranties; No Default. Borrower hereby
represents and warrants to the Agent and the Lenders that (a) all of
Borrower's representations and warranties contained in the Credit Agreement
and the other Loan Documents are true and correct on and as of the date of
Borrower's execution of this Amendment; (b) no Default or Event of Default
has occurred and is continuing as of such date under any Loan Document; (c)
Borrower has the power and authority to enter into this Amendment and to
perform all of its obligations hereunder; (d) the execution, delivery and
performance of this Amendment by Borrower have been duly authorized by all
necessary corporate, partnership or other action; and (e) the execution and
delivery of this Amendment and performance thereof by or on behalf Borrower
does not and will not violate the Partnership Agreement of Borrower or the
Certificate of Incorporation, By-laws or other organizational documents of
CBL Holdings I, Inc. and does not and will not violate or conflict with any
law, order, writ, injunction, or decree of any court, administrative agency
or other governmental authority applicable to Borrower, CBL Holdings I,
Inc., or their respective properties.
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11. Expenses. Borrower agrees to pay, immediately upon demand by
the Agent, all reasonable costs, expenses, fees and other charges and
expenses actually incurred by the Agent in connection with the negotiation,
preparation, execution and delivery of this Amendment and the Amendment
Documents.
12. Defaults Hereunder. The breach of any representation, warranty
or covenant contained herein or in any document executed in connection
herewith, or the failure to observe or comply with any term or agreement
contained herein shall constitute a Default or Event of Default under the
Credit Agreement (subject to any applicable cure period set forth in the
Credit Agreement) and the Agent and the Lenders shall be entitled to
exercise all rights and remedies they may have under the Credit Agreement,
any other documents executed in connection therewith and applicable law.
13. Interest Expense. The definition of "Interest Expense" which
appears on Page 9 of the Credit Agreement is hereby amended by deleting the
phrase "and (iii) all Interest to a Project" from the eighth and ninth lines
thereof, and inserting in lieu thereof the following: "and (iii) all
Interest specifically attributable as an expense to a Project."
14. References. All references in the Credit Agreement and the Loan
Documents to the Credit Agreement shall hereafter be deemed to be references
to the Credit Agreement as amended hereby and as the same may hereafter be
amended from time to time.
15. Limitation of Agreement. Except as especially set forth herein,
this Amendment shall not be deemed to waive, amend or modify any term or
condition of the Credit Agreement, each of which is hereby ratified and
reaffirmed and which shall remain in full force and effect, nor to serve as
a consent to any matter prohibited by the terms and conditions thereof.
16. Counterparts. This Amendment may be executed in any number of
counterparts, and any party hereto may execute any counterpart, each of
which, when executed and delivered, will be deemed to be an original and all
of which, taken together will be deemed to be but one and the same
agreement.
17. Further Assurances. Borrower agrees to take such further action
as the Agent or the Lenders shall reasonably request in connection herewith
to evidence the amendments herein contained to the Credit Agreement.
18. Successors and Assigns. This Amendment shall be binding upon
and inure to the benefit of the successors and permitted assigns of the
parties hereto.
19. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of Georgia, without
regard to principles of conflicts of law.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
under seal as of the date first above written.
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"BORROWER"
CBL & ASSOCIATES LIMITED PARTNERSHIP
By: CBL Holdings I, Inc. as General Partner
By:__John N. Foy______________
Name: John N. Foy
Title: Executive Vice President
Attest:__Joan C. Perry________
Name: Joan C. Perry
Title: Assistant Secretary
(CORPORATE SEAL)
(Signatures continued on next page)
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Signatures continued from previous page)
"LENDERS"
Commitment: $45,000,000.00 WELLS FARGO BANK, NATIONAL ASSOCIATION, as
successor in interest to Wells Fargo Realty
Advisors Funding, Incorporated
By: ___Robert W. Belson_______
Name:__Robert W. Belson_______
Title:_Senior Vice President__
(Signatures continued on next page)
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(Signatures continued from previous page)
Commitment: $40,000,000.00 U.S. BANK NATIONAL ASSOCIATION, f/k/a First
Bank National Association
By: ____Stephen P. Bailey_____
Name:___Stephen P. Bailey_____
Title:__Vice President________
(Signatures continued on next page)
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(Signatures continued from previous page)
Commitment: $17,500,000.00 FLEET NATIONAL BANK
By: ___Aron D. Levine_________
Name:__Aron D. Levine_________
Title:_Vice President_________
(Signatures continued on next page)
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(Signatures continued from previous page)
Commitment: $17,500,000.00 WACHOVIA BANK, N.A.
By: ___Judith A. Nunn_________
Name:__Judith A. Nunn_________
Title:_Vice President_________
(Signatures continued on next page)
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(Signatures continued from previous page)
"AGENT"
WELLS FARGO BANK, NATIONAL ASSOCIATION, as
successor in interest to Wells Fargo Realty
Advisors Funding, Incorporated, as Agent
By: __/s/__Robert W. Belson_____
Name:_____Robert W. Belson_____
Title:____Senior Vice President
<PAGE>
SCHEDULE 3.1
Eligible Projects
Attributable
Project: Borrowing Base:
1. Post Oak Mall $47,925,000
Brazos County, Texas
2. Georgia Square Mall $39,600,000
Clark County, Georgia
3. Twin Peaks Mall $33,075,000
Boulder County, Colorado
<PAGE>
_________________________________________________________
$85,000,000.00
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
Effective as of June 30, 1998
By and Among
CBL & ASSOCIATES LIMITED PARTNERSHIP,
a Delaware limited Partnership, as Borrower,
and
WELLS FARGO BANK, NATIONAL ASSOCIATION
as successor in interest to
Wells Fargo Realty Advisors Funding, Incorporated,
U.S. BANK NATIONAL ASSOCIATION,
f/k/a First Bank National Association,
TOGETHER WITH THOSE ASSIGNEES
BECOMING PARTIES HERETO PURSUANT TO SECTION 9.6
as Lenders,
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as successor in interest to
Wells Fargo Realty Advisors Funding, Incorporated,
as Agent
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TABLE OF CONTENTS
ARTICLE 1 2
DEFINITIONS 2
1.1 Definitions 2
1.2 Use of Defined Terms 17
1.3 Accounting Terms, Calculation 17
1.4 Terminology 18
ARTICLE 2.
THE LOAN 19
2.1 Commitment to Lend 19
2.2 Letters of Credit 19
2.3 Method of Borrowing 21
2.4 Notes 23
2.5 Interest Rate 24
2.6 Special Provisions for LIBOR Advances 25
2.7 Payments 27
2.8 Fees 30
2.9 Computation of Interest and Fees 31
2.10 Option to Replace Lenders 31
2.11 Extension of Termination Date 32
2.12 Term Loan Conversion 32
ARTICLE 3. 33
BORROWING BASE; ELIGIBLE PROJECTS 33
3.1 Borrowing Base 33
3.2 Leases and Major Agreements 37
3.3 Appraisals 38
3.4 Major Construction 38
ARTICLE 4. 39
CONDITIONS 39
4.1 Effectiveness 39
4.2 Advances 41
4.3 Conditions Precedent to a Project
Becoming An Eligible Project 42
4.4 Conditions to Conversion to Term Loan 44
ARTICLE 5 44
REPRESENTATIONS AND WARRANTIES 44
5.1 Organization and Power 44
5.2 Validity of Loan Instruments 44
5.3 Binding Effect 45
5.4 Financial Information 45
5.5 Litigation 46
5.6 ERISA 46
5.7 Hazardous Substances 46
5.8 Taxes and Other Payments 48
5.9 Not an Investment Company 48
5.10 Information 48
5.11 Insurance 49
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5.12 Liens 49
5.13 Title to the Projects 49
5.14 Governmental Requirements 49
5.15 ERISA; Plan Assets 49
ARTICLE 6 50
COVENANTS 50
6.1 Reporting Requirements 50
6.2 Payment and Performance. 52
6.3 Maintenance of Property; Insurance 52
6.4 Business; Existence 53
6.5 Payment of Impositions 53
6.6 Compliance with Legal Requirements 54
6.7 Inspection of Property, Books and Records 54
6.8 Indebtedness 54
6.9 Consolidations, Mergers and Sales of Assets 54
6.10 Use of Proceeds 54
6.11 Investment Concentration 55
6.12 Total Obligations to Gross Asset Value 56
6.13 Minimum Net Worth 56
6.14 Interest Coverage Ratio 56
6.15 Debt Coverage Ratio 56
6.16 ERISA 56
6.17 Liens 56
6.18 Restricted Payments 57
6.19 Year 2000 Compliance 57
ARTICLE 7 57
DEFAULTS 57
7.1 Events of Default 57
7.2 Remedies 61
7.3 Actions in Respect of the Letters of
Credit Upon Default 61
7.4 Curing Defaults Under Collateral Documents 62
7.5 Permitted Deficiency 62
ARTICLE 8 63
THE AGENT 63
8.1 Appointment and Authorization 63
8.2 Agent and Affiliates 64
8.3 Action by Agent 64
8.4 Consultation with Experts 64
8.5 Reliance by Agent 64
8.6 Defaults 65
8.7 Indemnification 65
8.8 Credit Decision 65
8.9 Failure to Act 66
8.10 Resignation or Removal of Agent; Co-Agent 66
8.11 Consent and Approvals 67
8.12 Agency Provisions Relating to Collateral 69
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8.13 Defaulting Lenders 71
8.14 Borrower Not a Beneficiary 74
ARTICLE 9 74
MISCELLANEOUS 74
9.1 Notices 74
9.2 No Waiver 74
9.3 Expenses; Documentary Taxes; Indemnification 75
9.4 Waiver of Set-Offs; Sharing of Set-Offs 76
9.5 Amendments and Waivers 76
9.6 Successors and Assigns 78
9.7 Capital Adequacy 79
9.8 Counterparts 80
9.9 Notice of Final Agreement 80
9.10 Invalid Provisions 80
9.11 Maximum Rate 80
9.12 Limitation Upon Liability 81
9.13 Course of Dealing 82
9.14 Treatment of Certain Information;
Confidentiality 82
9.15 Conflict of Terms 82
9.16 Governing Law; Submission to Jurisdiction 82
9.17 Waiver of Right to Trial by Jury 83
9.18 Amendment and Restatement 83
Schedule 3.1 List of Projects
Schedule 5.5 Litigation
Schedule 5.6 ERISA Plans
Schedule 5.11 Insurance
Exhibit A Notes
Exhibit B Notice of Borrowing
Exhibit C Rate Selection Notice
Exhibit D Form of Mortgage
Exhibit E Form of Environmental Indemnity
Agreement
Exhibit F Form of Closing Certificate
Exhibit G Form of Guaranty
Exhibit H Form of Assignment
Exhibit I Form of Extension Request
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THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT (the "Agreement") is
made and entered into as of this 30th day of June, 1998, by and between CBL
& ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership (hereinafter
referred to as the "Borrower"), WELLS FARGO BANK, NATIONAL ASSOCIATION, a
national banking association, as successor in interest to Wells Fargo Realty
Advisors Funding, Incorporated, a Colorado corporation, and U.S. BANK
NATIONAL ASSOCIATION, f/k/a FIRST BANK NATIONAL ASSOCIATION, a national
banking association, (hereinafter referred to individually as a "Lender" and
collectively as the "Lenders") and WELLS FARGO BANK, NATIONAL ASSOCIATION,
a national banking association, as successor in interest to Wells Fargo
Realty Advisors Funding, Incorporated, a Colorado corporation, as agent for
the benefit of each of the Lenders (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, Borrower, Wells Fargo Realty Advisors Funding, Incorporated,
NationsBank of Georgia, N.A., and First Bank National Association
(collectively, the "Original Lenders") and Agent entered into that certain
Credit Agreement dated as of July 28, 1994 (the "Credit Agreement"), pursuant
to which the Original Lenders agreed to extend to Borrower a credit facility
(the "Credit Facility") in the aggregate principal amount of up to Seventy-
Five Million Dollars ($75,000,000.00) at any one time outstanding; and
WHEREAS, Borrower, Original Lenders, Union Bank of Switzerland (New
York Branch) ("UBS") and Agent entered into that certain First Amendment to
Credit Agreement dated as of May 5, 1995 (the "First Amendment") to, among
other matters, add UBS as a "Lender" and increase the aggregate principal
amount of the Credit Facility to up to Eighty-Five Million Dollars
($85,000,000.00) at any one time outstanding; and
WHEREAS, Borrower, Original Lenders, UBS, and Agent entered into that
certain Second Amendment to Credit Agreement dated as of July 5, 1995 (the
"Second Amendment"); and
WHEREAS, Borrower, Original Lenders, UBS, and Agent entered into that
certain Third Amendment to Credit Agreement dated as of May 23, 1996 (the
"Third Amendment"); and
WHEREAS, Borrower, Original Lenders, UBS, and Agent entered into that
certain Fourth Amendment to Credit Agreement dated as of July 26, 1996 (the
"Fourth Amendment") (the Credit Agreement, the First Amendment, the Second
Amendment, the Third Amendment and the Fourth Amendment being collectively
referred to herein as the "Original Credit Agreement"); and
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WHEREAS, Borrower, Original Lenders, UBS, and Agent entered into that
certain Amended and Restated Credit Agreement dated as of September 26, 1996
(the "Restated Credit Agreement"); and
WHEREAS, Borrower, Original Lenders, UBS, and Agent entered into that
certain First Amendment to Amended and Restated Credit Agreement dated as of
March 14, 1997 (the "First Amendment to Restated Credit Agreement"); and
WHEREAS, Borrower, Original Lenders, UBS, and Agent entered into that
certain Second Amended and Restated Credit Agreement dated as of June 5, 1997
to be effective as of April 1, 1997 (the "Second Restated Credit Agreement");
and
WHEREAS, Borrower, Original Lenders, UBS, and Agent entered into that
certain First Amendment to Second Amended and Restated Credit Agreement dated
as of November 15, 1997 (the "First Amendment to Second Restated Credit
Agreement")(the Second Restated Credit Agreement and the First Amendment to
Second Restated Credit Agreement being collectively referred to herein as the
"Second Amended and Restated Credit Agreement"); and
WHEREAS, Borrower, Lenders and Agent desire to modify, amend and
restate the Second Amended and Restated Credit Agreement in the manner and
for the purposes set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
obligations and covenants hereinafter contained, the parties hereto hereby
agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 Definitions. When used herein, the following terms shall
have the following meanings:
"Adjusted Asset Value" means, as of a given date, (a) EBITDA for
Borrower's fiscal quarter most recently ended multiplied by (b) 4 and divided
by (c) the Capitalization Rate. For purposes of determining Adjusted Asset
Value, EBITDA shall be adjusted by the Agent in its reasonable discretion to
take into account acquisitions and dispositions of property by Borrower and
shall exclude any EBITDA from property not owned by Borrower for the entire
fiscal quarter most recently ended or upon which construction was in progress
at the end of the fiscal quarter most recently ended.
"Advance" shall have the meaning given such term in Section 2.1 hereof.
An Advance may be either a LIBOR Advance or a Base Rate Advance.
"Affiliate" shall mean, 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
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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.
"Appraisal" means, in respect of any Project or proposed Project, a
M.A.I. appraisal commissioned by and addressed to Agent (acceptable to Agent,
in Agent's reasonable judgment, as to form, substance and appraisal date),
prepared by a professional appraiser acceptable to Agent, in Agent's
reasonable judgment, having at least the minimum qualifications required
under applicable regulations governing Agent, including FIRREA, and
determining the "as is" market value of such Project or proposed Project as
between a willing buyer and a willing seller.
"Appraised Value" means, as to any Project or proposed Project, the "as
is" market value of such Project as reflected in the then most recent
Appraisal of such Project as the same may have been adjusted by Agent based
upon its internal review of such Appraisal which is based on criteria and
factors then generally used and considered by Agent in determining the value
of similar projects, which review shall be conducted prior to acceptance of
such Appraisal by Agent and in any event within thirty (30) days after
receipt by Agent of such Appraisal. In the event that an Appraisal of a
Project is performed after the occurrence of either (a) a casualty affecting
such Project or (b) a condemnation of a portion of such Project which results
in a loss of less than 10% of the acreage of the Project and of no portion
of the principal structures, but prior to complete restoration of the same,
the Appraised Value shall, to the extent permitted by applicable regulations,
be made on an "as-restored" basis.
"Approved Percentage" means with respect to the Appraised Value of any
Project, a percentage not to exceed seventy five percent (75%), as determined
by Agent and disclosed to Borrower prior to admission of such Project into
the Borrowing Base. With respect to the Appraised Value of the Property
listed in Schedule 3.1 attached hereto, the Approved Percentage is seventy
five percent (75%).
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"Base Rate" shall mean an interest rate per annum, fluctuating daily,
equal to the higher of (a) the rate announced by Agent from time to time at
its principal office in San Francisco, California as its prime rate in effect
on such day, or (b) the Federal Funds Rate in effect on such day plus 0.5%.
The Base Rate is not necessarily intended to be the lowest rate of interest
charged by Agent or any Lender in connection with extensions of credit. Each
change in Base Rate shall result in a corresponding change in the interest
rate hereunder with respect to a Base Rate Advance and such change shall be
effective on the effective date of such change in the Base Rate.
"Base Rate Advance" means any Advance hereunder with respect to which
the interest rate is calculated by reference to the Base Rate.
"Borrowing Base" has the meaning set forth in Section 3.1(b) hereof.
"Business Day" means any day on which all major departments of Agent
are open for business at its downtown headquarters in San Francisco,
California.
"Capital Stock" shall mean, as to any Person, any and all shares,
interests, warrants, participations or other equivalents (however designated)
of corporate stock of such Person.
"Capitalization Rate" means (a) eight and one-half percent (8.50%), as
to EBITDA from regional malls and power centers or (b) nine and one-quarter
percent (9.25%), as to all other EBITDA.
"CBL Management, Inc." means CBL & Associates Management, Inc., a
Delaware corporation.
"CBL Properties, Inc." means CBL & Associates Properties, Inc., a
Delaware corporation, a qualified public REIT and sole shareholder of
Holdings I and Holdings II.
"Collateral" means the real and personal property comprising each
Eligible Project securing payment of the Loan pursuant to the Collateral
Documents.
"Collateral Documents" means the Mortgages, assignments, security
agreements, financing statements, subordination, attornment and non-
disturbance agreements, tenant estoppel letters, title insurance policies and
other loan and collateral documents creating, evidencing, perfecting insuring
or relating to the Liens and security interests in the Collateral.
"Combined" means, as to any calculation hereunder, that such
calculation shall be made on a combined basis for Borrower, Holdings I,
Holdings II, 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 Holdings I, on a
consolidated basis for Holdings I and its Subsidiaries, (c) in respect of
Holdings II, on a consolidated basis for Holdings II and its Subsidiaries,
(d) in respect of CBL Properties, Inc., on a consolidated basis for CBL
Properties, Inc. and its Subsidiaries, and (e) in respect of CBL Management,
Inc., on a consolidated basis for CBL Management, Inc. and its Subsidiaries.
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"Commitment" means, in respect of each Lender, the obligation of such
Lender to make Advances to Borrower, subject to the terms and conditions
hereof, up to an aggregate principal amount not to exceed at any one time
outstanding the amount set forth opposite such Lender's name on the signature
pages hereto or as set forth in any amendment to this Agreement, subject to
adjustment, in the case of any Lender, from time to time by assignment
pursuant to Section 9.6 hereof or decrease by Borrower pursuant to Section
2.1 hereof, and "Commitments" shall mean the Commitment of all the Lenders
in an aggregate principal amount not to exceed at any one time outstanding
Eighty-Five Million Dollars ($85,000,000.00).
"Consequential Loss" means, for any Lender with respect to (a)
Borrower's payment of all or any portion of the then-outstanding principal
amount of a LIBOR Advance on a day other than the last day of the Interest
Period applicable thereto or (b) any of the circumstances specified in
Section 2.3(c) upon which a Consequential Loss may be incurred, any loss,
cost or expense incurred by such Lender as a result of the timing of such
payment or Advance or in the redepositing, redeploying or reinvesting the
principal amount so paid or affected by the timing of such Advance or the
circumstances described in Section 2.3(c) including the sum of (i) the
interest which, but for the payment or timing of the Advance, such Lender
would have earned in respect of such principal amount, reduced, if such
Lender is able to redeposit, redeploy, or reinvest such principal amount by
the interest earned by such Lender as a result of so redepositing,
redeploying or reinvesting such principal amount, plus (ii) any expense or
penalty incurred by such Lender on redepositing, redeploying or reinvesting
such principal amount.
"Contingent Obligations" means, for any Person, any material
commitment, undertaking, Guarantee or other material obligation constituting
a contingent liability under GAAP, but only to the extent the same are
required to be reflected on such Person's audited financial statements.
"Conversion Date" has the meaning set forth in Section 2.3(c) hereof.
"Debt Coverage Ratio" shall mean, 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, Holdings I, Holdings
II, CBL Properties, Inc., and their respective Subsidiaries for any period,
the sum of (a) Interest Expense of Borrower, Holdings I, Holdings II, CBL
Properties, Inc. and their respective Subsidiaries for such period, plus (b)
regularly scheduled principal payments on Indebtedness of Borrower, Holdings
I, Holdings II, CBL Properties, Inc. and their respective Subsidiaries during
such period other than (x) in respect of any period following the Term Loan
Conversion Date, the scheduled principal payments on the Term Loan and (y)
any regularly scheduled principal payment payable on any Indebtedness which
repays 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
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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 for such prepayment.
"Default" means any condition or event which, with the giving of notice
or lapse of time or both would, unless cured or waived, become an Event of
Default.
"Defaulting Lender" means any Lender which fails or refuses to perform
its obligations under this Agreement within the time period specified for
performance of such obligation or, if no time frame is specified, if such
failure or refusal continues for a period of five (5) days after notice from
Agent.
"EBITDA" means, for any period, the sum of (i) Net Income of Borrower,
Holdings I, Holdings II, 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, Holdings I, Holdings II, CBL
Properties, Inc. and their respective Subsidiaries for such period, plus
(iii) interest expense of Borrower, Holdings I, Holdings II, CBL Properties,
Inc. and their respective Subsidiaries for such period, plus (iv) income tax
expense (federal and state) in respect of such period, plus (v) cash
dividends and distributions actually received by Borrower, Holdings I,
Holdings II, 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, Holdings I, Holdings II, 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,
Holdings I, Holdings II, CBL Properties, Inc. and their respective
Subsidiaries (and any unusual gains arising in or outside the ordinary course
of business of Borrower, Holdings I, Holdings II, 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.
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 4.1 hereof.
"Eligible Project" means a Project which the Agent and the Lenders have
agreed, in their reasonable discretion, to include in the Borrowing Base.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concession, grants,
franchises, licenses, agreements and other governmental restrictions relating
to the environment, the effect of the environment on human health or to
emissions, discharges or releases of pollutants, contaminants, Hazardous
Substances or wastes into the environment including, without limitation,
ambient air, surface water, ground water, or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
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transport or handling of pollutants, contaminants, Hazardous Substances or
wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and all rules and regulations from time to time
promulgated thereunder.
"ERISA Affiliate" means each trade or business (whether or not
incorporated) which, together with Borrower, is treated as a single employer
under Sections 414(b), (c), (m) or (o) of the Internal Revenue Code.
"ERISA Plan" means any employee benefit plan subject to Title I of
ERISA.
"Event of Default" has the meaning set forth in Section 7.1 hereof.
"Federal Funds Rate" means, on any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (i) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding
Business Day, and (ii) if no such rate is published on such next succeeding
Business Day, the Federal Funds Rate for such day shall be the average rate
quoted to Agent on such day of such transactions as determined by Agent.
"FIRREA" means the Financial Institution Recovery, Reform and
Enforcement Act of 1989, as amended from time to time.
"Funds from Operations" means, as to any period, an amount equal to (a)
income (loss) from operations of Borrower, Holdings I, Holdings II, CBL
Properties, Inc. and their respective Subsidiaries for such period, excluding
gain (loss) from debt restructuring and sale of properties, plus (b)
depreciation and amortization of real estate assets, plus (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" shall mean generally accepted accounting principles applied on
a basis consistent with those which, in accordance with the last sentence of
Section 1.3(a) hereof, are to be used in making the calculations for purposes
of determining compliance with this Agreement.
"Governmental Authority" means, in respect any Person, any government
(or any political subdivision or jurisdiction thereof) , court, bureau,
agency or other governmental authority having jurisdiction over such Person
or any Affiliate of such Person or any of its or their business, operations
or properties.
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"Gross Asset Value" means, at a given time, the sum of (a) Adjusted
Asset Value at such time, plus (b) all of Borrower's cash and cash
equivalents at the end of the fiscal quarter most recently ended, plus (c)
the current book value of all real property of Borrower upon which
construction was in progress at the end of the fiscal quarter most recently
ended, plus (d) the purchase price paid by Borrower for any real property
purchased by Borrower during the fifteen (15) months after the acquisition
of such real property.
"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 loss 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" shall mean any pollutant, contaminant,
hazardous, toxic or dangerous waste, substance or material, or any other
substance or material regulated or controlled pursuant to any Environmental
Law, including, without limiting the generality of the foregoing, asbestos,
PCBs, petroleum products (including crude oil, natural gas, natural gas
liquids, liquefied natural gas or synthetic gas) or any other substance
defined as a "hazardous substance," "extremely hazardous waste," "restricted
hazardous waste," "hazardous material," "hazardous chemical," "hazardous
waste," "regulated substance," "toxic chemical," "toxic substance" or other
similar term in any Environmental Law.
"Holdings I" means CBL Holdings I, Inc., a Delaware corporation, and
a Wholly Owned Subsidiary of CBL Properties, Inc. and the sole general
partner of Borrower.
"Holdings II" means CBL Holdings II, Inc., a Delaware corporation, and
a Wholly Owned Subsidiary of CBL Properties, Inc. and a limited partner of
Borrower.
"Impositions" shall mean (i) all real estate and personal property
taxes, charges, assessments, excises and levies and any interest, costs or
penalties with respect thereto, general and special, ordinary and
extraordinary, foreseen and unforeseen, of any kind and nature whatsoever,
which at any time prior to or after the execution hereof may be assessed,
levied or imposed upon the Collateral or the ownership, use, occupancy or
enjoyment thereof, or any portion thereof, or the sidewalks, streets or
alleyways adjacent thereto; (ii) any charges, fees, license payments or other
sums payable for any easement, license or agreement maintained for the
benefit of the Collateral; and (iii) water, gas, sewer, electricity,
telephone and other utility charges and fees that are or may become a Lien
against the Collateral.
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"Indebtedness" shall mean, 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 arising in the ordinary course of business; or (vi) as a
lessee arising under a lease that is 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).
"Indemnitee" has the meaning set forth in Section 9.3(c) hereof.
"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, of 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 Loan and (ii) swap or other interest hedging breakage
costs, all as determined in conformity with GAAP and (iii) all Interest to
a Project.
"Interest Period" means, with respect to a LIBOR Advance, a period
commencing:
(a) on the borrowing date of such LIBOR Advance made pursuant
to Section 2.3(a) of this Agreement; or
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(b) on the Conversion Date pertaining to such LIBOR Advance,
if such LIBOR Advance is made pursuant to a conversion as described in
Section 2.3(c) hereof; or
(c) on the last day of the preceding Interest Period in the
case of a rollover to a successive Interest Period;
and ending 1, 2, 3, 6 or 12 months thereafter, as Borrower shall elect in
accordance with Section 2.3(c) of this Agreement; provided, that:
(i) any Interest Period that would otherwise end on a day
which is not a LIBOR Business Day shall be extended to the next succeeding
LIBOR Business Day, unless such LIBOR Business Day falls in another calendar
month in which case such Interest Period shall end on the next preceding
LIBOR Business Day;
(ii) any Interest Period that begins on the last LIBOR
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month or at the end of such
Interest Period) shall, subject to Clause (i) above, end on the last LIBOR
Business Day of a calendar month;
(iii) if the Interest Period for any LIBOR Advance would
otherwise end after the final maturity date of the Loan, then such Interest
Period shall end on the final maturity date of the Loan; and
(iv) if Borrower elects an Interest Period of 12 months
with respect to any LIBOR Advance, and any Lender determines that either
deposits in United States Dollars (in the applicable amounts) are not being
offered to it in the interbank eurodollar market for such Interest Period or
that quotes of the LIBOR Rate are not available for such Interest Period,
then Agent shall give notice thereof to Borrower, and Borrower shall be
deemed to have elected an Interest Period of 6 months.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"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.
"Issuing Bank" means Agent or an affiliate of Agent, as the issuer of
Letters of Credit hereunder.
"Lease" means any lease, sublease, license, concession or other
agreement (written or verbal, now or hereafter in effect) to which Borrower,
any Wholly Owned Subsidiary of Borrower or any Subpartnership is a party and
which grant a possessory interest in and to, or the right to use, all or any
part of an Eligible Project, save and except any lease or sublease pursuant
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to which Borrower, any Wholly Owned Subsidiary of Borrower or any
Subpartnership is granted a possessory interest in the land underlying such
Eligible Project.
"Legal Requirements" shall mean (i) any and all present and future
judicial decisions, statutes, rulings, rules, regulations, permits,
certificates or ordinances of any Governmental Authority in any way
applicable to Borrower, any Wholly Owned Subsidiary of Borrower or any
Subpartnership owning an Eligible Project, or the Collateral, including,
without limiting the generality of the foregoing, the ownership, use,
occupancy, possession, operation, maintenance, alteration, repair or
reconstruction thereof; (ii) any and all covenants, conditions and
restrictions contained in any deed or other form of conveyance or in any
other instrument of any nature that relate in any way or are applicable to
the Collateral or the ownership, use or occupancy thereof; (iii) Borrower's
and each such Wholly Owned Subsidiary's and Subpartnership's presently or
subsequently effective Articles of Partnership, Limited Partnership, Joint
Venture, Trust or other form of business association agreement; (iv) any
Major Agreements and Major Leases; and (v) any lease or other contract
pursuant to which Borrower is granted a possessory interest in any land.
"Lending Office" means Agent's office located 420 Montgomery Street,
6th Floor, San Francisco, California 94163, or such other office as Agent may
hereafter designate as its Lending Office by notice to Borrower and Lenders.
"Letter of Credit Obligations" means, collectively, (a) all
reimbursement and other obligations of Borrower in respect of Letters of
Credit, (b) all amounts paid by Agent to the Issuing Bank in respect of
Letters of Credit and (c) all amount paid by the Lenders to the Agent and/or
the Issuing Bank in respect of Letters of Credit.
"Letters of Credit" means the letters of credit made in connection with
the Loan issued by the Issuing Bank for the account of Borrower in an
aggregate face amount not to exceed $10,000,000.00 outstanding at any one
time, as they may be drawn on, advanced, replaced, or modified from time to
time.
"LIBOR Advance" means any Advance hereunder with respect to which the
interest rate is calculated by reference to the LIBOR Rate for a particular
Interest Period.
"LIBOR Business Day" means a Business Day on which dealings in United
States Dollars are carried out in the London interbank market.
"LIBOR Rate" means, with respect to any Interest Period, the rate per
annum which is equal to the quotient of the average rate per annum
(determined solely by the Agent and rounded upwards, if necessary, to the
next higher 1/16 of 1%) at which deposits in United States Dollars are
offered to Wells Fargo Bank by brokers in the London interbank market as of
11:00 a.m. (London time) two (2) LIBOR Business Days prior to the first day
of such Interest Period, in an amount equal to LIBOR Advance so requested and
for a period equal to such Interest Period. Each determination of the LIBOR
Rate by Agent shall, in absence of manifest error, be conclusive and binding.
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"LIBOR Reserve Requirement" means the daily average during the Interest
Period of the maximum aggregate reserve requirement (including all basic,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other schedule changes in reserve requirements
during the Interest Period) which is imposed under Regulation D against
"Eurocurrency liabilities" as defined in Regulation D. Each determination by
Agent of the LIBOR Reserve Requirement shall, in the absence of manifest
error, be conclusive and binding.
"Lien" means any deed to secure debt, mortgage, deed of trust or
similar security instruments (including any Mortgage), pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the
filing of, or agreement to give, any financing statement perfecting a
security interest under the Uniform Commercial Code or comparable law of any
jurisdiction).
"Loan" means the aggregate principal amount of outstanding Advances
made by Lenders pursuant to Article 2 hereof. From and after the Term Loan
Conversion Date, the term "Loan" shall mean and refer to the Term Loan.
"Loan Documents" means this Agreement, the Notes and the Collateral
Documents.
"Major Agreements" means, at any time, (a) each operating, cross-
easement, restrictions or similar agreement encumbering or affecting an
Eligible Project and any adjoining property material to the use and operation
of such Project; (b) each management agreement with respect to an Eligible
Project; and (c) any other agreement, such as engineers' contracts, utility
contracts, maintenance agreements and service contracts, which in any way
relates to the use, occupancy, operation, maintenance, enjoyment or ownership
of an Eligible Project, the breach or loss of which would have a material
adverse effect on such Project.
"Major Lease", with respect to any Eligible Project, shall mean any
lease of 50,000 or more leasable square feet, in the case of any Project
which is a regional mall or 20,000 or more leasable square feet, in the case
of any Project which is a strip center, or (ii) collectively, the leases of
space in the Projects by one or more tenants which are affiliates or operate
under separate leases of space within the Projects if the aggregate leasable
square footage leased by such affiliates is 50,000 or more leasable square
feet, in the case of any Project which is a regional mall or 20,000 or more
leasable square feet, in the case of any Project which is a strip center.
"Majority Lenders" shall mean, at any time, Lenders holding at least
sixty-six and two-thirds percent (66 2/3%) of the aggregate principal amount
of the Commitment or, if the Commitment has been terminated, Lenders holding
at least sixty-six and two-thirds percent (66 2/3%) of the aggregate
outstanding principal amount of the Loan; provided however, in determining
such percentage at any given time, all then existing Defaulting Lenders will
be disregarded and excluded and the Pro Rata Shares of Lenders shall be
redetermined, for voting purposes only, to exclude the Pro Rata Shares of
such Defaulting Lenders.
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"Maximum Rate" means the highest nonusurious rate of interest (if any)
permitted from day to day by applicable law.
"Mortgage" shall mean a mortgage, deed of trust, deed to secure debt
or similar security instrument made or to be made by a Person owning real
estate or an interest in real estate granting a Lien on such real estate or
interest in real estate as security for the payment of Indebtedness.
"Net Income" means, with respect to Borrower, Holdings I, Holdings II,
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 Project for the period in
question, but without duplication (a) any cash rentals, proceeds, expense
reimbursements or income earned by such Project (but excluding security or
other deposits, late fees, early lease termination or other penalties, and
other charges deemed by Agent to be of a non-recurring nature and excluding
rent dedicated to the repayment of Indebtedness secured by a Lien permitted
by Section 6.17(b) hereof) during such period; less (b) all cash costs and
expenses that Borrower incurred during such period, as a result of, or in
connection with, the development, operation, or leasing of such Project (but
excluding principal and interest payments during such period); plus (less)
(c) gains (losses) from the sale of outparcels made in the ordinary course
of business; less (d) to the extent exceeding the amounts for the applicable
costs and expenses incurred by Borrower pursuant (b) above, appropriate
accruals for items such as taxes, insurance, or other expenses reasonably
determined by Agent, in each case determined in accordance with GAAP.
"Net Worth" means, with respect to Borrower, Holdings I, Holdings II,
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) cumulative depreciation and
amortization after June 30, 1996, minus (d) all intangible assets, determined
on a Combined basis in accordance with GAAP.
"Non-ERISA Plan" means any Plan subject to Section 4975 of the Internal
Revenue Code.
"Non Pro Rata Advance" means an Advance with respect to which less than
all Lenders have funded their respective Pro Rata Shares of such Advance and
the failure of the non-funding Lender or Lenders to fund its or their
respective Pro Rata Shares of such Advance constitutes a breach of this
Agreement. For purposes of this definition, the Pro Rate Shares of the
Lenders will be calculated without regard to the proviso contained in the
definition of "Pro Rata Share."
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"Notes" means the amended and restated promissory notes executed by
Borrower, substantially in the form of Exhibit A hereto, payable to each of
the Lenders in an amount equal to such Lender's Commitment, as the same may
be amended, supplemented, modified, or restated from time to time, evidencing
the obligation of Borrower to repay the Loan, and all renewals, modifications
and extensions thereof, and "Note" means any one of the Notes.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit B attached hereto.
"Obligations" means the Loan, the Letter of Credit Obligations and any
and all other Indebtedness, liabilities and obligations of Borrower to the
Lenders, or any of them, or to any Indemnitee, of every kind and nature
(including, without limitation, interest charges, expenses, attorneys' fees
and other sums chargeable to Borrower by Lenders and future advances made to
or for the benefit of Borrower), arising under this Agreement or under any
of the other Loan Documents, whether direct or indirect, absolute or
contingent, primary or secondary, due or to become due, now existing or
hereafter acquired.
"Permanent Loan Estimate" means, as of any date and with respect to any
Project included in the Borrowing Base, an amount equal to the quotient of
(a) an amount equal to the aggregate Net Operating Income of such Project for
the immediately preceding twelve (12) month period divided by (b) the product
of (i) 1.25 and (ii) the percent of a principal amount of a loan required to
be paid each year in order to repay the principal amount of such loan in full
based on a twenty-five (25) year amortization, and to pay the amount of
interest due at each installment, utilizing a rate of interest equal to 1.5%
in excess of the average of the rates published during the four fiscal
quarters ending on or most recently prior to such date in the United States
Federal Reserve Statistical Release (H.15) for 10-year Treasury Constant
Maturities, in equal monthly installments of principal and interest.
"Permitted Liens" means (i) pledges or deposits made to secure payment
of worker's compensation (or to participate in any fund in connection with
worker's compensation insurance), unemployment insurance, pensions or social
security programs, (ii) encumbrances consisting of zoning restrictions,
easements, or other restrictions on the use of real property, provided that
such items do not materially impair the use of such property for the purposes
intended and none of which is violated in any material respect by existing
or proposed structures or land use, (iii) the following to the extent no Lien
has been filed in any applicable jurisdiction or agreed to: (A) Liens for
taxes not yet due and payable; and (B) Liens imposed by mandatory provisions
of law such as for materialmen's, mechanic's, warehousemen's and other like
Liens arising in the ordinary course of business, securing payment of
Indebtedness whose payment is not yet due, (iv) Liens for taxes, assessments
and governmental charges or assessments that are being contested in good
faith by appropriate proceedings diligently conducted, and for which reserves
or other adequate security acceptable to Agent have been provided, (v) to the
extent expressly approved in writing by Agent, Liens on Projects where
Borrower and Agent are insured against such Liens by title insurance
acceptable to the Lenders, (vi) Liens securing assessments or charges payable
to a property owner association or similar entity, which assessments are not
yet due and payable, or (vii) other Liens expressly permitted by the terms
of the Mortgages granted by Borrower or its Affiliates in favor of the Agent.
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"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency
or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Internal Revenue Code.
"Projects" means the real estate projects owned by Borrower, a Wholly
Owned Subsidiary of Borrower, a Subpartnership or, to the extent approved by
the Supermajority Lenders, any other Person and "Project" shall mean any one
of the Projects.
"Pro Rata Share" means, with respect to any Lender, the percentage
obtained by dividing (a) such Lender's Commitment by (b) the aggregate
Commitments of all Lenders, or, if the Commitments shall have been
terminated, the percentage obtained by dividing (x) the aggregate unpaid
principal amount of such Lender's Note or Notes by (y) the aggregate unpaid
principal amount of all Lenders' Notes; provided however, in determining such
percentage at any given time, all then existing Defaulting Lenders will be
disregarded and excluded and the Pro Rata Shares of Lenders shall be
redetermined to exclude the Pro Rata Shares of such Defaulting Lenders.
"Protective Advance" means all sums expended as determined by Agent to
be necessary to: (a) protect the priority, validity and enforceability of the
Liens on, and security interests in, any Collateral and the instruments
evidencing or securing the Obligations, or (b) (i) prevent the value of any
Collateral from being materially diminished (assuming the lack of such a
payment within the necessary time frame could potentially cause such
Collateral to lose value), or (ii) protect any of the Collateral from being
materially damaged, impaired, mismanaged or taken, including, without
limitation, any amounts expended in accordance with Section 9.3 or post-
foreclosure ownership, maintenance, operation or marketing of any Eligible
Project.
"Rate Selection Notice" has the meaning set forth in Section 2.3(c)
hereof. Each Rate Selection Notice shall be substantially in the form of
Exhibit C attached hereto.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System from time to time in effect and shall include any
successor or other regulation relating to reserve requirements applicable to
member banks of the Federal Reserve System.
"REIT" means a real estate investment trust qualified under the
Internal Revenue Code.
"Reserved Construction Loan" shall mean 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
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<PAGE>
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 Agent in its reasonable
judgment, will be sufficient, as reasonably determined by the Agent 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 6.1(f) hereof.
"Senior Officer" shall mean, with respect to Borrower, Holdings I or
CBL Properties, Inc., the President, any Senior Executive Vice President,
Executive Vice President or Senior Vice President of both CBL Properties,
Inc. and Holdings I.
"Significant Subsidiary" shall mean any Subsidiary which either (a)
owns any of the Collateral or (b) has assets having an aggregate book value
in excess of $500,000.
"Subpartnership" means any partnership in which Borrower is the sole
general partner or managing general partner, and in which CBL Properties,
Inc. is the sole limited partner or sole other general partner. For purposes
of clarity, each Subpartnership is a Subsidiary of Borrower.
"Subsidiary" shall mean, 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 and
Holdings I and Holdings II shall be deemed to be Wholly Owned Subsidiaries
of CBL Properties, Inc.
"Supermajority Lenders" shall mean, at any time, Lenders holding at
least eighty-five percent (85%) of the aggregate principal amount of the
Commitment or, if the Commitment has been terminated, Lenders holding at
least eighty-five percent (85%) of the aggregate outstanding principal amount
of the Loan; provided however, in determining such percentage at any given
time, all then existing Defaulting Lenders will be disregarded and excluded
and the Pro Rata Shares of Lenders shall be redetermined, for voting purposes
only, to exclude the Pro Rata Shares of such Defaulting Lenders.
"Term Loan" has the meaning set forth in Section 2.12 hereof.
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"Term Loan Conversion Date" has the meaning set forth in Section 2.12
hereof.
"Term Loan Termination Date" means the date which is three (3) years
after the Term Loan Conversion Date.
"Termination Date" means the earlier to occur of (a) September 26,
1999, or such later date to which the Termination Date may be extended by the
written agreement of the Borrower, the Agent and all the Lenders pursuant to
Section 2.11 hereof, (b) the date Lenders' Commitment to fund Advances are
terminated pursuant to Section 7.2 hereof or (c) the date that Lender's
Commitments are reduced to zero by Borrower pursuant to Section 2.1 hereof.
"Total Obligations" means, as of any date, the sum (without
duplication) of (a) the Indebtedness of Borrower, Holdings I, Holdings II,
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, Holdings I, Holdings II, 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, Holdings I's, Holdings II'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, Holdings
I, Holdings II, 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 Holdings I,
Holdings II, CBL Properties, Inc., determined in each case on a Combined
basis in accordance with GAAP.
"Unconsolidated Affiliate" shall mean, 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.
"Unused Facility Fee" has the meaning set forth in Section 2.8(a)
hereof.
1.2 Use of Defined Terms. All terms defined in this Agreement and the
Exhibits hereto shall have the same defined meanings when used in any other
Loan Document, unless the context shall require otherwise.
1.3 Accounting Terms, Calculation. (a) Except as otherwise expressly
provided herein, all accounting terms used herein shall be interpreted, and
all financial statements and certificates and reports as to financial matters
required to be delivered to the Lenders hereunder shall (unless otherwise
disclosed to the Lenders in writing at the time of delivery thereof in the
manner described in subsection (b) below) be prepared, in accordance with
generally accepted accounting principles applied on a basis consistent with
those used in the preparation of the latest financial statements furnished
to the Lenders hereunder (which, prior to the delivery of the first financial
statements under Section 6.1 hereof, shall mean the certified financial
statements as at June 30, 1996 referred to in Section 5.4 hereof). All
calculations made for the purposes of determining compliance with this
Agreement shall (except as otherwise expressly provided herein) be made by
application of generally accepted accounting principles applied on a basis
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consistent with those used in the preparation of the annual or quarterly
financial statements furnished to the Lenders pursuant to Section 6.1 hereof
most recently prior to or concurrently with such calculations (or, prior to
the delivery of the first financial statements under Section 6.1 hereof, used
in the preparation of the certified financial statements as at June 30, 1996,
referred to in Section 5.4 hereof) unless (i) either (x) Borrower shall have
objected to determining such compliance on such basis at the time of delivery
of such financial statements or (y) the Majority Lenders shall so object in
writing within 30 days after delivery of such financial statements and (ii)
Borrower and the Majority Lenders have not agreed upon amendments to the
provisions of this Agreement to reflect any change in such basis, in which
event such calculations shall be made on a basis consistent with those used
in the preparation of the latest financial statements as to which such
objection shall not have been made (which, if objection is made in respect
of the first financial statements delivered under Section 6.1 hereof, shall
mean the financial statements referred to in Section 5.4 hereof).
(b) Borrower shall deliver to the Lenders at the same time as
the delivery of any annual or quarterly financial statement under Section 6.1
hereof (i) a description in reasonable detail of any material variation
between the application of accounting principles employed in the preparation
of such statement and the application of accounting principles employed in
the preparation of the next preceding annual or quarterly financial
statements as to which no objection has been made in accordance with the last
sentence of subsection (a) above and (ii) reasonable estimates of the
difference between such statements arising as a consequence thereof.
(c) To enable the ready and consistent determination of
compliance with the covenants set forth in Article 6 hereof, Borrower will
not change the last day of its fiscal year from December 31 of each year, or
the last days of the first three fiscal quarters in each of its fiscal years
from March 31, June 30 and September 30 of each year, respectively, without
the prior written approval of the Majority Lenders.
1.4 Terminology. All personal pronouns used in this Agreement,
whether used in the masculine, feminine or neuter gender, shall include all
other genders; the singular shall include the plural, and the plural shall
include the singular. Titles of Sections in this Agreement are for
convenience only, and neither limit nor amplify the provisions of this
Agreement, and all references in this Agreement to Sections, Subsections,
paragraphs, clauses, subclauses, Exhibits or Schedules shall refer to the
corresponding Section, Subsection, paragraph, clause, subclause of, Exhibit
or Schedule attached to, this Agreement, unless specific reference is made
to the articles, sections or other subdivisions of, Exhibits or Schedules to,
another document or instrument. All Exhibits and Schedules attached hereto
are by reference made a part hereof. All references to any instrument,
document or agreement shall, unless the context otherwise requires, refer to
such instrument, document or agreement as the same may be, from time to time,
amended, modified, supplemented, renewed, extended, replaced or restated. In
the event that the Section references contained in any Mortgage granted to
the Agent on an Eligible Project (a "Project Mortgage") vary from the Section
references set forth in the form of Mortgage attached hereto as Exhibit D
(the "Form Mortgage"), any reference contained in this Agreement to a
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specific section of a Mortgage shall, when applied to such Project Mortgage,
be deemed to refer to the section in the Project Mortgage which most closely
corresponds to the text of specified section in the Form Mortgage.
ARTICLE 2.
THE LOAN
SECTION 2.1 Commitment to Lend. Subject to the terms and conditions
set forth in this Agreement, so long as there exists no (i) Default under
Sections 7.1(a), 7.1(g) or 7.1(h) hereof, (ii) other Default as to which
Agent has given Borrower notice or (iii) Event of Default, each Lender
severally agrees to make loans (each an "Advance" and collectively the
"Advances") to Borrower from time to time on any Business Day or LIBOR
Business Day, as appropriate, during the period from and including the
Effective Date to, but not including, the Term Loan Conversion Date (in the
event the Loan is converted into the Term Loan) or the Termination Date (in
the event the Loan is not converted into the Term Loan) in a principal amount
not to exceed the lesser of (a) such Lender's Commitment less such Lender's
Pro Rata Share of the aggregate face amount of outstanding Letters of Credit
or (b) such Lender's Pro Rata Share of the amount equal to (i) the Borrowing
Base less (ii) the aggregate face amount of the outstanding Letters of
Credit. Advances hereunder made at any one time shall be in an aggregate
principal amount of not less than $200,000.00 or any larger multiple of
$25,000.00 (except that any Base Rate Advance may be in the aggregate amount
of the unused Commitments). Within the foregoing limits, Borrower may borrow
under this Section 2.1, prepay the Advances as provided in this Agreement,
and reborrow at any time prior to the Term Loan Conversion Date (in the event
the Loan is converted into the Term Loan) or the Termination Date (in the
event the Loan is not converted into the Term Loan) under this Section 2.1.
Borrower shall have the right, upon (3) Business Days' prior written notice
to Agent, to permanently reduce the unutilized portion of the Commitments;
provided that any portion of the reduction shall be in the minimum amount of
$1,000,000.00 or in any integral multiple thereof.
SECTION 2.2 Letters of Credit.
(a) Subject to the terms and conditions set forth in this Agreement,
at any time and from time to time through the day that is the earlier to
occur of the Term Loan Conversion Date or thirty (30) days prior to the
Termination Date, the Agent shall cause the Issuing Bank to issue such
Letters of Credit for the account of Borrower as the Borrower may request by
a request for Letter of Credit; provided that (i) upon issuance of such
Letters of Credit, the sum of the aggregate principal amount of all
outstanding Advances plus the aggregate face amount of all outstanding
Letters of Credit shall not exceed the lesser of (A) the Borrowing Base or
(B) then applicable aggregate amount of the Commitments; (ii) the aggregate
face amount of all outstanding Letters of Credit (including without
limitation the requested Letter of Credit) shall not exceed Ten Million
Dollars ($10,000,000); and (iii) unless all the Lenders otherwise consent in
writing, the term of any Letter of Credit shall not extend beyond the
Termination Date and no Letter of Credit shall contain an automatic extension
or renewal clause.
(b) Borrower shall deliver to the Agent a duly executed request for
Letter of Credit not later than 9:00 A.M., Pacific Time, at least five (5)
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Business Days prior to the date upon which the requested Letter of Credit is
to be issued. The Borrower shall further deliver to the Agent and the Issuing
Bank such additional instruments and documents as the Agent and/or the
Issuing Bank may require, in conformity with the then standard practices of
its letter of credit department, in connection with the issuance of such
Letter of Credit.
(c) The Agent shall, if it approves of the content of the request for
Letter of Credit (which approval shall not be unreasonably withheld) give
prompt written notice to the Lenders upon the approval of the request, and
subject to the conditions set forth in this Agreement, cause the issuance of
the Letter of Credit on or before 5:00 p.m. Pacific Time, on or before the
day five (5) Business Days following receipt of the documents last due
pursuant to Section 2.2(b). Upon issuance of a Letter of Credit, the Agent
shall promptly notify the Lenders of the amount and terms thereof. The Agent
shall provide copies of each Letter of Credit to the Lenders promptly
following issuance thereof and shall notify the Lenders promptly of all
payments, reimbursements, expirations, negotiations, transfers and other
activity with respect to outstanding Letters of Credit.
(d) Upon the issuance of a Letter of Credit, each Lender shall be
deemed to have purchased a pro rata issuer participation therein from the
Issuing Bank in an amount equal to the Lender's Pro Rata Share of the face
amount of the Letter of Credit.
(e) If and to the extent that any amounts are drawn upon any Letters
of Credit the amount so drawn shall immediately be paid by Agent to the
Issuing Bank, and, from the date of payment thereof by the Issuing Bank,
shall be considered (i) so long as there exists no Default or Event of
Default, an Advance of the Agent for all purposes hereunder and (ii) if there
then exists a Default or Event of Default, a purchase by the Agent of the
Issuing Bank's right to reimbursement in respect of such Letter of Credit.
(f) Promptly after payment by the Issuing Bank of any amount drawn
upon any Letter of Credit, the Agent shall, without notice to or the consent
of the Borrower, direct the Lenders to advance to the Agent, their Pro Rata
Share of the amount so drawn. The proceeds of such advances shall be applied
by the Agent to reimburse it for the payment made by it to the Issuing Bank
under the Letter of Credit. All amounts paid by the Lenders pursuant to this
Section 2.2(f) shall be deemed to be (i) so long as there exists no Default
or Event of Default, Base Rate Advances made pursuant to this Agreement and
(ii) if there then exists a Default or Event of Default, a purchase by each
Lender of a participation in the Letter of Credit Obligations in respect of
such Letter of Credit.
(g) On the occurrence of (i) the Termination Date (in the event the
Loan is not converted into the Term Loan), or (ii) the Term Loan Termination
Date (in the event the Loan is converted into the Term Loan), prior to the
expiration of all Letters of Credit, the Borrower shall provide to the Agent
a standby letter of credit issued by a bank satisfactory to the Agent, in
form and substance satisfactory to the Agent, in favor of the Agent in a face
amount equal to outstanding Letters of Credit on that date, or shall make
other provisions satisfactory to the Agent for the full collateralization,
by cash or cash equivalent, of such outstanding Letter of Credit. In the
event of failure of the Borrower to comply with the requirement of this
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Section 2.2(g), such portion of the face amount of all outstanding Letters
of Credit as to which the Borrower has failed to comply shall be deemed to
be immediately due and payable.
(h) The issuance of any supplement, modification, amendment, renewal,
or extension to or of any Letter of Credit shall be treated in all respects
the same as issuance of a new Letter of Credit.
(i) Borrower assumes all risks of the acts or omissions of any
beneficiary or transferee of any Letter of Credit with respect to its use of
such Letter of Credit. Neither the Issuing Bank, the Agent, any Lender nor
any of their respective officers or directors shall be liable or responsible
for, nor shall Borrower's obligations hereunder in respect of such Letters
of Credit be impaired as a result of:
(i) any lack of validity or enforceability of any Letter of
Credit or any other agreement or instrument relating thereto (such Letter of
Credit and any other agreement or instrument relating thereto being,
collectively, the "Letter of Credit Documents");
(ii) the use that may be made of any Letter of Credit or any
acts or omissions of any beneficiary or transferee in connection therewith;
(iii) any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(iv) the existence of any claim, set-off, defense or other right
that the Borrower may have at any time against any beneficiary or any
transferee of a Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank or any
other Person, whether in connection with the transactions contemplated by the
Letter of Credit Documents or any unrelated transaction;
(v) payment by the Issuing Bank against presentation of
documents that do not comply with the terms of a Letter of Credit, including
failure of any documents to bear any reference or adequate reference to the
Letter of Credit; or
(vi) any other circumstances whatsoever in making or failing to
make payment under any Letter of Credit.
In furtherance and not in limitation of the foregoing, the Issuing Bank may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary
SECTION 2.3 Method of Borrowing.
(a) Application for Advance. Borrower shall deliver to Agent a Notice
of Borrowing not later than 10:00 A.M. (Pacific Standard Time or Pacific
Daylight Time, as applicable) at least one (1) Business Day prior to the date
such Advance is to be made, in the case of a Base Rate Advance, and at least
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three (3) LIBOR Business Days prior to the date such Advance is to be made,
in the case of a LIBOR Advance. Prior to delivering a Notice of Borrowing,
Borrower may (without specifying whether the Advance shall be a Base Rate
Advance or a LIBOR Advance) request that Agent provide Borrower with the most
recent LIBOR Rate available to Agent. Agent shall endeavor to provide such
quoted rate to Borrower and to Lenders on the date of such request.
(b) Funding.
(i) Promptly after receipt of a Notice of Borrowing under
Section 2.3(a), Agent shall send a copy thereof to each Lender by telex or
telecopy, or other similar form of transmission. Each Lender shall deposit
an amount equal to its Pro Rata Share of the Advance requested by Borrower
with Agent at its Lending Office, in immediately available funds not later
than 10:00 A.M. (Pacific Standard Time or Pacific Daylight Time, as
applicable) on the date such Advance is to be made. Upon fulfillment of all
applicable conditions set forth herein, Agent shall make available to
Borrower at Agent's Lending Office, not later than 2:00 P.M. (Pacific
Standard Time or Pacific Daylight Time, as the case may be) on the date of
each Advance, the proceeds of such amounts received by Agent. The failure of
any Lender to deposit the amount described above with Agent shall not relieve
any other Lender of its obligations hereunder to make its Pro Rata Share of
the Advance.
(ii) Unless Agent shall have been notified by any Lender that
such Lender will not make available to Agent such Lender's Pro Rata Share of
a proposed Advance, Agent may in its discretion assume that such Lender has
made such Advance available to Agent in accordance with this Section 2.3(b)
and Agent may, if it chooses, in reliance upon such assumption, make such
Advance available to Borrower. If and to the extent such Lender shall not so
make its Pro Rata Share of the proposed Advance available to Agent, such
Lender and Borrower severally agree to pay or repay to Agent within two (2)
days after demand the amount of such Advance together with interest thereon,
for each day from the date such Advance is made available to Borrower until
the date such amount is paid or repaid to Agent at (A) in the case of
Borrower, the interest rate applicable at the time to other Lenders' Advances
made on the date of such Advance, (B) in the case of such Lender, the Federal
Funds Rate. If such Lender shall pay to Agent such amount, such amounts so
repaid shall constitute such Lender's Advance for purposes of this Agreement.
If such Lender shall fail to pay such amount to Agent and Borrower repays
such amount to Agent, Borrower shall be entitled to pursue any remedies it
might have against such Lender under this Agreement or at law or in equity
for failure to make such Advance.
(c) Selection of Interest Period. Upon delivering a Notice of
Borrowing under Section 2.3(a) hereof, Borrower shall advise Agent as to
whether the Advance shall be (i) a LIBOR Advance, in which case Borrower
shall specify the applicable Interest Period therefor, or (ii) a Base Rate
Advance. Prior to 2:00 P.M. at least three (3) LIBOR Business Days prior to
the expiration of each Interest Period with respect to a LIBOR Advance,
Borrower shall give Agent notice (a "Rate Selection Notice"), specifying
whether such Advance shall, on the last day of such Interest Period, be
continued as a LIBOR Advance or converted to a Base Rate Advance. With
respect to any Base Rate Advance, Borrower shall have the right, on any LIBOR
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Business Day, as the case may be ("Conversion Date"), to convert such Base
Rate Advance to a LIBOR Advance, by giving Agent a Rate Selection Notice of
such selection at least three (3) LIBOR Business Days prior to such
Conversion Date. Each Rate Selection Notice shall either be in writing or by
telephone immediately followed by written notice. If any Rate Selection
Notice shall specify that said Advance shall be a LIBOR Advance, such Rate
Selection Notice shall also specify the length of the succeeding Interest
Period selected by Borrower with respect to such Advance. If a Rate Selection
Notice shall not have been timely received by Agent in respect of a LIBOR
Advance prior to the expiration of the then-relevant Interest Period for such
LIBOR Advance, then Borrower shall be deemed to have elected to continue such
Advance as a LIBOR Advance, with an Interest Period of thirty (30) days.
Promptly after receipt of a Rate Selection Notice under this Section 2.3(c),
Agent shall send a copy thereof to each Lender by telex or telecopy, or
similar form of transmission.
Notwithstanding anything to the contrary contained herein, (i) no more
than four (4) Interest Periods shall be in effect at any one time with
respect to LIBOR Advances; (ii) Borrower shall have no right to select an
Interest Period of longer than one (1) month if at the time of such LIBOR
Advance, the outstanding principal balance of the Loan exceeds the Borrowing
Base or, to the extent Borrower is then permitted to request LIBOR Advances,
if there exists any Default hereunder; (iii) Borrower shall have no right to
request an Interest Period (A) in the event the Loan has not been converted
into the Term Loan, that extends beyond the Termination Date, or (B) in the
event the Loan has been converted into the Term Loan, that extends beyond a
date on which a quarterly principal payment on the Term Loan is due unless,
giving effect to such Interest Period, the aggregate amount of LIBOR Advances
having Interest Periods ending after such date is not greater than the
principal amount of the Term Loan scheduled to be outstanding after such
date; and (iv) Borrower shall have no right to request a LIBOR Advance if (A)
there then exists any (1) Event of Default; (2) Default under Sections
7.1(a), 7.1(g) or 7.1(h) hereof, (3) other Default as to which Agent has
given Borrower notice, or (B) the interest rate applicable thereto under
Section 2.5 would exceed the Maximum Rate in effect on the first day of the
Interest Period applicable to such LIBOR Advance.
Each Notice of Borrowing and each Rate Selection Notice shall be
considered delivered only upon actual receipt thereof by the Agent, shall be
irrevocable and binding on Borrower and, in respect of any LIBOR Advance
specified in such Notice of Borrowing or Rate Selection Notice, Borrower
shall indemnify Agent and each Lender against any Consequential Loss incurred
by Agent and each Lender as a result of (i) any failure to fulfill, on or
before the date specified for such Advance, the conditions to such Advance
set forth herein, or (ii) Borrower's requesting that an Advance not be made,
continued or converted on the date specified for such Advance in the Notice
of Borrowing or Rate Selection Notice. A certificate of Agent and each Lender
establishing the amount due from Borrower according to the preceding
sentence, together with a description in reasonable detail of the manner in
which such amount has been calculated, shall be conclusive in the absence of
manifest error.
SECTION 2.4 Notes. Each Lender's Pro Rata Share of the Loan shall be
evidenced by a Note payable to the order of such Lender in the principal face
amount equal to such Lender's Commitment.
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SECTION 2.5 Interest Rate.
(a) All Advances. The unpaid principal of each Base Rate Advance
shall bear interest from the date of such Advance to but not including the
date such Advance is either converted pursuant to Section 2.3(c) or is repaid
in full at a rate per annum that shall from day to day be equal to the lesser
of (i) the Base Rate in effect from day to day, or (ii) the Maximum Rate. The
unpaid principal of each LIBOR Advance shall bear interest from the date of
such Advance to but not including the date such Advance is either converted
pursuant to Section 2.3(c) or is repaid in full at a rate per annum that
shall be equal to the lesser of (i) the LIBOR Rate for the then applicable
Interest Period plus one percent (1.00%), or (ii) the Maximum Rate.
(b) Default Rate. Upon the occurrence of an Event of Default, all
principal of, and to the extent permitted by applicable law, interest on the
Obligations shall bear interest until paid at the lesser of (i) the Base Rate
from time to time in effect plus two percent (2%), or (ii) the Maximum Rate.
Such lesser rate is referred to herein and in the Loan Documents as the
"Default Rate."
(c) Late Fee. Borrower acknowledges that late payment to Agent will
cause Agent and Lenders to incur costs not contemplated by this Agreement,
including, but not limited to, processing and accounting charges.
Accordingly, in the event Borrower fails to make any payment hereunder within
fifteen (15) days after the date such payment is due and payable, Borrower
shall pay to the Agent, for the benefit of the Lenders, as liquidated damages
for the purpose of defraying the expense incident to handling such delinquent
payment and not as a penalty, a late charge equal to three percent (3%) of
the amount of such payment, whether such payment is of principal, interest,
fees, expenses or other amounts due hereunder or under the Loan Documents;
provided, however, that in the event that (i) Borrower has not been invoiced
for any payment hereunder (other than principal payments) within fifteen (15)
days after the date such payment was due, and (ii) Borrower requested in
writing such invoice from Agent not later than ten (10) days after the date
such payment was due, Borrower shall not be required to pay such late fee
unless such payment remains unpaid fifteen (15) days after Borrower's receipt
of such invoice. Borrower and Agent agree that this late charge represents
a reasonable sum considering all of the circumstances existing on the date
hereof and represents a fair and reasonable estimate of the costs that Agent
and Lenders will incur by reason of late payment. Borrower and Agent further
agree that proof of actual damages would be costly and inconvenient.
Acceptance of any late charge shall not constitute a waiver of the default
with respect to the overdue installment (except to the extent payment of such
late charge is accompanied by payment of the Obligations in full), and shall
not prevent Agent from exercising any of the other rights available hereunder
or any other Loan Document. Such late charge shall be paid without prejudice
to any other rights of Agent. Payment of any late charge hereunder may be
waived upon the consent of the Majority Lenders.
(d) Recapture Rate. If the applicable interest rate ever exceeds the
Maximum Rate thereby causing the interest charged on the Obligations to be
limited to the Maximum Rate, then, to the extent permitted by Applicable Law,
any subsequent reductions in the applicable interest rate shall not reduce
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the rate of interest charged hereunder below the Maximum Rate until the total
amount of interest accrued on the Obligations equals the amount of interest
that would have accrued thereon if the applicable contract rate had at all
times been in effect.
SECTION 2.6 Special Provisions for LIBOR Advances.
(a) Inadequacy of LIBOR Pricing. If with respect to an Interest
Period for any LIBOR Advance, Agent reasonably determines that, by reason of
circumstances occurring subsequent to the date hereof affecting the interbank
eurodollar market generally, either deposits in United States Dollars (in the
applicable amounts) are not being offered to Wells Fargo Bank in the
interbank eurodollar market for such Interest Period or that quotes of the
LIBOR Rate are not generally available, then Agent shall forthwith give
notice thereof to Borrower and Lenders, whereupon until Agent notifies
Borrower that the circumstances giving rise to such suspension no longer
exist, (A) the obligation of Lenders to make LIBOR Advances shall be
suspended, and (B) Borrower shall either (x) repay in full the then-
outstanding principal amount of the LIBOR Advances, together with accrued
interest thereon on the last day of the then-current Interest Period
applicable to such LIBOR Advances, or (y) convert such LIBOR Advances to Base
Rate Advances in accordance with Section 2.3(c) of this Agreement on the last
day of the then-current Interest Period applicable to each such LIBOR
Advance.
(b) Illegality of LIBOR Advances. If, after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration thereof
by any Governmental Authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by any Lender
with any request or directive (whether or not having the force of law) of any
such authority, central bank or comparable agency shall make it unlawful or
impossible for any Lender to make, maintain or fund its LIBOR Advances, such
Lender shall forthwith give notice thereof to Agent and Borrower. Before
giving any notice pursuant to this Section 2.6(b) such Lender shall designate
a different LIBOR lending office if such designation will avoid the need for
giving such notice and will not be otherwise disadvantageous to such Lender
(as determined in good faith by such Lender). Upon receipt of such notice,
Borrower shall either (i) repay in full the then outstanding principal amount
of any of such Lender's LIBOR Advances, together with accrued interest
thereon, or (ii) convert such Lender's LIBOR Advances to Base Rate Advances,
on either (A) the last day of the then-current Interest Period applicable to
such LIBOR Advance if such Lender may lawfully continue to maintain and fund
such LIBOR Advance to such day or (B) immediately if such Lender may not
lawfully continue to fund and maintain such LIBOR Advance to such day.
(c) Increased Costs. If, after the date hereof, any Governmental
Authority, central bank or other comparable authority, shall at any time
impose, modify or deem applicable any reserve (including, without limitation,
the LIBOR Reserve Requirement and any other reserve imposed by the Board of
Governors of the Federal Reserve System), special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Lender, or shall impose on any Lender (or its eurodollar
lending office) or the interbank eurodollar market any other condition
affecting its LIBOR Advances, such Lender's Note, its obligation to make
LIBOR Advances or its obligations to issue, maintain or participate in
Letters of Credit; and the result of any of the foregoing is to increase the
cost to such Lender of making or maintaining its LIBOR Advances or of
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agreeing to issue or of issuing, maintaining or participating in Letters of
Credit, or to reduce the amount of any sum received or receivable by such
Lender under this Agreement, or under such Lender's Note, by an amount deemed
by such Lender to be material, then, within five (5) days after demand by
such Lender, Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender for such increased cost or reduction
with respect to such Lender's Note, its obligation to make or maintain LIBOR
Advances or its obligations to issue, maintain or participate in Letters of
Credit. Such Lender will use good faith and reasonable efforts to designate
a different lending office for such Lender's LIBOR Advances if such
designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the sole opinion of such Lender, be
disadvantageous to such Lender. A certificate of such Lender claiming
compensation under this Section 2.6(c) and setting forth in reasonable detail
the calculation of the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error. If such
Lender demands compensation under this Section 2.6(c) in respect of its LIBOR
Advances, then Borrower may at any time, upon at least five (5) Business
Days' prior notice to such Lender, either (i) repay in full such Lender's
then outstanding LIBOR Advances, together with accrued interest thereon to
the date of prepayment or (ii) convert such Lender's LIBOR Advances to Base
Rate Advances in accordance with the provisions of this Agreement; provided,
however, that Borrower shall be liable for any Consequential Loss arising
pursuant to such actions, unless the requirement or condition giving rise to
the incurred costs is not generally applicable to lenders similar to the
affected Lender, but rather is applicable solely to such Lender.
(d) Effect on Base Rate Advances. If notice has been given pursuant
to Section 2.6(a) or Section 2.6(b) requiring LIBOR Advances of a Lender to
be repaid or converted, then unless and until Agent notifies Borrower that
the circumstances giving rise to such repayment no longer apply, all Advances
shall be Base Rate Advances. If Agent notifies Borrower that the
circumstances giving rise to such repayment no longer apply, Borrower may
thereafter select Advances from such Lender to be LIBOR Advances in
accordance with Section 2.3(c) of this Agreement.
(e) Payments Not At End of Interest Period. If Borrower makes any
payment of principal with respect to any LIBOR Advance on any day other than
the last day of an Interest Period applicable to such LIBOR Advance (other
than any such payment required by Section 2.6(b)(ii)(B) hereof), then
Borrower shall reimburse Lenders on demand the Consequential Loss incurred
by Lenders as a result of the timing of such payment. A certificate of any
Lender setting forth in reasonable detail the basis for the determination of
the amount of Consequential Loss shall be delivered to Borrower by Agent and
shall, in the absence of manifest error, be conclusive and binding. Any
conversion of a LIBOR Advance to a Base Rate Advance on any day other than
the last day of the Interest Period for such LIBOR Advance shall be deemed
a payment for purposes of this Section 2.6(e).
(f) Each Lender shall notify Borrower and the Agent of any event
occurring after the date of this Agreement entitling such Lender to
compensation under Section 2.6(c) within 45 days after such Lender obtains
actual knowledge thereof; provided that if any Lender fails to give such
notice to Borrower within 45 days after it obtains actual knowledge of such
an event, such Lender shall, with respect to compensation payable pursuant
to such subsection (c) in respect of any costs resulting from such event,
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only be entitled to payment under subsection (c) for costs incurred from and
after the date 45 days prior to the date that such Lender gives such notice.
SECTION 2.7 Payments.
(a) Payment of Interest. Interest on the unpaid principal amount of
each Advance shall be payable monthly as it accrues on the first day of each
month, commencing with the first such day occurring after the date of the
Initial Advance, and thereafter until the Loan is paid in full.
(b) Payment of Principal of Loan. Subject to Section 2.12, the Loan
shall be due and payable in full on the Termination Date.
(c) Payment of Principal of Term Loan. Borrower shall repay the
principal balance of the Term Loan in twelve equal consecutive quarterly
installments, with the first installment due on the first day of the month
immediately following the date which is ninety (90) days after the Term Loan
Conversion Date, the second through eleventh installments due on the first
day of the month every three (3) months thereafter, and the final installment
due on the Term Loan Termination Date.
(d) Optional Prepayments. Borrower may, upon at least one (1)
Business Day's notice to Agent, prepay the Loan in whole at any time, or from
time to time in part in an amount equal to $100,000.00 or any greater amount
which would reduce the outstanding principal balance of the Loan to a
multiple of $100,000.00, by paying the principal amount to be prepaid
together with accrued interest thereon to the date of prepayment; provided,
however, that if Borrower shall prepay the principal of any LIBOR Advance on
any date other than the last day of the Interest Period applicable thereto,
Borrower shall simultaneously therewith make the payments required by Section
2.6(e) hereof; provided further, however, that Borrower shall not make any
prepayment which would reduce the outstanding principal balance of the Loan
to zero unless Borrower concurrently reduces the Commitments to zero pursuant
to Section 2.1. Any such prepayment made on the Term Loan on or after the
Term Loan Conversion Date shall be applied to the principal installments of
the Loan in the inverse order of their maturity.
(e) Mandatory Prepayments.
(i) In the event the sum of the outstanding principal balance
of the Advances made by any Lender plus such Lender's Pro Rata Share of the
aggregate face amount of the outstanding Letters of Credit exceeds such
Lender's Commitment, Borrower shall, within two (2) days after demand
therefor, pay to Agent for the benefit of such Lender, the amount by which
such Advances and the Lender's Pro Rata Share of the outstanding Letters of
Credit exceeds such lender's Commitment.
(ii) In the event the sum of the outstanding principal balance
of the Loan plus the aggregate face amount of the outstanding Letters of
Credit exceeds the Borrowing Base at any time other than by reason of a
reduction of the Borrowing Base pursuant to Section 3.1(b)(ii), Borrower
shall, within thirty (30) days after such date, deliver to each Lender a plan
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acceptable to the Lenders for bringing the Loan within the Borrowing Base
within ninety (90) days after the acceptance of such plan through the payment
of such excess, the admission of additional Projects into the Borrowing Base,
or through other means acceptable to Lenders in their sole discretion.
Lenders agree that they will review and respond to such proposed plan in a
reasonably prompt manner. In the event either (A) Borrower fails to deliver
an acceptable plan to the Lenders within said thirty (30) days or (B) the
Loan continues to exceed the Borrowing Base for ninety (90) days following
delivery of an acceptable plan (or, if the Lenders, in their discretion,
consent to a period longer than 90 days as a part of any such plan, beyond
the end of such longer period), Borrower shall prepay the amount of the Loan
in excess of the Borrowing Base, together with accrued interest thereon
(collectively, the "Overadvance Amount"), as follows:
(1) on such thirtieth (30th) day, ninetieth (90th) day
or the last day of such longer period as the Lenders, in their discretion,
have approved, as the case may be, (the "Applicable Date"), Borrower shall
prepay an amount equal to the lesser of the Overadvance Amount and the
outstanding principal amount of Base Rate Advances;
(2) to the extent that the outstanding principal amount
of Base Rate Advances are less than the Overadvance Amount, on the last day
of each Interest Period to expiring after the Applicable Date, Borrower shall
prepay an amount equal to the lesser of the amount of the LIBOR Advance to
which such Interest Period relates and the unpaid portion of the Overadvance
Amount; and
(3) on thirtieth (30th) day after the Applicable Date,
Borrower shall prepay the remaining portion of the Overadvance Amount.
(iii) Failure by Borrower to have complied with the foregoing in
a timely manner shall constitute an Event of Default without further notice
or grace period hereunder. No further Advances, or release of all or any
portion of any Eligible Project, shall be permitted so long as such excess
borrowing condition shall continue to exist. Nothing in this Section 2.7(e)
shall excuse Borrower's compliance with all terms, conditions, covenants and
other obligations imposed upon it under the Loan Documents during the period
of such excess borrowing, nor in any manner condition or impair Agent's or
Lenders' rights thereunder in respect of any such breach thereof.
(f) General Provisions as to Payments. Borrower shall make each
payment of principal of, and interest on, the Loan or fees payable hereunder,
not later than 11:00 A.M. (Pacific Standard Time or Pacific Daylight Time,
as the case may be) on the date when due, without offset, deduction or
counterclaim, in Federal or other funds immediately available, at Agent's
Lending Office. Whenever any payment of principal of, or interest on, the
Loan or fees (if any) shall be due on a day which is not a Business Day, the
date for payment thereof shall be extended to the next succeeding Business
Day. If the date for any payment of principal is extended by operation of law
or otherwise, interest thereon shall be payable for such extended time.
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(g) Application of Recoveries. Except to the extent otherwise
provided in Section 8.13 hereof, all payments made and actually received by
the Agent in respect of the Loan (from any person or source including,
without limitation, proceeds of title insurance policies with respect to any
Eligible Project) shall be applied in the following order of priority:
(i) to the reimbursement of any reasonable costs incurred by
the Agent to administer, enforce, collect or deal with the Loan (including
payments made pursuant to Section 8.11 or Section 8.12 hereof) (or to
reimbursement of the Lenders to the extent such costs have been paid by the
Lenders) (based on Pro Rata Shares thereof);
(ii) to the repayment of any Protective Advances (to the extent
not paid pursuant to clause (i) above) (based on Pro Rata Shares thereof);
(iii) to the payment of all interest (including default interest)
due and payable on the Notes (based on Pro Rata Shares thereof);
(iv) to the payment of fees payable under the Loan Documents
(based on Pro Rata Shares thereof); and
(v) to the payment of principal of the Notes (based on Pro Rata
Shares thereof).
Agent shall wire transfer to each Lender, at such Lender's bank account
as designated by such Lender to Agent in writing, its Pro Rata Share of any
payments (to the extent payable to Lender pursuant to this Section 2.7(g))
within one (1) Business Day of Agent's receipt of such payment. Agent shall
pay to the Lenders interest thereon, at the Federal Funds Rate, from the
Business Day following receipt of such funds by Agent until such funds are
paid in immediately available funds to the Lender. The Agent shall in any
event not be bound to inquire into or determine the validity, scope or
priority of any interest or entitlement of any Lender and may suspend all
payments and seek appropriate relief (including, without limitation,
instructions from the Majority Lenders or all Lenders, as applicable, or an
action in the nature of interpleader) in the event of any doubt or dispute
as to any apportionment or distribution contemplated hereby. In the absence
of gross negligence or willful misconduct, the Agent shall not be liable for
any apportionment or distribution of payments made by it in good faith
pursuant to this Section, and if any such apportionment or distribution is
subsequently determined to have been made in error, the sole recourse of any
person to whom payment was due, but not made, shall be to recover from the
recipients of such payments any payment in excess of the amount to which they
are determined to have been entitled.
(h) Excess Payments. If any Lender shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of set-off or
otherwise) on account of its interest in the Loan in excess of its Pro Rata
Share in the Loan, then such Lender shall forward such excess payment to
Agent and Agent shall distribute such excess payment to each Lender Pro Rata
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Shares thereof; provided, however, that if all or any portion of such excess
payment is thereafter recovered by the Borrower or other party entitled
thereto through legal action or otherwise, each Lender shall reimburse the
party returning such excess payment in an amount equal to such Lender's Pro
Rata Share of the excess payment.
SECTION 2.8 Fees.
(a) Unused Fee. Borrower agrees to pay to the Agent, for the benefit
of the Lenders an Unused Facility Fee for each calendar quarter, or portion
thereof, during which any of the Commitments are in effect, during the period
commencing on the date hereof and continuing to but not including the Term
Loan Conversion Date (in the event the Loan is converted into the Term Loan)
or the Termination Date (in the event the Loan is not converted into the Term
Loan), equal to the average daily unused portion of the Commitments during
such quarter times one-eighth percent (1/8%) per annum; provided, however,
that if the average daily unused portion of the Commitments is greater than
fifty percent (50%) of the Commitment, during any quarter (or portion thereof
for which such fee is computed), such Unused Facility Fee shall be equal to
the sum of (i) fifty percent (50%) of the Commitments times one-eighth
percent (1/8%) per annum, plus (ii) the amount by which the average daily
unused portion of the Commitments exceeds fifty percent (50%) of the
Commitments, times one-quarter percent (1/4%) per annum. Such Unused Facility
Fee on the unused portion of the Commitments shall be payable quarterly in
arrears on the first day of each December, March, June and September,
commencing on December 1, 1996, and continuing regularly thereafter so long
as the Commitment is in effect, and shall also be payable on the Term Loan
Conversion Date or the Termination Date, as applicable. By way of
illustration, the Unused Facility Fee for the calendar quarter ending on
September 30 shall be due and payable on December 1. Borrower acknowledges
that the Unused Facility Fees payable hereunder are bona fide commitment fees
and are intended as reasonable compensation to Lenders for committing to make
funds available to Borrower as described herein and for no other purposes.
For purposes of this Section 2.8(a), the unused portion of the Commitments
shall mean the amount by which the aggregate amount of the Commitments
exceeds the sum of (x) the aggregate principal amount of the outstanding
Advances plus (y) the aggregate face amount of the outstanding Letters of
Credit.
(b) Extension Fee. If, pursuant to Section 2.11, Lenders grant an
extension of the Termination Date, Borrower agrees to pay to Agent, for the
benefit of the Lenders, an extension fee equal to fifteen one-hundredths
percent (0.15%) of the aggregate amount of the Commitments at such time. Such
fee shall be payable on the date on which Lenders grant such extension.
(c) Term Loan Conversion Fee. If, pursuant to Section 2.12, the
outstanding balance of the Loan is converted into the Term Loan, Borrower
agrees to pay to Agent, for the benefit of the Lenders, an annual conversion
fee, payable on each of the first anniversary and the second anniversary of
the Term Loan Conversion Date, equal to fifteen one-hundredths percent
(0.15%) of the principal balance of the Term Loan outstanding on each such
date (taking into account any principal payment made on such dates).
(d) Other Fees. Borrower shall pay Agent such fees as are provided
for in the fee agreement between Agent and Borrower, as set forth in that
certain letter dated September 26, 1996 from Agent to Borrower.
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(e) Letter of Credit Fees. As additional consideration for the
issuance of any Letters of Credit pursuant to Section 2.2 hereof, Borrower
agrees to pay to the Agent, for the account of the Lenders in accordance with
their respective Pro Rata Shares, a letter of credit fee, in addition to the
processing, administrative and similar fees normally charged by and payable
to the Issuing Bank in connection with the issuance of Letters of Credit and
any other sums due pursuant to Article 3 hereof, equal to one and one-half
percent (11/2%) per annum of the average daily aggregate undrawn amount of the
Letters of Credit, payable quarterly on the last day of each fiscal quarter
of Borrower and on the Termination Date.
SECTION 2.9 Computation of Interest and Fees. Fees and interest on
the Loan and the Letters of Credit shall be computed on the basis of a year
of 360 days and paid for the actual number of days elapsed (including the
first day but excluding the last day).
SECTION 2.10 Option to Replace Lenders. If any Lender, other than
Agent, shall:
(a) become a Defaulting Lender;
(b) has either (i) declined to approve as Eligible Projects three or
more Projects which the Agent and each of the remaining Lenders have approved
as Eligible Projects or (ii) approved three or more Projects as Eligible
Project on the condition that the Approved Percentage for each such Project
is at least fifteen percent (15%) below the average Approved Percentage
approved by the each of the remaining Lenders for such Project;
(c) become subject to the provisions of Section 2.6(b);
(d) make any demand for payment or reimbursement pursuant to Section
2.6(c) or Section 9.7 hereof; or
(e) has declined to approve an Extension Request and each of the
remaining Lenders have approved such Extension Request.
then, in any of the foregoing cases, provided that (x) there does not then
exist any Default or Event of Default and (y) in the case of the
circumstances described in clauses (c) and (d), the circumstances resulting
in such demand for payment or reimbursement under Section 2.6(c) or Section
9.7 or the applicability of Section 2.6(b) are not applicable to all Lenders,
the Borrower may either (i) designate another financial institution (such
financial institution being herein called a "Replacement Lender") acceptable
to the Agent (which acceptance will not be unreasonably withheld) and which
is not an Affiliate of the Borrower, to assume such Lender's Commitment
hereunder and to purchase the Loan of such Lender and such Lender's rights
under this Agreement and the Note held by such Lender, all without recourse
to or representation or warranty (except as to title of such Lender's portion
of the Loan and as to the authority of such Lender to transfer the same) by,
or expense to, such Lender, for a purchase price equal to the outstanding
principal amount of the Loan payable to such Lender plus any accrued but
unpaid interest on such Loan and accrued but unpaid fees owing to such Lender
plus any amounts payable to such Lender under Section 2.6(c) or Section 9.7,
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if any, hereof, and upon such assumption, purchase and substitution, and
subject to the execution and delivery to the Agent by the Replacement Lender
of documentation reasonably satisfactory to the Agent (pursuant to which such
Replacement Lender shall assume the obligations of such original Lender under
this Agreement), the Replacement Lender shall succeed to the rights and
obligations of such Lender hereunder or (ii) pay to the Agent, as cash
collateral, an amount equal to such Lender's Pro Rata Share of the
outstanding Letters of Credit and pay to such Lender the outstanding
principal amount of the Advances payable to such Lender plus any accrued but
unpaid interest on such Advances and accrued but unpaid fees owing to such
Lender plus any amounts payable to such Lender under Section 2.6(c) or
Section 9.7 hereof. In the event that the Borrower exercises its rights under
the preceding sentence, the Lender against which such rights were exercised
shall no longer be a party hereto or have any rights or obligations
hereunder. The remedies of Borrower under this Section 2.10 shall be
cumulative of any other remedies Borrower may have against a Defaulting
Lender under this Agreement or at law or in equity.
SECTION 2.11 Extension of Termination Date. Borrower may request
Agent and Lenders to extend the current Termination Date by successive one-
year intervals by executing and delivering to Agent at least ninety (90) days
but no more than one hundred twenty (120) days prior to the date which is one
(1) year prior to the current Termination Date, a written request in the form
of Exhibit I (an "Extension Request"). Agent shall forward to each Lender a
copy of each Extension Request delivered to Agent promptly upon receipt
thereof. Borrower understands that this Section 2.11 has been included in
this Agreement for Borrower's convenience in requesting an extension and
acknowledges that none of Lenders nor Agent has promised (either expressly
or impliedly), nor has any obligation or commitment whatsoever, to extend the
Termination Date at any time. If all Lenders shall have notified Agent on or
prior to the date which is forty-five (45) days prior to the date which is
one (1) year prior to the current Termination Date that they accept such
Extension Request, the Termination Date shall be extended for one (1) year.
If one and only one Lender shall not have notified Agent on or prior to the
date which is forty-five (45) days prior to the date one year prior to the
Termination Date that it accepts such Extension Request, the Termination Date
shall not be extended unless Borrower proceeds pursuant to Section 2.10, in
which event the Termination Date shall be extended as to all Lenders which
have accepted such Extension Request. If two or more Lenders shall not have
notified Agent on or prior to the date which is forty-five (45) days prior
to the date one year prior to the Termination Date that they accept such
Extension Request, the Termination Date shall not be extended. Agent shall
promptly notify Borrower whether the Extension Request has been accepted or
rejected.
SECTION 2.12 Term Loan Conversion. Subject to the terms and conditions
of this Agreement, if any Extension Request of Borrower shall be denied,
Borrower may then elect to convert the aggregate principal amount of the Loan
then outstanding into a term loan owing to Lenders (the "Term Loan") provided
(a) Borrower has given Agent notice of Borrower's intention to so convert the
Loan not less than thirty (30) days following receipt by Borrower of notice
from Agent that Borrower's Extension Request has been rejected, and (b) the
conditions set forth in Section 4.4 have been satisfied as of the date one
year prior to the current Termination Date. Any such conversion shall become
effective on the date which is one (1) year prior to the Termination Date
(the "Term Loan Conversion Date"). Upon the effectiveness of the conversion
of the outstanding principal balance of Loan into the Term Loan as
contemplated by this Section, Borrower shall have no right to request or
borrow, and no Lender shall have any obligation to make, any Advance. If the
Loan is not converted to the Term Loan, the Loan shall be due and payable in
full on the Termination Date.
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ARTICLE 3.
BORROWING BASE; ELIGIBLE PROJECTS
SECTION 3.1 Borrowing Base.
(a) Admission of Projects into the Borrowing Base.
(i) As of the date hereof, the Lenders have admitted into the
Borrowing Base as Eligible Projects the Projects listed on Schedule 3.1
attached hereto, with the amount of the Borrowing Base attributable thereto
as is set forth in respect of each such Project on Schedule 3.1.
(ii) If Borrower desires that Lenders admit a Project into the
Borrowing Base, Borrower shall notify Agent thereof in writing. No Project
will be evaluated by Lenders for potential inclusion into the Borrowing Base
unless it is a domestic operating regional retail shopping mall or retail
strip shopping center, and unless and until Borrower delivers to Agent and
each Lender the following, in form and substance acceptable to Agent:
(A) A current operating statement for such Project
audited or certified by Borrower as being true and correct in all material
respects and prepared in accordance with GAAP and a comparative sales report
for the current period and for the previous two (2) fiscal years or, if such
Project has been in operation only for a lesser period, such lesser period;
and
(B) A current rent roll for such Project, certified by
Borrower as being true and correct in all material respects and a operating
and occupancy history of such Project for the previous three (3) fiscal years
or, if such Project has been in operation only for a lesser period, such
lesser period, in form satisfactory to Agent, and certified by Borrower and
the management agent of such Project to be true and correct.
(iii) Within ten (10) days after the Agent and the Lenders have
received the foregoing documents and information, each Lender shall notify
the Agent whether or not such Lender is willing to consider such Project and
the Agent shall notify the Borrower as to whether the Agent and the Lenders
are prepared to consider such Project for inclusion in the Borrowing Base;
provided, however, that failure to give such notice within such period shall
not constitute approval to consider such Project as an Eligible Project. If
the Lenders agree to so consider such Project, Agent will promptly notify
Borrower and obtain an Appraisal of such Project in order to determine the
Appraised Value thereof. Upon request of Borrower, Agent shall notify
Borrower of the reasons, to the Agent's knowledge, for any Lender's rejection
of a Project as an Eligible Project. No Project will be further evaluated by
Lenders for potential inclusion into the Borrowing Base unless and until
Borrower delivers to the Agent and each Lender the following, in form and
substance acceptable to Agent and/or the Majority Lenders:
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(A) A copy of the most recent ALTA Owner's Policy of
Title Insurance covering such Project showing the identity of the fee
titleholder thereto and all matters of record;
(B) Copies of all documents of record reflected in
Schedule B of the Owner's Policy of Title Insurance and a copy of the most
recent real estate tax bill and notice of assessment;
(C) A survey of such Project certified by a surveyor
licensed in the applicable jurisdiction to have been prepared in accordance
with the then effective Minimum Standard Detail Requirements for ALTA/ACSM
Land Title Surveys;
(D) A "Phase I" environmental assessment of such Project not
more than twelve (12) months old;
(E) A certificate from a licensed engineer or other
professional satisfactory to Agent that such Project is not located in a
Special Flood Hazard Area as defined by the Federal Insurance Administration;
(F) Copies of (I) all Major Leases, (II) all Major
Agreements, (III) the form or forms of tenant lease used at such Project, and
(IV) all material maintenance or service agreements affecting such Project;
(G) In the case of a Project which was owned by Borrower
or any Wholly Owned Subsidiary of Borrower or Subpartnership on the Effective
Date, a summary, prepared by a Senior Officer or appropriate vice president
of CBL Properties, Inc., of any engineering, mechanical, structural or
maintenance studies performed with respect to such Project or, in the case
of any other Project, copies of any engineering, mechanical, structural or
maintenance studies performed (if not previously performed, such studies
shall be required by Agent on behalf of Lenders) with respect to such
Project;
(H) Evidence that such Project complies with applicable
zoning and land use laws;
(I) A schedule of all personal property, including
intangible personal property owned by Borrower or any Wholly Owned Subsidiary
of Borrower or Subpartnership and used in connection with the maintenance or
operation of such Project; and
(J) Such other information reasonably requested by Agent
in order to evaluate the Project for potential inclusion in the Borrowing
Base.
(iv) Within thirty (30) days after the delivery to the Lenders
of all information and other documents required hereby or requested by the
Agent relating to the Project proposed by Borrower as an Eligible Project
(including, but not limited to, an Appraisal in respect of such Project),
each Lender shall notify the Agent whether such Lender approves such Project
as an Eligible Project and the Agent shall provide Borrower with written
notice of whether the Supermajority Lenders have approved a Project as an
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Eligible Project and, if so approved, the Approved Percentage applicable to
such Project; provided, however, that failure to give such notice within such
period shall not constitute approval of such Project as an Eligible Project;
provided, further, that is such Project is not approved as an Eligible
Project, the Agent shall, upon the request of Borrower, notify Borrower as
to Agent's understanding of why such Project was not approved as an Eligible
Project;
(v) Upon acceptance by Supermajority Lenders and execution and
delivery of documents and completion of all other closing requirements
imposed by Agent, which shall include the Collateral Documents and other
items described in Section 4.3 and such other items or documents as may be
appropriate under the circumstances, including updates of the documents
described in Section 3.1(a)(ii) and Section 3.1(a)(iii)(C), (D) (if then more
than twelve (12) months old), (F) and (I), such Project shall become an
Eligible Project admitted into the Borrowing Base.
(vi) The Lenders may, in their sole discretion, notify Borrower
that a Project that is not otherwise an Eligible Property, may be included
in the Borrowing Base, provided that Agent or the Lenders may require
additional terms and conditions (including a lower Approved Percentage or a
different method of calculating the Permanent Loan Estimate) to be evidenced
in writing as a supplement to this Agreement in order for such Project to be
an Eligible Project and to be admitted into the Borrowing Base.
(vii) If the Appraised Value of a Project is adjusted from that
set forth in the Appraisal relating to such Project as a result of Agent's
internal review, Agent shall advise the Borrower and, upon request of
Borrower, provide a reasonably detailed report describing the nature and
amount of such adjustments; provided, however, that failure to provide such
a report shall not affect the Appraised Value of a Project;
(viii) Pursuant to Section 9.3 hereof, Borrower shall pay
to Agent all reasonable third-party out-of-pocket expenses (which shall be
deemed to include, if outside counsel is not used by the Agent, the allocated
cost of in-house counsel of Agent) of Agent incurred in connection with
Agent's review of requests for a Project to be admitted into the Borrowing
Base.
(ix) If it shall be unlawful for Agent to require Borrower to
pay any taxes with respect to a Project or the Collateral Documents covering
a Project, then the Agent may, in its sole discretion, refuse to submit such
Project to the Lenders for consideration whether such Project shall be an
Eligible Project and be admitted into the Borrowing Base, or, if such Project
has been admitted into the Borrowing Base, then the Agent or the Lenders may,
in its or their sole discretion, elect to remove such Project from the
Borrowing Base.
(b) Borrowing Base. The Borrowing Base for the Projects shall be, as
of any date, equal to (i) the lesser of (A) the sum of the Approved
Percentage of the Appraised Value of each of the Eligible Projects or (B) the
aggregate Permanent Loan Estimates for the Eligible Projects less (ii)
reserves established pursuant to Section 7.5 hereof. In all events, the
Borrowing Base is subject to reduction in the manner set forth in this
Agreement including, without limitation, Section 6.3 and Section 7.4 hereof.
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(c) Computation of Net Operating Income. Borrower shall deliver to
Agent quarterly computations of Net Operating Income for each Eligible
Project with the Borrowing Base information required pursuant to Section
6.1(d) herein. Agent shall notify Borrower in writing of any additional
adjustments to Net Operating Income required by Agent and corresponding
adjustments to the Borrowing Base (if any).
(d) Release of Eligible Projects. Upon repayment and satisfaction in
full of all Obligations and the termination of all Commitments and this
Agreement, Agent will release the Collateral Documents with respect to each
of the Eligible Projects. From time to time Borrower may request, upon not
less than thirty (30) days prior written notice, that an Eligible Project or
portion thereof be released from the Liens created by the Collateral
Documents applicable thereto, which release ("Property Release") shall be
delivered by Agent if all of the following conditions are satisfied as of the
date of such Property Release:
(i) after giving effect to such Property Release, any of Post
Oak Mall, Georgia Square Mall or any regional mall which may be included in
the Borrowing Base and is determined by the Majority Lenders to be of
equivalent financial strength to any of the foregoing malls, will remain as
an Eligible Project in the Borrowing Base;
(ii) no Default or Event of Default has occurred and is then
continuing or will occur after giving effect to such Property Release and the
reduction in the Borrowing Base by reason of the release of all or a portion
of such Eligible Project;
(iii) the Termination Date has not occurred by reason of the
events described in clauses (b) or (c) of the definition thereof;
(iv) Borrower shall have delivered to Agent a Borrowing Base
Certificate reflecting the Borrowing Base after giving effect to such
Property Release;
(v) Borrower shall have delivered to Agent all documents and
instruments reasonably requested by Agent including, without limitation, the
following:
(A) a survey of the portion of the Eligible Project to
be released;
(B) the quitclaim deed or other instrument to be used to
effect such release; and
(C) an endorsement to the mortgagee title insurance
policy in effect with respect to the affected Eligible Project.
(vi) Agent shall have determined that the outstanding principal
balance of the Loans will not exceed the Borrowing Base after giving effect
to such Property Release and any prepayment to be and/or the acceptance of
any prepayment to be made and/or the acceptance of any Project as an
additional or replacement Eligible Project in the Borrowing Base to be given
concurrently with such Property Release; and
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(vii) with respect to a Property Release relating to a portion
of an Eligible Project, (A) the value of such Property is $1,000,000.00 or
less and (ii) after giving effect to the proposed Property Release, the
aggregate value of all Property Releases made in respect of such Eligible
Property is $5,000,000.00 or less.
If following any such Property Release, the Wholly-Owned Subsidiary or
Subpartnership owning the Project so released does not have any ownership
interest in any of the remaining Collateral, the Agent and the Lenders shall,
at Borrower's request, release such Wholly-Owned Subsidiary or Subpartnership
from any guaranty of the Obligations executed by it.
SECTION 3.2 Leases and Major Agreements.
(a) Borrower shall, or shall cause any Wholly Owned Subsidiary
of Borrower or Subpartnership Owning the applicable Eligible Project to, (i)
submit any and all proposed Major Agreements and Major Leases to Agent for
approval prior to the execution thereof, which approval shall not be
unreasonably withheld; (ii) duly and punctually perform and comply with any
and all material representations, warranties, covenants and agreements
expressed as binding upon Borrower under any Major Agreement or Major Lease;
(iii) proceed in a commercially reasonable manner to maintain each of the
Major Agreements and Major Leases in full force and effect during the term
thereof; (iv) appear in and defend any action or proceeding in any manner
connected with any of the Major Agreements and Major Leases; (v) deliver to
Agent execution counterparts of all Major Agreements and Leases; (vi) act in
a commercially reasonable manner in entering into, performing and enforcing
the Major Agreements and the Leases; and (vii) deliver to Agent such further
information, and execute and deliver to Agent such further assurances and
assignments, with respect to the Major Agreements and Leases as Agent may
from time to time reasonably request. Without Agent's prior written consent,
Borrower shall not (A) do or knowingly permit to be done anything to
materially impair the value of any of the Major Agreements or Major Leases;
(B) except for deposits not to exceed one month's rent for any one lessee,
collect any of the Rent more than one (1) month in advance of the time when
the same becomes due; (C) discount any future accruing Rent; (D) amend or
modify any of the financial or other economic terms of any Major Agreement
or Major Lease; (E) terminate any Major Agreement or Major Lease other than
as a result of a material default thereunder; or (F) assign or grant a
security interest in or to any of the Major Agreements or Leases.
(b) Borrower shall not, and shall not permit any Subsidiary or
Subpartnership owning an Eligible Project to, amend, modify in any material
manner, or terminate its management agreement with CBL Management, Inc.
except upon thirty (30) days prior written notice to Agent. If such proposed
amendment or modification limits or extinguishes Borrower's absolute right
to terminate the management agreement upon thirty (30) days notice or Agent
notifies Borrower that, in Agent's judgment, such proposed amendment,
modification or termination, as applicable, will either (i) increase the
management fees, reimbursements or other payments to manager to levels which
are in excess of applicable market levels or (ii) have a material adverse
effect upon Borrower or any Affiliate or Subsidiary of Borrower or its
ability to perform its obligations under the Collateral Documents, then
Borrower shall not enter into such amendment, modification or termination
without the consent of Majority Lenders; provided however, that any such
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termination which is required by Applicable Law in order for CBL Properties,
Inc. to maintain its status as a real estate investment trust shall not
require such consent. Borrower shall not enter into a management agreement
with a manager other than CBL Management, Inc., or another affiliate or
subsidiary of Borrower, in respect of any Eligible Project without the prior
written consent of Majority Lenders.
(c) Within sixty (60) days after the execution of each Major
Lease, Borrower agrees to deliver or to cause to be delivered to Agent a
fully executed and acknowledged non-disturbance, attornment, estoppel and
subordination agreement from the tenant under such Major Lease. With respect
to all Leases, Borrower agrees to exercise diligent efforts to deliver to
Agent fully executed estoppel certificates from each tenant at such times as
Agent may reasonably request, and Agent agrees to execute attornment
agreements with each such tenant who requests such an agreement; provided,
however, that such tenant is not in default of any of its obligations under
its Lease. At Agent's request, Borrower shall also exercise diligent efforts
to deliver fully executed estoppel certificates executed by the parties to
the Major Agreements. All agreements required under the terms of this Section
3.2(c) shall be in form and substance satisfactory to Agent in its sole but
reasonable discretion.
SECTION 3.3 Appraisals. (a) Prior to classifying any Project as an
Eligible Project, the Agent will cause, at Borrower's expense, an Appraisal
to be made of such Project for use in determining the Appraised Value
thereof. From time to time an Eligible Project may be reappraised, at
Borrower's option and expense, upon notice by Borrower to Agent of its
exercise of its option to reappraise a Project, in which event Agent shall
cause such Appraisal or Appraisals to be made. Agent shall disclose the
results of such Appraisal to Borrower after acceptance of such Appraisal by
Agent.
(b) In addition, no later than June 28, 1998, upon five (5)
Business Days prior written notice to Borrower, Agent shall, at Borrower's
expense, cause an Appraisal of all of the Eligible Projects to be performed,
to redetermine the Appraised Value thereof.
(c) In addition, at any time and from time to time (but no more
often than once per year as to each Eligible Project), upon five (5) Business
Days prior written notice to Borrower, Agent may, at Lenders' expense, cause
an Appraisal of any or all Eligible Projects to be prepared, to redetermine
the Appraised Value thereof.
(d) In addition, at any time and from time to time, upon five
(5) Business Days prior written notice to Borrower, Agent may, at Borrower's
expense, redetermine the Appraised Value of any Eligible Project if (i) in
Agent's reasonable judgment a material adverse change has occurred with
respect to such Eligible Project, including without limitation, an anchor or
tenant under a Major Lease in an Eligible Project closes or vacates its
premises and no commercially reasonably replacement is obtained, or a (ii)
major casualty or condemnation has occurred with respect to such Eligible
Project, or (iii) reasonably necessary or advisable in order to comply with
Legal Requirements applicable to Agent or any Lender.
SECTION 3.4 Major Construction. If Borrower or any Wholly owned
Subsidiary or Subpartnership intends to engage in any construction,
remodeling or demolition project or series of related projects, with respect
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to an Eligible Project (each, a "Construction Project"), the aggregate cost
of which will exceed $1,000,000.00, Borrower shall first notify Agent,
provided that (i) if any Construction Project (whether or not carried on
simultaneously or in conjunction with other Construction Projects) consists
of construction of improvements which would materially adversely affect the
value of such Eligible Project or (ii) the aggregate cost of such
Construction Project (other than for tenant improvements) will exceed
$5,000,000.00 (a "Major Construction Project"), such Major Construction
Project shall be subject to approval of the Majority Lenders, which approval
shall not be unreasonably withheld.
ARTICLE 4.
CONDITIONS
SECTION 4.1 Effectiveness. This Agreement shall become effective as
of June 30, 1998, provided that all of the following conditions shall have
been satisfied (the "Effective Date"):
(a) receipt by Agent of counterparts of this Agreement signed by each
of the parties hereto;
(b) receipt by Lenders of the duly executed Notes on or before the
Effective Date, complying with the provisions of Section 2.4 hereof;
(c) receipt by Agent of the opinions of Shumacker & Thompson, P.C.
and such other counsel located in the jurisdictions where the Eligible
Projects are located, addressed to Agent and each Lender and satisfactory in
form and substance to Agent covering the legal matters addressed in Article 5
hereof and such additional matters relating to the transactions contemplated
hereby as Agent may reasonably request;
(d) receipt by Agent of a certificate of Borrower approving the
execution, delivery and performance of this Agreement (when executed and
delivered pursuant to this Agreement) and the transactions contemplated
therein, duly adopted by Borrower in accordance with the terms of Borrower's
Partnership Agreement;
(e) receipt by Agent of (i) certificates of existence and good
standing for Borrower issued by the State of Delaware and certificates of
qualification and good standing for Borrower issued by each of the states
wherein any Eligible Project is located and such qualification is required,
and (ii) certificates of existence and good standing for each Subpartnership
which is a party to any Collateral Document issued by the state of each such
Subpartnership's formation and the state in which the Eligible Project owned
by such Subpartnership is located;
(f) receipt by Agent of a certificate of an officer of Borrower,
certifying (A) that attached thereto are true and complete copies of (i) the
Modification No. One to the Amended and Restated Agreement of Limited
Partnership of CBL & Associates Limited Partnership, and (ii) the Certificate
of Amendment to Certificate of Limited Partnership of CBL & Associates
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Limited Partnership, certified by the Secretary of State of the State of
Delaware, and, except for the foregoing, that there have been no amendments
to Borrower's certificate of partnership, partnership agreement or other
organizational documents; (B) that Holdings I is the sole general partner of
Borrower and is the sole Person with authority to authorize the execution,
delivery and performance of this Agreement and any other documents executed
in connection herewith to which Borrower is a party;
(g) a certificate of the Secretary of Holdings I, dated as of the
Effective Date, certifying (A) that attached thereto is a true and complete
copy of the Certificate of Incorporation of Holdings I and that there have
been no amendments thereto; (B) that attached thereto is a true and complete
copy of the By-laws of Holdings I and that there have been no amendments
thereto; (C) that attached thereto is a true and complete copy of Resolutions
adopted by the Board of Directors of Holdings I, authorizing the execution
and delivery on behalf of Borrower of this Agreement and any other documents
executed in connection herewith to which Borrower is a party, authorizing the
execution and delivery on behalf of Borrower as general partner of each
Subpartnership of each of the documents executed in connection herewith to
which such Subpartnership is a party, and authorizing the execution, delivery
and performance of each of the documents executed in connection herewith to
which Holdings I is a party; (D) as to the incumbency and genuineness of the
signatures of the officers of Holdings I executing any of the documents
executed in connection herewith to which Holdings I, Borrower or any
Subpartnership is a party and (E) that there have been no amendments to the
certificates of partnership, partnership agreements or other organizational
documents of any Subpartnership which is a party to any Collateral Document
since July 28, 1994, other than such amendments as may be attached to such
certificate and certified as being true, correct and complete as of the date
of such certification;
(h) a certificate of the Secretary of CBL Holdings I, Inc.,
certifying (A) that there have been no amendments to the Certificate of
Incorporation or By-laws of Holdings I, Inc. since June 1, 1997, other than
such amendments as may be attached thereto; and (B) that there have been no
amendments to the certificates of partnership, partnership agreements or
other organizational documents of any Subpartnership which is a party to any
Collateral Document since July 28, 1994, other than such amendments as may
be attached to such certificate and certified as being true, correct and
complete as of the date of such certification;
(i) good standing certificates for CBL Properties, Inc. and Holdings
I, each dated as of a date close to the Effective Date, issued by the
Secretaries of State of Delaware and of each state wherein CBL Properties,
Inc. and Holdings I is qualified to do business and where such qualification
is required;
(j) since June 1, 1997, there shall not have occurred any material
adverse change in the business, operations (including the operation
performance of any Eligible Project), condition (financial or otherwise),
assets, liabilities, properties or prospects of Borrower, or any event,
condition, or state of facts which would be expected materially and adversely
to affect the prospects of Borrower subsequent to consummation of the
transactions contemplated by this Agreement, in each case, as determined by
Agent in its reasonable discretion;
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(k) since June 1, 1997, there shall not have occurred any material
adverse change in the business, operations, condition (financial or
otherwise), assets, liabilities, properties or prospects of any Eligible
Project included or to be included in the Borrowing Base, or any event,
condition, or state of facts which would be expected materially and adversely
to affect the prospects of any such Project subsequent to consummation of the
transactions contemplated by this Agreement, in each case, as determined by
Agent in its reasonable discretion;
(l) there shall exist no Default or Event of Default; and
(m) all of the representations and warranties made by Borrower, any
Wholly Owned Subsidiary of Borrower or any Subpartnership hereunder, under
any of the Notes or under any of the Collateral Documents shall be true and
correct in all material respects as of the Effective Date with the same force
and effect as if made on and as of such date.
This Agreement shall not become effective or be binding on any party hereto
unless all of the foregoing conditions are satisfied on or before June 30,
1998.
SECTION 4.2 Advances. The obligation of Agent and each Lender to make
any Advance or to have any Letter of Credit issued is subject to the
satisfaction of the following conditions:
(a) receipt by Agent of a Notice of Borrowing as required by Section
2.3, in the case of an Advance, or a request for a Letter of Credit as
required by Section 2.2, in the case of a Letter of Credit, and a compliance
certificate as described in Section 6.1(c) hereof;
(b) the fact that the proposed use of proceeds of such Advance set
forth in the Notice of Borrowing or the proposed use of such Letter of Credit
set forth in such request for Letter of Credit is consistent with the
provisions of Section 6.10 and Section 2.2, respectively;
(c) (i) in the case of the issuance of a Letter of Credit, there
shall exist no Default or Event of Default nor any event or condition which,
with the issuance of such Letter of Credit, would constitute a Default or
Event of Default or (ii) in the case of the making of an Advance, there shall
exist no (A) Event of Default, (B) Default under Sections 7.1(a), 7.1(g) or
7.1(h) hereof, or (C) other Default as to which Agent has given Borrower
notice nor any event or condition which, with the making of such Advance,
would constitute an Event of Default or any such Default;
(d) all of the representations and warranties made by Borrower, any
Wholly Owned Subsidiary of Borrower or any Subpartnership hereunder, under
any of the Notes or under any of the Collateral Documents shall be true and
correct in all material respects as of the date of such Advance or the date
of such Letter of Credit with the same force and effect as if made on and as
of such date, except to the extent such representations or warranties
specifically relate to an earlier date and except for changes therein
occurring in the ordinary course of business which do not otherwise
constitute a Default or Event of Default hereunder;
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(e) all of the Collateral Documents for each Eligible Project
comprising the Borrowing Base shall be in full force and effect and shall
constitute a first priority perfected Lien on and security interest in each
such Project, subject only to Permitted Liens.
Acceptance by Borrower of an Advance hereunder or the issuance of a Letter
of Credit shall be deemed to be a representation and warranty by Borrower on
the date of such Advance or such Letter of Credit as to the facts specified
in clauses (b), (c), (d) and (e) of this Section 4.2.
SECTION 4.3 Conditions Precedent to a Project Becoming An Eligible
Project. No Project shall become an Eligible Project until Borrower shall
have granted, or shall have caused any Wholly Owned Subsidiary or
Subpartnership owning such Project to grant, to Agent, for the benefit of
Lenders, as security for the payment and performance of the Obligations of
Borrower, a valid, enforceable, perfected, first priority and (except for
Permitted Liens) only security interest and Lien in and to such Project and
all real and personal property relating thereto and, in connection therewith,
Borrower shall have executed and delivered, or shall have caused any Wholly-
Owned Subsidiary or Subpartnership owning such Project to execute and
deliver, to Agent, in form and substance reasonably satisfactory to Agent,
the following instruments, documents and agreements in respect of such
Project:
(a) a Mortgage encumbering such Project in favor of the Agent for the
benefit of Lenders, such Mortgage to be substantially in the form of Exhibit
D attached hereto and incorporated herein by reference, modified as
appropriate to conform to the laws of the jurisdiction in which the Project
is situate;
(b) an environmental indemnity agreement, substantially in the form
of Exhibit E attached hereto and incorporated herein by reference;
(c) a closing certificate and affidavit, in substantially the form
of Exhibit F attached hereto and incorporated herein by reference;
(d) if requested by the Agent or the Majority Lenders, collateral
assignments of operating agreements, reciprocal easement agreements,
management agreements and other agreements requested by the Agent or the
Majority Lenders, all in form and substance reasonably satisfactory to the
Agent and the Lenders;
(e) assurance from a title insurance company satisfactory to the
Agent (the "Title Company") that such Title Company is committed to cause the
Mortgage to be recorded and, upon recordation of the Mortgage, to issue its
ALTA lender's title insurance policies in a form reasonably acceptable to the
Agent and in an amount equal to the Borrowing Base to be attributable to the
Eligible Project described therein or such higher amount as may be reasonably
requested by the Agent, showing the Agent as the "insured mortgagee" and
insuring the validity and priority of the Mortgage as a first priority Lien
upon the Eligible Project and Collateral described therein, subject to
Permitted Liens;
(f) receipt by Agent of an opinion of outside counsel reasonably
acceptable to the Agent, addressed to Agent and each Lender and satisfactory
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in form and substance to Agent covering the legal matters addressed in
Article 5 hereof and such additional matters relating to the transactions
contemplated hereby as Agent may reasonably request;
(g) receipt by Agent of a Borrowing Base report certified by the
chief financial officer or the chief accounting officer of Borrower, setting
forth in reasonable detail the calculations establishing the Borrowing Base;
(h) if such Eligible Project is owned by a Wholly Owned Subsidiary
of Borrower or Subpartnership of Borrower, a guaranty, substantially in the
form of Exhibit G hereto, by such Wholly Owned Subsidiary or Subpartnerships
of the obligations of Borrower under this Agreement, duly executed and
delivered by such Wholly Owned Subsidiary or Subpartnership;
(i) if such Eligible Project is owned by a Wholly Owned Subsidiary
of Borrower, instruments, documents, certificates and items in respect of
such Wholly Owned Subsidiary as are comparable to the instruments, documents,
certificates and other items described in subsections (g) and (i) of Section
4.1 in respect of Holdings I, CBL Properties, Inc. and/or Borrower;
(j) if such Eligible Project is owned by a Subpartnership,
instruments, documents, certificates and items in respect of such
Subpartnership, as are comparable to the instruments, accounts, certificates
and other items described in subsections (d) through (i) of Section 4.1 in
respect of Borrower.
(k) receipt by Agent of all documents it may reasonably request
relating to the validity and enforceability of the Loan Documents and the
Collateral Documents (when executed and delivered pursuant to this Agreement)
and any other matters relevant hereto, all in form and substance satisfactory
to Agent;
(l) such other instruments, documents, agreements, financing
statements, certificates, opinions and other Collateral Documents as the
Agent or the Majority Lenders may reasonably request.
Borrower shall perform, and shall cause the Wholly Owned Subsidiaries and
Subpartnerships to perform, any and all reasonable steps requested by Agent
to perfect, maintain and protect Agent's Lien in the Projects and the
Collateral pledged to the Agent, including, without limitation, executing and
filing Mortgage Supplements, financing or continuation statements, or
amendments thereof, in form and substance satisfactory to Agent; and
delivering to Agent all documents, notes and other instruments or chattel
paper included in the Collateral, the possession of which is necessary or
appropriate to perfect Agent's security interest therein. Agent may file one
or more financing statements disclosing Agent's Lien under the Collateral
Documents without Borrower's or any such Subsidiary's signature appearing
thereon and Borrower shall pay the costs of, or incidental to, any recording
or filing of any financing statements concerning the Collateral.
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SECTION 4.4 Conditions to Conversion to Term Loan.
The right of Borrower to convert Loan into the Term Loan under Section
2.12 is subject to the condition precedent that the following conditions be
satisfied in the judgment of Agent:
(a) timely receipt by Agent of the notice required under such
Section;
(b) immediately before and after such conversion, no Event of Default
shall have occurred and be continuing; and
(c) the representations and warranties of Borrower contained in this
Agreement and the other Loan Documents shall be true in all material respects
on and as of the date of such conversion except to the extent such
representations or warranties specifically relate to an earlier date or such
representations or warranties become untrue by reason of events or conditions
otherwise permitted hereunder and the other Loan Documents.
The delivery of the notice required under such Section shall constitute a
certification by Borrower to Agent and Lenders that the statements in the
immediately preceding clauses (b) and (c) are true.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Agent and each Lender that:
SECTION 5.1 Organization and Power. Borrower is a limited partnership
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has all requisite partnership powers and all material
governmental certificates of authority, licenses, permits, qualifications,
documentation, consents and approvals required to own, lease and operate its
properties and to carry on its business as now conducted. Each of Holdings
I and CBL Properties, Inc. is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and has all
requisite corporate powers and all material governmental certificates of
authority, licenses, permits, qualifications, documentation, consents and
approvals required to own, lease and operate its properties and to carry on
its business as now conducted. Each of Borrower's Subsidiaries is a limited
partnership or a corporation duly organized, validly existing and in good
standing under the laws of its state of formation, and has all requisite
partnership powers and all material governmental certificates of authority,
licenses, permits, qualifications, documentation, consents and approvals
required to own, lease and operate its properties and to carry on its
business as now conducted.
SECTION 5.2 Validity of Loan Instruments. The execution, delivery and
performance by Borrower of the Loan Documents and the execution, delivery and
performance by any Wholly Owned Subsidiary of Borrower or by any
Subpartnership of any Collateral Documents to which such Wholly Owned
Subsidiary or Subpartnership is a party, when executed and delivered pursuant
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to the Original Credit Agreement, the First Amended and Restated Credit
Agreement and/or this Agreement, (a) are within Borrower's or such
Subsidiary's or Subpartnership's powers, (b) have been duly authorized by all
necessary corporate, partnership or other action, (c) require no action by
or in respect of, or filing with, any governmental body, agency or official
and (d) do not and will not contravene, or constitute a default under, any
Applicable Law or of the partnership agreement or other organizational
document of Borrower or such Subsidiary or Subpartnership or of any
agreement, judgment, injunction, order, decree or other instrument binding
upon Borrower or such Subsidiary or Subpartnership or result in the creation
or imposition of any Lien on any asset of Borrower or such Subsidiary or
Subpartnership. As of the date hereof, Holdings I is the sole general partner
of Borrower and possesses the sole authority to execute and deliver the Loan
Documents on behalf of Borrower. The execution and delivery by CBL
Properties, Inc. and/or Holdings I on behalf of Borrower of the Loan
Documents and the Collateral Documents (when executed and delivered pursuant
to the Original Credit Agreement and/or this Agreement) are within CBL
Properties, Inc.'s and/or Holdings I's corporate powers, have been duly
authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official and do
not and will not contravene, or constitute a default under, Applicable Law
or of the Certificate of Incorporation or By-laws of CBL Properties, Inc.
and/or Holdings I or of any agreement, judgment, injunction, order, decree
or other instrument binding upon CBL Properties, Inc. and/or Holdings I or
result in the creation or imposition of any Lien on any asset of CBL
Properties, Inc. and/or Holdings I.
The execution and delivery by Holdings I on behalf of Borrower of this
Agreement (when executed and delivered pursuant to this Agreement) are within
Holdings I's corporate powers, have been duly authorized by all necessary
corporate action, require no action by or in respect of, or filing with, any
governmental body, agency or official and do not and will not contravene, or
constitute a default under, any Applicable Law or of the Certificate of
Incorporation or By-laws of Holdings I or of any agreement, judgment,
injunction, or order, or result in the imposition or creation of any Lien on
any asset of Holdings I.
SECTION 5.3 Binding Effect. This Agreement constitutes a valid and
binding agreement of Borrower and the other Loan Documents (when executed and
delivered in accordance with the Original Credit Agreement and/or this
Agreement) do and will constitute valid and binding obligations of Borrower,
enforceable in accordance with their respective terms, except as may be
limited by bankruptcy, insolvency, and other similar laws affecting the
rights of creditors generally. All Collateral Documents, when executed and
delivered in accordance with the Original Credit Agreement, the First Amended
and Restated Credit Agreement and/or this Agreement, do and will constitute
valid and binding obligations of Borrower and/or the Subsidiary or
Subpartnership which is a party thereto enforceable in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency, and
other similar laws affecting the rights of creditors generally.
SECTION 5.4 Financial Information.
(a) The balance sheet of Borrower as of June 30, 1996 and the related
statements of funds from operations, stockholders' equity and cash flows for
the fiscal year then ended, certified by Borrower's Chief Financial Officer
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or Controller, and filed with the Securities and Exchange Commission, copies
of which have been delivered to Agent, fairly present, in conformity with
GAAP (as modified by the rules and regulations of the Securities and Exchange
Commission and the New York Stock Exchange), the financial position of
Borrower as of such date and its results of operations and cash flows for
such fiscal year.
(b) Between June 30, 1996 and the Effective Date, there has been no
material adverse change in the business, properties, financial position,
results of operations or prospects of CBL Properties, Inc., Holdings I,
Borrower, the Subpartnerships or any of their respective Subsidiaries, taken
as a whole.
SECTION 5.5 Litigation. Except as set forth in Schedule 5.5 attached
hereto, there are no actions, suits or proceedings of a material nature
pending or threatened in writing against or affecting Borrower, Holdings I,
CBL Properties, Inc., any of their respective Subsidiaries or the Collateral
before any court or arbitrator or any governmental body, agency or official
which (a) could have a material adverse effect on the business, properties,
financial position, results of operations or prospects of Borrower, Holdings
I, CBL Properties, Inc. and their respective Subsidiaries other than a
material adverse effect which Borrower has fully disclosed to the Agent
unless the Agent notifies Borrower that Agent has determined that such
material adverse effect is likely to result in a future Default or Event of
Default under any covenant set forth in Section 8 hereof; (b) could have a
material adverse effect on any Eligible Project; or (c) in any manner draw
into question the validity of any Loan Document or Collateral Document or the
priority of any Lien, Mortgage or security interest created hereby or
pursuant to the Collateral Documents; and, subject to the provisions of
Section 5.7 hereof, to the best knowledge of Borrower, no event has occurred
which will violate, be in conflict with, result in the breach of or
constitute (with due notice or lapse of time, or both) a default of a
material nature under Applicable Law or result in the creation or imposition
of any Lien, charge or encumbrance of any nature whatsoever on the
Collateral.
SECTION 5.6 ERISA. Except as set forth on Schedule 5.6 hereof,
neither Borrower nor any ERISA Affiliate maintains, or participates in, and
has not at any time maintained or participated in, any ERISA Plan.
SECTION 5.7 Hazardous Substances. Borrower warrants, represents and
agrees as follows:
(a) Borrower has had performed reasonable investigations,
studies and tests as to any environmental contamination, liabilities or
problems with respect to the Collateral, including without limitation, the
storage, disposal, presence, discharge or release of any Hazardous Substances
at or with respect to the Collateral, copies of which have been provided to
the Agent prior to the date hereof, and, except as otherwise set forth in the
Mortgages, such investigations, studies, and tests have disclosed no
Hazardous Substances or possible violations of any Environmental Laws.
(b) No personal or real property owned by Borrower or any of
its Subsidiaries is subject to any private or governmental Lien, or to the
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best of Borrower's knowledge judicial or administrative notice or action
relating to Hazardous Substances or environmental problems, impairments or
liabilities with respect to such property or the direct or indirect violation
of any Environmental Laws, in each case which could have a material adverse
effect on the business, properties, financial position, results of operations
or prospects of Borrower, Holdings I, CBL Properties, Inc. and their
respective Subsidiaries other than a material adverse effect which Borrower
has fully disclosed to the Agent unless the Agent notifies Borrower that
Agent has determined that such material adverse effect is likely to result
in a future Default or Event of Default under any covenant set forth in
Section 8 hereof;
(c) Except as disclosed in the Mortgages, no Hazardous
Substances are located on or have been stored, processed or disposed of on
or released or discharged from (including ground water contamination) the
Collateral and no above or underground storage tanks exist on the Collateral.
Borrower shall not allow, and shall not permit its Subsidiaries to allow, any
Hazardous Substances to be stored, located, discharged, possessed, managed,
processed or otherwise handled on any of their properties or the Collateral
other than small quantities which are utilized in the ordinary course of
business of such properties, and which are used and disposed of in a lawful
manner, and shall comply, and cause said Subsidiaries to comply, with all
Environmental Laws affecting such properties or the Collateral.
(d) Borrower shall immediately notify Agent should Borrower
become aware of (i) the existence of any Hazardous Substance in, on or
beneath any of its properties or the properties of its Subsidiaries in
violation of any Environmental Law, or any other violation of any
Environmental Law with respect to such properties, (ii) any "release" or
threatened "release" (as defined in CERCLA and rules and regulations
promulgated thereunder) of any Hazardous Substances on or from the Collateral
or any other real property owned by Borrower or any of its Subsidiaries, or
(iii) any Lien, action, or notice of the nature described in subparagraph (b)
above, in each case which could have a material adverse effect on the
business, properties, financial position, results of operations or prospects
of Borrower, Holdings I, CBL Properties, Inc. and their respective
Subsidiaries other than a material adverse effect which Borrower has fully
disclosed to the Agent unless the Agent notifies Borrower that Agent has
determined that such material adverse effect is likely to result in a future
Default or Event of Default under any covenant set forth in Section 8 hereof.
Upon the occurrence of any such event, Borrower shall, and shall cause its
Subsidiaries, at its or such Subsidiary's own cost and expense, take all
actions as shall be necessary or advisable for the clean-up of any such
property including all removal, containment and remedial actions to the
extent required by applicable Environmental Laws, and shall further pay or
cause to be paid at no expense to Agent and other Lenders all clean-up,
administrative, and enforcement costs of applicable government agencies
asserted against such property or the owner thereof. All costs, including,
without limitation, those costs set forth above, damages, liabilities,
losses, claims, expenses (including reasonable attorneys' fees actually
incurred and disbursements) which are incurred by Agent (except to the extent
resulting from the gross negligence or willful misconduct of Agent), without
requirement of waiting for the ultimate outcome of any other proceeding,
shall be paid by Borrower to Agent as incurred within ten (10) days after
notice from Agent itemizing the amounts incurred to the date of such notice.
(e) Upon reasonable prior notice to Borrower, and subject to
the rights of tenants, Agent or its representatives may from time to time
(whether before or after the commencement of a nonjudicial or judicial
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proceeding) enter and inspect Collateral for the purpose of determining the
existence, location, nature and magnitude of any past or present release or
threatened release of any Hazardous Substance into, onto, beneath or from
such properties. Except in cases of emergency, any such inspection shall be
conducted in a manner which does not unreasonably interfere with the
operation of the Collateral.
All warranties and representations contained in this Section 5.7 shall
be deemed to be continuing and shall remain true and correct in all material
respects until the Indebtedness has been paid in full and any limitations
period expires. Notwithstanding anything to the contrary contained herein or
in any of the other Loan Documents, Borrower's agreements and Borrower's
indemnification of Lenders contained in this Section 5.7 shall survive the
exercise of any remedy by Agent under any of the Collateral Documents,
including foreclosure (or deed in lieu thereof), even if, as a part of such
foreclosure or deed in lieu of foreclosure, the Indebtedness is satisfied in
full, but only with respect to liability or costs arising as a result of
events occurring prior to the date upon which Borrower and its Subsidiaries,
are divested of title to the Collateral whether voluntarily, involuntarily
or by operation of law.
SECTION 5.8 Taxes and Other Payments. As of the date hereof, no
United States federal income tax returns of the "affiliated group" (as
defined in the Internal Revenue Code) of which Borrower is a member have been
examined and closed. To the best of Borrower's knowledge, each member of such
affiliated group, including Borrower, have filed all federal, state, county,
municipal and city income and other tax returns required to have been filed
by it and has paid all taxes which have become due pursuant to such returns
or pursuant to any assessments received by it, and each member, including
Borrower, does not know of any basis for any material additional assessment
in respect of any such taxes. Borrower has paid or will pay (or has caused
to be paid or will be caused to be paid) in full (except for such retainages
as may be permitted or required by any Legal Requirement to be withheld
pending completion of any improvements) all sums by Borrower or its
Affiliates owing or claimed from Borrower or such Affiliates for labor,
material, supplies, personal property (whether or not forming a fixture
hereunder) and services of every kind and character used, furnished or
installed in or on the Collateral and no claim for same exists or will be
permitted to be created; provided, however, that Borrower may contest such
amounts in good faith by appropriate proceedings so long as Borrower provides
Agent adequate security therefor.
SECTION 5.9 Not an Investment Company. None of Holdings I, Borrower,
any of its Subsidiaries or CBL Properties, Inc. is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
SECTION 5.10 Information. All information, reports, papers and data
given to Agent with respect to Holdings I, CBL Properties, Inc., Borrower,
their respective Subsidiaries or others obligated under the terms of the
Original Credit Agreement, this Agreement, the other Loan Documents or the
Collateral Documents are, or at the time of delivery will be, when taken as
a whole, accurate, complete and correct in all material respects and do not,
or will not, omit any fact, the inclusion of which is necessary to prevent
the facts contained therein from being materially misleading; all financial
data have been, or when delivered will have been, prepared in accordance with
GAAP consistently applied and fully and accurately present, or will present,
in all material respects, the financial condition of the subjects thereof as
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of the dates thereof; and with respect to the financial data heretofore
furnished, no material adverse change has occurred in the financial
conditions reflected therein since the dates thereof other than a material
adverse change which Borrower has fully disclosed to the Agent unless the
Agent notifies Borrower that Agent has determined that such material adverse
effect is likely to result in a future Default or Event of Default under any
covenant set forth in Section 8 hereof.
SECTION 5.11 Insurance. Schedule 5.11 sets forth a true and correct
description of the insurance coverage maintained by or on behalf of Borrower
and its Subsidiaries currently in effect.
SECTION 5.12 Liens. The liens and security interests granted to Agent
pursuant to the Collateral Documents (when executed and delivered to Agent
pursuant to the Original Credit Agreement, the First Amended and Restated
Credit Agreement and/or this Agreement) are valid and enforceable first
priority liens and security interests subject only to Permitted Liens.
SECTION 5.13 Title to the Projects. Borrower or a Wholly Owned
Subsidiary of Borrower or a Subpartnership holds full legal and equitable
title to the Eligible Projects subject only to Liens permitted by Section
6.17 hereof.
SECTION 5.14 Governmental Requirements. To the best knowledge of
Borrower, no violation of any material governmental requirement exists with
respect to the Eligible Projects, and the use or anticipated use thereof
complies with applicable zoning ordinances, regulations and restrictive
covenants affecting such Projects, and all governmental requirements for such
use have been satisfied, except where such violation or noncompliance could
not (a) have a material adverse effect on the business, properties, financial
position, results of operations or prospects of Borrower, Holdings I, CBL
Properties, Inc. and their respective Subsidiaries other than a material
adverse effect which Borrower has fully disclosed to the Agent unless the
Agent notifies Borrower that Agent has determined that such material adverse
effect is likely to result in a future Default or Event of Default under any
covenant set forth in Section 8 hereof; (b) have a material adverse effect
on any Eligible Project; or (c) in any manner draw into question the validity
of any Loan Document or Collateral Document or the priority of any Lien,
Mortgage or security interest created hereby or pursuant to the Collateral
Documents.
SECTION 5.15 ERISA; Plan Assets. Borrower is a not an "employee
benefit plan" as defined in Section 3(3) of ERISA and the assets of Borrower
do not constitute "plan assets" within the meaning of 29 C.F.R. 2510.3-101.
The execution, delivery and performance of this Agreement, and the borrowing
and repayment of amounts thereunder, do not and will not constitute on the
part of Borrower "prohibited transactions" under ERISA or the Internal
Revenue Code.
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ARTICLE 6.
COVENANTS
Borrower agrees that, so long as Lenders have any Commitment hereunder,
any of the Obligations remain unpaid or any Letter of Credit remains
outstanding, unless the Majority Lenders otherwise agree in writing:
SECTION 6.1 Reporting Requirements. Borrower shall deliver to Agent
(with copies for each Lender):
(a) as soon as available and in any event within one hundred twenty
(120) days after the end of each fiscal year of Borrower, Combined audited
annual financial statements of Borrower, Holdings I, Holdings II and CBL
Properties, Inc., for such fiscal year, consisting of Combined balance sheet
of the end of such fiscal year and the related Combined statements of income
and retained earnings and Combined statements of cash flows for such fiscal
year, setting forth in each case in comparative form the figures for the
previous fiscal year, and accompanied by the materially unqualified opinion
of Arthur Anderson & Co. or any other nationally recognized firm of
independent certified public accountants regularly retained by Borrower and
acceptable to the Majority Lenders;
(b) as soon as available and in any event within sixty (60) days
after the end of each fiscal quarter of Borrower, Combined interim unaudited
financial statements of Borrower, Holdings I, Holdings II and CBL Properties,
Inc., including Combined balance sheets, Combined statements of income and
retained earnings and Combined statements of cash flow, for the quarter and
year-to-date period then ended, prepared in accordance with GAAP, setting
forth in comparative form the figures for the corresponding quarter and the
corresponding portion of Borrower's previous fiscal year, all certified
(subject to normal year-end adjustments) by the chief financial officer or
the chief accounting officer of Borrower;
(c) simultaneously with the delivery the financial statements
referred to in clauses (a) and (b) above, a certificate of the chief
financial officer or the chief accounting officer of Borrower (i) setting
forth in reasonable detail the calculations required to establish whether
Borrower was in compliance with the requirements of Sections 6.8, 6.11
through 6.15 and 6.18 on the date of such financial statements, (ii) stating
whether, to the actual knowledge of such officer, any Default or Event of
Default exists on the date of such certificate and, if any Default or Event
of Default then exists, setting forth the details thereof and the action
which Borrower is taking or proposes to take with respect thereto, and (iii)
setting forth a schedule of all Contingent Obligations of Borrower as of the
date of such financial statements;
(d) as soon as available and in any event within forty five (45) days
after the end of each fiscal quarter of Borrower, a Borrowing Base report,
certified by the chief financial officer or the chief accounting officer of
Borrower, setting forth in reasonable detail the calculations required to
establish the Borrowing Base for each Eligible Project and the Borrowing Base
for all Eligible Projects as of the last day of such quarter, all in
reasonable detail and satisfactory to Agent; provided, however, that any
change in the Borrowing Base reflected in such Borrowing Base report shall
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not become effective until Agent notifies Borrower in writing of Agent's
approval of such Borrowing Base report. Agent shall use its reasonable
efforts to notify Borrower of its approval or non-approval of the Borrowing
Base report within ten (10) business days after Agent's receipt of the
Borrowing Base report, together with a statement, in reasonable detail, of
the reasons for any non-approval of such report;
(e) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements (i) whether
anything has come to their attention in the normal course of their audit to
cause them to believe that any Default or Event of Default existed on the
date of such statements and (ii) confirming the calculations set forth in the
officer's certificate delivered simultaneously therewith pursuant to clause
(c) above;
(f) simultaneously with the delivery of each set of financial
statements referred to in clause (b) above, a certificate of the chief
financial officer or the chief accounting officer of Borrower, certifying as
to each Reserved Construction Loan: (i) that, to the actual knowledge of such
officer, no monetary or material non-monetary default or event of default
exists thereunder; (ii) the amount currently available in the interest
reserve available for the payment of interest on such Reserved Construction
Loan; (iii) an updated cash flow projections for the project being
constructed with the proceeds of such Reserved Construction Loan, setting
forth the assumptions on which such projections are based; (iv) the
outstanding principal balance of such Reserved Construction Loan; (v) the
undisbursed amount of such Reserved Construction Loan (other than such
interest reserve); and (vi) such other matters as the Agent or the Majority
Lenders may reasonably request;
(g) as soon as available and in any event within one hundred twenty
(120) days after the end of each fiscal year of Borrower, all financial
information of Borrower, Holdings I, Holdings II, CBL Properties, Inc., CBL
Management Inc., and the Eligible Projects as Agent shall reasonably request
and as shall be reasonably available to Borrower, Holdings I, Holdings II,
CBL Properties, Inc. or CBL Management, Inc.;
(h) within forty five (45) days after the end of each fiscal quarter,
operating statements for each Eligible Project for such quarter and for the
year-to-date period then ended, together with a rent roll, lease expiration
report (unless included in the rent roll) and leasing status report for each
Eligible Project;
(i) promptly after obtaining actual knowledge of any Default or Event
of Default, a certificate of the controller or senior vice-president in
accounting of Borrower setting forth the details thereof and the action which
Borrower is taking or proposes to take with respect thereto;
(j) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements
on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) which CBL Properties, Inc., Holdings I, Holdings II,
Borrower or any of their respective Affiliates shall have filed with the
Securities and Exchange Commission;
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(k) promptly upon the consummation thereof, a description in
reasonable detail of any acquisition of assets in excess of $35,000,000.00
in a single transaction or related series of transactions;
(l) promptly upon obtaining actual knowledge thereof, a description
in reasonable detail of any event or condition which could materially
adversely affect the business, properties, financial position, results of
operations or prospects of Borrower or which in any material manner draws
into question the validity of any Loan Document;
(m) from time to time such additional information regarding the
financial position or business of Borrower, its Affiliates or any Project as
Agent may reasonably request, to the extent such information is reasonably
available to Borrower;
(n) concurrently with, subject to the requirements of the Securities
and Exchange Commission or any securities exchange on which CBL Properties,
Inc.'s securities are traded, issuance to analysts and the media (after
notification of the New York Stock Exchange and release to an established
wire service recognized as an official disclosure source) of any press
release concerning Borrower, telecopy notice of such press release and the
contents thereof.
SECTION 6.2 Payment and Performance. Borrower shall pay and
discharge, and shall cause each of its Subsidiaries to pay and discharge, at
or before maturity, subject to any applicable notice and grace periods, all
material obligations and liabilities, including, without limitation, tax
liabilities, except where the same may be contested in good faith by
appropriate proceedings, and will maintain, in accordance with GAAP,
appropriate reserves for the accrual of any of the same; and shall pay the
Indebtedness, as and when called for in this Agreement, and on or before the
due dates thereof, subject to any applicable notice and grace periods, and
will perform all of the Obligations in full and on or before the dates same
are to be performed subject to any applicable notice and grace periods.
SECTION 6.3 Maintenance of Property; Insurance.
(a) Borrower shall keep, or cause to be kept, all Collateral in good
working order and condition, ordinary wear and tear and insured casualty
losses excepted.
(b) Borrower shall obtain and maintain, or cause to be obtained and
maintained, insurance upon and relating to the Collateral, insuring against
personal injury and death, loss by fire and such other hazards, casualties
and contingencies (including business interruption insurance covering loss
of rents for a period of twelve [12] months and builder's all risk coverage)
as are normally and usually covered by extended coverage policies in effect
where the Collateral is located and such other risks as may be reasonably
specified by Agent, from time to time, all in such amounts and with such
insurers of recognized responsibility as are reasonably acceptable to Agent.
Each insurance policy covering the Collateral issued in connection therewith
shall provide by way of endorsements, riders or otherwise that (a) proceeds
will be payable to Agent as its interest may appear, it being agreed by
Borrower and Agent that such payments, less Agent's expenses in collecting
such insurance proceeds, shall be applied, to the restoration, repair or
replacement of the Collateral to the extent provided for in the Collateral
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Documents encumbering such Collateral, provided, however, notwithstanding
anything to the contrary contained herein or in the Collateral Documents, so
long as no Default or Event of Default is then in existence, Borrower may
instruct Agent to apply all or any portion of casualty insurance proceeds
held by Agent in connection with damage to an Eligible Project to prepayment
of the Loan. In the event Borrower so instructs Agent to apply insurance
proceeds to the prepayment of the Loan, the Borrowing Base shall be reduced
by the amount of insurance proceeds so applied; provided however, that
notwithstanding such reduction in the Borrowing Base, Borrower may reborrow,
in accordance with the terms hereof, an amount not greater than the amount
of such proceeds so applied to prepayment of the Loan, so long as the amount
so reborrowed is used for the restoration of the Eligible Project giving rise
to such proceeds in the manner required under the Collateral Documents, and
upon full restoration, the Borrowing Base shall be increased by an amount
equal to the prior reduction.
SECTION 6.4 Business; Existence. Neither Borrower nor any of its
wholly Owned Subsidiaries nor any Subpartnership shall engage to any
substantial extent in any line or lines of business other than the businesses
of owing, managing, leasing and operating regional malls and retail strip
shopping centers and other related businesses to the extent incidental to the
conduct of any of the foregoing businesses. Except as otherwise expressly
permitted by the terms of this Agreement, Borrower shall, and shall cause
each of its Wholly Owned Subsidiaries and each Subpartnership to, preserve
and keep in full force and effect its existence, rights, franchises and trade
names.
SECTION 6.5 Payment of Impositions. Borrower shall duly pay and
discharge, or cause to be paid and discharged, all Impositions not later than
the due date thereof, or the day prior to the day any fine, penalty, interest
or cost may be added thereto or imposed, or the day prior to the day any Lien
may be filed, for the nonpayment thereof (if such day is used to determine
the due date of the respective item); provided, however, that Borrower may,
if, to the extent and in the manner permitted by law, (a) pay the Impositions
in installments, whether or not interest shall accrue on the unpaid balance
of such Impositions, if such installment payment would not create or permit
the filing of a Lien against the Collateral, and (b) contest the payment of
any Impositions in good faith and by appropriate proceedings provided that:
(i) any such contests shall be prosecuted diligently and in a manner not
prejudicial to the rights, liens and security interests of Agent,
(ii) Borrower shall deposit funds with Agent or obtain a bond in form and
substance and with an issuing company reasonably satisfactory to Agent in an
amount sufficient to cover any amounts which may be owing in the event the
contest may be unsuccessful (Borrower agreeing to make such deposit or obtain
such bond, as the case may be, within five (5) days after demand therefor and
that, if made by payment of funds to Agent, the amount so deposited shall be
disbursed in accordance with the resolution of the contest either to Borrower
or the adverse claimant), (iii) no contest may be conducted and no payment
may be delayed beyond the date on which the Collateral could be sold for
nonpayment (provided however, that such contest may be continued beyond such
date so long as Borrower provides assurances, by bond, payment or otherwise,
that the Collateral will not be so sold) and (iv) Agent may pay over to the
taxing authority entitled thereto any or all of the funds at any time when,
in the opinion of Agent's counsel, the entitlement of such authority to such
funds is established and no reasonable avenues for contesting such
entitlement are available to Borrower. Subject to Borrower's right to contest
as provided for herein, Borrower shall submit to Agent copies of tax
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statements and paid tax receipts evidencing the due and punctual payment of
all real estate and personal property taxes, charges and assessments levied
upon or assessed or charged against the Collateral on or before thirty (30)
days of the delinquent date of any such taxes.
SECTION 6.6 Compliance with Legal Requirements. Borrower shall, and
shall cause each Wholly Owned Subsidiary or Subpartnership owing any of the
Collateral to, promptly and faithfully comply with, conform to and obey all
present and future material Legal Requirements, whether or not same shall
necessitate structural changes in, improvements to, or interfere with the use
or enjoyment of the Collateral; provided, however, that Borrower may contest
a Legal Requirement in good faith by appropriate proceedings; provided
further, that with respect to Legal Requirements affecting any portion of the
Collateral (or any other property of Borrower) which is leased to a
financially capable tenant, if such Lease provides that compliance with such
Legal Requirement is the obligation of the tenant thereunder, Borrower shall
be deemed to comply with its obligations under this Agreement with respect
to such Legal Requirement if Borrower is continuing to exercise in good faith
any remedies it may have under said Lease to compel such tenant to comply
with such Legal Requirement.
SECTION 6.7 Inspection of Property, Books and Records. Borrower will
keep, and will cause each Subsidiary to keep, proper books of record and
account in which full, true and correct entries shall be made of all dealings
and transactions in relation to its business and activities; and will permit,
and will cause each Subsidiary to permit, representatives of Agent to visit
and inspect any of their respective properties, to examine and make abstracts
from any of their respective books and records and to discuss their
respective affairs, finances and accounts with their respective officers,
employees and independent public accountants, all at such reasonable times
and as often as may reasonably be desired.
SECTION 6.8 Indebtedness. Borrower shall not 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) in an aggregate principal
amount in excess of twenty-five percent (25%) of Gross Asset Value 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 in respect of the principal amount of such Indebtedness
in excess of twenty-five percent (25%) of Gross Asset Value (including base
rate, applicable margin and reserve and similar costs) from increasing above
ten percent (10%) per annum.
SECTION 6.9 Consolidations, Mergers and Sales of Assets. Borrower
shall not and shall not permit its Subsidiaries to, (i) consolidate or merge
with or into any other Person (other than Borrower or another Subsidiary)
(ii) sell, lease or otherwise transfer, directly or indirectly, any of its
real estate properties or investments in ventures holding such properties to
any other Person, other than in the ordinary course of business.
SECTION 6.10 Use of Proceeds. The proceeds of the Advances made under
this Agreement shall be used by Borrower (a) for the payment of pre-
development and development costs incurred in connection with the Projects
or proposed Projects; (b) to finance acquisitions and loans permitted by
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Section 6.11 hereof; (c) to pay Indebtedness of Borrower and its
Subsidiaries; (d) to make equity Investments permitted hereunder (e) to
provide for the general working capital needs of Borrower and its
Subsidiaries; and (f) to make dividend payments; provided, however, that (i)
proceeds of Advances may not be used to make dividend payments (A) more than
twice during any calendar year; or (B) in respect of two (2) consecutive
fiscal quarters of Borrower. No portion of the proceeds of any Advance may
be used by Borrower in any manner which would cause such Loan or the
application of the proceeds thereof to violate any of Regulations G, T, U or
X of the Board of Governor of the Federal Reserve System.
SECTION 6.11 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 Gross Asset Value:
(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 development of a Project has commenced; (C) land
subject to a binding contract of sale under which the 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 Gross
Asset Value;
(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 Gross Asset Value;
(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 Gross Asset Value;
(iv) Mortgages, such that the aggregate principal amount
secured by Mortgages acquired by Borrower after September 26, 1996 exceeds
ten percent (10%) of Gross Asset Value;
(v) Investments made after the date hereof in partnerships,
joint ventures and other non-corporate Persons accounted using the equity
basis of accounting (determined in accordance with GAAP), such that the
aggregate outstanding amount of such Investments (other than Investments in
(A) partnerships in which (I) Borrower is the sole general partner and the
only limited partners are either (a) the Person from whom the real estate
owned by such Partnership was purchased, and such Person's successors and
assigns or (b) a Person operating stores which anchor the development
constructed or to be constructed by such partnership or (II) Borrower owns
not less than ninety percent (90%) of the partnership interests and has the
unilateral right to make all operational and strategic decisions, or (B)
partnerships, joint ventures and other non-corporate Persons whose financial
reports are prepared on a consolidated basis with Borrower) exceeds fifteen
percent (15%) of Gross Asset Value;
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(vi) items described in subsections (i), (ii), (iii) and (v) of
this Section 6.11(a), such that the aggregate value thereof, determined in
accordance with such subsections, exceeds thirty percent (30%) of Gross Asset
Value.
(b) Neither Borrower nor any of its Subsidiaries shall acquire the
business of or 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 Agent, 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
Agent 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 Sections 6.8, 6.11, 6.12,
6.13, 6.14, 6.15, 6.17 or 6.18; and
SECTION 6.12 Total Obligations to Gross Asset Value. Borrower shall
not at any time permit the ratio of (a) Total Obligations to (b) Gross Asset
Value to exceed 0.60 to 1.00.
SECTION 6.13 Minimum Net Worth. Borrower shall not permit Net Worth
at any time to be less than an amount equal to $315,330,052 plus fifty
percent (50%) of the net proceeds or value (whether cash, property or
otherwise) received by CBL Properties, Inc., Holdings I, Holdings II or
Borrower from any issuance after September 26, 1996 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.
SECTION 6.14 Interest Coverage Ratio. Borrower shall not permit, as
of the last day of any fiscal quarter, the Interest Coverage Ratio to be less
than 2.0 to 1.0.
SECTION 6.15 Debt Coverage Ratio. Borrower shall not permit, as of
the last day of any fiscal quarter of Borrower, the Debt Coverage Ratio to
be less than 1.75 to 1.0.
SECTION 6.16 ERISA. Borrower will operate, or will cause its ERISA
Affiliates to operate, each ERISA Plan described on Schedule 5.6, and each
ERISA Plan that either Borrower or its ERISA Affiliates may adopt, sponsor
or participate in after the Effective Date, in accordance with the terms of
such ERISA Plan and in accordance with all applicable requirements of ERISA
and the Internal Revenue Code.
SECTION 6.17 Liens. Borrower shall not create, assume or suffer to
exist and shall not permit any Subsidiary to create, assume or suffer to
exist, any Lien securing Indebtedness on any of the Collateral, except for
(a) Permitted Liens; and (b) Liens to secure Indebtedness incurred for common
area maintenance, improvements and leasing costs provided that: (i) such Lien
is expressly subordinate, on terms and conditions satisfactory to the Agent
and the Majority Lenders, to the Lien created by the Collateral Documents;
(ii) the principal amount of such Indebtedness, and all interest thereon, can
be repaid from common area maintenance charges or from additional rental
charges (not a part of a rent for such Project used most recently to
determine the Appraised Value of such Project) specifically dedicated to the
repayment of such Indebtedness; and (iii) in the case of leasing costs, such
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Indebtedness does not exceed, in respect of any single Project, $3,000,000
in aggregate principal amount at any one time outstanding.
SECTION 6.18 Restricted Payments.
(a) Borrower shall not directly or indirectly declare or make, or
incur any liability to make, any cash or other distributions on, or in
respect of, any partnership interest in Borrower, or other payments or
transfers made in respect of the redemption, repurchase or acquisition of
such partnership interests, except for distributions in an aggregate amount
not to exceed during any fiscal year ninety-five percent (95%) of Funds from
Operations for such fiscal year.
(b) Borrower shall not enter into any transaction with, or pay any
management or other fees to, any Affiliate, except, so long as Borrower
effectively receives at least 99% of the economic benefit thereof, management
or other fees payable to CBL Management, Inc.
SECTION 6.19 Year 2000 Compliance . Borrower shall ensure that the
following are Year 2000 Compliant in a timely manner, but in no event later
than December 31, 1999: (a) the Projects; (b) Borrower itself and its
Affiliates (including, without limitation, its Subsidiaries and the
Subpartnerships); and (c) any other major commercial properties and entities
in which Borrower holds a controlling interest. Borrower shall further make
reasonable inquiries of and request reasonable validation that each of the
following are similarly Year 2000 Compliant: (x) all major tenants or other
entities from which Borrower or its Affiliates receives payments; and (y) all
major contractors, suppliers, service providers and vendors of Borrower and
its Affiliates. As used in this paragraph, "major" shall mean properties or
entities the failure of which to be Year 2000 Compliant would have a material
adverse economic impact upon Borrower or any Affiliate of Borrower. The term
"Year 2000 Compliant" shall mean, in regard to any property or entity, that
all software, hardware, equipment, goods or systems utilized by or material
to the physical operations, business operations, or financial reporting of
such property or entity (collectively the "systems") will properly perform
date sensitive functions before, during and after the year 2000. In
furtherance of this covenant, Borrower shall, in addition to any other
necessary actions perform a comprehensive review and assessment of all
systems of Borrower, its Affiliates and the Projects. Borrower shall, within
thirty business days of Lender's written request, provide to Lender such
certifications or other evidence of Borrower's compliance with the terms of
this paragraph as Lender may from time to time reasonably require.
ARTICLE 7.
DEFAULTS
SECTION 7.1 Events of Default. It shall be an event of default
("Event of Default") if one or more of the following events shall have
occurred and be continuing:
(a) Borrower shall fail, refuse or neglect to pay, in full, any
installment or portion of the Obligations as and when the same shall become
due and payable, whether at the due date thereof stipulated in this Agreement
or the Notes, or at a date fixed for prepayment, or by acceleration or
otherwise, and such failure, refusal or neglect continues for a period of
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fifteen (15) days after notice thereof from Agent; provided, however, that
Agent shall not be required to give such notice more than twice during any
twelve consecutive month period; provided, further, that if such installment
or portion of the Obligations becomes due and payable as a result of Agent's
accelerating the maturity of the Obligations in accordance with the this
Agreement, neither any requirement of notice nor the fifteen (15) day
grace/cure period for payment set forth in this Section 7.1(a) shall apply
to the accelerated due date;
(b) Borrower or any of its Subsidiaries shall fail to observe or
perform any covenant or agreement contained in Sections 6.8, 6.11, 6.12,
6.13, 6.14, 6.15, 6.17 or 6.18 hereof and such failure shall continue for
ninety (90) days after the earlier of (i) the date any Senior Officer of
Borrower has actual knowledge of such failure or (ii) the date written notice
of such failure has been given to Borrower by Agent;
(c) Borrower or any of its Subsidiaries shall fail to observe or
perform any covenant or agreement contained in this Agreement (other than
those covered by clause (a) or (b) above) for thirty (30) days after written
notice thereof has been given to Borrower by Agent; provided; however, that
is such failure is curable but requires work to be performed, acts to be done
or conditions to be remedied which, by their nature, cannot be performed,
done or remedied, as the case may be, within such thirty (30) day period, no
Event Default shall be deemed to have occurred if Borrower or its
Subsidiaries commence same within such thirty (30) day period and
continuously prosecute the same to completion within ninety (90) days after
such notice.
(d) Borrower, Holdings I, CBL Properties, Inc. or any of their
Subsidiaries shall fail to observe or perform any covenant or agreement
contained in any of the Collateral Documents, or there occurs any other
default under any of the Collateral Documents, and such failure or default
shall continue beyond any applicable grace or cure period;
(e) any representation, warranty or statement made by Borrower,
Holdings I, CBL Properties, Inc. or any of their Subsidiaries in, under or
pursuant to this Loan Documents or the Collateral Documents or any affidavit
or other instrument executed in connection with the Loan Documents or
Collateral Documents shall be false or misleading in any material respect as
of the date hereof or shall become so at any time prior to the repayment in
full of the Obligation and, except in the case of fraud, such breach is not
cured with 30 days after the earlier of (i) the date any Senior Officer of
Borrower, Holdings I or CBL Properties, Inc. has actual knowledge of such
breach or (ii) the date written notice of such breach is given to Borrower
by Agent;
(f) Borrower, Holdings I, CBL Properties, Inc. or any of their
Subsidiaries shall default in the payment when due of any Indebtedness under
any Guarantee, note, indenture or other agreement relating to or evidencing
Indebtedness (other than Indebtedness which is fully non-recourse as to
Borrower, Holdings I, CBL Properties, Inc. or such Subsidiary and which has
a principal balance of less than any amount equal to $10,000,000.00 less the
outstanding amount of Permitted Deficiencies), or any event specified in any
Guarantee, note, indenture or other agreement relating to or evidencing any
such Indebtedness shall occur if the effect of such event is to cause or to
permit (giving effect to any grace or cure period applicable thereto) the
holder or holders of such Indebtedness to cause such Indebtedness to become
due, or to be prepaid in full (whether by redemption, purchase or otherwise),
prior to its stated maturity;
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(g) Borrower, Holdings I, Holdings II, CBL Properties, Inc. or any
of their Significant Subsidiaries shall (1) voluntarily be adjudicated as
bankrupt or insolvent, (2) file any petition or commence any case or
proceeding under any provision or chapter of the Federal Bankruptcy Code or
any other federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization, (3) make a general assignment
for the benefit of its or his creditors, (4) have an order for relief entered
under the Federal Bankruptcy Code with respect to it or him, (5) convene a
meeting of its or his creditors, or any class thereof, for the purpose of
effecting a moratorium upon or extension or composition of its or his debts,
(6) admit in writing that it or he is generally not able to pay its or his
debts as they mature or generally not pay its or his debts as they mature,
or (7) become insolvent;
(h) (1) a petition is filed or any case or proceeding described in
Section 7.1(g) above is commenced against Borrower, Holdings I, Holdings II,
CBL Properties, Inc. or any of their Significant Subsidiaries, or against the
assets of any such persons or entities and either an order for relief is
granted or such petition and the case or proceeding initiated thereby is not
dismissed within ninety (90) days from the date of the filing, (2) an answer
is filed by Borrower, Holdings I, Holdings II, CBL Properties, Inc. or any
of their Significant Subsidiaries, admitting the allegations of any such
petition, or (3) a court of competent jurisdiction enters an order, judgment
or decree appointing, without the consent of Borrower, Holdings I, Holdings
II, CBL Properties, Inc. or any of their Significant Subsidiaries, a
custodian, trustee, agent or receiver for it or him, or for all or any part
of its or his property, or authorizing the taking possession by a custodian,
trustee, agent or receiver of it or him, or all or any part of its or his
property unless such appointment is vacated or dismissed or such possession
is terminated within ninety (90) days from the date of such appointment or
commencement of such possession, but not later than five (5) days before the
proposed sale of any assets of Borrower, Holdings I, Holdings II, CBL
Properties, Inc. or such Significant Subsidiary, by such custodian, trustee,
agent or receiver, other than in the ordinary course of the business of
Borrower, Holdings I, Holdings II, CBL Properties, Inc. or such Subsidiary;
(i) one or more judgments or orders for the payment of money in
excess of an amount equal to $10,000,000 less the outstanding amount of
Permitted Deficiencies shall be rendered against Borrower, Holdings I,
Holdings II, CBL Properties, Inc. or any of their Significant Subsidiaries
and such judgment(s) or order(s) shall continue unbonded, unsatisfied and
unstayed for a period of sixty (60) days;
(j) the failure of Charles B. Lebovitz to remain active in the
management of Borrower, Holdings I, Holdings II, CBL Properties, Inc. and CBL
Management, Inc.; provided, however, that in the event of the death or
incapacity of Charles B. Lebovitz, no Default or Event of Default shall arise
solely by virtue of this clause (j) if either (i) Borrower, Holdings I,
Holdings II, CBL Properties, Inc. and CBL Management, Inc. shall have each
retained, within 180 days of the date of the death or incapacity of Charles
B. Lebovitz, senior management having, in the reasonable opinion of the Agent
and the Majority Lenders, sufficient skill and experience in Borrower's
industry to manage Borrower competently and efficiently; or (ii) at least two
of John N. Foy, Stephen Lebovitz, Michael Lebovitz and/or Ron Fullam (with
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at least one of said two [2] being either John N. Foy or Stephen Lebovitz)
remain active as Senior Officers of Borrower, CBL Properties, Inc., Holdings
I, Holdings II, and CBL Management, Inc.
(k) (1) Borrower, Holdings I, CBL Properties, Inc. or any of their
Subsidiaries shall die, dissolve, terminate or liquidate, or merge with or
be consolidated into any other entity (except as permitted by Section 6.9
hereof), or shall hypothecate, pledge, mortgage or otherwise encumber all or
any part of the beneficial ownership interest in Borrower or shall attempt
to do any of the same; or (2) Borrower or any of its Subsidiaries shall amend
or modify, in a manner which would adversely affect Agent or the Lenders, its
articles of incorporation, bylaws, articles of partnership, certificate of
partnership or other charter or enabling documents, and Majority Lenders have
not given its prior written consent to such amendments or modifications;
(l) the failure of Charles B. Lebovitz, John N. Foy, Ben S. Landress,
Stephen Lebovitz, Michael Lebovitz and/or Ron Fullam to own, directly or
through CBL & Associates, Inc., beneficially and of record, at least twenty
percent (20%) of the shares of equity of Borrower and CBL Properties, Inc.,
on a Combined basis (without giving effect to the issuance after the date
hereof of stock of CBL Properties, Inc. at a price equal to the fair market
value of such stock on the date of such issuance); the failure of Holdings
I to be the sole general partner of Borrower; the failure of CBL Properties,
Inc. to own one hundred percent (100%) of the voting shares of Holdings I and
Holdings II; or the failure of Charles B. Lebovitz, John N. Foy, Ben S.
Landress, Stephen Lebovitz, Michael Lebovitz and/or Ron Fullam to
collectively own, beneficially and of record, with power to vote, an
aggregate amount of at least fifty one percent (51%) of the shares of voting
stock of CBL Management, Inc., unless such failure is the result of the
merger of CBL Management, Inc. with and into Borrower or CBL Properties,
Inc., with Borrower or CBL Properties, Inc. as the surviving Person;
provided, however, that Charles B. Lebovitz, John N. Foy, Ben S. Landress,
Stephen Lebovitz, Michael Lebovitz and Ron Fullam shall be deemed to own any
equity interest so long as the same is owned by (i) such Person, (ii) a
Subsidiary of such Person, (iii) a trust or similar entities in which such
Person and members of such Person's family, including spouses, children,
parents, siblings and their descendants, are the sole beneficiaries of all
of the interest therein;
(m) Borrower or any of its Subsidiaries shall fail to maintain the
insurance coverage described in Schedule 5.11 as being maintained by it at
the date of this Agreement or any insurer listed as providing any of such
insurance coverage shall cease to have an A.M Best policyholders rating of
at least A-IX (with respect to liability) or A-XII (with respect to property
damage); provided that it shall not constitute an Event of Default hereunder
if Borrower shall establish deductibles with respect to any such listed
insurance not exceeding $50,000.00 per occurrence; or
(n) the assets of Borrower, Holdings I, CBL Properties, Inc. or any
of their Subsidiaries at any time constitute assets, within the meaning of
ERISA, the Internal Revenue Code and the respective regulations promulgated
thereunder, of any ERISA Plan or Non-ERISA Plan.
(o) CBL Properties, Inc. shall (i) fail to have the shares of its
Capital Stock listed for trading on the New York Stock Exchange or the
American Stock Exchange, or the respective successors thereto; (ii) fail to
remain qualified as a REIT under the Internal Revenue Code; or (iii) amend
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or modify its Certificate of Incorporation in a manner which would adversely
affect Agent or the Lenders except (A) with the prior written consent of the
Majority Lenders; (B) to the extent required in order to remain qualified as
a real estate investment trust under the Internal Revenue Code; or (C) to the
extent required by Applicable Law.
(p) Borrower shall cease to represent one hundred percent (100%) of
the book value of Holdings I and Holdings II, or the revenues of Borrower for
any fiscal year shall fail to represent one hundred percent (100%) of the
total revenues of Holdings I and Holdings II for such fiscal year; or
Holdings I and Holdings II shall cease to represent at least ninety percent
(90%) of the book value of CBL Properties, Inc., or the revenues of Holdings
I and Holdings II for any fiscal year shall fail to represent at least ninety
percent (90%) of the total revenues of CBL Properties, Inc. for such fiscal
year.
(q) At any time, for any reason (i) subject to the provisions of
Section 7.3 hereof, any Collateral Document or other Loan Document ceases to
be in full force and effect in any material respect or (ii) Borrower or any
Affiliate of Borrower seeks to repudiate its Obligations thereunder and the
Liens intended to be created thereby are, or Borrower or any Affiliate of
Borrower seeks to render such Liens, invalid and unperfected, or (iii)
subject to the provisions of Section 7.3 hereof, Liens in favor of the Agent
and/or Lenders contemplated by the Collateral Documents shall, at any time,
for any reason, be invalidated or otherwise cease to be in full force and
effect, or such Liens shall be subordinated or shall not have the priority
contemplated by this Agreement or the other Loan Documents, and such Default
under this item (ii) continues for thirty (30) days after written notice
thereof has been given to Borrower Agent.
(r) Holdings I shall cease to be a Wholly Owned Subsidiary of CBL
Properties, Inc., unless such is the result of a merger of Holdings I into
CBL Properties, Inc., or merger of Holdings I into another Wholly Owned
Subsidiary of CBL Properties, Inc.
SECTION 7.2 Remedies. Upon the occurrence of an Event of Default: (a)
in the case of any Event of Default specified in clauses 7.1(g) or 7.1(h)
above with respect to Borrower, Holdings I, Holdings II, CBL Properties, Inc.
or any of their respective Significant Subsidiaries, the Commitments shall
automatically terminate and the Obligations (together with accrued interest
thereon) shall become immediately due and payable, without any notice to
Borrower or any other act by Agent and without presentment, demand, protest,
notice of intention to accelerate or notice of acceleration, or other notice
of any kind, all of which are hereby waived by Borrower; (b) the Agent shall,
at the direction of the Majority Lenders (i) by notice to Borrower terminate
the Commitments, which shall thereupon terminate, and (ii) by notice to
Borrower declare the Obligations (together with accrued interest thereon) to
be, and the Obligations shall thereupon become, immediately due and payable
without presentment, demand, protest, notice of intention to accelerate or
notice of acceleration, or other notice of any kind, all of which are hereby
waived by Borrower; and (c) the Agent may exercise any and all other rights
and remedies granted to the Agent under this Agreement or under any of the
Loan Documents or pursuant to law, all of which shall be cumulative and none
of which shall be exclusive.
SECTION 7.3 Actions in Respect of the Letters of Credit Upon Default.
If any Event of Default shall have occurred and be continuing, the Agent may,
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irrespective of whether it is taking any of the actions described in
Section 7.2 or otherwise, make demand upon Borrower to, and forthwith upon
such demand Borrower will, pay to the Agent on behalf of the Lenders in same-
day funds at the Agent's Lending Office, for deposit in a cash collateral
account, an amount equal to the aggregate face amount of all Letters of
Credit then outstanding. If at any time the Agent determines that any funds
held in any such cash collateral account are subject to any right or claim
of any Person other than the Agent and the Lenders or that the total amount
of such funds is less than the aggregate face amount of all Letters of
Credit, Borrower will, forthwith upon demand by the Agent, pay to the Agent,
as additional funds to be deposited and held in such cash collateral account,
an amount equal to the excess of (a) such aggregate face amount of all
outstanding Letters of Credit over (b) the total amount of funds, if any,
then held in such cash collateral account that the Agent determines to be
free and clear of any such right and claim.
SECTION 7.4 Curing Defaults Under Collateral Documents. Lenders
hereby agree that Borrower may cure any Default under Section 7.1(d) hereof
relating to the Collateral Documents and any Default under this Agreement
which relates solely to an Eligible Project by giving Agent written notice
within the applicable notice and cure period that the Eligible Project to
which such Collateral Document relates shall be removed from the Borrowing
Base, so long as both of the following conditions are satisfied:
(a) such Default does not constitute a Default or Event of Default
under any other term of this Agreement; and
(b) the sum of the aggregate principal amount of the outstanding
Advances plus the aggregate face amount of the outstanding Letters of Credit
does not exceed the Borrowing Base after giving effect to the removal of such
Eligible Project.
SECTION 7.5 Permitted Deficiency. Notwithstanding anything to the
contrary set forth herein, (a) failure of Borrower or any other Person owing
any of the Collateral to keep such Collateral in the condition required under
Section 6.3 hereof or under the comparable provisions of the Mortgage
applicable thereto; (b) failure of Borrower or any of its Subsidiaries or any
other Person owning an Eligible Project to pay Impositions in the manner
required under Section 6.5 hereof or under the comparable provisions of the
Mortgage applicable thereto; (c) failure of Borrower or any other Person
owning an Eligible Project to comply with Legal Requirements applicable to
the Collateral as required under Section 6.6 hereof or under the comparable
provisions of the Mortgage applicable thereto; (d) failure of Borrower or any
of its Subsidiaries or any other Person owning an Eligible Project to comply
with any Legal Requirement required under Section 5.1 of the Mortgage
applicable thereto; (e) failure of Borrower or any other Person owning an
Eligible Project to prevent alterations to any Eligible Project as required
under Section 5.2 of the Mortgage applicable thereto; (f) failure of Borrower
or any other Person owning an Eligible Project to replace "Fixtures" or
"Personalty" required under, and as such terms are defined in, Section 5.3
of the Mortgage applicable thereto; (g) the existence of any non-consensual
Lien on the any of the Collateral not permitted by Section 6.17 hereof or by
the applicable terms of the Collateral Documents; or (h) Borrower and/or its
Subsidiary, Subpartnership or other Person owing an Eligible Project shall
fail to deposit with the Agent any "Casualty Completion Deposit" or "Escrowed
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Sums" required under, and as such terms are defined in, the Mortgage to which
such Eligible Project is subject, shall not constitute a Default or Event of
Default hereunder, so long as the following conditions are satisfied:
(i) the sum (without duplication) of (A) the cost of
correcting all failures described in (a) through (f) above, as determined by
Agent in its reasonable discretion, plus (B) the amount secured by Liens
described in (g) above plus (C) the amount of Indebtedness secured by Liens
permitted under Section 6.17(b) hereof plus (D) the aggregate amount of
unpaid Casualty Completion Deposits or Escrowed Sums (said sum being referred
to herein as the "Permitted Deficiency"), plus (E) the amount of all
judgments or orders for the payment of money rendered against Borrower,
Holdings I, Holdings II, CBL Properties, Inc. or any of their Significant
Subsidiaries which have continued unbonded, unsatisfied and unstayed for a
period of sixty (60) days; plus (F) the principal balance of any Indebtedness
under any Guarantee, note, indenture or other agreement relating to or
evidencing Indebtedness of Borrower, Holdings I, Holdings II, CBL Properties,
Inc. or any of their Subsidiaries on which any payment is past due or in
respect of which any event has occurred the effect of which is to cause or
to permit (giving effect to any grace or cure period applicable thereto) the
holder or holders of such Indebtedness to cause such Indebtedness to become
due, or to be prepaid in full (whether by redemption, purchase or otherwise),
prior to its stated maturity does not exceed, in the aggregate at any one
time, $5,000,000.00;
(ii) Such Permitted Deficiency does not constitute a
Default or Event of Default under this Agreement or the other Loan Documents
except to the extent described in clauses (a) through (h) above;
(iii) The aggregate amount of the Permitted Deficiencies
either secured by a Lien or consisting of unpaid Casualty Completion Deposits
or Escrowed Sums does not exceed the difference between (A) the Borrowing
Base (prior to reduction by the amount of the Permitted Deficiency, as
required by this Section 7.5), minus (B) the sum of the aggregate principal
amount of all outstanding Advances plus the aggregate face amount of all
outstanding Letters of Credit;
(iv) Borrower is proceeding to cure all such failures in
a diligent manner; and
(v) The Borrowing Base shall be reduced by the amount of (A)
any outstanding Permitted Deficiency secured by a Lien on any of the
Collateral and (B) any outstanding Permitted Deficiency representing an
unpaid Casualty Completion Deposit or Escrowed Sums.
ARTICLE 8.
THE AGENT
SECTION 8.1 Appointment and Authorization. Each Lender irrevocably
appoints and authorizes Agent to take such action as agent on its behalf and
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to exercise such powers under the Loan Documents and the Collateral Documents
as are granted to Agent by the terms thereof, together with all such powers
as are reasonably incidental thereto. Borrower shall be entitled to rely upon
a written notice or written response from Agent as being made pursuant to the
requisite concurrence or consent of the Lenders necessary to take such action
without investigation or otherwise contacting the Lenders hereunder.
SECTION 8.2 Agent and Affiliates. Agent shall have the same rights
and powers under the Loan Documents and the Collateral Documents as any other
Lender and may exercise or refrain from exercising the same as though it were
not Agent, and Agent and its Affiliates may accept deposits from, lend money
to, and generally engage in any kind of business with Borrower or Affiliate
of Borrower as if it were not Agent hereunder.
SECTION 8.3 Action by Agent. The Agent (which term as used in this
sentence and in Section 8.8 hereof and the first sentence of Section 8.8
hereof shall include reference to its Affiliates and its own and its
Affiliates' shareholders, officers, directors, employees and agents):
(a) shall have no duties or responsibilities except those expressly set forth
in this Agreement, and shall not by reason of this Agreement be a trustee for
any Lender; (b) shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Agreement or any
of the other Loan Documents, or in any certificate or other instrument,
document or agreement referred to or provided for in, or received by any of
them under, this Agreement or any of the other Loan Documents, or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement, any Note or any of the other Loan Documents or for any
failure by Borrower or any other Person to perform any of its obligations
hereunder or thereunder; (c) subject to Section 8.6 hereof, shall not be
required to initiate or conduct any litigation or collection proceedings
hereunder; (d) shall have no liability to any Lender for any determination
made in good faith by the Agent that such Lender is in default of its
obligations hereunder; and (e) shall not be responsible for any action taken
or omitted to be taken by it hereunder or under any other agreement, document
or instrument referred to or provided for herein or in connection herewith,
except for its own gross negligence or willful misconduct. The Agent may deem
and treat the payee of any Note as the holder thereof for all purposes hereof
unless and until a written notice of the assignment or transfer complying
with the terms and conditions of Section 9.6 hereof.
SECTION 8.4 Consultation with Experts. Agent may consult with legal
counsel (who may be counsel for Borrower) , independent public accountants
and other experts selected by it and shall not be liable for any action taken
or omitted to be taken by it in good faith in accordance with the advice of
such counsel, accountants or experts.
SECTION 8.5 Reliance by Agent. The Agent shall be entitled to rely
upon any certification, notice or other communication (including any thereof
by telephone, telex, facsimile, telegram or cable) believed by it to be
genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons. As to any matters not expressly provided for by
this Agreement, the Agent shall in all cases be fully protected in acting,
or in refraining from acting, and no Lender shall have any right of action
against Agent as a result of Agent acting or refraining from acting,
hereunder or under the other Loan Documents in accordance with instructions
signed by the Majority Lenders (or, where applicable, all Lenders) and such
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instructions and any action taken or failure to act pursuant thereto shall
be binding on all of the Lenders; provided, however, the Agent shall not be
required to take any action which (a) the Agent reasonably believes will
expose it to personal liability unless the Agent receives an indemnification
satisfactory to it from the Lenders with respect to such action or (b) is
contrary to this Agreement, the Notes, the other Loan Documents or Applicable
Law.
SECTION 8.6 Defaults. The Agent shall not be deemed to have knowledge
or notice of the occurrence of a Default or Event of Default (other than the
non-payment of principal of or interest on Loans or of fees) unless the Agent
has received notice from a Lender or the Borrower specifying such Default or
Event of Default and stating that such notice is a "Notice of Default." In
the event of any such non-payment or in the event the Agent receives such a
notice of the occurrence of a Default or Event of Default, the Agent shall
give, and to the extent the Agent otherwise has actual knowledge of a Default
or Event of Default the Agent shall use best efforts to give, prompt notice
thereof to the Lenders.
SECTION 8.7 Indemnification. Each Lender shall, in accordance with
its Pro Rata Share, promptly (and in all events within ten [10] days after
demand therefor) reimburse (to the extent not reimbursed by Borrower) Agent
for, and indemnify Agent against, any third- party costs (including, without
limitation, Protective Advances and costs described in Section 8.12(e) and
Section 8.12(f)), expense (including attorneys' fees and disbursements
provided that, if outside counsel is not used by the Agent, the allocated
cost of in-house counsel of Agent shall be deemed to be a third-party cost
and expense ), claim, demand, action, loss or liability (except such as
result from Agent's gross negligence or willful misconduct) that Agent may
pay, suffer or incur in connection with the Loan Documents, the Collateral
Documents or any action taken or omitted by Agent. The obligations of Lenders
under this Section 8.7 shall survive the payment in full of all Obligations
and the termination of this Agreement. In the event that after payment and
distribution of any amount by Agent to Lenders, any Lender or third party,
including Borrower, any creditor of Borrower or a trustee in bankruptcy,
recovers from Agent any amount found to have been wrongfully paid to Agent
or disbursed by Agent to Lenders, then Lenders, in proportion to their
respective Pro Rata Share, shall reimburse Agent for all such amounts.
Notwithstanding the foregoing, Agent shall not be obligated to advance any
amounts hereunder (other than Agent's Pro Rata Share of each Advance) and may
require the deposit with Agent by each Lender of its Pro Rata Share of any
material expenditures anticipated by Agent before they are incurred or made
payable.
SECTION 8.8 Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon Agent or
any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking any action under the Loan Documents (including without
limitation decisions with respect to the matters described in clauses (i)
through (x) of Section 9.5(a) of this Agreement) or the Collateral Documents.
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SECTION 8.9 Failure to Act. Except for action expressly required of
the Agent hereunder, the Agent shall in all cases be fully justified in
failing or refusing to act hereunder unless it shall receive further
assurances to its satisfaction from the Lenders of their indemnification
obligations under Section 8.7 hereof against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action.
SECTION 8.10 Resignation or Removal of Agent; Co-Agent.
(a) Subject to the appointment and acceptance of a successor Agent
as provided below, the Agent may resign at any time by giving notice thereof
to the Lenders and the Borrower. For good cause, the Majority Lenders may
remove Agent at any time by giving at least thirty (30) days prior written
notice to Agent, Borrower and the other Lenders. For purposes of this Section
8.10, in determining whether the Majority Lenders have approved the removal
of the Agent, the Agent, in its capacity as a Lender, will be disregarded and
excluded and the Pro Rata Shares of the remaining Lenders shall be
redetermined, for voting purposes only, to exclude the Pro Rata Shares of the
Agent. Such resignation or removal shall take effect upon the acceptance of
appointment as Agent by the successor Agent. Upon any such resignation or
removal, the Majority Lenders shall have the right to appoint a successor
Agent consented to by Borrower, which consent shall not be unreasonably
withheld. If no successor Agent shall have been so appointed by the Majority
Lenders and shall have accepted such appointment within thirty (30) days
after the retiring Agent's giving of notice of resignation or the Majority
Lender's removal of the retiring Agent, the retiring Agent may, on behalf of
the Lenders appoint a successor Agent consented to by Borrower, which consent
shall not be unreasonably withheld. Any successor Agent must be a bank (i)
the senior debt obligations of which (or such bank's parent's senior debt
obligations) are rated not less than Baa-1 by Moody's Investors Services,
Inc. or a comparable rating by a rating agency acceptable to the Majority
Lenders and (ii) which has total assets in excess of $10,000,000,000.00. Upon
the acceptance of any appointment as Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring
Agent's resignation or removal hereunder as Agent, the provisions of this
Article 8 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as the Agent. Upon the
acceptance of any appointment as Agent, such successor Agent shall confirm
to Borrower, in writing, the agency fees to be paid to such successor Agent
pursuant to Section 2.8(d).
(b) In the event that Applicable Law imposes any restrictions on the
identity of an agent such as the Agent or requires the appointment of any co-
agent in connection therewith, the Agent may, in its discretion, for the
purpose of complying with such restrictions, appoint one or more co-agents
hereunder consented to by Borrower, which consent shall not be unreasonably
withheld by Borrower. Any such Co-Agent(s) shall have the same rights,
powers, privileges and obligations as the Agent and shall be subject to and
entitled to the benefits of all provisions of this Agreement and the Loan
Documents relative to the Agent but the appointment of a co-agent shall not
increase the obligation of Borrower hereunder. In addition to any rights of
the Majority Lenders set forth in Section 8.10(a) above, any such Co-Agent
may be removed at any time by the Agent.
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SECTION 8.11 Consent and Approvals.
(a) Each Lender has authorized and directed, and hereby authorizes
and directs, Agent to enter into the Loan Documents other than this Agreement
for the benefit of Lenders. Each Lender agrees that any action taken by Agent
or the Majority Lenders (or, where required by the express terms of this
Agreement, a greater proportion of Lenders) in accordance with the provisions
of this Agreement or any Loan Document, and the exercise by Agent or the
Majority Lenders (or, where so required, such greater proportion), of the
powers set forth herein or therein, together with such other powers as are
reasonably incidental thereto, shall be authorized and binding upon all
Lenders. Without limiting the generality of the foregoing, the Agent shall
have the sole and exclusive right and authority to:
(i) act as the disbursing and collecting agent for the Lenders
with respect to all payments and collections arising in connection with this
Agreement and the Loan Documents relating to the Collateral;
(ii) execute and deliver each Collateral Document and accept
delivery of each such agreement delivered by the Borrower or any of its
Subsidiaries;
(iii) act as collateral agent for the Lenders for purposes of the
perfection of all security interests and Liens created by such agreements and
all other purposes stated therein, provided, however, the Agent hereby
appoints, authorizes and directs the Lenders to act as collateral sub-agents
for the Agent and the Lenders for purposes of the perfection of all security
interests and Liens with respect to any of the Collateral held by such
Lender;
(iv) manage, supervise and otherwise deal with the Collateral;
(v) take such action as is necessary or desirable to maintain
the perfection and priority of the security interest and Liens created or
purported to be created by the Loan Documents;
(vi) deliver notices, including notices of default, hereunder
and under the other Loan Documents; and
(vii) except as may be otherwise specifically restricted by the
terms of this Agreement or any other Loan Document, exercise all remedies
given to the Agent or the Lenders with respect to the Collateral under the
Loan Documents, Applicable Law or otherwise.
(b) Each of the following shall require the approval or consent of
the Majority Lenders:
(i) approval of certain actions with respect to management
agreements for the Eligible Projects pursuant to Section 3.2(b) hereof;
(ii) approval of a Major Construction Project under Section 3.4
hereof;
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(iii) approval of any material amendment of the organizational
documents of Borrower, Holdings I, Holdings II, CBL Properties, Inc. or their
respective Subsidiaries prohibited by Section 7.1 hereof;
(iv) approval of certain changes in executive officers otherwise
prohibited by Section 7.1 hereof;
(v) acceleration of the Obligations following an Event of
Default or rescission of such acceleration under Section 7.2(b) hereof;
(vi) approval of the exercise of rights and remedies under the
Loan Documents following an Event of Default;
(vii) removal of Agent and appointment of a successor under
Section 8.10 hereof;
(viii) approval of a Post-Foreclosure Plan and related
matters pursuant to Section 8.12(f) hereof; and
(ix) except as otherwise provided in Section 9.5, approval of
any amendment, modification or termination of this Agreement.
(c) Designation of a Project as an Eligible Project shall require the
approval or consent of the Supermajority Lenders pursuant to Section 3.1(a)
hereof.
(d) Approval of certain Protective Advances shall require the
approval of either the Majority Lenders or all of the Lenders, all as set
forth in Section 8.12(a) hereof.
(e) In addition to the required consents or approvals referred to in
Section 8.11(b) above, Agent may at any time request instructions from the
Majority Lenders with respect to any actions or approvals which, by the terms
of this Agreement or of any of the Loan Documents, Agent is permitted or
required to take or to grant without instructions from any Lenders, and if
such instructions are promptly requested, Agent shall be absolutely entitled
to refrain from taking any action or to withhold any approval and shall not
be under any liability whatsoever to any Person for refraining from taking
any action or withholding any approval under any of the Loan Documents until
it shall have received such instructions from the Majority Lenders. Agent
shall promptly notify each Lender at any time that the Majority Lenders have
instructed Agent to act or refrain from acting pursuant hereto.
(f) All communications from Agent to Lenders requesting Lenders
determination, consent, approval or disapproval (i) shall be given in the
form of a written notice to each Lender, (ii) shall be accompanied by a
description of the matter or thing as to which such determination, approval,
consent or disapproval is requested, or shall advise each Lender where such
matter or thing may be inspected, or shall otherwise describe the matter or
issue to be resolved, (iii) shall include, if reasonably requested by a
Lender and to the extent not previously provided to such Lender, written
materials and a summary of all oral information provided to Agent by Borrower
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in respect of the matter or issue to be resolved, and (iv) shall include
Agent's recommended course of action or determination in respect thereof.
Each Lender shall reply promptly, but in any event within ten (10) Business
Days after receipt of the request therefor by Agent (the "Lender Reply
Period"). Unless a Lender shall give written notice to Agent that it objects
to the recommendation or determination of Agent (together with a written
explanation of the reasons behind such objection) within the Lender Reply
Period, such Lender shall be deemed to have approved of or consented to such
recommendation or determination. With respect to decisions requiring the
approval of Majority Lenders or all Lenders, Agent shall submit its
recommendation or determination for approval of or consent to such
recommendation or determination to all Lenders and upon receiving the
required approval or consent shall follow the course of action or
determination recommended to Lenders by Agent or such other course of action
recommended by Majority Lenders or all Lenders, as the case may be, and each
non-responding Lender shall be deemed to have concurred with such recommended
course of action.
SECTION 8.12 Agency Provisions Relating to Collateral.
(a) Agent is hereby authorized on behalf of all Lenders, without the
necessity of any notice to or further consent from any Lender, from time to
time prior to an Event of Default, to take any action with respect to any
Collateral or Loan Document which may be necessary to perfect and maintain
perfected Liens upon the Collateral granted pursuant to the Collateral
Documents. Agent may make, and shall be reimbursed for, Protective Advance(s)
during any one calendar year with respect to each Eligible Project up to the
sum of (i) amounts expended to pay real estate taxes, assessments and
governmental charges or levies imposed upon such Eligible Project, (ii)
amounts expended to pay insurance premiums for policies of insurance related
to such Eligible Project, and (iii) $500,000.00. Protective Advances in
excess of said sum during any calendar year for any Eligible Project shall
require the consent of Majority Lenders. Any Protective Advance which would,
when aggregated with all other Advances, cause the Lenders to exceed their
Commitments, shall require the consent of all of the Lenders; provided,
however, that each Lender will approve or disapprove any request by the Agent
for such Protective Advance within three (3) Business Days after receipt of
such request from the Agent; provided, further, that any Lender who fails to
so approve or disapprove within such three (3) Business Day period shall be
deemed to have approved such Protective Advance.
(b) Lenders hereby irrevocably authorize Agent, at its option and in
its discretion, to release any Lien granted to or held by Agent upon any
Collateral (i) upon termination of the Commitments and repayment and
satisfaction of all Loans, and all other Obligations and the termination of
this Agreement or (ii) constituting property being released in compliance
with Section 3.1(d) hereof or (iii) if approved, authorized or ratified in
writing by Agent at the direction of all Lenders. Without in any manner
limiting Agent's authority to act without any specific or further
authorization or consent by Lenders (as set forth in Section 8.5), upon
request by Agent at any time, Lenders will confirm in writing Agent's
authority to release the Collateral Documents with respect to any Eligible
Project pursuant to Section 3.1(d) or this Section 8.12(b).
(c) So long as no Default or Event of Default is then continuing,
upon receipt by Agent of any such written confirmation as referenced in
Section 8.12(b)(iii) from all Lenders of its authority to release Collateral,
and upon at least five (5) Business Days prior written request by Borrower,
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Agent shall (and is hereby irrevocably authorized by Lenders to) execute such
documents as may be necessary to evidence the release of the Liens granted
to Agent for the benefit of Lenders herein or pursuant hereto upon such
Collateral; provided, that (i) Agent shall not be required to execute any
such document on terms which, in Agent's opinion, would expose Agent to
liability or create any obligation or entail any consequence other than the
release of such Liens without recourse or warranty, and (ii) such release
shall not in any manner discharge, affect or impair the Obligations or any
Liens upon (or obligations of Borrower in respect of) any Project which shall
continue to constitute part of the Collateral.
(d) Except as provided in this Agreement, Agent shall have no
obligation whatsoever to any Lender or to any other Person to assure that the
Collateral exists or is owned by Borrower or is cared for, protected or
insured or has been encumbered or that the Liens granted to Agent herein or
in any of the other Loan Documents or pursuant hereto or thereto have been
properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise at all
or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and
powers granted or available to the Agent in this Agreement or in any of the
Loan Documents, it being understood and agreed that in respect of the
Collateral, or in any act, omission or event related thereto, the Agent may
act in any manner it may deem appropriate, in its sole discretion, given its
own interest in the Collateral as one of the Lenders and that the Agent shall
have no duty or liability whatsoever to any Lender.
(e) Should Agent commence any proceeding or in any way seek to
enforce its rights or remedies under the Loan Documents, irrespective of
whether as a result thereof Agent shall acquire title to any Collateral,
either through foreclosure, deed in lieu of foreclosure, or otherwise, each
Lender, upon demand therefor from time to time, shall contribute its share
(based on its Pro Rata Share) of the reasonable costs and/or expenses of any
such enforcement or acquisition, including, but not limited to, fees of
receivers or trustees, court costs, title company charges, filing and
recording fees, appraisers' fees and fees and expenses of attorneys to the
extent not otherwise reimbursed by Borrower. Without limiting the generality
of the foregoing, each Lender shall contribute its share (based on its Pro
Rata Share) of all reasonable costs and expenses incurred by Agent (including
reasonable attorneys' fees and expenses) if Agent employs counsel for advice
or other representation (whether or not any suit has been or shall be filed)
with respect to any Collateral or any part thereof, or any of the Loan
Documents, or the attempt to enforce any security interest or Lien on any of
the Collateral, or to enforce any rights of Agent or any of Borrower's or any
other party's obligations under any of the Loan Documents, but not with
respect to any dispute between Agent and any other Lender(s). Any loss of
principal and interest resulting from any Event of Default shall be shared
by Lenders in accordance with their respective Pro Rata Shares. It is
understood and agreed that in the event Agent determines it is necessary to
engage counsel for Lenders from and after the occurrence of an Event of
Default, said counsel shall be selected by Agent and written notice of such
selection, together with a copy of such counsel's engagement letter and fee
estimate, shall be delivered to Lenders.
(f) In the event that all or any portion of the Collateral is
acquired by Agent as the result of a foreclosure or the acceptance of a deed
or assignment in lieu of foreclosure, or is retained in satisfaction of all
or any part the Obligations, title to any such Collateral or any portion
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thereof shall be held in the name of Agent or a nominee or subsidiary of
Agent, as agent, for the ratable benefit of Agent and Lenders. Agent shall
prepare a recommended course of action for such Collateral (the
"Post-Foreclosure Plan"), which shall be subject to the approval of the
Majority Lenders. In the event that Majority Lenders do not approve such
Post-Foreclosure Plan, any Lender shall be permitted to submit an alternative
Post-Foreclosure Plan to Agent and Agent shall submit any and all such
additional Post-Foreclosure Plans to the Lenders for evaluation and the
approval of Majority Lenders. Agent shall manage, operate, repair,
administer, complete, construct, restore or otherwise deal with the
Collateral acquired and administer all transactions relating thereto,
including, without limitation, employing a management agent, leasing agent
and other agents, contractors and employees, including agents of the sale of
such Collateral, and the collecting of rents and other sums from such
Collateral and paying the expenses of such Collateral. Upon demand therefor
from time to time, each Lender will contribute its share (based on its Pro
Rata Share) of all reasonable costs and expenses incurred by Agent pursuant
to the Post-Foreclosure Plan in connection with the construction, operation,
management, maintenance, leasing and sale of such Collateral. In addition,
Agent shall render or cause to be rendered by the managing agent, to each of
the Lenders, monthly, an income and expense statement for such Collateral,
and each of the Lenders shall promptly contribute its Pro Rata Share of any
operating loss for such Collateral, and such other expenses and operating
reserves as Agent shall deem reasonably necessary pursuant to and in
accordance with the Post-Foreclosure Plan. To the extent there is net
operating income from such Collateral, Agent shall, in accordance with the
Post-Foreclosure Plan, determine the amount and timing of distributions to
Lenders. All such distributions shall be made to Lenders in accordance with
their respective Pro Rata Shares. Lenders acknowledge that if title to any
Collateral is obtained by Agent or its nominee, such Collateral will not be
held as a permanent investment but will be liquidated as soon as practicable.
Agent shall undertake to sell such Collateral, at such price and upon such
terms and conditions as the Majority Lenders shall reasonably determine to
be most advantageous. Any purchase money mortgage or deed of trust taken in
connection with the disposition of such Collateral in accordance with the
immediately preceding sentence shall name Agent, as agent for Lenders, as the
beneficiary or mortgagee. In such case, Agent and Lenders shall enter into
an agreement with respect to such purchase money mortgage defining the rights
of Lenders in the same Pro Rata Shares as provided hereunder, which agreement
shall be in all material respects similar to this Agreement insofar as this
Agreement is appropriate or applicable.
SECTION 8.13 Defaulting Lenders.
(a) If a Lender fails or refuses to fund its Pro Rata Share of an
Advance hereunder and each other Lender has funded its Pro Rata Share of such
Advance, Borrower may request that the Agent deliver to such non-funding
Lender a notice stating that unless such Lender funds such Advance within
five (5) days of its receipt of such notice, such Lender shall be a
Defaulting Lender. The Agent, upon receipt of such request, shall send such
notice if either (i) the Agent determines that such Lender, by not funding
its Pro Rata Share of such Advance, has defaulted in its obligations
hereunder or (ii) Borrower has obtained a judgment from a court of competent
jurisdiction that such non-funding Lender has breach it obligations to
Borrower by failing to fund its Pro Rata Share of such Advance. Any
determination made in good faith by the Agent pursuant to clause (i) above
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shall be conclusive and binding on Borrower and such Lender unless and until
a judgment to contrary is obtained as described in clause (ii) above.
(b) Once a Lender becomes a Defaulting Lender, the Agent shall notify
the other Lenders of such occurrence, whereupon the Pro Rata Share of each
of the other Lenders shall be recalculated to exclude the Pro Rata Share of
such Defaulting Lender.
(c) Notwithstanding any provision hereof to the contrary, until such
time as a Defaulting Lender has funded its Pro Rata Share of any Advance
which was previously a Non Pro Rata Advance, or such Lender is determined by
a court of competent jurisdiction not to have defaulted in it obligations
hereunder or all other Lenders have received payment in full (whether by
repayment or prepayment) of the principal and interest due in respect of such
Non Pro Rata Advance, all of the Obligations owing to such Defaulting Lender
hereunder shall be subordinated in right of payment, as provided in the
following sentence, to the prior payment in full of all principal, interest
and fees in respect of all Non Pro Rata Advances in which the Defaulting
Lender has not funded its Pro Rata Share (such principal, interest and fees
being referred to as "Senior Loans"). All amounts paid by Borrower and
otherwise due to be applied to the Obligations owing to the Defaulting Lender
pursuant to the terms hereof shall be distributed by Agent to the other
Lenders in accordance with their respective Pro Rata Shares (recalculated for
purposes hereof to exclude the Defaulting Lender's Commitment), until all
Senior Loans have been paid in full. This provision governs only the
relationship among Agent, each Defaulting Lender, and the other Lenders;
nothing hereunder shall limit the obligation of Borrower to repay all
Advances in accordance with the terms of this Agreement. The provisions of
this section shall apply and be effective regardless of whether an Event of
Default occurs and is then continuing, and notwithstanding (i) any other
provision of this Agreement to the contrary, (ii) any instruction of Borrower
as to its desired application of payments or (iii) the suspension of such
Defaulting Lender's right to vote on matters which are subject to the consent
or approval of Majority Lenders, Supermajority Lender or all Lenders.
(d) Agent shall be entitled to (i) collect interest from such Lender
for the period from the date on which the payment was due until the date on
which the payment is made at the Federal Funds Rate for each day during such
period, (ii) withhold or setoff, and to apply to the payment of the defaulted
amount and any related interest, any amounts to be paid to such Defaulting
Lender under this Agreement, and (iii) bring an action or suit against such
Defaulting Lender in a court of competent jurisdiction to recover the
defaulted amount and any related interest. In addition, the Defaulting Lender
shall indemnify, defend and hold Agent and each of the other Lenders harmless
from and against any and all costs, expenses and liabilities plus interest
thereon at the Default Rate set forth in the Loan Documents for funds
advanced by Agent or any other Lender on account of the Defaulting Lender
which they may sustain or incur by reason of or as a direct consequence of
the Defaulting Lender's failure or refusal to abide by its obligations under
this Agreement.
(e) So long as any Lender is a Defaulting Lender, (i) no Unused
Facility Fee shall accrue in favor of, or be payable to, such Defaulting
Lender; (ii) the Defaulting Lender's outstanding portion of the Loan shall
accrue interest during each month at a rate equal to the LIBOR Rate
applicable to an Interest Period having a duration one-month and commencing
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on the first LIBOR Business Day of such month; and (iii) at the request of
Borrower, all interest payable to such Defaulting Lender shall be placed by
the Agent in a cash collateral account and held as security for the
Obligations owed to all of the Lenders and such interest shall not be paid
to such Defaulting Lender until such time as either (A) the other Lenders
have been paid in full or (B) such Lender is no longer a Defaulting Lender;
provided, however, if such Lender has been found to be a Defaulting Lender
pursuant to a judgment of a court of competent jurisdiction that such non-
funding Lender has breached its funding obligations hereunder and such
judgment is not a final, non-appealable judgment, then until Borrower obtains
such a final, non-appealable judgment that such non-funding Lender is in
breach of its funding obligations hereunder, Borrower shall continue to pay
the Unused Facility Fee on such Defaulting Lender's Commitment and shall pay
interest on the Defaulting Lender's portion of the outstanding Loan at the
rate applicable to the other Lenders' portion of the outstanding Loan and the
Agent shall, at the request of Borrower, deposit such Unused Facility Fee and
the excess of such interest over the interest payable at the rate set forth
in clause (ii) above into a cash collateral account, held as security for the
Obligations owed to all of the Lenders and paid (x) to the Borrower, if such
non-funding Lender is determined, in a final, non-appealable judgment from
a court of competent jurisdiction to have breached its funding obligations
hereunder, or (y) to such non-funding Lender, if such non-funding Lender is
determined, in a final, non-appealable judgment from a court of competent
jurisdiction not to have breached its funding obligations hereunder.
(f) A Defaulting Lender shall cease to be a Defaulting Lender upon
(i) the payment by such Defaulting Lender to the Agent, for the benefit of
the Agent and the Lenders, as appropriate, of its Pro Rata Share (determined
without giving affect to any recalculation thereof as a result of such Lender
being a Defaulting Lender) of an amount equal to the amount of each Advance
which was previously a Non Pro Rata Advance plus all other amounts required
to be paid or funded by Lenders hereunder since the date such Lender became
a Defaulting Lender and for which such Defaulting Lender has not paid or
funded its Pro Rata Share, (ii) any judgment that such non-funding Lender has
breached its obligations to Borrower in respect of such Non Pro Rata Advance
is reversed or vacated for any reason; or (iii) the Agent and all other
Lenders receiving payment in full (whether by repayment or prepayment) of the
principal and interest due in respect of all such Non Pro Rata Advances and
all such other amounts.
(g) In the event a non-funding Lender is designated as a Defaulting
Lender as a result of a judgment that such non-funding Lender has breached
its obligations to Borrower in respect of such Non Pro Rata Advance and such
judgment is subsequently reversed for any reason, then (i) such Lender shall
not longer be a Defaulting Lender, (ii) the Pro Rata Share of each Lender
shall be adjusted to include the Commitment of such Lender, (iii) such Lender
shall be entitled to immediate payment of any and all amounts owed to it and
held in any cash collateral account established pursuant to Section 8.13;
(iv) the Borrower shall, within three (3) Business Days, repay to the Agent,
for the benefit of the other Lenders, the aggregate amount by which the
outstanding Advances made by each Lender exceeds such Lender's Pro Rata Share
of the Loan (giving effect to the recomputation of Pro Rata Share pursuant
to clause (ii) above); and (v) such Lender shall have the right to recover
from Borrower any damages that such Lender may have suffered as a result of
having been categorized as "Defaulting Lender" and (vi) such Lender such
other remedies against Borrower as it may have under this Agreement, at law
or in equity.
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SECTION 8.14 Borrower Not a Beneficiary. The provisions of this
Article 8 are solely for the benefit of the Agent and the Lenders and neither
the Borrower nor any Affiliate of the Borrower shall have any right to rely
on or enforce any of the provisions hereof; provided, however, that the
Borrower shall have the rights granted to it in subsections (a), (b), (e) and
(f) of Section 8.13 hereof. In performing its functions and duties under this
Agreement, the Agent shall act solely as the agent of the Lenders and does
not assume and shall not be deemed to have assumed any obligations or
relationship of agency, trustee or fiduciary with or for the Borrower or any
Affiliate of the Borrower. Lenders represent to Borrower that, other than
letter agreements relating to the payment of fees and letters committing to
participate as a Lender, the Loan Documents contain as of the date hereof all
of the written agreements establishing the relationships between the Agent
and the Lenders and among the Lenders in connection with the Loan.
ARTICLE 9
MISCELLANEOUS
SECTION 9.1 Notices. All notices or other communications required or
permitted to be given pursuant to this Agreement shall be in writing and
shall be considered as properly given if mailed by first-class United States
mail, postage prepaid, registered or certified with return receipt requested,
if sent by national overnight courier providing documentation of receipt, if
delivered in person to the intended addressee or if sent by prepaid telegram,
telex or telecopy, with a copy of such telegram, telex or telecopy sent by
mail, overnight courier or personal delivery as aforesaid. Notice so mailed
shall be effective three (3) Business Days after its deposit (provided
however, that any Notice of Borrowing or Rate Selection Notice so mailed
shall be effective only if and when received by Agent). Notice given in any
other manner shall be effective only if and when received by the addressee.
For purposes of notice, the addresses of the parties shall be as set forth
on the signature pages hereto; provided, however, that any party shall have
the right to change its address for notice hereunder to any other location
within the continental United States by the giving of thirty (30) days'
notice to the other parties in the manner set forth hereinabove.
SECTION 9.2 No Waiver. Any failure by Agent or any Lender to insist,
or any election by Agent or any Lender not to insist, upon strict performance
by Borrower or its Affiliates of any of the terms, provisions or conditions
of the Loan Documents shall not be deemed to be a waiver of same or of any
other term, provision or condition thereof, and Agent and the Lenders shall
have the right at any time or times thereafter to insist upon strict
performance by Borrower and its Affiliates of any and all such terms,
provisions and conditions. No delay or omission by Agent or any Lender to
exercise any right, power or remedy accruing upon any Default or Event of
Default shall exhaust or impair any such right, power or remedy or shall be
construed to be a waiver of any such Default or Event of Default, or
acquiescence therein, and every right, power and remedy given by this
Agreement to Agent or any Lender may be exercised from time to time and as
often as may be deemed expedient by Agent or any Lender. No consent or
waiver, expressed or implied, by Agent or any Lender to or of any Default or
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Event of Default by Borrower or its Affiliates in the performance of the
Obligations of Borrower and its Affiliates hereunder or to any other Event
of Default shall be deemed or construed to be a consent or waiver to or of
any other Default or Event of Default in the performance of the same or any
other Obligations of Borrower or its Affiliates hereunder. Failure on the
part of Agent or any Lender to complain of any act or failure to act or to
declare an Event of Default, irrespective of how long such failure continues,
shall not constitute a waiver by Agent or any such Lender of its rights
hereunder or impair any rights, powers, or remedies of Agent or any Lender
hereunder.
SECTION 9.3 Expenses; Documentary Taxes; Indemnification.
(a) Borrower agrees to reimburse the Agent for all of the Agent's
reasonable costs and expenses incurred in connection with the development,
preparation, execution, delivery, modification or amendment of this
Agreement, the Notes and the Collateral Documents, including reasonable audit
costs, appraisal costs, the cost of searches, filings and filing fees, taxes
and the fees and disbursements of Agent's attorneys, Messrs. Troutman Sanders
and any counsel retained by them. Borrower further agrees to reimburse the
Agent and each Lender for all reasonable third-party costs and expenses
incurred by the Agent or such Lender (including attorneys' fees and
disbursements provided that, if outside counsel is not used by the Agent, the
allocated cost of in-house counsel of Agent shall be deemed to be a third-
party cost and expense) from and after the occurrence of a Default to:
(i) commence, defend or intervene in any court proceeding; (ii) file a
petition, complaint, answer, motion or other pleading, or to take any other
action in or with respect to any suit or proceeding (bankruptcy or otherwise)
relating to the Collateral or this Agreement, the Notes or any of the
Collateral Documents; (iii) protect, collect, lease, sell, take possession
of, or liquidate any of the Collateral; (iv) attempt to enforce any security
interest in any of the Collateral or to seek any advice with respect to such
enforcement; and (v) enforce any of the Agent's and the Lenders' rights to
collect any of the Obligations.
(b) Borrower also agrees to pay, and to save harmless the Agent and
the Lenders from any delay in paying, any intangibles, documentary stamp and
other taxes, if any, which may be payable in connection with the execution
and delivery of this Agreement, the Notes, the Letters of Credit or any of
the Collateral Documents, or the recording of any thereof, or in any
modification hereof or thereof.
(c) Borrower agrees to indemnify Agent and each Lender, their
respective Affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel, which may be incurred by such indemnitee in
connection with any investigative, administrative or judicial proceeding
(whether or not such Indemnitee shall be designated a party thereto) brought
or threatened relating to or arising out of the Loan Documents or the
Collateral Documents or any actual or proposed use of proceeds of the Loan
hereunder; provided that no Indemnitee shall have the right to be indemnified
hereunder for such Indemnitee's own gross negligence or willful misconduct
as determined by a court of competent jurisdiction.
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(d) In the event of the passage of any state, federal, municipal or
other governmental law, order, rule or regulation, subsequent to the date
hereof, in any manner changing or modifying the laws now in force governing
the taxation of Mortgages, security agreements, or assignments of leases or
debts secured thereby or the manner of collecting such taxes so as to
adversely affect Agent or any Lender, Borrower will pay any such tax on or
before the due date thereof. If Borrower fails to make such prompt payment
or if, in the opinion of Agent, any such state, federal, municipal, or other
governmental law, order, rule or regulation prohibits Borrower from making
such payment or would penalize Agent if Borrower makes such payment or if,
in the opinion of Agent, the making of such payment might result in the
imposition of interest beyond the maximum amount permitted by applicable law,
then the entire balance of the Obligations and all interest accrued thereon
shall, at the option of Agent, become immediately due and payable.
SECTION 9.4 Waiver of Set-Offs; Sharing of Set-Offs. (a) Each Lender
hereby waives any right of set-off against the Obligations it has with
respect to any deposit account of Borrower, its Subsidiaries or Affiliates
maintained with such Lender or any other account or property of Borrower, its
Subsidiaries or its Affiliates held by such Lender other than the Collateral;
provided however, that the within waiver is not intended, and shall not be
deemed, to waive any right of set-off (i) any Lender has with respect to any
account required to be maintained pursuant to this Agreement or any other
Loan Document or (ii) arising other than pursuant to this Agreement, the
Collateral Documents or the other Loan Documents.
(b) As to any set-off permitted pursuant to Section 9.4(a) above,
each Lender agrees that if it shall, by exercising any right of set-off or
counterclaim or otherwise, receive payment of a proportion of the aggregate
amount of principal and interest due with respect to the Obligations held by
it which is greater than the proportion received by any other Lender in
respect of the aggregate amount of principal and interest due with respect
to the Obligations held by such other Lender, such Lender receiving such
proportionately greater payment shall promptly purchase such participation
in the Obligations held by the other Lenders, and such other adjustments
shall be made, as may be required so that all such payments of principal and
interest with respect to the Obligations held by Lenders shall be shared by
Lenders based upon each Lender's Pro Rata Share; provided that nothing in
this Section shall impair the right of any Lender to exercise any right of
set-off or counterclaim it may have and to apply the amount subject to such
exercise to the payment of Indebtedness of Borrower other than the
Obligations. Borrower agrees, to the fullest extent it may effectively do so
under applicable law, that any holder of a participation in a Obligations,
whether or not acquired pursuant to the foregoing arrangements, may exercise
rights of set-off or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were a direct
creditor of Borrower in the amount of such participation.
SECTION 9.5 Amendments and Waivers.
(a) No amendment or modification of any provision of this Agreement
shall be effective without the written agreement of the Majority Lenders
(after notice to all Lenders) and Borrower (except for amendments which by
the express terms of this Agreement do not require the consent of Borrower),
and (b) no termination or waiver of any provision of this Agreement, or
consent to any departure by Borrower therefrom (except as expressly provided
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in Section 9.5(a)(v) below with respect to waivers of late fees), shall in
any event be effective without the written concurrence of the Majority
Lenders (after notice to all Lenders), which Majority Lenders shall have the
right to grant or withhold at their sole discretion; provided, however, that
any amendment to Section 8.11(c) shall require the consent of the
Supermajority Lenders; provided, further, that the following amendments,
modifications or waivers shall require the consent of all Lenders:
(i) increasing or decreasing the Commitment of any Lender
(except for ratable decreases in the Commitments by Borrower pursuant to
Section 2.1);
(ii) changing the principal amount or final maturity of the
Loan;
(iii) reducing the interest rates applicable to the Loan;
(iv) reducing the rates on which fees payable pursuant hereto
are determined;
(v) forgiving or delaying any amount payable or receivable
under Article 2 or waiving any Default or Event of Default in respect
thereof;
(vi) changing the definition of "Majority Lenders",
"Supermajority Lenders," "Pro Rata Share" or "Borrowing Base";
(vii) changing any provision contained in this Section 9.5;
(viii) releasing any obligor under any Loan Document or any
Collateral, unless such release is otherwise required or permitted by the
terms of this Agreement; or
(ix) consent to assignment by Borrower of all of its duties
and Obligations hereunder pursuant to Section 9.6;
(x) permitting the term of any Letter of Credit to extend
beyond the Termination Date;
provided, further, any amendment, waiver or modification of the provisions
of Article 8 (other than subsections (a), (b), (e), (f) and (g) of Section
8.13) may be made without the consent of the Borrower. Agent agrees to
provide Borrower with notice of any such amendment, waiver or modification;
provided, however, that the failure to give such notice shall not invalidate
such amendment, waiver or modification.
No amendment, modification, termination or waiver of any provision of
Article 8 or any other provision referring to Agent shall be effective
without the written concurrence of Agent, but only if such amendment,
modification, termination or waiver alters the obligations or rights of
Agent. Any waiver or consent shall be effective only in the specific instance
and for the specific purpose for which it was given. No notice to or demand
on Borrower in any case shall entitle Borrower to any other further notice
or demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this Section 9.5
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shall be binding on each assignee, transferee or recipient of Agent's or any
Lender's Commitment under this Agreement or the Advances at the time
outstanding.
SECTION 9.6 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that Borrower may not assign or otherwise transfer any of its
rights under this Agreement without the prior written consent of all Lenders.
(b) Any Lender may, in accordance with applicable law, at any time
sell to one or more banks or other institutions (each a "Participant")
participating interests in any Advances owing to such Lender, the Note held
by such Lender, the Commitment held by such Lender hereunder or any other
interests of such Lender hereunder. Borrower agrees that each Participant
shall be entitled to the benefits of Sections 2.6, 9.3(c) and 9.7 hereof with
respect to its participation; provided that no Participant shall be entitled
to receive any greater amount pursuant to such Section than such Lender would
have been entitled to receive in respect of the amount of the participation
transferred by such Lender to such Participant had no such transfer occurred.
In no event shall a Lender that sells a participation be obligated to the
Participant to take or refrain from taking any action hereunder, under such
Lender's Note or in respect of such Lender's Commitment except that such
Lender may agree that it will not, without the consent of the Participant,
agree to (i) the increase or extension of the term, or the extension of the
time or waiver of any requirement for the reduction or termination, of such
Lender's Commitment, (ii) the extension of any date fixed for the payment of
principal of or interest on the related Loan or Loans or any portion of any
fees payable to the Participant, (iii) the reduction of any payment of
principal thereof, or (iv) the reduction of the rate at which either interest
is payable thereon to a level below the rate at which the Participant is
entitled to receive interest in respect of such participation.
(c) Each Lender may at any time assign, pursuant to an assignment
substantially in the form of Exhibit H attached hereto and incorporated
herein by reference, with (unless such assignment is to an existing Lender
or to an Affiliate of any such Lender) the consent of the Agent and the
Borrower (not to be unreasonably withheld) to one or more banks or other
institutions (in either case, an "Assignee") all or any part of any Advances
owing to such Lender, the Note held by such Lender, the Commitment held by
such Lender or any other interest of such Lender hereunder; provided,
however, that (i) each such assignment by a Lender shall be made in such
manner so that the same portion of its Advances, Note and Commitment is
assigned to the Assignee and (ii) unless Borrower and the Agent consent
otherwise, and except in the case of an assignment to another Lender, any
partial assignment of a Lender's Commitment shall be in a minimum principal
amount of $10,000,000.00, and (iii) at all times prior to its resignation or
replacement, Agent's Commitment shall be equal to or greater than the
Commitment of each other Lender. Without restricting the right of Borrower
or Agent to reasonably object to any bank or financial institutional becoming
an assignee of an interest of a Lender hereunder, each proposed assignee must
be an existing Lender or a bank or financial institution which (i) has (or,
in the case of a bank which is a subsidiary, such bank's parent has) a rating
of its senior debt obligations of not less than Baa-1 by Moody's Investors
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Services, Inc. or a comparable rating by a rating agency acceptable to Agent
and (ii) has total assets in excess of $10,000,000,000.00. Borrower and the
Lenders agree that, to the extent of any assignment, the Assignee shall be
deemed to have the same rights and benefits with respect to Borrower under
this Agreement and the Notes as it would have had if it were a Lender
hereunder on the date hereof with respect to its Pro Rata Share and the
assigning Lender shall be released from its Commitment hereunder, to the
extent of such assignment. Upon the making of an assignment, the assigning
Lender shall pay to the Agent an assignment fee of $2,500.
(d) In addition to the assignments and participations permitted under
the foregoing provisions of this Section 9.6, any Lender may assign and
pledge all or any portion of its Advances and its Note to any Federal Reserve
Bank as collateral security pursuant to Regulation A and any Operating
Circular issued by such Federal Reserve Bank. No such assignment shall
release the assigning Lender from its obligations hereunder.
(e) Borrower authorizes each Lender to disclose to any Participant
or Assignee ("Transferee") and any prospective Transferee any and all
financial information in such Lender's possession concerning Borrower which
has been delivered to such Lender by Borrower or the Agent pursuant to this
Agreement or which has been delivered to such Lender by Borrower in
connection with such Lender's credit evaluation of Borrower prior to entering
into this Agreement.
(f) Any Lender, at such Lender's sole cost and expense, shall be
entitled to have the Note held by it subdivided in connection with a
permitted assignment of all or any portion of such Note and the respective
Advances evidenced thereby pursuant to Section 9.6(c) above. Any Lender,
which by reason of an assignment pursuant to Section 9.6(c) hereof or
otherwise, has or would have more than one (1) Note hereunder shall be
entitled to have such Notes consolidated into a single Note. In the case of
any such subdivision or consolidation, the new Note (the "New Note") issued
in exchange for a Note or Notes (the "Old Note(s)") previously issued
hereunder (i) shall be substantially in the form of Exhibit A hereto, as
appropriate, (ii) shall be dated the date of such assignment or of the most
recent Note held by such Lender, as the case may be, (iii) shall be otherwise
duly completed and (iv) shall bear a legend, to the effect that such New Note
is issued in exchange for such Old Note(s) and that the indebtedness
represented by such Old Note(s) shall not have been extinguished by reason
of such exchange.
(g) Borrower will use reasonable efforts to cooperate with Agent and
Lenders in connection with the assignment of interests under this Agreement
or the sale of participations herein.
SECTION 9.7 Capital Adequacy. If, after the date hereof, any Lender
shall have determined that either (i) the adoption or implementation of any
applicable law, rule, regulation or guideline of general applicability
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or (ii) compliance by such Lender (or any lending
office of such Lender) with any request or directive of general applicability
regarding capital adequacy (whether or not having the force of law) of any
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such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Lender's capital as a
consequence of its or Borrower's obligations hereunder to a level below that
which such Lender could have achieved but for such adoption, implementation,
change or compliance (taking into consideration such Lender's policies with
respect to capital adequacy) by an amount deemed by such Lender to be
material, then from time to time, within ten (10) days after demand by such
Lender, which demands shall include a calculation and a reference to the
applicable law, rule or regulation, Borrower shall pay to such Lender such
additional amount of amounts as will adequately compensate such Lender for
such reduction. Such Lender will use good faith and reasonable efforts to
designate a different lending office for such Lender's Advances if such
designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the sole opinion of such Lender, be
disadvantageous to such Lender. Each Lender shall notify the Agent and the
Borrower of any event occurring after the date of this Agreement entitling
such Lender to compensation under this Section 9.7 within 45 days, after such
Lender obtains actual knowledge thereof; provided that if any Lender fails
to give such notice within 45 days after it obtains actual knowledge of such
an event, such Lender shall, with respect to compensation payable pursuant
to this Section 9.7 in respect of any costs resulting from such event, only
be entitled to payment for costs incurred from and after the date 45 days
prior to the date that such Lender gives such notice. A certificate of such
Lender claiming compensation under this Section 9.7 and setting forth the
additional amount of amounts to be paid to it hereunder, together with the
description of the manner in which such amounts have been calculated, shall
be conclusive in the absence of manifest error. In determining such amount,
such Lender may use any reasonable averaging and attribution methods.
SECTION 9.8 Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as
if the signatures thereto and hereto were upon the same instrument.
SECTION 9.9 Notice of Final Agreement. THIS AGREEMENT REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES.
SECTION 9.10 Invalid Provisions. Any provision of any Loan Document
held by a court of competent jurisdiction to be illegal, invalid or
unenforceable shall not invalidate the remaining provisions of such Loan
Document which shall remain in full force and effect and the effect thereof
shall be confined to the provision held invalid or illegal.
SECTION 9.11 Maximum Rate. Regardless of any provision contained in
any of the Loan Documents, Lenders shall never be entitled to receive,
collect or apply as interest (whether termed interest herein or deemed to be
interest by operation of law or judicial determination) on the Obligations
any amount in excess of interest calculated at the Maximum Rate, and, in the
event that any Lender ever receives, collects or applies as interest any such
excess, the amount which would be excessive interest shall be deemed to be
a partial prepayment of principal and treated hereunder as such; and, if the
principal amount of the Obligations are paid in full, any remaining excess
shall forthwith be paid to Borrower. In determining whether or not the
interest paid or payable under any specific contingency exceeds interest
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calculated at the Maximum Rate, Borrower and Lenders shall, to the maximum
extent permitted under applicable law, (i) characterize any non-principal
payment as an expense, fee or premium rather than as interest; (ii) exclude
voluntary prepayments and the effects thereof; and (iii) amortize, prorate,
allocate and spread, in equal parts, the total amount of interest throughout
the entire contemplated term of the Obligations; provided that, if the
Obligations are paid and performed in full prior to the end of the full
contemplated term thereof, and if the interest received for the actual period
of existence thereof exceeds interest calculated at the Maximum Rate, Lenders
shall refund to Borrower the amount of such excess or credit the amount of
such excess against the principal amount of the Obligations and, in such
event, Lenders shall not be subject to any penalties provided by any laws for
contracting for, charging, taking, reserving or receiving interest in excess
of interest calculated at the Maximum Rate.
SECTION 9.12 Limitation Upon Liability. Subject to the exceptions and
qualifications described below, Holdings I, Borrower's sole general partner,
its successors and assigns (the "General Partner"), shall not be personally
liable for the payment of the Obligations. Notwithstanding the foregoing
provisions of this paragraph: (a) if an Event of Default occurs, nothing
hereinabove stated shall in any way prevent or hinder the Agent or the
Lenders in the enforcement or foreclosure of the Liens now or at any time
hereafter securing the payment of the Obligations, or in the pursuit or
enforcement of any remedy or judgment against Borrower and its assets; and
(b) the General Partner shall be fully liable to the Agent and the Lenders
to the same extent that the General Partner would be liable absent the
foregoing provisions of this Section 9.12: (i) for fraud or willful
misrepresentation by the General Partner, its Affiliates or predecessor
general partner (i.e., CBL Properties, Inc.), (to the full extent of losses
suffered by the Agent or any Lender by reason of such fraud or willful
misrepresentations); (ii) for the retention of any rental income or other
income in excess of operating expenses of the property arising with respect
to the property covered by any Loan Document and collected by Borrower after
the Agent has given Borrower any notice that Borrower is in default under any
of the Loan Documents and that the Agent and the Lenders have exercised their
option to accelerate the maturity of the Obligations, foreclose or require
the foreclosure of the Liens securing payment thereof or exercise any of the
other rights, remedies and recourses of the Agent or the Lenders under the
Loan Documents (to the full extent of the rental income or other income in
excess of such operating expenses collected by Borrower after the giving of
any such notice); (iii) for the fair market value, as of the time of the
giving of any notice referred to in (ii) above, of any personalty or fixtures
removed or disposed of by Borrower (other than in accordance with the terms
of the Mortgage encumbering the same) after the giving of any notice referred
to in (ii) above; and (iv) for the misapplication by Borrower (contrary to
the provisions of this Agreement or the Loan Documents) of (x) any proceeds
paid under any insurance policy by reason of damage, loss or destruction to
any portion of the Collateral or the Projects (to the full extent of such
proceeds so misapplied); or (y) any proceeds or awards resulting from the
condemnation of all or any part of the Collateral or Projects (to the full
extent of such proceeds or awards so misapplied). No subsequent owner of the
Collateral or the Projects shall be liable under the foregoing clause (b) for
the acts and omissions of any prior owner, provided such subsequent owner and
any partner therein or other party thereto is not an Affiliate of such prior
owner or any partner therein or other party thereto, and further provided
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that the Agent and the Majority Lenders have given their prior written
approval to the transfer of such Collateral or Projects to such subsequent
owner, if such approval is required under the Loan Documents.
SECTION 9.13 Course of Dealing. Borrower and Lenders mutually agree
that each shall proceed at all times in good faith and in a commercially
reasonable manner in the performance of its obligations and in the exercise
of its judgment or discretion hereunder and under the other loan documents.
SECTION 9.14 Treatment of Certain Information; Confidentiality.
(a) Borrower acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided
to Borrower or one or more of its Subsidiaries (in connection with this
Agreement or otherwise) by any Lender or by one or more Subsidiaries or
Affiliates of such Lender and Borrower hereby authorizes each Lender to share
any information delivered to such Lender by Borrower and its Subsidiaries
pursuant to this Agreement, or in connection with the decision of such Lender
to enter into this Agreement, to any such Subsidiary or Affiliate, it being
understood that any such Subsidiary or Affiliate receiving such information
shall be bound by the provisions of clause (b) below as if it were a Lender
hereunder.
(b) Each Lender agrees (on behalf of itself and each of its
Affiliates, directors, officers, employees and representatives) to keep
confidential, in accordance with their customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices, any non-public information supplied to it by Borrower
pursuant to this Agreement which is identified by Borrower as being
confidential at the time the same is delivered to the Lenders, provided that
nothing herein shall limit the disclosure of any such information (i) to the
extent required by statute, rule, regulation or judicial process, (ii) to
counsel for any of the Lenders, (iii) to bank examiners, auditors or
accountants, (iv) to any other Lender, (v) in connection with any litigation
to which any one or more of the Lenders is a party (provided, that each such
Lender will promptly notify Borrower of such litigation and of such proposed
disclosure prior to the disclosure of such information (unless prohibited
from doing so by the relevant court)) or (vi) to any Transferee (or
prospective Transferee) so long as such Transferee (or prospective
Transferee) first executes and delivers to the respective Lender a
Confidentiality Agreement containing substantially the term of this Section
9.14.
SECTION 9.15 Conflict of Terms. In the event of a conflict between the
terms and provisions of this Agreement and the terms and provisions of any
of the other Loan Documents, the terms of this Agreement shall govern;
provided, however, that any term or provision of any Collateral Document
applicable to the Collateral shall be deemed to be supplemental to, and not
in conflict with, the terms and provisions of this Agreement.
SECTION 9.16 Governing Law; Submission to Jurisdiction. THIS AGREEMENT
AND EACH NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF GEORGIA. BORROWER HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT
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OF GEORGIA AND OF ANY GEORGIA STATE COURT SITTING IN ATLANTA, GEORGIA FOR
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY. BORROWER IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
SECTION 9.17 Waiver of Right to Trial by Jury. EACH PARTY TO THIS
AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION (1) ARISING UNDER THIS AGREEMENT, ANY NOTE
OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION THEREWITH, OR (2) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT
TO THIS AGREEMENT, ANY NOTE OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED
HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING,
AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS
AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER
OF THEIR RIGHT TO TRIAL BY JURY.
________________
Initials
SECTION 9.18 Amendment and Restatement. This Agreement constitutes an
amendment to and a restatement in the entirety of the Original Credit
Agreement, and the obligations set forth therein, as amended and restated
hereby, continue in full force and effect. This Agreement is not and shall
not be deemed to constitute a novation of the underlying obligations. The
Original Credit Agreement shall govern the relationship of the parties and
the Loan through the date preceding the Effective Date; from and after the
Effective Date, this Agreement shall govern and control.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and
year first above written.
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"Borrower"
CBL & ASSOCIATES LIMITED PARTNERSHIP
By: CBL Holdings I, Inc.
as General Partner
By:_____John N. Foy________________
Name: ____John N. Foy___________
Title:_____Vice President_______
Attest:___Jeffrey V. Curry_________
Name: ___Jeffrey V. Curry_______
Secretary:__Assistant Secretary_
Address for Notices:
CBL & Associates Limited Partnership
c/o CBL & Associates Properties, Inc.
One Park Place
6148 Lee Highway
Chattanooga, Tennessee 37421
Attn: President
Telecopy Number: (615) 490-8662
with a copy to:
CBL & Associates Properties, Inc.
One Park Place
6148 Lee Highway
Chattanooga, Tennessee 37421
Attn: Mary Ann Okrasinski, Esq.
Telecopy Number: (615) 490-8662
Signatures Continued on Next Page
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Signatures Continued from Previous Page
"Lenders"
Commitment:
$45,000,000 WELLS FARGO BANK, NATIONAL
ASSOCIATION., as successor in interest
to Wells Fargo Realty Advisors Funding,
Incorporated
By: ___Robert W. Belson____________
Name: __Robert W. Belson________
Title:__Senior Vice President___
Wells Fargo Bank, National Association
2859 Paces Ferry Road, Suite 1805
Atlanta, Georgia 30339
Attn: Loan Administration Manager
Telecopy Number: (770) 435-2262
with copies to:
Wells Fargo Bank, National Association
420 Montgomery Street, 9th Floor
San Francisco, California 94163
Attn: Leslie Eckstein
Telecopy Number: (415) 391-2971
Wells Fargo Bank, National Association
2030 Main Street, Suite 800
Irvine, California 92714
Attn: Debra Autry
Telecopy Number: (714) 261-0946
Troutman Sanders LLP
Suite 5200
600 Peachtree Street
Atlanta, Georgia 30308-2216
Attn: Joseph R. White, Esq.
Telecopy Number: (404) 885-3900
Signatures Continued on Next Page
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Signatures Continued from Previous Page
Commitment:
$40,000,000 U.S. BANK NATIONAL ASSOCIATION, f/k/a
FIRST BANK NATIONAL ASSOCIATION
By:___Stephen P. Bailey___________
Name: ___Stephen P. Bailey_____
Title:___Vice President________
U.S. Bank National Association
First Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
Attn: Real Estate Banking Division
Telecopy Number: (612) 973-0830
Signatures Continued on Next Page
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Signatures Continued from Previous Page
"Agent"
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as successor in interest to Wells Fargo
Realty Advisors Funding, Incorporated,
as Agent
By: _____Robert W. Belson__________
Name: ___Robert W. Belson_______
Title:___Senior Vice President__
Wells Fargo Bank, National Association
2859 Paces Ferry Road, Suite 1805
Atlanta, Georgia 30339
Attn: Loan Administration Manager
Telecopy Number: (770) 435-2262
with copies to:
Wells Fargo Bank, National Association
420 Montgomery Street, 9th Floor
San Francisco, California 94163
Attn: Leslie Eckstein
Telecopy Number: (415) 391-2971
Wells Fargo Bank, National Association
2030 Main Street, Suite 800
Irvine, California 92714
Attn: Debra Autry
Telecopy Number: (714) 261-0946
Troutman Sanders LLP
Suite 5200
600 Peachtree Street
Atlanta, Georgia 30308-2216
Attn: Joseph R. White, Esq.
Telecopy Number: (404) 885-3900
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EXHIBIT I
FORM OF EXTENSION REQUEST
______________ __, 199_
Wells Fargo Bank, National Association
2859 Paces Ferry Road
Suite 1805
Atlanta, Georgia 30339
Attention: ________________
Ladies and Gentlemen:
Reference is made to that certain Third Amended and Restated Credit
Agreement dated as of _________ __, 1998, (the "Credit Agreement"), by and
among CBL & Associates Limited Partnership (the "Borrower"), Wells Fargo
Bank, National Association, and U.S. Bank National Association and their
assignees under Section 9.6 thereof ("Lenders"), and Wells Fargo Bank,
National Association, as Agent (the "Agent"). Capitalized terms used herein,
and not otherwise defined herein, have their respective meanings given them
in the Credit Agreement.
Pursuant to Section 2.11 of the Credit Agreement, the Borrower hereby
requests that the Lenders and Agent extend the current Termination Date of
_____________ __, 199_ by a one-year period to _________________ __, 1999_.
The Borrower hereby certifies to the Agent and the Lenders that as of
the date hereof (a) no Default or Event of Default has occurred and is
continuing, and (b) the representations and warranties of the Borrower
contained in the Credit Agreement and the other Loan Documents are true and
correct in all material respects, except to the extent such representations
or warranties specifically relate to an earlier date or such representations
or warranties become untrue by reason of events or conditions otherwise
permitted under the Credit Agreement or the other Loan Documents.
CBL & ASSOCIATES LIMITED PARTNERSHIP
By: CBL Holdings I, Inc., as General
Partner
By:
Name:
Title:
Attest:
Name:
Title:
<PAGE>
Schedule 3.1
Eligible Projects
Attributable
Project Borrowing Base
- ------------ ---------------
1. Post Oak Mall $39,000,000
Brazos County, Texas
2. Georgia Square Mall $28,600,000
Clark County, Georgia
3. Twin Peaks Mall $19,500,000
Boulder County, Colorado
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet at September 30, 1998 (unaudited) and the
Consolidated Statement of Operations for the nine months ended
September 30, 1998 (unaudited) and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> SEP-30-1998
<CASH> 6,787
<SECURITIES> 0
<RECEIVABLES> 17,665
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 174,921
<TOTAL-ASSETS> 1,834,467
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
29
<COMMON> 242
<OTHER-SE> 407,793
<TOTAL-LIABILITY-AND-EQUITY> 1,834,467
<SALES> 0
<TOTAL-REVENUES> 180,168
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 95,503
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 47,836
<INCOME-PRETAX> 29,743
<INCOME-TAX> 0
<INCOME-CONTINUING> 29,743
<DISCONTINUED> 0
<EXTRAORDINARY> 676
<CHANGES> 0
<NET-INCOME> 29,067
<EPS-PRIMARY> 1.14
<EPS-DILUTED> 1.13
