Securities Exchange Act of 1934 -- Form 8-K/A
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report :
February 18, 1998
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CBL & ASSOCIATES PROPERTIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-12494 62-1545718
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
6148 Lee Highway, Suite 300, Chattanooga, Tennessee 37421
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(Address of principal executive offices)
Registrant's telephone number, including area code:
(423) 855-0001
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CBL & ASSOCIATES PROPERTIES, INC.
ITEM 2 ACQUISITION OR DISPOSITION OF ASSETS
ACQUISITION OF ASHEVILLE MALL ASHEVILLE, NORTH CAROLINA
On January 2, 1998, Asheville, LLC, a North Carolina Limited Liability
Corporation (the "Asheville LLC"), a majority-owned subsidiary of CBL &
Associates Properties, Inc. (the "Registrant")acquired Asheville Mall, a
regional shopping mall located in Asheville, North Carolina, containing
approximately 823,916 square feet of total gross leasable area ("GLA")
including 260,581 of mall store GLA from the R.B.R.& S.T. Limited
Partnership, a subsidiary of the R.L. Coleman Company (the "R.L. Coleman
Company") pursuant to a Purchase and Sale Agreement between R.L. Coleman
Company and Asheville LLC (the "Purchase Agreement"). The assets acquired
included, among other things, real property, the buildings, improvements,
and fixtures located thereon, certain lease interests, personal property
and rights related thereto.
The aggregate purchase price, including closing costs, was approximately $65
million and was determined in good faith, arms length negotiations between
Registrant and R.L. Coleman Company, an unrelated third party. In negotiating
the purchase price the Registrant considered, among other facts, the mall's
historical and projected cash flow, the nature and term of existing leases,
the current operating costs, the physical condition of the property, and the
terms and conditions of available financing. There were no independent
appraisals obtained by the Registrant. The purchase price consisted of $65
million in cash. The cash consideration was paid from proceeds from the
Registrant's lines of credit and proceeds from a promissory note in the
amount of $48.9 million which Asheville LLC placed with Wells Fargo Bank
N.A. The Registrant intends to continue operating the mall as currently
operated and leasing space therein to national and local retailers.
The description contained herein of the transaction described above does not
purport to be complete and is qualified in its entirety by reference to the
Purchase and Sale Agreement, which is filed as an exhibit to this document.
2
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ITEM 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Report of Independent Public Accountants F-1
Statements of the excess of revenues over
specific operating expenses for the year
ended December 31, 1996 and for the nine
months ended September 30, 1997 (unaudited) F-2
Notes to Financial Statements F-3
B) PRO FORMA FINANCIAL INFORMATION OF REGISTRANT
Pro forma consolidated statement of
operations for the nine months ended
September 30, 1997 (unaudited) F-4
Pro forma consolidated statement of
operations for the year ended
December 31, 1996 (unaudited) F-6
Pro forma consolidated balance sheet as of
September 30, 1997 (unaudited) F-8
3
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A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
of CBL & Associates Properties, Inc.:
We have audited the accompanying statement of the excess of revenues over
specific operating expenses of Asheville Mall for the year ended December 31,
1996. This statement is the responsibility of the Property's management.
Our responsibility is to express an opinion on this statement based on our
audit. We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of the excess of
revenues over specific operating expenses is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the statement. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation. We believe that our audit
provides a reasonable basis for our opinion.
The accompanying statement was prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission and excludes
certain material expenses that would not be comparable to those resulting from
the proposed future operations of the Property described in Note 2 and is not
intended to be a complete presentation of the Property's revenues and
expenses.
In our opinion, the statement referred to above presents fairly, in all
material respects, the excess of revenues over specific operating expenses
(exclusive of expenses described in Note 2) of Asheville Mall for the year
ended December 31, 1996, in conformity with generally accepted accounting
principles.
Arthur Andersen LLP
Chattanooga, Tennessee
December 10, 1997
F-1
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ASHEVILLE MALL
STATEMENTS OF THE EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1996
AND FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997 (UNAUDITED)
(In Thousands)
Nine
Year Ended Months Ended
December 31, September 30,
1996 1997
------------ ------------
(unaudited)
Revenues:
Rental revenues...................... $ 5,430 $ 4,065
Tenant reimbursements................ 1,594 1,522
------- -------
Total revenues.............. 7,024 5,587
Specific Operating Expenses (Note 2):
Property operating................... 733 450
Real estate taxes.................... 378 284
Maintenance & repairs................ 793 620
------- -------
Excess of revenues over specific
operating expenses................. $ 5,120 $ 4,233
======= =======
The accompanying notes are an integral part of these statements.
F-2
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ASHEVILLE MALL
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. DESCRIPTION OF PROPERTY
On January 2, 1998, Asheville, LLC, as assignee of Development
Options, Inc., a majority-owned subsidiary of CBL & Associates
Properties, Inc., acquired Asheville Mall (the "Property"), a
regional shopping mall located in Asheville, North Carolina,
containing approximately 823,916 square feet of total gross
leasable area.
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying statements of the excess of revenues over specific
operating expenses are presented on the accrual basis. These
statements have been prepared in accordance with the applicable rules
and regulations of the Securities and Exchange Commission for real
estate properties acquired. Accordingly, the statements exclude
certain historical expenses not comparable to the operations of the
Property after acquisition, such as depreciation, interest expense and
management fees.
REVENUE RECOGNITION
Rental revenue attributable to operating leases is recognized on a
straight-line basis over the initial term of the related leases.
Certain tenants are required to pay additional rent if sales volume
exceeds specified amounts. The Property recognizes this additional
rent as revenue when such amounts become determinable.
TENANT REIMBURSEMENTS
The Property receives reimbursements from tenants for certain costs as
provided in the lease agreements. These costs consist of real estate
taxes, common area maintenance and other recoverable costs. Tenant
reimbursements are recognized as revenue in the period the costs are
incurred.
F-3
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B. PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
The unaudited pro forma consolidated statements of operations are presented as
if the acquisition of Asheville Mall had taken place as of the beginning of
each period presented. In management's opinion, all adjustments necessary to
present fairly the effects of the acquisition have been made.
The unaudited pro forma consolidated statements of operations are not
necessarily indicative of what the actual results of operations of CBL &
Associates Properties, Inc. (the "Company") would have been assuming the
Company had acquired Asheville Mall as of the beginning of each period
presented, nor do they purport to represent the results of operations for
future periods.
CBL & ASSOCIATES PROPERTIES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(Unaudited And Amounts In Thousands, Except Per Share Amounts)
CBL Asheville Pro Forma Pro Forma
Historical Mall Adjustments Consolidated
---------- --------- ----------- ------------
REVENUES:
Rentals:
Minimum.................... $ 83,266 $ 3,497 $ - $ 86,763
Percentage................. 2,677 568 - 3,245
Other...................... 615 - - 615
Tenant reimbursements......... 36,622 1,522 - 38,144
Management and leasing fees... 1,765 - - 1,765
Interest and other............ 1,998 - - 1,998
-------- ------- ------- -------
Total revenues............. 126,943 5,587 - 132,530
-------- ------- ------- -------
EXPENSES:
Property operating............ 22,038 450 - 22,488
Depreciation and amortization. 23,639 - 1,084(A) 24,723
Real estate taxes............. 10,450 284 - 10,734
Maintenance and repairs....... 7,270 620 - 7,890
General and administrative.... 6,352 - - 6,352
Interest...................... 27,081 - 3,447(B) 30,528
Other......................... 45 - - 45
-------- ------- ------- -------
Total expenses............. 96,875 1,354 4,531 102,760
-------- ------- ------- -------
INCOME FROM OPERATIONS........ 30,068 4,233 (4,531) 29,770
F-4
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GAIN ON SALES OF REAL
ESTATE ASSETS.............. 4,156 - - 4,156
EQUITY IN EARNINGS OF
UNCONSOLIDATED AFFILIATES.. 1,514 - - 1,514
MINORITY INTEREST IN EARNINGS:
Operating partnership......... (9,763) - 84(C) (9,679)
Shopping center properties.... (405) - - (405)
-------- ------- ------- --------
INCOME BEFORE EXTRAORDINARY
ITEM....................... 25,570 4,233 (4,447) 25,356
EXTRAORDINARY LOSS ON
EXTINGUISHMENT OF DEBT..... (928) - - (928)
-------- ------- ------- -------
Net income......... $ 24,642 $4,233 $(4,447) $24,428
======== ======= ======= =======
EARNINGS PER COMMON SHARE DATA:
Income before extraordinary
item....................... $ 1.06 $ 1.05
Extraordinary loss on
extinguishment of debt..... (0.04) (0.04)
-------- -------
Net income......... $ 1.02 $ 1.01
======== =======
WEIGHTED AVERAGE SHARES
OUTSTANDING................ 24,104 24,104
======== =======
(A) Reflects depreciation expense on the Asheville Mall
acquisition computed on the straight-line method over
the estimated useful life of 40 years.
(B) Reflects interest expense associated with the $48,900
mortgage note payable and the $16,697 of borrowings
under the Company's line of credit agreement, at LIBOR
plus .9% (6.98%) and LIBOR plus 1.0% (7.08%),
respectively, in connection with the acquisition of
Asheville Mall.
(C) Reflects the minority interests' share of the income
from operations of Asheville Mall and the pro forma
adjustments.
F-5
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CBL & ASSOCIATES PROPERTIES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(Unaudited And Amounts In Thousands, Except Per Share Amounts)
CBL Asheville Pro Forma Pro Forma
Historical Mall Adjustments Consolidated
---------- --------- ----------- ------------
REVENUES:
Rentals:
Minimum.................... $ 93,217 $ 4,564 $ - $ 97,781
Percentage................. 2,724 866 - 3,590
Other...................... 1,758 - - 1,758
Tenant reimbursements......... 42,447 1,594 - 44,041
Management and leasing fees... 2,377 - - 2,377
Development fees.............. 7 - - 7
Interest and other............ 4,275 - - 4,275
-------- ------- ------- --------
Total revenues............ 146,805 7,024 - 153,829
-------- ------- ------- --------
EXPENSES:
Property operating............ 24,232 733 - 24,965
Depreciation and amortization. 25,439 - 1,445(A) 26,884
Real estate taxes............. 11,587 378 - 11,965
Maintenance and repairs....... 8,957 793 - 9,750
General and administrative.... 8,467 - - 8,467
Interest...................... 31,684 - 4,399(B) 36,083
Other......................... 646 - - 646
-------- ------- ------- --------
Total expenses............ 111,012 1,904 5,844 118,760
-------- ------- ------- --------
INCOME FROM OPERATIONS........ 35,793 5,120 (5,844) 35,069
GAIN ON SALES OF REAL
ESTATE ASSETS.............. 13,614 - - 13,614
EQUITY IN EARNINGS OF
UNCONSOLIDATED AFFILIATES.. 1,831 - - 1,831
MINORITY INTEREST IN EARNINGS:
Operating partnership......... (15,468) - 225(C) (15,243)
Shopping center properties.... (527) - - (527)
-------- ------- ------- --------
INCOME BEFORE EXTRAORDINARY
ITEM....................... 35,243 5,120 (5,619) 34,744
EXTRAORDINARY LOSS ON
EXTINGUISHMENT OF DEBT..... (820) - - (820)
-------- ------- ------- --------
F-6
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Net income........... $ 34,423 $ 5,120 $(5,619) $ 33,924
======== ======= ======= ========
EARNINGS PER COMMON SHARE DATA:
Income before extraordinary
item...................... $ 1.69 $ 1.66
Extraordinary loss on
extinguishment of debt.... (0.04) (0.04)
Net income........... $ 1.65 $ 1.62
======== ========
WEIGHTED AVERAGE
SHARES OUTSTANDING......... 20,890 20,890
======== ========
(A) Reflects depreciation expense on the Asheville
Mall acquisition computed on the straight-line
method over the estimated useful life of 40 years.
(B) Reflects interest expense associated with the
$48,900 mortgage note payable and the $16,697 of
borrowings under the Company's line of credit
agreement, at LIBOR plus .9% (6.68%) and LIBOR
plus 1.0% (6.78%), respectively, in connection
with the acquisition of Asheville Mall. If
interest rates under the mortgage note payable
and line of credit agreement fluctuated 0.125%,
interest costs on the pro forma indebtedness would
increase or decrease by approximately $82 on an
annualized basis.
(C) Reflects the minority interests' share of the income
from operations of Asheville Mall and the pro forma
adjustments.
F-7
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PROFORMA CONSOLIDATED BALANCE SHEET
The unaudited pro forma consolidated balance sheet is presented as
if the acquisition of Asheville Mall had occurred as of September 30, 1997.
The unaudited pro forma consolidated balance sheet is not necessarily
indicative of what the actual financial position would have been at
September 30, 1997, nor does it purport to represent the future financial
position of the Company.
CBL & ASSOCIATES PROPERTIES, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
(Unaudited And Dollars In Thousands, Except Per Share Amounts)
Pro Forma
CBL Acquisition Company
Historical Adjustments Pro Forma
---------- ----------- ---------
ASSETS: (A)
Real Estate Assets:
Land............................ $ 152,961 $ 7,349 $ 160,310
Buildings and improvements...... 942,470 57,819 1,000,289
---------- ----------- ----------
1,095,431 65,168 1,160,599
Less: Accumulated depreciation.. (137,407) - (137,407)
---------- ----------- ----------
958,024 65,168 1,023,192
---------- ----------- ----------
Developments in progress........ 149,083 - 149,083
---------- ----------- ----------
Net investment in real
estate assets................ 1,107,107 65,168 1,172,275
Cash and cash equivalents.......... 6,202 - 6,202
Receivables:
Tenant, net of allowance for
doubtful accounts of $788.... 11,829 606 12,435
Other........................... 967 - 967
Mortgage notes receivable.......... 16,638 - 16,638
Other assets....................... 7,895 - 7,895
---------- ----------- ----------
1,150,638 65,774 1,216,412
========== =========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Mortgage and other notes payable... 643,556 65,597 709,153
Accounts payable and
accrued liabilities............. 30,375 177 30,552
---------- ----------- ----------
F-8
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Total liabilities........... 673,931 65,774 739,705
---------- ----------- ----------
Commitments and contingencies...... - - -
Distributions and losses in excess
ofinvestment in unconsolidated
affiliates...................... 7,142 - 7,142
---------- ----------- ----------
Minority interest.................. 128,096 - 128,096
---------- ----------- ----------
Shareholders' equity:
Preferred stock, $0.01 par value,
5,000,000 shares authorized,
none issued..................... - - -
Common stock, $0.01 par value,
95,000,000 shares authorized,
24,043,890 shares issued and
outstanding at
September 30, 1997.............. 240 - 240
Excess stock, $0.01 par value,
100,000,000 shares authorized,
none issued..................... - - -
Additional paid-in capital......... 359,044 - 359,044
Accumulated deficit................ (17,444) - (17,444)
Deferred compensation.............. (371) - (371)
---------- ----------- ----------
Total shareholders' equity.. 341,469 - 341,469
---------- ----------- ----------
$1,150,638 $ 65,774 $1,216,412
========== =========== ==========
(A) Reflects the acquisition of Asheville Mall
through the issuance of a $48,900 mortgage
note payable, borrowings of $16,697 under
the Company's line of credit agreement, and
the assumption of certain assets and
liabilities.
F-9
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C) EXHIBITS
Purchase and Sale Agreement dated November 12, 1997 between
R.B.R.& S.T. Limited Partnership, a North Carolina limited
partnership (seller) and Development Options, Inc., a Wyoming
corporation (Purchaser)
Promissory Note between Asheville, LLC and Wells Fargo Bank
National Association in the amount of $48,900,000
Consent of Arthur Andersen LLP
PAGE
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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.
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: February 18, 1997
PAGE
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EXHIBITS INDEX
Exhibit:
2.1 Purchase and Sale Agreement dated November 12, 1997 between
R.B.R.& S.T. Limited Partnership, a North Carolina limited
partnership (seller) and Development Options, Inc., a Wyoming
corporation (Purchaser)
2.2 Promissory Note between Asheville, LLC and Wells Fargo Bank
National Association in the amount of $48,900,000
2.3 Consent of Arthur Andersen LLP
AGREEMENT OF PURCHASE AND SALE
BETWEEN
R.B.R.&S.T. LIMITED PARTNERSHIP,
a North Carolina limited partnership
as Seller
AND
DEVELOPMENT OPTIONS, INC., a Wyoming corporation
as Purchaser
dated November 12, 1997
List of Exhibits
Exhibit A: Description of Land
Exhibit B: Deposit Provisions
Exhibit C-1: Form of Tenant Estoppel
Exhibit C-2: Second Form of Tenant Estoppel
Exhibit D: The Rent Roll
Exhibit E: List of Pending Litigation
Exhibit T-1: Permitted Exceptions
Exhibit T-2: Mechanic's Liens and Other Title Matters
<PAGE> AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT OF PURCHASE AND SALE (this "Agreement") is made and
entered into by and between R.B.R.&S.T. LIMITED PARTNERSHIP, a North
Carolina limited partnership, ("Seller"), and DEVELOPMENT OPTIONS, INC., a
Wyoming Corporation ("Purchaser"), as of the "Effective Date" (as
hereinafter defined).
W I T N E S S E T H:
For and in consideration of the mutual covenants contained herein, and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
do hereby agree as follows:
Article 1.
Property
Seller hereby agrees to sell, and Purchaser hereby agrees to purchase,
all of the following property: (a) an approximately 26.18 acre parcel or
tract of real property (the "Main Parcel") together with all and singular
easements, covenants, agreements, rights, privileges, tenements,
hereditaments and appurtenances thereunto now or hereafter belonging or
appertaining, together with an approximately 14 acre adjacent parcel or
tract of real property (collectively with the Main Parcel, the "Land")
subject to a ground lease in favor of Belk of Asheville Mall, Inc., all
located in the City of Asheville, Buncombe County, North Carolina, more
particularly described on Exhibit "A" attached to this Agreement; (b) the
enclosed regional shopping mall (the "Building") located on the Main Parcel,
and all other improvements of every kind located in, upon or over the Main
Parcel, generally known as "Asheville Mall" (collectively, the
"Improvements"); (c) all of Seller's right, title and interest in and to the
tenant leases relating to the Improvements, the ground leases pertaining to
the Land, all occupancy agreements, reciprocal easement agreements,
operating agreements, licenses or other agreements (collectively, the
"Leases") conveying or permitting occupancy or possession of any part of the
"Property", as hereafter defined, including without limitation, the tenant
leases referred to on the "Rent Roll" (as hereinafter defined) (the Land,
the Improvements, and the Leases are referred to herein collectively as the
"Real Property"); and (d) all of Seller's right, title and interest in all
fixtures, equipment, and other personal property of Seller which may be
located upon the Land and Improvements and which is used exclusively in the
operation of the business conducted thereon (both tangible and intangible,
including, without limitation, all rents, issues and profits of the
Property, all licenses, permits, parking rights, trade names (including the
right to use the name "Asheville Mall"), any service and maintenance
agreements applicable thereto owned by Seller and contained in or related
to the Improvements (collectively the "Personal Property") (the Real
Property and the Personal Property are sometimes referred to herein
collectively as the "Property").
Article 2.
Earnest Money Deposit and Purchase Price
2.1 Earnest Money Deposit. Purchaser shall deliver to Nelson
Mullins Riley & Scarborough, L.L.P. ("Escrow Agent") the sum of THREE
HUNDRED THOUSAND AND NO/100 DOLLARS ($300,000.00) simultaneously with
Purchaser's execution and delivery of this Agreement to Seller and Seller's
acceptance of such offer by execution hereof, which sum shall be held by
Escrow Agent (in a separate, interest bearing account) as earnest money and
shall be hereinafter referred to as the "Deposit". The Deposit shall be
non-refundable except as set forth on Exhibit "B", attached hereto but shall
be applicable to the Purchase Price, as hereinafter defined. Escrow Agent
shall hold, invest, and disburse the Deposit in accordance with Exhibit "B".
2.2 Purchase Price. The purchase price for the Property to be paid
by Purchaser to Seller at the closing and consummation of the purchase and
sale of the Property (the "Closing") as contemplated herein shall be SIXTY
FIVE MILLION DOLLARS ($65,000,000.00), and shall be hereinafter referred to
as the "Purchase Price." The Purchase Price, as adjusted to reflect a
credit in the amount of the Deposit paid hereunder and as further adjusted
to reflect the prorations between Purchaser and Seller described in Section
5 hereof, shall be paid by Purchaser to Seller at the Closing in immediately
available funds by bank wire transfer received by Seller prior to 2:00 P.M.
on the "Closing Date", as hereinafter defined.
Article 3.
Default by Purchaser or Seller
3.1 Purchaser's Default. If Seller shall have materially complied
with all of the covenants and conditions contained in this Agreement, and
Purchaser defaults in one or more of its obligations hereunder (including
failing to consummate the purchase and sale contemplated herein or breaching
any obligation, representation or warranty hereunder), then Seller shall be
entitled to elect one of the following remedies: (a) Seller shall have the
right to terminate this Agreement by written notice to Purchaser and to
retain the Deposit plus any interest earned thereon in which event neither
Purchaser nor Seller shall have any further rights or obligations with
respect to the other under this Agreement, except for the "Surviving
Covenants", as hereinafter defined; or (b) Seller shall have the right to
seek specific performance against Purchaser.
3.2 Seller's Default. In the event that Purchaser has complied with
all of the covenants and conditions contained herein and is ready, willing
and able to take title to the Property in accordance with this Agreement on
the Closing Date, and Seller defaults hereunder through breach of any
representation or warranty set forth herein or otherwise defaults in
performance of its obligations hereunder and fails to consummate this
Agreement, then Purchaser shall be entitled to elect one of the following
remedies: (a) Purchaser shall have the right to terminate this Agreement
by written notice to Seller, in which event neither Purchaser nor Seller
shall have any further rights or obligations with respect to the other under
this Agreement, except for the Surviving Covenants; or (b) Purchaser shall
have the right to seek specific performance against Seller but not the right
to seek damages. If the remedy of specific performance is not capable of
being achieved due to the nature of Seller's default, Purchaser's sole
remedy shall be termination. In the event of Seller's default hereunder,
the disbursement of the Deposit shall be governed by Exhibit "B".
Article 4.
Closing and Closing Deliveries
4.1 Closing. Seller and Purchaser agree to conduct the Closing of
the purchase and sale of the Property at 11:00 a.m. Eastern Time on January
6, 1998 (the "Closing Date") in the Charlotte, North Carolina office of
Nelson Mullins Riley & Scarborough, LLP, located at 100 N. Tryon Street,
Suite 3350, or at such other place as may be agreed upon by the parties
hereto.
4.2 Seller's Closing Deliveries. At the Closing, Seller shall
execute and deliver, or cause to be executed and delivered, to Purchaser,
in form and substance reasonably acceptable to Purchaser, the following:
(a) A special warranty deed (subject only to the "Permitted
Exceptions", as hereinafter defined);
(b) A bill of sale (the "Bill of Sale") conveying to Purchaser,
without warranty, the Personal Property which may be located upon the Land
and Improvements and which is used exclusively in the business operated
thereon;
(c) An assignment and assumption of the Leases (the "Assignment and
Assumption") dated as of the Closing Date, assigning all of the Seller's
right, title and interest in and to the Leases; and, to the extent
necessary, also assigning all of Seller's right, title and interest in and
to the service and maintenance contracts pertaining to the Property
(collectively, the "Contracts");
(d) Tenant notification agreements (the "Tenant Notices"), dated as
of the Closing Date, and complying with applicable statutes in order to
relieve Seller of liability for tenant security deposits, if any, notifying
the tenants that the Property has been sold to Purchaser and directing the
tenants thereafter to pay rentals to Purchaser (or Purchaser's designated
agent);
(e) To the extent in Seller's possession or under Seller's
reasonable control, the originals of the Contracts, the Leases, and all
tenant correspondence and other correspondence pertaining to the ongoing
operation of the Property, as-built plans and specifications, maintenance
and service contracts, and all licenses, permits and certificates of
occupancy for the Real Property or the Improvements;
(f) An updated Rent Roll, in the form of the Rent Roll attached
hereto, dated within five (5) days of the date of the Closing;
(g) To the extent in the possession of Seller or Seller's Property
manager, copies of all engineering and maintenance records for the Property;
(h) Such title affidavits as are reasonably required by the title
company insuring title to the Real Property on behalf of Purchaser (but not
an owner's affidavit covering the "Purchaser Created Liens," as hereinafter
defined, or indemnifying the title company for such Purchaser Created
Liens);
(i) Documentary evidence of authority of the Seller to consummate
the transaction contemplated hereunder;
(j) An executed original of a sale closing statement (the "Closing
Statement") in form and substance mutually agreeable to Seller and
Purchaser; and
(k) Written confirmation from the Seller that all representations
and warranties of the Seller set forth herein at Section 10.1 are and
continue to be true, accurate and complete as of the Closing Date, or if
not, the extent and nature of any material changes to such representations
and warranties. If there is a material, adverse change in the
representations and warranties of Seller, Purchaser shall have the right to
terminate this Agreement, without a return of the Deposit, except as set
forth in Exhibit "B".
<PAGE>
4.3 No Default for Failure to Obtain Estoppels. During the
Inspection Period, Seller agrees to reasonably cooperate in good faith, with
Purchaser's attempt, at Purchaser's cost, to procure tenant estoppel
certificates executed by Belk, Dillard's, and Montgomery Ward, in the form
attached hereto as Exhibit "C-1", or otherwise in form and substance
reasonably satisfactory to Purchaser, together with an acceptable operating
estoppels from all parties to any reciprocal easement agreement or operating
agreement pertaining to the Real Property, together with additional tenant
estoppel certificates from fifty percent (50%), as measured by floor area,
of the remaining permanent tenants leasing space in the Building, in the
form attached hereto as Exhibit "C-2", or in a form reasonably acceptable
to Purchaser. Purchaser's failure to obtain the estoppels provided for
hereunder shall not constitute a breach of this Agreement by Seller so long
as Seller has reasonably cooperated in good faith with Purchaser, and
Purchaser shall have no rights hereunder to compel Seller to perform any
action with respect to estoppels. Nonetheless, if Purchaser is not
satisfied with the estoppels obtained, Purchaser shall have the right to
terminate this Agreement on or prior to the last day of the Inspection
Period as such right is more fully described in Section 6.1, hereof, without
a return of the Deposit, except as provided on Exhibit "B".
4.4 Purchaser's Closing Deliveries. At the Closing, Purchaser will
cause the Purchase Price to be delivered to Seller by the method herein
described, and will execute and deliver to Seller counterparts of the Tenant
Notices, the Assignment and Assumption, the Bill of Sale and the Closing
Statement.
4.5 Evidence of Authority; Miscellaneous. Both parties agree to
deliver to the Escrow Agent and each other such evidence or documents as may
be reasonably required by the Escrow Agent or either party hereto evidencing
the power and authority of Seller and Purchaser and the due authority of,
and execution and delivery by, any person or persons who are executing any
of the documents required hereunder in connection with the sale of the
Property.
Article 5.
Prorations of Rents, Taxes, Etc.
5.1 General Prorations. Real estate taxes for the year of Closing
and any tax bond or assessment which is a lien against the Real Property
shall be prorated as of 12:01 a.m. on January 1, 1998 (notwithstanding the
fact that the Closing Date is January 6, 1998) either using actual tax or
assessment figures or, if actual figures are not available, then using as
a basis for said proration the most recent assessed value of the Real
Property multiplied by the current tax or assessment rate, with a subsequent
cash adjustment to be made between Purchaser and Seller when actual tax or
assessment figures are available. Personal property taxes, annual permit
or inspection fees, sewer charges, other utility charges, and other expenses
and charges normal to the operation and maintenance of the Property shall
also be prorated as of 12:01 a.m. on January 1, 1998. Final readings on all
gas, water and electric meters shall be made as of the proration date, if
possible, for purposes of accurate proration. If final readings are not
possible, gas, water, electricity, and other utility charges will be
prorated based on the most recent period for which costs are available. Any
deposits made by Seller with utility companies shall be returned to Seller,
and Purchaser shall be responsible for all arrangements for the continuation
of utility services to the Property.
5.2 Rental Prorations. All "base" rental and percentage rental
payments pertaining to the Property (including base rents and percentage
rents pursuant to the Leases) shall be prorated on an accrual basis,
effective as of 12:01 a.m. on January 1, 1998 (notwithstanding the fact that
the Closing Date is January 6, 1998). With regard to those base rents or
percentage rents that Seller shall set forth on a list of delinquent
accounts provided to Purchaser just prior to Closing (the "Delinquent
Accounts Receivable), no proration will be made at the Closing. With regard
to such Delinquent Accounts Receivable, Purchaser and Seller acknowledge and
agree that Seller shall be transferring and assigning to Purchaser, at the
Closing, up to $25,000.00 of the most current of such Delinquent Accounts
Receivable (the "Transferred DAR"). Seller shall receive a credit at the
Closing for the total sum due pursuant to the Transferred DAR. Thereafter,
Purchaser shall make a good faith effort to collect all Delinquent Accounts
Receivable in the usual course of Purchaser's operation of the Property,
using commercially reasonable methods, with all sums collected pursuant to
the Transferred DAR being the sole property of Purchaser and all sums
collected pursuant to the other Delinquent Accounts Receivable being
promptly paid over to Seller subject to deduction by Purchaser for the
actual, out-of-pocket expenses incurred by Purchaser in making such
collections. All other sums collected by Purchaser in respect of the
Property which are the property of Seller shall be promptly paid over to
Seller subject to deduction by Purchaser for the actual, out-of-pocket
expenses incurred by Purchaser in making such collections (provided,
however, that funds received by Purchaser which are not specifically
designated by the payor as property of Seller shall be first applied to sums
due Purchaser accruing after the Closing Date). The obligations of
Purchaser under this Section shall survive the Closing.
5.3 Prorations for Tenant Deposits. The following shall apply to
proration of deposits made by tenants for common area maintenance charges,
taxes, insurance and other similar tenant assessments (collectively, the
"Tenant Expense Deposits"): Seller and Purchaser agree that the Tenant
Expense Deposits shall be part of the Personal Property transferred to
Purchaser at the Closing. Therefore, from and after the Closing Date,
Purchaser shall have the sole responsibility for proper application of the
Tenant Expense Deposits, the refund of any overpayment of Tenant Expense
Deposits and the collection of any deficiencies from tenants of the Real
Property. In addition, all tenant security deposits, if any, pertaining to
the Leases shall be assigned by Seller to Purchaser at the Closing and
Purchaser shall thereafter have sole responsibility for management and
accounting of such security deposits.
5.4 Final Adjustment. Purchaser and Seller acknowledge and agree
that all prorated items that are not subject to an exact determination shall
be estimated by the parties with prorations adjusted to actual sums within
twelve (12) months after the Closing Date. This obligation shall survive
the Closing.
5.5 Property Management Agreement. Purchaser and Seller acknowledge
and agree that any contract for the management of the Property currently in
force shall be terminated by Seller as of the Closing Date, with any fees
for such termination to be paid by Seller. After such termination, Seller
shall have no further responsibility with regard to supplying management
services for the Property and Purchaser shall be solely responsible for
procuring its own contract for management services for the Property.
Article 6.
Inspection Period, Survey and Title Matters
6.1 Inspection Period. Purchaser shall have from the Effective Date
of this Agreement until 5:00 p.m. Eastern Standard Time on December 19, 1997
(hereinafter referred to as the "Inspection Period") to complete such
environmental, title, economic and other due diligence investigations as
Purchaser shall deem necessary or appropriate with regard to the Property.
During the Inspection Period, Purchaser's agents and employees shall have
the reasonable right to enter upon the Real Property to conduct due
diligence in a manner reasonably acceptable to Seller, and to make
commercially reasonable inquiries of tenants, governmental authorities and
others with potentially relevant information about the Property; but in any
event, without disruption to the normal business of Seller. During the
Inspection Period, Purchaser shall be permitted to inspect and copy, in
Asheville, North Carolina, the Leases and the Contracts and other pertinent
information relating to the Property. On or before 5:00 p.m. Eastern
Standard Time on the last day of the Inspection Period, Purchaser shall have
the right to terminate this Agreement if Purchaser determines that it is not
satisfied with any of the results of any of its due diligence investigation.
The parties agree that for ease of administration of this Agreement, if
Purchaser elects such termination, Purchaser shall not be obligated to
provide any written notice of same to Seller. This Agreement shall
automatically terminate at 5:00 p.m. on the last day of the Inspection
Period, if Purchaser has not notified Seller otherwise. If Purchaser does
not elect to have this Agreement automatically terminate but desires to
proceed to Closing, Purchaser shall provide written notice of same to Seller
and Escrow Agent on or before 5:00 p.m. of the last day of the Inspection
Period (which notice shall also serve as a notice by Purchaser of
Purchaser's acknowledgment that it has waived its right to a return of the
Deposit if any of the representations made by Seller as set forth in Section
10.1(d), (e), (f), and (k) of this Agreement prove to be materially false).
6.2 Survey. Purchaser acknowledges that Seller has provided it with
a copy of the most recent survey of the Real Property in the possession of
Seller, which survey was performed in 1997 (the "Prior Survey"). In the
event Purchaser elects to have a new or updated as-built survey (the
"Survey") of the Real Property prepared, which shall be at Purchaser's own
expense, on or prior to the end of the Inspection Period, Purchaser shall
provide a copy of such Survey to Seller. In the event the legal description
conforming to the Survey does not match the legal description originally
attached to this Agreement as Exhibit "A", Seller agrees to execute and
deliver to Purchaser on the Closing Date, a quitclaim deed with a legal
description conforming to the Survey (if so requested by Purchaser), in
addition to the special warranty deed with the legal description set forth
on Exhibit "A". Seller makes no representation or warranty whatsoever with
regard to the accuracy or completeness of the Prior Survey and Purchaser
acknowledges and agrees that it shall be solely responsible for procuring
the Survey and ensuring that this Survey is satisfactory to Purchaser.
6.3 Title Matters.
(a) Purchaser shall have until the end of the Inspection
Period to examine title to and the Survey of the Real Property and to
furnish Seller with a written statement of objections to the title or
Survey, if any, other than the Permitted Exceptions, accompanied by copies
of Purchaser's title commitment or Survey disclosing such objections to
title and all documents listed therein as exceptions to title. Thereafter,
Purchaser shall have until the Closing Date in which to reexamine title to
the Property and in which to give Seller written notice of any additional
encumbrances, other than the Permitted Exceptions and those disclosed by the
earlier title examination, disclosed by such reexamination. Should
Purchaser fail to notify Seller of any such objections within the aforesaid
time periods, Purchaser shall be deemed to have waived all objections to the
title to the Property. Seller shall have the right, until the Closing Date,
to satisfy or cure all valid objections to title of which it was timely
notified by Purchaser, but not the obligation to satisfy or cure such title
objections; provided, however, that Seller, upon written notice to
Purchaser, may postpone the Closing by thirty (30) days in order that such
objections might be cured. Should Seller fail to satisfy or cure all such
valid objections by the Closing Date, as postponed, if appropriate, then
Purchaser shall have the right, at Purchaser's election, either to terminate
this Agreement (without return of the Deposit, except as provided on Exhibit
"B"), or to waive those title objections which Seller failed to satisfy or
cure and proceed to close the sale of the Property contemplated herein and
accept the Property subject to such objections with no reduction in the
Purchase Price. For purposes of this Agreement, the term "Permitted
Exceptions" shall mean taxes and assessments for the Property not yet due
and payable, the exceptions to title shown on Exhibit "T-1", attached
hereto, and such additional title exceptions as Purchaser shall approve or
waive hereunder.
(b) In the event that Purchaser should furnish to Seller such
written statement of objections and should Seller fail to convey title to
the Real Property subject only to the Permitted Exceptions and should
Purchaser not waive all title objections other than the Permitted
Exceptions, Purchaser's sole remedy shall be to terminate this Agreement
(without return of the Deposit, except as provided on Exhibit "B") in which
event this Agreement shall wholly cease and terminate, the parties hereto
shall have no further rights or obligations hereunder, except for the
Surviving Covenants, and the lien or right, if any, of the Purchaser against
or to the Property shall wholly cease. Except as specifically provided
herein, Seller shall not be required and is not obligated hereby to bring
any action or proceeding or otherwise to incur an expense to render the
title to the Property free of any liens and encumbrances, subject to the
Permitted Exceptions. The acceptance of a deed to the Real Property by
Purchaser shall be deemed to be a full performance of and discharge of every
agreement and obligation on the part of Seller to be performed pursuant to
the provisions of this Agreement, except those pursuant to any articles
hereof which are herein specifically stated to survive the Closing.
(c) Seller hereby covenants that it shall not voluntarily
transfer, sell, assign, encumber, hypothecate or otherwise dispose of any
or all of its right, title and interest in and to the Property or any
portion thereof granting to any person or entity any rights with respect to
the Property or any interest whatsoever therein without the consent of
Purchaser, which will not be unreasonably withheld, conditioned or delayed,
during the existence of this Agreement.
(d) Notwithstanding any other provision of this Section 6 to
the contrary, Seller shall satisfy, cure or cause to be released or bonded
off of the Property, at Seller's election, (i) all materialmen's and
mechanic's liens affecting the Property shown as mechanics or materialmen's
liens on Exhibit "T-2", attached hereto (but not liens attaching to the
Property which are caused or created by Purchaser either from work ordered
by Purchaser or due to Purchaser's disclosure of information to tenants or
others during the existence of this Agreement (collectively, the "Purchaser
Created Liens"); (ii) the additional items listed on Exhibit "T-2", and
(iii) the lien and interest of any other person or any other entity securing
a loan to Seller in respect of the Property.
Article 7.
Loss Due to Casualty or Condemnation
7.1 Loss due to Condemnation. In the event of a condemnation of all
or a "Substantial Portion" (as hereinafter defined) of the Real Property
which condemnation shall or would render a Substantial Portion of the Real
Property untenantable or would result in the Real Property not having
sufficient parking to materially comply with applicable law or the specific
requirement of any Lease, either party may, upon written notice to the other
given within ten (10) days of receipt of notice of such event, cancel this
Agreement, in which event this Agreement shall terminate, and neither party
shall have any rights or obligations hereunder except for the Surviving
Covenants. In the event that Purchaser or Seller does not elect to
terminate, or if the condemnation affects less than a Substantial Portion
of the Real Property or does not materially affect the parking area, then
this Agreement shall remain in full force and effect, and Seller shall
assign to Purchaser at Closing all monies received or collected by reason
of such condemnation prior to Closing. In such event, the transaction
hereby contemplated shall close in accordance with the terms and conditions
of this Agreement. For purposes of this Section, the term "Substantial
Portion" shall mean five percent (5%) or greater of the Real Property.
7.2 Loss due to Casualty. In the event of "Substantial Loss or
Damage" (as hereinafter defined) to the Real Property by fire or other
casualty (not resulting from acts or omissions of Purchaser), Purchaser or
Seller, upon written notice to the other given within ten (10) days of
receipt of notice of such event, may cancel this Agreement in which event
this Agreement shall terminate and neither party shall have any rights or
obligations hereunder except for the Surviving Covenants. In the event that
neither party elects to terminate, or if the casualty results in less than
Substantial Loss or Damage, then this Agreement shall remain in full force
and effect and Seller shall be entitled to all insurance proceeds received
or collected by reason of such damage or loss, whereupon the transaction
hereby contemplated shall close in accordance with the terms and conditions
of this Agreement except that there will be abatement of the Purchase Price
equal to the amount of the gross proceeds of insurance, plus Seller's
deductible, provided that such abatement will be reduced by the amount
expended by Seller (if any) for restoration of the Property following the
casualty, and provided, further, that such abatement will be further reduced
by the amount that the gross proceeds include any separate award for costs
(including preservation costs) and attorneys' fees, to the extent actually
incurred by Seller. For purposes of this Section 7.2, "Substantial Loss or
Damage" shall mean loss or damage to the parking and/or any portion of the
Building the cost for repair of which exceeds Two Million Dollars
($2,000,000.00) of the value of the Real Property.
Article 8.
Maintenance of the Property
Between the Effective Date of this Agreement and the Closing, Seller
shall maintain the Property in good condition and repair, reasonable wear
and tear excepted, and shall perform all work required to be done under the
terms of any Lease or agreement relating to the Property, in accordance with
its customary practices in operation of the Property; except that in the
event of a fire or other casualty, damage or loss, Seller shall have no duty
or obligation to repair said damage except as otherwise provided in
Section 7.2 of this Agreement.
Until the Closing Date, Seller shall not intentionally cause or
intentionally permit any new liens to attach to the Property except (i) the
Purchaser Created Liens, or (ii) the lien for taxes not yet due and payable,
or (iii) other liens in the ordinary course of business. In the event of
liens attaching to the Property pursuant to clause (iii) immediately above,
Seller agrees to satisfy such liens at or prior to Closing, provided they
do not constitute Purchaser Created Liens. Seller shall not lease any
portion of the Real Property or amend or terminate any existing Lease
without first obtaining Purchaser's written approval, which approval shall
not be unreasonably denied or delayed. Purchaser shall have three (3) days
from the date Seller provides Purchaser with the business terms of a new
lease, or modification or termination of any existing Lease, together with
any information reasonably requested by Purchaser regarding such matter, to
approve such lease, modification or termination. If Purchaser fails to
respond within said time period, Purchaser shall be deemed to have approved
such lease, modification or termination, as applicable.
Article 9.
No Brokers
Seller and Purchaser each represent and warrant to the other that
neither has employed, retained or consulted any broker, agent, or finder in
carrying on the negotiations in connection with this Agreement or the
purchase and sale referred to herein, and Seller and Purchaser shall each
indemnify and hold the other harmless from and against any and all claims,
demands, causes of action, debts, liabilities, judgments and damages
(including costs and reasonable attorneys' fees incurred in connection with
the enforcement of this indemnity) which may be asserted or recovered
against the indemnified party on account of any brokerage fee, commission
or other compensation arising by reason of the indemnitor's breach of this
representation and warranty. This Section 9 shall survive the Closing or
any termination of this Agreement.
Article 10.
Representations and Warranties
10.1 Representations and Warranties of Seller. Seller represents and
warrants to Purchaser that the following matters are true and correct as of
the Effective Date hereof. None of the representations and warranties shall
survive the Closing.
(a) The Seller is not a party to, subject to or bound by any
agreement, contract, permit or other restriction of any nature, or any
judgment, order, statute, rule or regulation of any court, governmental
body, administrative agency or arbitrator, or any legal proceeding which
would prevent or be violated by, or under which there would be a default,
or which would result in creation of or claim of any lien, charge or
encumbrance upon any of the Property as a result of any of the items set
forth below (excepting therefrom any claims covered by Seller's general
liability insurance):
(i) the execution, delivery and performance of this Agreement; or
(ii) the transfer and assignment to Purchaser, in accordance with
this Agreement, of the Property.
(b) Seller is a North Carolina limited partnership, organized,
existing, and in good standing under the laws of the State of North
Carolina, and has all power and authority to conduct the business of the
Property and to enter into and perform its obligations hereunder under the
laws of the State of North Carolina.
(c) The execution and delivery of this Agreement and the
consummation of the transaction contemplated hereby have been duly
authorized by all necessary parties and no other proceedings on the part of
Seller are necessary in order to permit them to consummate the transaction
contemplated hereby. This Agreement has been duly executed and delivered
by Seller.
(d) The rent roll attached hereto as Exhibit "D" (the "Rent
Roll") is true, correct and complete in all material respects. At the
Closing, Seller shall deliver to Purchaser an updated Rent Roll which will
be true, correct and complete as of the Closing.
(e) The Land is currently zoned under the classification
"Regional Business" pursuant to the applicable zoning ordinance for the City
of Asheville. The zoning for the Land permits the current use of the Land
as a shopping center.
(f) To the best of Seller's knowledge, and except as may be set
forth in that certain Phase I Environmental Site Assessment - Asheville Mall
Property - S&ME Project Number 14-14-97-100 prepared for R.L. Coleman &
Company, dated August 13, 1997, a copy of which will be provided to
Purchaser, the Property has not been used by Seller as a land fill or as a
dump for the disposal of garbage, refuse, hazardous substances or toxic
wastes, nor are any storage tanks located on the Property, and Seller has
not received any notice of, and has no knowledge, information or belief of,
the use of the Land for the disposal of garbage, refuse, hazardous
substances or toxic wastes.
(g) To the best of Seller's knowledge, there is no permanent
condemnation proceeding pending with regard to all or any part of the
Property and Seller has received no notice of such proceeding commenced or
threatened by any governmental authority.
(h) Seller has not received notice of, nor does Seller have
knowledge of any litigation or any administrative, regulatory, or judicial
proceeding, pending against Seller or the Property, except as set forth on
Exhibit "E", which will be provided by Seller to Purchaser promptly
following the Effective Date hereof.
(i) Seller is not a "foreign person" as defined in the Federal
Foreign Investment in Real Property Tax Act of 1980 and the 1984 Tax Reform
Act, as amended.
(j) Seller is not currently subject to any bankruptcy,
reorganization, insolvency or similar proceedings.
(k) In addition, Seller represents and warrants to Purchaser
that as of the Effective Date of this Agreement, Seller has fee simple title
to the Land subject only to those matters shown on Exhibits "T-1" and "T-2",
attached hereto.
Purchaser acknowledges that it has the skills, knowledge and expertise
to perform its own investigation of all aspects of the Property, that it has
been provided with the time to do so, that it has conducted its own
independent investigation to the fullest extent desired and that, other than
Seller's representation and warranties set forth herein or made pursuant
hereto, it is relying solely on its own investigation and analysis of the
Property in entering into this Agreement and closing the transaction
contemplated hereby. Purchaser acknowledges that its due diligence shall
include, without limitation, "Phase I" environmental assessments of the
Property performed by independent environmental consultants, electrical,
mechanical, roof and parking lot inspections, and all such other inspection
as Purchaser shall deem appropriate (all of which shall be conducted in a
manner so as not to interfere with the business conducted upon the Land and
the Improvements).
10.2 Representations and Warranties of Purchaser.
(a) The Purchaser is not a party to, subject to or bound by
any agreement, contract, permit or other restriction of any nature, or any
judgment, order, statute, rule or regulation of any court, governmental
body, administrative agency or arbitrator, or any legal proceeding which
would prevent or be violated by, or under which there would be a default as
a result of any of the items set forth below:
(i) the execution, delivery and performance of this Agreement;
or
(ii) the transfer and assignment to Purchaser, in accordance
with this Agreement, of the Property.
(b) Purchaser is a corporation, duly organized and validly
existing, and in good standing under the laws of the State of Wyoming, and
has all power and authority to enter into and perform its obligations
hereunder under the laws of the State of Wyoming and North Carolina, and has
been qualified to do business in the State of North Carolina.
(c) the execution and delivery of this Agreement and the
consummation of the transaction contemplated hereby have been duly
authorized by all necessary parties and no other proceedings on the part of
Purchaser are necessary in order to permit it to consummate the transaction
contemplated hereby. This Agreement has been duly executed and delivered
by Purchaser.
Article 11.
Indemnification
11.1 Purchaser's Indemnification. Purchaser on behalf of itself, its
successors and assigns does hereby agree to indemnify and hold Seller, its
successors and assigns, and any independent property manager which Seller
has hired to manage the Property, harmless from and against all costs,
charges and expenses arising from Purchaser's entry on the Property prior
to Closing in conducting due diligence or relating to the ownership,
management and operation of the Property from and after the Closing Date,
including costs (i) for any labor performed on, or materials furnished to
the Real Property subsequent to the Closing Date, (ii) for any leasing
commissions disclosed to Purchaser on the Rent Roll and due for renewals of
extensions of existing Leases subsequent to the Closing Date, (iii) for
compliance with any laws, requirements or regulations of, or taxes,
assessments, or other charges due to any governmental authority, but only
to the extent that any such liability is attributable exclusively to
Purchaser's period of ownership of the Property, or (iv) for any other
charges or expenses whatsoever pertaining to the Property or to the
ownership, title, possession, use or occupancy of the Property, but only to
the extent any such liability is attributable to Purchaser's period of
ownership of the Property.
11.2 Third Parties. Except as specifically limited herein, nothing
contained in this Section is in any way intended to limit the rights of
Seller or Purchaser to pursue any remedies as may exist at law or in equity
against any unrelated third parties with respect to any liabilities covered
by this Section 11.
The provisions of this Section 11 shall survive the Closing or earlier
termination of this Agreement.
Article 12.
Assignment
Purchaser shall not assign this Agreement without the prior written
consent of Seller, in Seller's sole discretion.
Article 13.
Notices
All notices hereunder or required by law shall be sent via United
States Mail, postage prepaid, certified mail, return receipt requested, or
via any nationally recognized commercial overnight carrier with provisions
for receipt, addressed to the parties hereto at their respective addresses
set forth below or as they have theretofore specified by written notice
delivered in accordance herewith:
PURCHASER: Development Options, Inc.
c/o CBL & Associates Properties, Inc.
One Park Place
6148 Lee Highway
Chattanooga, Tennessee 37421-2931
Attn: Mr. John Foy
with a copy to: Mary Ann Okrasinski, Esq.
CBL & Associates Properties, Inc.
One Park Place
6148 Lee Highway
Chattanooga, Tennessee 37421-2931
SELLER: R.B.R.&S.T. Limited Partnership
c/o Richard L. Coleman, Jr.
39 Hilltop Road
Asheville, North Carolina 28803
with a copy to: Nelson Mullins Riley & Scarborough, L.L.P.
First Union Plaza, Suite 1400
999 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attn: Wade H. Stribling, Esq.
ESCROW AGENT: Nelson Mullins Riley & Scarborough, L.L.P.
First Union Plaza, Suite 1400
999 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attn: Wade H. Stribling, Esq.
Delivery will be deemed complete upon confirmed receipt or refusal to accept
delivery.
Article 14.
Expenses of Closing
Seller shall pay its own attorney's fees, brokerage commissions
payable in respect of the Leases, if any, which are due and payable prior
to the Closing Date and were not disclosed on the Rent Roll, and the other
items and costs specifically provided for hereunder to be the responsibility
of Seller. Purchaser shall pay its due diligence expenses, including, but
not limited to, the cost of any environmental or engineering studies,
surveys, and title reports, it's own attorney's fees, and the title
insurance premium for the policy of title insurance for Purchaser and any
lender of Purchaser. The parties shall split equally the real estate
transfer tax, any recording fees, and other similar documentary fees and
charges incurred in connection with the transfer of the Property, except for
any fees charged in connection with Purchaser's financing for the Property
including intangibles tax or loan fees which shall be paid solely by
Purchaser.
Article 15.
Miscellaneous
15.1 Successors and Assigns. All the terms and conditions of this
Agreement are hereby made binding upon the executors, heirs, administrators,
successors and permitted assigns of the parties hereto.
15.2 Gender. Words of any gender used in this Agreement shall be
held and construed to include any other gender, and words in the singular
number shall be held to include the plural, and vice versa, unless the
context requires otherwise.
15.3 Captions. The captions in this Agreement are inserted only for
the purpose of convenient reference and in no way define, limit or prescribe
the scope or intent of this Agreement or any part hereof.
15.4 Construction. No provision of this Agreement shall be construed
by any Court or other judicial authority against any party hereto by reason
of such party's being deemed to have drafted or structured such provisions.
15.5 Entire Agreement. This Agreement constitutes the entire
contract between the parties hereto and there are no other oral or written
promises, conditions, representations, understandings or terms of any kind
as conditions or inducements to the execution hereof and none have been
relied upon by either party.
15.6 Recording. The parties agree that this Agreement shall not be
recorded. If Purchaser causes this Agreement or any notice or memorandum
thereof to be recorded, this Agreement shall be null and void at the option
of the Seller.
15.7 No Continuance. Purchaser acknowledges that there shall be no
assignment, transfer or continuance of any of Seller's insurance coverage.
15.8 Time of Essence. Time is of the essence of this Agreement. If
the date for performance of any action under this Agreement shall fall on
a Saturday, Sunday or legal holiday, such action shall, and may, be
performed on the next succeeding business day which is not a Saturday,
Sunday or legal holiday.
15.9 Counterparts. This Agreement may be executed by both parties
in counterparts in which event each shall be deemed an original and all of
which together shall be deemed one and the same agreement.
15.10 Governing Law. This Agreement shall be construed, and the
rights and obligations of Seller and Purchaser hereunder, shall be
determined in accordance with the laws of the State of North Carolina.
15.11 Confidentiality. Purchaser and Seller agree that neither shall
make any public announcement or issue any press release or similar statement
with regard to the existence of this Agreement or any of the terms hereof,
without the written consent of the other party, in its sole discretion
(except as may be required by law, court order or stock exchange rules).
15.12 Surviving Covenants. Only the provisions specifically stated
herein to survive the Closing or earlier termination of this Agreement, as
the case may be (collectively, the "Surviving Covenants") shall survive the
Closing or any termination of this Agreement. All others shall merge with
the execution and delivery of the deed at Closing.
15.13 Further Assurances. The parties hereto hereby expressly agree
to perform such additional acts and deliver such additional documents as
shall be reasonably required by the other party, or its counsel, to
consummate the transaction herein contemplated.
15.14 Severability. If any term, covenant, or condition of this
Agreement or the application thereof to any person or circumstance shall,
to any extent, be invalid or unenforceable, the remainder of this Agreement
or the application of such term, covenant, or condition to persons or
circumstances other than those as to which it is held invalid or
unenforceable shall not be affected thereby and each term, covenant or
condition of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
15.15 Attorneys' Fees. In the event a party hereto shall be required
to file suit to enforce its rights hereunder, the prevailing party in such
action shall be entitled to recovery of its reasonable attorneys' fees and
costs, as may be awarded by the court.
15.16 Effective Date. The Effective Date of this Agreement shall be
the later of the dates on which this Agreement is executed by Purchaser and
Seller.
[Remainder of this page intentionally left blank]<PAGE>
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this Agreement under seal as of the dates set
forth below.
EXECUTED BY PURCHASER this 12th day of November, 1997.
PURCHASER:
DEVELOPMENT OPTIONS, INC., a Wyoming corporation
John N. Foy
------------------------------
By: John N. Foy
------------------------------
Title: Executive Vice President
[SEAL]
EXECUTED BY SELLER this 12th day of November, 1997.
SELLER:
R.B.R.&S.T. LIMITED PARTNERSHIP,
a North Carolina limited Partnership
By: Asheville Mall, Inc., a North Carolina
corporation, its general partner
Richard L. Coleman Jr.
----------------------------------
By: Richard L. Coleman Jr.
----------------------------------
Title: President
[SEAL]
Receipt of an original counterpart of this Agreement executed by Seller and
Purchaser is acknowledged this 12th day of November, 1997.
Escrow Agent:
Nelson Mullins Riley & Scarborough, LLP
Wade Stribling
------------------------------
By: Wade Stribling
------------------------------
Title: Partner
<PAGE>
EXHIBIT "B"
DEPOSIT PROVISIONS
Purchaser and Seller acknowledge that Purchaser is requiring a
substantial quantity of documentation, the production of which, is claimed
to be necessary to facilitate the Closing. In consideration thereof, and
in consideration of Seller holding the Property off the market during the
term of this Agreement, Purchaser shall pay to Escrow Agent simultaneously
with the execution of this Agreement the lump sum of $300,000.00, the
Deposit, to offset the cost to Seller in connection with the production and
reproduction of the documented items listed but not limited to those set
forth herein and including the cost of counsel. Escrow Agent shall place
the Deposit in an interest bearing account with a financial institution
having an office in Atlanta, Georgia. The interest earned on the Deposit
shall become a part of the Deposit and disbursed in the same manner as the
Deposit. Notwithstanding anything to the contrary contained in this
Agreement, the Deposit shall only be refundable to Purchaser if: (i) any of
the representations made by Seller as set forth in Section 10.1(d), (e),
(f), and (k) of this Agreement prove to be materially false (subject to
Purchaser's waiver of this right as set forth in Section 6.1), or (ii)
Seller shall breach this Agreement by (1) failing to consummate the sale of
the Property to Purchaser, (2) failing to materially comply with the
provisions of Section 8 of this Agreement, (3) failing to cure those title
matters which Seller has agreed, in writing, on and after the Effective Date
hereof, to cure, or (4) failing to materially comply with the provisions of
Section 6.3(d) of this Agreement. In any event, if Purchaser purchases the
Property, Purchaser shall receive a credit against the Purchase Price in the
amount of the Deposit.
In performing its duties hereunder, Escrow Agent shall not incur any
liability for any damages, losses or expenses, except for its gross
negligence or willful misconduct, and it shall accordingly not incur any
such liability with respect (a) to any action taken or omitted in good faith
upon advice of its counsel or (b) to any action taken or omitted in reliance
upon any instrument, including any written notice or instruction provided
for in this Agreement, not only as to its due execution and the validity and
effectiveness of its provisions, but also as to the truth and accuracy of
any information contained therein, that Escrow Agent shall in good faith
believe to be genuine, to have been signed or presented by a proper person,
and to conform to the provisions of this Agreement. The parties hereto
(other than Escrow Agent) agree to indemnify and hold harmless Escrow Agent
against any and all losses, claims, damages, liabilities and expenses,
including reasonable costs of investigation, legal fees and disbursements,
that may be imposed upon Escrow Agent or incurred by Escrow Agent in
connection with its acceptance or performance of its duties hereunder,
including, without limitation, any litigation arising out of this Agreement
or involving the subject matter hereof. If any dispute shall arise among
the parties sufficient in the sole discretion of Escrow Agent to justify its
doing so, Escrow Agent shall be entitled to tender into the registry or
custody of the Clerk of the Superior Court of Buncombe County, North
Carolina, or the Clerk for the United States District Court for the
corresponding district, any or all money, property or documents in its hands
relating to this Agreement, together with such legal pleadings and documents
as it shall deem appropriate, and thereupon be discharged from all further
duties and liabilities under this Agreement. The parties hereto (other than
Escrow Agent) shall bear all costs and expenses of any such legal
proceedings. Liability for the indemnities made in this Exhibit shall
survive the execution and delivery of this Agreement, the termination of
this Agreement prior to Closing (if applicable), and the Closing.
EXHIBIT "E"
LIST OF PENDING LITIGATION
EXHIBT "T-1"
PERMITTED ENCUMBRANCES
<PAGE>
EXHIBIT "T-2"
Mechanic's and Materialmen's Liens:
Additional Matters:
PROMISSORY NOTE
$48,900,000.00 December 31, 1997
FOR VALUE RECEIVED, the undersigned, ASHEVILLE, LLC, a North Carolina
limited liability company (hereinafter called "Maker"), promises to pay to the
order of WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking
association, (hereinafter, together with all subsequent holders of this Note,
called "Payee") on or before the 28th day of February, 1998 (the "Maturity
Date"), as hereinafter provided, the principal sum of FORTY-EIGHT MILLION NINE
HUNDRED THOUSAND AND No/100 DOLLARS ($48,900,000.00), or so much thereof as may
actually be advanced from time to time, together with interest on the unpaid
principal balance from time to time outstanding at the rate per annum equal to
the "Base Rate" of interest as it fluctuates; provided, however, subject to the
limitations stated herein, the Maker may elect in accordance with the
procedures set forth below to have interest accrue and be paid on all or a
portion of the outstanding principal balance hereof at a rate per annum equal
to the "Fixed Increment Rate" (as defined below).
Defined Terms:
"Base Rate:" An interest rate per annum, fluctuating daily, equal to
the rate announced by Payee from time to time at its principal office in San
Francisco, California as its prime rate in effect on such day. Neither the
Base Rate nor the prime rate of Payee is necessarily intended to be the lowest.
rate of interest charged by Payee in connection with extensions of credit.
Each change in the prime rate shall result in a corresponding change in the
Base Rate and such change shall be effective on the effective date of such
change in the prime rate.
"Fixed Increment Rate:" The "Fixed LIBO Rate" (as defined below), plus
nine-tenths of one percent (.90%) (i.e. 90 basis points) per annum.
"Fixed LIBO Rate:" With respect to any "Fixed Period" (as defined
below), the rate per annum which is equal to the quotient of the average rate
per annum (determined solely by Payee and rounded upwards, if necessary, to
the next higher 1/16 of 1%) at which deposits in United States Dollars are
offered to Payee by brokers in the London interbank market as of 11:00 a.m.
(London time) two (2) Business Days prior to the first day of such Fixed
Period, in an amount equal to the "Fixed Increment" (as defined below) so
requested and for a period equal to -such Fixed Period. Each determination
of the Fixed LIBO Rate by Payee shall, in absence of manifest error, be
conclusive and binding.
<PAGE> 1
"Reserve Requirement The daily average during the Fixed 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 Fixed
Period) which is imposed under "Regulation D" (as defined below) against
"Eurocurrency liabilities" as defined in Regulation D. Each determination by
Payee of the Reserve Requirement shall, in the absence of manifest error, be
conclusive and binding.
"Regulation D:" Regulation D of the Board of Governors of the Federal
Reserve System from time to time in effect arid shall include any successor
or other regulation relating to reserve requirements applicable to member
banks of the Federal Reserve System.
"Loan" The loan advanced under this Note and evidenced hereby and by the
other Security
Documents.
"Event of Default:" Any default hereunder or tender the other Security
Documents.
"Guaranty:" That certain Guaranty of or about even date herewith from
CBL & Associates
Limited Partnership in favor of payee.
"Security Documents As that term is defined in the Guaranty.
"Fixed Increment:" The portion of the outstanding principal balance
hereof specified by Maker to Payee effective as of the applicable
"Fixed Period Commencement Date" (as defined below); provided,
however, in no event shall any such Fixed Increment be less than One
Million and No/100 Dollars ($1,000,000.00).
"Fixed Period A period as designated by Maker which is thirty (30) or
sixty (60) days, commencing on the Fixed Period Commencement Date.
Notwithstanding the foregoing, in no event shall any Fixed Period extend
beyond the Maturity Date.
"Fixed Period Commencement Date: The proposed commencement of the
applicable Fixed
Period.
,,Business Day:" (a) With respect to any advance, payment or rate
determination for a Fixed Increment, a day, other than a Saturday or Sunday,
on which Payee is open for business, in San Francisco and on which dealings in
United States Dollars are carried on in the London interbank market; and (b)
for all other purposes, any day of the week (but not a Saturday, Sunday or
holiday) on which the offices of Payee are open to the public for carrying on
substantially all of Payee's business functions. Unless specifically
referenced in this Note as a Business Day, all references to "days" shall be
to calendar days.
<PAGE> 2
Selection of Fixed Increment Rate
If the Maker elects to have the Fixed Increment Rate apply, it shall
advise the Payee in writing of its election and the Fixed Period and Fixed
Increment for which the Maker desires said rate to apply not later than 1 1:00
a.m., Pacific Standard Time or Pacific Daylight Time (as applicable), three (3)
Business Days prior to the Fixed Period Commencement Date. Any such election
may be made only (I) once during any thirty (30) day period and (ii) while no
Event of Default is in existence and no event has occurred which with notice
and/or lapse of time would constitute an Event of Default. After Maker has
designated a Fixed Increment to which the Fixed Increment Rate shall apply,
such rate shall apply to the Fixed Increment for the duration of the Fixed
Period. At any one time during the term hereof, no more than three (3) Fixed
Increments may be outstanding. If the Maker elects the Fixed Increment Rate,
but the applicable Fixed Period will commence on a date which is not a Business
Day, such Fixed Period shall be deemed to commence on the next Business Day
after it would otherwise commence, and any interest which accrues hereunder in
the interim shall accrue at the Base Rate.
Notwithstanding anything contained herein to the contrary, if the Maker
elects the Fixed Increment Rate to apply but the Payee is unable for any reason
to obtain funds from Payee in the amount of the Fixed Increment elected for the
Fixed Period elected, interest on such Fixed Increment shall accrue at the Base
Rate unless and until a new election of the Fixed Increment Rate is made by
Maker and the Payee is then able to obtain such funds.
In the absence of an effective election by Maker of the Fixed Increment
Rate in accordance with the above procedures prior to the expiration of the
then current Fixed Period with respect to any Fixed Increment, Payee shall be
deemed to have elected that such Fixed Increment thereafter bear interest at
the Fixed Increment Rate for a fixed period of thirty (30) days.
Special Provisions Applicable to LIBO Rate Provisions. Notwithstanding any
other provisions hereof-
A. Change in Law: If, after the date hereof, 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 Payee 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 o*@ impossible for Payee to make, maintain or
fund advances at the Fixed Increment Rate, Payee shall forthwith give notice
thereof to Maker. Before giving any noticed Payee shall designate a different
LIBO lending office if such designation will avoid the need for giving such
notice and will not be otherwise disadvantageous to Payee (as determined in
good faith by Payee). Upon receipt of such notice, Maker shall either (I)
repay in full the then outstanding principal amount of any Fixed Increment,
together with accrued interest thereon, or (ii) convert such Fixed Increments
to the Base Rate, either (a) on the last day of the then current Fixed Period
applicable to such fixed increment if Payee may lawfully continue to maintain
and fund advances at the fixed increment rate to such day or (b) immediately
if payee may not lawfully continue to fund and maintain advances at the
<PAGE> 3
Fixed Increment Rate to such day.
B. 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 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, Payee,
or shall impose on Payee (or its eurodollar lending office) or the interbank
eurodollar market any other condition affecting Fixed Increments, this Note,
or Payee's obligation to pen-nit Maker to elect to have the Fixed Increment
Rate apply to a Fixed Increment; and the result of any of the foregoing is to
increase the cost to Payee of making or maintaining advances at the Fixed
Increment Rate, or to reduce the amount of any sum received or receivable by
Payee hereunder, by an amount deemed by Payee to be material, then, within five
(5) days after demand by Payee, Maker shall pay to Payee, such additional
amount or amounts as will compensate Payee for such increased cost or
reduction. Payee will use good faith and reasonable efforts to designate a
different LIBO lending office if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in the sole opinion of
Payee, be disadvantageous to Payee. A certificate of Payee claiming
compensation under this Paragraph B 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 Payee demands
compensation under this Paragraph B, then Maker may at any time, upon at least
five (5) Business Days' prior notice to Payee either (I) repay in full all then
outstanding Fixed Increments, together with accrued interest thereon on the
date of prepayment or (ii) convert such Fixed Increments to the Base Rate;
provided, however, that Maker shall be liable for any."Consequential Loss" (as
defined below) arising pursuant to such actions, unless the requirement or
condition giving rise to the incurred costs is not generally applicable to
lenders similar to Payee, but rather is applicable solely to Payee.
C. Payments Not At End of Interest Period. If Maker makes any
payment of principal with respect to any Fixed Increment on any day other than
the last day of a Fixed Period applicable to such Fixed Increment (other than
any such payment required by Paragraph A(ii)(b) above), then Maker shall
reimburse Payee on demand the Consequential Loss incurred by Payee as a result
of the timing of such payment. A certificate of Payee setting forth in
reasonable detail the basis for the determination of the amount of Consequential
Loss shall be delivered to Maker by Payee and shall, in the absence of manifest
error, be conclusive and binding. Any conversion of a Fixed Increment to the
Base Rate on any day other than the last day of the Fixed Period for such Fixed
Increment shall be deemed a payment for purposes of this Paragraph C.
D. Effect on Fixed Increments. If notice has been given pursuant to
Paragraph A above requiring a Fixed Increment to be repaid or converted, then
unless and until Payee notifies Maker that the circumstances giving rise to
such repayment or conversion no longer apply, Maker shall not have the right
to elect to have the Fixed Increment Rate apply. If Payee notifies Maker that
the circumstances giving rise to such repayment or conversion no longer apply,
Maker may thereafter elect to have the Fixed Increment Rate apply in accordance
with the terms of this Note.
<PAGE> 4
E. Notice. Payee shall notify Maker of any event occurring after the
date hereof entitling Payee to compensation under Paragraph B above within 45
days after Payee obtains actual knowledge thereof, provided that if Payee fails
to give such notice to Maker within 45 days after it obtains actual knowledge
of such an event, Payee shall, with respect to compensation payable pursuant
to such Paragraph B in respect of any costs resulting from such event, only be
entitled to payment under Paragraph B for costs incurred from and after the
date 45 days prior to the date that Payee gives such notice.
F. Consequential Loss. The term "Consequential Loss" shall mean any
loss, cost or expense incurred by Payee as a result of the payment or
conversion of any Fixed Increment on a day other than the last day of the Fixed
Period applicable thereto or in the redepositing, redeploying or reinvesting
the principal amount so paid or affected by the timing of such conversion
including the sum of (I) the interest which, but for the payment or conversion
Payee would have earned in respect of such principal amount, reduced, if Payee
is able to redeposits redeploy, or reinvest such principal amount by the
interest earned by Payee as a result of so redepositing, redeploying or
reinvesting such principal amount, plus (ii) any expense or penalty incurred
by payee on redepositing, redeploying or reinvesting such principal amount.
General Provisions:
Interest based on a 360-day year will be accrued on the number of days
funds are actually outstanding. Interest shall be calculated on a daily
basis and shall be payable monthly on the first day of each and every month
following the date hereof until the Maturity Date, at which time all accrued
and unpaid interest and the unpaid principal balance hereof shall be due and
payable in full.
All payments on this Note shall, at the option of Payee, be applied
first to the payment of accrued but unpaid interest, and any remainder shall
be applied to reduction of the principal balance hereof. All payments
hereunder shall be made to Payee at c/o Wells Fargo Bank, National
Association, 212,0 East Park Place, Suite 100, El Segundo, California 90245,
or at such other address as Payee may from time to time designate in writing
to Maker.
Except as otherwise specifically provided in the Security Documents,
Maker and any endorsers or guarantors hereof jointly and severally waive
presentment and demand for payment, notice of intent to accelerate maturity,
notice of acceleration of maturity, protest or notice of protest and
nonpayment, bringing of suit and diligence in taking any action to collect
any sums owing hereunder or in proceeding against any of the rights and
properties securing payment
<PAGE> 5
hereof. Maker and any endorsers or guarantors hereof agree that the time
for any payments hereunder may be extended from time to time without notice
and consent to the acceptance of further security or the release of any
existing security for this Note, all without in any manner affecting their
liability under or with respect to this Note. No extension of time for the
payment of this Note or any installment hereof shall affect the liability of
Maker under. this Note even though Maker is not a party to such agreement.
If a default is made in the payment, in whole or in part, of any sum
provided for herein when due and such default is not cured within fifteen
(15) days after written notice thereof from Payee to Maker, or if an Event
of Default shall occur under the any of the Security Documents, then Payee
may, at its option, without further notice or demand, except as otherwise
specifically provided in the Security Documents, declare the unpaid
principal balance and accrued interest on this Note at once due and payable,
foreclose all deeds of trust, mortgages and liens securing payment hereof,
pursue any and all other rights, remedies, and recourses available to Payee,
or pursue any combination of the foregoing, all remedies hereunder and under
the Security Documents being cumulative.
Failure to exercise any of the foregoing options shall not constitute a
waiver of the right to exercise the same or any other option at any
subsequent time in respect to any other event. The acceptance by Payee of
any payment hereunder that is less than payment in full of all amounts due
and payable at the time of such payment shall not constitute a waiver of the
right to exercise any of the foregoing options at that time or at any
subsequent time or nullify any prior exercise of any such option without the
express written consent of Payee.
If any payment required under this Note is not paid within fifteen
(15) days after written notice has been given to Maker that the same has
become due and payable, Payee may require a late charge for late payment to
compensate for the Payee's loss of use of funds and for the expenses of
handling the delinquent payment, in an amount not to exceed four percent
(4%) of such delinquent payment. Said late charge shall be paid in any
event not later than the due date of the next subsequent installment of
principal and/or interest. In the event the maturity of the indebtedness
hereunder is accelerated by Payee, this paragraph shall apply only to
payments overdue prior to the time of such acceleration. This paragraph
shall not be deemed to be a waiver of Payee's right to accelerate payment of
this Note under the terms hereof.
Maker shall have the right prior to. the Maturity Date, upon ten (10)
days' prior written notice, to prepay all or any portion (except any portion
constituting a Fixed Increment during its applicable Fixed Period) of the
principal balance owing hereunder from time to time without the payment of
any premium or penalty; provided, however, that (a) if such prepayment is
only a partial payment of the then outstanding principal balance hereof,
such prepayment shall be
<PAGE> 6
accompanied by the payment of all accrued but unpaid interest on the portion
of the outstanding principal balance of the Note being so paid through the
date the prepayment is made, and (b) for same day credit all monies shall be
received at Payee's office at c/o Wells Fargo Bank, National Association,
2120 East Park Place, Suite 100, El Segundo, California 90245 on or before 1
1:00 a.m., Pacific Standard Time or Pacific Daylight Time (as applicable).
All monies received after this time shall be deemed received on the
following Business Day and shall continue to accrue interest at the Base
Rate to the date funds are deemed received.
Maker shall have the right to prepay any Fixed Increment during its
applicable Fixed Period only upon payment to Payee at the time of such
prepayment, of an amount (the "Fixed Increment Liquidation Amount") equal to
the excess of (I) the interest that would have been payable by Maker for
such Fixed Increment for the remainder of the applicable Fixed Period at the
applicable Fixed Increment Rate had such prepayment not been made by Maker,
over (ii) the interest to be earned on sums equal to the amount of such
Fixed Increment for the remainder of the applicable Fixed Period as invested
by Payee in an interest bearing obligation of Payee's selection, in its sole
and absolute discretion.
In addition, in any such event, the provisions of the immediately,
preceding paragraph hereto (relating to the obligation of Maker to pay to
Payee certain amounts in the event of the prepayment of a Fixed Increment
prior to the last day of the applicable Fixed Period) shall apply with
respect to any Fixed Increment prepaid by Maker prior to the last day of the
applicable Fixed Period as a result of the acceleration by Payee of the
outstanding principal balance hereof.
Upon the occurrence of an Event of Default, at the option of the
Payee, all amounts payable hereunder or under the Security Documents shall
bear interest for the period beginning with the date of occurrence -of such
Event Of Default at a rate of interest per annum (the "Default Rate"),
payable on the first day of each and every month, equal to three percent
(3%) above the Base Rate, as it fluctuates, or three percent (3%) above the
Fixed Increment Rate, whichever is applicable.
Notwithstanding any other provision of this Note to the contrary, from
and after the Maturity Date of this Note, or such earlier date as the unpaid
principal owing on this Note becomes due and payable upon acceleration or
otherwise pursuant to the terms hereof, the whole of the unpaid principal
and, to the fullest extent permitted by law, interest owing on this Note,
shall thereafter bear interest until paid in full at the Default Rate.
All amounts payable hereunder are payable in lawful money of the
United States of America. Maker agrees to pay all costs of collection
hereof when incurred, including reasonable attorneys' fees, whether or not
any legal action shall be instituted to enforce this Note.
<PAGE> 7
This Note is given for business purposes and none of the proceeds of
the Loan or this Note will be used for personal, family or household
purposes.
If this Note is executed by more than one party, each such party shall
be jointly and severally liable for the obligations of Maker under this Note.
If the Maker is a partnership, each general partner of Maker shall be jointly
and severally liable hereunder, and each such general partner hereby waives any
requirement of law that, upon an occurrence of an Event of Default hereunder
or under the Security Documents, Payee exhaust any assets of Maker before
proceeding against such general partner's assets.
MAKER AGREES THAT TIME IS OF THE ESSENCE IN THE PERFORMANCE OF ALL
OBLIGATIONS HEREUNDER.
This Note shall be governed by and construed according to the laws of
the State of Georgia.
It is expressly stipulated and agreed to be the intent of Maker and
Payee at all times to comply with the applicable law now or hereafter governing
the interest payable on this Note or the Loan (or applicable United States
federal law to the extent that it permits the Payee to contract for, charge,
take, reserve, or receive a greater amount of interest than under Georgia law).
If the applicable law is ever revised, repealed, or judicially interpreted so
as to render usurious any amount called for under this Note, or under any of the
Security Documents, or contracted for, charged, taken, reserved or received-
with respect to the Loan, or if Payee's exercise of the option herein contained
to accelerate the maturity of this Note, or if any prepayment by Maker results
in Maker's having paid any interestt in excess of that permitted by applicable
law, then it is Maker's and Payee's express intent that all excess amounts
theretofore collected by Payee be credited on the principal balance of this
Note (or, if the Note has been paid in full, refunded to Maker), and the
provisions of this Note and the Security Documents immediately be deemed
reformed and the amounts thereafter collectible hereunder and thereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the then applicable law, but so as to permit the recovery of the
fullest amount otherwise called for hereunder and thereunder.
All sums paid or agreed to be paid to Payee for the use, forbearance or
detention of the indebtedness evidenced hereby and by the other Security
Documents shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of such indebtedness
until payment in full so that the rate or amount of interest on account of such
indebtedness does not exceed the usury ceiling from time to time in effect and
applicable to the Loan for so long as debt is outstanding under the Loan.
The term "Maker" as used in this Note shall mean and have reference to,
collectively, all parties and each of them directly or indirectly obligated for
the indebtedness evidenced by this Note, whether as principal maker, endorser,
guarantor, or otherwise, together with the respective heirs, administrators,
executors, legal representatives, successors and assigns of each of the
foregoing.
<PAGE> 8
All notices hereunder shall be given at the following addresses: If to
Maker, c/o CBL & Associates Limited Partnership, One Park Place, 6148 Lee
Highway, Chattanooga, Tennessee 37421, Attention: President. If to Payee,
Suite 1805, 2859 Paces Ferry Road, Atlanta, Georgia 30339, with a copy of all
notices to Chief Credit Officer - Real Estate Group, Wells Fargo Bank, National
Association, 420 Montgomery Street, 6th Floor, San Francisco, California 94163.
Either party may change their address for notice purposes upon giving thirty
(30) days' prior notice thereof to the other party in accordance with this
paragraph. All notices given hereunder shall be in writing and shall be
considered 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, or if sent by prepaid telegram, telex or telecopy, with a copy of any
communication so sent by telegram, telex or telecopy being sent by mail,
overnight courier or personal delivery as aforesaid. Any notice mailed as
above provided shall be effective three (3) business days after its deposit in
the custody of the United States Postal Service; all other notices shall be
effective upon receipt.
Whenever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited by or invalid under such law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Note.
IN WITNESS WHEREOF, this Note has been duly executed under seal in
Chattanooga,
Tennessee on the date first above written.
"MAKER"
ASHEVILLE, LLC, a North Carolina limited liability
company (SEAL)
By: CBL & Associates Limited Partnership, a
Delaware limited partnership, its sole member
By: CBL Holdings I, Inc., a Delaware
corporation, its sole general partner
By: /c/ John N. Foy
--------------------------------------
By: John N. Foy
---------------------------------------
Its: Executive Vice President
<PAGE> 9
Attest /c/ Jeffery V. Curry
--------------------------------------------
Attest Jeffery V. Curry
-------------------------------------------
Its: Assistant Secretary
(CORPORATE SEAL)
This signature page is attached to and is a part of that certain Promissory
Note in the original principal amount of Forty-Eight Million Nine Hundred
Thousand and No/100 Dollars ($48,900,000.00), from Asheville, LLC, as
"Maker," to Wells Fargo Bank, National Association, as "Payee."
10
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report on the statement of the excess of revenues over specific
operating expenses of Asheville Mall for the year ended December 31, 1996
included in this Form 8-k, into the Company's previously filed S-3
Registration Statement File No. 33-92218.
Arthur Andersen, LLP
Chattanooga, Tennessee
February 16, 1998
